[Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of the company's fundamental information, including board members and key appointments [Company Information Overview](index=3&type=section&id=Company%20Information%20Overview) This section discloses basic information for Yue Yuen Industrial (Holdings) Limited as of August 11, 2025, including board members, company secretary, authorized representatives, registered office, principal place of business in Hong Kong, auditor, share registrar, and principal bankers, noting the resignation of CFO Shi Zhihong and the appointment of Zou Zhiming on August 11, 2025 - Chief Financial Officer Shi Zhihong resigned on August 11, 2025, and Zou Zhiming was appointed as the new CFO on the same day[8](index=8&type=chunk) - The Board of Directors includes executive directors (Lu Jinzhu as Chairman, Tsai Pei-Chun as Managing Director) and independent non-executive directors[8](index=8&type=chunk) - The company's principal bankers include ANZ Bank, BNP Paribas, Citibank, and others[10](index=10&type=chunk) [Financial and Operational Highlights](index=4&type=section&id=Financial%20and%20Operational%20Highlights) This section summarizes key financial and operational metrics for the period, indicating revenue growth but a decline in profit indicators [Financial and Operational Highlights Overview](index=4&type=section&id=Financial%20and%20Operational%20Highlights%20Overview) This section outlines the company's key financial and operational metrics for the six months ended June 30, 2025, including footwear shipments, revenue, profit, EPS, key financial ratios, total employees, and capital expenditure, showing slight revenue growth but declining profit indicators, alongside increases in employee count and capital expenditure Key Financial Performance for H1 2025 | Metric | 2025 (Million USD) | 2024 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,060.1 | 4,015.4 | 1.1% | | Gross Profit | 918.6 | 975.1 | -5.8% | | Operating Profit | 207.0 | 259.3 | -20.2% | | Profit Attributable to Owners of the Company | 171.2 | 184.4 | -7.2% | | Basic Earnings Per Share (US Cents) | 10.67 | 11.44 | -6.8% | | Interim Dividend Per Share (HKD) | 0.40 | 0.40 | 0.0% | Operating Metrics for H1 2025 | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Footwear Shipments (Million Pairs) | 126.7 | 120.7 | 5.0% | | Total Employees | 292,300 | 277,000 | 5.5% | | Capital Expenditure (Million USD) | 146.0 | 93.8 | 55.7% | Profitability Ratios for H1 2025 | Metric | 2025 (%) | 2024 (%) | Change (Percentage Points) | | :--- | :--- | :--- | :--- | | Gross Profit Margin | 22.6 | 24.3 | -1.7 | | Operating Profit Margin | 5.1 | 6.5 | -1.4 | | Profit Attributable to Owners of the Company Margin | 4.2 | 4.6 | -0.4 | - In terms of solvency, the leverage ratio increased from **18.1% in 2024** to **19.6% in 2025**, and the net leverage ratio shifted from a net cash position in 2024 to a **1.7% net debt position in 2025**[11](index=11&type=chunk) [Review Report on Condensed Consolidated Financial Statements](index=5&type=section&id=Review%20Report%20on%20Condensed%20Consolidated%20Financial%20Statements) This section presents the auditor's review report on the condensed consolidated financial statements, concluding no material misstatements [Conclusion of Review Report](index=5&type=section&id=Conclusion%20of%20Review%20Report) Deloitte Touche Tohmatsu reviewed Yue Yuen Industrial (Holdings) Limited's condensed consolidated financial statements for the six months ended June 30, 2025, finding no matters indicating material non-compliance with HKAS 34, despite the review scope being less than an audit - The auditor found no matters indicating that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[16](index=16&type=chunk) - The scope of the review is substantially less than an audit, and therefore no audit opinion is expressed[15](index=15&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[15](index=15&type=chunk) [Interim Results](index=6&type=section&id=Interim%20Results) This section details the company's interim financial performance, including statements of profit or loss, comprehensive income, financial position, equity changes, and cash flows, along with explanatory notes [Condensed Consolidated Statement of Profit or Loss](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This section discloses the company's profit or loss for the six months ended June 30, 2025, showing slight revenue growth but increased cost of sales, selling and distribution expenses, and administrative expenses, leading to declines in gross profit, profit before tax, profit for the period, and basic earnings per share Key Data from Condensed Consolidated Statement of Profit or Loss for H1 2025 | Metric | 2025 (Thousand USD) | 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,060,148 | 4,015,407 | 1.1% | | Cost of sales | (3,141,576) | (3,040,320) | 3.3% | | Gross profit | 918,572 | 975,087 | -5.8% | | Profit before tax | 221,325 | 265,200 | -16.5% | | Profit for the period | 182,305 | 203,971 | -10.7% | | Basic earnings per share (US Cents) | 10.67 | 11.44 | -6.8% | [Condensed Consolidated Statement of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This section presents the company's comprehensive income for the six months ended June 30, 2025, where a decrease in profit for the period was offset by a significant improvement in other comprehensive income (expense) due to a positive shift in exchange differences on translating foreign operations, resulting in an overall increase in total comprehensive income Key Data from Condensed Consolidated Statement of Comprehensive Income for H1 2025 | Metric | 2025 (Thousand USD) | 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Profit for the period | 182,305 | 203,971 | -10.7% | | Exchange differences on translating foreign operations | 32,698 | (29,775) | Significantly improved | | Total comprehensive income for the period | 213,250 | 170,546 | 25.0% | - The exchange differences on translating foreign operations shifted from a negative value in the first half of 2024 to a positive value in the first half of 2025, which was the primary driver of comprehensive income growth[19](index=19&type=chunk) [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section provides the company's asset, liability, and equity status as of June 30, 2025, showing a slight decrease in non-current assets, increases in both current assets and current liabilities, leading to a marginal rise in net current assets, while total assets less current liabilities and total equity maintained stable growth Key Data from Condensed Consolidated Statement of Financial Position as of June 30, 2025 | Metric | June 30, 2025 (Thousand USD) | December 31, 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 3,520,586 | 3,530,430 | -0.3% | | Current assets | 3,919,122 | 3,844,924 | 1.9% | | Current liabilities | 1,828,978 | 1,769,779 | 3.3% | | Net current assets | 2,090,144 | 2,075,145 | 0.7% | | Total equity | 4,934,857 | 4,914,354 | 0.4% | - Current bank borrowings increased from **357,616 thousand USD** as of December 31, 2024, to **568,387 thousand USD** as of June 30, 2025[23](index=23&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section details the company's equity changes for the six months ended June 30, 2025, where the increase in total equity was primarily driven by profit for the period and positive exchange differences from overseas operations, despite dividend distributions and share award scheme adjustments - As of June 30, 2025, total equity was **4,934,857 thousand USD**, an increase from **4,914,354 thousand USD** as of January 1, 2025[25](index=25&type=chunk) - Profit for the period of **171,190 thousand USD** and exchange differences on translating foreign operations of **21,163 thousand USD** were the main contributors to equity growth[25](index=25&type=chunk) - Dividends of **183,950 thousand USD** were distributed during the period, share award schemes resulted in the purchase of shares totaling **3,705 thousand USD**, and equity-settled share-based payments of **1,397 thousand USD** were recognized[25](index=25&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section reports the company's cash flows for the six months ended June 30, 2025, showing a decrease in net cash from operating activities, a significant increase in net cash used in investing activities, and a substantial reduction in net cash used in financing activities, ultimately leading to a net decrease in cash and cash equivalents Key Data from Condensed Consolidated Statement of Cash Flows for H1 2025 | Metric | 2025 (Thousand USD) | 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 110,407 | 173,650 | -36.4% | | Net cash used in investing activities | (140,123) | (51,369) | 172.8% (outflow increased) | | Net cash used in financing activities | (63,848) | (337,677) | -81.1% (outflow decreased) | | Net decrease in cash and cash equivalents | (93,564) | (215,396) | -56.5% (decrease narrowed) | - Net cash used in investing activities significantly increased, primarily due to higher payments for property, plant, and equipment[29](index=29&type=chunk) - Net cash used in financing activities significantly decreased, primarily due to a substantial increase in new bank borrowings[31](index=31&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and supplementary information for various items in the condensed consolidated financial statements, covering accounting policies, revenue classification, taxation, dividends, earnings per share, asset changes, fair value measurement of financial instruments, financial guarantees, and share award schemes, offering essential context and details for understanding the financial data - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and incorporate the first-time application of amendments to Hong Kong Accounting Standard 21, which had no significant impact[33](index=33&type=chunk)[35](index=35&type=chunk) Revenue Composition for H1 2025 | Business Segment | 2025 (Thousand USD) | 2024 (Thousand USD) | | :--- | :--- | :--- | | Manufacturing business | 2,797,981 | 2,634,404 | | Retail business | 1,262,167 | 1,381,003 | | Sports/Outdoor Footwear (as % of total revenue) | 53.6% | 51.7% | - Income tax expense for the first half of 2025 was **39,020 thousand USD**, with **2,860 thousand USD** recognized for the first time as current tax expense under Pillar Two rules[43](index=43&type=chunk) - As of June 30, 2025, **109.0 million USD** of disputed tax has been provisionally paid for the Indonesian tax dispute, with **40.5 million USD** recognized as additional income tax expense and late payment interest, and the remainder as recoverable tax and other receivables[46](index=46&type=chunk)[47](index=47&type=chunk) - The Board resolved to declare an interim dividend of **HKD 0.40 per share**, consistent with the prior year period[52](index=52&type=chunk) - Purchases of property, plant, and equipment for the period amounted to **142,479 thousand USD**, higher than **78,387 thousand USD** in the prior year period[56](index=56&type=chunk) - Bank credit guarantees were provided for joint ventures and associates, with guaranteed amounts of **32,796 thousand USD** and **20,700 thousand USD**, respectively[69](index=69&type=chunk) - Both the Yue Yuen Share Award Scheme and the Pou Sheng Share Award Scheme experienced changes in share grants, vesting, and lapses[71](index=71&type=chunk)[72](index=72&type=chunk) [Management Discussion and Analysis](index=27&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's perspective on the company's performance, financial condition, and future outlook, covering business review, operating results, liquidity, and capital structure [Business Review](index=27&type=section&id=Business%20Review) As a leading global footwear manufacturer and sports retailer, Yue Yuen faced global economic uncertainties in H1 2025, yet its manufacturing business saw robust demand, with footwear shipments and average selling prices recovering, while its retail business (Pou Sheng) faced challenges in mainland China but achieved steady online sales, with the company continuing its commitment to ESG and talent development, earning multiple external recognitions - Despite challenges such as tariffs, inflation, and geopolitical conflicts, footwear exports from major Southeast Asian producing countries continued to