2025 中期報告 2025 香港聯合交易所有限公司（「聯交所」）GEM的特色 由於GEM上市公司通常為中小公司，在GEM買賣的證券可能會較於聯交所主板買賣的證券承受較大的市 場波動風險，同時無法保證在GEM買賣的證券會有高流通量的市場。 GEM的定位，乃為相比起其他在聯交所上市的公司帶有較高投資風險的中小型公司提供一個上市的市場。 有意投資的人士應了解投資於該等公司的潛在風險，並應經過審慎周詳的考慮後方作出投資決定。 香港交易及結算所有限公司及聯交所對本報告的內容概不負責，對其準確性或完備性亦無發表任何聲明， 並明確表示不會就因本報告全部或任何部分內容而產生，或因依賴該等內容而引致的任何損失承擔任何責任。 1 中國三三傳媒集團有限公司 目錄 | 簡明綜合損益及其他全面收入報表 | 3 | | --- | --- | | 簡明綜合財務狀況表 | 5 | | 簡明綜合權益變動表 | 7 | | 簡明綜合現金流量表 | 8 | | 簡明綜合中期財務報表附註 | 9 | | 管理層討論與分析及披露其他資料 | 18 | 中期報告2025 2 簡明綜合損益及其他全面收入報表 截至2025年6月30日止六個月 未經審核 ...

[Corporate Information](index=3&type=section&id=Corporate%20Information) Provides essential corporate information, including board composition, registered offices, and stock code - Board member change: **Mr. Li Ronghui was appointed as an Executive Director** on June 25, 2025, while Mr. Ling Ke retired on the same day[5](index=5&type=chunk) - The company's stock code is **535**[1](index=1&type=chunk)[11](index=11&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) Analyzes financial performance, business operations, and future outlook for the six months ended June 30, 2025 [Financial Review](index=5&type=section&id=Financial%20Review) The Group's revenue grew significantly in H1 2025, driven by property sales, leading to a substantial reduction in losses Key Financial Data Comparison for H1 2025 (RMB in thousands) | Metric | H1 2025 | H1 2024 | Change | Change (%) | Key Reason | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 6,467,800 | 3,286,900 | +3,180,900 | +96.8% | Increase in recognized property sales revenue | | Other income and gains | 195,700 | 354,300 | -158,600 | -44.8% | Decrease in interest income and consulting service fees | | Direct operating expenses | 608,500 | 627,800 | -19,300 | -3.1% | Staff optimization leading to lower employee costs | | Finance costs | 493,800 | 613,100 | -119,300 | -19.5% | Repayment of some bank loans and lower interest rates | | Impairment of receivables | 773,900 | 281,700 | +492,200 | +174.7% | Large impairment provisions for property inventories of JVs and associates | | Loss attributable to owners of the Company | (1,008,200) | (2,179,100) | +1,170,900 | -53.7% | Significant narrowing of loss | | Basic/diluted loss per share (RMB) | (0.0607) | (0.1312) | +0.0705 | -53.7% | Significant narrowing of loss | [Review of Operations](index=10&type=section&id=Review%20of%20Operations) The Group's total land bank GFA decreased, while its property investment and management business maintained stable performance - As of June 30, 2025, the Group's total land bank GFA in China was **11.57 million sq.m.**, a decrease of approximately 7.6% from the end of December 2024[52](index=52&type=chunk)[56](index=56&type=chunk) Property Investment and Management Business Data for H1 2025 | Metric | H1 2025 | YoY Change | Remarks | | :--- | :--- | :--- | :--- | | Total GFA of Investment Properties in Operation (million sq.m.) | 3.246 | +2.5% | Including JVs and associates | | Total Rental and Related Service Revenue (RMB million) | 1,110 | -0.6% | Including JVs and associates | | Commercial & Office Projects GFA (million sq.m.) | 1.17 | - | Including JVs and associates | | Commercial & Office Rental and Related Service Revenue (RMB million) | 654 | +7.9% | Including JVs and associates | | Occupancy Rate of Shenzhen Viseen Science & Technology Park (Phase 1 & 2) | ~95% | - | - | | Occupancy Rate of Shenzhen Viseen Science & Technology Park (Phase 3) | ~89% | - | - | | Industrial Parks GFA (million sq.m.) | 1.82 | - | Including JVs and associates | | Industrial Parks Rental and Related Service Revenue (RMB million) | 364 | - | - | | Occupancy Rate of Industrial Parks in Stable Operation | ~89% | - | - | | Rental Housing Business Revenue (RMB million) | 96 | - | - | | Occupancy Rate of Economy Apartments in Stable Operation | ~94% | - | - | - Gemdale Viseen Industrial was awarded "Top 3 in Comprehensive Strength of National Industrial City Developers" and "Top 3 in National Industrial Park Asset-light Service Capability" by CRIC for the fourth consecutive year[59](index=59&type=chunk)[62](index=62&type=chunk) - Gemdale Strawberry Community received "Top 10 Excellent Brands of China's Housing Rental Enterprises" and "Top 5 Excellent Operating Enterprises of China's Rental Housing Complexes" from CRIC[60](index=60&type=chunk)[62](index=62&type=chunk) - The Shanghai Baoshan Nanda rental housing project, with over 2,500 high-quality subsidized rental units, has commenced operations, setting a benchmark for heavy-asset investment in rental housing[60](index=60&type=chunk)[62](index=62&type=chunk) [Prospects](index=12&type=section&id=Prospects) The Group anticipates a gradual recovery in the real estate market in H2 2025, supported by government policies - The central government continues to optimize real estate policies, including easing purchase restrictions and lowering down payment ratios, to support housing demand[66](index=66&type=chunk)[68](index=68&type=chunk) - Commercial banks have increased support for development loans, and special loans for "ensuring delivery of buildings" are being accelerated, improving the financing environment for property developers[66](index=66&type=chunk)[68](index=68&type=chunk) - The real estate industry is transitioning from a "high-leverage, high-turnover" model to a "refined, sustainable" one, with development projects focusing on core first- and second-tier cities[66](index=66&type=chunk)[68](index=68&type=chunk) - First- and second-tier city markets show stronger resilience and faster inventory destocking, while third- and fourth-tier cities lag due to higher inventory levels[66](index=66&type=chunk)[68](index=68&type=chunk) - The Group will prioritize financial stability and liquidity, adopting flexible pricing strategies, providing high-quality products, and accelerating sales collection to ensure cash flow[67](index=67&type=chunk)[69](index=69&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=13&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group's loss attributable to owners narrowed significantly due to higher revenue and reduced losses from JVs and associates Key Data from Condensed Consolidated Statement of Profit or Loss (RMB in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | 6,467,765 | 3,286,864 | | Gross profit | 931,231 | 557,414 | | Direct operating expenses | (608,481) | (627,789) | | Other income and gains | 195,699 | 354,290 | | Impairment of receivables | (773,938) | (281,719) | | Finance costs | (493,843) | (613,054) | | Share of profits and losses of joint ventures | (149,847) | (1,168,865) | | Share of profits and losses of associates | 21,659 | (193,813) | | Loss before tax | (967,571) | (2,298,117) | | Loss for the period | (867,090) | (2,152,232) | | Loss attributable to owners of the Company | (1,008,189) | (2,179,099) | | Basic/diluted loss per share (RMB) | (0.0607) | (0.1312) | [Condensed Consolidated Statement of Comprehensive Income](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The Group's total comprehensive loss for the period decreased substantially, driven by a narrower net loss and positive exchange differences Key Data from Condensed Consolidated Statement of Comprehensive Income (RMB in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Loss for the period | (867,090) | (2,152,232) | | Exchange differences on translation of foreign operations | 219,215 | (145,237) | | Share of exchange differences of JVs and associates | (6,126) | 13,333 | | Exchange differences on translation of financial statements | (90,148) | 42,964 | | Other comprehensive income/(loss) for the period, net of tax | 122,941 | (88,940) | | Total comprehensive loss for the period | (744,149) | (2,241,172) | | Comprehensive loss attributable to owners of the Company | (885,989) | (2,255,659) | [Condensed Consolidated Statement of Financial Position](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets and total equity both decreased, primarily due to a reduction in properties under development Key Data from Condensed Consolidated Statement of Financial Position (RMB in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total non-current assets | 39,983,649 | 41,575,049 | | Investment properties | 19,859,473 | 19,799,320 | | Investments in joint ventures | 11,946,749 | 12,766,092 | | Investments in associates | 5,521,191 | 6,482,131 | | Total current assets | 27,627,659 | 34,416,892 | | Properties held for sale | 7,602,234 | 4,963,180 | | Properties under development | 5,492,290 | 12,981,354 | | Bank balances, bank and cash balances | 1,247,386 | 1,821,303 | | Total current liabilities | 24,292,484 | 31,348,063 | | Interest-bearing bank borrowings (current) | 1,390,137 | 1,248,450 | | Amounts due to JVs and associates | 6,976,658 | 8,250,246 | | Total non-current liabilities | 23,023,379 | 23,581,218 | | Interest-bearing bank borrowings (non-current) | 9,712,417 | 10,191,337 | | Total equity | 20,295,445 | 21,062,660 | | Equity attributable to owners of the Company | 16,816,357 | 17,704,352 | [Condensed Consolidated Statement of Changes in Equity](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) The Group's total equity decreased during the period, mainly due to the loss attributable to owners, partially offset by an increase in the exchange fluctuation reserve Key Data from Condensed Consolidated Statement of Changes in Equity (RMB in thousands) | Metric | Jan 1, 2025 (Audited) | (Loss)/Profit for the period | Exchange fluctuation reserve | Total comprehensive (loss)/income | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | :--- | | Equity attributable to owners of the Company | 17,704,352 | (1,008,189) | 122,200 | (885,989) | 16,816,357 | | Non-controlling interests | 3,358,308 | 141,099 | 741 | 141,840 | 3,479,088 | | Total equity | 21,062,660 | (867,090) | 122,941 | (744,149) | 20,295,445 | [Condensed Consolidated Statement of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) The Group experienced a net cash outflow from operating activities, alongside reduced net cash flows from investing and financing activities Key Data from Condensed Consolidated Statement of Cash Flows (RMB in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in)/from operating activities | (70,974) | 192,187 | | Net cash from investing activities | 363,358 | 719,764 | | Net cash used in financing activities | (865,343) | (1,608,191) | | Net decrease in cash and cash equivalents | (572,959) | (696,240) | | Cash and cash equivalents at end of period | 1,247,386 | 1,759,619 | [Notes to the Condensed Consolidated Financial Information](index=22&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Information) Details the notes to the Group's financial information, covering accounting policies, segment information, and other key financial items [1. GENERAL INFORMATION](index=22&type=section&id=1.%20GENERAL%20INFORMATION) Gemdale Properties and Investment Corporation Limited is a Bermuda-incorporated company listed on the Hong Kong Stock Exchange - Company Name: Gemdale Properties and Investment Corporation Limited, Stock Code: 535[1](index=1&type=chunk)[90](index=90&type=chunk)[95](index=95&type=chunk) - Principal Activities: Property development, property investment, and property management[91](index=91&type=chunk)[96](index=96&type=chunk) - Ultimate Holding Company: Gemdale Corporation, whose shares are listed on the Shanghai Stock Exchange[92](index=92&type=chunk)[96](index=96&type=chunk) [2. BASIS OF PREPARATION AND ACCOUNTING POLICIES](index=22&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20ACCOUNTING%20POLICIES) The financial information is prepared in accordance with HKAS 34 and is consistent with the 2024 annual financial statements - Basis of Preparation: Prepared in accordance with Hong Kong Accounting Standard (HKAS) 34 "Interim Financial Reporting"[93](index=93&type=chunk)[97](index=97&type=chunk) - Changes in Accounting Policies: First-time application of amended Hong Kong Financial Reporting Standards (HKFRSs) effective for the financial year beginning on or after January 1, 2025[99](index=99&type=chunk)[103](index=103&type=chunk) - The amendment to HKAS 21 "Lack of Exchangeability" had **no impact** on the interim condensed consolidated financial information as the Group's transaction currencies are exchangeable[100](index=100&type=chunk)[104](index=104&type=chunk) [3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES](index=23&type=section&id=3.%20CRITICAL%20ACCOUNTING%20JUDGEMENTS%20AND%20ESTIMATES) The critical accounting judgements and estimation uncertainties are consistent with those applied in the 2024 annual financial statements - Critical accounting judgements and estimates are **consistent** with those in the consolidated financial statements for the year ended December 31, 2024[102](index=102&type=chunk)[105](index=105&type=chunk) [4. OPERATING SEGMENT INFORMATION](index=24&type=section&id=4.%20OPERATING%20SEGMENT%20INFORMATION) The Group operates three reportable segments, with property development contributing 90% of total revenue in H1 2025 - The Group has three reportable operating segments: property development, property investment and management, and corporate expenses and others[107](index=107&type=chunk)[113](index=113&type=chunk) - **Over 90% of the Group's revenue** is derived from customers in Mainland China, and over 90% of its assets are located in Mainland China[109](index=109&type=chunk)[111](index=111&type=chunk) Operating Segment Revenue and Results (RMB in thousands) | Segment | H1 2025 Revenue | H1 2025 Results | H1 2024 Revenue | H1 2024 Results | | :--- | :--- | :--- | :--- | :--- | | Property development | 5,837,347 | (686,212) | 2,633,025 | (2,017,414) | | Property investment and management | 630,418 | 253,299 | 653,839 | 352,169 | | Corporate expenses and others | – | (60,075) | – | (65,091) | | Total | 6,467,765 | (492,988) | 3,286,864 | (1,730,336) | - The property development segment's loss decreased by **RMB 1,331,200 thousand**, mainly due to a reduction in impairment provisions for amounts due from JVs and associates[30](index=30&type=chunk)[33](index=33&type=chunk) - The property investment and management segment's results decreased by **RMB 98,900 thousand**, primarily due to lower interest income and consulting service fees[31](index=31&type=chunk)[34](index=34&type=chunk) [5. REVENUE, OTHER INCOME AND GAINS](index=27&type=section&id=5.%20REVENUE,%20OTHER%20INCOME%20AND%20GAINS) The Group's total revenue increased significantly in H1 2025, driven by property sales, while other income and gains declined Revenue Analysis (RMB in thousands) | Revenue Source | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Property sales | 5,590,773 | 2,622,288 | | Decoration works income | 246,574 | 10,737 | | Property management fee income | 142,436 | 160,362 | | Operation and management fee income | 12,453 | 12,453 | | Gross rental income | 475,529 | 481,024 | | **Total revenue** | **6,467,765** | **3,286,864** | Other Income and Gains Analysis (RMB in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Bank interest income | 8,350 | 18,157 | | Interest income from loans receivable | 11,680 | 24,303 | | Interest income from related parties | 1,957 | 66,379 | | Net gain on disposal of financial assets at FVTPL | 13,029 | – | | Consulting service income | 119,562 | 147,560 | | Government subsidies | 5,627 | 4,516 | | **Total** | **195,699** | **354,290** | [6. FINANCE COSTS](index=30&type=section&id=6.%20FINANCE%20COSTS) Total finance costs incurred decreased during the period, mainly due to lower interest on loans from related parties Finance Costs Analysis (RMB in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Interest on bank loans | 241,263 | 244,039 | | Interest on loans from related parties | 394,208 | 473,680 | | Interest on lease liabilities | 16,233 | 23,231 | | **Total finance costs incurred** | **652,409** | **742,258** | | Less: Interest capitalized (Investment properties) | (16,891) | (17,513) | | Less: Interest capitalized (Properties under development) | (141,675) | (111,691) | | **Net finance costs** | **493,843** | **613,054** | [7. IMPAIRMENT LOSSES OF RECEIVABLES](index=31&type=section&id=7.%20IMPAIRMENT%20LOSSES%20OF%20RECEIVABLES) Impairment losses on receivables increased significantly due to substantial provisions for amounts due from JVs and associates Impairment Losses of Receivables Analysis (RMB in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Loans and other receivables, net | 40,718 | 69,344 | | Amounts due from JVs and associates | 733,220 | 212,375 | | **Total** | **773,938** | **281,719** | - The impairment on amounts due from JVs and associates was mainly due to **significant impairment losses on property inventories** held by these entities[139](index=139&type=chunk) [8. LOSS BEFORE TAX](index=32&type=section&id=8.%20LOSS%20BEFORE%20TAX) The Group's loss before tax narrowed considerably, driven by improved performance from JVs and associates Loss Before Tax Adjustment Items (RMB in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cost of properties sold | 5,189,186 | 2,446,254 | | Depreciation of property, plant and equipment | 16,112 | 19,208 | | Impairment of receivables, net | 773,938 | 281,719 | | Net loss on disposal of JVs and associates | 29,161 | – | | Total employee benefit expenses | 290,108 | 372,771 | | Foreign exchange losses/(gains), net | 94,594 | (1,993) | [9. TAX](index=33&type=section&id=9.%20TAX) The Group recorded a tax credit for the period, primarily due to a decrease in deferred tax liabilities and adjustments to land appreciation tax Tax Analysis (RMB in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Mainland China corporate income tax - current period | 190,639 | 129,002 | | Mainland China land appreciation tax | 15,351 | (142,147) | | Deferred tax | (313,269) | (133,406) | | **Total** | **(100,481)** | **(145,885)** | - The Group had no assessable profits arising in Hong Kong during the period, hence no provision for Hong Kong profits tax was made[143](index=143&type=chunk)[144](index=144&type=chunk) [10. LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY](index=34&type=section&id=10.%20LOSS%20PER%20SHARE%20ATTRIBUTABLE%20TO%20OWNERS%20OF%20THE%20COMPANY) Both basic and diluted loss per share attributable to owners of the Company decreased significantly for the period Loss Per Share Analysis | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Loss attributable to owners of the Company (RMB in thousands) | (1,008,189) | (2,179,099) | | Basic/diluted loss per share (RMB) | (0.0607) | (0.1312) | | Weighted average number of ordinary shares in issue | 16,613,686,827 | 16,613,686,827 | - As there were no outstanding share options during the six months ended June 30, 2025, the basic loss per share was not adjusted for dilution[152](index=152&type=chunk)[154](index=154&type=chunk) [11. TRADE RECEIVABLES](index=36&type=section&id=11.%20TRADE%20RECEIVABLES) The Group's trade receivables, mainly comprising rental and property management fees, decreased as of June 30, 2025 Trade Receivables (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables | 75,924 | 105,947 | Ageing Analysis of Trade Receivables (RMB in thousands) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 18,468 | 41,935 | | 1 to 3 months | 35,275 | 42,833 | | Over 3 months | 22,181 | 21,179 | | **Total** | **75,924** | **105,947** | - Trade receivables are non-interest-bearing and unsecured, with an average credit period of one month and no significant concentration of credit risk[160](index=160&type=chunk)[161](index=161&type=chunk) [12. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES](index=37&type=section&id=12.%20PREPAYMENTS,%20DEPOSITS%20AND%20OTHER%20RECEIVABLES) The total balance of prepayments, deposits, and other receivables decreased, with increased impairment provisions for certain receivables Prepayments, Deposits and Other Receivables (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Deposits and other receivables, net | 1,771,775 | 1,885,821 | | Loans receivable, net | 1,589,437 | 1,638,091 | | Prepayments | 143,144 | 121,433 | | Prepayments of other taxes and surcharges | 491,315 | 679,998 | | Costs incurred to obtain contracts | 41,416 | 105,613 | | **Total** | **4,037,087** | **4,430,956** | | Non-current portion | (21,581) | (21,864) | | Current portion | 4,015,506 | 4,409,092 | Movement in Impairment Provisions (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Impairment provision for other receivables | 218,035 | 208,140 | | Impairment provision for loans receivable | 633,914 | 602,914 | - Loans receivable carry interest at annual rates from **2.3% to 20%**, with repayment terms from two months to six years, and some are secured[169](index=169&type=chunk)[171](index=171&type=chunk) - Impairment analysis uses a loss rate approach, with a **5% loss rate** for other receivables and **1% to 100%** for loans receivable[179](index=179&type=chunk)[181](index=181&type=chunk) [13. TRADE PAYABLES](index=40&type=section&id=13.%20TRADE%20PAYABLES) The Group's total trade payables decreased, with the majority of balances settled within one month Trade Payables (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total trade payables | 4,256,035 | 4,826,246 | Ageing Analysis of Trade Payables (RMB in thousands) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 3,191,322 | 3,574,109 | | 1 to 3 months | 264,607 | 285,222 | | Over 3 months | 800,106 | 966,915 | | **Total** | **4,256,035** | **4,826,246** | - Trade payables are non-interest-bearing and are normally settled within an average of one month[184](index=184&type=chunk) [14. INTEREST-BEARING BANK BORROWINGS](index=41&type=section&id=14.%20INTEREST-BEARING%20BANK%20BORROWINGS) The Group's total interest-bearing bank borrowings decreased slightly, with most loans secured by Group assets or guaranteed by Gemdale Corporation Interest-bearing Bank Borrowings (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current portion | 1,390,137 | 1,248,450 | | Non-current portion | 9,712,417 | 10,191,337 | | **Total** | **11,102,554** | **11,439,787** | - Certain bank loans are secured by the Group's properties under development, properties held for sale, investment properties, and equity interests in subsidiaries[188](index=188&type=chunk) - Bank loans of **RMB 3,368,886 thousand** are guaranteed by Gemdale Corporation[188](index=188&type=chunk) Repayment Schedule of Interest-bearing Bank Borrowings (RMB in thousands) | Repayment Period | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within one year or on demand | 1,390,137 | 1,248,450 | | In the second year | 1,132,584 | 1,057,100 | | In the third to fifth years, inclusive | 3,031,151 | 3,115,694 | | Over five years | 5,548,682 | 6,018,543 | | **Total** | **11,102,554** | **11,439,787** | Currency Denomination of Interest-bearing Bank Borrowings (RMB in thousands) | Currency | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | HKD | 163,881 | 182,333 | | RMB | 10,938,673 | 11,257,454 | | **Total** | **11,102,554** | **11,439,787** | - The Group has complied with the financial covenants under the relevant loan agreements[195](index=195&type=chunk)[197](index=197&type=chunk) [15. ISSUED CAPITAL](index=43&type=section&id=15.%20ISSUED%20CAPITAL) The Group's authorized and issued share capital remained unchanged, with all outstanding share options having lapsed in 2024 Issued and Fully Paid Share Capital | Item | No. of shares as at June 30, 2025 | Equivalent to RMB in thousands as at June 30, 2025 | No. of shares as at Dec 31, 2024 | Equivalent to RMB in thousands as at Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Ordinary shares of HK$0.10 each | 16,613,686,827 | 1,505,164 | 16,613,686,827 | 1,505,164 | - All outstanding share options had lapsed as of December 31, 2024, and thus there were **no share options** in H1 2025[202](index=202&type=chunk)[203](index=203&type=chunk) [16. CONTINGENT LIABILITIES](index=45&type=section&id=16.%20CONTINGENT%20LIABILITIES) The Group has provided guarantees for mortgage loans of property buyers and financing for joint ventures Contingent Liabilities (RMB in thousands) | Guarantee Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Guarantees for mortgage loans of property buyers | 2,504,186 | 2,954,150 | | Guarantees for financing of JVs (USD equivalent) | 562,547 | 573,945 | | Guarantees for financing of JVs (RMB) | 200,000 | 200,000 | | Guarantees for drawn-down financing of JVs | 707,766 | 721,746 | - The directors consider the fair value of the guarantees to be insignificant, and the net realizable value of the related properties is sufficient to cover potential defaults[205](index=205&type=chunk)[206](index=206&type=chunk) [17. PLEDGE OF ASSETS](index=46&type=section&id=17.%20PLEDGE%20OF%20ASSETS) The Group has pledged investment properties, properties under development, properties held for sale, and restricted funds to secure bank loans Pledged Assets (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investment properties | 16,026,000 | 15,999,154 | | Properties under development | 1,037,446 | 2,410,032 | | Properties held for sale | 1,345,477 | – | | Restricted funds | 169,455 | 124,520 | | **Total** | **18,578,378** | **18,533,706** | [18. COMMITMENTS](index=46&type=section&id=18.%20COMMITMENTS) The Group has capital commitments for investment properties and contractual commitments to joint ventures Capital Commitments (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investment properties | 235,481 | 231,661 | | Contractual commitments to JVs | 251,579 | 330,898 | | - Investment properties | 251,579 | 281,898 | | - Capital contribution | – | 49,000 | | **Total** | **487,060** | **562,559** | Total Future Minimum Rentals Receivable (RMB in thousands) | Due Date | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within one year | 765,551 | 743,549 | | After one year but within two years | 563,746 | 646,703 | | After two years but within three years | 304,237 | 313,431 | | After three years but within four years | 179,096 | 189,248 | | After four years but within five years | 127,530 | 154,821 | | After five years | 71,676 | 139,555 | | **Total** | **2,011,836** | **2,187,307** | - Rental income recognized during the period was **RMB 475,529 thousand** (2024: RMB 481,024 thousand)[217](index=217&type=chunk)[220](index=220&type=chunk) [19. RELATED PARTY TRANSACTIONS](index=48&type=section&id=19.%20RELATED%20PARTY%20TRANSACTIONS) The Group engaged in various transactions with related parties, all conducted on normal commercial terms Related Party Transactions (RMB in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Interest expense paid to related parties | 394,208 | 473,680 | | Interest income received from related parties | (9,402) | (77,379) | | Consulting service income from JVs and associates | (76,221) | (151,117) | | **Net expense from related party transactions** | **310,079** | **246,271** | Outstanding Balances with Related Parties (RMB in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amounts due from group companies | 29,704 | 197,364 | | Amounts due from JVs and associates | 4,028,114 | 4,226,409 | | Amounts due from non-controlling shareholders | 1,958,544 | 1,827,996 | | Amounts due from related companies | 1,170,789 | 1,170,842 | | Amounts due to group companies | (14,025,105) | (14,054,692) | | Amounts due to JVs and associates | (6,976,658) | (8,250,246) | | Amounts due to non-controlling shareholders | (1,316,386) | (1,270,057) | - Of the amounts due to group companies, **RMB 10,228,856 thousand** is interest-bearing (at LPR plus a spread or 3% to 5% per annum) and not repayable within one year[233](index=233&type=chunk) [20. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS](index=51&type=section&id=20.%20FAIR%20VALUE%20AND%20FAIR%20VALUE%20HIERARCHY%20OF%20FINANCIAL%20INSTRUMENTS) The Group's financial instruments are primarily measured using Level 3 inputs, indicating reliance on unobservable data for valuation Carrying Amounts and Fair Values of Financial Instruments (RMB in thousands) | Item | Carrying Amount at June 30, 2025 | Fair Value at June 30, 2025 | Carrying Amount at Dec 31, 2024 | Fair Value at Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total financial assets | 615,078 | 613,472 | 754,724 | 752,969 | | Interest-bearing bank borrowings | 11,102,554 | 8,794,124 | 11,439,787 | 9,023,566 | | Non-current portion of amounts due to group companies | 10,228,856 | 8,656,635 | 10,217,712 | 8,396,287 | | Total financial liabilities | 21,331,410 | 17,450,759 | 21,657,499 | 17,419,853 | - The fair value measurements of financial assets and liabilities primarily use **Level 3 inputs**, which are significant unobservable inputs[250](index=250&type=chunk)[254](index=254&type=chunk) - Valuation techniques include valuation multiples (average price-to-sales ratio) for unlisted equity investments and enterprise value allocation method (risk-free rate) for unlisted debt investments[246](index=246&type=chunk) - Level 3 fair value measurement assets (financial assets at FVTPL) decreased from **RMB 732,860 thousand** at the beginning of the period to **RMB 593,497 thousand** at the end, mainly due to disposals and fair value changes[258](index=258&type=chunk) [Other Information](index=57&type=section&id=Other%20Information) Provides other key information, including dividend policy, share schemes, directors' interests, and corporate governance practices [INTERIM DIVIDEND](index=57&type=section&id=INTERIM%20DIVIDEND) 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 (2024: Nil)[261](index=261&type=chunk)[264](index=264&type=chunk) [SHARE SCHEME](index=57&type=section&id=SHARE%20SCHEME) No arrangements were in place during the period to enable directors to acquire benefits through the acquisition of Company shares - At no time during the review period was the Company, its holding companies, or any of its subsidiaries a party to any arrangement to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate[262](index=262&type=chunk)[265](index=265&type=chunk) [DIRECTORS' INTERESTS IN SECURITIES](index=57&type=section&id=DIRECTORS'%20INTERESTS%20IN%20SECURITIES) Several directors hold long positions in the Company's shares, with some also holding interests in the associated corporation, Gemdale Corporation Directors' Long Positions in Shares of the Company | Director's Name | Nature of Interest | Number of Shares | Approximate Percentage of Total Shareholding | | :--- | :--- | :--- | :--- | | Mr. Huang Juncan | Beneficial owner | 144,460,000 | 0.87% | | Mr. Xu Jiajun | Beneficial owner | 126,230,000 | 0.76% | | Mr. Wei Chuanjun | Beneficial owner | 83,150,000 | 0.50% | | Mr. Hui Chiu Chung | Beneficial owner | 2,500,000 | 0.02% | | Mr. Hui Chiu Chung | Interest of spouse | 1,500,000 | - | Directors' Long Positions in Shares of Gemdale Corporation | Director's Name | Nature of Interest | Number of Shares | Approximate Percentage of Total Shareholding | | :--- | :--- | :--- | :--- | | Mr. Huang Juncan | Beneficial owner | 2,065,600 | 0.05% | | Mr. Xu Jiajun | Beneficial owner | 1,050,800 | 0.02% | | Mr. Wei Chuanjun | Beneficial owner | 960,100 | 0.02% | [SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SECURITIES](index=60&type=section&id=SUBSTANTIAL%20SHAREHOLDERS'%20INTERESTS%20IN%20SECURITIES) As of June 30, 2025, Runan Co., Limited and Beacon Limited were the substantial shareholders of the Company Substantial Shareholders' Long Positions in Shares of the Company | Shareholder's Name | Nature of Interest/Capacity | Number of Shares | Approximate Percentage of Total Shareholding | | :--- | :--- | :--- | :--- | | Runan Co., Limited | Direct beneficial owner | 6,689,716,983 | 40.27% | | Beacon Limited | Direct beneficial owner | 4,829,690,322 | 29.07% | - Runan Co., Limited is an indirect wholly-owned subsidiary of Gemdale Corporation[278](index=278&type=chunk) - Beacon Limited is a wholly-owned subsidiary of OUE Limited, whose shares are listed on the Singapore Exchange[282](index=282&type=chunk) [CORPORATE GOVERNANCE](index=62&type=section&id=CORPORATE%20GOVERNANCE) The Company has complied with most provisions of the Corporate Governance Code, with two deviations noted - The Company has complied with most of the mandatory disclosure requirements and applicable code provisions of the Corporate Governance Code[284](index=284&type=chunk)[289](index=289&type=chunk) - Deviations from code provisions C.1.5 and F.1.3 occurred as certain non-executive directors and the Chairman were unable to attend the AGM due to prior business commitments[285](index=285&type=chunk)[286](index=286&type=chunk)[289](index=289&type=chunk) [CHANGE IN COMPOSITION OF THE BOARD](index=62&type=section&id=CHANGE%20IN%20COMPOSITION%20OF%20THE%20BOARD) Mr. Ling Ke retired as an Executive Director and Mr. Li Ronghui was appointed as an Executive Director on June 25, 2025 - Mr. Ling Ke retired as an Executive Director of the Company, effective from the conclusion of the AGM on June 25, 2025[287](index=287&type=chunk)[290](index=290&type=chunk) - Mr. Li Ronghui was appointed as an Executive Director of the Company, effective from the conclusion of the AGM on June 25, 2025[287](index=287&type=chunk)[291](index=291&type=chunk) [MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS](index=62&type=section&id=MODEL%20CODE%20FOR%20SECURITIES%20TRANSACTIONS%20BY%20DIRECTORS) The Company has adopted the Model Code for securities transactions by directors and confirmed full compliance by all directors - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for securities transactions by directors[288](index=288&type=chunk)[292](index=292&type=chunk) - All directors have complied with the required standards set out in the Model Code throughout the six months ended June 30, 2025[288](index=288&type=chunk)[292](index=292&type=chunk) [PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES](index=63&type=section&id=PURCHASE,%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY'S%20LISTED%20SECURITIES) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities on the Stock Exchange during the six months ended June 30, 2025[294](index=294&type=chunk)[299](index=299&type=chunk) [EMPLOYEES AND REMUNERATION POLICY](index=63&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICY) The Group employed approximately 2,100 staff as of June 30, 2025, and maintains a competitive remuneration policy - As of June 30, 2025, the Group employed approximately **2,100 staff** (June 30, 2024: approximately 2,600)[295](index=295&type=chunk)[300](index=300&type=chunk) - Employee remuneration is maintained at a competitive level, with discretionary bonuses awarded based on Group and individual performance[295](index=295&type=chunk)[300](index=300&type=chunk) - Other employee benefits include MPF, housing provident funds, insurance, medical coverage, and education and training allowance schemes[295](index=295&type=chunk)[300](index=300&type=chunk) - Directors' remuneration is determined by the Remuneration Committee and the Board based on their duties, the Group's financial performance, and company policy[296](index=296&type=chunk)[301](index=301&type=chunk) [AUDIT COMMITTEE](index=63&type=section&id=AUDIT%20COMMITTEE) The Audit Committee, composed of independent non-executive directors, reviews the Group's accounting and financial reporting matters - The Audit Committee comprises Mr. Xia Xinping (Chairman), Mr. Hui Chiu Chung, and Mr. Chiang Shang-Yi, all of whom are independent non-executive directors[297](index=297&type=chunk)[302](index=302&type=chunk) - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed auditing, internal control, and financial reporting matters[298](index=298&type=chunk)[302](index=302&type=chunk) - The Group's unaudited interim results for the six months ended June 30, 2025 have not been reviewed by the external auditor, Ernst & Young[298](index=298&type=chunk)[302](index=302&type=chunk) [RISK MANAGEMENT AND INTERNAL CONTROL](index=64&type=section&id=RISK%20MANAGEMENT%20AND%20INTERNAL%20CONTROL) The Board is responsible for continuously monitoring and improving the Group's risk management and internal control systems - The Board is responsible for continuously monitoring and improving the Group's risk management and internal control systems to safeguard assets and shareholder interests[304](index=304&type=chunk)[307](index=307&type=chunk) - The Audit Committee and internal audit department assist in reviewing the effectiveness of these systems at least annually[305](index=305&type=chunk)[308](index=308&type=chunk) - The Group will adapt its risk management and internal control systems in response to changes in its operating scale, business scope, and risk profile[306](index=306&type=chunk)[308](index=308&type=chunk) [DISCLOSURE PURSUANT TO RULE 13.51B(2) OF THE LISTING RULES](index=65&type=section&id=DISCLOSURE%20PURSUANT%20TO%20RULE%2013.51B(2)%20OF%20THE%20LISTING%20RULES) A change in the directorship held by an independent non-executive director in another listed company is disclosed - Mr. Hui Chiu Chung, an independent non-executive director of the Company, ceased to be an independent non-executive director of China South City Holdings Limited with effect from August 11, 2025[310](index=310&type=chunk)[313](index=313&type=chunk) [BOARD OF DIRECTORS](index=65&type=section&id=BOARD%20OF%20DIRECTORS) As of the date of this report, the Board of Directors comprises nine members - The Board consists of four Executive Directors (Mr. Huang Juncan, Mr. Xu Jiajun, Mr. Li Ronghui, Mr. Wei Chuanjun), two Non-executive Directors (Mr. Loh Lian Huat, Ms. Zhang Feiyun), and three Independent Non-executive Directors (Mr. Hui Chiu Chung, Mr. Chiang Shang-Yi, Mr. Xia Xinping)[312](index=312&type=chunk)[314](index=314&type=chunk)

[Group Introduction](index=2&type=section&id=%E9%9B%86%E5%9C%98%E7%B0%A1%E4%BB%8B) [Company Overview](index=2&type=section&id=%E5%85%AC%E5%8F%B8%E6%A6%82%E6%B3%81) Road King Infrastructure is a property developer in Mainland China and Hong Kong, also operating four toll expressways in Indonesia with a land bank of 2.36 million sqm - Road King Infrastructure Limited is a property developer in Mainland China and Hong Kong, and invests in and operates toll expressways in Indonesia[2](index=2&type=chunk) - As of June 30, 2025, the property land bank is approximately **2.36 million square meters**, primarily distributed across the Yangtze River Delta, Bohai Rim, and Greater Bay Area[2](index=2&type=chunk) - The toll road project portfolio includes four expressways in Indonesia, with a total length of approximately **335 kilometers**[2](index=2&type=chunk) [Financial Overview](index=4&type=section&id=%E8%B2%A1%E5%8B%99%E6%A6%82%E8%A7%80) [Key Financial Data](index=4&type=section&id=%E5%85%B3%E9%94%AE%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) The Group reported property sales of RMB 5.232 billion, a 28% decrease, with a net loss of HKD 1.59 billion for the period 2025 H1 Key Financial Data (RMB/HKD Million) | Indicator | 2025 H1 | 2024 H1 | YoY Change | 2024 Full Year | 2023 Full Year | | :--- | :--- | :--- | :--- | :--- | :--- | | Property Sales (RMB) | 5,232 | 7,304 | -28.37% | 12,462 | 27,650 | | Group Revenue (HKD) | 1,785 | 3,468 | -48.51% | 5,537 | 13,075 | | Indonesian Toll Road Revenue (HKD) | 878 | 919 | -4.46% | 1,765 | 1,667 | | Loss for the Period (HKD) | (1,590) | (394) | -303.55% | (3,308) | (3,761) | | Loss Attributable to Owners (HKD) | (2,034) | (1,027) | -98.05% | (4,122) | (3,962) | | Equity Attributable to Owners (HKD) | 9,183 | 14,234 | -35.49% | 10,815 | 15,696 | | Total Assets (HKD) | 53,329 | 64,806 | -17.69% | 57,513 | 73,146 | | Bank Balances and Cash (HKD) | 3,084 | 6,716 | -54.08% | 4,274 | 5,480 | | Net Asset Value Per Share Attributable to Owners (HKD) | 12.25 | 19.00 | -35.53% | 14.43 | 20.95 | [Revenue Contribution Analysis](index=4&type=section&id=%E6%94%B6%E5%85%A5%E8%B4%A1%E7%8C%AE%E5%88%86%E6%9E%90) Property revenue was mainly from Yangtze River Delta (61%), while Indonesian toll road revenue was led by SB (35%) and MKTT (29%) 2025 H1 Property Project Revenue Contribution by Region (Including Joint Ventures and Associates) | Region | Percentage | | :--- | :--- | | Yangtze River Delta | 61% | | Bohai Rim | 27% | | Greater Bay Area | 11% | | Other Regions | 1% | 2025 H1 Indonesian Toll Road Project Revenue Contribution Analysis | Expressway Project | Percentage | | :--- | :--- | | Solo Ngawi Expressway (SN Expressway) | 16% | | Ngawi Kertosono Kediri Expressway (NKK Expressway) | 20% | | Medan-Kualanamu-Tebing Tinggi Expressway (MKTT Expressway) | 29% | | Semarang Batang Expressway (SB Expressway) | 35% | - In 2025 H1, the Group's business revenue (including share of revenue from joint operations and joint ventures and associates) was **HKD 4,702 million**, a significant decrease from **HKD 11,141 million** in 2024 H1[14](index=14&type=chunk)[15](index=15&type=chunk) [Land Bank and Gearing Ratio](index=5&type=section&id=%E5%9C%9F%E5%9C%B0%E5%82%B2%E5%82%99%E4%B8%8E%E8%B4%9F%E5%80%BA%E6%AF%94%E7%8E%87) The land bank decreased to 2.36 million sqm, with the net equity gearing ratio at 63%, reflecting a decline in equity and total assets Land Bank (Including Joint Ventures and Associates, Square Meters) | Period | Property Segment | Industrial Segment | Total | | :--- | :--- | :--- | :--- | | Dec 2023 | 2,590,000 | 980,000 | 3,570,000 | | Dec 2024 | 1,630,000 | 960,000 | 2,590,000 | | Jun 2025 | 1,420,000 | 940,000 | 2,360,000 | Net Equity Gearing Ratio (%) | Period | Ratio | | :--- | :--- | | Dec 2023 | 63 | | Dec 2024 | 55 | | Jun 2025 | 63 | - Net asset value per share attributable to owners decreased from **HKD 20.95** in December 2023 to **HKD 12.25** in June 2025[20](index=20&type=chunk)[21](index=21&type=chunk) - Equity attributable to owners decreased from **HKD 15,696 million** in December 2023 to **HKD 9,183 million** in June 2025[22](index=22&type=chunk) - Total assets decreased from **HKD 73,146 million** in December 2023 to **HKD 53,329 million** in June 2025[23](index=23&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) [Land Bank](index=7&type=section&id=%E5%9C%9F%E5%9C%B0%E5%84%B2%E5%82%99) The total land bank was 2.36 million sqm, with 79% for sale and 21% for investment, primarily in Yangtze River Delta and Henan Land Bank by Region (As of June 30, 2025) | Region | Developable Area (sqm) | Percentage | | :--- | :--- | :--- | | Yangtze River Delta | 879,000 | 37% | | Bohai Rim | 454,000 | 20% | | Greater Bay Area | 124,000 | 5% | | Henan Province | 907,000 | 38% | | Other Regions | 907,000 | 38% | | Total | 2,364,000 | 100% | | Of which: Properties Held for Sale | 1,872,000 | 79% | | Properties Held for Investment | 492,000 | 21% | [Key Project Information](index=8&type=section&id=%E4%B8%BB%E8%A6%81%E9%A0%85%E7%9B%AE%E8%B3%87%E6%96%99) Property projects span major Chinese regions, while toll road investments are concentrated in four Indonesian expressways with varying equity stakes - Properties held for sale projects are located in Shanghai, Nanjing, Changzhou, Wuxi, Suzhou, Beijing, Tianjin, Langfang, Jinan, Guangzhou, Hong Kong, Zhengzhou, Luoyang, mostly residential, with target completion dates ranging from already completed to 2030[28](index=28&type=chunk)[29](index=29&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) - Properties held for investment projects are primarily commercial, located in Changzhou, Wuxi, Suzhou, Ningbo, Beijing, Tianjin, Jinan, Guangzhou, and are all completed[37](index=37&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) Indonesian Toll Road Project Overview (As of June 30, 2025) | Project | Location | Total Length (km) | Equity Interest | | :--- | :--- | :--- | :--- | | SN Expressway | Central & East Java Province | 91 | 40% | | NKK Expressway | East Java Province | 107 | 40% | | MKTT Expressway | North Sumatra Province | 62 | 45% | | SB Expressway | Central Java Province | 75 | 39.77% | [Properties Held for Sale](index=8&type=section&id=%E6%8C%81%E4%BD%9C%E9%8A%B7%E5%94%AE%E7%94%A8%E9%80%94%E4%B9%8B%E7%89%A9%E6%A5%AD) The Group's diverse portfolio of residential and commercial properties for sale spans key regions, with completion dates extending to 2030 - Yangtze River Delta key projects include Road King Sheshan Courtyard East Garden (**95,000 sqm**, completed 2028), Road King Yue Mao Mansion (**28,000 sqm**, completed), mostly residential[28](index=28&type=chunk)[29](index=29&type=chunk) - Bohai Rim key projects include Road King Yunhe Shangyuan (**25,000 sqm**, completed 2027), Road King Sun City (**92,000 sqm**, completed 2026), covering residential and commercial[31](index=31&type=chunk) - Greater Bay Area key projects include Road King Xing Tang (**23,000 sqm**, completed), Junyue Mansion (**52,000 sqm**, completed 2026), primarily residential[32](index=32&type=chunk) - Other regions' key projects are concentrated in Henan Province, such as Road King Jiujun (**526,000 sqm**, completed 2030), Road King Zhongyuan International Slow City (**246,000 sqm**, completed 2030), mostly large-scale residential and commercial mixed-use projects[33](index=33&type=chunk)[35](index=35&type=chunk) [Properties Held for Investment](index=13&type=section&id=%E6%8C%81%E4%BD%9C%E6%8A%95%E8%B3%87%E7%94%A8%E9%80%94%E4%B9%8B%E7%89%A9%E6%A5%AD) Investment properties are commercial, fully completed, and located in major regions like Yangtze River Delta, Bohai Rim, and Greater Bay Area - Yangtze River Delta investment properties include Road King Again City (Changzhou) (**119,000 sqm**), Meili Ancient Town (**51,000 sqm**), all completed[37](index=37&type=chunk) - Bohai Rim investment properties include Road King World Plaza (**63,000 sqm**), Road King Joy Shopping Park (**14,000 sqm**), all completed[39](index=39&type=chunk) - Greater Bay Area investment properties include Road King Junyu (**18,000 sqm**), completed[40](index=40&type=chunk) [Toll Road Projects](index=15&type=section&id=%E6%94%B6%E8%B2%BB%E5%85%AC%E8%B7%AF%E9%A0%85%E7%9B%AE) The Group holds equity in four Indonesian expressways totaling 335 km, all four-lane, located in strategic economic areas - Indonesian expressway projects include Solo Ngawi Expressway (**91 km**, **40% equity**), Ngawi Kertosono Kediri Expressway (**107 km**, **40% equity**), Medan-Kualanamu-Tebing Tinggi Expressway (**62 km**, **45% equity**), and Semarang Batang Expressway (**75 km**, **39.77% equity**)[42](index=42&type=chunk) [Business Review](index=17&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) Property sales declined 28% to RMB 5.232 billion, toll road revenue fell 4% to HKD 878 million, resulting in a HKD 1.59 billion loss - In 2025 H1, the Group's property sales (including joint ventures and associates) were **RMB 5.232 billion**, a decrease of approximately **28%** compared to the same period last year[43](index=43&type=chunk) - Indonesian toll road project revenue was **HKD 878 million**, a decrease of approximately **4%** compared to the same period last year[43](index=43&type=chunk) - Loss for the period was **HKD 1.59 billion**, loss attributable to shareholders was **HKD 2.034 billion**, loss per share was **HKD 2.71**, and net asset value per share was **HKD 12.25**[43](index=43&type=chunk) - As of June 30, 2025, the Group's total land bank was approximately **2.36 million square meters**, of which **380,000 square meters** were sold but not yet delivered[44](index=44&type=chunk) [Segmental Analysis](index=17&type=section&id=%E5%90%84%E6%A5%AD%E5%8B%99%E5%88%86%E9%83%A8%E5%88%86%E6%9E%90) Property segment losses widened due to market downturn, toll road revenue declined despite traffic growth, and the industrial segment's non-core operations were scaled back [Property Segment](index=17&type=section&id=%E6%88%BF%E5%9C%B0%E7%94%A2%E5%88%86%E9%83%A8) Property sales dropped 30% to RMB 5.032 billion, resulting in a HKD 1.068 billion segment loss, as the Group ceased land acquisition and seeks offshore debt solutions - In 2025 H1, the Mainland China property market's bottoming-out and recovery momentum weakened, with third and fourth-tier cities affected by high inventory and downward pressure on housing prices, limiting the effectiveness and sustainability of policies[45](index=45&type=chunk) - Property segment sales (including joint ventures and associates) were **RMB 5.032 billion**, a decrease of approximately **30%** compared to the same period last year[46](index=46&type=chunk) 2025 H1 Property Segment Sales and Deliveries (RMB Million/Square Meters) | Region | Sales (Million) | Sales Area (sqm) | Deliveries (Million) | Delivery Area (sqm) | | :--- | :--- | :--- | :--- | :--- | | Yangtze River Delta | 1,703 | 109,000 | 3,842 | 158,000 | | Bohai Rim | 1,066 | 67,000 | 700 | 54,000 | | Greater Bay Area | 2,209 | 43,000 | 1,698 | 39,000 | | Other Regions | 54 | 8,000 | 34 | 5,000 | | Total (2025 H1) | 5,032 | 227,000 | 6,274 | 256,000 | | Total (2024 H1) | 7,174 | 372,000 | 21,945 | 739,000 | - In 2025 H1, the average property sales price for the property segment was **RMB 22,200 per square meter**, with Hong Kong projects averaging **HKD 118,000 per square meter** and Mainland China projects averaging **RMB 18,000 per square meter**[49](index=49&type=chunk) - The property segment recorded a loss of approximately **HKD 1.068 billion** for the period, mainly due to declines in both property sales volume and price[50](index=50&type=chunk) - The Group ceased participating in land auctions and did not acquire new projects or land parcels during the period. The property segment's land bank is approximately **1.42 million square meters**, primarily located in the Yangtze River Delta[51](index=51&type=chunk) - The Group will actively explore comprehensive solutions for offshore debt and has suspended payments of all due principal and interest on all offshore bank debt, notes, and perpetual securities[52](index=52&type=chunk)[104](index=104&type=chunk) [Toll Road Segment](index=21&type=section&id=%E6%94%B6%E8%B2%BB%E5%85%AC%E8%B7%AF%E5%88%86%E9%83%A8) Toll road traffic grew 1%, but revenue fell 4% due to currency depreciation; segment profit dropped significantly due to a prior-year one-off gain 2025 H1 Indonesian Toll Road Project Daily Average Mixed Traffic Volume and Toll Revenue | Project | Daily Average Mixed Traffic Volume (Vehicles) | Toll Revenue (HKD Million) | | :--- | :--- | :--- | | SN Expressway | 20,600 | 255 | | NKK Expressway | 19,200 | 177 | | MKTT Expressway | 22,400 | 139 | | SB Expressway | 28,900 | 307 | | Total (2025 H1) | 91,100 | 878 | | Total (2024 H1) | 89,900 | 919 | - Indonesian expressway projects' daily average mixed traffic volume increased by **1%** year-on-year, but toll revenue decreased by **4%** year-on-year, mainly due to the depreciation of the Indonesian Rupiah against the Hong Kong Dollar; excluding exchange rate fluctuations, toll revenue was flat year-on-year[61](index=61&type=chunk)[62](index=62&type=chunk) - The Group's share of profit from Indonesian expressway project joint ventures was **HKD 131 million**, a decrease of **HKD 93 million** from the same period last year, mainly due to the recognition of a one-off income tax credit in the prior period[64](index=64&type=chunk) - The Group's toll road segment profit (after deducting headquarters expenses and taxes) was **HKD 96 million**, a significant decrease from **HKD 1.69 billion** in the same period last year, mainly due to the recognition of a one-off after-tax net gain of approximately **HKD 1.49 billion** from the sale of Mainland China expressway business in the prior period[64](index=64&type=chunk) - Each project is actively preparing relevant applications, and the related rate adjustments are expected to be approved by the end of 2025. The Group will continue to advance the proposed sale of Indonesian toll roads[62](index=62&type=chunk)[66](index=66&type=chunk) [Industrial Segment](index=23&type=section&id=%E7%94%A2%E6%A5%AD%E5%88%86%E9%83%A8) Industrial segment sales were RMB 200 million, deliveries RMB 93 million, with a 940,000 sqm land bank, and non-core businesses significantly reduced - In 2025 H1, the industrial segment achieved property sales of approximately **RMB 200 million** and property deliveries of approximately **RMB 93 million**, covering an area of approximately **20,000 square meters**[71](index=71&type=chunk) - As of June 30, 2025, the industrial segment's land bank is approximately **940,000 square meters**, primarily located in Henan Province[71](index=71&type=chunk) - Other original industrial businesses (including real estate fund investments and cultural tourism businesses) have been significantly scaled down after restructuring and consolidation[71](index=71&type=chunk) [Group Financial Review](index=24&type=section&id=%E9%9B%86%E5%9C%98%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's loss widened to HKD 1.59 billion, driven by property segment losses and impairment, leading to suspended offshore debt payments and active restructuring efforts [Condensed Consolidated Statement of Profit or Loss](index=24&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) Total revenue decreased 48.51% to HKD 1.785 billion, resulting in a gross loss of HKD 696 million and a net loss of HKD 1.59 billion Condensed Consolidated Statement of Profit or Loss Key Data (HKD Thousand) | Indicator | 2025 H1 | 2024 H1 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 1,784,898 | 3,468,218 | -48.51% | | Gross Loss | (696,218) | (363,587) | -91.49% | | Other Net Losses | (557,612) | (1,105,037) | 49.54% | | Sales and Operating Expenses | (359,399) | (485,154) | 25.92% | | Gain on Disposal of Subsidiaries | – | 1,862,976 | -100.00% | | Share of Profits of Joint Operations/Ventures | 285,165 | 454,309 | -37.23% | | Finance Costs | (304,281) | (434,072) | 29.90% | | Loss for the Period | (1,590,215) | (393,508) | -304.14% | | Loss Attributable to Owners | (2,034,386) | (1,026,865) | -98.12% | | Basic Loss Per Share | (HKD 2.71) | (HKD 1.37) | -97.81% | - Other net losses primarily resulted from increased impairment provisions for properties and related assets; the prior period also included net exchange losses from RMB depreciation and gains from repurchase of senior notes[76](index=76&type=chunk) - Sales and operating expenses decreased mainly due to reduced property sales volume, lower sales commissions and promotional activities, and optimized operating costs[77](index=77&type=chunk) - Share of profits of joint operations/ventures decreased, mainly due to the prior period's share of profits from Mainland China expressway projects and a one-off income tax credit recognition for Indonesian projects[79](index=79&type=chunk) [Condensed Consolidated Statement of Financial Position](index=26&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) Total assets decreased 7.3% to HKD 53.329 billion, with equity attributable to owners down 15.09% to HKD 9.183 billion Condensed Consolidated Statement of Financial Position Key Data (HKD Million) | Indicator | Jun 30, 2025 | Dec 31, 2024 | Change Rate | | :--- | :--- | :--- | :--- | | Non-current Assets | 21,942 | 22,937 | -4.34% | | Current Assets | 31,387 | 34,576 | -9.22% | | Total Assets | 53,329 | 57,513 | -7.27% | | Non-current Liabilities | (14,052) | (14,351) | 2.08% | | Current Liabilities | (20,108) | (22,262) | 9.68% | | Total Equity (incl. Perpetual Capital Securities) | 19,169 | 20,900 | -8.30% | | Equity Attributable to Owners | 9,183 | 10,815 | -15.09% | - Property inventories decreased, mainly because the Group ceased participating in land auctions and did not acquire new projects or land parcels[86](index=86&type=chunk) - Bank balances and cash decreased, mainly due to the Group's repayment of multiple bank loans and redemption of **HKD 400 million** in disposal loans[87](index=87&type=chunk) - Deposits from presold properties increased, mainly because the Group's wholly-owned projects' presold properties are concentrated for completion and delivery in 2025 H2 or later[88](index=88&type=chunk) [Bank and Other Borrowings](index=28&type=section&id=%E9%8A%80%E8%A1%8C%E5%8F%8A%E5%85%B6%E4%BB%96%E8%B2%B8%E6%AC%BE) Total borrowings decreased 6.27% to HKD 15.21 billion, with 14% short-term and 86% long-term, resulting in a 63% net equity gearing ratio Bank and Other Borrowings Overview (HKD Million) | Indicator | Jun 30, 2025 | Dec 31, 2024 | Change Rate | | :--- | :--- | :--- | :--- | | Total Borrowings | 15,210 | 16,227 | -6.27% | | Repayable within one year or on demand | 2,184 | 2,912 | -25.00% | | After one year but within two years | 459 | 641 | -28.39% | | After two years but within five years | 11,344 | 8,280 | 37.00% | | Over five years | 1,223 | 4,394 | -72.17% | Borrowing Source, Currency, and Interest Rate Basis (As of June 30, 2025) | Borrowing Type | Percentage | Borrowing Currency | Percentage | Interest Rate Basis | Percentage | | :--- | :--- | :--- | :--- | :--- | :--- | | Short-term Borrowings | 14% | HKD | 1% | Floating Annual Rate | 24% | | Long-term Borrowings | 86% | RMB | 22% | Fixed Annual Rate | 76% | | Unsecured Loans | 78% | USD | 77% | | | | Secured Loans | 22% | | | | | - The Group has issued three tranches of guaranteed senior perpetual capital securities, with an outstanding principal of **USD 890.5 million** as of June 30, 2025[97](index=97&type=chunk) - The Group's net equity gearing ratio is **63%**, and the net debt to total capital ratio is **39%**[97](index=97&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=29&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) Operating cash flow turned to an outflow of HKD 368 million, while investing and financing cash flows decreased due to prior-year asset sales and repayments Condensed Consolidated Statement of Cash Flows Key Data (HKD Million) | Indicator | 2025 H1 | 2024 H1 | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (368) | 320 | -215.00% | | Net Cash Flow from Investing Activities | 1,857 | 5,092 | -63.53% | | Net Cash Flow from Financing Activities | (1,964) | (3,728) | 47.29% | | Net (Decrease) Increase in Cash and Cash Equivalents | (475) | 1,685 | -128.19% | | Cash and Cash Equivalents at June 30 | 2,587 | 6,125 | -57.76% | - Net cash flow from operating activities was an outflow, mainly due to the Group's sales volume decreasing compared to the same period last year, resulting in reduced cash income from presales and property sales[100](index=100&type=chunk) - Net cash flow from investing activities significantly decreased, mainly due to the Group receiving cash consideration of approximately **HKD 4.902 billion** from the disposal of its Mainland China expressway business equity in the prior period[101](index=101&type=chunk) - Net cash flow from financing activities decreased compared to the same period last year, mainly due to larger loan repayments and dividend payments to non-controlling interests of other subsidiaries in the prior period[102](index=102&type=chunk) [Liquidity and Financial Resources](index=30&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) Equity attributable to owners was HKD 9.183 billion, with HKD 3.084 billion in cash; the Group suspended offshore debt payments due to liquidity pressure - Equity attributable to owners was **HKD 9.183 billion**, and net asset value per share was **HKD 12.25**[103](index=103&type=chunk) - The Group's total assets were **HKD 53.329 billion**, with bank balances and cash at **HKD 3.084 billion**, of which **81%** was in RMB[103](index=103&type=chunk) - The Group has repaid **HKD 1.029 billion** in loans, but due to the slow market recovery, it anticipates continued debt repayment and liquidity pressure in the future[103](index=103&type=chunk) - The Group has suspended payments of all due principal and interest on all offshore bank debt, notes, and perpetual securities, and is actively exploring solutions to protect the interests of all stakeholders[104](index=104&type=chunk) [Pledged Assets](index=30&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) HKD 40 million in bank balances, HKD 8.071 billion in properties, and HKD 456 million in subsidiary equity were pledged as collateral - Bank balances of **HKD 40 million** were pledged to banks as mortgage credit guarantees and bank loan guarantees[105](index=105&type=chunk) - Properties with a book value of **HKD 8.071 billion** were pledged as collateral for certain credit guarantees[105](index=105&type=chunk) - Borrowings with an outstanding principal amount of **HKD 456 million** were secured by equity shares in certain subsidiaries of the Company[105](index=105&type=chunk) [Exchange Rate Fluctuations and Interest Rate Risk](index=31&type=section&id=%E5%8C%AF%E5%85%8C%E6%B3%A2%E5%8B%95%E5%8F%8A%E5%88%A9%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group faces exchange rate and interest rate risks from its RMB and USD denominated borrowings and cash flows, which it monitors and hedges - The Group's borrowings are primarily in RMB and USD, and cash flows mainly originate from RMB project income, thus facing exchange rate risks from RMB and USD fluctuations[106](index=106&type=chunk) - The Group faces interest rate fluctuation risks related to RMB and USD denominated borrowings[106](index=106&type=chunk) - The Group will closely monitor changes in the international environment and enter into foreign currency forward contracts and hedge interest rate risks as appropriate[106](index=106&type=chunk) [Financial Guarantee Contracts](index=31&type=section&id=%E8%B2%A1%E5%8B%99%E6%93%94%E4%BF%9D%E5%90%88%E7%B4%84) The Group provided HKD 3.387 billion in mortgage guarantees for property buyers and HKD 1.587 billion for joint venture bank financing - The Group provided guarantees of **HKD 3.387 billion** to banks for mortgage loans of property buyers purchasing the Group's developed properties[107](index=107&type=chunk) - The Group also provided guarantees of **HKD 1.587 billion** for bank financing granted by banks to joint ventures[107](index=107&type=chunk) [Employees](index=31&type=section&id=%E5%83%B1%E5%93%A1) The Group employed 3,458 staff with HKD 355 million in expenses, offering various benefits but no share options - The Group had a total of **3,458 employees** as of June 30, 2025[108](index=108&type=chunk) - Staff costs (excluding directors' emoluments) were **HKD 355 million**[108](index=108&type=chunk) - Employee remuneration is determined by performance and contribution, with benefits including provident funds, insurance, medical coverage, and training programs. No share options were granted during the period[108](index=108&type=chunk) [Corporate Governance](index=32&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) [Corporate Governance Code](index=32&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The Company complied with all applicable provisions of the Corporate Governance Code for the six months ended June 30, 2025 - The Company complied with all applicable provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules of The Stock Exchange of Hong Kong Limited[111](index=111&type=chunk) [Standard Securities Dealing Code for Directors](index=32&type=section&id=%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 adopted and all Directors complied with the Model Code for Securities Transactions for the six months ended June 30, 2025 - 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 confirmed compliance with the Model Code for Securities Transactions for the six months ended June 30, 2025[112](index=112&type=chunk) [Disclosure of Interests](index=33&type=section&id=%E6%AC%8A%E7%9B%8A%E6%8A%AB%E9%9C%B2) [Directors' Interests and Short Positions](index=33&type=section&id=%E8%91%A3%E4%BA%8B%E4%B9%8B%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) Directors Shan Wei Biao (3.29%) and Fong Siu Leung (0.03%) held Company shares, with other directors holding associated corporate securities Directors' Long Positions in Company Shares (As of June 30, 2025) | Director Name | Number of Shares Held | Percentage of Shareholding (%) | | :--- | :--- | :--- | | Shan Wei Biao | 24,649,000 | 3.29 | | Fong Siu Leung | 260,000 | 0.03 | - As of June 30, 2025, the Company had no outstanding share options, and no share options were granted, exercised, lapsed, or cancelled during the period[114](index=114&type=chunk) - Mr. Shan Wei Biao holds multiple guaranteed senior perpetual capital securities and guaranteed senior notes issued by RKI Overseas Finance 2017 (A) Limited, RKPF Overseas 2019 (E) Limited, RKP Overseas Finance 2016 (A) Limited, and RKPF Overseas 2019 (A) Limited[116](index=116&type=chunk) - Mr. Wong Wai Ho holds **USD 200,000** of 7% perpetual capital securities issued by RKI Overseas Finance 2017 (A) Limited[116](index=116&type=chunk) [Major Shareholders' Interests](index=35&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E4%B9%8B%E6%AC%8A%E7%9B%8A) Wai Kee Holdings (44.92%) and Shum Yip Group (27.00%) were the largest shareholders as of June 30, 2025 Major Shareholders' Long Positions in Company Shares (As of June 30, 2025) | Shareholder Name | Nature of Interest | Long Position (Number of Shares) | Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | | Wai Kee Holdings Limited | Interest of a controlling corporation | 336,608,428 | 44.92 | | Wai Kee (Zens) Holding Limited | Interest of a controlling corporation | 336,608,428 | 44.92 | | Rich Fortune Trading Limited | Beneficial owner | 81,880,000 | 10.93 | | Wai Kee China Investments (BVI) Company Limited | Interest of a controlling corporation | 251,728,428 | 33.59 | | Wai Kee China Investments Limited | Interest of a controlling corporation | 251,728,428 | 33.59 | | ZWP Investments Limited | Beneficial owner | 251,728,428 | 33.59 | | Shum Yip Group Limited | Interest of a controlling corporation | 202,334,142 | 27.00 | | Shum Yip (Group) Company Limited | Interest of a controlling corporation | 202,334,142 | 27.00 | | Shenzhen Investment Limited | Interest of a controlling corporation | 202,334,142 | 27.00 | | Brightful Investment Holding Limited | Beneficial owner | 202,334,142 | 27.00 | - Wai Kee Holdings Limited holds interests in the Company's shares through its wholly-owned subsidiaries and subsidiaries, with Mr. Shan Wei Biao being a director of Wai Kee Holdings Limited[121](index=121&type=chunk) - Shum Yip Group Limited holds interests in the Company's shares through its interests in Shum Yip (Group) Company Limited and Shenzhen Investment Limited, with Ms. Cai Xun being a director of Shum Yip Group Limited[121](index=121&type=chunk) [Other Disclosures](index=37&type=section&id=%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2) [Dividends](index=37&type=section&id=%E8%82%A1%E6%81%AF) The Board declared no interim dividend for the six months ended June 30, 2025 - The Board of Directors announced that no interim dividend would be declared for the six months ended June 30, 2025[123](index=123&type=chunk) [Purchase, Sale or Redemption of the Group's Listed Securities](index=37&type=section&id=%E8%B3%BC%E5%9B%9E%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E9%9B%86%E5%9C%98%E4%B9%8B%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) No listed securities of the Group were purchased, sold, or redeemed by the Company or its subsidiaries during the period - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Group's listed securities[124](index=124&type=chunk) [Continuing Disclosure under Listing Rules](index=37&type=section&id=%E4%B8%8A%E5%B8%82%E8%A6%8F%E5%89%87%E4%B9%8B%E6%8C%81%E7%BA%8C%E6%8A%AB%E9%9C%B2) Affiliated companies reported HKD 4.755 billion net current assets and HKD 2.052 billion net liabilities, with guarantees for joint venture financing and Board changes disclosed Summary of Aggregated Financial Information of Affiliated Companies (As of June 30, 2025, HKD Million) | Indicator | Amount | | :--- | :--- | | Non-current Assets | 11 | | Current Assets | 14,805 | | Current Liabilities | (10,050) | | Net Current Assets | 4,755 | | Non-current Liabilities | (6,818) | | Net Liabilities | (2,052) | - The Group provided guarantees for financing granted by banks to joint ventures, with a total guarantee amount of **HKD 1.076 billion**[127](index=127&type=chunk) - Changes in Board members include Mr. Shan Wei Biao re-designated as Chairman, Mr. Ng Koon Hung appointed Company Secretary, Mr. Yuan Yang appointed Non-executive Director, Mr. Xu Enli resigned as Non-executive Director, Ms. Hui Suk Han retired as Independent Non-executive Director, Mr. Cheung Hon Kit appointed Audit Committee member, and Mr. Ho David and Ms. Lam Man Kuen appointed Independent Non-executive Directors[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Review of Financial Statements](index=40&type=section&id=%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E4%B9%8B%E5%AF%A9%E9%96%B1) The Audit Committee and external auditor reviewed the Group's unaudited condensed consolidated financial statements and accounting principles - The Company's Audit Committee, together with the external auditor, reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025[133](index=133&type=chunk) [Group Information](index=41&type=section&id=%E9%9B%86%E5%9C%98%E8%B3%87%E6%96%99) [Board of Directors](index=41&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E6%88%90%E5%91%98) The Board comprises Executive Directors (Chairman, CEO, CFO), Non-executive Directors, and Independent Non-executive Directors - Executive Directors include Shan Wei Biao (Chairman), Fong Siu Leung (Chief Executive Officer), Ng Koon Hung (Chief Financial Officer)[135](index=135&type=chunk) - Non-executive Directors include Cai Xun, Yuan Yang[135](index=135&type=chunk) - Independent Non-executive Directors include Wong Wai Ho, Cheung Hon Kit, Ho David, Lam Man Kuen[135](index=135&type=chunk) [Committee Members](index=41&type=section&id=%E5%A7%94%E5%91%98%E4%BC%9A%E6%88%90%E5%91%98) The Group operates with Property Business Management, Audit, Nomination, and Remuneration Committees, each with distinct responsibilities - The convener of the Property Business Management Committee is Fong Siu Leung[135](index=135&type=chunk) - The Chairman of the Audit Committee is Ho David[135](index=135&type=chunk) - The Chairman of the Nomination Committee is Shan Wei Biao[135](index=135&type=chunk) - The Chairman of the Remuneration Committee is Wong Wai Ho[135](index=135&type=chunk) [Company Secretary and Auditor](index=41&type=section&id=%E5%85%AC%E5%8F%B8%E7%A7%98%E4%B9%A6%E4%B8%8E%E6%A0%B8%E6%95%B0%E5%B8%88) Ng Koon Hung serves as Company Secretary, with Deloitte Touche Tohmatsu as the Group's auditor - The Company Secretary is Ng Koon Hung[135](index=135&type=chunk) - The Auditor is Deloitte Touche Tohmatsu[135](index=135&type=chunk) [Principal Bankers](index=41&type=section&id=%E4%B8%BB%E8%A6%81%E5%BE%80%E6%9D%A5%E9%93%B6%E8%A1%8C) Principal bankers include major Chinese banks and The Hongkong and Shanghai Banking Corporation Limited - Principal bankers in Mainland China include Agricultural Bank of China, Bank of China, China Construction Bank, Industrial and Commercial Bank of China[135](index=135&type=chunk) - The principal banker in Hong Kong is The Hongkong and Shanghai Banking Corporation Limited[135](index=135&type=chunk) [Registered Office and Principal Place of Business](index=42&type=section&id=%E6%B3%A8%E5%86%8C%E5%8A%9E%E4%BA%8B%E5%A4%84%E5%8F%8A%E4%B8%BB%E8%A6%81%E7%87%9F%E6%A5%AD%E5%9C%B0%E9%BB%9E) The registered office is in Bermuda, with the principal place of business located in Tsim Sha Tsui, Hong Kong - The registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda[136](index=136&type=chunk) - The principal place of business is located at Unit 502, 5/F, 6 Gateway Tower, 9 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong[136](index=136&type=chunk) [Listing of Shares, Notes, Securities and Bonds](index=42&type=section&id=%E8%82%A1%E4%BB%BD%E3%80%81%E7%A5%A8%E6%8D%A8%E3%80%81%E8%AD%89%E5%88%B8%E5%8F%8A%E5%80%B5%E5%88%B8%E4%B8%8A%E5%B8%82) Company shares are listed on HKEX (1098), while various guaranteed notes and perpetual securities are listed on SGX - The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: **1098**)[136](index=136&type=chunk) - Multiple USD-denominated guaranteed senior notes and guaranteed perpetual capital securities are listed on the Singapore Exchange Securities Trading Limited[136](index=136&type=chunk)[137](index=137&type=chunk) [Investor Relations](index=42&type=section&id=%E6%8A%95%E8%B5%84%E8%80%85%E5%85%B3%E7%B3%BB) Investor relations contacts are Ng Koon Hung and Choi Yuk Chi, available via phone or email - Investor relations contacts are Ng Koon Hung and Choi Yuk Chi, reachable at telephone number **(852) 2957 6800** and email address **ir@roadking.com.hk**[136](index=136&type=chunk) [Review Report on Condensed Consolidated Financial Statements](index=43&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) [Introduction](index=43&type=section&id=%E7%B7%92%E8%A8%80) Deloitte Touche Tohmatsu reviewed the Group's condensed consolidated financial statements, prepared by Directors under HKAS 34 - Deloitte Touche Tohmatsu was engaged to review the Group's condensed consolidated financial statements for the six months ended June 30, 2025[139](index=139&type=chunk) - The Company's Directors are responsible for the preparation and presentation of the condensed consolidated financial statements in accordance with Hong Kong Accounting Standard 34[139](index=139&type=chunk) [Basis for Disclaimer of Conclusion](index=43&type=section&id=%E7%84%A1%E6%B3%95%E7%99%BC%E8%A1%A8%E7%B5%90%E8%AB%96%E7%9A%84%E5%9F%BA%E7%A4%8E) Failure to obtain noteholder consent and suspension of offshore debt payments raise significant going concern doubts, as auditors lack sufficient evidence on liquidity plans - The Group failed to obtain consent solicitation for its senior notes and has suspended payments of all principal and interest on all offshore bank borrowings, senior notes, and perpetual capital securities[140](index=140&type=chunk) - The suspension of payments may lead to certain creditors demanding accelerated repayment of approximately **USD 1.529 billion** (approximately **HKD 11.895 billion**) of offshore bank borrowings and senior notes[140](index=140&type=chunk) - The existence of the aforementioned events or conditions may cast significant doubt on the Group's ability to continue as a going concern[141](index=141&type=chunk) - The auditors were unable to obtain necessary and sufficient appropriate evidence to assess the likelihood of success of the Group's plans to improve liquidity (including financial restructuring and asset realization), and therefore could not be satisfied with the appropriateness of the Directors' use of the going concern basis of accounting[142](index=142&type=chunk) [Disclaimer of Conclusion](index=44&type=section&id=%E7%84%A1%E6%B3%95%E7%99%BC%E8%A1%A8%E7%B5%90%E8%AB%96) Due to material uncertainties regarding going concern, auditors could not obtain sufficient evidence and thus disclaim a conclusion on the financial statements - Due to the materiality of the matters described in the Basis for Disclaimer of Conclusion, the auditors were unable to obtain sufficient appropriate evidence and therefore do not express a conclusion on these condensed consolidated financial statements[145](index=145&type=chunk) [Condensed Consolidated Financial Statements](index=45&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Condensed Consolidated Statement of Profit or Loss](index=45&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) Total revenue was HKD 1.785 billion, resulting in a HKD 696 million gross loss and a HKD 1.59 billion net loss for the period Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30, 2025, HKD Thousand) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | 1,784,898 | 3,468,218 | | Gross Loss | (696,218) | (363,587) | | Other Gains and Losses | (557,612) | (1,105,037) | | Selling Expenses | (108,747) | (144,156) | | Administrative Expenses | (250,652) | (340,998) | | Gain on Disposal of Subsidiaries | – | 1,862,976 | | Share of Profits of Joint Operations/Ventures | 285,165 | 454,309 | | Finance Costs | (304,281) | (434,072) | | Loss for the Period | (1,590,215) | (393,508) | | Loss Attributable to Owners | (2,034,386) | (1,026,865) | | Basic Loss Per Share | (HKD 2.71) | (HKD 1.37) | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=46&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) The Group reported a HKD 1.59 billion loss for the period, with total comprehensive expense reaching HKD 1.586 billion Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2025, HKD Thousand) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the Period | (1,590,215) | (393,508) | | Other Comprehensive Income (Expense) | 4,514 | (539,174) | | Total Comprehensive Expense for the Period | (1,585,701) | (932,682) | | Total Comprehensive (Expense) Income Attributable to Owners | (2,029,802) | (1,462,090) | [Condensed Consolidated Statement of Financial Position](index=47&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) Total assets were HKD 53.329 billion, with HKD 19.169 billion in total equity and HKD 34.160 billion in total liabilities Condensed Consolidated Statement of Financial Position (As of June 30, 2025, HKD Thousand) | Indicator | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-current Assets | 21,941,752 | 22,936,711 | | Current Assets | 31,387,303 | 34,576,424 | | Total Assets | 53,329,055 | 57,513,135 | | Equity Attributable to Owners | 9,182,835 | 10,815,447 | | Holders of Perpetual Capital Securities | 7,395,396 | 7,123,442 | | Total Equity | 19,169,339 | 20,900,179 | | Non-current Liabilities | 14,052,302 | 14,350,791 | | Current Liabilities | 20,107,414 | 22,262,165 | | Total Equity and Liabilities | 53,329,055 | 57,513,135 | [Condensed Consolidated Statement of Changes in Equity](index=49&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) Equity attributable to owners decreased from HKD 15.696 billion to HKD 9.183 billion, mainly due to period loss and exchange adjustments - Equity attributable to owners decreased from **HKD 15,695,656 thousand** as of January 1, 2024, to **HKD 9,182,835 thousand** as of June 30, 2025[154](index=154&type=chunk) - Loss for the period (attributable to owners of the Company) was **HKD 2,034,386 thousand**[154](index=154&type=chunk) - Exchange reserves changed due to the translation of overseas operations and presentation currency[154](index=154&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=50&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) Operating cash flow was a HKD 368 million outflow, investing cash flow was a HKD 1.857 billion inflow, and financing cash flow was a HKD 1.964 billion outflow Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2025, HKD Thousand) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (367,900) | 320,510 | | Net Cash Flow from Investing Activities | 1,857,448 | 5,092,119 | | Net Cash Flow from Financing Activities | (1,964,331) | (3,727,861) | | Net (Decrease) Increase in Cash and Cash Equivalents | (474,783) | 1,684,768 | | Cash and Cash Equivalents at June 30 | 2,586,796 | 6,125,278 | [Notes to the Condensed Consolidated Financial Statements](index=52&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [Basis of Preparation](index=52&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) Prepared under HKAS 34, the statements highlight significant going concern uncertainties due to suspended offshore debt payments and uncertain liquidity plans - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants[158](index=158&type=chunk) - The Group failed to obtain consent solicitation for its senior notes and has suspended payments of all principal and interest on all offshore bank borrowings, senior notes, and perpetual capital securities, which may lead to demands for immediate repayment of approximately **HKD 11.895 billion** in debt[159](index=159&type=chunk) - The Group has formulated financial restructuring plans and measures to realize designated assets, but their success is subject to significant uncertainty, raising doubts about its ability to continue as a going concern[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) [Principal Accounting Policies](index=53&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) Financial statements are prepared on a historical cost basis, with fair value for investment properties; revised HKFRSs had no significant impact - The condensed consolidated financial statements are prepared on a historical cost basis, with investment properties and certain financial instruments measured