grow (**Vietnam +10.1%**, **Indonesia +13.6%**), while China's footwear exports decreased by **7.2%**[74](index=74&type=chunk) - The manufacturing business experienced robust overall footwear product demand, sustained improvement in multi-brand orders, full production lines, steady growth in footwear shipments, and a recovery in average selling prices[75](index=75&type=chunk) - The retail business was affected by weak consumer confidence and high inventory in mainland China, resulting in soft foot traffic and intense discount competition; Pou Sheng focused on enhancing omnichannel capabilities, achieving steady online sales growth, which partially alleviated offline pressure[75](index=75&type=chunk) - Yue Yuen achieved high scores in S&P Global Corporate Sustainability Assessment, was included in "The Sustainability Yearbook (China Edition) 2025," and received a **"B-" rating for CDP Water Security** and a **"B" rating for Climate Change**, with an **MSCI ESG rating of "BB"**[77](index=77&type=chunk)[78](index=78&type=chunk) [Operating Results](index=29&type=section&id=Operating%20Results) During the reporting period, the company's revenue slightly increased, but profit attributable to owners of the company decreased, with manufacturing revenue growing, footwear shipments and average selling prices rising, though gross margin was impacted by rising costs, while retail revenue declined and gross margin was affected by promotional competition, with continued investment in product development and updates on taxation and tax disputes - Revenue increased by **1.1%** to **4,060.1 million USD**, but profit attributable to owners of the company decreased by **7.2%** to **171.2 million USD**[81](index=81&type=chunk) - Footwear manufacturing revenue increased by **8.3%** to **2,610.8 million USD**, footwear shipments rose by **5.0%** to **126.7 million pairs**, and the average selling price increased by **3.2%** to **20.61 USD per pair**[82](index=82&type=chunk) - Revenue contributed by Pou Sheng decreased by **8.6%** to **1,262.2 million USD**, with a net closure of **40 stores**, but omnichannel sales grew by approximately **16%** year-on-year[83](index=83&type=chunk) - Overall gross profit margin decreased by **1.7 percentage points** to **22.6%**, and the manufacturing business gross profit margin decreased by **1.4 percentage points** to **17.7%**, primarily due to uneven capacity utilization, unmet production efficiency targets, and rising labor costs[90](index=90&type=chunk) - Product development expenses reached **70.8 million USD**, allocated to sample production, digital prototyping, technology and process re-engineering, and enhancing production efficiency[94](index=94&type=chunk) - Income tax expense for the period was **39.0 million USD**, with the effective tax rate decreasing to **17.6%** (compared to **23.1%** in the prior year period)[95](index=95&type=chunk) - After excluding non-recurring items, recurring profit attributable to owners of the company decreased by **9.0%** to **162.8 million USD**[96](index=96&type=chunk) [Revenue Analysis](index=29&type=section&id=Revenue%20Analysis) This section details the composition and changes in the company's revenue during the reporting period, showing significant growth in footwear manufacturing revenue, with sports/outdoor footwear remaining the primary source, while retail revenue declined, but online sales performed strongly - Footwear manufacturing revenue increased by **8.3%** to **2,610.8 million USD** compared to the prior year period[82](index=82&type=chunk) - Footwear shipments increased by **5.0%** to **126.7 million pairs**, and the average selling price rose by **3.2%** to **20.61 USD per pair**[82](index=82&type=chunk) - Sports/outdoor footwear accounted for **83.4%** of footwear manufacturing revenue and **53.6%** of total revenue[82](index=82&type=chunk) - Revenue contributed by Pou Sheng decreased by **8.6%** to **1,262.2 million USD** (RMB **9,159.4 million**, a decrease of **8.3%**)[83](index=83&type=chunk) - Retail business's offline direct-operated and franchised channels significantly declined, but omnichannel sales grew by approximately **16%** year-on-year, with live streaming sales more than doubling[83](index=83&type=chunk) - As of June 30, 2025, Pou Sheng operated **3,408 directly-operated retail stores** in Greater China, with a net closure of **40 stores**[83](index=83&type=chunk) [Production Review](index=30&type=section&id=Production%20Review) This section reviews the company's production performance during the reporting period, including footwear shipments, average selling prices, and the distribution across major production regions - The manufacturing business shipped a total of **126.7 million pairs** of footwear, an increase of **5.0%** compared to the prior year period[88](index=88&type=chunk) - The average selling price per pair of footwear was **20.61 USD**, an increase of **3.2%** from **19.98 USD** in the prior year period[88](index=88&type=chunk) - Indonesia, Vietnam, and mainland China remained the main production regions, accounting for **53%**, **32%**, and **10%** of total footwear shipments, respectively[88](index=88&type=chunk) [Cost and Expense Review](index=31&type=section&id=Cost%20and%20Expense%20Review) This section details the company's cost and expense composition and changes during the reporting period, showing declines in both gross profit and gross profit margin, primarily due to rising labor costs in manufacturing and promotional competition in retail, while selling and distribution expenses and administrative expenses as a percentage of revenue decreased - Gross profit decreased by **5.8%** to **918.6 million USD**, and the overall gross profit margin decreased by **1.7 percentage points** to **22.6%**[90](index=90&type=chunk) Manufacturing Business Cost of Sales Analysis for H1 2025 | Cost Category | 2025 (Million USD) | 2024 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Major raw material costs | 995.2 | 925.1 | 7.6% | | Direct labor costs and manufacturing overheads | 1,307.2 | 1,206.7 | 8.3% | | Total cost of sales | 2,302.4 | 2,131.8 | 8.0% | - Manufacturing business gross profit margin decreased by **1.4 percentage points** to **17.7%**, primarily due to uneven production line utilization, unmet production efficiency targets, and rising labor costs[90](index=90&type=chunk) - Pou Sheng's gross profit margin decreased by **0.7 percentage points** to **33.5%**, affected by promotional competition and increased average discount rates[91](index=91&type=chunk) - Selling and distribution expenses decreased by **5.9%** to **399.0 million USD**, representing approximately **9.8%** of revenue (compared to **10.6%** in the prior year period)[91](index=91&type=chunk) - Administrative expenses increased by **2.8%** to **283.0 million USD**, representing approximately **7.0%** of revenue (compared to **6.9%** in the prior year period)[92](index=92&type=chunk) - Net operating expenses decreased by **4.2 million USD** to **711.6 million USD**, representing approximately **17.5%** of revenue (compared to **17.8%** in the prior year period)[92](index=92&type=chunk) [Product Development](index=32&type=section&id=Product%20Development) During the reporting period, the company continued to increase investment in product development, focusing on innovative technologies and sustainable materials, and collaborated with clients to drive digital transformation to enhance development, mass production, and delivery efficiency - Product development expenses reached **70.8 million USD** (compared to **68.8 million USD** in the prior year period)[94](index=94&type=chunk) - Investments were made in projects such as sample production and digital prototyping, technology and process re-engineering, and improving production efficiency[94](index=94&type=chunk) - Independent product R&D centers were established for major brand clients, incorporating innovative technology elements and sustainable materials, and collaborating with clients to implement digital transformation[94](index=94&type=chunk) [Finance Costs, Taxation, and Tax Dispute Update](index=32&type=section&id=Finance%20Costs,%20Taxation,%20and%20Tax%20Dispute%20Update) During the reporting period, interest expenses on bank borrowings and finance costs for lease liabilities both decreased, while income tax expense reduced, the effective tax rate lowered, and current tax expense under Pillar Two rules was recognized for the first time, with the Indonesian tax dispute fully provisionally paid, and a portion recognized as recoverable tax - Interest expense on bank borrowings was **22.4 million USD** (compared to **26.9 million USD** in the prior year period)[95](index=95&type=chunk) - Finance costs for lease liabilities were **4.0 million USD** (compared to **5.1 million USD** in the prior year period)[95](index=95&type=chunk) - Total income tax expense was **39.0 million USD**, with an effective tax rate of **17.6%** (compared to **23.1%** in the prior year period)[95](index=95&type=chunk) - Current tax expense of **2.86 million USD** under Pillar Two rules was recognized for the first time[95](index=95&type=chunk) - **109.0 million USD** of disputed tax for the Indonesian tax dispute has been provisionally paid, with **40.5 million USD** recognized as additional income tax expense and late payment interest, and the remainder as recoverable tax and other receivables; no additional tax expense was recognized in the current period[95](index=95&type=chunk) [Recurring Profit Attributable to Owners of the Company](index=32&type=section&id=Recurring%20Profit%20Attributable%20to%20Owners%20of%20the%20Company) During the reporting period, non-recurring profit attributable to owners of the company increased, primarily from gains on disposal of an associate and fair value changes of financial instruments, while recurring profit decreased after excluding non-recurring items - Non-recurring profit attributable to owners of the company was **8.4 million USD** (compared to **5.5 million USD** in the prior year period), primarily comprising a gain on disposal of an associate of **3.4 million USD** and a gain from fair value changes of financial instruments of **5.0 million USD**[96](index=96&type=chunk) - After excluding non-recurring items, recurring profit attributable to owners of the company was **162.8 million USD**, a decrease of **9.0%** compared to the prior year period[96](index=96&type=chunk) [Liquidity, Financial Resources, Capital Structure, and Other Information](index=33&type=section&id=Liquidity,%20Financial%20Resources,%20Capital%20Structure,%20and%20Other%20Information) During the reporting period, the company experienced a decrease in net cash from operating activities and a significant increase in net cash used in investing activities, resulting in free cash outflow, while its financial position remained sound, but the leverage ratio increased, shifting from a net cash to a net debt position, with the company primarily meeting funding needs through operating cash flow and bank borrowings, and focusing on optimizing capital structure and managing foreign exchange risk - Net cash from operating activities decreased to **110.4 million USD**; free cash outflow was **35.6 million USD** (compared to an inflow of **79.9 million USD** in the prior year period), primarily due to increased capital expenditure payments[98](index=98&type=chunk) - Bank balances and cash were **882.3 million USD**, and total bank borrowings were **968.2 million USD**; the leverage ratio increased to **19.6%**, shifting from net cash of **185.9 million USD** to net borrowings of **85.8 million USD**[99](index=99&type=chunk) - The current ratio was **2.1** (compared to **2.2** at year-end), with current assets of **3,919.1 million USD** and current liabilities of **1,829.0 million USD**[99](index=99&type=chunk) - The company primarily meets its funding needs through operating cash flows and bank borrowings, with some bank financing incorporating ESG elements[100](index=100&type=chunk) - Overall capital expenditure was **146.0 million USD** (compared to **93.8 million USD** in the prior year period), with manufacturing business capital expenditure at **129.6 million USD** and Pou Sheng's capital expenditure at **16.4 million USD**[104](index=104&type=chunk) - Plans are underway to invest approximately **276 million USD** in