at fair value[163](index=163&type=chunk) - Revised Hong Kong Financial Reporting Standards were first applied in this interim period but had no significant impact on the Group's financial position and performance[164](index=164&type=chunk) [Revenue](index=54&type=section&id=%E6%94%B6%E5%85%A5) Revenue from customer contracts was HKD 1.682 billion, mainly from property sales and management; total revenue, including joint ventures, significantly decreased to HKD 4.702 billion Revenue from Contracts with Customers (For the six months ended June 30, 2025, HKD Thousand) | Category of Goods and Services | Property Development and Investment | Industrial Investment and Asset Management | Total | | :--- | :--- | :--- | :--- | | Property Sales | 1,236,727 | 57,196 | 1,293,923 | | Property Management and Services Revenue | 376,934 | 11,477 | 388,411 | | Total | 1,613,661 | 68,673 | 1,682,334 | | By Market Region (Mainland China) | 1,558,493 | 68,673 | 1,627,166 | | By Market Region (Hong Kong) | 55,168 | – | 55,168 | | Revenue Recognition Timing (At a point in time) | 1,236,727 | 57,196 | 1,293,923 | | Revenue Recognition Timing (Over time) | 376,934 | 11,477 | 388,411 | - The Group's total revenue (including share of revenue from property joint ventures and associates, and share of toll revenue from infrastructure joint operations/ventures) was **HKD 4,702,024 thousand**, a significant decrease from **HKD 11,141,002 thousand** in 2024 H1[169](index=169&type=chunk) [Segment Information](index=56&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) Property and industrial segments incurred losses, while toll roads were profitable; total segment assets were HKD 53.086 billion, liabilities HKD 33.567 billion Segment Revenue and (Loss) Profit (For the six months ended June 30, 2025, HKD Thousand) | Segment | Revenue | (Loss) Profit | | :--- | :--- | :--- | | Property Development and Investment | 1,711,444 | (1,067,702) | | Toll Roads | – | 95,624 | | Industrial Investment and Asset Management | 73,454 | (594,329) | | Total | 1,784,898 | (1,566,407) | Segment Assets and Liabilities (As of June 30, 2025, HKD Thousand) | Segment | Assets | Liabilities | | :--- | :--- | :--- | | Property Development and Investment | 43,127,962 | (32,845,018) | | Toll Roads | 4,455,913 | (43,461) | | Industrial Investment and Asset Management | 5,501,802 | (678,539) | | Total | 53,085,677 | (33,567,018) | [Other Gains and Losses](index=58&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E6%90%8D%E5%A4%B1) Other net losses of HKD 558 million were primarily due to impairment on loans and joint venture receivables, and fair value losses on investment properties Other Gains and Losses (For the six months ended June 30, 2025, HKD Thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Exchange Gains (Losses) | 1,227 | (299,338) | | Gain on Repurchase of Senior Notes | – | 344,175 | | Impairment Loss on Loans Receivable | (96,567) | (639,984) | | Impairment Loss on Amounts Due from Joint Ventures | (268,240) | (176,489) | | Fair Value Change of Investment Properties | (209,970) | (284,848) | | Total | (557,612) | (1,105,037) | [Share of Profits of Joint Operations/Ventures](index=58&type=section&id=%E5%88%86%E4%BD%94%E5%90%88%E4%BD%9C%E2%97%A4%E5%90%88%E8%B3%87%E4%BC%81%E6%A5%AD%E6%BA%A2%E5%88%A9) Share of profits from joint operations/ventures was HKD 285 million, with infrastructure profits decreasing while property and other joint ventures increased Share of Profits of Joint Operations/Ventures (For the six months ended June 30, 2025, HKD Thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Share of Profits of Infrastructure Joint Operations/Ventures | 130,766 | 357,702 | | Share of Profits of Property and Other Joint Ventures | 154,399 | 96,607 | | Total | 285,165 | 454,309 | [Finance Costs](index=59&type=section&id=%E8%B2%A1%E5%8B%99%E8%B2%BB%E7%94%A8) Total finance costs were HKD 464 million, with net finance costs of HKD 304 million after capitalization, a decrease from the prior period Finance Costs (For the six months ended June 30, 2025, HKD Thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest on Borrowings | 440,434 | 657,473 | | Interest on Lease Liabilities | 310 | 617 | | Other Interest and Finance Charges | 23,052 | 66,237 | | Total | 463,796 | 724,327 | | Less: Capitalized to Properties Under Development for Sale | (159,515) | (290,255) | | Net Finance Costs | 304,281 | 434,072 | [(Loss) Profit Before Tax](index=59&type=section&id=%E7%A8%85%E5%89%8D%EF%BC%88%E虧%E6%90%8D%EF%BC%89%E6%BA%A2%E5%88%A9) Loss before tax was HKD 1.598 billion, mainly due to property inventory costs including HKD 472 million impairment - In 2025 H1, the Group's loss before tax was **HKD 1,597,589 thousand**[178](index=178&type=chunk) - Cost of property inventories recognized as expense was **HKD 2,047,080 thousand**, which included property inventory impairment of **HKD 472,103 thousand**[178](index=178&type=chunk) - Total depreciation of right-of-use assets and property, plant and equipment was **HKD 16,861 thousand**[178](index=178&type=chunk) [Income Tax (Credit) Expense](index=60&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%EF%BC%88%E6%8A%B5%E5%85%8D%EF%BC%89%E6%94%AF%E5%87%BA) Income tax credit was HKD 7.374 million, primarily from PRC taxes, while prior period expense was higher due to asset sale gains Income Tax (Credit) Expense (For the six months ended June 30, 2025, HKD Thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Hong Kong Profits Tax | 253 | 1,468 | | PRC Corporate Income Tax | 120,540 | 409,665 | | PRC Land Appreciation Tax | (123,523) | 49,240 | | Withholding Tax | 21,202 | 64,685 | | Deferred Tax | (25,846) | (94,216) | | Total | (7,374) | 430,842 | - Prior period income tax expense was higher, mainly due to the recognition of gains from the one-off disposal of Mainland China expressway business[80](index=80&type=chunk) [Loss Per Share](index=61&type=section&id=%E6%AF%8F%E8%82%A1%E虧%E6%90%8D) Basic loss per share was HKD 2.71; diluted loss per share was not presented due to no dilutive ordinary shares Loss Per Share (For the six months ended June 30, 2025) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss Attributable to Owners for Basic Loss Per Share Calculation (HKD Thousand) | (2,034,386) | (1,026,865) | | Weighted Average Number of Ordinary Shares for Basic Loss Per Share Calculation (Thousand Shares) | 749,337 | 749,337 | | Basic Loss Per Share | (HKD 2.71) | (HKD 1.37) | - There were no issued ordinary shares with dilutive potential for the six months ended June 30, 2025 and 2024, hence no diluted loss per share is presented[183](index=183&type=chunk) [Investment Properties](index=61&type=section&id=%E6%8A%95%E8%B3%87%E7%89%A9%E6%A5%AD) Completed investment properties had a book value of HKD 5.086 billion, with a HKD 210 million fair value loss recognized Investment Properties (HKD Thousand) | Item | Amount | | :--- | :--- | | As of January 1, 2025 | 5,323,712 | | Fair Value Change Recognized in Profit or Loss | (209,970) | | Disposals During the Period | (27,489) | | As of June 30, 2025 | 5,086,253 | - The fair value of completed investment properties is determined by valuations performed by independent professional valuers, primarily referencing the capitalized income approach or market conditions of comparable property transactions[184](index=184&type=chunk) - Investment properties are located in Mainland China and consist of land leasehold interests held by the Group for rental income or capital appreciation purposes[184](index=184&type=chunk) [Interests in Joint Operations/Ventures](index=62&type=section&id=%E5%90%88%E4%BD%9C%E2%97%A4%E5%90%88%E8%B3%87%E4%BC%81%E6%A5%AD%E6%AC%8A%E7%9B%8A) Total interests in joint operations/ventures were HKD 12.466 billion, including HKD 836 million in impairment losses Interests in Joint Operations/Ventures (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Interests in Infrastructure Joint Operations/Ventures | 4,353,694 | 4,338,630 | | Interests in Property and Other Joint Ventures | 8,112,292 | 8,179,887 | | Total | 12,465,986 | 12,518,517 | - Infrastructure joint operations/ventures distribute dividends or cash surpluses according to cooperation agreements, based on the Group's registered capital proportion or agreed profit/cash sharing ratios[188](index=188&type=chunk) - The carrying amount of interests in joint ventures includes impairment losses of **HKD 836,318 thousand**, of which **HKD 1,143 thousand** was recognized in profit or loss during the period[188](index=188&type=chunk) [Property Inventories](index=63&type=section&id=%E7%89%A9%E6%A5%AD%E5%AD%98%E8%B2%A8) Total property inventories were HKD 22.814 billion, with HKD 2.189 billion in provisions due to market deterioration Property Inventories (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Completed Properties Held for Sale | 8,075,610 | 9,282,207 | | Properties Under Development for Sale | 14,738,651 | 14,450,053 | | Total | 22,814,261 | 23,732,260 | - Due to the continued deterioration of the property markets in Mainland China and Hong Kong, the net realizable value of certain of the Group's property inventories fell below their cost. As of June 30, 2025, the provision for property inventories amounted to **HKD 2,188,841 thousand**[189](index=189&type=chunk) [Amounts Due from Joint Ventures and Associates](index=63&type=section&id=%E6%87%89%E6%94%B6%E5%90%88%E8%B3%87%E4%BC%81%E6%A5%AD%E5%8F%8A%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E6%AC%BE%E9%A0%85) Amounts due from joint ventures and associates totaled HKD 2.791 billion, with HKD 1.628 billion in impairment losses recognized Amounts Due from Joint Ventures and Associates (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Gross Carrying Amount | 4,418,659 | 5,061,329 | | Less: Impairment Loss | (1,628,112) | (1,252,575) | | Net Amount | 2,790,547 | 3,808,754 | | Current Portion | 848,822 | 1,092,002 | | Non-current Portion | 1,941,725 | 2,716,752 | - Amounts due from joint ventures and associates are unsecured, and the Group expects to recover the current portion within twelve months after the end of the reporting period[190](index=190&type=chunk) [Loans Receivable](index=64&type=section&id=%E6%87%89%E6%94%B6%E8%B2%B8%E6%AC%BE) Loans receivable totaled HKD 493 million, with HKD 1.280 billion in impairment losses recognized, following a prior-period debt restructuring acquisition Loans Receivable (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Gross Carrying Amount | 1,773,049 | 1,773,026 | | Less: Impairment Loss | (1,279,903) | (1,183,336) | | Net Amount | 493,146 | 589,690 | | Current Portion | 67,107 | 79,110 | | Non-current Portion | 426,039 | 510,580 | - For the six months ended June 30, 2024, the Group entered into a debt restructuring agreement with the sole shareholder of Guangzhou Kangcheng Hongshen Enterprise Management Consulting Co., Ltd. to acquire its entire equity interest for zero consideration to settle the loan to Kangcheng Hongshen[191](index=191&type=chunk) [Trade and Other Receivables, Deposits and Prepayments](index=65&type=section&id=%E6%87%89%E6%94%B6%E8%B3%A6%E6%AC%BE%E3%80%81%E6%8C%89%E9%87%91%E5%8F%8A%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85) Total trade and other receivables, deposits, and prepayments were HKD 2.396 billion, including HKD 176 million in trade receivables Trade and Other Receivables, Deposits and Prepayments (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Trade Receivables from Sales of Goods and Services to Customers | 175,963 | 138,893 | | Prepaid Land Development Costs | 536,481 | 536,481 | | Deposits Paid for Acquisition of Property Inventories | 377,449 | 385,036 | | Prepaid VAT and Other Taxes | 495,966 | 539,600 | | Other Receivables, Deposits and Prepayments | 704,759 | 707,959 | | Total | 2,395,538 | 2,398,980 | - Trade receivables primarily arise from property sales and are generally payable within **60 to 90 days** after the agreement date[192](index=192&type=chunk) - Prepaid land development costs of **HKD 536,481 thousand** will be fully refunded with interest if the land parcel is not acquired through public auction[192](index=192&type=chunk) [Pledged Bank Deposits/Bank Balances and Cash](index=66&type=section&id=%E5%B7%B2%E6%8A%B5%E6%8A%BC%E9%8A%80%E8%A1%8C%E5%AD%98%E6%AC%BE%E2%97%A4%E9%8A%80%E8%A1%8C%E7%B5%90%E5%AD%98%E5%8F%8A%E7%8F%BE%E9%87%91) Pledged bank deposits were HKD 40.022 million, with total bank balances and cash at HKD 3.084 billion, excluding HKD 497 million restricted deposits - Pledged bank deposits totaling **HKD 40,022 thousand** have been pledged to banks as mortgage guarantees and bank credit line guarantees[193](index=193&type=chunk) - Bank balances and cash amounted to **HKD 3,083,906 thousand**, of which restricted bank deposits of **HKD 497,110 thousand** are not included in cash and cash equivalents[193](index=193&type=chunk) - Bank balances bear interest at market rates ranging from **0.01% to 4.7%** per annum[194](index=194&type=chunk) [Bank and Other Borrowings](index=68&type=section&id=%E9%8A%80%E8%A1%8C%E5%8F%8A%E5%85%B6%E4%BB%96%E8%B2%B8%E6%AC%BE) Total borrowings were HKD 15.21 billion (HKD 3.315 billion secured, HKD 11.895 billion unsecured), with some reclassified as current due to covenant breaches Bank and Other Borrowings (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Sep 2019 Guaranteed Senior Notes | 1,626,315 | 1,624,062 | | Mar 2020 Guaranteed Senior Notes | 1,271,433 | 1,270,263 | | Sep 2020 Guaranteed Senior Notes | 1,210,802 | 1,208,816 | | Jan 2021 Guaranteed Senior Notes | 3,431,083 | 3,428,064 | | Jul 2021 Guaranteed Senior Notes | 3,471,168 | 3,467,765 | | Bank Loans | 4,199,353 | 5,228,278 | | Total Borrowings | 15,210,154 | 16,227,248 | | Secured | 3,315,469 | 3,972,816 | | Unsecured | 11,894,685 | 12,254,432 | - The Group violated the fixed charge coverage ratio for bank borrowings with a gross carrying amount of **HKD 883,885 thousand**; as the lenders have not yet provided waivers, these loans have been classified as current liabilities[198](index=198&type=chunk) - Senior notes bear interest at fixed annual rates, and their maturity dates have been extended. Bank loans bear interest at floating or fixed annual rates[199](index=199&type=chunk) [Trade and Other Payables and Accruals](index=70&type=section&id=%E6%87%89%E4%BB%98%E8%B3%A6%E6%AC%BE%E5%8F%8A%E6%87%89%E8%A8%88%E8%B2%BB%E7%94%A8) Total trade and other payables and accruals were HKD 4.062 billion, including HKD 932 million in trade payables and HKD 1.774 billion in accrued construction costs Trade and Other Payables and Accruals (HKD Thousand) | Item | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Trade Payables | 931,894 | 1,136,969 | | Accrued Construction Costs | 1,774,397 | 1,885,507 | | Accrued Taxes | 230,639 | 227,583 | | Consideration Payable for Acquisition of Joint Ventures | 213,687 | 213,687 | | Construction Related Deposits | 221,400 | 230,283 | | Property Purchase Deposits | 124,275 | 265,201 | | Other Payables | 566,181 | 643,145 | | Total | 4,062,473 | 4,602,375 | [Financial Guarantee Contracts](index=73&type=section&id=%E8%B2%A1%E5%8B%99%E6%93%94%E4%BF%9D%E5%90%88%E7%B4%84) The Group provided HKD 3.387 billion in mortgage guarantees for property buyers and HKD 1.587 billion for joint venture bank financing - The Group provided guarantees of **HKD 3,386,697 thousand** to banks for mortgage loans of property customers purchasing the Group's developed properties[205](index=205&type=chunk) - The Group also provided guarantees of **HKD 1,586,811 thousand** for bank financing granted by banks to joint ventures[205](index=205&type=chunk) [Pledged Assets](index=73&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) HKD 4.129 billion in property inventories, HKD 3.942 billion in investment properties, and HKD 456 million in subsidiary equity were pledged - The Group's property inventories of **HKD 4,128,553 thousand** and investment properties of **HKD 3,942,142 thousand** have been pledged as collateral for bank and other financing obtained by the Group[206](index=206&type=chunk) - Borrowings with an outstanding principal amount of **HKD 456,441 thousand** are secured by equity shares in a subsidiary of the Company[206](index=206&type=chunk) [Events After the Reporting Period](index=78&type=section&id=%E5%91%88%E5%A0%B1%E6%9C%9F%E5%BE%8C%E4%B9%8B%E4%BA%8B%E9%A0%85) Failure to obtain noteholder consent led to suspended offshore debt payments (USD 23.36 million interest), potentially triggering accelerated repayment of USD 1.529 billion - On August 8, 2025, the Group failed to obtain consent solicitation regarding its five senior notes due between 2028 and 2030[216](index=216&type=chunk) - The Group decided to suspend payments of all principal and interest on all offshore bank borrowings, senior notes, and perpetual capital securities[216](index=216&type=chunk) - As of the report date, the Group had suspended interest payments totaling approximately **USD 23.36 million** (equivalent to **HKD 181.742 million**) on two senior notes and offshore bank borrowings[216](index=216&type=chunk) - The suspension of payments may lead to certain creditors demanding accelerated repayment of their debts totaling approximately **USD 1,529,082,000** (equivalent to **HKD 11,894,686,000**)[216](index=216&type=chunk)

[Company Information](index=2&type=section&id=Company%20Information) This chapter provides essential company information, including board and committee structures, registration details, auditors, legal advisors, and stock exchange listing particulars [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The Board of Directors consists of executive directors Zhang Hongjun (Chairman), Li Jing (CEO), Shan Jingchao, and independent non-executive directors Dr. Xie Xiangbing, Ms. Wang Yanxiao, and Mr. You Huanyu, along with the composition of the Audit, Remuneration, Nomination, and Investment Management Committees - Board comprises **3 executive directors and 3 independent non-executive directors**, with Mr. Zhang Hongjun as Chairman and Mr. Li Jing as CEO[7](index=7&type=chunk) - The Audit Committee is chaired by Dr. Xie Xiangbing, the Remuneration Committee by Ms. Wang Yanxiao, and both the Nomination and Investment Management Committees by Mr. Zhang Hongjun[7](index=7&type=chunk) [Basic Company Information](index=4&type=section&id=Basic%20Company%20Information) The company's auditor is Zhonghui Anda Certified Public Accountants Limited, and its Hong Kong legal counsel is Loeb & Loeb LLP. The company's shares were listed on the Main Board of the Stock Exchange on July 15, 2020, with stock code 9986 - The company's auditor is Zhonghui Anda Certified Public Accountants Limited, and its Hong Kong legal counsel is Loeb & Loeb LLP[8](index=8&type=chunk) - The company's shares were listed on the Main Board of the Stock Exchange on **July 15, 2020**, with stock code **9986**[9](index=9&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This chapter reviews the Group's business operations, financial performance, and future strategies, emphasizing its core education services and expansion into international education and brand management [Business Review](index=5&type=section&id=Business%20Review) The Group primarily offers extracurricular personal quality courses, overseas education consulting, and diversified consulting services, adapting to China's education reforms and parental demands by building an international education ecosystem and expanding its beauty and health product brand portfolio - The Group primarily provides **extracurricular personal quality courses**, **overseas education consulting services**, and **diversified consulting services** to entities[11](index=11&type=chunk) - The Group is committed to building an international education ecosystem, offering **one-stop, full-scenario international education services** for Chinese students[11](index=11&type=chunk) - During the reporting period, the Group expanded its brand operation and management portfolio to include **two new beauty and health product brands**[12](index=12&type=chunk) [Future Outlook](index=6&type=section&id=Future%20Outlook) The Group will continue to monitor the regulatory environment, adjust business plans, reallocate resources, and actively explore opportunities to expand its business scope, focusing on building an international education ecosystem, providing high-quality diversified services, and developing diversified consulting services, including collaborations in beauty and health, leveraging technology, and exploring acquisition opportunities - The Group will closely monitor the regulatory environment, adjust business plans, reallocate resources, and actively explore business opportunities to expand its breadth and depth[13](index=13&type=chunk) - The Group is committed to building an international education ecosystem, providing **high-quality, diversified integrated services**, and expanding its service scope to include language training, cultural exchange, background enhancement, and academic guidance[13](index=13&type=chunk) - The Group will actively expand diversified consulting services, particularly with **beauty and health brands**, leveraging technology to reconstruct brand value chains, and exploring acquisitions of related businesses[14](index=14&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) During the reporting period, the Group's revenue decreased by 12.6% year-on-year, gross profit decreased by 8.5%, but gross margin improved. Loss for the period significantly increased to RMB45.9 million, primarily due to share-based payment expenses recognized in administrative expenses [Revenue and Cost](index=7&type=section&id=Revenue%20and%20Cost) The Group's total revenue decreased by 12.6% year-on-year to RMB41.5 million, with declines in extracurricular courses, overseas education, and training & consulting segments, but a new brand operation and management segment contributed RMB5.7 million; cost of sales and services decreased by 15.4%, improving gross margin to 41.7% Revenue by Segment (RMB million) | Segment | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 41.5 | 47.5 | -12.6% | | Extracurricular Courses | 13.3 | 16.6 | -19.9% | | Overseas Education | 19.3 | 22.5 | -14.2% | | Training & Consulting | 3.0 | 7.9 | -62.0% | | Others | 0.2 | 0.5 | -60.0% | | Brand Operation & Management | 5.7 | 0.0 | New | Gross Profit and Gross Margin (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Gross Profit | 17.3 | 18.9 | -8.5% | | Gross Margin | 41.7% | 39.9% | +1.8 percentage points | [Other Income and Gains/Losses](index=7&type=section&id=Other%20Income%20and%20Gains%2FLosses) Other income slightly decreased year-on-year, while net other gains and losses shifted from a RMB6.0 million gain in the prior period to a RMB1.0 million loss, primarily due to the absence of software under development sales gain and reduced fair value loss on financial assets at fair value through profit or loss in the prior period Other Income (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Other Income | 0.4 | 0.5 | -20.0% | Net Other Gains and Losses (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Net Other Gains and Losses | (1.0) | 6.0 | Shift from gain to loss | - The shift from net other gains to losses was primarily due to a **RMB10.0 million gain from the disposal of software under development** in the 2024 period (none in the reporting period) and a reduced fair value loss on financial assets at fair value through profit or loss[19](index=19&type=chunk) [Operating Expenses](index=8&type=section&id=Operating%20Expenses) Selling and marketing expenses increased by 10.0% year-on-year due to expanded business scale, while administrative expenses surged by 116.1% primarily due to the recognition of share-based payment expenses during the reporting period Selling and Marketing Expenses (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Selling and Marketing Expenses | 6.6 | 6.0 | +10.0% | Administrative Expenses (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 54.9 | 25.4 | +116.1% | - The significant increase in administrative expenses was primarily due to the recognition of **share-based payment expenses** during the reporting period[21](index=21&type=chunk) [Finance Costs and Tax](index=8&type=section&id=Finance%20Costs%20and%20Tax) Finance costs increased by 62.8% year-on-year, while income tax credit decreased by 46.4% Finance Costs (RMB thousand) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Finance Costs | 389 | 239 | +62.8% | Income Tax Credit (RMB thousand) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Income Tax Credit | 273 | 509 | -46.4% | [Profitability](index=8&type=section&id=Profitability) The Group's loss for the period significantly increased to RMB45.9 million, a RMB37.1 million increase from RMB8.8 million in the prior period, primarily due to the recognition of share-based payment expenses, leading to a corresponding increase in basic and diluted loss per share Loss for the Period (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Loss for the Period | (45.9) | (8.8) | Loss widened | - The increase in loss for the period was primarily due to the recognition of **share-based payment expenses** during the reporting period[24](index=24&type=chunk) Loss Per Share (RMB cents) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Basic and Diluted Loss Per Share | (5.66) | (1.29) | Loss widened | [Non-HKFRS Measures](index=9&type=section&id=Non-HKFRS%20Measures) To better compare operating performance, the company presents adjusted loss for the period (a non-HKFRS measure), which adds back equity-settled share option and share award expenses; for the reporting period, adjusted loss was RMB16.0 million, compared to RMB8.8 million in the prior period Adjusted Loss for the Period (RMB thousand) | Metric | 2025 Period | 2024 Period | | :--- | :--- | :--- | | Loss for the Period | (45,905) | (8,810) | | Add: Equity-settled share option and share award expenses | 29,914 | – | | Adjusted Loss for the Period | (15,991) | (8,810) | - Adjusted loss for the period (non-HKFRS measure) aims to eliminate the impact of **equity-settled share option and share award expenses** for better comparison of operating performance across periods[26](index=26&type=chunk) [Financial Position](index=9&type=section&id=Financial%20Position) As of June 30, 2025, the Group's net current liabilities increased by 40.6% to RMB57.5 million, primarily due to a decrease in bank balances and cash, with the gearing ratio rising to 57.8% [Liquidity and Cash](index=9&type=section&id=Liquidity%20and%20Cash) As of June 30, 2025, the Group's net current liabilities were RMB57.5 million, a 40.6% increase from the end of 2024, with bank balances and cash significantly decreasing by 62.9% to RMB19.3 million Net Current Liabilities (RMB million) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Current Liabilities | 57.5 | 40.9 | +40.6% | Bank Balances and Cash (RMB million) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Bank Balances and Cash | 19.3 | 52.0 | -62.9% | [Borrowings and Liabilities](index=10&type=section&id=Borrowings%20and%20Liabilities) As of June 30, 2025, the Group's borrowings increased to RMB7.2 million, with RMB2.6 million repayable within one year and RMB4.6 million within two years; contingent liabilities remained unchanged, and the gearing ratio rose to 57.8% from 38.5% at the end of 2024 Borrowings (RMB million) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Borrowings | 7.2 | 2.3 | +213.0% | - As of June 30, 2025, the Group had **no significant contingent liabilities**[30](index=30&type=chunk) Gearing Ratio | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gearing Ratio | 57.8% | 38.5% | +19.3 percentage points | [Working Capital](index=10&type=section&id=Working%20Capital) As of June 30, 2025, trade receivables increased by 46.2% to RMB1.9 million, trade payables significantly increased to RMB5.1 million, and inventories rose from zero to RMB5.7 million Trade Receivables (RMB million) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade Receivables | 1.9 | 1.3 | +46.2% | Trade Payables (RMB million) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade Payables | 5.1 | 0.1 | Significant increase | Inventories (RMB million) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Inventories | 5.7 | 0.0 | New | [Capital Expenditure and Commitments](index=10&type=section&id=Capital%20Expenditure%20and%20Commitments) During the reporting period, the Group's capital expenditure was RMB1.674 million, primarily for additions to property, plant, and equipment, a significant increase from the prior period; as of June 30, 2025, the Group had no capital commitments for additions to property, plant, and equipment Capital Expenditure (RMB thousand) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Capital Expenditure | 1,674 | 96 | Significant increase | - Capital expenditure was primarily for **additions to property, plant and equipment**[35](index=35&type=chunk) - As of June 30, 2025, the Group had **no capital commitments** for additions to property, plant and equipment[36](index=36&type=chunk) [Risk Management](index=11&type=section&id=Risk%20Management) This section outlines the Group's strategies for managing asset pledges, interest rate risk, and foreign exchange risk, noting no current asset pledges and continuous monitoring with potential hedging [Pledge and Charge of Assets](index=11&type=section&id=Pledge%20and%20Charge%20of%20Assets) As of June 30, 2025, the Group had no assets pledged or charged - As of June 30, 2025, the Group had **no assets pledged or charged**[37](index=37&type=chunk) [Interest Rate Risk](index=11&type=section&id=Interest%20Rate%20Risk) The Group faces cash flow interest rate risk from variable-rate bank balances and fair value interest rate risk from fixed-rate borrowings; currently, no financial instruments are used for hedging, but risks are continuously monitored, and hedging will be considered if necessary - The Group faces **cash flow interest rate risk** from variable-rate bank balances and **fair value interest rate risk** from fixed-rate borrowings[38](index=38&type=chunk) - The Group currently does not use financial instruments to hedge interest rate risk but continuously monitors it and will consider hedging if necessary[38](index=38&type=chunk) [Foreign Exchange Risk](index=11&type=section&id=Foreign%20Exchange%20Risk) The Group is exposed to foreign exchange risk as most of its revenue, expenses, and bank balances are denominated in RMB or HKD; currently, no financial instruments are used for hedging, but risks are continuously monitored, and hedging will be considered if necessary - The Group is exposed to **foreign exchange risk** as most of its revenue, expenses, and bank balances are denominated in RMB or HKD[39](index=39&type=chunk) - The Group currently does not use financial instruments to hedge foreign exchange risk but continuously monitors it and will consider hedging if necessary[39](index=39&type=chunk) [Dividends and Investments](index=11&type=section&id=Dividends%20and%20Investments) The Board decided not to declare an interim dividend, and the Group has no other significant investments or immediate future plans for major investments and capital assets, nor any significant acquisitions or disposals of subsidiaries, associates, and joint ventures during the reporting period [Interim Dividend](index=11&type=section&id=Interim%20Dividend) The Board has decided not to declare an interim dividend for the reporting period - The Board has decided **not to declare an interim dividend** for the reporting period[40](index=40&type=chunk) [Significant Investments and Future Plans](index=11&type=section&id=Significant%20Investments%20and%20Future%20Plans) As of June 30, 2025, the Group had no significant investments other than those disclosed in this interim report, nor any other immediate future plans for major investments and capital assets - As of June 30, 2025, the Group had **no significant investments** other than those disclosed in this interim report[40](index=40&type=chunk) - As of June 30, 2025, the Group had **no other immediate plans for major investments and capital assets**[41](index=41&type=chunk) [Significant Acquisitions and Disposals](index=11&type=section&id=Significant%20Acquisitions%20and%20Disposals) During the reporting period, the Group had no significant acquisitions or disposals of subsidiaries, associates, and joint ventures other than those disclosed in this interim report - During the reporting period, the Group had **no significant acquisitions or disposals** of subsidiaries, associates, and joint ventures other than those disclosed in this interim report[42](index=42&type=chunk) [Corporate Governance and Other Information](index=12&type=section&id=Corporate%20Governance%20and%20Other%20Information) This chapter covers corporate governance, including IPO proceeds, director and employee information, share incentive schemes, shareholder interests, audit committee functions, and legal matters [Use of IPO Proceeds](index=12&type=section&id=Use%20of%20IPO%20Proceeds) The company's IPO in July 2020 raised approximately HKD204.0 million net, with initial plans for K-12 after-school academic education services; in August 2022, the Board resolved to reallocate unutilized proceeds to expand overseas education, strategic acquisitions of education-related services and extracurricular personal quality courses, and internal growth, with HKD4.4 million remaining unutilized as of June 30, 2025, expected to be used by the end of 2025 - The company's share offer raised **net proceeds of approximately HKD204.0 million**[44](index=44&type=chunk) - In August 2022, the Board resolved to change the use of unutilized proceeds, reallocating them to expand **overseas education business**, **strategic acquisitions of education-related services and extracurricular personal quality courses**, and **internal growth of education-related services**[44](index=44&type=chunk) Use of IPO Net Proceeds (HKD million) | Intended Use | Original Allocation | Utilized as of Aug 29, 2022 | Unutilized as of Aug 29, 2022 | Revised Allocation | Utilized from Aug 29, 2022 to Dec 31, 2024 | Utilized during Reporting Period | Unutilized as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion of K-12 after-school academic education services and self-operated learning center network | 122.4 | 52.4 | 70.0 | – | – | – | – | | Expansion of geographical footprint in China and operation scale of K-12 after-school academic education services | 61.2 | 6.1 | 55.1 | – | – | – | – | | Expansion of education business outside China | – | – | – | 60.0 | 58.6 | 0.6 | 0.8 | | Strategic acquisitions or establishment of joint ventures to expand education-related services, extracurricular personal quality courses, and vocational education | – | – | – | 50.0 | 50.0 | – | – | | Internal growth to expand education-related services, extracurricular personal quality courses, and vocational education | – | – | – | 15.1 | 11.0 | 0.5 | 3.6 | | Working capital purposes | 20.4 | 14.4 | 6.0 | 6.0 | 6.0 | – | – | | **Total** | **204.0** | **72.9** | **131.1** | **131.1** | **125.6** | **1.1** | **4.4** | - The unutilized net proceeds of **HKD4.4 million** are expected to be used by the **end of 2025**, with the usage period extended due to a shift in business focus[46](index=46&type=chunk) [Equity Fundraising Activities](index=14&type=section&id=Equity%20Fundraising%20Activities) During the reporting period, the company did not engage in any equity fundraising activities or sell treasury shares for cash - During the reporting period, the company undertook **no equity fundraising activities** or sales of treasury shares for cash[47](index=47&type=chunk) [Director Information](index=14&type=section&id=Director%20Information) This section discloses changes in directors and key terms of directors' service contracts [Changes in Directors and Information](index=14&type=section&id=Changes%20in%20Directors%20and%20Information) During the reporting period and up to the date of this interim report, there were no changes in directors or director information requiring disclosure under the Listing Rules - During the reporting period and up to the date of this interim report, there were **no changes in directors or director information** requiring disclosure under the Listing Rules[48](index=48&type=chunk) [Directors' Service Contracts](index=14&type=section&id=Directors'%20Service%20Contracts) The service contracts/letters of appointment for executive and independent non-executive directors are for a term of three years, terminable according to their respective terms - Executive directors' service contracts are for a **term of three years**, terminable according to contract terms[49](index=49&type=chunk) - Independent non-executive directors' letters of appointment are for a **term of three years**, terminable according to contract terms[49](index=49&type=chunk) [Employees and Remuneration Policy](index=14&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 319 employees, a decrease from 429 at the end of 2024; total staff-related costs (including directors' emoluments) for the reporting period were approximately RMB28.6 million, largely consistent with the prior period. The Group offers comprehensive remuneration, including salaries, performance bonuses, training, retirement benefits, and medical benefits, along with share option and share award schemes for incentives Number of Employees | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of Employees | 319 | 429 | -25.6% | Total Staff-Related Costs (RMB million) | Metric | 2025 Period | 2024 Period | Change | | :--- | :--- | :--- | :--- | | Total Staff-Related Costs | 28.6 | 28.8 | -0.7% | - The Group offers a comprehensive remuneration package, including **salaries, performance bonuses, training, retirement benefits, and medical benefits**, and has **share option and share award schemes**[50](index=50&type=chunk) [Share Incentive Schemes](index=15&type=section&id=Share%20Incentive%20Schemes) This section details the operation of the company's share option scheme and share award scheme, including grants, exercises, cancellations, or lapses [Share Option Scheme](index=15&type=section&id=Share%20Option%20Scheme) The share option scheme aims to incentivize and retain outstanding employees; as of June 30, 2025, a total of 80,000,000 unexercised share options were outstanding under the scheme, with a weighted average exercise price of HKD3.51 per share, and no options were granted, exercised, cancelled, or lapsed during the reporting period - The share option scheme aims to **encourage or reward eligible persons** for their contributions to the Group and/or enable the Group to **employ and retain outstanding employees**[51](index=51&type=chunk) Share Option Scheme Movements (number of options) | Metric | Unexercised as of Jan 1, 2025 | Granted during Period | Exercised during Period | Lapsed/Cancelled during Period | Unexercised as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Share Options | 80,000,000 | – | – | – | 80,000,000 | - As of June 30, 2025, the weighted average exercise price for outstanding share options was **HKD3.51 per share**[52](index=52&type=chunk) [Share Award Scheme](index=16&type=section&id=Share%20Award%20Scheme) The share award scheme aims to recognize employee contributions; as of June 30, 2025, the trustee held 37,156,000 ordinary shares, with 75,000,000 award shares available for future grants and 5,000,000 granted but unvested. During the reporting period, the company repurchased 4,220,000 ordinary shares through the trustee for a total consideration of RMB9.12 million - The share award scheme aims to **recognize the contributions of the Group's employees**, and to **incentivize, retain, and recruit outstanding employees**[54](index=54&type=chunk) Share Award Scheme Movements (number of shares) | Metric | Unvested as of Jan 1, 2025 | Granted during Period | Vested during Period | Cancelled during Period | Lapsed during Period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Award Shares | 5,000,000 | – | – | – | – | 5,000,000 | - During the reporting period, the company repurchased **4,220,000 ordinary shares** through the trustee for a total consideration of **RMB9.12 million**[140](index=140&type=chunk) [Dealings in Listed Securities](index=17&type=section&id=Dealings%20in%20Listed%20Securities) During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the reporting period, neither the company nor any of its subsidiaries **purchased, sold, or redeemed** any of the company's listed securities[57](index=57&type=chunk) [Corporate Governance Practices](index=17&type=section&id=Corporate%20Governance%20Practices) The Group is committed to maintaining high standards of corporate governance, has complied with all applicable code provisions of Appendix C1 to the Listing Rules, and directors have confirmed compliance with the standard code for securities transactions, with no conflicts of interest [Compliance with Corporate Governance Code](index=17&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules during the reporting period - The company has complied with **all applicable code provisions** of the Corporate Governance Code set out in Appendix C1 to the Listing Rules during the reporting period[58](index=58&type=chunk) [Standard Code for Securities Transactions by Directors](index=17&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) Following specific inquiries with all directors, each has confirmed compliance with the required standards set out in the Standard Code during the reporting period - Following specific inquiries with all directors, each has confirmed compliance with the **required standards** set out in the Standard Code during the reporting period[59](index=59&type=chunk) [Competition and Conflicts of Interest](index=17&type=section&id=Competition%20and%20Conflicts%20of%20Interest) As of the date of this interim report, no director directly or indirectly held any interest in any business that competes or may compete significantly with the Group's business, nor were there any other existing or potential conflicts of interest with the Group - As of the date of this interim report, no director directly or indirectly held any interest in any business that constitutes or may constitute **any significant competition** with the Group's business, nor were there any other existing or potential **conflicts of interest** with the Group[60](index=60&type=chunk) [Directors' and Chief Executive's Interests](index=18&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) As of June 30, 2025, Mr. Zhang Hongjun, Executive Director and Chairman, held 62,000,000 shares, representing 7.75% of the issued share capital, through his controlled corporation, Baitai; Mr. Zhang Hongjun and Mr. Shan Jingchao also held interests in the associate, Dashan Training Directors' Interests in Shares and Underlying Shares of the Company (June 30, 2025) | Director Name | Capacity in which Interests are Held | Number of Shares Held (L) | Approximate Percentage of Issued Share Capital (%) | | :--- | :--- | :--- | :--- | | Zhang Hongjun | Interest of controlled corporation (Baitai) | 62,000,000 | 7.75 | Directors' Interests in Ordinary Shares of Associated Corporations (June 30, 2025) | Director Name | Name of Associated Corporation | Capacity in which Interests are Held | Number of Shares Held | Approximate Percentage of Issued Share Capital (%) | | :--- | :--- | :--- | :--- | :--- | | Zhang Hongjun | Dashan Training | Nominee Shareholder | 13,562,500 | 42.04 | | | | Interest of controlled corporation (Houde Education) | 13,750,000 | 42.62 | | Shan Jingchao | Dashan Training | Nominee Shareholder | 125,000 | 0.39 | [Substantial Shareholders' Interests](index=20&type=section&id=Substantial%20Shareholders'%20Interests) As of June 30, 2025, INFINITE APEX ENTERPRISES LIMITED and its wholly-owned owner, Mr. Xi Wang, held 26.31% of the company's shares; Rui Tian International Limited, Giga Talent Investment Limited, and its wholly-owned owner, Ms. Liu Bingtian, held 26.23%; and Baitai and its wholly-owned owner, Mr. Zhang Hongjun, held 7.75% Substantial Shareholders' Interests in Shares and Underlying Shares of the Company (June 30, 2025) | Name | Capacity in which Interests are Held | Number of Shares Held (L) | Approximate Percentage of Issued Share Capital (%) | | :--- | :--- | :--- | :--- | | INFINITE APEX ENTERPRISES LIMITED | Beneficial owner | 210,510,800 | 26.31 | | Xi Wang | Interest of controlled corporation | 210,510,800 | 26.31 | | Rui Tian International Limited | Beneficial owner | 209,872,000 | 26.23 | | Giga Talent Investment Limited | Interest of controlled corporation | 209,872,000 | 26.23 | | Liu Bingtian | Interest of controlled corporation | 209,872,000 | 26.23 | | Baitai | Beneficial owner | 62,000,000 | 7.75 | - **INFINITE APEX ENTERPRISES LIMITED** is wholly owned by Mr. Xi Wang[68](index=68&type=chunk) - **Rui Tian International Limited** is 100% owned by Giga Talent Investment Limited, which is 100% owned by Ms. Liu Bingtian[69](index=69&type=chunk) - **Baitai** is wholly owned by Mr. Zhang Hongjun[70](index=70&type=chunk) [Audit Committee](index=21&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors chaired by Dr. Xie Xiangbing, assists the Board in reviewing and overseeing financial reporting, risk management, and internal control systems, and has reviewed the unaudited condensed consolidated financial statements for the reporting period - The Audit Committee comprises **three independent non-executive directors**: Dr. Xie Xiangbing (Chairman), Ms. Wang Yanxiao, and Mr. You Huanyu[71](index=71&type=chunk) - The Committee primarily assists the Board in reviewing and overseeing the **financial reporting process, risk management, and internal control systems**, and has reviewed the company's unaudited condensed consolidated financial statements for the reporting period[71](index=71&type=chunk) [Significant Legal Proceedings](index=21&type=section&id=Significant%20Legal%20Proceedings) During the reporting period and up to the date of this interim report, the Group was not involved in any significant legal proceedings or arbitration - During the reporting period and up to the date of this interim report, the Group was **not involved in any significant legal proceedings or arbitration**[72](index=72&type=chunk) [Publication of Report](index=21&type=section&id=Publication%20of%20Report) This interim report will be sent to shareholders upon request and will be available on the Stock Exchange website and the company's website - This interim report will be sent to shareholders upon request and will be available on the **Stock Exchange website (www.hkexnews.hk)** and the **company's website (www.dashanedu.com)** in due course[73](index=73&type=chunk) [Acknowledgements](index=21&type=section&id=Acknowledgements) The Board extends its gratitude to management, all employees, shareholders, business partners, students and their families, customers, and auditors for their support - The Board thanks the Group's management and all employees for their hard work and dedication, and shareholders, business partners, students and their families, customers, and auditors for their trust and support throughout the period[74](index=74&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=21&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the condensed consolidated profit or loss and other comprehensive income for the six months ended June 30, 2025, and the corresponding period in 2024, showing a decrease in revenue, reduced gross profit but improved gross margin, and a significantly expanded loss for the period, primarily due to share-based payment expenses in administrative costs Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, RMB thousand) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 41,452 | 47,504 | | Cost of sales and services | (24,232) | (28,562) | | Gross Profit | 17,220 | 18,942 | | Other income | 433 | 484 | | Net other gains and losses | (975) | 6,028 | | Selling and marketing expenses | (6,621) | (6,031) | | Administrative expenses | (54,895) | (25,391) | | Share of results of associates | (951) | (3,112) | | Finance costs | (389) | (239) | | Loss before tax | (46,178) | (9,319) | | Income tax credit | 273 | 509 | | **Loss for the Period** | **(45,905)** | **(8,810)** | | Exchange differences on translating foreign operations | 67 | (8) | | **Total Comprehensive Expense for the Period** | **(45,838)** | **(8,818)** | | Loss for the period attributable to owners of the Company | (43,158) | (9,903) | | Loss/(Profit) for the period attributable to non-controlling interests | (2,747) | 1,093 | | Basic and Diluted Loss Per Share (RMB cents) | (5.66) | (1.29) | [Condensed Consolidated Statement of Financial Position](index=22&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement presents the condensed consolidated financial position as of June 30, 2025, and December 31, 2024, showing a decrease in total assets, an increase in net current liabilities, and a decline in total equity at the end of the reporting period Condensed Consolidated Statement of Financial Position (As of, RMB thousand) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, plant and equipment | 38,759 | 44,949 | | Investment properties | 3,840 | 4,130 | | Goodwill | 27,208 | 26,441 | | Interests in associates | 40,984 | 41,866 | | Other intangible assets | 3,015 | 4,263 | | Lease deposits | 1,127 | 1,153 | | **Total Non-current Assets** | **114,933** | **122,802** | | **Current Assets** | | | | Inventories | 5,652 | – | | Trade receivables | 1,946 | 1,264 | | Financial assets at fair value through profit or loss | 10,557 | 4,000 | | Prepayments, deposits and other receivables | 20,400 | 14,656 | | Restricted bank deposits | – | 65 | | Bank balances and cash | 19,250 | 52,019 | | **Total Current Assets** | **57,805** | **72,004** | | **Current Liabilities** | | | | Trade payables | 5,128 | 111 | | Other payables and accrued expenses | 13,662 | 12,884 | | Contract liabilities | 83,386 | 86,257 | | Tax liabilities | 646 | 487 | | Lease liabilities | 9,855 | 10,845 | | Borrowings | 2,631 | 2,320 | | **Total Current Liabilities** | **115,308** | **112,904** | | **Net Current Liabilities** | **(57,503)** | **(40,900)** | | **Total Assets Less Current Liabilities** | **57,430** | **81,902** | | **Non-current Liabilities** | | | | Lease liabilities | 8,287 | 12,977 | | Deferred tax liabilities | 754 | 1,066 | | Borrowings | 4,560 | – | | **Total Non-current Liabilities** | **13,601** | **14,043** | | **Net Assets** | **43,829** | **67,859** | | **Total Equity** | **43,829** | **67,859** | [Condensed Consolidated Statement of Changes in Equity](index=24&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement presents the condensed consolidated changes in equity for the six months ended June 30, 2025, and the corresponding period in 2024, showing a decrease in equity attributable to owners of the Company from RMB99.4 million at the beginning of the period to RMB77.1 million, primarily due to total comprehensive expense for the period and the purchase of shares under the share award scheme Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, RMB thousand) | Metric | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | | :--- | :--- | :--- | | **Attributable to Owners of the Company** | | | | Share capital | 7,223 | 7,223 | | Share premium | 237,106 | 237,106 | | Other reserves | 32,260 | 32,260 | | Share-based payment reserve | 35,411 | – | | Shares held under share award scheme | (42,839) | (25,744) | | Investment revaluation reserve | (5,000) | (5,000) | | Capital surplus | (41,715) | 1,443 | | Statutory surplus reserve | 13,365 | 13,365 | | Translation reserve | 2,512 | 1,131 | | Accumulated losses | (161,196) | (104,029) | | **Total Attributable to Owners of the Company** | **77,127** | **157,755** | | Non-controlling interests | (33,298) | (28,144) | | **Total Equity** | **43,829** | **129,611** | [Condensed Consolidated Statement of Cash Flows](index=25&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement presents the condensed consolidated cash flows for the six months ended June 30, 2025, and the corresponding period in 2024, showing a significant increase in net cash used in operating activities, increased net cash outflow from investing activities, and increased net cash outflow from financing activities, leading to a larger net decrease in cash and cash equivalents Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, RMB thousand) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (25,506) | (3,762) | | Net cash (used in)/generated from investing activities | (3,640) | 214 | | Net cash (used in)/generated from financing activities | (3,602) | 889 | | **Net Decrease in Cash and Cash Equivalents** | **(32,748)** | **(2,659)** | | Cash and cash equivalents at beginning of period | 52,019 | 109,033 | | Effect of exchange rate changes | (21) | – | | **Cash and Cash Equivalents at End of Period** | **19,250** | **106,374** | [Notes to the Condensed Consolidated Financial Statements](index=26&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This chapter provides detailed notes to the condensed consolidated financial statements, covering general information, accounting policies, revenue, segment data, and significant transactions [General Information](index=27&type=section&id=General%20Information) The company was incorporated in the Cayman Islands on November 30, 2018, and its shares were listed on the Main Board of the Stock Exchange on July 15, 2020; its principal business is investment holding, with subsidiaries primarily engaged in extracurricular personal quality courses, overseas education consulting, and diversified consulting services - The company was incorporated in the **Cayman Islands on November 30, 2018**, and its shares were listed on the Main Board of the Stock Exchange on **July 15, 2020**[85](index=85&type=chunk) - The company's principal business is **investment holding**, with subsidiaries primarily providing **extracurricular personal quality courses, overseas education consulting services, and diversified consulting services** to entities[85](index=85&type=chunk) [Basis of Preparation](index=27&type=section&id=Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with HKAS 34 Interim Financial Reporting issued by the HKICPA and the Listing Rules; directors assess the Group's ability to continue as a going concern, and due to regulatory restrictions, most of the Group's education business is conducted in China through contractual arrangements [Going Concern Assessment](index=27&type=section&id=Going%20Concern%20Assessment) As of June 30, 2025, the Group had net current liabilities of RMB57.5 million; based on a sound liquidity position and net operating cash inflows from new businesses, directors reasonably expect the Group to continue as a going concern - As of June 30, 2025, the Group's **net current liabilities were RMB57,503,000**[88](index=88&type=chunk) - The directors believe the Group can continue to operate on a **going concern basis**, citing a sound liquidity position and net operating cash inflows from new businesses[88](index=88&type=chunk) [Contractual Arrangements](index=27&type=section&id=Contractual%20Arrangements) Due to regulatory restrictions on foreign-owned education institutions in China, the Group conducts most of its education business through consolidated affiliated entities (Dashan Training and its subsidiaries) via a series of contractual arrangements, enabling effective control over their financial and operational policies and the collection of substantially all their economic benefits, thus consolidating their financial position and results into the condensed consolidated financial statements - The Group conducts most of its education business in China through **consolidated affiliated entities** to address regulatory restrictions on foreign ownership[89](index=89&type=chunk) - Contractual arrangements enable the company to exercise **effective control** over the consolidated affiliated entities and collect substantially all their economic benefits[90](index=90&type=chunk) Financial Data of Consolidated Affiliated Entities (RMB thousand) | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | 13,282 | 16,963 | | Profit/(Loss) before tax | 1,137 | (2,586) | | | June 30, 2025 | Dec 31, 2024 | | Non-current assets | 22,155 | 29,784 | | Current assets | 48,597 | 53,716 | | Current liabilities | 65,250 | 67,330 | | Non-current liabilities | 10,736 | 10,736 | [Application of New and Revised HKFRSs](index=29&type=section&id=Application%20of%20New%20and%20Revised%20HKFRSs) The Group has adopted all new and revised HKFRSs effective for accounting periods beginning on January 1, 2025, but their adoption has not resulted in significant changes to accounting policies, financial statement presentation, or reported amounts - The Group has adopted all new and revised HKFRSs effective for accounting periods beginning on **January 1, 2025**[93](index=93&type=chunk) - The adoption of these standards has **not resulted in significant changes** to the Group's accounting policies, financial statement presentation, or reported amounts for the current and prior periods[93](index=93&type=chunk) [Principal Accounting Policies](index=30&type=section&id=Principal%20Accounting%20Policies) The condensed consolidated financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value; the accounting policies for this interim period are consistent with those followed in the 2024 annual consolidated financial statements, except for other accounting policies arising from the adoption of new and revised HKFRSs - The condensed consolidated financial statements are prepared on a **historical cost basis**, except for certain financial instruments measured at fair value[94](index=94&type=chunk) - The accounting policies for this interim period are **consistent with those followed in the 2024 annual consolidated financial statements**, except for other accounting policies arising from the adoption of new and revised HKFRSs[94](index=94&type=chunk) [Revenue and Segment Information](index=30&type=section&id=Revenue%20and%20Segment%20Information) This section details the Group's revenue composition and recognition timing, along with revenue and performance analysis by operating segment (extracurricular courses, brand operation and management, overseas education, training and consulting, and others) and geography (China) [Revenue Breakdown](index=30&type=section&id=Revenue%20Breakdown) Group revenue primarily derives from providing extracurricular courses, brand operation and management services, overseas education consulting services, and other consulting services, with revenue recognized both at a point in time and over time Revenue Breakdown (For the six months ended June 30, RMB thousand) | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | Tuition income – provision of extracurricular courses | 13,282 | 16,615 | | Tuition income – provision of teacher training | – | 47 | | Provision of brand operation and management services | 5,689 | – | | Provision of overseas education consulting services | 19,279 | 22,457 | | Provision of other consulting services | 2,985 | 7,884 | | Sales of books and teaching materials | 217 | 418 | | Brand name licensing and related consulting services | – | 83 | | **Total Revenue** | **41,452** | **47,504** | | **Timing of Revenue Recognition** | | | | At a point in time | 19,496 | 22,875 | | Over time | 21,956 | 24,629 | - Revenue from extracurricular courses is recognized **over time using the output method**, while revenue from overseas education consulting services is recognized upon **student enrollment in overseas educational institutions**[96](index=96&type=chunk) [Segment Information](index=31&type=section&id=Segment%20Information) The Group's operating segments include extracurricular courses, brand operation and management, overseas education, training and consulting, and others; during the reporting period, the extracurricular courses segment saw decreased revenue but turned profitable, the overseas education segment experienced decreased revenue and expanded losses, and brand operation and management was a new revenue source - The Group's operating segments include **extracurricular courses, brand operation and management, overseas education, training and consulting, and others**[100](index=100&type=chunk) Segment Revenue and Results (For the six months ended June 30, RMB thousand) | Segment | 2025 Revenue | 2025 Results | 2024 Revenue | 2024 Results | | :--- | :--- | :--- | :--- | :--- | | Extracurricular Courses | 13,282 | 5,431 | 16,615 | (2,293) | | Brand Operation & Management | 5,689 | 1,480 | – | – | | Overseas Education | 19,279 | (6,889) | 22,457 | (581) | | Training & Consulting | 2,985 | (68) | 7,931 | 1,808 | | Others | 217 | (221) | 501 | (255) | | **Total** | **41,452** | **(267)** | **47,504** | **(1,321)** | [Geographical and Customer Information](index=34&type=section&id=Geographical%20and%20Customer%20Information) For the six months ended June 30, 2025, and 2024, all of the Group's revenue and non-current assets were generated or located in China, with no single customer contributing over 10% of total revenue during the current interim period - For the six months ended June 30, 2025, and 2024, **all of the Group's revenue was generated in China**[102](index=102&type=chunk) - As of June 30, 2025, and 2024, **all of the Group's non-current assets were located in China**[103](index=103&type=chunk) - During the current interim period, there was **no revenue from any single customer** accounting for over 10% of the Group's total revenue[104](index=104&type=chunk) [Other Income and Net Other Gains and Losses](index=35&type=section&id=Other%20Income%20and%20Net%20Other%20Gains%20and%20Losses) Other income primarily includes interest income, rental income, and others; net other gains and losses shifted from a gain in the prior period to a loss, mainly affected by exchange losses, fair value losses on financial assets, and the absence of a gain from the disposal of software under development in the prior period Other Income Breakdown (For the six months ended June 30, RMB thousand) | Source | 2025 | 2024 | | :--- | :--- | :--- | | Interest income from financial institutions | 75 | 153 | | Interest income from non-financial institutions | 71 | – | | Government grants | – | 6 | | Rental income | 242 | 70 | | Others | 45 | 255 | | **Total** | **433** | **484** | Net Other Gains and Losses Breakdown (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Exchange losses, net | (1,741) | (118) | | Net reversal of impairment loss recognized on other receivables | 14 | 1,647 | | Fair value loss on financial assets at fair value through profit or loss | (61) | (5,590) | | Net gain on disposal of subsidiaries | 196 | – | | Gain on dissolution of a subsidiary | 1,998 | – | | Gain on disposal of software under development | – | 10,000 | | Gain on disposal of property, plant and equipment | 382 | 89 | | Impairment loss on property, plant and equipment | (1,488) | – | | Impairment loss on investment properties | (290) | – | | Reversal of impairment loss on inventories | 15 | – | | **Total** | **(975)** | **6,028** | [Finance Costs](index=36&type=section&id=Finance%20Costs) Finance costs primarily include interest on lease liabilities, bank borrowings, and bonds; total finance costs for the reporting period were RMB389 thousand, an increase from the prior period Finance Costs Breakdown (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest on lease liabilities | 321 | 223 | | Interest on bank borrowings | 43 | 16 | | Interest on bonds | 25 | – | | **Total** | **389** | **239** | [Income Tax Credit](index=36&type=section&id=Income%20Tax%20Credit) The income tax credit for the reporting period was RMB273 thousand, primarily contributed by deferred tax credits; Chinese subsidiaries are subject to a 25% corporate income tax rate, with some small and micro enterprises enjoying a preferential rate of 5% Income Tax Credit Breakdown (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Current tax: China corporate income tax | 75 | 76 | | Deferred tax credit | (348) | (585) | | **Total** | **273** | **509** | - Chinese subsidiaries are subject to a **25% corporate income tax rate**, with some small and micro enterprises enjoying a **preferential rate of 5%**[108](index=108&type=chunk) [Loss for the Period and Total Comprehensive Expense](index=37&type=section&id=Loss%20for%20the%20Period%20and%20Total%20Comprehensive%20Expense) This section details the composition of loss for the period and total comprehensive expense, primarily including staff costs, rental expenses, depreciation, and amortization; total staff costs for the reporting period were RMB28.6 million Loss for the Period and Total Comprehensive Expense Composition (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Total staff costs | 28,591 | 28,772 | | Rental expenses | 1,392 | 1,816 | | Depreciation of investment properties | 290 | 53 | | Depreciation of property, plant and equipment | 3,327 | 3,969 | | Amortization of other intangible assets | 2,340 | 2,340 | [Dividends](index=37&type=section&id=Dividends) No dividends were declared, paid, or proposed during the current interim period - **No dividends were declared, paid, or proposed** during the current interim period[111](index=111&type=chunk) [Loss Per Share](index=38&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, loss for the period attributable to owners of the Company was RMB43.158 million, with basic and diluted loss per share of RMB5.66 cents; all potential ordinary shares had an anti-dilutive effect Loss Per Share Calculation Data (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company (RMB thousand) | (43,158) | (9,903) | | Weighted average number of ordinary shares | 762,983,890 | 770,600,000 | | Basic and Diluted Loss Per Share (RMB cents) | (5.66) | (1.29) | - For the six months ended June 30, 2025, all potential ordinary shares had an **anti-dilutive effect**[113](index=113&type=chunk) [Movements in Property, Plant and Equipment](index=38&type=section&id=Movements%20in%20Property%2C%20Plant%20and%20Equipment) During the reporting period, the Group added RMB1.674 million in property, plant, and equipment (excluding right-of-use assets for buildings), a significant increase from the prior period, with no new building lease agreements entered into Additions to Property, Plant and Equipment (RMB thousand) | Item | 2025 Period | 2024 Period | | :--- | :--- | :--- | | Additions to property, plant and equipment | 1,674 | 96 | - During the current interim period, the Group **did not enter into any new building lease agreements**[114](index=114&type=chunk) [Goodwill](index=39&type=section&id=Goodwill) As of June 30, 2025, the Group's total goodwill was RMB27.208 million, primarily from overseas education consulting services, other consulting services, brand operation and management, and extracurricular courses segments, with RMB2.776 million in new goodwill from the brand operation and management segment Goodwill Composition (RMB thousand) | Segment | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Other consulting services | 5,471 | 5,471 | | Overseas education consulting services | 17,919 | 19,928 | | Brand operation and management | 2,776 | – | | Extracurricular courses | 1,042 | 1,042 | | **Total** | **27,208** | **26,441** | - The brand operation and management segment added **RMB2.776 million in goodwill**[115](index=115&type=chunk) [Interests in Associates](index=39&type=section&id=Interests%20in%20Associates) As of June 30, 2025, the Group's interests in associates amounted to RMB40.984 million, a slight decrease from the end of 2024 Interests in Associates (RMB thousand) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cost of unlisted investments | 51,332 | 51,332 | | Share of post-acquisition results and other comprehensive income | (12,862) | (11,911) | | Exchange rate adjustments | 2,514 | 2,445 | | **Total** | **40,984** | **41,866** | [Trade Receivables](index=40&type=section&id=Trade%20Receivables) As of June 30, 2025, total trade receivables were RMB1.946 million, a 46.2% increase from the end of 2024, with the 0 to 30-day aging category accounting for the largest proportion Trade Receivables Aging Analysis (RMB thousand) | Aging | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | 0 to 30 days | 1,700 | 369 | | 31 to 60 days | 12 | 355 | | 61 to 90 days | 78 | 195 | | Over 90 days | 156 | 345 | | **Total** | **1,946** | **1,264** | [Prepayments, Deposits and Other Receivables](index=41&type=section&id=Prepayments%2C%20Deposits%20and%20Other%20Receivables) As of June 30, 2025, total prepayments, deposits, and other receivables amounted to RMB21.527 million, an increase from the end of 2024, primarily comprising amounts due from trade partners and former shareholders of subsidiaries Prepayments, Deposits and Other Receivables Breakdown (RMB thousand) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Rental deposits | 2,092 | 1,969 | | Other deposits | 518 | 72 | | Prepaid taxes | 165 | 2 | | Other prepayments | 283 | 947 | | Amounts due from former shareholders of subsidiaries | 8,778 | 7,943 | | Amounts due from trade partners | 11,557 | 10,491 | | Others | 8,412 | 4,363 | | **Total** | **31,805** | **25,787** | | Less: Impairment loss under expected credit loss model | (10,278) | (9,978) | | **Total** | **21,527** | **15,809** | [Bank Balances and Cash](index=41&type=section&id=Bank%20Balances%20and%20Cash) As of June 30, 2025, bank balances and cash amounted to RMB19.250 million, a significant decrease of 62.9% from the end of 2024, primarily denominated in RMB or HKD and bearing interest at annual rates ranging from 0.001% to 0.30% Bank Balances and Cash (RMB thousand) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Bank balances and cash | 19,250 | 52,019 | - Bank balances and cash are primarily denominated in **RMB or HKD**, bearing interest at annual rates ranging from **0.001% to 0.30%**[118](index=118&type=chunk) [Trade Payables](index=41&type=section&id=Trade%20Payables) As of June 30, 2025, trade payables amounted to RMB5.128 million, a significant increase from the end of 2024, with credit terms ranging from 0 to 60 days Trade Payables Aging Analysis (RMB thousand) | Aging | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | 0 to 30 days | 5,128 | 111 | [Other Payables and Accrued Expenses](index=42&type=section&id=Other%20Payables%20and%20Accrued%20Expenses) As of June 30, 2025, total other payables and accrued expenses amounted to RMB13.662 million, a slight increase from the end of 2024, primarily comprising staff costs payable, refundable tuition deposits, and amounts due to former shareholders of subsidiaries Other Payables and Accrued Expenses Breakdown (RMB thousand) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Staff costs payable | 2,901 | 3,324 | | Refundable tuition deposits and other deposits | 121 | 281 | | Other taxes payable | 488 | 600 | | Consideration payable | 1,000 | 320 | | Accrued operating expenses and other payables | 249 | 3,284 | | Amounts due to former shareholders of subsidiaries | 5,142 | 1,801 | | Other payables | 3,761 | 3,274 | | **Total** | **13,662** | **12,884** | [Contract Liabilities](index=42&type=section&id=Contract%20Liabilities) As of June 30, 2025, total contract liabilities amounted to RMB83.386 million, primarily comprising advance payments for tutoring fees and overseas education consulting services Contract Liabilities Breakdown (RMB thousand) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Tutoring fees | 19,142 | 28,094 | | Overseas education consulting services | 63,833 | 58,044 | | Other consulting services | 411 | – | | Brand name licensing and related consulting services | – | 119 | | **Total** | **83,386** | **86,257** | - Contract liabilities primarily represent **advance payments received from students and counterparties**, with revenue recognized as performance obligations are satisfied through service provision[120](index=120&type=chunk) [Lease Liabilities](index=43&type=section&id=Lease%20Liabilities) As of June 30, 2025, total lease liabilities amounted to RMB18.142 million, with a current portion of RMB9.855 million; total lease cash outflow for the reporting period was RMB5.777 million Lease Liabilities (RMB thousand) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-current | 9,855 | 12,977 | | Current | 8,287 | 10,845 | | **Total** | **18,142** | **23,822** | - Total lease cash outflow for the reporting period was **RMB5.777 million**[122](index=122&type=chunk) [Borrowings](index=44&type=section&id=Borrowings) As of June 30, 2025, the Group's total borrowings amounted to RMB7.191 million, including bank borrowings and bonds; bank borrowings are unsecured, bear an annual interest rate of 3.65%, and are repayable within one year, while bonds are unsecured, bear an annual interest rate of 6%, and are repayable within two years Borrowings Breakdown (RMB thousand) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Bank borrowings | 2,631 | 2,320 | | Bonds | 4,560 | – | | **Total** | **7,191** | **2,320** | - Bank borrowings are **unsecured**, bear an annual interest rate of **3.65%**, and are repayable within **one year**[123](index=123&type=chunk) - Bonds are **unsecured**, bear an annual interest rate of **6%**, and are repayable within **two years**[123](index=123&type=chunk) [Share Capital](index=45&type=section&id=Share%20Capital) As of June 30, 2025, the company's authorized share capital was 10,000,000,000 shares with a par value of HKD0.01 each, and 800,000,000 ordinary shares were issued and fully paid, amounting to RMB7.223 million Share Capital Information (As of June 30, 2025) | Item | Number of Shares | Amount (RMB thousand) | | :--- | :--- | :--- | | Authorized share capital (par value HKD0.01 per share) | 10,000,000,000 | – | | Issued and fully paid ordinary shares | 800,000,000 | 7,223 | [Acquisition and Disposal of Subsidiaries](index=46&type=section&id=Acquisition%20and%20Disposal%20of%20Subsidiaries) During the reporting period, the Group engaged in several subsidiary acquisition and disposal activities, including the acquisition of a 50% equity interest in Shanghai Oumiluo and the disposal of a 77% equity interest in Zhengzhou Dashan Guangxiao and a 22.88% equity interest in Hubei Meiteng [Acquisition of Shanghai Oumiluo](index=46&type=section&id=Acquisition%20of%20Shanghai%20Oumiluo) In March 2025, the Group acquired a 50% equity interest in Shanghai Oumiluo, primarily engaged in brand operation and management, for RMB1.0 million, resulting in goodwill of RMB2.777 million - In March 2025, the Group acquired a **50% equity interest in Shanghai Oumiluo** for **RMB1,000,000**, a company primarily engaged in providing consulting services, particularly brand operation and management[126](index=126&type=chunk) - This acquisition resulted in **goodwill of RMB2.777 million**[127](index=127&type=chunk) Fair Value of Identifiable Assets and Liabilities at Acquisition Date of Shanghai Oumiluo (RMB thousand) | Item | Amount | | :--- | :--- | | Net liabilities acquired | (3,553) | | Cash consideration payable | 1,000 | | Add: Non-controlling interests | (1,776) | | Add: Net liabilities acquired | 3,553 | | **Goodwill arising from acquisition** | **2,777** | [Disposal of Zhengzhou Dashan Guangxiao](index=48&type=section&id=Disposal%20of%20Zhengzhou%20Dashan%20Guangxiao) On April 30, 2025, the Group disposed of a 77% equity interest in Zhengzhou Dashan Guangxiao for a cash consideration of RMB770 thousand, resulting in a gain on disposal of RMB407 thousand - On April 30, 2025, the Group disposed of a **77% equity interest in Zhengzhou Dashan Guangxiao** for a cash consideration of **RMB770,000**[131](index=131&type=chunk) - This disposal resulted in a **gain of RMB407 thousand**[131](index=131&type=chunk) Gain on Disposal of Zhengzhou Dashan Guangxiao Calculation (RMB thousand) | Item | Amount | | :--- | :--- | | Net assets disposed of | 794 | | Consideration receivable | 770 | | Net assets disposed of | (794) | | Non-controlling interests | 431 | | **Gain on disposal** | **407** | [Disposal of Hubei Meiteng](index=49&type=section&id=Disposal%20of%20Hubei%20Meiteng) On April 30, 2025, the Group disposed of a 22.88% equity interest in Hubei Meiteng for a cash consideration of RMB1, resulting in a loss on disposal of RMB211 thousand - On April 30, 2025, the Group disposed of a **22.88% equity interest in Hubei Meiteng** for a cash consideration of **RMB1**[132](index=132&type=chunk) - This disposal resulted in a **loss of RMB211 thousand**[132](index=132&type=chunk) Loss on Disposal of Hubei Meiteng Calculation (RMB thousand) | Item | Amount | | :--- | :--- | | Net liabilities disposed of | (4,329) | | Consideration received | – | | Net liabilities disposed of | 4,329 | | Non-controlling interests | (2,531) | | Goodwill | (2,009) | | **Loss on disposal** | **(211)** | [Acquisition of Hangzhou Aorong](index=50&type=section&id=Acquisition%20of%20Hangzhou%20Aorong) In May 2024, the Group acquired a 60% equity interest in Hangzhou Aorong, primarily engaged in brand operation and management, for RMB1, resulting in goodwill of RMB500 thousand - In May 2024, the Group acquired a **60% equity interest in Hangzhou Aorong** for **RMB1**, a company primarily engaged in providing consulting services, particularly brand operation and management[133](index=133&type=chunk) - This acquisition resulted in **goodwill of RMB500 thousand**[134](index=134&type=chunk) Fair Value of Identifiable Assets and Liabilities at Acquisition Date of Hangzhou Aorong (RMB thousand) | Item | Amount | | :--- | :--- | | Net liabilities acquired | (834) | | Cash consideration paid | – | | Add: Non-controlling interests | (334) | | Add: Net liabilities acquired | 834 | | **Goodwill arising from acquisition** | **500** | [Share-based Payment Transactions](index=51&type=section&id=Share-based%20Payment%20Transactions) This section details the terms, grants, and movements of the company's share option scheme and share award scheme [Share Option Scheme](index=51&type=section&id=Share%20Option%20Scheme) The share option scheme, adopted on June 18, 2020, aims to incentivize employees; as of June 30, 2025, a total of 80,000,000 unexercised share options were outstanding, with a weighted average exercise price of HKD3.51 per share, and no options were granted, exercised, cancelled, or lapsed during the reporting period - The share option scheme was adopted on **June 18, 2020**, to encourage or reward eligible persons for their contributions to the Group[137](index=137&type=chunk) Details of Outstanding Share Options (June 30, 2025) | Grant Date | Number of Options Granted | Exercise Price | Fair Value | | :--- | :--- | :--- | :--- | | Nov 14, 2024 | 60,000,000 | HKD3.88 | H