establishing a production base in Tamil Nadu, India, with preliminary engineering work already commenced[105](index=105&type=chunk) - The manufacturing business faces foreign exchange risk between the US dollar and local currencies (such as Vietnamese Dong and Indonesian Rupiah), which is hedged through forward contracts[111](index=111&type=chunk) - Share of results of associates and joint ventures recorded a profit of **32.5 million USD**, largely consistent with the prior year period[112](index=112&type=chunk) [Cash Flow](index=33&type=section&id=Cash%20Flow) During the reporting period, net cash from operating activities decreased, net cash used in investing activities significantly increased, and net cash used in financing activities substantially reduced, resulting in a net decrease in cash and cash equivalents - Net cash from operating activities was **110.4 million USD** (compared to **173.7 million USD** in the prior year period), a decrease of **36.4%**[98](index=98&type=chunk) - Free cash outflow was **35.6 million USD** (compared to an inflow of **79.9 million USD** in the prior year period), primarily due to payments for capital expenditure projects committed in the previous year[98](index=98&type=chunk) - Net cash used in investing activities was **140.1 million USD** (compared to an outflow of **51.4 million USD** in the prior year period)[98](index=98&type=chunk) - Net cash used in financing activities was **63.8 million USD** (compared to an outflow of **337.7 million USD** in the prior year period)[98](index=98&type=chunk) - Net decrease in cash and cash equivalents was **84.3 million USD** (compared to **223.9 million USD** in the prior year period)[98](index=98&type=chunk) [Financial Position and Liquidity](index=33&type=section&id=Financial%20Position%20and%20Liquidity) The company's financial position remained sound, but the leverage ratio increased, shifting from a net cash to a net debt position, with the current ratio slightly decreasing but still maintaining a healthy level - Bank balances and cash were **882.3 million USD** (December 31, 2024: **943.2 million USD**)[99](index=99&type=chunk) - Total bank borrowings were **968.2 million USD** (December 31, 2024: **757.3 million USD**)[99](index=99&type=chunk) - The leverage ratio (total bank borrowings to total equity) was **19.6%** (December 31, 2024: **15.4%**)[99](index=99&type=chunk) - As of June 30, 2025, the Group's net borrowings were **85.8 million USD** (December 31, 2024: net cash of **185.9 million USD**)[99](index=99&type=chunk) - The current ratio was **2.1** (December 31, 2024: **2.2**)[99](index=99&type=chunk) [Funding Sources and Capital Structure](index=33&type=section&id=Funding%20Sources%20and%20Capital%20Structure) The company primarily meets its funding needs through operating cash flows and bank borrowings, considering the impact of debt and equity financing on weighted average cost of capital and leverage ratio, with some bank financing incorporating ESG elements, and manufacturing business primarily using USD-denominated long-term floating-rate borrowings, while retail business mainly uses RMB-denominated fixed-rate borrowings - Current and future funding needs are primarily met through multiple sources, including operating cash flows and bank borrowings[100](index=100&type=chunk) - When choosing between debt and equity financing, the impact on weighted average cost of capital and leverage ratio is considered, with a commitment to reducing costs and maintaining an appropriate leverage ratio[100](index=100&type=chunk) - Some bank financing arrangements have incorporated ESG elements[100](index=100&type=chunk) - Almost all bank borrowings for the manufacturing business are denominated in USD and bear interest at floating rates; bank borrowings and cash balances for the retail business are mostly held in RMB, primarily with fixed-rate borrowings[102](index=102&type=chunk)[103](index=103&type=chunk) - Approximately **51.6%** of total bank borrowings were long-term bank loans[100](index=100&type=chunk) [Capital Expenditure](index=34&type=section&id=Capital%20Expenditure) During the reporting period, the company's overall capital expenditure significantly increased, primarily for capacity expansion and digital transformation in the manufacturing business, while retail capital expenditure decreased, focusing on refined retail strategies - Overall capital expenditure was **146.0 million USD** (compared to **93.8 million USD** in the prior year period), a year-on-year increase of **55.7%**[104](index=104&type=chunk) - Capital expenditure for the manufacturing business was **129.6 million USD** (compared to **67.4 million USD** in the prior year period), primarily for strategic expansion and strengthening manufacturing capacity, and precise investment in digital transformation[104](index=104&type=chunk) - Pou Sheng's capital expenditure decreased to **16.4 million USD** (compared to **26.4 million USD** in the prior year period), used for selective opening and upgrading of physical stores, and optimizing the SAP ERP system[104](index=104&type=chunk) [Significant Investments Held and Plans for Future Significant Investments or Acquisitions of Capital Assets](index=34&type=section&id=Significant%20Investments%20Held%20and%20Plans%20for%20Future%20Significant%20Investments%20or%20Acquisitions%20of%20Capital%20Assets) No significant investments or M&A activities occurred during the reporting period, but the company plans to invest approximately **276 million USD** in a production base in Tamil Nadu, India, with preliminary engineering already underway, and future progress dependent on market demand and government approvals - There were no significant investments or major acquisitions and disposals during the reporting period[105](index=105&type=chunk) - Plans are to invest approximately **23 billion Indian Rupees** (approximately **276 million USD**) in establishing a production base in Tamil Nadu, India, with preliminary related engineering construction already commenced and progressing in an orderly manner[105](index=105&type=chunk) - This investment project will be funded by internal resources and/or bank borrowings[105](index=105&type=chunk) - The Group currently has no plans for asset acquisitions, but may have other significant investment or capital asset acquisition plans in the future to support sustainable growth[106](index=106&type=chunk)[107](index=107&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures](index=35&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries,%20Associates,%20and%20Joint%20Ventures) During the reporting period, the company did not undertake any significant acquisition or disposal activities related to subsidiaries, associates, or joint ventures - During the reporting period, the Group did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures[109](index=109&type=chunk) [Contingent Liabilities](index=35&type=section&id=Contingent%20Liabilities) The company provided financial guarantees to banks for its joint ventures and associates - The Group has provided bank guarantees for its joint ventures and associates to obtain bank credit[110](index=110&type=chunk) Financial Guarantee Contracts as of June 30, 2025 | Guaranteed Party | Guaranteed Amount (Thousand USD) | Amount Utilized (Thousand USD) | | :--- | :--- | :--- | | Joint ventures | 32,796 | 22,453 | | Associates | 20,700 | 149 | [Foreign Exchange Risk](index=35&type=section&id=Foreign%20Exchange%20Risk) The manufacturing business faces foreign exchange risk between the US dollar and local currencies (e.g., Vietnamese Dong, Indonesian Rupiah), which is hedged through forward contracts, while the retail business, primarily denominated in RMB, has relatively lower exchange rate risk - All revenue from the manufacturing business is denominated in USD, most costs for materials and components are paid in USD, while local expenses such as wages, utilities, and local fees are paid in local currencies; the Group uses forward contracts for hedging[111](index=111&type=chunk) - Most revenue from the Greater China retail business is denominated in RMB, and almost all expenses are also paid in RMB[111](index=111&type=chunk) [Share of Results of Associates and Joint Ventures](index=35&type=section&id=Share%20of%20Results%20of%20Associates%20and%20Joint%20Ventures) During the reporting period, the company's share of results from associates and joint ventures recorded a profit of **32.5 million USD**, largely consistent with the prior year period - Share of results of associates and joint ventures collectively recorded a profit of **32.5 million USD**, compared to a total profit of **32.9 million USD** in the prior year period[112](index=112&type=chunk) [Employees](index=36&type=section&id=Employees) As of June 30, 2025, the company's total employee count increased, with manufacturing staff rising and retail staff decreasing, while the company remains committed to talent development, competitive compensation, and promoting a diverse, equitable, and inclusive corporate culture, adhering to Fair Labor Association standards Total Employees as of June 30, 2025 | Business Segment | June 30, 2025 | June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Employees | 292,300 | 277,000 | 5.5% | | Manufacturing Business Employees | 273,100 | 256,300 | 6.6% | | Retail Business Employees | 19,200 | 20,700 | -7.2% | - The company believes talent is a crucial asset for the Group, planning comprehensive systems for recruitment, utilization, development, and retention, while offering competitive compensation and comprehensive employee benefits programs[115](index=115&type=chunk) - Committed to fostering a diverse workplace, promoting a corporate culture of diversity, equity, and inclusion among employees, and as the world's first and only FLA-accredited footwear supplier, pledging to adhere to the FLA Workplace Code of Conduct[115](index=115&type=chunk) [Outlook](index=37&type=section&id=Outlook) Despite escalating global economic headwinds, the company remains optimistic about the long-term prospects of the sports industry, and in the short term, it will actively monitor the political and economic environment, promote diversified capacity layout, prioritize rapid response, and consolidate profitability and market leadership through digital transformation, cost and expense control, and refined retail strategies - Despite escalating global economic headwinds, the Group remains optimistic about the long-term prospects of the sports industry and confident in its role as a strategic supplier[117](index=117&type=chunk) - In the short term, challenges include reciprocal tariffs, inflation, slowing consumer confidence, and the impact of geopolitical conflicts on shipping logistics, leading to volatile operating environment and order visibility[117](index=117&type=chunk) - The company will continue to actively monitor the political and economic environment, promote medium-to-long-term capacity layout strategies, including diversified allocation targeting regions such as Indonesia and India[117](index=117&type=chunk) - Adopting rapid response as a core guiding principle, the company will drive comprehensive plans, including prudent evaluation of workforce arrangements and expansion timelines, balancing demand, order scheduling, and labor supply[117](index=117&type=chunk) - The SAP ERP system and Integrated Operations Platform (OCP) are expected to be fully launched by the end of 2025, and in the future, an excellent manufacturing system will be built through gradually piloted AI agents and ecological intelligence module tools[118](index=118&type=chunk) - Retail subsidiary Pou Sheng will continue to dynamically deploy its physical and omnichannel retail footprint through refined retail strategies, but still faces revenue and profitability pressure in the short term[119](index=119&type=chunk) [Other Information](index=38&type=section&id=Other%20Information) This section covers additional corporate information, including interim dividend details, share registration, directors' and major shareholders' interests, share award schemes, and corporate governance practices [Interim Dividend](index=38&type=section&id=Interim%20Dividend) The Board has resolved to declare an interim dividend of **HKD 0.40 per share**, consistent with the prior year period, with payment scheduled for October 9, 2025, and