Company Information [Board of Directors and Committees](index=3&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E8%88%87%E5%A7%94%E5%93%A1%E6%9C%83) This section details ZTO Express's board members and the composition of its professional committees, outlining the company's governance structure - The Board of Directors is chaired by Mr. Lai Meisong and includes multiple executive, non-executive, and independent non-executive directors[5](index=5&type=chunk) - The company has professional committees such as Audit, Remuneration, Nomination and Corporate Governance, and Environmental, Social and Governance to oversee specific matters[5](index=5&type=chunk) - Ms. Xu Di was appointed as a non-executive director on April 25, 2025, and Mr. Chen Xudong resigned on the same day[5](index=5&type=chunk) [Company Contact and Listing Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%81%AF%E7%B5%A1%E8%88%87%E4%B8%8A%E5%B8%82%E4%BF%A1%E6%81%AF) This section provides ZTO Express's key contact details and listing information, including its headquarters, auditor, share registrar, and stock codes on the HKEX and NYSE - The company's auditor is Deloitte Touche Tohmatsu, and the Hong Kong share registrar is Hong Kong Central Share Registrar Limited[7](index=7&type=chunk) - The company's stock code on the HKEX is **2057**, and on the NYSE is **ZTO**[7](index=7&type=chunk) - The company website is http://zto.investorroom.com/, providing investor relations information[7](index=7&type=chunk) Financial Highlights [Key Financial Metrics](index=5&type=section&id=%E9%97%9C%E9%8D%B5%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99) ZTO Express achieved revenue growth in the first half of 2025, but gross profit, net income, and adjusted net income all declined, indicating pressure on profitability despite revenue growth Key Financial Data for H1 2025 (thousand RMB) | Metric | 2024 (Unaudited) | 2025 (Unaudited) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 20,685,970 | 22,723,272 | 9.8% | | Cost of Revenue | (14,063,408) | (17,089,655) | 21.5% | | Gross Profit | 6,622,562 | 5,633,617 | (14.9)% | | Net Income | 4,061,744 | 4,003,740 | (1.4)% | | Net Income Attributable to Ordinary Shareholders | 4,037,848 | 3,931,579 | (2.6)% | | Adjusted Net Income | 5,029,768 | 4,312,027 | (14.3)% | | Adjusted Net Income Attributable to Ordinary Shareholders | 5,005,872 | 4,239,866 | (15.3)% | | Adjusted Basic Earnings Per ADS Attributable to Ordinary Shareholders | 6.21 | 5.31 | (14.5)% | | Adjusted Diluted Earnings Per ADS Attributable to Ordinary Shareholders | 6.06 | 5.18 | (14.5)% | [Explanation of Non-GAAP Financial Measures](index=6&type=section&id=%E9%9D%9E%E5%85%AC%E8%AA%8D%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99%E8%AA%AA%E6%98%8E) The company uses non-GAAP metrics to assess operating performance, believing they reflect underlying business trends, but emphasizes they are not substitutes for GAAP measures - Non-GAAP measures are used to identify business trends, provide useful information on operating performance, and enhance understanding of past performance and future prospects[11](index=11&type=chunk) - The company reminds investors that non-GAAP measures are not GAAP-defined, should not be considered in isolation, and may not be comparable to similar measures presented by other companies[12](index=12&type=chunk) [GAAP to Non-GAAP Reconciliation](index=7&type=section&id=%E5%85%AC%E8%AA%8D%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87%E8%88%87%E9%9D%9E%E5%85%AC%E8%AA%8D%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87%E8%AA%BF%E7%AF%80%E8%A1%A8) This section provides a detailed reconciliation table, adjusting GAAP net income to non-GAAP adjusted net income and EBITDA by excluding non-recurring items GAAP to Non-GAAP Performance Reconciliation (thousand RMB) | Metric | 2024 (Unaudited) | 2025 (Unaudited) | | :--- | :--- | :--- | | Net Income | 4,061,744 | 4,003,740 | | Add: Share-based compensation expenses | 305,155 | 223,263 | | Add: Impairment of equity investments | 672,816 | – | | Add: Goodwill impairment | – | 84,431 | | Adjusted Net Income | 5,029,768 | 4,312,027 | | EBITDA | 7,034,205 | 6,913,336 | | Adjusted EBITDA | 8,000,042 | 7,221,597 | | Adjusted Net Income Attributable to Ordinary Shareholders | 5,005,872 | 4,239,866 | Business Review and Outlook [Business Review for the Reporting Period](index=9&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E9%96%93%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) ZTO Express achieved solid financial and operating results in the first half of 2025, driven by improved service quality and operational efficiency, with revenue growth primarily from increased online consumption penetration - Revenue increased by **9.8% year-over-year** to **RMB 22,723.3 million** in the first half of 2025[17](index=17&type=chunk) - Revenue growth was primarily attributed to increased express delivery demand driven by higher online consumption penetration and a shift in customer structure towards higher-value segments[17](index=17&type=chunk) [Core Express Delivery Business and Ecosystem](index=9&type=section&id=%E6%A0%B8%E5%BF%83%E5%BF%AB%E9%81%9E%E6%A5%AD%E5%8B%99%E8%88%87%E7%94%9F%E6%85%8B%E7%B3%BB%E7%B5%B1) The company's core express delivery business primarily generates revenue from transit fees and continuously expands its service offerings, aiming to build an integrated logistics ecosystem - Core express delivery business revenue primarily derives from transit fees for parcel sorting and line-haul transportation, as well as delivery services provided to enterprise customers[18](index=18&type=chunk) - The company is actively building an integrated logistics service ecosystem, covering express delivery, less-than-truckload freight, cross-border, warehousing, air cargo, cold chain, and commercial solutions, to capture diversified demand[20](index=20&type=chunk) [Logistics Network and Technology Infrastructure](index=10&type=section&id=%E7%89%A9%E6%B5%81%E7%B6%B2%E7%B5%A1%E5%8F%8A%E6%8A%80%E8%A1%93%E5%9F%BA%E7%A4%8E%E8%A8%AD%E6%96%BD) ZTO Express boasts extensive network coverage and advanced logistics infrastructure, continuously enhancing operational digitalization and intelligence through its self-developed Zhongtian system, effectively reducing unit costs - Network covers **99% of cities and counties in China**, with approximately **6,000 direct network partners**, over **31,000 pick-up and delivery outlets**, and about **110,000 last-mile stations**[21](index=21&type=chunk) - Logistics infrastructure includes **94 sorting centers**, **690 automated sorting lines**, and over **10,000 self-owned line-haul vehicles**, of which over **9,400 are high-capacity models**[22](index=22&type=chunk) - The self-developed centralized Zhongtian system optimizes dispatch plans and improves order fulfillment rates through intelligent routing algorithms and real-time monitoring, reducing overall unit costs for sorting and transportation[23](index=23&type=chunk)[25](index=25&type=chunk) [Environmental, Social, and Governance (ESG)](index=11&type=section&id=%E7%92%B0%E5%A2%83%E3%80%81%E7%A4%BE%E6%9C%83%E5%92%8C%E7%AE%A1%E6%B2%BB(ESG)) ZTO Express actively fulfills its corporate social responsibility, committed to sustainable development by creating social value through eco-friendly services, safety, and economic contributions, and has published annual ESG reports since 2019 - The express delivery industry plays a crucial role in saving distribution costs, supporting related industries, and reducing logistics costs[26](index=26&type=chunk) - ZTO is committed to developing more "eco-friendly" express services, ensuring safety, contributing to economic development, and creating more social value[26](index=26&type=chunk) - The company has published annual ESG reports since 2019, detailing key initiatives and developments in environmental, social, and corporate governance areas[26](index=26&type=chunk) [Post-Reporting Period Events and Business Outlook](index=11&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E7%9A%84%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A0%85%E8%88%87%E6%A5%AD%E5%8B%99%E5%89%8D%E6%99%AF) After the reporting period, the company completed a tender offer for its 2027 notes and, while confident in the industry, lowered its full-year 2025 parcel volume guidance - In August 2025, the company completed a tender offer for its 2027 notes, repurchasing a total principal amount of **USD 982.3 million**[27](index=27&type=chunk) - The company lowered its full-year 2025 parcel volume guidance to **38.8 billion to 40.1 billion parcels**, representing a **14% to 18% year-over-year growth**[29](index=29&type=chunk) - The company will continue to adhere to the "co-build and share" philosophy, focus on infrastructure efficiency, and promote fairness and reasonableness in responsibility and benefit distribution among all network participants[29](index=29&type=chunk) Management Discussion and Analysis [Revenue Analysis](index=13&type=section&id=%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) ZTO Express's total revenue increased by 9.8% year-over-year in the first half of 2025, primarily driven by core express delivery services with increased parcel volume, but a decrease in average parcel price H1 2025 Revenue Composition (thousand RMB) | Revenue Category | 2024 (Unaudited) | 2025 (Unaudited) | Revenue Percentage (%) | | :--- | :--- | :--- | :--- | | Express Delivery Services | 19,116,095 | 21,106,041 | 92.9 | | Freight Forwarding Services | 435,989 | 359,477 | 1.5 | | Material Sales | 1,065,484 | 1,196,066 | 5.3 | | Others | 68,402 | 61,688 | 0.3 | | Total Revenue | 20,685,970 | 22,723,272 | 100.0 | - Core express delivery business revenue grew by **10.4%**, primarily due to a **17.7% increase in parcel volume** and a **6.2% decrease in average parcel price**[32](index=32&type=chunk) - Freight forwarding service revenue decreased by **17.5%**, while material sales and other revenue increased by **12.3%**[33](index=33&type=chunk)[34](index=34&type=chunk) [Cost of Revenue and Gross Profit Analysis](index=14&type=section&id=%E7%87%9F%E6%A5%AD%E6%88%90%E6%9C%AC%E8%88%87%E6%AF%9B%E5%88%A9%E5%88%86%E6%9E%90) Total cost of revenue significantly increased by 21.5% in the first half of 2025, leading to a 14.9% decrease in gross profit and a decline in gross margin from 32.0% to 24.8% H1 2025 Cost of Revenue Composition (thousand RMB) | Cost Category | 2024 (Unaudited) | 2025 (Unaudited) | Percentage of Revenue (%) | | :--- | :--- | :--- | :--- | | Line-haul Transportation Cost | 6,654,616 | 6,774,009 | 29.8 | | Sorting Center Operating Cost | 4,395,871 | 4,729,435 | 20.8 | | Freight Forwarding Cost | 405,106 | 343,028 | 1.5 | | Material Sales Cost | 293,140 | 284,463 | 1.3 | | Other Costs | 2,314,675 | 4,958,720 | 21.8 | | Total Cost of Revenue | 14,063,408 | 17,089,655 | 75.2 | - Line-haul transportation unit cost decreased by **14.0%**, primarily due to improved economies of scale, lower fuel prices, and more efficient route planning[35](index=35&type=chunk) - Sorting center operating cost per unit decreased by **7.1%**, with automated sorting equipment increasing from **515 sets in 2024 to 690 sets in 2025**[35](index=35&type=chunk) - Other costs significantly increased by **114.2%**, mainly due to serving higher-value enterprise customers[35](index=35&type=chunk) - Gross profit decreased by **14.9%** to **RMB 5,633.6 million**, with gross margin declining from **32.0% to 24.8%**[37](index=37&type=chunk) [Operating Expenses and Profit](index=15&type=section&id=%E7%87%9F%E9%81%8B%E8%B2%BB%E7%94%A8%E8%88%87%E5%88%A9%E6%BD%A4) Total operating expenses decreased by 34.0% in the first half of 2025, primarily due to a reduction in compensation and benefits, but operating profit still declined by 11.0% - Total operating expenses decreased by **34.0%** to **RMB 753.2 million**[38](index=38&type=chunk) - Selling, general, and administrative expenses decreased by **8.6%**, mainly due to a **RMB 88.7 million reduction** in compensation and benefits[38](index=38&type=chunk) - Operating profit was **RMB 4,880.5 million**, an **11.0% year-over-year decrease**, with operating margin declining from **26.5% to 21.5%**[39](index=39&type=chunk) [Other Income, Expenses, and Net Income](index=15&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E3%80%81%E8%B2%BB%E7%94%A8%E8%88%87%E6%B7%A8%E5%88%A9%E6%BD%A4) Interest income and expenses decreased, gain on fair value change of financial instruments declined, and a goodwill impairment was recognized, leading to a 1.4% year-over-year decrease in net income - Interest income decreased by **23.6%** to **RMB 407.1 million**, and interest expense decreased by **16.4%** to **RMB 167.0 million**[40](index=40&type=chunk) - Gain on fair value change of financial instruments decreased from **RMB 97.6 million to RMB 33.0 million**[41](index=41&type=chunk) - Goodwill impairment of **RMB 84.4 million** was recognized, related to the 2017 acquisition of China Eastern Express Co., Ltd.'s core freight forwarding business[41](index=41&type=chunk) - Income tax expense decreased by **10.1%** to **RMB 1,107.1 million**, with the overall effective tax rate decreasing by **1.6 percentage points**[42](index=42&type=chunk) - Net income decreased by **1.4%** from **RMB 4.1 billion to RMB 4.0 billion**[43](index=43&type=chunk) [Liquidity, Capital Resources, and Risks](index=16&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90%E8%88%87%E9%A2%A8%E9%9A%AA) The company maintains ample liquidity, primarily from operating and financing cash flows, with a slightly decreased debt-to-asset ratio, while managing foreign exchange and interest rate risks through hedging - As of June 30, 2025, cash and cash equivalents, restricted cash, and short-term investments totaled **RMB 26,547.0 million**[47](index=47&type=chunk) - The debt-to-asset ratio was **31.5%**, a decrease from **32.1% at the end of 2024**[45](index=45&type=chunk) - As of June 30, 2025, outstanding short-term bank borrowings were **RMB 11.0 billion**, and long-term borrowings were **RMB 180.0 million**[48](index=48&type=chunk) - The company faces risks from fluctuations in the RMB to USD exchange rate and has entered into hedging transactions; interest rate risk is primarily associated with interest-bearing bank deposits and floating-rate borrowings[52](index=52&type=chunk)[53](index=53&type=chunk) - As of June 30, 2025, total capital expenditures were approximately **RMB 3.1 billion**, and capital commitments were **RMB 6.0 billion**, primarily for the construction of office buildings, sorting centers, and warehouse facilities[55](index=55&type=chunk) [Employees and Compensation](index=20&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC) As of June 30, 2025, ZTO Express had 23,913 employees primarily in sorting, transportation, operations support, and customer service, offering competitive compensation and training programs while participating in government-mandated benefits Employee Functional Distribution as of June 30, 2025 | Function Category | Number of Employees | Percentage of Total | | :--- | :--- | :--- | | Sorting | 7,716 | 32.3 | | Transportation | 3,337 | 14.0 | | Management and Administration | 4,453 | 18.6 | | Operations Support and Customer Service | 6,918 | 28.9 | | Technology and Engineering | 1,080 | 4.5 | | Sales and Marketing | 409 | 1.7 | | Total | 23,913 | 100.0 | - Employee compensation costs (excluding share-based compensation expenses) totaled **RMB 1,590.3 million** in the first half of 2025, a decrease from the same period last year[56](index=56&type=chunk) - The company participates in various government-mandated employee benefit plans and continuously invests in employee training and education programs[57](index=57&type=chunk)[60](index=60&type=chunk) Corporate Governance [Dual-Class Share Structure](index=22&type=section&id=%E4%B8%8D%E5%90%8C%E6%8A%95%E7%A5%A8%E6%AC%8A%E6%9E%B6%E6%A7%8B) ZTO Express employs a dual-class share structure where Class A ordinary shares carry one vote and Class B ordinary shares carry ten votes, granting Mr. Lai Meisong the vast majority of voting control to implement long-term strategies - Holders of Class A ordinary shares are entitled to **one vote per share**, while holders of Class B ordinary shares are entitled to **ten votes per share**[62](index=62&type=chunk) - As of June 30, 2025, Mr. Lai Meisong held a total of **77.7% of the company's voting power** through Class B ordinary shares[63](index=63&type=chunk)[64](index=64&type=chunk) - The dual-class share structure enables the beneficiary to exercise voting control over the company to implement long-term strategies[67](index=67&type=chunk) - Class B ordinary shares will automatically convert to Class A ordinary shares when Mr. Lai Meisong and his affiliates collectively own less than **10% of the company's total issued share capital**[67](index=67&type=chunk) [Compliance with Corporate Governance Code](index=23&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87%E9%81%B5%E5%AE%88%E6%83%85%E6%B3%81) The company complies with the Corporate Governance Code, except for the combined roles of Chairman and CEO held by Mr. Lai Meisong, which the company believes ensures consistent leadership and efficiency - The company has complied with all code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules, except for the provision that the roles of Chairman and Chief Executive Officer should be separate and not held by the same individual[69](index=69&type=chunk) - Mr. Lai Meisong concurrently serves as Chairman and Chief Executive Officer, which the Board believes helps ensure consistent leadership within the Group and enhances efficiency in strategic planning[69](index=69&type=chunk) - The company has adopted a code for securities transactions by management and confirms that directors and relevant employees have complied with this code and the Model Code throughout the reporting period[71](index=71&type=chunk) [Board Committee Functions](index=24&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A7%94%E5%93%A1%E6%9C%83%E8%81%B7%E8%83%BD) The Board has established four committees—Audit, Remuneration, Nomination and Corporate Governance, and Environmental, Social and Governance—each with specific written terms of reference, with the Audit Committee overseeing financial reporting and having reviewed the interim results - The Board has established an Audit Committee, Remuneration Committee, Nomination and Corporate Governance Committee, and Environmental, Social and Governance Committee to oversee specific matters[72](index=72&type=chunk) - The Audit Committee, comprising Mr. Herman YU (Chairman), Mr. Liu Xing, and Mr. Huang Qin, is responsible for overseeing accounting and financial reporting processes and collaborating with independent auditors[73](index=73&type=chunk) - The Audit Committee has reviewed the unaudited condensed consolidated interim results of the Group for the six months ended June 30, 2025, and this interim report[75](index=75&type=chunk) Other Information [Disclosure of Directors' and Major Shareholders' Interests](index=26&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A%E6%8A%AB%E9%9C%B2) This section details the interests and short positions of directors, senior management, and major shareholders in the company's shares, including Class A and Class B ordinary shares, and indirect interests through trusts and controlled corporations Interests of Directors and Senior Management in the Company's Shares (as of June 30, 2025) | Name | Nature of Interest | Number of Shares/Related Shares | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | Mr. Lai Meisong | Founder of Discretionary Trust | 206,100,000 Class B Ordinary Shares (L) | 100.00 | | Mr. Lai Meisong | Founder of Discretionary Trust/Other/Beneficial Owner | 6,202,146 Class A Ordinary Shares (L) | 1.04 | | Mr. Wang Jilei | Founder of Discretionary Trust/Other/Beneficial Owner | 42,244,603 Class A Ordinary Shares (L) | 7.06 | | Mr. Hu Hongqun | Other/Beneficial Owner | 122,825 Class A Ordinary Shares (L) | 0.02 | Interests of Major Shareholders in the Company's Class A Ordinary Shares (as of June 30, 2025) | Name/Entity | Capacity/Nature of Interest | Number of Shares | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | SCTS Capital Pte. Ltd. | Nominee of another person | 116,146,241 (L) | 19.41 | | Standard Chartered Trust (Singapore) Limited | Trustee | 116,146,241 (L) | 19.41 | | Alibaba Group Holding Limited | Interest in controlled corporation | 71,941,287 (L) | 12.02 | | Taobao Holding Limited | Interest in controlled corporation | 61,192,420 (L) | 10.23 | | Mr. Lai Jianfa | Founder of Discretionary Trust/Other | 64,252,639 (L) | 10.74 | - Mr. Lai Meisong beneficially owned **206,100,000 Class B ordinary shares** through Zto Lms Holding Limited, representing **100% of the voting rights** of Class B ordinary shares[79](index=79&type=chunk)[88](index=88&type=chunk) [Share-based Incentives and Securities Transactions](index=31&type=section&id=%E8%82%A1%E6%AC%8A%E6%BF%80%E5%8B%B5%E8%88%87%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93) The company operated a cash incentive plan and the 2024 Plan during the reporting period, and repurchased and cancelled some American Depositary Shares on the NYSE, demonstrating its commitment to shareholder returns and capital management - The company operates a cash incentive plan (through ZTO ES) and the 2024 Plan, neither of which involves the issuance of new shares[91](index=91&type=chunk) - During the reporting period, the company repurchased a total of **352,791 ADSs** on the NYSE for a total consideration of **USD 6,341,912.13**, and all repurchased shares have been cancelled[92](index=92&type=chunk)[93](index=93&type=chunk) [Changes in Board and Director Information](index=32&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%8F%8A%E8%91%A3%E4%BA%8B%E8%B3%87%E6%96%99%E8%AE%8A%E5%8B%95) Since the 2024 annual report, Mr. Chen Xudong resigned as a non-executive director and Ms. Xu Di was appointed as a non-executive director, both effective April 25, 2025 - Mr. Chen Xudong resigned as a non-executive director, effective April 25, 2025[94](index=94&type=chunk) - Ms. Xu Di was appointed as a non-executive director, effective April 25, 2025[95](index=95&type=chunk) [Interim Dividend and Report Approval](index=32&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF%E8%88%87%E5%A0%B1%E5%91%8A%E6%89%B9%E5%87%86) The Board has approved an interim dividend of USD 0.30 per ADS and ordinary share for the six months ended June 30, 2025, representing a payout ratio of 40%, and this interim report has been approved for publication - The Board approved an interim dividend of **USD 0.30 per ADS and ordinary share** for the six months ended June 30, 2025[96](index=96&type=chunk) - The payout ratio for this dividend payment is **40%**[96](index=96&type=chunk) - The interim report and the unaudited condensed consolidated financial statements have been approved and authorized for publication by the Board[99](index=99&type=chunk) Review Report on Condensed Consolidated Financial Statements [Auditor's Review Conclusion](index=33&type=section&id=%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%AF%A9%E9%96%B1%E7%B5%90%E8%AB%96) Deloitte Touche Tohmatsu has reviewed ZTO Express's condensed consolidated financial statements for the six months ended June 30, 2025, and concluded that they found no matters indicating that these statements are not prepared in all material respects in accordance with U.S. GAAP - The auditor is **Deloitte Touche Tohmatsu**[105](index=105&type=chunk) - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[103](index=103&type=chunk) - The auditor found no matters that caused them to believe the condensed consolidated financial statements are not prepared in all material respects in accordance with U.S. GAAP[104](index=104&type=chunk) Unaudited Condensed Consolidated Balance Sheets [Balance Sheet Overview](index=35&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8%E6%A6%82%E8%A6%BD) As of June 30, 2025, ZTO Express's total assets and total equity both increased, with a significant rise in short-term investments, while total liabilities also slightly increased, but the debt-to-asset ratio remained stable Key Data from Condensed Consolidated Balance Sheets (thousand RMB) | Metric | December 31, 2024 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Total Current Assets | 30,353,721 | 34,520,605 | | Total Assets | 92,340,330 | 94,620,760 | | Total Current Liabilities | 28,273,235 | 28,454,751 | | Total Liabilities | 29,665,497 | 29,764,954 | | Equity Attributable to ZTO Express (Cayman) Inc. Shareholders | 62,062,392 | 64,197,609 | | Total Equity | 62,674,833 | 64,855,806 | - As of June 30, 2025, cash and cash equivalents were **RMB 13,291,796 thousand**, and short-term investments were **RMB 13,232,512 thousand**[107](index=107&type=chunk) - Short-term bank borrowings increased to **RMB 11,046,963 thousand**, and new long-term bank borrowings of **RMB 180,000 thousand** were added[108](index=108&type=chunk) Unaudited Condensed Consolidated Statements of Comprehensive Income [Comprehensive Income Statement Overview](index=37&type=section&id=%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8%E6%A6%82%E8%A6%BD) ZTO Express achieved revenue growth in the first half of 2025, but due to a significant increase in cost of revenue, gross profit, operating profit, and net income all declined, with corresponding decreases in basic and diluted earnings per share Key Data from Condensed Consolidated Statements of Comprehensive Income (thousand RMB) | Metric | 2024 (Unaudited) | 2025 (Unaudited) | | :--- | :--- | :--- | | Revenue | 20,685,970 | 22,723,272 | | Cost of Revenue | (14,063,408) | (17,089,655) | | Gross Profit | 6,622,562 | 5,633,617 | | Operating Profit | 5,481,898 | 4,880,462 | | Net Income | 4,061,744 | 4,003,740 | | Net Income Attributable to Ordinary Shareholders | 4,037,848 | 3,931,579 | | Net Earnings Per Share Attributable to Ordinary Shareholders - Basic | 5.01 | 4.92 | | Net Earnings Per Share Attributable to Ordinary Shareholders - Diluted | 4.90 | 4.81 | | Comprehensive Income | 3,944,184 | 4,054,272 | - Cost of revenue increased by **21.5% year-over-year**, leading to a **14.9% decrease in gross profit**[110](index=110&type=chunk) - Operating profit decreased by **11.0% year-over-year**, and net income decreased by **1.4% year-over-year**[110](index=110&type=chunk) Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity [Shareholders' Equity Changes Overview](index=39&type=section&id=%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E6%A6%82%E8%A6%BD) As of June 30, 2025, ZTO Express's total shareholders' equity increased, primarily driven by net income contributions, but partially offset by dividend payments and ordinary share repurchases, with share-based compensation expenses and foreign currency translation adjustments also impacting equity changes Key Data from Condensed Consolidated Statements of Changes in Shareholders' Equity (thousand RMB) | Metric | January 1, 2025 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Equity Attributable to ZTO Express (Cayman) Inc. Shareholders | 62,062,392 | 64,197,609 | | Net Income | – | 3,931,579 | | Share-based compensation expenses | – | 223,263 | | Repurchase of ordinary shares | – | (46,555) | | Dividend payments | – | (2,023,602) | | Accumulated other comprehensive loss | (294,694) | (244,162) | - Net income attributable to ZTO Express (Cayman) Inc. was **RMB 3,931,579 thousand**[114](index=114&type=chunk) - During the reporting period, the company conducted ordinary share repurchases and paid **RMB 2,023,602 thousand** in dividends[114](index=114&type=chunk) Unaudited Condensed Consolidated Statements of Cash Flows [Cash Flow Overview](index=41&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E6%A6%82%E8%A6%BD) In the first half of 2025, ZTO Express's net cash from operating activities decreased, net cash used in investing activities decreased, and net cash used in financing activities also decreased, resulting in a slight decrease in total cash, cash equivalents, and restricted cash at period-end Key Data from Condensed Consolidated Statements of Cash Flows (thousand RMB) | Metric | 2024 (Unaudited) | 2025 (Unaudited) | | :--- | :--- | :--- | | Net cash generated from operating activities | 5,511,115 | 4,531,184 | | Net cash used in investing activities | (7,044,941) | (4,321,982) | | Net cash used in financing activities | (973,492) | (378,804) | | Net change in cash, cash equivalents and restricted cash | (2,472,241) | (201,868) | | Cash, cash equivalents and restricted cash at end of period | 10,579,069 | 13,329,079 | - Net cash generated from operating activities decreased by **17.8% year-over-year**[116](index=116&type=chunk) - Net cash used in investing activities decreased, primarily due to reduced expenditures on short-term and long-term investments[116](index=116&type=chunk) - Total cash, cash equivalents, and restricted cash at period-end was **RMB 13,329,079 thousand**[116](index=116&type=chunk) Notes to Unaudited Condensed Consolidated Financial Statements [Organization and Principal Activities](index=43&type=section&id=%E7%B5%84%E7%B9%94%E5%8F%8A%E4%B8%BB%E8%A6%81%E6%B4%BB%E5%8B%95) ZTO Express (Cayman) Inc. and its group primarily provide express delivery services in the People's Republic of China through a nationwide network partner model - The Group is principally engaged in providing express delivery services in the People's Republic of China through a nationwide network partner model[120](index=120&type=chunk) [Summary of Significant Accounting Policies](index=43&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E6%A6%82%E8%A6%81) This section outlines the significant accounting policies followed by ZTO Express in preparing its condensed consolidated financial statements, including the basis of presentation, consolidation principles, accounting estimates, fair value measurement, revenue recognition, income taxes, and earnings per share calculation methods - The condensed consolidated financial statements are prepared in accordance with **U.S. GAAP** and include the financial statements of the Company, its subsidiaries, and variable interest entities[121](index=121&type=chunk)[122](index=122&type=chunk) - Variable interest entities contributed **86.0% of the Group's total revenue** in the first half of 2025[126](index=126&type=chunk) - Fair value measurement uses a three-level hierarchy, with short-term financial instruments recorded at cost approximating fair value[131](index=131&type=chunk)[132](index=132&type=chunk) H1 2025 Revenue Breakdown (thousand RMB) | Revenue Category | 2025 (Unaudited) | Revenue Percentage (%) | | :--- | :--- | :--- | | Express Delivery Services | 21,106,041 | 92.9 | | Freight Forwarding Services | 359,477 | 1.5 | | Material Sales | 1,196,066 | 5.3 | | Others | 61,688 | 0.3 | | Total Revenue | 22,723,272 | 100.0 | - Earnings per share calculation considers the dual-class share structure, with Class A and Class B ordinary shares having identical dividend rights[140](index=140&type=chunk) [Accounts Receivable, Net](index=51&type=section&id=%E6%87%89%E6%94%B6%E8%B3%A6%E6%AC%BE%E6%B7%A8%E9%A1%8D) As of June 30, 2025, ZTO Express's accounts receivable, net, was RMB 1,395,625 thousand, a decrease from the end of 2024, with most accounts receivable aged within six months Accounts Receivable, Net, and Aging Analysis (thousand RMB) | Metric | December 31, 2024 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Total Accounts Receivable | 1,539,338 | 1,422,210 | | Less: Allowance for credit losses | (35,632) | (26,585) | | Total | 1,503,706 | 1,395,625 | | Within six months | 1,366,198 | 1,319,417 | | Six months to one year | 49,799 | 12,137 | | One year to two years | 48,687 | 25,404 | | Over two years | 74,654 | 65,252 | [Property and Equipment, Net](index=52&type=section&id=%E7%89%A9%E6%A5%AD%E5%8F%8A%E8%A8%AD%E5%82%99%E6%B7%A8%E9%A1%8D) As of June 30, 2025, ZTO Express's property and equipment, net, increased to RMB 34,861,771 thousand, primarily comprising buildings, machinery and equipment, and motor vehicles, with depreciation expense increasing during the reporting period Property and Equipment, Net, Composition (thousand RMB) | Category | December 31, 2024 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Buildings | 24,774,679 | 27,381,238 | | Machinery and equipment | 10,006,532 | 10,422,093 | | Motor vehicles | 5,544,713 | 5,521,588 | | Construction in progress | 4,649,302 | 3,792,710 | | Property and equipment, net | 33,915,366 | 34,861,771 | - For the six months ended June 30, 2025, depreciation expense was **RMB 1,635,503 thousand**, an increase from **RMB 1,473,049 thousand** in the same period last year[143](index=143&type=chunk) [Accounts Payable](index=53&type=section&id=%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, ZTO Express's total accounts payable was RMB 2,415,671 thousand, with the vast majority aged within six months, indicating strong short-term payment capability Accounts Payable Aging Analysis (thousand RMB) | Aging | December 31, 2024 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Within six months | 2,448,751 | 2,403,058 | | Six months to one year | 9,154 | 8,068 | | One year to two years | 2,840 | 2,530 | | Over two years | 2,650 | 2,015 | | Total | 2,463,395 | 2,415,671 | [Income Taxes](index=53&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85) In the first half of 2025, ZTO Express's income tax expense was RMB 1,107,105 thousand, with an effective tax rate of 21.79%, a decrease from the same period last year, primarily due to the impact of deferred income tax Income Tax Expense Composition (thousand RMB) | Category | 2024 (Unaudited) | 2025 (Unaudited) | | :--- | :--- | :--- | | Current income tax expense | 1,319,902 | 1,427,696 | | Deferred income tax | (88,586) | (320,591) | | Total | 1,231,316 | 1,107,105 | - For the six months ended June 30, 2025, the Group's effective tax rate was **21.79%**, a decrease from **23.35%** in the same period of 2024[147](index=147&type=chunk) [Share-based Compensation Expenses](index=54&type=section&id=%E8%82%A1%E6%AC%8A%E6%BF%80%E5%8B%B5%E8%B2%BB%E7%94%A8) ZTO Express granted share units, restricted share units, and share options to employees and directors through its employee shareholding platform and the 2024 share incentive plan, resulting in corresponding share-based compensation expenses - In the first half of 2025, share-based compensation expenses of **RMB 149,362 thousand** were recognized for ordinary share units granted under the employee shareholding platform[150](index=150&type=chunk) - Share-based compensation expenses of **RMB 66,127 thousand** were recognized for restricted share units granted under the 2024 share incentive plan[153](index=153&type=chunk) - The 2024 share incentive plan granted **916,200 share options** with an exercise price of **USD 21.88**, resulting in related share-based compensation expenses of **RMB 7,774 thousand**[154](index=154&type=chunk)[155](index=155&type=chunk) - As of June 30, 2025, unrecognized share-based compensation expenses related to unvested share options amounted to **RMB 12,773 thousand**[155](index=155&type=chunk) [Earnings Per Share](index=57&type=section&id=%E6%AF%8F%E8%82%A1%E6%94%B6%E7%9B%8A) In the first half of 2025, ZTO Express's basic and diluted earnings per share both decreased, with the dilutive effect of convertible senior notes included in the diluted EPS calculation, while share options were excluded due to their anti-dilutive effect Earnings Per Share Calculation (RMB) | Metric | 2024 (Unaudited) | 2025 (Unaudited) | | :--- | :--- | :--- | | Net income attributable to ordinary shareholders - Basic | 4,037,848 | 3,931,579 | | Net income attributable to ordinary shareholders - Diluted | 4,112,825 | 4,007,506 | | Weighted average ordinary shares outstanding - Basic | 805,806,731 | 799,123,030 | | Weighted average ordinary shares outstanding - Diluted | 838,836,131 | 833,360,830 | | Earnings per share - Basic | 5.01 | 4.92 | | Earnings per share - Diluted | 4.90 | 4.81 | - For the six months ended June 30, 2025, **886,248 share options** held by the Group were excluded from the diluted earnings per share calculation due to their anti-dilutive effect[157](index=157&type=chunk) [Related Party Transactions](index=58&type=section&id=%E9%97%9C%E8%81%AF%E4%BA%A4%E6%98%93) ZTO Express engaged in various transactions with multiple related parties, including transportation services, material purchases, rental income, and loans, resulting in accounts receivable from and payable to related parties during the reporting period H1 2025 Major Related Party Transactions (thousand RMB) | Transaction Category | 2024 (Unaudited) | 2025 (Unaudited) | | :--- | :--- | :--- | | Transportation revenue from ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries | 79,969 | 164,538 | | Transportation service fees paid to ZTO Supply Chain Management Co., Ltd. and its subsidiaries | 366,360 | 326,501 | | Purchase of materials from Shanghai Mingyu Barcode Technology Co., Ltd. | 161,415 | 182,059 | | Rental income from ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries | 39,948 | 35,707 | | Interest income from Zhongkuai (Tonglu) Future City Industrial Development Co., Ltd. | 10,928 | 8,058 | Accounts Payable to Related Parties (thousand RMB) | Related Party | December 31, 2024 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Shanghai Mingyu Barcode Technology Co., Ltd. | 37,277 | 33,670 | | ZTO Supply Chain Management Co., Ltd. and its subsidiaries | 118,874 | 71,964 | | Total | 202,766 | 131,294 | Accounts Receivable from Related Parties (thousand RMB) | Related Party | December 31, 2024 (Audited) | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries | 71,373 | 67,802 | | Zhongkuai (Tonglu) Future City Industrial Development Co., Ltd. (Non-current) | 421,667 | 366,917 | | Total (Current) | 168,160 | 85,585 | | Total (Non-current) | 421,667 | 366,917 | [Repurchase of Ordinary Shares and Dividends](index=62&type=section&id=%E6%99%AE%E9%80%9A%E8%82%A1%E7%9A%84%E5%9B%9E%E8%B3%BC%E8%88%87%E8%82%A1%E6%81%AF) The company continued its share repurchase program and repurchased some American Depositary Shares during the reporting period, with the Board approving an interim dividend for the first half of 2025, demonstrating its commitment to shareholder returns - As of June 30, 2025, the company had repurchased a total of **50,899,498 ADSs** under its share repurchase program at an average purchase price of **USD 24.13**[165](index=165&type=chunk) - The Board approved an interim dividend of **USD 0.30 per ordinary share** for the six months ended June 30, 2025, totaling **USD 239,926** (**RMB 1,718,732 thousand**)[166](index=166&type=chunk) [Commitments and Contingencies](index=63&type=section&id=%E6%89%BF%E8%AB%BE%E5%8F%8A%E6%88%96%E6%9C%89%E4%BA%8B%E9%A0%85) ZTO Express's capital commitments primarily involve the construction of office buildings, sorting centers, and warehouse facilities, totaling RMB 6,016,609 thousand as of June 30, 2025, and the company believes current pending legal or administrative proceedings will not have a material adverse effect on its business or financial condition - As of June 30, 2025, total capital commitments contracted but not reflected in the consolidated financial statements amounted to **RMB 6,016,609 thousand**[168](index=168&type=chunk) - The company believes that any current pending legal or administrative proceedings to which it is a party will not have a material adverse effect on its business or financial condition[169](index=169&type=chunk) [Segment Information](index=64&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) ZTO Express operates as a single operating and reporting segment, with the chief operating decision maker reviewing consolidated results for resource allocation and performance assessment, and the vast majority of revenue and long-term assets are derived from and located in China - The Group has only **one operating and reporting segment**, and the chief operating decision maker uses consolidated net income to measure segment profit or loss, allocate resources, and assess performance[170](index=170&type=chunk) - For the six months ended June 30, 2025, the vast majority of the Group's revenue was derived from China, and most of its long-term assets were also located in China[172](index=172&type=chunk) [Reconciliation Between U.S. GAAP and IFRS](index=65&type=section&id=%E7%BE%8E%E5%9C%8B%E5%85%AC%E8%AA%8D%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87%E5%8F%8A%E5%9C%8B%E9%9A%9B%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87%E4%B9%8B%E9%96%93%E7%9A%84%E8%AA%BF%E6%95%B4) This section details the differences in accounting treatment between U.S. GAAP and IFRS across various areas and their impact on financial statements, including investments measured at fair value, leases, convertible senior notes, equity method investments, deferred income taxes from acquired assets, call option transactions, and classification of cash and cash equivalents - Significant differences exist between **U.S. GAAP and IFRS** in accounting for investments measured at fair value, leases, convertible senior notes, equity method investments, deferred income taxes from acquired assets, call option transactions, and cash and cash equivalents[174](index=174&type=chunk)[177](index=177&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Under **IFRS**, equity securities investments that do not meet the criteria for fair value measurement through other comprehensive income are measured at fair value through profit or loss[181](index=181&type=chunk) - **IFRS** requires lessees to present amortization of right-of-use assets and interest expense on lease liabilities as separate items, differing from the straight-line recognition effect under U.S. GAAP[182](index=182&type=chunk) - Under **IFRS**, convertible senior notes are designated as financial liabilities measured at fair value through profit or loss due to embedded derivatives[182](index=182&type=chunk) - **IFRS** generally does not include wealth management products in cash equivalents, instead classifying them as short-term investments measured at fair value[186](index=186&type=chunk) Definitions [Terms and Abbreviations](index=71&type=section&id=%E8%A1%93%E8%AA%9E%E8%88%87%E7%B8%AE%E5%AF%AB) This section provides definitions for key terms and abbreviations used in the interim report, covering company structure, governance, financial, and legal concepts, to ensure readers have a clear and consistent understanding of the report content - Defines company-related terms such as "2024 Plan," "ADS," "Affiliate," "Articles of Association," "Associate," "Audit Committee," "Board," "BVI," "Corporate Governance Code," "China," "Class A Ordinary Share," "Class B Ordinary Share," "Company" or "ZTO"[188](index=188&type=chunk) - Explains governance and operation-related terms including "Remuneration Committee," "Consolidated Affiliated Entity," "Contractual Arrangements," "Director," "ESG," "ESG Committee," "Group" or "we," "Hong Kong," "HKEX," "Latest Practicable Date," "Listing Rules," "Model Code," "Nomination and Corporate Governance Committee," "NYSE"[189](index=189&type=chunk) - Clarifies financial and legal terms such as "Ordinary Share," "Primary Listing Conversion," "Reporting Period," "RMB," "SFO," "Share," "Shareholder," "Subsidiary," "Substantial Shareholder," "U.S.," "USD," "U.S. GAAP," "WVR," "WVR Beneficiary," "ZTO ES," and "%"[191](index=191&type=chunk)