the company remains committed to a long-term relatively stable dividend policy - The Board has resolved to pay an interim dividend of **HKD 0.40 per share** for the six months ended June 30, 2025 (2024: **HKD 0.40 per share**)[121](index=121&type=chunk) - The interim dividend will be paid on **October 9, 2025**[121](index=121&type=chunk) - The Group will continue to strive for a long-term relatively stable dividend policy[121](index=121&type=chunk) [Closure of Register of Members](index=38&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility for the interim dividend, the company will close its register of members from September 16 to September 18, 2025, requiring all transfer documents to be lodged with the Hong Kong share registrar by 4:30 p.m. on September 15, 2025 - The company will suspend registration of members from **Tuesday, September 16, 2025**, to **Thursday, September 18, 2025**[122](index=122&type=chunk) - To qualify for the interim dividend, all transfer documents must be lodged with the Hong Kong share registrar by **4:30 p.m. on Monday, September 15, 2025**[122](index=122&type=chunk) - The record date for interim dividend entitlement will be **Tuesday, September 16, 2025**[122](index=122&type=chunk) [Directors' and Chief Executive's Interests in Securities](index=38&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Securities) This section discloses the interests of directors and chief executives in the shares of the company and its associated corporations (Pou Sheng, Pou Chen) as of June 30, 2025, including personal interests and those held through share award schemes Directors' Interests in the Company's Shares as of June 30, 2025 | Director's Name | Capacity | Total Shares Held (Long Position) | % of Issued Shares | | :--- | :--- | :--- | :--- | | Lu Jinzhu | Beneficial owner | 603,000 | 0.03% | | Chou Wei-Te | Beneficial owner | 80,000 | 0.00% | | Lin Chen-Tien | Beneficial owner | 334,000 | 0.02% | | Liu Hung-Chih | Beneficial owner | 859,000 | 0.05% | | Shih Chih-Hung | Beneficial owner | 61,000 | 0.00% | Directors' Interests in Pou Sheng's Shares as of June 30, 2025 | Director's Name | Capacity | Total Pou Sheng Shares Held (Long Position) | % of Pou Sheng's Issued Shares | | :--- | :--- | :--- | :--- | | Tsai Pei-Chun | Beneficial owner | 19,523,000 | 0.37% | | Liu Hung-Chih | Family interest | 414,000 | 0.01% | Directors' Interests in Pou Chen's Shares as of June 30, 2025 | Director's Name | Capacity | Total Pou Chen Shares Held (Long Position) | % of Pou Chen's Issued Shares | | :--- | :--- | :--- | :--- | | Lu Jinzhu | Beneficial owner | 1,143,770 | 0.04% | | Tsai Pei-Chun | Beneficial owner | 4,177,779 | 0.14% | | Lin Chen-Tien | Beneficial owner | 297,760 | 0.01% | | Shih Chih-Hung | Family interest | 40,000 | 0.00% | - Mr. Chou Wei-Te and Mr. Liu Hung-Chih each held interests in **80,000 shares** of the Company granted with vesting conditions[128](index=128&type=chunk) [Share Award Schemes](index=40&type=section&id=Share%20Award%20Schemes) This section details the terms, validity, grant limits, vesting conditions, and share movement during the reporting period for the Yue Yuen Share Option Scheme, Yue Yuen Share Award Scheme, and Pou Sheng Share Award Scheme - The Yue Yuen Share Option Scheme was adopted on **May 31, 2019**, for a term of ten years, with the total number of shares available for issue as of the reporting date representing approximately **10.06%** of the issued shares, but no share options have been granted since its adoption[129](index=129&type=chunk) - The Yue Yuen Share Award Scheme was adopted on **January 28, 2014**, and amended and restated on **November 13, 2023**, extending its validity for ten years to **January 27, 2034**; the total number of shares granted shall not exceed **2%** of the company's issued share capital on the grant date[130](index=130&type=chunk)[131](index=131&type=chunk) Yue Yuen Share Award Scheme Movements for H1 2025 | Type of Movement | Number of Shares | | :--- | :--- | | Balance at January 1 | 1,570,000 | | Granted during the period | 2,452,000 | | Vested | (2,062,000) | | Lapsed | (120,000) | | Balance at June 30 | 1,840,000 | - The Pou Sheng Share Award Scheme was adopted on **May 9, 2014**, and amended and restated on **November 13, 2023**, extending its validity for ten years to **May 8, 2034**; the total number of shares granted shall not exceed **4%** of Pou Sheng's issued shares[138](index=138&type=chunk)[141](index=141&type=chunk) Pou Sheng Share Award Scheme Movements for H1 2025 | Type of Movement | Number of Shares | | :--- | :--- | | Balance at January 1 | 22,080,000 | | Lapsed/Cancelled | (2,880,000) | | Balance at June 30 | 19,200,000 | [Arrangements for Purchase of Shares or Debentures](index=44&type=section&id=Arrangements%20for%20Purchase%20of%20Shares%20or%20Debentures) Except for shares purchased by the trustee of the Yue Yuen Share Award Scheme, neither the company nor its subsidiaries participated in any arrangements during the reporting period that would enable directors to benefit from acquiring shares or debt securities of the company or any other body corporate - Save as disclosed in the share award schemes, neither the company nor any of its subsidiaries participated in any arrangements during the period that would enable directors to acquire benefits by means of the purchase of shares or debt securities (including debentures) of the company or any other body corporate[146](index=146&type=chunk) - The trustee of the Yue Yuen Share Award Scheme purchased a total of **2,180,000 shares** on the Stock Exchange for a total consideration of approximately **3,705,000 USD** in accordance with the terms of the scheme[154](index=154&type=chunk) [Major Shareholders' Interests in Securities](index=45&type=section&id=Major%20Shareholders'%20Interests%20in%20Securities) This section discloses the interests of major shareholders in the company's securities as of June 30, 2025, with Pou Chen Corporation and its wholly-owned subsidiary Wealthplus Holdings Limited being the largest shareholders, holding over **50%** of the shares Major Shareholders' Interests in the Company's Securities as of June 30, 2025 | Shareholder Name | Capacity | Number of Shares Held (Long Position) | % of Issued Shares | | :--- | :--- | :--- | :--- | | Pou Chen Corporation | Interest in controlled corporation | 824,143,835 | 51.36% | | Wealthplus Holdings Limited | Interest in controlled corporation | 773,156,303 | 48.18% | | Merrill Lynch & Co. Inc. | Interest in controlled corporation | 99,315,703 | 6.18% | - Pou Chen Corporation holds shares in the company through its wholly-owned subsidiaries, Wealthplus Holdings Limited and Win Fortune Investments Limited[151](index=151&type=chunk) - Merrill Lynch & Co. Inc. held both long and short positions in the company's shares, with a short position of **109,341,792 shares** (**6.81%**)[148](index=148&type=chunk) [Update on Directors' Information Pursuant to Rule 13.51B(1) of the Listing Rules](index=46&type=section&id=Update%20on%20Directors'%20Information%20Pursuant%20to%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) This section updates changes in directors' information since the annual report's publication, including significant personnel changes such as the retirement of Zhan Luming, appointment of Chou Wei-Te, resignation of Shih Chih-Hung, and appointment of Zou Zhiming, as well as some directors' positions in other listed companies - Mr. Zhan Luming retired as an executive director effective **June 1, 2025**[155](index=155&type=chunk) - Mr. Chou Wei-Te was appointed as an executive director on **June 1, 2025**, and as an executive director of Eagle Nice (International) Holdings Limited on **June 30, 2025**[155](index=155&type=chunk) - Mr. Shih Chih-Hung resigned as executive director and Chief Financial Officer on **August 11, 2025**, and during the reporting period, was appointed as a director of San Fang Chemical Industry Co., Ltd. and Nan Pao Resins Chemical Co., Ltd., and resigned as an executive director of Eagle Nice[155](index=155&type=chunk) - Mr. Zou Zhiming was appointed as an executive director and Chief Financial Officer on **August 11, 2025**[155](index=155&type=chunk) [Review of Unaudited Interim Financial Report](index=47&type=section&id=Review%20of%20Unaudited%20Interim%20Financial%20Report) The company's Audit Committee (renamed Audit and Risk Management Committee) has reviewed the interim financial report, and external auditor Deloitte Touche Tohmatsu has issued an unqualified review report in accordance with Hong Kong Standard on Review Engagements 2410 - The company's Audit Committee (renamed Audit and Risk Management Committee effective **August 11, 2025**) has reviewed the accounting principles and practices adopted by the Group, together with management[156](index=156&type=chunk) - External auditor Deloitte Touche Tohmatsu has issued an unqualified review report in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[156](index=156&type=chunk) [Corporate Governance](index=47&type=section&id=Corporate%20Governance) The company is committed to maintaining high standards of corporate governance practices and complies with all applicable provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules - The company is committed to maintaining high standards of corporate governance practices by focusing on transparency, accountability, and responsibility to shareholders[157](index=157&type=chunk) - During the period, the company adopted the principles of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules and complied with all applicable code provisions[157](index=157&type=chunk) [Standard Code for Securities Transactions](index=47&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The company has adopted the Standard Code as the code of conduct for directors' securities transactions and requires relevant employees to adhere to similar internal guidelines; all directors confirmed compliance with the Standard Code during the reporting period, with no non-compliance incidents found among relevant employees - The company has adopted the Standard Code as the code of conduct for directors' securities transactions[159](index=159&type=chunk) - Following specific enquiries made by the company to all directors, all directors confirmed their compliance with the standards set out in the Standard Code throughout the period[159](index=159&type=chunk) - Relevant employees of the company who may possess unpublished inside information have also been required to comply with internal guidelines similar to the provisions of the Standard Code; no incidents of non-compliance by relevant employees were found during the period[159](index=159&type=chunk) [Acknowledgement](index=47&type=section&id=Acknowledgement) The Chairman, on behalf of the Board, extends sincere gratitude to clients, suppliers, shareholders, fellow board members, and all employees - The Chairman takes this opportunity to express sincere gratitude to clients, suppliers, and shareholders for their continuous strong support[160](index=160&type=chunk) - The Chairman expresses deep appreciation for the valuable contributions of all Board members during the period and the tireless efforts and dedicated service of the Group's employees[160](index=160&type=chunk) [Directors](index=47&type=section&id=Directors) This section lists the Board of Directors members as of the reporting date and after executive director changes, including executive and independent non-executive directors - Executive Directors: Mr. Lu Jinzhu (Chairman), Ms. Tsai Pei-Chun (Managing Director), Mr. Chou Wei-Te, Mr. Lin Chen-Tien, Mr. Liu Hung-Chih, and Mr. Zou Zhiming (Chief Financial Officer)[161](index=161&type=chunk) - Independent Non-executive Directors: Mr. Wang Ke-Chin, Mr. Ho Lai-King, Mr. Lin Hsueh-Yuan, and Dr. Yang Ju-Hui[161](index=161&type=chunk)

( 於中華人民共和國註冊成立的股份有限公司 ) 股份代號：6199 中期報告 | 目錄 | | --- | | | 釋義 | 2 | | --- | --- | --- | | 第一章 | 公司簡介 | 4 | | 第二章 | 會計數據和財務指標摘要 | 6 | | 第三章 | 管理層討論與分析 | 9 | | 第四章 | 股本變動及股東情況 | 49 | | 第五章 | 董事、監事、高級管理人員、 | 60 | | | 員工及機構情況 | | | 第六章 | 企業管治 | 78 | | 第七章 | 重要事項 | 85 | | 第八章 | 中期財務資料審閱報告 | 88 | | 第九章 | 未經審計中期財務資料的 | 89 | | | 財務報表及附註 | | | 第十章 | 未經審計補充財務信息 | 185 | | 附錄 | 分支機構名錄 | 188 | 本行經國家金融監督管理總局批准持有B1383H252010001號 金融許可證，並經國家金融監督管理總局貴州監管局核准 領取統一社會信用代碼為915200000550280000號營業執照。 本行根據香港銀行業條例（香港法例第155章）並非一家認可 機構，不 ...

目錄 頁次 | 2 | 釋義 | | --- | --- | | 9 | 本集團簡介 | | 11 | 本集團架構圖 | | 14 | 報告期大事回顧 | | 16 | 回顧與展望 | | 18 | 管理層討論和分析 | | 29 | 其他資料 | | 36 | 合併資產負債表 | | 39 | 合併利潤表 | | 40 | 合併股東權益變動表 | | 42 | 合併現金流量表 | | 44 | 公司資產負債表 | | 46 | 公司利潤表 | | 47 | 公司股東權益變動表 | | 49 | 公司現金流量表 | | 51 | 財務報表附註 | | 91 | 公司資料 | 1 成都高速公路股份有限公司 2025中報 釋義 在本報告中，除非文義另有所指，下列詞語具有如下涵義： | 「公司章程」 | 指 | 本公司公司章程 | | --- | --- | --- | | 「聯繫人」 | 指 | 具有上市規則賦予之涵義 | | 「電服交投」 | 指 | 成都電服交投能源科技有限公司，一家於中國註冊成立的有限 | | | | 責任公司，為能源發展公司持有48%股權的合營公司 | | 「董事會」 | 指 | 本公司董 ...

[Company Information](index=4&type=section&id=Company%20Information) This section provides essential details about OrbusNeich Medical Group Holdings Limited, including its board members, committees, registered office, and auditor [Company Basic Information](index=4&type=section&id=Company%20Basic%20Information) This section provides basic information about OrbusNeich Medical Group Holdings Limited, including its board members, audit committee, remuneration committee, nomination committee, authorized representatives, company secretary, registered office, company headquarters, principal place of business in Hong Kong, share registrar, legal advisers, auditor, principal bankers, stock code, and company website - Board members include Executive Directors Mr. Qian Yongxun, Ms. Liu Guizhen, Mr. Chen Yongcheng; Non-executive Directors Mr. Liang Dingxin, Dr. Zhou Yi, Mr. Zhou Jingzhong (resigned); Independent Non-executive Directors Mr. Chen Yeqiang, Mr. Lou Jiaqiang, Dr. Tan Lifen[8](index=8&type=chunk) - The company's registered office is in the Cayman Islands, with its headquarters and principal place of business in Hong Kong located in Hong Kong Science Park[8](index=8&type=chunk) - The auditor is PricewaterhouseCoopers, stock code is **6929**, and the company website is https://orbusneich.com/[10](index=10&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) This section summarizes the Group's financial performance, highlighting revenue growth, profit for the period, and key profitability ratios [Operating Results and Profitability](index=6&type=section&id=Operating%20Results%20and%20Profitability) For the six months ended June 30, 2025, the company's revenue increased by 5.9% year-on-year to USD 83,550 thousand, but gross margin decreased by 3.8 percentage points to 66.9%; profit for the period attributable to owners of the company grew by 5.1% to USD 19,785 thousand, with basic earnings per share at 2.40 US cents For the six months ended June 30, Operating Results and Profitability | Metric | 2025 (USD thousands) | 2024 (USD thousands) | Change (%) | Change (percentage points) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 83,550 | 78,910 | 5.9% | - | | Cost of Sales | (27,653) | (23,134) | 19.5% | - | | Gross Profit | 55,897 | 55,776 | 0.2% | - | | Profit Before Income Tax | 20,775 | 21,285 | -2.4% | - | | Profit for the Period Attributable to Owners of the Company | 19,785 | 18,828 | 5.1% | - | | Basic EPS (US cents) | 2.40 | 2.28 | 5.3% | - | | Diluted EPS (US cents) | 2.40 | 2.28 | 5.3% | - | | Gross Margin | 66.9% | 70.7% | - | -3.8% | | Net Margin | 23.7% | 23.9% | - | -0.2% | [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business operations, financial performance, strategic outlook, and capital management for the reporting period [Business Review](index=7&type=section&id=Business%20Review) OrbusNeich Medical is a global medical device company specializing in PCI and PTA interventional devices, headquartered in Hong Kong, with products sold in over 70 countries and regions worldwide; in H1 2025, despite macroeconomic and geopolitical challenges, the company's revenue grew by 5.9%, driven by strong growth in Asia Pacific and EMEA markets, partially offset by declines in Japan and China, while actively expanding its direct sales model and investing in product development and manufacturing facilities - OrbusNeich Medical specializes in PCI and PTA interventional devices, with products sold in over **70** countries and regions globally, and is actively expanding into the structural heart disease field[14](index=14&type=chunk) - In H1 2025, the Group's revenue reached **USD 83.6 million**, a year-on-year increase of **5.9%**, with proprietary product sales growing by **8.6%** year-on-year[15](index=15&type=chunk) - Profit attributable to owners of the Company was **USD 19.8 million**, a year-on-year increase of **5.1%**; the Board declared a special dividend of **HK 15 cents** per ordinary share to celebrate the Group's 25th anniversary[16](index=16&type=chunk) [Performance by Geographical Market](index=7&type=section&id=Performance%20by%20Geographical%20Market) The Asia Pacific and Europe, Middle East & Africa markets showed strong performance, with revenue growth of 14.0% and 17.0% respectively; the US market also saw significant growth of 20.0% despite tariff impacts, while Japan and Mainland China experienced revenue declines of 14.8% and 5.1% due to sales strategy adjustments and volume-based procurement For the six months ended June 30, Revenue Performance by Geographical Market | Region | 2025 (USD thousands) | 2024 (USD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Asia Pacific | 27,311 | 23,955 | 14.0% | | Europe, Middle East & Africa | 22,429 | 19,170 | 17.0% | | Japan | 16,114 | 18,908 | -14.8% | | Mainland China | 9,652 | 10,176 | -5.1% | | United States | 8,044 | 6,701 | 20.0% | | **Total** | **83,550** | **78,910** | **5.9%** | - Revenue in the Asia Pacific region significantly increased by **14.0%**, primarily due to strong growth in the Indonesian market and widespread adoption of Scoreflex TRIO in Singapore and Malaysia[17](index=17&type=chunk) - Revenue in Europe, Middle East, and Africa (EMEA) significantly rose by **17.0%**, mainly driven by increased sales of proprietary balloon products in direct sales markets (e.g., Germany, France, Spain) and distribution markets (e.g., UK, Slovakia, Czech Republic)[18](index=18&type=chunk) - Revenue in Japan decreased by **14.8%** year-on-year, primarily due to adjusted sales strategy, shifting focus away from lower-priced coronary balloon products, leading to a decline in sales volume[19](index=19&type=chunk) - Revenue in Mainland China decreased by **5.1%** year-on-year, mainly due to a decline in average selling prices caused by the volume-based procurement program, despite an increase in sales volume of conventional balloon products[20](index=20&type=chunk) - Revenue in the US market significantly increased by **20.0%**, primarily due to a notable rise in sales volume of conventional and scoring coronary balloons, and peripheral balloons (including high-value Scoreflex NC balloons)[21](index=21&type=chunk) [Operations Summary](index=8&type=section&id=Operations%20Summary) The company's strategy focuses on enhancing brand value through a direct sales model and extensive distributor network covering over 70 countries and regions globally; in H1 2025, the company acquired a Taiwanese distributor, transitioning the Taiwan market to a direct sales model and increasing its direct sales team to 13; the company continues to invest in R&D, holding over 250 granted patents, with several new products receiving regulatory approvals or entering clinical trials; global manufacturing facilities include a new Hangzhou facility expected to be operational by 2027, significantly boosting production capacity - The company covers over **70** countries and regions through its direct sales team and distributor network; in H1 2025, it acquired a Taiwanese distributor, transitioning the Taiwan market to a direct sales model, increasing the direct sales team to **13**[23](index=23&type=chunk) - As of June 30, 2025, the Group had **286** sales and marketing personnel (December 31, 2024: 266), with direct sales and distributor sales contributing **57.7%** and **42.3%** of total revenue, respectively[23](index=23&type=chunk) - The Group holds over **250** granted patents and published patent applications in major global jurisdictions, with several products having obtained CE Mark, PMDA, or FDA approvals[27](index=27&type=chunk)[28](index=28&type=chunk) - The company has manufacturing facilities in multiple global locations, including Shenzhen (China), Hoofddorp (Netherlands), and Weil am Rhein (Germany); the largest R&D and manufacturing facility in Hangzhou is expected to be operational by **2027**, increasing annual production capacity by approximately **2.4 million units**[29](index=29&type=chunk) [Third-Party Product Collaboration](index=9&type=section&id=Third-Party%20Product%20Collaboration) OrbusNeich Medical expanded its exclusive distribution agreement with Shenzhen Mindray Bio-Medical Electronics Co., Ltd. ("Mindray Medical") to include intravascular ultrasound (IVUS) products, extending the collaboration from Hong Kong and Macau to direct sales markets such as Singapore, Malaysia, France, Germany, Spain, and Switzerland, and covering six additional distribution markets in Europe - The exclusive distribution agreement with Kaili Medical has been expanded to direct sales markets including Singapore, Malaysia, France, Germany, Spain, and Switzerland, and covers six additional distribution markets in Europe for its IVUS products[26](index=26&type=chunk) [Joint Ventures](index=10&type=section&id=Joint%20Ventures) The joint venture OrbusNeich P&F focuses on developing innovative structural heart products, with TricValve's clinical trials in Mainland China progressing well, expanding to 21 participating institutions and achieving its first commercial application in July; the joint venture also boasts a pipeline of structural heart interventional devices - Joint venture OrbusNeich P&F focuses on innovative structural heart products; TricValve's clinical trials in Mainland China have expanded to **21** participating institutions and achieved its first commercial application in Mainland China in **July 2025**[30](index=30&type

Financial Performance - Revenue for the six months ended June 30, 2025, was RMB 9,159,425 thousand, a decrease of 8.3% compared to RMB 9,983,269 thousand in 2024[7] - Gross profit decreased by 10.1% to RMB 3,069,210 thousand, with a gross margin of 33.5%, down 0.7 percentage points from 34.2%[7] - Operating profit fell by 41.6% to RMB 281,596 thousand, resulting in an operating margin of 3.1%, down 1.7 percentage points from 4.8%[7] - Profit attributable to owners of the company decreased by 44.1% to RMB 187,615 thousand, with basic earnings per share of RMB 3.62, down from RMB 6.48[7] - The company's profit for the six months ended June 30, 2025, was RMB 200,106 thousand, a decrease of 40.9% compared to RMB 338,006 thousand for the same period in 2024[15] - Total comprehensive income for the same period was RMB 197,764 thousand, down 42.5% from RMB 342,575 thousand in 2024[15] - Basic and diluted earnings per share for the six months ended June 30, 2025, were RMB 0.036, down from RMB 0.065 in 2024, reflecting a decline of 44.6%[36] - The company’s net profit attributable to shareholders decreased by 44.1% to RMB 187.6 million, resulting in a profit margin of 2.0%, down 1.4 percentage points year-on-year[62] Dividends - The interim dividend was reduced by 42.5% to HKD 0.0115 per share, compared to HKD 0.02 in the previous year[7] - The board has declared an interim dividend of HKD 0.0115 per share for the six months ending June 30, 2025, down from HKD 0.02 per share for the same period in 2024[74] - A special dividend of HKD 0.0115 per share has also been approved, compared to HKD 0.02 per share in the previous period, resulting in a total dividend of HKD 0.0230 per share with a payout ratio of 60%[74] - The record date for the interim and special dividends is September 16, 2025, with the payment scheduled for October 9, 2025[75] Assets and Liabilities - Non-current assets totaled RMB 3,329,854 thousand as of June 30, 2025, a decrease from RMB 3,630,267 thousand at the end of 2024[16] - Current assets amounted to RMB 9,261,076 thousand, slightly down from RMB 9,407,623 thousand at the end of 2024[18] - Current liabilities decreased to RMB 2,844,523 thousand from RMB 3,253,830 thousand at the end of 2024, indicating improved liquidity[18] - The company's net asset value increased to RMB 8,977,358 thousand as of June 30, 2025, compared