Company Information [Board of Directors and Committees](index=2&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 details the composition of the Board of Directors, including executive and independent non-executive members, their committee roles, and recent changes - Mr. Zhong Shihui was appointed as an Executive Director on June 20, 2025, while Mr. Fang Guohong resigned as an Executive Director on May 16, 2025[4](index=4&type=chunk) - Mr. Xie Xiaohong resigned as an Independent Non-executive Director on July 9, 2025, consequently resigning from the Audit, Remuneration, and Nomination Committees[4](index=4&type=chunk) - Mr. Liu Shuren serves as the Chairman of the Audit Committee and Nomination Committee, and Ms. Chen Baolin serves as the Chairman of the Remuneration Committee[4](index=4&type=chunk) [Other Company Information](index=2&type=section&id=%E5%85%B6%E4%BB%96%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) This section provides essential company details, including the company secretary, auditor, registered office, and website - The Company Secretary is Mr. Lam Ka Shun, and the Auditor is Tianjian International CPA Limited[4](index=4&type=chunk) - The Company's registered office is in Bermuda, with its principal place of business in Hong Kong[5](index=5&type=chunk) - The Company's website is www.perfectech.hk[5](index=5&type=chunk) Condensed Consolidated Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) This section reports revenue, gross profit, expenses, and loss for the six months ended June 30, 2025, showing a significant reduction in loss compared to the prior year Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (HKD thousands) | Indicator | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 61,958 | 68,611 | | Cost of sales | (41,784) | (53,951) | | Gross profit | 20,174 | 14,660 | | Loss before tax | (4,622) | (19,264) | | Loss for the period | (4,717) | (19,436) | | Loss attributable to owners of the Company | (4,284) | (17,806) | | Basic and diluted loss per share (HK cents) | (1.31) | (5.45) | - Revenue decreased by **9.70% year-on-year**, but gross profit increased by **37.61%**[7](index=7&type=chunk) - Loss for the period significantly narrowed by **75.73%**, from HKD 19,436 thousands in 2024 to **HKD 4,717 thousands** in 2025[7](index=7&type=chunk) [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) This section presents the company's assets, liabilities, and equity as of June 30, 2025, indicating a decrease in total assets and total equity Condensed Consolidated Statement of Financial Position (HKD thousands) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Non-current assets | 25,214 | 26,207 | | Current assets | 55,744 | 56,291 | | Current liabilities | 31,506 | 28,056 | | Net current assets | 24,238 | 28,235 | | Net assets | 38,322 | 43,010 | | Equity attributable to owners of the Company | 30,321 | 34,543 | - Net current assets decreased from HKD 28,235 thousands as of December 31, 2024, to **HKD 24,238 thousands** as of June 30, 2025[10](index=10&type=chunk) - Total equity decreased from HKD 43,010 thousands as of December 31, 2024, to **HKD 38,322 thousands** as of June 30, 2025[11](index=11&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) This section details changes in equity components, including share capital, share premium, reserves, and accumulated losses, reflecting the period's loss impact Condensed Consolidated Statement of Changes in Equity (HKD thousands) | Indicator | June 30, 2025 (HKD thousands) | January 1, 2024 (HKD thousands) | | :--- | :--- | :--- | | Share capital | 32,692 | 32,692 | | Share premium | 118,895 | 118,895 | | Redemption reserve | 10,337 | 10,337 | | Exchange fluctuation reserve | (1,798) | (1,026) | | Accumulated losses | (129,805) | (98,501) | | Equity attributable to owners of the Company | 30,321 | 62,397 | | Non-controlling interests | 8,001 | 12,264 | | Total equity | 38,322 | 74,661 | - Equity attributable to owners of the Company decreased from HKD 34,543 thousands as of January 1, 2025, to **HKD 30,321 thousands** as of June 30, 2025, primarily due to the loss for the period[13](index=13&type=chunk) - Dividends paid to non-controlling interests were **HKD 197 thousands** in the first half of 2025, compared to HKD 1,489 thousands in the same period of 2024[13](index=13&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) This section reports cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, showing a net decrease in cash and cash equivalents Condensed Consolidated Statement of Cash Flows (HKD thousands) | Indicator | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,907) | (22,858) | | Net cash used in investing activities | (975) | (2,823) | | Net cash used in financing activities | (2,349) | (2,340) | | Net decrease in cash and cash equivalents | (5,231) | (28,021) | | Bank balances and cash (end of period) | 19,303 | 16,897 | - Net cash used in operating activities significantly narrowed from HKD 22,858 thousands in the same period of 2024 to **HKD 1,907 thousands** in the same period of 2025[14](index=14&type=chunk) - Bank balances and cash at the end of the period were **HKD 19,303 thousands**, a decrease from HKD 24,547 thousands as of January 1, 2024[14](index=14&type=chunk) Notes to the Condensed Consolidated Financial Statements [Basis of Preparation and Accounting Policies](index=9&type=section&id=%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) This section outlines the basis of preparation for the condensed consolidated financial statements and the adoption of new accounting standards - The financial statements are prepared in accordance with Appendix 16 of the Hong Kong Listing Rules and Hong Kong Accounting Standard 34, and have been reviewed by the Audit Committee[16](index=16&type=chunk)[17](index=17&type=chunk) - The adoption of amendments to Hong Kong Financial Reporting Standards (e.g., HKAS 21 amendments) had no significant impact on the financial performance and position for the current or prior accounting periods[19](index=19&type=chunk) - The Group has not early applied new or amended Hong Kong Financial Reporting Standards that have been issued but are not yet effective, and is assessing their potential impact[20](index=20&type=chunk) [Revenue and Segment Reporting](index=10&type=section&id=%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%88%86%E9%A1%9E%E5%A0%B1%E5%91%8A) This section details the group's revenue composition, primarily from toy product sales, and provides segment and geographical breakdowns Revenue by Source (HKD thousands) | Revenue Source | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Toy products | 61,958 | 68,611 | | Novelty items and ornaments | — | — | - The Group's revenue is entirely derived from toy product sales, with no revenue from novelty items and ornaments[22](index=22&type=chunk)[23](index=23&type=chunk) Segment Results by Business Classification (HKD thousands) | Business Classification | June 30, 2025 Segment Results (HKD thousands) | June 30, 2024 Segment Results (HKD thousands) | | :--- | :--- | :--- | | Novelty items and ornaments | (837) | (2,043) | | Toy products | (992) | (13,759) | - Loss from the toy products segment significantly narrowed from HKD 13,759 thousands in the same period of 2024 to **HKD 992 thousands** in the same period of 2025[24](index=24&type=chunk)[26](index=26&type=chunk) Revenue by Market Region (HKD thousands) | Market Region | June 30, 2025 Revenue (HKD thousands) | June 30, 2024 Revenue (HKD thousands) | | :--- | :--- | :--- | | Hong Kong | 1,156 | 11,551 | | Europe | 1,483 | 4,645 | | United States | 6,455 | 3,045 | | Asia (excluding Hong Kong) | 52,862 | 49,367 | - Asia (excluding Hong Kong) is the primary revenue source, with a **7.08% year-on-year increase**, while revenue from Hong Kong and Europe markets significantly decreased[27](index=27&type=chunk) [Other Income, Gains and Losses, Net](index=15&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E3%80%81%E6%94%B6%E7%9B%8A%E5%8F%8A%E8%99%A7%E6%90%8D%E6%B7%A8%E9%A1%8D) This section itemizes the net other income, gains, and losses for the period, showing a year-on-year decrease in the total amount Other Income, Gains and Losses, Net (HKD thousands) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Interest income from financial assets | 30 | 130 | | Mould income | 416 | 422 | | Laboratory testing income | 240 | 184 | | Gain (loss) on disposal of financial assets at fair value through profit or loss | 36 | (11) | | Net exchange gain | 85 | 565 | | **Total** | **1,142** | **1,739** | - Total other income, gains, and losses, net, decreased from HKD 1,739 thousands in the same period of 2024 to **HKD 1,142 thousands** in the same period of 2025[28](index=28&type=chunk) - Net exchange gain significantly decreased from HKD 565 thousands in the same period of 2024 to **HKD 85 thousands** in the same period of 2025[28](index=28&type=chunk) [Loss Before Tax and Income Tax Expense](index=15&type=section&id=%E9%99%A4%E7%A8%85%E5%89%8D%E8%99%A7%E6%90%8D%E5%8F%8A%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) This section details the components of loss before tax, including depreciation expenses, and the income tax expense primarily from China Depreciation Expenses (HKD thousands) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 1,642 | 2,091 | | Depreciation of right-of-use assets | 780 | 784 | | **Total Depreciation** | **2,422** | **2,875** | - Total depreciation expense decreased year-on-year from HKD 2,875 thousands in the same period of 2024 to **HKD 2,422 thousands** in the same period of 2025[29](index=29&type=chunk) - Income tax expense primarily consists of China corporate income tax, amounting to **HKD 95 thousands** in the first half of 2025, compared to HKD 172 thousands in the same period of 2024[30](index=30&type=chunk) [Dividends and Loss Per Share](index=16&type=section&id=%E8%82%A1%E6%81%AF%E5%8F%8A%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) This section reports the board's decision not to declare an interim dividend and discloses the basic and diluted loss per share - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[31](index=31&type=chunk) Loss Per Share (HK cents) | Indicator | June 30, 2025 (HK cents) | June 30, 2024 (HK cents) | | :--- | :--- | :--- | | Basic loss per share | (1.31) | (5.45) | | Diluted loss per share | (1.31) | (5.45) | - Both basic and diluted loss per share significantly narrowed from 5.45 HK cents in the same period of 2024 to **1.31 HK cents** in the same period of 2025[32](index=32&type=chunk) [Details of Assets and Liabilities](index=16&type=section&id=%E8%B3%87%E7%94%A2%E8%88%87%E8%B2%A0%E5%82%B5%E8%A9%B3%E6%83%85) This section provides detailed changes and aging analyses for property, plant and equipment, trade and other receivables, trade and other payables, and amounts due to a director of a subsidiary [Property, Plant and Equipment](index=16&type=section&id=%E7%89%A9%E6%A5%AD%E3%80%81%E6%A9%9F%E5%99%A8%E8%A8%AD%E5%82%99%E5%8F%8A%E5%84%80%E5%99%A8) This subsection details the capital expenditure on property, plant, and equipment during the period - Purchases of property, plant and equipment amounted to approximately **HKD 1,280 thousands** in the first half of 2025, higher than HKD 850 thousands in the same period of 2024[33](index=33&type=chunk) [Trade and Other Receivables](index=17&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E8%B3%87%E6%AC%BE) This subsection provides an aging analysis and changes in trade and other receivables Trade Receivables Aging Analysis (HKD thousands) | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0–60 days | 11,098 | 8,695 | | 61–90 days | — | 463 | | Over 120 days | 16 | 24 | | **Total Trade Receivables** | **11,114** | **9,182** | - Trade receivables increased from HKD 9,182 thousands as of December 31, 2024, to **HKD 11,114 thousands** as of June 30, 2025[34](index=34&type=chunk) - The average credit period granted to trade customers is **60 days**[34](index=34&type=chunk) [Trade and Other Payables](index=17&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E8%B3%87%E6%AC%BE) This subsection presents an aging analysis and changes in trade and other payables Trade Payables Aging Analysis (HKD thousands) | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0–60 days | 6,648 | 5,304 | | 61–90 days | 369 | 214 | | 91–120 days | 24 | 176 | | Over 120 days | 680 | 272 | | **Total Trade Payables** | **7,721** | **5,966** | - Trade payables increased from HKD 5,966 thousands as of December 31, 2024, to **HKD 7,721 thousands** as of June 30, 2025[35](index=35&type=chunk) [Amount Due to a Director of a Subsidiary](index=18&type=section&id=%E6%87%89%E4%BB%98%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E4%B8%80%E5%90%8D%E8%91%A3%E4%BA%8B%E4%B9%8B%E6%AC%BE%E9%A0%85) This subsection describes the terms of the amount payable to a director of a subsidiary - The amount due to Ms. Liu Gui'e bears interest at an annual rate of **12%**, is unsecured, and repayable on demand[36](index=36&type=chunk) [Related Party Transactions](index=18&type=section&id=%E9%97%9C%E9%80%A3%E4%BA%BA%E5%A3%AB%E4%BA%A4%E6%98%93) This section reports related party transactions for the period, primarily interest expenses and key management personnel compensation Related Party Transactions (HKD thousands) | Transaction Type | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Interest expense payable to Ms. Liu Gui'e | 333 | — | Key Management Personnel Compensation (HKD thousands) | Key Management Personnel Compensation | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Short-term benefits | 2,640 | 3,918 | | Post-employment benefits | 18 | 18 | | **Total** | **2,658** | **3,936** | - Total key management personnel compensation decreased year-on-year from HKD 3,936 thousands in the same period of 2024 to **HKD 2,658 thousands** in the same period of 2025[39](index=39&type=chunk) Management Discussion and Analysis [Interim Dividend](index=19&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board has decided not to declare an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[41](index=41&type=chunk) [Business and Financial Review](index=19&type=section&id=%E6%A5%AD%E5%8B%99%E5%8F%8A%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) Despite challenging operating conditions, the Group's revenue decreased by only 10% year-on-year, and the loss attributable to owners significantly narrowed - In the first half of 2025, the Group's revenue decreased by **10% year-on-year** to approximately HKD 61,958 thousands[42](index=42&type=chunk) - Loss attributable to owners of the Company for the period was approximately **HKD 4,284 thousands**, a significant narrowing from HKD 17,806 thousands in the same period of 2024[42](index=42&type=chunk) - Core business loss narrowed from HKD 15,802 thousands in the same period of 2024 to **HKD 1,829 thousands** in the same period of 2025[42](index=42&type=chunk) [Overall Performance](index=19&type=section&id=%E7%B8%BD%E9%AB%94%E8%A1%A8%E7%8F%BE) This subsection summarizes the Group's overall business and financial performance under challenging operating conditions - The operating environment is challenging due to trade protectionism[42](index=42&type=chunk) - The decrease in revenue was primarily due to a decline in toy product sales[42](index=42&type=chunk) [Toy Products](index=19&type=section&id=%E7%8E%A9%E5%85%B7%E7%94%A2%E5%93%81) This subsection reviews the performance of the toy products segment, noting a decrease in revenue but a significant reduction in loss - Revenue from the toy products segment decreased by approximately **10% year-on-year** to HKD 61,958 thousands, accounting for **100% of the Group's total revenue**[43](index=43&type=chunk) - The segment recorded a loss of approximately **HKD 992 thousands**, a significant reduction from HKD 13,759 thousands in the same period of 2024, mainly due to lower sales in the Hong Kong market[43](index=43&type=chunk) [Novelty Items and Ornaments](index=19&type=section&id=%E5%A5%87%E8%B6%A3%E7%B2%BE%E5%93%81%E5%8F%8A%E8%A3%9D%E9%A3%BE%E5%93%81) This subsection reviews the performance of the novelty items and ornaments segment, which recorded no revenue but a narrowed loss - The novelty items and ornaments segment generated no revenue and recorded a loss of approximately **HKD 837 thousands**, primarily due to staff costs and factory overheads[44](index=44&type=chunk) - The segment's loss narrowed compared to HKD 2,043 thousands in the same period of 2024[44](index=44&type=chunk) [Distribution Costs and Administrative Expenses](index=20&type=section&id=%E5%88%86%E9%8A%B7%E6%88%90%E6%9C%AC%E5%8F%8A%E8%A1%8C%E6%94%BF%E8%B2%BB%E7%94%A8) This subsection analyzes changes in distribution costs and administrative expenses, highlighting the reasons for their fluctuations - Distribution costs increased by approximately **4% year-on-year** to HKD 998 thousands, mainly due to higher transportation costs[45](index=45&type=chunk) - Administrative expenses decreased by approximately **30% year-on-year** to HKD 24,164 thousands, primarily due to reduced staff costs and directors' remuneration resulting from a decrease in the average monthly salary of full-time employees[45](index=45&type=chunk) [Finance Costs](index=20&type=section&id=%E8%B2%A1%E5%8B%99%E8%B2%BB%E7%94%A8) This subsection details the increase in finance costs and the contributing factors - Finance costs increased by approximately **104% year-on-year** to HKD 776 thousands[46](index=46&type=chunk) - The increase was due to higher interest on lease liabilities, amounts due to a director of a subsidiary, and other borrowings[46](index=46&type=chunk) [Liquidity and Financial Resources](index=20&type=section&id=%E8%B3%87%E9%87%91%E6%B5%81%E5%8B%95%E6%80%A7%E5%8F%8A%E8%B2%A1%E6%94%BF%E8%B3%87%E6%BA%90) This section reports the Group's debt-to-equity ratio, cash balances, and confirms sufficient financial resources Liquidity and Financial Resources (HKD thousands) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Amount due to a director of a subsidiary | 5,686 | 6,443 | | Other borrowings | 3,450 | 1,000 | | Bank balances and cash | 19,303 | 24,547 | - The debt-to-equity ratio increased from **22%** as of December 31, 2024, to **30%** as of June 30, 2025[47](index=47&type=chunk) - As of June 30, 2025, net current assets were **HKD 24,238 thousands**, indicating the Group has sufficient financial resources[47](index=47&type=chunk) [Net Asset Value and Pledges](index=21&type=section&id=%E8%B3%87%E7%94%A2%E6%B7%A8%E5%80%BC%E5%8F%8A%E6%8A%B5%E6%8A%BC) This section discloses a decrease in net asset value per share and confirms no assets were pledged at the reporting date Net Asset Value Per Share (HKD) | Indicator | June 30, 2025 (HKD) | December 31, 2024 (HKD) | | :--- | :--- | :--- | | Net asset value per share | 0.09 | 0.11 | - As of June 30, 2025, the Group had not pledged any assets[49](index=49&type=chunk) [Contingent Liabilities](index=21&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) The Group's contingent liabilities remained unchanged since December 31, 2024 - The Group's contingent liabilities remained unchanged since December 31, 2024[50](index=50&type=chunk) [Significant Investments](index=21&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) This section details the Group's financial assets at fair value through profit or loss, including equity and debt securities, and related gains Financial Assets at Fair Value Through Profit or Loss (HKD thousands) | Financial Asset Type | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Hong Kong listed equity securities | 556 | 1,747 | | Overseas listed debt securities | 63 | 90 | | Unlisted equity-linked notes | 1,807 | 585 | | **Total** | **2,426** | **2,422** | - As of June 30, 2025, the total financial assets at fair value through profit or loss amounted to **HKD 2,426 thousands**[51](index=51&type=chunk) - Gain on disposal of financial assets at fair value through profit or loss was **HKD 36 thousands** (2024: loss of HKD 11 thousands)[51](index=51&type=chunk) [Employees and Remuneration Policy](index=21&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) This section provides information on the Group's employee headcount and its remuneration policy, emphasizing performance-based compensation - As of June 30, 2025, the Group employed approximately **620 full-time employees** (December 31, 2024: 610 employees)[52](index=52&type=chunk) - The remuneration policy is primarily determined by current industry practices and individual employee performance, and is reviewed regularly[52](index=52&type=chunk) [Foreign Exchange Risk](index=22&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) This section discusses the Group's exposure to foreign exchange risk, primarily involving RMB, HKD, and USD, and its current hedging strategy - Purchases are mainly settled in RMB and HKD, while sales are primarily settled in RMB and USD[53](index=53&type=chunk) - No significant risk is anticipated due to the HKD peg to the USD, and RMB trends will be closely monitored[53](index=53&type=chunk) - As of June 30, 2025, the Group did not use any financial instruments to hedge foreign currency risk[53](index=53&type=chunk) [Future Plans for Significant Investments](index=22&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The company has established a wholly-owned subsidiary to launch AI large model-centric tech services and plans to integrate AI into its existing core business - China's government work report first proposed the "AI+" initiative, stimulating demand for computing power[54](index=54&type=chunk) - The Company established a wholly-owned subsidiary, Perfectech Intelligence (Hong Kong) Limited, in June 2025 to launch AI large model-centric technology services[54](index=54&type=chunk) - Perfectech Intelligence (Hong Kong) Limited will focus on foundational model building and enterprise application exploration, including database services, computing power services, multi-semantic understanding, multi-modal content generation, and intelligent interaction[54](index=54&type=chunk) - The Company is considering applying large model technology to product design, marketing content generation, and consumer interaction in its existing core business to enhance operational efficiency and user experience[55](index=55&type=chunk) - Management is committed to continuously increasing investment in technology services and adopting a diversified business development strategy under the "Strengthen Core Business + Layout Future" strategy[55](index=55&type=chunk) [Outlook](index=23&type=section&id=%E5%89%8D%E6%99%AF) The company will launch AI tech services, prudently evaluate investments, optimize existing products, and control costs to navigate high interest rates and tariffs - The Company will launch AI large model-centric technology services through Perfectech Intelligence (Hong Kong) Limited, seeking added value and new revenue streams[56](index=56&type=chunk) - High interest rates and tariffs are expected to continue posing uncertainties and challenges to the operating environment in the second half of 2025[56](index=56&type=chunk) - The Group will continue to optimize its existing product portfolio, improve production and operational efficiency, and implement strict cost control measures[56](index=56&type=chunk) Other Information [Directors' and Chief Executive's Interests in Shares and Share Options](index=24&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%E6%96%BC%E8%82%A1%E4%BB%BD%E5%8F%8A%E8%B3%BC%E8%82%A1%E6%AC%8A%E4%B9%8B%E6%AC%8A%E7%9B%8A) As of June 30, 2025, no directors or chief executives held disclosable interests in the company's shares, related shares, or debentures - As of June 30, 2025, no directors or chief executives held disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or its associated corporations[57](index=57&type=chunk) [Major Shareholders](index=24&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1) This section lists major shareholders holding 5% or more of the company's shares as of June 30, 2025, and their respective holdings Major Shareholders as of June 30, 2025 | Shareholder | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhong Shihui | Interest of controlled corporation | 81,730,000 | 25.00% | | Xiao Qing | Spouse's interest | 81,730,000 | 25.00% | | Hong Kong Zhonglai Industrial Co., Limited | Beneficial owner | 81,730,000 | 25.00% | | Ms. Chen Yuyan | Interest of controlled corporation | 59,867,081 | 18.31% | | One Two Three Technology Limited | Beneficial owner | 59,867,081 | 18.31% | | Hou Hanping* | Beneficial owner | 18,757,200 | 5.74% | | Yan Guoliang* | Beneficial owner | 18,528,000 | 5.67% | - Mr. Zhong Shihui and his spouse, Ms. Xiao Qing, hold **25.00%** of the shares through Hong Kong Zhonglai Industrial Co., Limited[58](index=58&type=chunk)[62](index=62&type=chunk) - Ms. Chen Yuyan holds **18.31%** of the shares through One Two Three Technology Limited[58](index=58&type=chunk)[62](index=62&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=25&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) For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[59](index=59&type=chunk) [Corporate Governance](index=25&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) This section reports on the company's compliance with corporate governance codes, including deviations from certain listing rules and corrective actions - The Company has adopted the Corporate Governance Code and complied with its provisions during the period, except for the non-separation of the roles of Chairman and Chief Executive[60](index=60&type=chunk)[61](index=61&type=chunk) - The Board is actively seeking suitable candidates for the roles of Chairman and Chief Executive, with responsibilities jointly undertaken by directors and the company secretary in the interim[63](index=63&type=chunk) [Compliance with Corporate Governance Code](index=25&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%88%99) This subsection details the company's adherence to the Corporate Governance Code, noting a deviation regarding the separation of Chairman and CEO roles - The Company complied with the code provisions, but deviated from code provision C.2.1, where the roles of Chairman and Chief Executive are not separated[61](index=61&type=chunk) - The responsibilities of the Chairman are jointly undertaken by all directors and the company secretary, while the responsibilities of the Chief Executive are jointly undertaken by all executive directors and senior management[63](index=63&type=chunk) [Non-Compliance with Listing Rules](index=26&type=section&id=%E4%B8%8D%E9%81%B5%E5%AE%88%E4%B8%8A%E5%B8%82%E8%A6%8F%E5%89%87) This subsection outlines specific instances of non-compliance with Listing Rules, particularly concerning the number of independent non-executive directors and audit committee members - Following Mr. Xie Xiaohong's resignation as an Independent Non-executive Director, the Board does not comply with Listing Rule 3.10(1) (at least three independent non-executive directors) and Rule 3.21 (at least three members on the Audit Committee)[64](index=64&type=chunk) - The Company is making its best efforts to identify suitable candidates to comply with the Listing Rules within three months from July 9, 2025[65](index=65&type=chunk) [Standard Code for Securities Transactions by Directors](index=27&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E4%B9%8B%E6%A8%99%E6%BA%96%E5%AE%88%E5%88%99) This subsection confirms the adoption and compliance with a code of conduct for directors' securities transactions - The Board has adopted a code of conduct no less exacting than the Standard Code set out in Appendix C3 of the Listing Rules[66](index=66&type=chunk) - All Directors confirmed compliance with the Standard Code and the Company's code of conduct for the six months ended June 30, 2025[66](index=66&type=chunk) [Audit Committee and Board Members](index=27&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%91%A1%E6%9C%83%E5%8F%8A%E8%91%A3%E4%BA%8B%E6%9C%83%E6%88%90%E5%93%A1) This subsection details the composition of the Audit Committee and the Board of Directors as of the reporting date - The Audit Committee comprises two Independent Non-executive Directors (Ms. Chen Baolin and Mr. Liu Shuren, with Mr. Liu Shuren as Chairman) and has reviewed the interim results[67](index=67&type=chunk) - As of the reporting date, the Board of Directors includes three Executive Directors (Mr. Li Shaohua, Mr. Pan Weiye, Mr. Zhong Shihui) and two Independent Non-executive Directors (Mr. Liu Shuren, Ms. Chen Baolin)[68](index=68&type=chunk)

Corporate Information [Directors, Supervisors, and Joint Company Secretaries](index=3&type=section&id=DIRECTORS) This section outlines the composition of the Board of Directors, Supervisory Board, and joint company secretaries of Foshan Haitian Flavouring & Food Company Ltd - Executive Directors include Ms. Cheng Xue (Chairperson), Mr. Guan Jianghua (President), Mr. Huang Wenbiao, Mr. Wen Zhizhou, Mr. Liao Changhui, and Mr. Dai Wen[5](index=5&type=chunk) - Independent Non-Executive Directors include Mr. Zhang Kechun, Mr. Qu Wenzhou, and Mr. Ding Bangqing[6](index=6&type=chunk) - Supervisors include Ms. Chen Min, Mr. Huang Shuliang, and Mr. He Tao[6](index=6&type=chunk) [Committee Composition](index=3&type=section&id=AUDIT%20COMMITTEE) This section details the membership of the company's Audit, Remuneration and Assessment, Nomination, and Strategy and Sustainable Development Committees - The Audit Committee is chaired by Mr. Qu Wenzhou, with members including Mr. Zhang Kechun and Mr. Ding Bangqing[7](index=7&type=chunk) - The Remuneration and Assessment Committee is chaired by Mr. Qu Wenzhou, with members including Mr. Zhang Kechun, Mr. Ding Bangqing, Ms. Cheng Xue, and Mr. Guan Jianghua[8](index=8&type=chunk)[9](index=9&type=chunk) - The Nomination Committee is chaired by Mr. Zhang Kechun, with members including Mr. Qu Wenzhou, Mr. Ding Bangqing, Ms. Cheng Xue, and Mr. Dai Wen[8](index=8&type=chunk) - The Strategy and Sustainable Development Committee is chaired by Ms. Cheng Xue, with members including Mr. Guan Jianghua, Mr. Huang Wenbiao, Mr. Wen Zhizhou, and Mr. Liao Changhui[8](index=8&type=chunk) [Company Details](index=4&type=section&id=H%20SHARE%20REGISTRAR) This section provides key company information including H-share registrar, headquarters, Hong Kong principal place of business, banks, legal advisors, auditors, website, and stock codes - The H-share registrar is Tricor Investor Services Limited, located at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong[8](index=8&type=chunk)[9](index=9&type=chunk) - The China headquarters and registered office are located at No. 16 Wensha Road, Foshan City, Guangdong Province, China[8](index=8&type=chunk)[9](index=9&type=chunk) - The auditor is KPMG[14](index=14&type=chunk) - The company website is https://www.haitian-food.com, with stock codes **03288.HK** (H-shares) and **603288.SH** (A-shares)[14](index=14&type=chunk) Management Discussion and Analysis [Macro and Industry Environment](index=7&type=section&id=MACRO%20AND%20INDUSTRY%20ENVIRONMENT) The essential condiment industry, with high entry barriers, faces challenges from diverse consumer demands, technological innovation, and intense competition - The condiment industry is characterized by high consumption frequency, strong rigid demand, high user stickiness, and relatively high entry barriers[15](index=15&type=chunk)[17](index=17&type=chunk) - The industry faces challenges such as technological innovation and product innovation, with consumers increasingly seeking diversified products and services that offer extreme value for money[16](index=16&type=chunk)[18](index=18&type=chunk) - Industry competition is intense and fragmented, but leading enterprises are expected to expand their advantages through technology, production capacity, capital, and efficiency barriers, promoting industry consolidation[20](index=20&type=chunk)[23](index=23&type=chunk) - Consumer touchpoints are fragmented, and omnichannel delivery models are diverse, requiring enterprises to accelerate the restructuring of supply and sales systems and enhance digital marketing capabilities[22](index=22&type=chunk)[24](index=24&type=chunk) [Business Review](index=9&type=section&id=BUSINESS%20REVIEW) The Group achieved steady growth in H1 2025, with increased revenue and net profit, advancing its globalization strategy through Hong Kong listing - The Group adheres to strengthening its foundation, optimizing transformation with a user-centric approach, and advancing its globalization strategy through its Hong Kong listing[25](index=25&type=chunk)[28](index=28&type=chunk) - The Group deeply cultivates the Chinese market, creating high-quality and value-for-money products and services, accelerating channel penetration, while steadily promoting its internationalization strategy[26](index=26&type=chunk)[28](index=28&type=chunk) - The company focuses on enhancing systemic comprehensive competitiveness, strengthening extreme supply chain development, and advocating a mutually beneficial cooperative ecosystem[27](index=27&type=chunk)[28](index=28&type=chunk) [Discussion and Analysis on Operations](index=9&type=section&id=1.%20Discussion%20and%20Analysis%20on%20Operations) In H1 2025, the Group achieved robust growth in operating revenue, condiment business revenue, and net profit attributable to shareholders 2025 H1 Operating Performance | Indicator | 2025 H1 (RMB billion) | YoY Growth Rate (%) | | :--- | :--- | :--- | | Operating Revenue | 15.23 | 7.6 | | Condiment Business Revenue | 14.56 | 10.4 | | Net Profit Attributable to Listed Company Shareholders | 3.91 | 13.3 | [Analysis of Core Competitiveness](index=10&type=section&id=2.%20Analysis%20of%20Core%20Competitiveness%20during%20the%20Reporting%20Period) The Group's core strengths lie in leading fermentation technology, optimized supply chain, extensive distribution, diverse product matrix, and sustainable development initiatives - The company has decades of experience in the fermentation and brewing industry, continuously achieving breakthroughs in core fermentation technology, key brewing equipment, nutrition, raw materials, and formulations, forming high technological barriers[30](index=30&type=chunk)[31](index=31&type=chunk) - Haitian Gaoming Factory was selected for the World Economic Forum's "Lighthouse Factory" list in January 2025, demonstrating its scale advantage and technology-driven extreme efficiency[39](index=39&type=chunk)[40](index=40&type=chunk) - The company continuously optimizes its traditional distribution network, strengthens coverage in towns and villages, and builds a full-chain digital ecosystem through digital marketing tools to enhance market responsiveness[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - The company boasts a rich product matrix, with classic best-selling products in core categories like soy sauce, oyster sauce, and seasoning sauces, while accelerating the development of extended categories such as cooking wine, vinegar, and compound seasonings[46](index=46&type=chunk)[47](index=47&type=chunk) - The company adheres to steady operations and high-quality development, deploying multi-base production capacity, building smart industrial parks, and incorporating green and low-carbon initiatives into performance incentives to promote sustainable supply chain development[51](index=51&type=chunk)[54](index=54&type=chunk) [Core Products of the Group](index=16&type=section&id=3.