to RMB 8,870,796 thousand at the end of 2024[18] - The group's asset-liability ratio increased to 2.2% as of June 30, 2025, compared to 0.4% as of December 31, 2024, indicating a rise in leverage[64] Cash Flow - Cash and cash equivalents decreased by 13.2% to RMB 1,232,169 thousand from RMB 1,419,052 thousand[7] - The net cash generated from operating activities for the six months ended June 30, 2025, was RMB 399,258,000, a decrease from RMB 873,308,000 in the same period of 2024[21] - The company incurred a net cash outflow from investing activities of RMB 273,713,000, down from RMB 608,057,000 in the prior year[21] - The company's cash and cash equivalents were RMB 1,232,169 thousand, down from RMB 1,419,052 thousand at the end of 2024[16] - The group's operating cash flow for the period was RMB 399.3 million, indicating a stable cash generation capability[65] Inventory and Costs - Inventory as of June 30, 2025, was RMB 4,865,388 thousand, a slight decrease of 1.6% from RMB 4,946,314 thousand[7] - The average inventory turnover period increased to 146 days from 130 days in the previous year, while inventory at the end of the period decreased to RMB 4,865.4 million[63] - The company’s employee costs totaled RMB 1,053,815,000, a decrease of 3.6% from RMB 1,092,906,000 in the previous period[35] - Total sales and distribution expenses were RMB 2,508.4 million, accounting for 27.4% of revenue, while administrative expenses were RMB 381.9 million, representing 4.2% of revenue[58] Operational Highlights - The company continued to enhance its digital capabilities, integrating its multi-dimensional operational matrix to improve interaction with different consumer groups[52] - The company is focusing on optimizing its store layout and enhancing digital capabilities to improve consumer experience and sales performance[51] - The group signed multiple new lease agreements for retail stores with lease terms generally ranging from 1 to 6 years, resulting in right-of-use assets of RMB 157,629,000 and RMB 76,218,000 respectively[40] - The group has 3,408 directly operated stores in the Greater China region as of June 30, 2025[50] - The group recorded over 100% growth in live-streaming sales, indicating strong performance in private traffic channels[48] - The group continues to optimize its store portfolio and enhance direct store sales conversion rates amid a challenging retail environment[49] Shareholder Information - As of June 30, 2025, the total number of issued shares is 5,326,179,615, with key executives holding a combined total of 19,523,000 shares, representing 0.37% of the issued shares[77] - The major shareholder, Li Shang Management Limited, holds 3,331,551,560 shares, representing 62.55% of the issued shares[87] - The company has a share award plan in place, which was adopted on May 9, 2014, and has been extended for another ten years until May 8, 2034[80] - The total number of shares granted under the share incentive plan cannot exceed 4% of the issued shares as of the grant date, which is 213,047,184 shares[82] - The total number of shares granted to directors and key executives during the reporting period is 800,000 shares, with 1,480,000 shares being forfeited or canceled[83] Governance and Compliance - The company has complied with all applicable code provisions and recommended best practices as per the Corporate Governance Code during the six-month period ending June 30, 2025[94] - The audit committee has reviewed the unaudited condensed consolidated financial information for the six months ending June 30, 2025, and discussed risk management and internal control matters[96] - The board of directors includes non-executive directors, executive directors, and independent non-executive directors as of the report date[98]

[Company Information](index=3&type=section&id=Company%20Information) [Basic Company Information](index=3&type=section&id=Basic%20Company%20Information) This section details the foundational corporate structure and key appointments of Tristate Holdings Limited, including board composition, committee chairs, auditor, and listing details - Board members include executive directors (Mr. Cheung Yau Chuen as Chairman and CEO), non-executive directors, and independent non-executive directors[3](index=3&type=chunk) - Audit Committee Chairman is Mr. Sin Hon Di, Remuneration Committee Chairman is Mr. Szeto Yuk Ting, and Nomination Committee Chairman is Mr. Cheung Yau Chuen[3](index=3&type=chunk) - The company's auditor is RSM Hong Kong, and its shares are listed on The Stock Exchange of Hong Kong Limited (Stock Code: 1962)[3](index=3&type=chunk)[4](index=4&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=5&type=section&id=Business%20Review) Global trade uncertainties and tariffs negatively impacted customer sentiment, leading to an 11.3% revenue decrease to HKD 465.7 million, primarily from lower-margin hair extension products, while gross margin improved to 24.2% due to material optimization and currency depreciation - Global trade prospects deteriorated sharply, with increased tariff and trade policy uncertainties negatively impacting customer sentiment, leading to a cautious "wait-and-see" approach to sales orders[6](index=6&type=chunk) - To address ongoing global trade uncertainties, the Group continuously enhances operations and strengthens customer communication channels to better understand customer needs, while actively exploring new markets and accelerating the development of additional e-commerce platforms[6](index=6&type=chunk) 2025 H1 Key Financial Indicators | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 465.7 | 525.2 | -11.3% | | Gross Margin | 24.2% | 22.4% | +1.8% | | Net Profit Margin | 4.0% | 4.5% | -0.5% | - Gross margin increase primarily attributed to raw material availability, focus on material optimization, and the continuous depreciation of the Bangladeshi Taka against the US Dollar, partially offset by rising labor costs[6](index=6&type=chunk) [Outlook](index=5&type=section&id=Outlook) The Group will continue its growth strategy, monitor market changes, optimize financial performance, expand online stores on cross-border e-commerce platforms, and enlarge its core business sales team, expecting core product demand to gradually recover - The Group will continue to adopt a growth strategy, while closely monitoring market changes and business environment conditions to adjust its business development direction to manage any negative impacts on the Group[7](index=7&type=chunk) - The Group will continue to strengthen financial performance optimization measures across various businesses, continuously open more online stores on several well-known cross-border e-commerce platforms, and expand its core business sales team to drive revenue growth and cover existing and new market developments[7](index=7&type=chunk) - The Board believes the Group is capable of navigating the complex global trade environment and expects demand for its core products to gradually recover by year-end[7](index=7&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) The Group's financial performance significantly declined compared to the prior period, primarily due to reduced revenue from trade policy uncertainties, negative customer sentiment from US tariffs, and increased distribution and selling expenses related to new overseas sales offices - During the period, the Group's financial performance significantly declined compared to the same period in 2024, mainly due to reduced revenue from trade policy uncertainties and the negative impact of increased US tariffs on customer sentiment, as well as increased distribution and selling expenses related to new overseas sales offices[8](index=8&type=chunk) [Revenue](index=6&type=section&id=Revenue) Total revenue decreased by 11.3% to HKD 465.7 million, primarily due to a decline in higher-margin human hair extension products, while lower-margin braid products remained stable Revenue Overview | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 465.7 | 525.2 | (59.5) | -11.3% | | Bangladesh Factory Revenue Share | 99.2% | 98.9% | +0.3% | - | | US Market Revenue Share | 90.5% | 92.1% | -1.6% | - | | Wigs, Hair Accessories & Other Products Revenue Share | 90.9% | 84.1% | +6.8% | - | - Revenue decrease primarily due to stable demand for lower-margin braid products, while sales of higher-margin human hair extension products declined[9](index=9&type=chunk) [Revenue by Product Category](index=6&type=section&id=Revenue%20by%20Product%20Category) Revenue from high-end human hair extension products significantly decreased by 66.6% due to rebranding and inventory clearance, while Halloween product revenue increased by 12.9% Revenue by Product Category | Product Category | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Wigs, Hair Accessories & Other | 423.3 | 441.8 | (18.5) | -4.2% | | High-end Human Hair Extension Products | 21.8 | 65.1 | (43.3) | -66.6% | | Halloween Products | 20.6 | 18.3 | 2.3 | +12.9% | - Revenue from high-end human hair extension products significantly decreased, mainly due to reduced customer orders from rebranding, product updates, and inventory clearance[10](index=10&type=chunk) - Halloween product revenue increased, primarily due to a gradual recovery in sales volume from customers[10](index=10&type=chunk) [Cost of Sales](index=7&type=section&id=Cost%20of%20Sales) Total cost of sales decreased by 13.4% to HKD 353.0 million, consistent with the revenue decline, with similar trends across all product categories Cost of Sales Overview | Product Category | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Cost of Sales | 353.0 | 407.6 | (54.6) | -13.4% | | Wigs, Hair Accessories & Other | 325.8 | 351.2 | (25.4) | -7.3% | | High-end Human Hair Extension Products | 14.1 | 44.2 | (30.1) | -68.0% | | Halloween Products | 13.1 | 12.1 | 1.0 | +7.7% | - The decrease in cost of sales is consistent with the revenue decline during the period, with changes in cost of sales for each product category moving in the same direction as their respective revenue changes[12](index=12&type=chunk) [Gross Profit](index=7&type=section&id=Gross%20Profit) Total gross profit decreased by 4.2% to HKD 112.7 million due to lower revenue, but the overall gross margin improved to 24.2%, with all product categories showing increased margins from reduced production costs Gross Profit and Gross Margin Overview | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Gross Profit | 112.7 | 117.6 | (4.9) | -4.2% | | Total Gross Margin | 24.2% | 22.4% | +1.8% | - | | Wigs, Hair Accessories & Other Gross Profit | 97.5 | 90.6 | 6.9 | +7.7% | | Wigs, Hair Accessories & Other Gross Margin | 23.0% | 20.5% | +2.5% | - | | High-end Human Hair Extension Products Gross Profit | 7.6 | 20.9 | (13.3) | -63.5% | | High-end Human Hair Extension Products Gross Margin | 35.1% | 32.1% | +3.0% | - | | Halloween Products Gross Profit | 7.6 | 6.1 | 1.5 | +24.6% | | Halloween Products Gross Margin | 36.6% | 33.5% | +3.1% | - | - Total gross profit decreased primarily due to lower revenue, but the total gross margin increased, with all product categories showing improved gross margins, mainly benefiting from reduced total production costs[13](index=13&type=chunk)[14](index=14&type=chunk) [Other Income](index=8&type=section&id=Other%20Income) Other income decreased by 9.1% to HKD 3.7 million, mainly due to lower bank interest and rental income Other Income | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Income | 3.7 | 4.1 | (0.4) | -9.1% | - Other income decreased primarily due to lower bank interest income and rental income during the period[15](index=15&type=chunk) [Other Gains and Losses](index=8&type=section&id=Other%20Gains%20and%20Losses) Other gains and losses increased by 55.6% to HKD 4.5 million, primarily driven by fair value changes in financial assets and foreign exchange gains Other Gains and Losses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Gains and Losses | 4.5 | 2.9 | 1.6 | +55.6% | - The increase in other gains and losses primarily includes a gain of **HKD 0.4 million** from fair value changes in financial assets measured at fair value through profit or loss and a gain of **HKD 4.1 million** from foreign currency exchange[16](index=16&type=chunk) [Impairment Losses