%20Core%20Products%20of%20the%20Group) The Group, a leading Chinese condiment enterprise, offers a wide product range including soy sauce, oyster sauce, and seasonings, maintaining top market shares - Based on 2024 sales volume, the company has been China's largest condiment enterprise for **28 consecutive years**, with soy sauce and oyster sauce sales ranking first in the Chinese market for many years, and seasoning sauces, vinegar, and cooking wine also among the top in the Chinese market[55](index=55&type=chunk) 2025 H1 Revenue by Product Category | Product Category | 2025 H1 Revenue (RMB million) | Share of Total Revenue (%) | 2024 H1 Revenue (RMB million) | Share of Total Revenue (%) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Soy Sauce Products | 7,927.9 | 52.1 | 7,263.9 | 51.3 | 664.0 | 9.1 | | Oyster Sauce Products | 2,502.3 | 16.4 | 2,322.5 | 16.4 | 179.8 | 7.7 | | Seasoning Sauce Products | 1,626.0 | 10.7 | 1,451.6 | 10.3 | 174.4 | 12.0 | | Specialty Condiments and Others | 2,505.5 | 16.5 | 2,146.3 | 15.2 | 359.2 | 16.7 | | Subtotal | 14,561.7 | 95.7 | 13,184.3 | 93.2 | 1,377.4 | 10.4 | | Other | 668.2 | 4.3 | 971.6 | 6.8 | -303.4 | -31.2 | | **Total** | **15,229.9** | **100.0** | **14,155.9** | **100.0** | **1,074.0** | **7.6** | - Soy sauce product revenue increased by **9.1%**, primarily driven by growth in healthy series products (organic, light soy sauce) and increased sales from digital promotion at the retail level[60](index=60&type=chunk)[61](index=61&type=chunk)[89](index=89&type=chunk) - Oyster sauce product revenue increased by **7.7%**, mainly due to growth in healthy series products (organic, light oyster sauce), product upgrades, and increased channel penetration[66](index=66&type=chunk)[67](index=67&type=chunk)[89](index=89&type=chunk) - Seasoning sauce product revenue increased by **12.0%**, primarily due to the introduction of specialty flavored products to meet regional market demands[69](index=69&type=chunk)[70](index=70&type=chunk)[89](index=89&type=chunk) - Specialty condiments and other revenue increased by **16.7%**, mainly due to the company launching new products such as compound sauces and seasoning liquids based on user needs[73](index=73&type=chunk)[75](index=75&type=chunk)[89](index=89&type=chunk) [Financial Review](index=24&type=section&id=FINANCIAL%20REVIEW) The Group achieved robust financial growth in H1 2025, with improved profitability, a healthy balance sheet, enhanced liquidity, and a reduced debt-to-capital ratio 2025 H1 Key Financial Indicators | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 15,229.9 | 14,155.9 | 7.6 | | Cost of Sales | 9,250.4 | 9,051.1 | 2.2 | | Gross Profit | 5,979.5 | 5,104.8 | 17.1 | | Gross Profit Margin | 39.3% | 36.1% | +3.2 percentage points | | Profit for the Period | 3,921.8 | 3,465.2 | 13.2 | | Net Profit Margin | 25.8% | 24.5% | +1.3 percentage points | - Gross profit margin improved primarily due to a decrease in market prices for some raw materials and increased production efficiency[91](index=91&type=chunk)[95](index=95&type=chunk) - Other revenue decreased by **8.8%** year-on-year, mainly due to lower interest income resulting from decreased interest rates[92](index=92&type=chunk)[96](index=96&type=chunk) - Selling and marketing expenses increased by **14.4%** year-on-year, primarily due to increased employee benefits expenses from a higher number of sales personnel and increased advertising fees[94](index=94&type=chunk)[98](index=98&type=chunk) - Administrative expenses increased by **19.6%** year-on-year, mainly due to increased employee benefits expenses from a higher number of administrative personnel[99](index=99&type=chunk)[104](index=104&type=chunk) - Research and development costs increased by **8.2%** year-on-year, primarily due to increased raw materials and consumables used in R&D processes[100](index=100&type=chunk)[105](index=105&type=chunk) - Inventories decreased by **31.3%** compared to the end of 2024, mainly due to increased inventory reserves at the end of the previous year to meet distributor stocking demand[114](index=114&type=chunk)[119](index=119&type=chunk) - Trade receivables increased by **14.3%** compared to the end of 2024, primarily due to increased product sales to a small number of customers provided with credit terms[120](index=120&type=chunk)[125](index=125&type=chunk) - Trade and bills payable increased by **66.6%** compared to the end of 2024, mainly due to an increase in bills payable[121](index=121&type=chunk)[126](index=126&type=chunk) - Net cash generated from operating activities was **RMB 1,504.9 million**, an increase from **RMB 1,126.8 million** in the same period last year[122](index=122&type=chunk)[127](index=127&type=chunk) - Total cash and bank balances were **RMB 29,998.7 million**, an increase of **35.7%** from the end of 2024, primarily benefiting from H-share issuance financing and operating cash flow[123](index=123&type=chunk)[127](index=127&type=chunk)[138](index=138&type=chunk) - Interest-bearing bank loans and other borrowings decreased by **50.2%** compared to the end of 2024, mainly due to repayment of bank loans during the reporting period[124](index=124&type=chunk)[127](index=127&type=chunk) - The debt-to-capital ratio was **15.2%**, a decrease of **7.9 percentage points** from **23.1%** at the end of 2024, primarily due to increased monetary assets from H-share issuance financing and operating cash flow[138](index=138&type=chunk) [Employees and Remuneration](index=32&type=section&id=Employees%20and%20remuneration) The Group maintained a substantial workforce, supported by competitive compensation, talent development programs, and employee stock ownership plans - As of June 30, 2025, the Group had a total of **9,006** full-time employees[149](index=149&type=chunk) - During the reporting period, the Group's employee costs were **RMB 1,007.2 million** (including salaries, bonuses, allowances, subsidies, welfare expenses, and directors' remuneration)[149](index=149&type=chunk) - The company adheres to the philosophy that "talent is the driving force of development," continuously upgrading its talent cultivation model and providing customized talent development products[151](index=151&type=chunk) - The company implements a "high salary, high efficiency, high responsibility" compensation philosophy and promotes employee and Group co-development through incentive programs such as employee stock ownership plans[152](index=152&type=chunk)[153](index=153&type=chunk) [Risk Factors](index=33&type=section&id=RISK%20FACTORS) The Group faces risks including food safety, raw material price volatility, industry downturns, market competition, talent shortages, and foreign exchange fluctuations - Food safety is paramount for food processing enterprises; the company consistently enforces strict quality control and focuses on technological breakthroughs for quality improvement[154](index=154&type=chunk)[157](index=157&type=chunk) - Raw material price fluctuations may impact gross profit margins, so the company's procurement team develops purchasing plans in advance based on sales forecasts and expected price volatility[155](index=155&type=chunk)[158](index=158&type=chunk) - While the condiment industry is resilient, it is susceptible to the catering industry's prosperity, and growth in mass consumer goods may face downward risks, potentially driving industry consolidation[156](index=156&type=chunk)[159](index=159&type=chunk) - Intensified market competition may lead to homogenization and disorderly competition risks; the company is committed to providing high-quality and value-for-money products, enhancing operational capabilities and efficiency[161](index=161&type=chunk)[164](index=164&type=chunk) - As business expands, the company may face risks of insufficient or loss of R&D talent[162](index=162&type=chunk)[165](index=165&type=chunk) - Foreign exchange risk primarily arises from USD, EUR, HKD, and RMB, with the company monitoring exchange rate fluctuations and using financial instruments for hedging when necessary[163](index=163&type=chunk)[166](index=166&type=chunk) [Significant Events After the Reporting Period](index=35&type=section&id=SIGNIFICANT%20EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) Post-reporting period, the company issued 12,192,700 additional H-shares on July 21, 2025, through an over-allotment option, raising approximately RMB 398 million - On July 21, 2025, the company issued **12,192,700** H-shares through an over-allotment option, with an offering price of **HKD 36.30** per share[167](index=167&type=chunk)[170](index=170&type=chunk) - The net proceeds from the exercise of the over-allotment option amounted to approximately **RMB 398 million**[167](index=167&type=chunk)[170](index=170&type=chunk) [Outlook](index=35&type=section&id=OUTLOOK) The company will uphold its "quality-first" principle, focusing on innovation and product upgrades, leveraging domestic demand, and expanding global influence post-H-share listing - "Quality-first" is Haitian's core competitiveness; the company will continue to focus on technological innovation and product upgrades, committed to creating high-quality and value-for-money products[168](index=168&type=chunk)[171](index=171&type=chunk) - The company will leverage its strengths to seize growth opportunities arising from the national strategy to expand domestic demand[168](index=168&type=chunk)[171](index=171&type=chunk) - On June 19, 2025, the company successfully listed on the Main Board of the Hong Kong Stock Exchange, opening a new chapter for global development and aiming to build the global influence of "Oriental Flavors"[169](index=169&type=chunk)[171](index=171&type=chunk) Corporate Governance and Other Information [Directors', Supervisors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=36&type=section&id=DIRECTORS%27%2C%20SUPERVISORS%27%20AND%20CHIEF%20EXECUTIVE%20%27%20S%20I%20N%20T%20E%20R%20E%20S%20T%20S%20A%20N%20D%20S%20H%20O%20R%20T%20P%20O%20S%20I%20T%20I%20O%20N%20S%20I%20N%20T%20H%20E%20SHARES%2C%20UNDERLYING%20SHARES%20AND%20DEBENTURES%20OF%20THE%20COMPANY%20AND%20ITS%20ASSOCIATED%20CORPORATIONS) This section discloses the interests and short positions of the company's directors, supervisors, and chief executive in the company's and its associated corporations' shares as of the reporting period end Directors', Supervisors' and Chief Executive's Interests in the Company's A-Shares | Name | Nature of Interest | Share Class | Number of Shares Held | Percentage of Total Share Capital (%) | | :--- | :--- | :--- | :--- | :--- | | Ms. Cheng Xue | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,432,656,153 | 58.78 | | Mr. Guan Jianghua | Controlled Corporation Interest, Beneficial Owner & Spouse's Interest | A-shares | 3,290,012,954 | 56.34 | | Mr. Wen Zhizhou | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,265,176,642 | 55.91 | | Mr. Liao Changhui | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,257,828,998 | 55.79 | | Mr. Huang Wenbiao | Beneficial Owner | A-shares | 28,984,921 | 0.50 | | Mr. Ding Bangqing | Spouse's Interest | A-shares | 180,000 | 0.003 | - Guangdong Haitian is collectively owned by Mr. Pang, Ms. Cheng, Mr. Guan, Mr. Chen, Mr. Wen, and Mr. Liao (the "Concerted Action Group"), holding a total of **73.59%** equity interest[177](index=177&type=chunk)[183](index=183&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=40&type=section&id=SUBSTANTIAL%20SHAREHOLDERS%20%27%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20THE%20SHARES%20AND%20UNDERLYING%20SHARES) This section lists the interests and short positions of substantial shareholders in the company's shares or underlying shares as of the reporting period end Substantial Shareholders' Interests and Short Positions in the Company's Shares | Name/Entity | Nature of Interest | Share Class | Number of Shares Held | Percentage of Total Share Capital (%) | | :--- | :--- | :--- | :--- | :--- | | Guangdong Haitian | Beneficial Owner & Controlled Corporation Interest | A-shares | 3,256,290,675 | 55.76 | | Mr. Pang | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,788,405,852 | 64.87 | | Ms. Cheng | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,432,656,153 | 58.78 | | Mr. Guan | Controlled Corporation Interest, Beneficial Owner & Spouse's Interest | A-shares | 3,290,012,954 | 56.34 | | Mr. Chen | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,268,053,059 | 55.96 | | Mr. Wen | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,265,176,642 | 55.91 | | Mr. Liao | Controlled Corporation Interest & Beneficial Owner | A-shares | 3,257,828,998 | 55.79 | | HHLR Advisors, Ltd. | Investment Manager | H-shares | 99,385,600 | 1.70 | | HHLR Fund, L.P. | Beneficial Owner | H-shares | 60,349,100 | 1.03 | | China International Capital Corporation (International) Limited | Controlled Corporation Interest | H-shares | 51,662,878 (Long Position) / 42,120,700 (Short Position) | 0.88 (Long Position) / 0.72 (Short Position) | | GIC Private Limited | Investment Manager | H-shares | 27,995,000 | 0.48 | | TF-B, L.P. | Beneficial Owner | H-shares | 14,325,800 | 0.25 | - As of the end of the reporting period, the total number of shares in the company was **5,839,632,244**, comprising **279,031,700** H-shares and **5,560,600,544** A-shares[190](index=190&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=44&type=section&id=PURCHASE%2C%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY%27S%20LISTED%20SECURITIES) Neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities from the listing date to the end of the reporting period - From the listing date to the end of the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities[195](index=195&type=chunk)[196](index=196&type=chunk) - As of the end of the reporting period, the company held **10,289,491** treasury A-shares, which will be used for the employee stock ownership plan[195](index=195&type=chunk)[196](index=196&type=chunk) [Compliance with the Model Code Regarding Securities Transactions](index=44&type=section&id=C%20O%20M%20P%20L%20I%20A%20N%20C%20E%20W%20I%20T%20H%20T%20H%20E%20M%20O%20D%20E%20L%20C%20O%20D%20E%20R%20E%20G%20A%20R%20D%20I%20N%20G%20S%20E%20C%20U%20R%20I%20T%20I%20E%20S%20TRANSACTIONS) The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers and confirmed compliance by all directors and supervisors - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers[197](index=197&type=chunk)[199](index=199&type=chunk) - All directors and supervisors confirmed compliance with the requirements of the Model Code from the listing date to the end of the reporting period[197](index=197&type=chunk)[199](index=199&type=chunk) [Share Scheme](index=44&type=section&id=SHARE%20SCHEME) The company adopted the 2024-2028 A-share employee stock ownership plan on September 19, 2024, with no awards granted to date and no new share issuance involved - The company adopted the 2024-2028 Employee Stock Ownership Plan (A-share Employee Stock Ownership Plan) on September 19, 2024[198](index=198&type=chunk)[200](index=200&type=chunk) - As of the latest practicable date, no awards have been granted under the A-share Employee Stock Ownership Plan[198](index=198&type=chunk)[200](index=200&type=chunk) - The A-share Employee Stock Ownership Plan does not involve the issuance of new shares by the company[198](index=198&type=chunk)[200](index=200&type=chunk) [Compliance with the Corporate Governance Code](index=45&type=section&id=COMPLIANCE%20WITH%20THE%20CORPORATE%20GOVERNANCE%20CODE) The company is committed to high corporate governance standards, adopting and complying with the Corporate Governance Code since its listing date - The company has adopted the code provisions of the Corporate Governance Code as set out in Part 2 of Appendix C1 to the HKEX Listing Rules since its listing date[201](index=201&type=chunk)[204](index=204&type=chunk) - The company has complied with the applicable code provisions of the Corporate Governance Code from the listing date to the end of the reporting period[201](index=201&type=chunk)[204](index=204&type=chunk) [Interim Dividend](index=45&type=section&id=INTERIM%20DIVIDEND) The company proposes an interim dividend of RMB 2.60 per 10 shares (tax inclusive) for 2025, totaling RMB 1.519 billion, payable on October 23, 2025 - The company proposes to distribute a 2025 interim dividend, with a total cash dividend of **RMB 1,518,799,217.78** (tax inclusive)[202](index=202&type=chunk)[205](index=205&type=chunk) - A cash dividend of **RMB 2.60** (tax inclusive) will be distributed per 10 shares[202](index=202&type=chunk)[205](index=205&type=chunk) - H-share shareholders will be paid in HKD, with **HKD 2.850452** (tax inclusive) per 10 shares, calculated at the average exchange rate[202](index=202&type=chunk)[205](index=205&type=chunk) - The 2025 interim dividend will be distributed on Thursday, October 23, 2025[203](index=203&type=chunk)[206](index=206&type=chunk) [Closure of Register of Members](index=46&type=section&id=CLOSURE%20OF%20REGISTER%20OF%20MEMBERS) H-share transfer registration will be suspended from September 18 to September 25, 2025, to determine eligibility for the 2025 interim dividend and EGM attendance - H-share transfer registration will be suspended from Thursday, September 18, 2025, to Thursday, September 25, 2025 (both dates inclusive)[207](index=207&type=chunk)[209](index=209&type=chunk) - Shareholders whose names appear on the company's H-share register of members on Tuesday, September 23, 2025, will be entitled to receive the 2025 interim dividend and attend the first extraordinary general meeting of 2025[207](index=207&type=chunk)[209](index=209&type=chunk) [Tax Implications](index=46&type=section&id=TAX%20IMPLICATIONS) This section details tax policies for H-share dividends, including withholding tax rates for non-resident individual and corporate shareholders, and different treatments for mainland investors - Non-resident individual H-share shareholders receiving dividends from domestic non-foreign-invested enterprises listed in Hong Kong are generally subject to a **10%** individual income tax withholding rate[210](index=210&type=chunk)[211](index=211&type=chunk)[213](index=213&type=chunk) - Residents of countries with tax treaties with China that specify a dividend tax rate lower than **10%** must proactively submit forms to enjoy treaty benefits[211](index=211&type=chunk)[213](index=213&type=chunk) - Mainland individual investors investing in H-shares through Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect are subject to a **20%** individual income tax withholding rate by the H-share company[215](index=215&type=chunk)[217](index=217&type=chunk) - When Chinese resident enterprises distribute dividends to non-resident corporate H-share shareholders, a **10%** corporate income tax is uniformly withheld and remitted[216](index=216&type=chunk)[218](index=218&type=chunk) - For non-resident corporate H-share shareholders, the company will distribute the 2025 interim dividend after deducting a **10%** income tax[220](index=220&type=chunk)[222](index=222&type=chunk) [Audit Committee and Review of Financial Information](index=50&type=section&id=AUDIT%20COMMITTEE%20AND%20REVIEW%20OF%20FINANCIAL%20INFORMATION) The Audit Committee, comprising three independent non-executive directors, reviewed the unaudited interim results for H1 2025, which were also reviewed by KPMG - The Audit Committee is composed of three independent non-executive directors, with Mr. Qu Wenzhou serving as Chairman[224](index=224&type=chunk)[228](index=228&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and considers them to be in compliance with relevant accounting standards, rules, and regulations[224](index=224&type=chunk)[228](index=228&type=chunk) - The interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[225](index=225&type=chunk)[229](index=229&type=chunk) [Changes in Information of Directors, Supervisors and Chief Executive](index=50&type=section&id=C%20H%20A%20N%20G%20E%20S%20I%20N%20I%20N%20F%20O%20R%20M%20A%20T%20I%20O%20N%20O%20F%20DIRECTORS%2C%20SUPERVISORS%20AND%20CHIEF%20EXECUTIVE) No changes in information of directors, supervisors, and chief executive requiring disclosure under Listing Rule 13.51B(1) occurred during the reporting period - There were no changes in the information of directors, supervisors, and chief executive requiring disclosure during the reporting period and up to the latest practicable date[226](index=226&type=chunk)[230](index=230&type=chunk) [Use of Proceeds](index=51&type=section&id=USE%20OF%20PROCEEDS) The company's H-share IPO on June 19, 2025, raised approximately RMB 9.543 billion net, with proceeds allocated consistent with the prospectus for product development, capacity expansion, and global influence - The company issued H-shares and listed on the Main Board of the HKEX on June 19, 2025, issuing **279,031,700** H-shares at an issue price of **HKD 36.30** per share[231](index=231&type=chunk)[232](index=232&type=chunk) - Subsequently, on July 21, 2025, an additional **12,192,700** H-shares were issued through over-allotment, also at **HKD 36.30** per share[231](index=231&type=chunk)[232](index=232&type=chunk) - The total gross proceeds from the H-share issuance were **HKD 10,571.4 million** (approximately **RMB 9,658.9 million**), with net proceeds of approximately **RMB 9,542.6 million** after deducting issuance expenses[231](index=231&type=chunk)[232](index=232&type=chunk) H-share Proceeds Usage and Expected Timetable | Use | Approximate Percentage of Total (%) | Net Proceeds Available (RMB million) | Amount Utilized During Reporting Period (RMB million) | Amount Unutilized as of Reporting Period End (RMB million) | Expected Timetable for Full Utilization of Unutilized Amount | | :--- | :--- | :--- | :--- | :--- | :--- | | Product Development and Technology Upgrades | 20.0 | 1,908.5 | – | 1,908.5 | Before December 31, 2028 | | Capacity Expansion and Digital Upgrades | 30.0 | 2,862.8 | – | 2,862.8 | Before December 31, 2028 | | Enhancing Global Influence | 20.0 | 1,908.5 | – | 1,908.5 | Before December 31, 2028 | | Strengthening Sales Network and Penetration | 20.0 | 1,908.5 | – | 1,908.5 | Before December 31, 2028 | | Working Capital and General Corporate Purposes | 10.0 | 954.3 | – | 954.3 | Before December 31, 2028 | | **Total** | **100** | **9,542.6** | **–** | **9,542.6** | **N/A** | Consolidated Financial Statements [Consolidated Statement of Profit or Loss](index=53&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For H1 2025, the Group reported RMB 15.23 billion in revenue, RMB 5.98 billion in gross profit, and RMB 3.92 billion in profit for the period, with basic and diluted EPS of RMB 0.70 Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30, 2025) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 15,229,923 | 14,155,910 | | Cost of Sales | (9,250,415) | (9,051,102) | | Gross Profit | 5,979,508 | 5,104,808 | | Operating Profit | 4,665,992 | 4,091,888 | | Profit Before Taxation | 4,651,340 | 4,076,138 | | Profit for the Period | 3,921,771 | 3,465,188 | | Profit Attributable to Equity Holders of the Company | 3,914,004 | 3,453,049 | | Basic and Diluted Earnings Per Share (RMB) | 0.70 | 0.62 | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=54&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For H1 2025, the Group's profit for the period was RMB 3.922 billion, with other comprehensive income of RMB (1.6) million, resulting in a total comprehensive income of RMB 3.920 billion Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (For the six months ended June 30, 2025) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the Period | 3,921,771 | 3,465,188 | | Other Comprehensive Income for the Period | (1,599) | (1,887) | | Total Comprehensive Income for the Period | 3,920,172 | 3,463,301 | | Total Comprehensive Income Attributable to Equity Holders of the Company | 3,912,405 | 3,451,162 | [Consolidated Statement of Financial Position](index=55&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets less current liabilities were RMB 40.15 billion, with net assets of RMB 39.70 billion, driven by a significant increase in net current assets Consolidated Statement of Financial Position Key Data (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 8,011,728 | 8,016,326 | | Current Assets | 38,796,975 | 32,842,109 | | Current Liabilities | 6,657,076 | 8,985,791 | | Net Current Assets | 32,139,899 | 23,856,318 | | Total Assets Less Current Liabilities | 40,151,627 | 31,872,644 | | Non-current Liabilities | 450,114 | 470,700 | | Net Assets | 39,701,513 | 31,401,944 | | Total Equity Attributable to Equity Holders of the Company | 39,187,211 | 30,895,409 | | Total Equity | 39,701,513 | 31,401,944 | - Property, plant, and equipment increased by **1.8%** compared to the end of 2024, primarily due to increased production facilities at some production bases[112](index=112&type=chunk)[117](index=117&type=chunk)[240](index=240&type=chunk) - Inventories decreased by **31.3%** compared to the end of 2024, mainly due to increased inventory reserves at the end of the previous year to meet distributor stocking demand[114](index=114&type=chunk)[119](index=119&type=chunk)[240](index=240&type=chunk) - Cash and bank balances (including term deposits, certificates of deposits, restricted cash, and cash equivalents) increased by **35.7%** compared to the end of 2024, reaching **RMB 29,998.7 million**[123](index=123&type=chunk)[127](index=127&type=chunk)[240](index=240&type=chunk) - Trade and bills payable increased by **66.6%** compared to the end of 2024, primarily due to an increase in bills payable[121](index=121&type=chunk)[126](index=126&type=chunk)[242](index=242&type=chunk) [Consolidated Statement of Changes in Equity](index=58&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity attributable to equity holders increased from RMB 30.895 billion to RMB 39.187 billion in H1 2025, primarily due to profit for the period and H-share issuance Consolidated Statement of Changes in Equity Key Data (For the six months ended June 30, 2025) | Indicator | Balance as of January 1, 2025 (RMB thousand) | Balance as of June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | | Share Capital | 5,560,601 | 5,839,632 | | Treasury Shares | (563,842) | (563,842) | | Capital Reserve | 95,860 | 8,965,193 | | Statutory Reserve | 3,075,896 | 3,075,896 | | Other Reserves | 46,639 | 46,639 | | Exchange Reserve | (5,082) | (6,681) | | Retained Earnings | 22,685,337 | 21,830,374 | | Total Equity Attributable to Equity Holders of the Company | 30,895,409 | 39,187,211 | | Non-controlling Interests | 506,535 | 514,302 | | **Total Equity** | **31,401,944** | **39,701,513** | - The issuance of H-shares resulted in an increase in share capital of **RMB 279,031 thousand** and an increase in capital reserve of **RMB 8,869,333 thousand**[247](index=247&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) - Profit for the period was **RMB 3,914,004 thousand**, positively impacting total equity[247](index=247&type=chunk) - Dividends for the previous year amounting to **RMB 4,768,967 thousand** were distributed[247](index=247&type=chunk) [Condensed Consolidated Cash Flow Statement](index=59&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) For H1 2025, net cash from operating activities was RMB 1.505 billion, net cash used in investing activities was RMB (1.272) billion, and net cash from financing activities was RMB 5.452 billion, significantly increasing cash and cash equivalents Condensed Consolidated Cash Flow Statement Key Data (For the six months ended June 30, 2025) | Activity Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 1,504,939 | 1,126,773 | | Net Cash Used in Investing Activities | (1,271,574) | (2,182,704) | | Net Cash Generated From/(Used In) Financing Activities | 5,451,696 | (3,346,328) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 5,685,061 | (4,402,259) | | Cash and Cash Equivalents at End of Period | 17,624,412 | 8,439,172 | - Net cash generated from financing activities significantly increased, primarily due to net proceeds of **RMB 9,179,673 thousand** from the initial public offering of H-shares[248](index=248&type=chunk)[334](index=334&type=chunk)[336](index=336&type=chunk) - Net cash used in investing activities decreased, mainly due to a reduction in term deposits and certificates of deposit, and an increase in proceeds from the disposal of other financial assets at fair value through profit or loss[248](index=248&type=chunk) Notes to the Unaudited Interim Financial Report [General Information and Basis of Preparation](index=61&type=section&id=1%20GENERAL%20INFORMATION%20AND%20BASIS%20OF%20PREPARATION) Foshan Haitian Flavouring & Food Company Ltd, established in 2000, listed A-shares in 2014 and H-shares in 2025, with this interim report prepared under HKEX Listing Rules and IAS 34 - The company was established on April 8, 2000, listed its A-shares on the Shanghai Stock Exchange on February 11, 2014, and its H-shares on the Main Board of The Stock Exchange of Hong Kong Limited on June 19, 2025[251](index=251&type=chunk)[255](index=255&type=chunk) - This interim financial report is prepared in accordance with the HKEX Listing Rules and International Accounting Standard 34, and has been reviewed by KPMG[252](index=252&type=chunk)[258](index=258&type=chunk)[255](index=255&type=chunk)[262](index=262&type=chunk) [Changes in Accounting Policies](index=62&type=section&id=2%20CHANGES%20IN%20ACCOUNTING%20POLICIES) The Group applied amendments to HKAS 21 regarding lack of exchangeability, which had no material impact as no relevant foreign currency transactions occurred - The Group has applied the amendments to Hong Kong Accounting Standard 21, "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability"[260](index=260&type=chunk)[263](index=263&type=chunk) - As the Group has not entered into any foreign currency transactions that cannot be converted into other currencies, these amendments have no material impact on this interim report[260](index=260&type=chunk)[263](index=263&type=chunk) [Revenue and Segment Reporting](index=63&type=section&id=3%20REVENUE%20AND%20SEGMENT%20REPORTING) The Group's primary business is manufacturing and selling condiments, with H1 2025 revenue from customer contracts at RMB 15.225 billion, operating as a single segment - The Group's principal business is the manufacture and sale of soy sauce, oyster sauce, seasoning sauces, specialty condiments, and other products[265](index=265&type=chunk)[266](index=266&type=chunk) Revenue by Major Products and Services (For the six months ended June 30, 2025) | Product/Service | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Sales of Soy Sauce Products | 7,927,943 | 7,263,877 | | Sales of Oyster Sauce Products | 2,502,330 | 2,322,480 | | Sales of Seasoning Sauce Products | 1,625,951 | 1,451,593 | | Sales of Specialty Condiments and Others | 2,505,507 | 2,146,329 | | Other | 663,761 | 962,336 | | **Revenue from Contracts with Customers** | **15,225,492** | **14,146,615** | | Rental Income | 4,431 | 9,295 | | **Total Revenue** | **15,229,923** | **14,155,910** | - The Group has a diversified customer base, with no single customer accounting for more than **10%** of total revenue[269](index=269&type=chunk)[272](index=272&type=chunk) - The Group has only one operating segment, therefore no segment information is presented[274](index=274&type=chunk)[277](index=277&type=chunk) [Other Revenue](index=65&type=section&id=4%20OTHER%20REVENUE) For H1 2025, other revenue decreased by 8.8% to RMB 333.298 million, primarily due to a reduction in interest income Other Revenue Details (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest Income | 254,608 | 269,517 | | Government Grants | 43,069 | 48,348 | | VAT Additional Deduction | 35,621 | 47,761 | | **Total** | **333,298** | **365,626** | - Other revenue decreased by **8.8%** year-on-year, mainly due to lower interest income resulting from decreased interest rates[92](index=92&type=chunk)[96](index=96&type=chunk)[280](index=280&type=chunk) [Other Net Income](index=66&type=section&id=5%20OTHER%20NET%20INCOME) For H1 2025, other net income decreased by 51.7% to RMB 55.680 million, mainly due to reduced fair value changes in financial assets and increased foreign exchange losses Other Net Income Details (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Fair Value Change of Other Financial Assets at Fair Value Through Profit or Loss | 90,709 | 114,004 | | Net Loss on Disposal of Property, Plant and Equipment | (344) | (735) | | Net Foreign Exchange (Loss)/Gain | (27,145) | 775 | | Other | (7,540) | 1,318 | | **Total** | **55,680** | **115,362** | - Other net income decreased by **51.7%** year-on-year, primarily due to a decrease in the net fair value change of other financial assets at fair value through profit or loss, and an increase in foreign exchange losses[93](index=93&type=chunk)[97](index=97&type=chunk)[285](index=285&type=chunk) [Profit Before Taxation](index=66&type=section&id=6%20PROFIT%20BEFORE%20TAXATION) For H1 2025, the Group's profit before taxation was RMB 4.651 billion, with financial costs including interest on bank loans and lease liabilities, and other expenses like depreciation and R&D Financial Costs Details (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on Bank Loans and Other Borrowings | 13,722 | 14,800 | | Interest on Lease Liabilities | 930 | 950 | | **Total** | **14,652** | **15,750** | Other Expenses Details (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Amortization Cost of Intangible Assets | 7,739 | 8,019 | | Depreciation Expense (Property, Plant and Equipment) | 380,436 | 450,178 | | Depreciation Expense (Right-of-Use Assets) | 23,663 | 17,894 | | Depreciation Expense (Investment Properties) | 138 | 169 | | Cost of Inventories | 7,728,113 | 7,488,465 | | Logistics Costs | 790,681 | 737,438 | | Research and Development Expenses | 411,400 | 380,128 | [Income Tax in the Consolidated Statements of Profit or Loss](index=68&type=section&id=7%20INCOME%20TAX%20IN%20THE%20CONSOLIDATED%20STATEMENTS%20OF%20PROFIT%20OR%20LOSS) For H1 2025, income tax increased by 19.4% to RMB 729.569 million, primarily due to higher profit before taxation, with Pillar Two income tax exceptions applied Income Tax Details in Consolidated Statement of Profit or Loss (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Tax – China Corporate Income Tax | 664,539 | 543,517 | | Deferred Tax | 65,030 | 67,433 | | **Total** | **729,569** | **610,950** | - Income tax increased by **19.4%** year-on-year, primarily due to an increase in profit before taxation[110](index=110&type=chunk)[115](index=115&type=chunk)[291](index=291&type=chunk) - The company has applied the temporary mandatory exception for Pillar Two income tax, recognizing it as current tax when incurred[294](index=294&type=chunk)[296](index=296&type=chunk) - The Group's assessment indicates no significant related current tax risks in Vietnam and Hong Kong for the six months ended June 30, 2025, and 2024[293](index=293&type=chunk)[295](index=295&type=chunk) [Earnings Per Share](index=70&type=section&id=8%20EARNINGS%20PER%20SHARE) For H1 2025, basic earnings per share increased to RMB 0.70 from RMB 0.62 in the prior period, with diluted EPS remaining the same due to anti-dilutive over-allotment options Earnings Per Share (For the six months ended June 30, 2025) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Basic and Diluted Earnings Per Share (RMB) | 0.70 | 0.62 | | Profit Attributable to Ordinary Equity Holders of the Company (RMB thousand) | 3,914,004 | 3,453,049 | | Weighted Average Number of Ordinary Shares Issued (thousand shares) | 5,562,363 | 5,547,938 | - For the six months ended June 30, 2025, the over-allotment option had an anti-dilutive effect, thus diluted earnings per share are the same as basic earnings per share[302](index=302&type=chunk)[303](index=303&type=chunk) [Property, Plant and Equipment](index=72&type=section&id=9%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) In H1 2025, the Group purchased RMB 496.958 million in property, plant, and equipment, while disposing of items with a net book value of RMB 481 thousand, resulting in a net loss of RMB 344 thousand - For the six months ended June 30, 2025, the Group purchased property, plant, and equipment at a cost of **RMB 496,958 thousand**[304](index=304&type=chunk)[307](index=307&type=chunk) - The net book value of disposed property, plant, and equipment was **RMB 481 thousand**, resulting in a net loss on disposal of **RMB 344 thousand**[304](index=304&type=chunk)[307](index=307&type=chunk) [Right-of-Use Assets](index=72&type=section&id=10%20RIGHT-OF-USE%20ASSETS) In H1 2025, right-of-use assets decreased by RMB 23.663 million due to depreciation, while new lease agreements increased their original cost by RMB 12.049 million - For the six months ended June 30, 2025, depreciation of right-of-use assets resulted in a net decrease of **RMB 23,663 thousand**[305](index=305&type=chunk)[308](index=308&type=chunk) - The Group recognized an increase in the original cost of right-of-use assets of **RMB 12,049 thousand** due to new lease agreements[306](index=306&type=chunk)[308](index=308&type=chunk) [Other Financial Assets at Fair Value Through Profit or Loss](index=73&type=section&id=11%20OTHER%20FINANCIAL%20ASSETS%20AT%20FAIR%20VALUE%20THROUGH%20PROFIT%20OR%20LOSS) As of June 30, 2025, other financial assets at fair value through profit or loss totaled RMB 6.500 billion, primarily comprising wealth management products and listed securities Other Financial Assets at Fair Value Through Profit or Loss (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current: Equity Securities | 100 | 100 | | Current: Wealth Management Products | 6,493,370 | 7,518,580 | | Current: Listed Securities | 6,511 | 98,996 | | **Total** | **6,499,981** | **7,617,676** | - Wealth management products are issued by banks, have variable investment returns, and are redeemable immediately or in the short term[311](index=311&type=chunk) [Inventories](index=74&type=section&id=12%20INVENTORIES) As of June 30, 2025, total inventories decreased by 31.3% to RMB 1.734 billion, primarily consisting of work-in-progress, finished goods, and raw materials Inventory Composition (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw Materials | 200,646 | 210,128 | | Work-in-Progress | 1,112,105 | 1,318,745 | | Finished Goods | 311,149 | 884,592 | | Packaging Materials | 67,963 | 73,989 | | Low-Value Consumables | 36,698 | 32,744 | | Other | 5,336 | 5,076 | | **Total** | **1,733,897** | **2,525,274** | - As of June 30, 2025, inventories decreased by **31.3%** compared to December 31, 2024, mainly due to increased inventory reserves at the end of the previous year to meet distributor stocking demand[114](index=114&type=chunk)[119](index=119&type=chunk)[313](index=313&type=chunk) Amount of Inventories Recognized as Expense (For the six months ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Carrying Amount of Inventories Sold | 7,441,924 | 7,224,270 | | Carrying Amount of Inventories Recognized as R&D Expenses | 285,972 | 264,188 | | Inventory Write-downs | 217 | 7 | | **Total** | **7,728,113** | **7,488,465** | [Trade Receivables](index=75&type=section&id=13%20TRADE%20RECEIVABLES) As of June 30, 2025, total trade receivables increased by 14.3% to RMB 277.270 million, with most expected to be recovered within one year Trade Receivables Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Receivables | 289,559 | 254,507 | | Bills Receivable | 1,100 | 371 | | Less: Loss Allowance | (13,389) | (12,246) | | **Total** | **277,270** | **242,632** | - Trade receivables increased by **14.3%** compared to the end of 2024, primarily due to increased product sales to a small number of customers provided with credit terms[120](index=120&type=chunk)[125](index=125&type=chunk)[316](index=316&type=chunk) Ageing Analysis of Trade Receivables and Bills Receivable (As of June 30, 2025) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 Year | 287,317 | 251,728 | | 1 to 2 Years | 2,125 | 2,053 | | 2 to 3 Years | 142 | 737 | | Over 3 Years | 1,075 | 360 | | **Total** | **290,659** | **254,878** | [Other Receivables](index=76&type=section&id=14%20OTHER%20RECEIVABLES) As of June 30, 2025, current other receivables were RMB 287.232 million and non-current were RMB 32.487 million, mainly including deductible input VAT and prepayments for materials Other Receivables Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Current: Amounts Due from Related Parties | 7,025 | 3,325 | | Current: Other Receivables | 17,284 | 15,281 | | Current: Prepayments for Materials | 43,512 | 34,294 | | Current: Deductible Input VAT and Others | 219,411 | 288,991 | | Non-current: Prepayments for Purchase of Property, Plant and Equipment | 32,487 | 61,219 | | **Total** | **319,719** | **403,110** | - All current other receivables are expected to be recovered or recognized as expenses within one year[323](index=323&type=chunk) [Cash and Cash Equivalents, Term Deposits, Certificates of Deposits, Restricted Cash and Cash Flow Information](index=77&type=section&id=15%20CASH%20AND%20CASH%20EQUIVALENTS%2C%20TERM%20DEPOSITS%2C%20CERTIFICATES%20OF%20DEPOSITS%2C%20RESTRICTED%20CASH%20AND%20CASH%20FLOW%20INFORMATION) As of June 30, 2025, cash and cash equivalents totaled RMB 17.624 billion, with significant inflows from the H-share listing Cash and Bank Balances Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash and Bank Balances, and Cash Equivalents | 17,624,412 | 11,906,831 | | Term Deposits | 4,849,928 | 5,327,793 | | Certificates of Deposit | 7,503,788 | 4,871,719 | | Restricted Cash (Margin Deposits) | 20,567 | 8,393 | | **Total** | **29,998,700** | **22,114,736** | - For the six months ended June 30, 2025, the H-share listing generated net proceeds of **RMB 9,179,673 thousand**[334](index=334&type=chunk)[336](index=336&type=chunk) - Restricted cash primarily includes letter of credit margin deposits and third-party payment platform margin deposits[334](index=334&type=chunk)[335](index=335&type=chunk) [Trade and Bills Payable](index=79&type=section&id=16%20TRADE%20AND%20BILLS%20PAYABLE) As of June 30, 2025, trade and bills payable increased by 66.6% to RMB 3.242 billion, primarily due to an increase in bills payable, with all expected to be settled within one year Trade and Bills Payable Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Payables (Third Parties) | 1,243,695 | 1,224,340 | | Trade Payables (Related Parties) | 128,869 | 135,758 | | Bills Payable | 1,869,533 | 586,477 | | **Total** | **3,242,097** | **1,946,575** | - Trade and bills payable increased by **66.6%** compared to the end of 2024, primarily due to an increase in bills payable[121](index=121&type=chunk)[126](index=126&type=chunk)[338](index=338&type=chunk) - The company has factoring arrangements with Guangdong Haitian Commercial Factoring Co., Ltd. (an entity controlled by Guangdong Haitian), where some suppliers transfer their receivables from