under Expected Credit Loss Model](index=8&type=section&id=Impairment%20Losses%20under%20Expected%20Credit%20Loss%20Model) The Group recognized no impairment provisions for trade receivables in the current period, compared to HKD 0.1 million in the prior year - During the period, the Group did not make any impairment provisions for trade receivables (2024: the Group made a provision of **HKD 0.1 million**)[17](index=17&type=chunk) [Distribution and Selling Expenses](index=8&type=section&id=Distribution%20and%20Selling%20Expenses) Distribution and selling expenses increased by 5.3% to HKD 13.9 million, mainly due to higher advertising and transportation costs Distribution and Selling Expenses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Distribution and Selling Expenses | 13.9 | 13.2 | 0.7 | +5.3% | - The increase in distribution and selling expenses was primarily due to higher advertising and transportation costs during the period[18](index=18&type=chunk) [Administrative Expenses](index=8&type=section&id=Administrative%20Expenses) Administrative expenses increased by 4.3% to HKD 64.2 million, mainly due to higher salaries and staff benefits from increased headcount in a core business Administrative Expenses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative Expenses | 64.2 | 61.5 | 2.7 | +4.3% | - The increase in administrative expenses was primarily due to higher salaries and staff benefits resulting from an increase in headcount within one of the Group's core businesses[19](index=19&type=chunk) [Other Expenses](index=8&type=section&id=Other%20Expenses) Other expenses increased by 129.9% to HKD 0.4 million, primarily due to higher donations Other Expenses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Expenses | 0.4 | 0.2 | 0.2 | +129.9% | - The increase in other expenses was primarily due to increased donations during the period[20](index=20&type=chunk) [Finance Costs](index=8&type=section&id=Finance%20Costs) Finance costs decreased by 18.4% to HKD 17.6 million, mainly due to a slowdown in interest rates Finance Costs | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finance Costs | 17.6 | 21.5 | (3.9) | -18.4% | - The decrease in finance costs was primarily due to a slowdown in interest rates[21](index=21&type=chunk) [Taxation](index=9&type=section&id=Taxation) Income tax expense increased by 41.9% to HKD 6.2 million, primarily due to the expiration of the income tax holiday in Bangladesh Income Tax Expense | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Income Tax Expense | 6.2 | 4.3 | 1.9 | +41.9% | - The increase in income tax expense was primarily due to the expiration of the income tax holiday in Bangladesh[22](index=22&type=chunk) [Net Profit](index=9&type=section&id=Net%20Profit) Net profit decreased by 21.1% to HKD 18.8 million, mainly due to reduced order shipments from trade policy uncertainties and US tariffs, coupled with increased distribution and selling expenses from new overseas sales offices Net Profit | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 18.8 | 23.9 | (5.1) | -21.1% | - The decrease in net profit was primarily due to reduced order shipments during the period resulting from trade policy uncertainties and the negative impact of increased US tariffs on customer sentiment, as well as increased distribution and selling expenses related to new overseas sales offices[23](index=23&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=Liquidity%20and%20Financial%20Resources) Cash and bank balances increased by 23.0% to HKD 142.3 million, mainly due to higher bank borrowings, while pledged bank deposits decreased due to bank loan repayments Liquidity and Financial Resources Overview | Indicator | June 30, 2025 (million HKD) | Dec 31, 2024 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 142.3 | 115.7 | 26.6 | +23.0% | | Pledged Bank Deposits | 55.2 | 58.7 | (3.5) | -5.9% | | Trade and Other Receivables | 268.6 | 264.8 | 3.8 | +1.4% | - The increase in cash and bank balances was primarily due to increased bank borrowings during the period, while the decrease in pledged bank deposits was mainly due to the repayment of bank borrowings during the period[24](index=24&type=chunk) [Borrowings and Gearing Ratio](index=9&type=section&id=Borrowings%20and%20Gearing%20Ratio) Total borrowings increased by 10.6% to HKD 645.0 million, leading to a 9.0% increase in the gearing ratio to 81.1%, while the Group maintains sufficient financial resources Borrowings and Gearing Ratio Overview | Indicator | June 30, 2025 (million HKD) | Dec 31, 2024 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Borrowings | 645.0 | 583.0 | 62.0 | +10.6% | | Bank Facilities | 869.0 | - | - | - | | Unused Bank Facilities | 192.5 | - | - | - | | Gearing Ratio | 81.1% | 72.1% | +9.0% | - | - The average effective annual interest rate for floating-rate bank borrowings ranged from **1.98% to 8.37%** (December 31, 2024: 2.90% to 7.59%)[26](index=26&type=chunk) - The Group believes it has sufficient financial resources to meet its commitments and working capital requirements[26](index=26&type=chunk) [Capital Expenditure and Capital Commitments](index=10&type=section&id=Capital%20Expenditure%20and%20Capital%20Commitments) Capital expenditure for property, plant, and equipment increased by 24.8% to HKD 16.6 million to maintain manufacturing capacity, while capital commitments decreased by 51.5% Capital Expenditure and Capital Commitments | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Acquisition of Fixed Assets | 16.6 | 13.3 | 3.3 | +24.8% | | Capital Commitments for Property, Plant & Equipment | 3.2 | 6.6 | (3.4) | -51.5% | - Capital expenditure increased to maintain its manufacturing capacity in Bangladesh, while capital commitments decreased[27](index=27&type=chunk) [Foreign Exchange Risk](index=10&type=section&id=Foreign%20Exchange%20Risk) The Group faces foreign currency risk from transactions denominated in USD and RMB, but the HKD peg to USD minimizes this risk, and a 1% appreciation in BDT or RMB is not expected to significantly impact gross margin - The Group faces foreign currency risk as its transactions are denominated in foreign currencies (e.g., USD and RMB), but due to the HKD peg to the USD, the likelihood of the Group facing currency risk is extremely low[28](index=28&type=chunk) - The Group estimates that a **1% appreciation** in Bangladeshi Taka or RMB would not have a significant impact on the Group's gross margin[28](index=28&type=chunk) - As of June 30, 2025, the Group did not have any outstanding foreign currency forward contracts to purchase USD to hedge against any fluctuations in the USD exchange rate[29](index=29&type=chunk) [Contingent Liabilities](index=11&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities (December 31, 2024: Nil)[31](index=31&type=chunk) [Pledge of Assets](index=11&type=section&id=Pledge%20of%20Assets) The Group's bank borrowings are secured by approximately HKD 52.0 million in bank deposits, HKD 69.3 million in land and buildings in Hong Kong, HKD 26.4 million in land and buildings in the US and China, HKD 4.8 million in investment properties in China, negative pledges over assets of certain subsidiaries in China and Bangladesh, and certain life insurance contracts - The Group's bank borrowings are secured by approximately **HKD 52.0 million** in bank deposits, approximately **HKD 69.3 million** in land and buildings and car park spaces in Hong Kong, approximately **HKD 26.4 million** in land and buildings in the US and China, approximately **HKD 4.8 million** in investment properties in China, negative pledges over assets of certain subsidiaries in China and Bangladesh, and certain life insurance contracts[32](index=32&type=chunk)[34](index=34&type=chunk) - The Group's other borrowings are secured by bank deposits of approximately **HKD 3.2 million** (December 31, 2024: HKD 7.7 million)[32](index=32&type=chunk) [Employees and Remuneration Policy](index=11&type=section&id=Employees%20and%20Remuneration%20Policy) The total number of employees decreased by 0.7% to 23,692, while total employee expenses increased by 1.2% to HKD 184.2 million, with remuneration policies remaining consistent Employee Overview | Indicator | June 30, 2025 | June 30, 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Number of Employees | 23,692 | 23,851 | (159) | -0.7% | | Total Employee Expenses (million HKD) | 184.2 | 182.1 | 2.1 | +1.2% | - The Group's remuneration policy has remained unchanged since the date of the annual report for the year ended December 31, 2024[33](index=33&type=chunk) - The Group has a Mandatory Provident Fund Scheme for Hong Kong employees, Chinese employees participate in state-managed retirement benefit schemes, and Bangladeshi employees are covered by a self-managed provident fund[33](index=33&type=chunk) [Significant Investments Held, Material Acquisitions and Disposals, and Future Plans for Material Investments or Capital Assets](index=12&type=section&id=Significant%20Investments%20Held%2C%20Material%20Acquisitions%20and%20Disposals%2C%20and%20Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) During the period, the Group held no significant investments, nor did it undertake any material acquisitions or disposals, and there are no authorized plans for future material investments or capital asset additions - During the period, the Group did not hold any significant investments or undertake any material acquisitions or disposals[35](index=35&type=chunk) - As of June 30, 2025, the Board had not authorized any plans for any material investments or additions to capital assets[35](index=35&type=chunk) [Significant Events Affecting the Group Since June 30, 2025](index=12&type=section&id=Significant%20Events%20Affecting%20the%20Group%20Since%20June%2030%2C%202025) No significant events affecting the Group occurred from June 30, 2025, up to the date of this report - No significant events affecting the Group occurred after June 30, 2025, and up to the date of this report[36](index=36&type=chunk) [Interim Dividend](index=12&type=section&id=Interim%20Dividend) The Board declared an interim dividend of 2.0 HK cents per share, totaling approximately HKD 12.7 million, a decrease from 3.0 HK cents per share in the prior year, with a payout ratio of 67.6% Interim Dividend Overview | Indicator | 2025 H1 | 2024 H1 | Change | | :--- | :--- | :--- | :--- | | Interim Dividend (HK cents per share) | 2.0 | 3.0 | (1.0) | | Total Interim Dividend (million HKD) | 12.7 | - | - | | Interim Payout Ratio | 67.6% | 82.4% | -14.8% | - The Board declared an interim dividend of **2.0 HK cents per share** for the period, totaling approximately **HKD 12.7 million**, a decrease from **3.0 HK cents per share** in the same period of 2024[37](index=37&type=chunk) - The interim dividend will be distributed on November 28, 2025, to shareholders whose names appear on the Company's register of members on September 12, 2025[38](index=38&type=chunk) [Closure of Register of Members](index=12&type=section&id=Closure%20of%20Register%20of%20Members) The Company's register of members will be closed from September 10 to September 12, 2025, to determine shareholders eligible for the interim dividend - To determine shareholders eligible for the interim dividend, the Company's register of members will be closed from September 10, 2025, to September 12, 2025 (both dates inclusive)[39](index=39&type=chunk) [Corporate Governance and Other Information](index=13&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Compliance with the Corporate Governance Code](index=13&type=section&id=Compliance%20with%20the%20Corporate%20Governance%20Code) The company adheres to the Corporate Governance Code, with full compliance except for the combined roles of Chairman and CEO, which the Board believes ensures consistent leadership and efficient strategic planning - The Company has adopted the principles set out in the Corporate Governance Code contained in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[41](index=41&type=chunk) - During the period, the Company has complied with all code provisions in the Corporate Governance Code, except for code provision C.2.1, which stipulates that the roles of chairman and chief executive should be separate and not performed by the same