the Group to Haitian Factoring[338](index=338&type=chunk) Ageing Analysis of Trade Payables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 Year | 1,372,564 | 1,360,098 | | **Total** | **1,372,564** | **1,360,098** | [Other Payables](index=80&type=section&id=17%20OTHER%20PAYABLES) As of June 30, 2025, other payables totaled RMB 1.626 billion, mainly comprising accrued wages, marketing expenses, transportation expenses, and other taxes, all due within one year Other Payables Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Other Taxes Payable | 236,956 | 76,320 | | Accrued Wages | 510,068 | 664,673 | | Amounts Due to Related Parties | 2,872 | 3,858 | | Supplier Deposits | 165,786 | 154,877 | | Accrued Marketing Expenses | 273,444 | 227,760 | | Accrued Transportation Expenses | 293,573 | 261,592 | | Payables for Equipment and Projects | 96,084 | 157,538 | | Other | 46,803 | 56,389 | | **Total** | **1,625,586** | **1,603,007** | - All other payables are expected to be settled within one year or repaid on demand[343](index=343&type=chunk) [Contract Liabilities](index=81&type=section&id=18%20CONTRACT%20LIABILITIES) As of June 30, 2025, contract liabilities significantly decreased to RMB 1.184 billion, primarily representing customer prepayments for goods not yet delivered Contract Liabilities (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer Prepayments | 1,184,045 | 4,335,313 | - Contract liabilities primarily represent prepayments from customers for goods not yet provided (excluding output VAT)[344](index=344&type=chunk)[345](index=345&type=chunk) [Capital, Reserves and Dividends](index=81&type=section&id=19%20CAPITAL%2C%20RESERVES%20AND%20DIVIDENDS) This section details the company's share capital, capital reserves, and dividend policy, noting a significant increase in equity due to H-share listing and proposed interim dividend - The company proposes to distribute a 2025 interim dividend of **RMB 0.26** per share (tax inclusive), totaling **RMB 1,518,799 thousand**[348](index=348&type=chunk)[349](index=349&type=chunk) - On June 19, 2025, the company's H-shares were listed, issuing **279,031,700** shares, with net proceeds of **RMB 9,148,364 thousand**, of which **RMB 279,031 thousand** was credited to share capital and **RMB 8,869,333 thousand** to capital reserve[354](index=354&type=chunk)[355](index=355&type=chunk) - For the six months ended June 30, 2025, the company did not repurchase any treasury shares, whereas **8,068,939** A-shares were repurchased in H1 2024 for a total consideration of **RMB 297,544 thousand**[356](index=356&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk) - Ordinary shares held as of June 30, 2025, include **10,289,491** treasury shares and **5,000,000** shares held under the 2024 employee stock ownership plan, primarily for future share award schemes[359](index=359&type=chunk)[360](index=360&type=chunk) [Fair Value Measurement of Financial Instruments](index=85&type=section&id=20%20FAIR%20VALUE%20MEASUREMENT%20OF%20FINANCIAL%20INSTRUMENTS) This section provides fair value measurements for financial instruments, classified by IFRS 13 levels, with wealth management products and listed securities as key assets Financial Assets Measured at Fair Value (As of June 30, 2025) | Item | Fair Value (RMB thousand) | Level 1 (RMB thousand) | Level 2 (RMB thousand) | Level 3 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Wealth Management Products | 6,493,370 | – | 6,493,370 | – | | Equity Securities | 100 | – | 100 | – | | Listed Securities | 6,511 | 6,511 | – | – | | **Total** | **6,499,981** | **6,511** | **6,493,470** | **–** | - The fair value of wealth management products is measured by reference to the net asset value published by banks (Level 2)[368](index=368&type=chunk)[370](index=370&type=chunk) - Listed securities are recognized at Level 1 fair value, measured by reference to share prices[367](index=367&type=chunk)[369](index=369&type=chunk) - As of June 30, 2025, there were no significant differences between the carrying amounts and fair values of the Group's financial instruments measured at amortized cost[371](index=371&type=chunk)[374](index=374&type=chunk) [Commitments](index=88&type=section&id=21%20COMMITMENTS) As of June 30, 2025, the Group's capital commitments not provided for in the interim financial report totaled RMB 558.055 million, primarily for property, plant, and equipment purchases Capital Commitments (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Contracted for Purchase of Property, Plant and Equipment | 558,055 | 704,563 | [Material Related Party Transactions](index=89&type=section&id=22%20MATERIAL%20RELATED%20PARTY%20TRANSACTIONS) The Group engaged in significant related party transactions, including buying and selling goods and services, leasing, and loan agreements with distributors, primarily involving Guangdong Haitian Transactions with Related Parties (For the six months ended June 30, 2025) | Transaction Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Purchase of Goods and Services | 597,553 | 653,191 | | Sale of Goods and Provision of Services | 27,170 | 30,283 | | Short-term Lease Related Expenses | 1,102 | 1,099 | | Provision of Lease Services | 651 | 876 | | Purchase of Property, Plant and Equipment | 28,371 | 70,225 | - The Group has entered into lease agreements with Guangdong Haitian and its controlled entities for leasing properties, machinery, and equipment[379](index=379&type=chunk)[381](index=381&type=chunk) - Since 2024, some distributors have entered into loan agreements with Jiaxing Haitian Microfinance Co., Ltd. (an entity controlled by Guangdong Haitian), where Jiaxing Haitian pays prepayments to the Group on behalf of the distributors[380](index=380&type=chunk)[381](index=381&type=chunk) Balances with Related Parties (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Other Receivables (Related Parties) | 7,025 | 3,325 | | Trade Payables (Related Parties) | 122,769 | 135,758 | | Other Payables (Related Parties) | 2,872 | 3,858 | [Immediate and Ultimate Controlling Party](index=92&type=section&id=23%20IMMEDIATE%20AND%20ULTIMATE%20CONTROLLING%20PARTY) As of June 30, 2025, Guangdong Haitian was the immediate controlling party, with Mr. Pang Kang and five others as ultimate controlling parties through a concerted action agreement - The immediate controlling party of the company is Guangdong Haitian[384](index=384&type=chunk)[387](index=387&type=chunk) - The ultimate controlling parties of the company are Mr. Pang Kang, Ms. Cheng Xue, Mr. Guan Jianghua, Mr. Chen Junyang, Mr. Wen Zhizhou, and Mr. Liao Changhui, who have signed a concerted action agreement[385](index=385&type=chunk)[387](index=387&type=chunk) [Significant Non-Adjusting Events](index=92&type=section&id=24%20SIGNIFICANT%20NON-ADJUSTING%20EVENTS) Post-reporting period, on July 21, 2025, the company successfully issued 12,192,700 additional H-shares via over-allotment, raising approximately RMB 398 million net - On July 21, 2025, the company successfully issued and allotted **12,192,700** additional H-shares under the over-allotment option, with an offering price of **HKD 36.30** per share[386](index=386&type=chunk)[388](index=388&type=chunk) - The net additional proceeds received from the exercise of the over-allotment option amounted to approximately **RMB 398 million**[386](index=386&type=chunk)[388](index=388&type=chunk) Independent Review Report [Independent Review Report](index=93&type=section&id=Independent%20Review%20Report) KPMG reviewed Foshan Haitian Flavouring & Food Company Ltd's unaudited interim financial report for H1 2025, concluding no material non-compliance with IAS 34 - KPMG has reviewed the interim financial report in accordance with Hong Kong Standard on Review Engagements 2410[389](index=389&type=chunk)[391](index=391&type=chunk)[394](index=394&type=chunk) - The review concluded that nothing has come to their attention that causes them to believe the interim financial report is not prepared, in all material respects, in accordance with International Accounting Standard 34[396](index=396&type=chunk)[397](index=397&type=chunk) Definitions [Definitions](index=95&type=section&id=Definitions) This section provides definitions for key terms used throughout the report, ensuring clarity and consistent understanding for readers - This section contains key terms used in the report, such as "A Shares," "Board," "China," "Company," "Controlling Shareholder," "Group," "Guangdong Haitian," "H Shares," "HKD," "Listing Date," "Listing Rules," "Listing," "Main Board," "Mr. Pang," "Ms. Cheng," "Prospectus," "Reporting Period," "RMB," "SFO," "Shareholder," "SSE," and "Stock Exchange"[399](index=399&type=chunk)[401](index=401&type=chunk)

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) This announcement provides clarifications and supplementary information to Sinopec Clean Energy Holdings Group Limited's 2024 annual report - This announcement serves as a supplementary disclosure to the 2024 annual report of Sinopec Clean Energy Holdings Group Limited (Stock Code: 1759), published on April 29, 2025, providing clarifications and additional information on certain aspects[2](index=2&type=chunk)[3](index=3&type=chunk) [Supplementary Disclosures](index=1&type=section&id=Supplementary%20Disclosures) [Connected Transactions](index=1&type=section&id=Connected%20Transactions) The company confirms related party transactions under Note 28, excluding disclosed continuing connected transactions, comply with Listing Rules Chapter 14A - The company confirms that, excluding continuing connected transactions already disclosed in the annual report, related party transactions under Note 28 do not constitute connected transactions or continuing connected transactions requiring announcement, circular, shareholder approval, and/or reporting under Chapter 14A of the Listing Rules[4](index=4&type=chunk) - The company has complied with the requirements of Chapter 14A of the Listing Rules[5](index=5&type=chunk) [Share Option Scheme](index=2&type=section&id=Share%20Option%20Scheme) The share option scheme has **21.6 million shares** available for issue, representing **10%** of issued shares, with approximately **3 years 11 months** remaining as of December 31, 2024 Key Data for Share Option Scheme | Metric | Data | | :--- | :--- | | Total Shares Available for Issue | 21,600,000 shares | | Percentage of Issued Shares | 10% (excluding treasury shares) | | Scheme Validity Period | 10 years (November 22, 2018, to November 21, 2028) | | Remaining Period as of December 31, 2024 | Approximately 3 years 11 months | [Other Information](index=2&type=section&id=Other%20Information) - Except for the disclosures in this announcement, the remaining content of the 2024 annual report remains unchanged[7](index=7&type=chunk) - The announcement lists the company's board members, including Executive Directors Mr. Ji Guang (Chairman), Ms. Ji Ling (Vice Chairman and CEO), Mr. Zhou Feng, and Independent Non-executive Directors Mr. Sheng Yuhong, Mr. Wang Zhonghua, and Dr. Zheng Jianpeng[9](index=9&type=chunk)

[Company Information](index=4&type=section&id=Company%20Information) This section details the company's board of directors, key personnel, registration, and contact information [Board of Directors and Key Personnel](index=4&type=section&id=Board%20of%20Directors%20and%20Key%20Personnel) This section lists the company's executive and independent non-executive directors, authorized representatives, company secretary, and committee members - Executive Directors include Mr. Wong Tsz Chiu (Chairman), Mr. Pong Kin Yee, BBS, JP, and Mr. Li Kai Leung. Independent Non-executive Directors include Dr. Chan Kin Keung, SBS, BBS, JP, Mr. Ng Chun Fai, Mr. Yu Man Yiu, and Ms. Wong Tsui Yu[5](index=5&type=chunk) - Mr. Yu Man Yiu chairs the Audit Committee, Dr. Chan Kin Keung, SBS, BBS, JP chairs the Remuneration Committee, and Mr. Ng Chun Fai chairs the Nomination Committee[5](index=5&type=chunk) [Company Registration and Contact Information](index=5&type=section&id=Company%20Registration%20and%20Contact%20Information) This section provides the company's registered office in the Cayman Islands, principal place of business in Hong Kong, website, and GEM stock code - The company's registered office is in the Cayman Islands, with its principal place of business in Wong Chuk Hang, Hong Kong[6](index=6&type=chunk) - The company's website is www.classifiedgroup.com.hk, and its GEM stock code is 08232[6](index=6&type=chunk) [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the company's financial performance, including revenue, other income, and loss before tax for the six months ended June 30, 2025 Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data for the Six Months Ended June 30, 2025 | Indicator | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Year-on-year Change (HKD thousands) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 17,008 | 17,777 | (769) | -4.33% | | Other income | 79 | 206 | (127) | -61.65% | | Other gains and losses | 767 | (1) | 768 | - | | Loss before tax | (2,983) | (2,996) | 13 | -0.43% | | Total loss and comprehensive income attributable to owners of the Company for the period | (2,983) | (2,996) | 13 | -0.43% | | Basic and diluted loss per share (HK cents) | (5.35) | (5.37) | 0.02 | -0.37% | [Unaudited Condensed Consolidated Statement of Financial Position](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2025 Unaudited Condensed Consolidated Statement of Financial Position Key Data as of June 30, 2025 | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current assets | 883 | 1,267 | (384) | -30.31% | | Current assets | 25,355 | 26,075 | (720) | -2.76% | | Current liabilities | 19,712 | 17,797 | 1,915 | 10.76% | | Net current assets | 5,643 | 8,278 | (2,635) | -31.83% | | Total assets less current liabilities | 6,526 | 9,545 | (3,019) | -31.63% | | Net assets | 6,526 | 9,509 | (2,983) | -31.37% | | Equity attributable to owners of the Company | 6,526 | 9,509 | (2,983) | -31.37% | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement outlines the changes in the company's equity components for the six months ended June 30, 2025 Unaudited Condensed Consolidated Statement of Changes in Equity Key Data for the Six Months Ended June 30, 2025 | Indicator | January 1, 2025 (HKD thousands) | Loss and total comprehensive expense for the period (HKD thousands) | June 30, 2025 (HKD thousands) | | :--- | :--- | :--- | :--- | | Share capital | 11,150 | – | 11,150 | | Share premium | 133,445 | – | 133,445 | | Other reserves | 766 | – | 766 | | Accumulated losses | (135,852) | (2,983) | (138,835) | | **Total** | **9,509** | **(2,983)** | **6,526** | [Unaudited Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 Unaudited Condensed Consolidated Statement of Cash Flows Key Data for the Six Months Ended June 30, 2025 | Activity | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (694) | (684) | (10) | | Net cash generated from investing activities | 879 | 259 | 620 | | Net cash used in financing activities | (751) | (5,490) | 4,739 | | Net decrease in cash and cash equivalents | (566) | (5,915) | 5,349 | | Cash and cash equivalents at end of period | 249 | 270 | (21) | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [1. General Information](index=10&type=section&id=1.%20General%20Information) This section provides an overview of the company's incorporation, listing, business activities, and reporting currency - The company was incorporated in the Cayman Islands on October 24, 2014, and listed on GEM of the Hong Kong Stock Exchange on July 11, 2016[13](index=13&type=chunk) - The company is an investment holding company, with its subsidiaries primarily engaged in restaurant operations in Hong Kong[14](index=14&type=chunk) - The unaudited condensed consolidated financial statements are presented in Hong Kong Dollars[15](index=15&type=chunk) [2. Basis of Preparation and Presentation](index=10&type=section&id=2.%20Basis%20of%20Preparation%20and%20Presentation) This section outlines the accounting standards and rules used for preparing and presenting the financial statements - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the disclosure requirements of the Hong Kong Companies Ordinance[16](index=16&type=chunk) - The statements comply with applicable disclosure requirements of Chapter 18 of the GEM Listing Rules and have been reviewed by the Audit Committee[16](index=16&type=chunk) [3. Significant Accounting Policies](index=11&type=section&id=3.%20Significant%20Accounting%20Policies) This section describes the accounting policies applied in the preparation of the condensed consolidated financial statements - The condensed consolidated financial statements are prepared on a historical cost basis[17](index=17&type=chunk) - Accounting policies and methods of computation are consistent with those used for the financial statements for the year ended December 31, 2024, except for changes arising from the application of new and revised HKFRSs[17](index=17&type=chunk) [4. Application of Hong Kong Financial Reporting Standards](index=11&type=section&id=4.%20Application%20of%20Hong%20Kong%20Financial%20Reporting%20Standards) This section states that the Group has adopted new and revised HKFRSs, with no significant impact on the financial statements - The Group has adopted all new and revised Hong Kong Financial Reporting Standards effective for accounting periods beginning on or after January 1, 2025[18](index=18&type=chunk) - The application of these standards has not had any significant impact on the Group's unaudited condensed consolidated financial statements[18](index=18&type=chunk) [5. Revenue and Segment Information](index=11&type=section&id=5.%20Revenue%20and%20Segment%20Information) This section details the Group's revenue sources and segment performance, primarily from casual dining and bakery operations - The Group's operating and reportable segment is the operation of casual restaurants and bakeries ("Casual")[19](index=19&type=chunk) - Revenue represents amounts received and receivable for services rendered and goods sold during the period, net of discounts[19](index=19&type=chunk) [Segment Revenue and Results](index=12&type=section&id=Segment%20Revenue%20and%20Results) This subsection presents the revenue and loss for the casual dining segment for the six months ended June 30, 2025 Segment Revenue and Results (Six Months Ended) | Indicator | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Casual segment revenue | 17,008 | 17,777 | (769) | -4.33% | | Casual segment loss | (1,608) | (1,368) | (240) | 17.54% | | Other income | 79 | 206 | (127) | -61.65% | | Loss before tax | (2,983) | (2,996) | 13 | -0.43% | [Segment Assets and Liabilities](index=13&type=section&id=Segment%20Assets%20and%20Liabilities) This subsection details the assets and liabilities attributable to the casual dining segment as of June 30, 2025 Segment Assets and Liabilities (As of June 30, 2025) | Indicator | Casual Segment (HKD thousands) | Consolidated Total (HKD thousands) | | :--- | :--- | :--- | | Segment assets | 4,267 | 26,238 | | Segment liabilities | 7,056 | 19,712 | - All assets and liabilities are allocated to the operating and reportable segment, except for certain property, plant and equipment, inventories, receivables, taxes, and bank balances[22](index=22&type=chunk) [6. Other Income](index=15&type=section&id=6.%20Other%20Income) This section details the components of other income, showing a significant decrease for the six months ended June 30, 2025 Other Income (Six Months Ended) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest income | – | 3 | (3) | -100% | | Others | 19 | 143 | (124) | -86.71% | | Management fee income from associated companies | 60 | 60 | – | 0% | | **Total** | **79** | **206** | **(127)** | **-61.65%** | [7. Other Gains and Losses](index=15&type=section&id=7.%20Other%20Gains%20and%20Losses) This section presents the net other gains and losses, primarily driven by the net gain on disposal of property, plant and equipment Other Gains and Losses (Six Months Ended) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Net gain on disposal of property, plant and equipment | 768 | – | 768 | | Net foreign exchange loss | (1) | (1) | – | | **Total** | **767** | **(1)** | **768** | [8. Finance Costs](index=15&type=section&id=8.%20Finance%20Costs) This section details the finance costs incurred, primarily interest on lease liabilities, showing a significant decrease Finance Costs (Six Months Ended) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on lease liabilities | (72) | (187) | 115 | -61.50% | [9. Loss Before Tax](index=16&type=section&id=9.%20Loss%20Before%20Tax) This section details the components contributing to the loss before tax, which remained stable year-on-year Loss Before Tax Key Components (Six Months Ended) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Raw materials and consumables used in restaurant operations | (4,455) | (4,335) | (120) | | Short-term lease payments | (391) | (387) | (4) | | Contingent rentals | (129) | (96) | (33) | [10. Taxation](index=16&type=section&id=10.%20Taxation) This section states that no Hong Kong profits tax provision was made due to the absence of taxable profits - The Group had no taxable profits for the six months ended June 30, 2025, and June 30, 2024, thus no Hong Kong profits tax provision was made[29](index=29&type=chunk) [11. Dividends](index=16&type=section&id=11.%20Dividends) This section confirms that no dividends were paid, declared, or proposed during the interim period - The company did not pay, declare, or propose any dividends during the reporting period[30](index=30&type=chunk) [12. Loss Per Share](index=17&type=section&id=12.%20Loss%20Per%20Share) This section details the calculation of basic and diluted loss per share, which remained stable year-on-year Loss Per Share Calculation Data (Six Months Ended) | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Loss attributable to owners of the Company for the period (HKD thousands) | (2,983) | (2,996) | | Weighted average number of ordinary shares (thousands) | 55,750 | 55,750 | | Basic and diluted loss per share (HK cents) | (5.35) | (5.37) | - The company had no dilutive potential ordinary shares outstanding for the six months ended June 30, 2025, and 2024[31](index=31&type=chunk) [13. Changes in Property, Plant and Equipment](index=18&type=section&id=13.%20Changes%20in%20Property,%20Plant%20and%20Equipment) This section reports the disposal of property, plant and equipment during the interim period - The Group disposed of property, plant and equipment amounting to approximately **HKD 32 thousands** during the interim period[34](index=34&type=chunk) [14. Trade and Other Receivables, Deposits and Prepayments](index=18&type=section&id=14.%20Trade%20and%20Other%20Receivables,%20Deposits%20and%20Prepayments) This section provides a breakdown of receivables, deposits, and prepayments, including credit terms for trade receivables Trade and Other Receivables, Deposits and Prepayments (As of Period End) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Trade receivables from restaurant operations | 192 | 217 | (25) | | Rental deposits | 1,793 | 2,027 | (234) | | Other deposits | 414 | 476 | (62) | | Prepayments and other receivables | 816 | 572 | 244 | | **Total** | **3,215** | **3,292** | **(77)** | - Trade receivables primarily relate to credit card settlements with customers, typically settled within 7 days of the transaction date, while corporate customers have a 30-day credit period[35](index=35&type=chunk) Ageing Analysis of Trade Receivables from Restaurant Operations (As of Period End) | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 days | 135 | 180 | | 31 to 60 days | 4 | 7 | | 61 to 90 days | 1 | 4 | | Over 90 days | 52 | 26 | | **Total** | **192** | **217** | [15. Trade and Other Payables and Accrued Charges](index=19&type=section&id=15.%20Trade%20and%20Other%20Payables%20and%20Accrued%20Charges) This section details the components of payables and accrued charges, including credit terms for purchases Trade and Other Payables and Accrued Charges (As of Period End) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Trade payables | 1,655 | 1,772 | (117) | | Accrued staff-related costs | 1,888 | 1,565 | 323 | | Other payables and accrued charges | 5,039 | 4,414 | 625 | | **Total** | **8,582** | **7,751** | **831** | - The credit period for purchases of goods is 30 to 90 days[40](index=40&type=chunk) Ageing Analysis of Trade Payables (As of Period End) | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 days | 630 | 838 | | 31 to 60 days | 764 | 726 | | 61 to 90 days | 124 | 136 | | Over 90 days | 137 | 72 | | **Total** | **1,655** | **1,772** | [16. Share Capital](index=21&type=section&id=16.%20Share%20Capital) This section provides details on the company's authorized and issued share capital, noting no changes during the period Share Capital Details (As of Period End) | Category | Par Value (HKD) | Number of Shares | Amount (HKD thousands) | | :--- | :--- | :--- | :--- | | Authorized share capital | 0.2 | 200,000,000 | 40,000 | | Issued and fully paid share capital | 0.2 | 55,750,000 | 11,150 | - There were no changes in the company's issued share capital during the reporting period[42](index=42&type=chunk) [17. Related Party Transactions](index=21&type=section&id=17.%20Related%20Party%20Transactions) This section outlines various transactions with related parties, including revenue, management fees, and purchases Related Party Transactions (Six Months Ended) | Item | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Catering income from directors of the Company | 1 | 3 | (2) | | Catering income from Ponti Wine Cellars Limited | 2 | 5 | (3) | | Management fee income from Way Wise Limited | 60 | 60 | – | | Management fees paid to Ponti Wine Cellars Limited | 387 | 462 | (75) | | Purchases of goods from Ponti Wine Cellars Limited | 64 | 100 | (36) | - Ponti Wine Cellars Limited is controlled by Mr. Pong Kin Yee, an Executive Director, and his family[46](index=46&type=chunk) - Mr. Pong is a shareholder and director of Way Wise Limited[47](index=47&type=chunk) - Remuneration for key management personnel was **HKD 210 thousands**, consistent with the prior period[47](index=47&type=chunk) [Management Discussion and Analysis](index=23&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the company's operational and financial performance, industry outlook, and strategic initiatives [Industry Review](index=23&type=section&id=Industry%20Review) This section discusses the challenging operating environment for the Hong Kong catering industry, including cost pressures and cautious consumer spending - The Hong Kong catering industry faces continuous pressure from rising food costs, rent, utilities, and labor costs[48](index=48&type=chunk) - Economic uncertainty has led to cautious consumer spending, resulting in lower-than-expected restaurant revenue[48](index=48&type=chunk) - The company has implemented cost-saving measures, including reducing staff costs, negotiating with suppliers, increasing marketing, and expanding takeaway product lines[48](index=48&type=chunk) [Business Review](index=23&type=section&id=Business%20Review) This section summarizes the Group's core business operations and key financial performance indicators for the reporting period - "Classified" operates as European-style casual cafes, specializing in artisanal bread, cheese, and fine wines[49](index=49&type=chunk) - "Rise by Classified" is a modern bakery brand focused on providing dining experiences for local residents[49](index=49&type=chunk) Business Revenue Review (Six Months Ended) | Indicator | June 30, 2025 (HKD millions) | June 30, 2024 (HKD millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net revenue | 17.0 | 17.8 | -4.3% | [Future Prospects](index=24&type=section&id=Future%20Prospects) This section outlines the challenges and opportunities for the Group, along with its strategies for future growth and risk mitigation - The Hong Kong catering industry remains challenging, with success dependent on dining concepts and the economic situation in Hong Kong[50](index=50&type=chunk) [Key Risks and Uncertainties](index=24&type=section&id=Key%20Risks%20and%20Uncertainties) This subsection identifies the primary risks impacting the Group's operations and future development - Changes in customer spending patterns, including avoiding dining out and the trend of traveling north, pose commercial risks to the business[52](index=52&type=chunk) - Failure to find commercially attractive new restaurant locations or renew existing leases will adversely affect the business and future development[52](index=52&type=chunk) - Operations may be affected by fluctuations in food raw material prices, including imported food influenced by exchange rates[52](index=52&type=chunk) - Future labor shortages are possible, with intense competition for qualified personnel in the catering industry[52](index=52&type=chunk) [Mitigation Strategies](index=24&type=section&id=Mitigation%20Strategies) This subsection details the company's plans to address identified risks and enhance business performance - Expand takeaway product lines, increase promotional efforts, and implement sales stimulation measures[52](index=52&type=chunk) - Improve and upgrade existing restaurant facilities to attract more customers[52](index=52&type=chunk) - Closely monitor supplier quotations for raw materials to ensure competitiveness[53](index=53&type=chunk) - Open restaurants with different styles to diversify operational risks[53](index=53&type=chunk) [Financial Review](index=25&type=section&id=Financial%20Review) This section provides a summary of the Group's financial performance, including turnover and loss attributable to owners Financial Review Key Data (Six Months Ended) | Indicator | June 30, 2025 (HKD millions) | June 30, 2024 (HKD millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total turnover | 17.0 | 17.8 | -4.3% | | Total loss attributable to owners of the Company | 3.0 | 3.0 | 0% | - The decrease in revenue was primarily due to changes in consumer spending patterns and the closure of one restaurant upon lease expiry in May 2025[54](index=54&type=chunk) - Despite a net gain of **HKD 0.77 million** from the disposal of property, plant and equipment, a restoration fee of **HKD 0.18 million**, and the closure of a loss-making restaurant, the loss remained consistent with the prior period[54](index=54&type=chunk) [Financial Resources, Liquidity and Capital Structure](index=25&type=section&id=Financial%20Resources,%20Liquidity%20and%20Capital%20Structure) This section analyzes the Group's financial position, including liquidity ratios and capital structure Liquidity and Capital Structure Key Data (As of Period End) | Indicator | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | Change (HKD millions) | | :--- | :--- | :--- | :--- | | Current assets | 25.4 | 26.1 | (0.7) | | Bank balances and cash | 0.25 | 0.82 | (0.57) | | Trade and other receivables, deposits and prepayments | 3.2 | 3.1 | 0.1 | | Current liabilities | 19.7 | 17.8 | 1.9 | | Lease liabilities (current) | 0.9 | 2.4 | (1.5) | | Trade and other payables and accrued charges | 8.6 | 7.8 | 0.8 | Liquidity Ratios (As of Period End) | Ratio | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Current ratio | 1.29 | 1.46 | (0.17) | | Quick ratio | 0.18 | 0.23 | (0.05) | | Gearing ratio | 0% | 0% | 0% | - The Group's capital structure consists of equity attributable to owners of the Company, with no significant changes during the reporting period[57](index=57&type=chunk) [Foreign Currency Risk](index=26&type=section&id=Foreign%20Currency%20Risk) This section states that the Group does not face significant foreign exchange risk due to most transactions being denominated in HKD - The Group's transactions are mostly denominated in Hong Kong Dollars, thus it does not face significant foreign exchange risk[58](index=58&type=chunk) [Capital Commitments](index=26&type=section&id=Capital%20Commitments) This section confirms the absence of any significant capital commitments as of the reporting date - As of June 30, 2025, the Group had no significant capital commitments[59](index=59&type=chunk) [Contingent Liabilities](index=26&type=section&id=Contingent%20Liabilities) This section confirms the absence of any contingent liabilities as of the reporting date - As of June 30, 2025, the Group had no contingent liabilities[60](index=60&type=chunk) [Employees and Remuneration Policy](index=26&type=section&id=Employees%20and%20Remuneration%20Policy) This section provides information on the Group's employee count and remuneration policies Employee Count (As of Period End) | Indicator | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of employees (Hong Kong) | 50 | 52 | (2) | - Remuneration is determined based on market terms, individual performance, qualifications, and experience, with discretionary bonuses and other benefits such as medical insurance and retirement benefits provided[61](index=61&type=chunk) [Other Information](index=26&type=section&id=Other%20Information) This section covers various additional disclosures, including share transactions, investments, and corporate governance matters [Issue of Equity Securities for Cash](index=27&type=section&id=Issue%20of%20Equity%20Securities%20for%20Cash) This section confirms that no equity securities were issued for cash during the reporting period - The company did not issue any equity securities, including those convertible into equity securities, for cash during the six months ended June 30, 2025[62](index=62&type=chunk) [Material Investments, Acquisitions or Disposals](index=27&type=section&id=Material%20Investments,%20Acquisitions%20or%20Disposals) This section states the absence of any material investments, acquisitions, or disposals during the reporting period - There were no material investments, acquisitions, or disposals of subsidiaries, associates, and joint ventures during the six months ended June 30, 2025[63](index=63&type=chunk) [Pledge of Assets](index=27&type=section&id=Pledge%20of%20Assets) This section confirms that no assets were pledged as of the reporting date - As of June 30, 2025, the Group had no pledged assets[64](index=64&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=27&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) This section states that neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the reporting period - 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, and up to the date of this report[65](index=65&type=chunk) [Share Schemes](index=27&type=section&id=Share%20Schemes) This section confirms that no share options were granted under any share option scheme as of the report date - As of the date of this report, the company had not granted any share options under any share option scheme[66](index=66&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=28&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20and%20its%20Associated%20Corporations) This section details the interests of directors in the company's shares, including a significant post-reporting period share disposal Directors' Long Positions in Ordinary Shares of the Company (As of June 30, 2025) | Director Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Wong Tsz Chiu | Interest in controlled corporation | 13,843,692 | 24.8% | | Mr. Pong Kin Yee | Interest in controlled corporation | 22,771,433 | 40.9% | - As of June 30, 2025, Peyton Global Limited and Wiltshire Global Limited (as sellers) entered into a sale and purchase agreement with Yimu Group (BVI) Limited (as offeror) to dispose of a total of **36,615,125 shares** of the company (representing **65.7%**), with the transaction completed on July 21, 2025[67](index=67&type=chunk) - Save as disclosed, the directors had no other disclosable interests or short positions in shares, underlying shares, and debentures at the end of the reporting period[68](index=68&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares of the Company](index=29&type=section&id=Substantial%20Shareholders%27%20and%20Other%20Persons%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) This section lists the interests of substantial shareholders as of the reporting date, noting a significant post-reporting period share disposal Substantial Shareholders' Long Positions in Ordinary Shares of the Company (As of June 30, 2025) | Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Wiltshire Global Limited | Beneficial owner | 13,843,692 | 24.8% | | Ms. Li Yuen Ching | Spouse's interest | 13,843,692 | 24.8% | | Peyton Global Limited | Beneficial owner | 22,771,433 | 40.9% | | Ms. Cheng Chi Man | Spouse's interest | 22,771,433 | 40.9% | | Topaz Investment Group Limited | Beneficial owner | 3,400,000 | 6.1% | | Ms. Mak Siu Han | Interest in controlled corporation | 3,400,000 | 6.1% | - As of June 30, 2025, Peyton Global Limited and Wiltshire Global Limited (as sellers) entered into a sale and purchase agreement with Yimu Group (BVI) Limited (as offeror) to dispose of a total of **36,615,125 shares** of the company (representing **65.7%**), with the transaction completed on July 21, 2025[70](index=70&type=chunk)[72](index=72&type=chunk) [Directors' Interests in Competing Business](index=31&type=section&id=Directors%27%20Interests%20in%20Competing%20Business) This section confirms that no directors or controlling shareholders have interests in businesses competing with the Group - The directors are unaware of any business or interest of any director, controlling shareholder, or their respective close associates that competes or may compete with the Group's business during the period ended June 30, 2025[73](index=73&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) This section describes the composition and role of the Audit Committee, including its review of the interim financial statements - The Audit Committee comprises four independent non-executive directors, with Mr. Yu Man Yiu serving as chairman[74](index=74&type=chunk) - The Audit Committee has reviewed the interim financial statements and considers them to be in compliance with applicable accounting standards and requirements[74](index=74&type=chunk) [Directors' Securities Transactions](index=31&type=section&id=Directors%27%20Securities%20Transactions) This section confirms that all directors have complied with the company's code for securities transactions - The company has adopted a code for directors' securities transactions no less stringent than that required by the GEM Listing Rules, and all directors have complied with it as of the date of this report[75](index=75&type=chunk) [Corporate Governance](index=32&type=section&id=Corporate%20Governance) This section outlines the company's commitment to corporate governance standards and notes a deviation regarding the roles of Chairman and CEO - The company is committed to maintaining high standards of corporate governance and complies with the code provisions set out in Appendix C1 Part 2 of the GEM Listing Rules[76](index=76&type=chunk) - There is a deviation from Code Provision C.2.1, where the roles of Chairman and Chief Executive Officer are not segregated, with Mr. Wong Tsz Chiu serving as Chairman and no Chief Executive Officer[76](index=76&type=chunk) - The Board believes this vacancy does not impair the Group's management and will review the structure periodically[76](index=76&type=chunk) [Post Balance Sheet Events](index=32&type=section&id=Post%20Balance%20Sheet%20Events) This section details significant events that occurred after the reporting period, including a change in shareholding and a new lease agreement - On July 21, 2025, Peyton Global Limited and Wiltshire Global Limited sold **65.7%** of the company's shares to Yimu Group (BVI) Limited[77](index=77&type=chunk) - This change in shareholding triggered a mandatory unconditional cash offer of **HKD 1.318 per share**[77](index=77&type=chunk) - On August 27, 2025, a subsidiary of the company entered into a six-year lease agreement for operating a Chinese restaurant, involving a total right-of-use asset value of approximately **HKD 16.8 million**[78](index=78&type=chunk)

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