individual[41](index=41&type=chunk) - The Board believes that combining the roles of Chairman and Chief Executive Officer allows the Group to benefit from consistent leadership and ensures more efficient and effective overall strategic planning for the Group[41](index=41&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors](index=13&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance with its required standards during the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules as its code of conduct for directors' securities transactions[42](index=42&type=chunk) - Following specific enquiry by the Company, all Directors confirmed that they have complied with the required standards set out in the Model Code during the period[42](index=42&type=chunk) [Directors' and Chief Executive's Interests in Shares and Underlying Shares of the Company and its Associated Corporations](index=14&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company%20and%20its%20Associated%20Corporations) As of June 30, 2025, Mr. Cheung Yau Chuen held over 55% of the company's shares through trust beneficiaries and beneficial ownership, with other executive directors holding minor interests, and Ms. Jia Ziying and Mr. Li Yanbo deemed to have interests through spousal relationships Directors' and Chief Executive's Long Positions in Shares of the Company | Name of Director/Chief Executive | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Cheung Yau Chuen | (i) Beneficiary of a trust/Settlor of a discretionary trust | 343,369,803 | 53.97% | | | (ii) Beneficial owner | 12,790,000 | 2.01% | | Mr. Chan Kwok Keung | Beneficial owner | 1,000,000 | 0.16% | | Ms. Jia Ziying | (i) Beneficial owner | 394,000 | 0.06% | | | (ii) Spouse's interest | 100,000 | 0.02% | | Mr. Li Yanbo | (i) Beneficial owner | 100,000 | 0.02% | | | (ii) Spouse's interest | 394,000 | 0.06% | - Mr. Cheung Yau Chuen indirectly holds significant share interests through HSBC International Trustee Limited as trustee of Felix Family Trust and CLC Family Trust[46](index=46&type=chunk) - Ms. Jia Ziying is the spouse of Mr. Li Yanbo, and thus both are deemed to have interests in the interests held by the other[46](index=46&type=chunk) [Substantial Shareholders' Interests in Shares and Underlying Shares of the Company](index=18&type=section&id=Substantial%20Shareholders%27%20Interests%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) This section lists substantial shareholders holding 5% or more of the company's interests as of June 30, 2025, including Evergreen Holdings and its controlling entities, HSBC International Trustee Limited, Ms. Wang Kexin (spouse of Mr. Cheung Yau Chuen), and Precision Global Capital Management LLC Substantial Shareholders' Interests in Shares of the Company | Name of Shareholder/Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Evergreen Holdings | Beneficial owner | 343,369,803 | 53.97% | | Golden Evergreen | Interest of controlled corporation | 343,369,803 | 53.97% | | FC Investment | Interest of controlled corporation | 343,369,803 | 53.97% | | FC Management | Interest of controlled corporation | 343,369,803 | 53.97% | | CLC Investment | Interest of controlled corporation | 343,369,803 | 53.97% | | CLC Management | Interest of controlled corporation | 343,369,803 | 53.97% | | HSBC International Trustee Limited | Trustee of a trust | 343,369,803 | 53.97% | | Ms. Wang Kexin | Spouse's interest | 356,159,803 | 55.98% | | Precision Global Capital Management LLC | Investment manager | 58,236,000 | 9.15% | - Evergreen Holdings and its upstream controlling companies (Golden Evergreen, FC Investment, FC Management, CLC Investment, CLC Management) and HSBC International Trustee Limited are all deemed to have interests in the shares held by Evergreen Holdings[55](index=55&type=chunk) - Ms. Wang Kexin is the spouse of Mr. Cheung Yau Chuen, and under the Securities and Futures Ordinance, she is deemed to have an interest in the shares in which Mr. Cheung Yau Chuen is deemed to have an interest[55](index=55&type=chunk) [Share Option Scheme](index=20&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme in 2017 to provide ownership opportunities to contributors, with no options granted or agreed to be granted as of June 30, 2025, but 61,500,000 options remain available for grant - The Company adopted a share option scheme on June 19, 2017, to provide any employee, director, consultant, or advisor of the Group with an opportunity to acquire an ownership interest in the Company[57](index=57&type=chunk) - As of June 30, 2025, no share options had been granted or agreed to be granted under the share option scheme[58](index=58&type=chunk) - As of January 1, 2025, and June 30, 2025, the total number of share options available for grant under the share option scheme was **61,500,000**[59](index=59&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=20&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the period, the company repurchased and cancelled 10,492,000 shares on the Stock Exchange for approximately HKD 6.5 million, which the Board believes will enhance net asset value and/or earnings per share, with no other listed securities purchased, sold, or redeemed Details of Share Repurchases in May 2025 | Month of Repurchase | Number of Ordinary Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration Paid (million HKD) | | :--- | :--- | :--- | :--- | :--- | | May 2025 | 10,492,000 | 0.62 | 0.60 | 6.5 | - The repurchased shares were subsequently cancelled, and as of June 30, 2025, the total number of issued shares was **636,182,000**[60](index=60&type=chunk) - The Directors believe that the aforementioned share repurchases will enhance the net asset value and/or earnings per share, and are beneficial to the Company and its shareholders[60](index=60&type=chunk) [Changes in Directors' Information](index=21&type=section&id=Changes%20in%20Directors%27%20Information) Executive Director Ms. Jia Ziying was appointed as a member of the Company's Nomination Committee, effective June 5, 2025 - Ms. Jia Ziying, an executive director of the Company, has been appointed as a member of the Company's Nomination Committee, effective June 5, 2025[63](index=63&type=chunk) [Audit Committee Review of Interim Results](index=21&type=section&id=Audit%20Committee%20Review%20of%20Interim%20Results) The Audit Committee, in conjunction with the Board and external auditor RSM Hong Kong, reviewed the Group's unaudited condensed consolidated interim financial statements and confirmed their fair presentation in accordance with applicable accounting standards - The Company's Audit Committee, together with the Board and the Company's external auditor, RSM Hong Kong, has reviewed the Group's unaudited condensed consolidated interim financial statements for the period[64](index=64&type=chunk) - The Audit Committee is satisfied that the Group's unaudited condensed consolidated interim financial statements for the period have been prepared in accordance with applicable accounting standards and fairly present the Group's financial position and performance for the period[64](index=64&type=chunk) [Interim Financial Information Review Report](index=22&type=section&id=Interim%20Financial%20Information%20Review%20Report) [Review Conclusion](index=22&type=section&id=Review%20Conclusion) RSM Hong Kong reviewed Tristate Holdings Limited's interim financial information under HKSRS 2410 and found no matters suggesting it was not prepared in all material respects in accordance with HKAS 34, noting the review scope is less than an audit - RSM Hong Kong has conducted its review in accordance with Hong Kong Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity," issued by the Hong Kong Institute of Certified Public Accountants[68](index=68&type=chunk) - Based on the review, nothing has come to the reviewer's attention that causes them to believe that the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[69](index=69&type=chunk) - A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit, and accordingly, no audit opinion is expressed[68](index=68&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=23&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Overview of Profit or Loss and Comprehensive Income](index=23&type=section&id=Overview%20of%20Profit%20or%20Loss%20and%20Comprehensive%20Income) For the six months ended June 30, 2025, Group revenue decreased by 11.3% to HKD 465,699 thousand, profit for the period fell by 21.1% to HKD 18,831 thousand, and profit attributable to owners decreased by 37.7% to HKD 15,505 thousand, halving basic and diluted earnings per share to HKD 0.02, while total other comprehensive expense significantly improved Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 465,699 | 525,178 | (59,479) | -11.3% | | Gross Profit | 112,744 | 117,627 | (4,883) | -4.2% | | Profit Before Tax | 24,998 | 28,228 | (3,230) | -11.4% | | Profit for the Period | 18,831 | 23,882 | (5,051) | -21.1% | | Profit Attributable to Owners of the Company for the Period | 15,505 | 24,882 | (9,377) | -37.7% | | Total Comprehensive Income (Expense) for the Period | 14,936 | (196) | 15,132 | - | | Basic and Diluted Earnings Per Share Attributable to Owners of the Company (HKD) | 0.02 | 0.04 | (0.02) | -50.0% | - Profit for the period and profit attributable to owners of the Company both significantly decreased, with earnings per share halved[72](index=72&type=chunk)[73](index=73&type=chunk) - Total other comprehensive expense for the period significantly improved from a loss of **HKD 24,078 thousand** in the same period of 2024 to a loss of **HKD 3,895 thousand** in the same period of 2025, primarily due to reduced exchange differences arising from the translation of overseas operations[72](index=72&type=chunk) [Condensed Consolidated Statement of Financial Position](index=25&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) [Overview of Assets, Liabilities and Equity](index=25&type=section&id=Overview%20of%20Assets%2C%20Liabilities%20and%20Equity) As of June 30, 2025, total assets increased slightly to HKD 1,600,262 thousand, current assets grew by 6.9%, but a larger increase in current liabilities led to a 5.6% decrease in net current assets to HKD 248,431 thousand, while total equity slightly decreased by 1.2% Summary of Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 603,950 | 602,912 | 1,038 | +0.2% | | Current Assets | 996,312 | 932,027 | 64,285 | +6.9% | | Current Liabilities | 747,881 | 668,917 | 78,964 | +11.8% | | Net Current Assets | 248,431 | 263,110 | (14,679) | -5.6% | | Total Equity | 785,522 | 795,230 | (9,708) | -1.2% | | Non-current Liabilities | 66,859 | 70,792 | (3,933) | -5.6% | - Current assets increased, but current liabilities increased more, leading to a decrease in net current assets[75](index=75&type=chunk) - Total equity slightly decreased, and non-controlling interests turned from negative to positive[76](index=76&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=27&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) [Overview of Changes in Equity](index=27&type=section&id=Overview%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, profit attributable to owners was HKD 15,505 thousand, a decrease from the prior year, while total comprehensive income significantly improved to HKD 11,775 thousand due to reduced exchange differences, with dividends of HKD 18,107 thousand and a HKD 6,537 thousand reduction in equity from share repurchases and cancellations Summary of Condensed Consolidated Statement of Changes in Equity | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Profit Attributable to Owners of the Company for the Period | 15,505 | 24,882 | (9,377) | | Total Comprehensive Income (Expense) for the Period | 11,775 | 1,058 | 10,717 | | Dividends Recognized as Distribution | (18,107) | (19,014) | 907 | | Share Repurchases and Cancellations | (6,537) | - | (6,537) | | Equity Attributable to Owners of the Company at End of Period | 787,270 | 833,670 | (46,400) | - Profit attributable to owners of the Company decreased, but total comprehensive income for the period significantly improved, mainly due to a reduced impact from exchange differences[78](index=78&type=chunk) - Share repurchases and cancellations led to a reduction in share capital, affecting the total equity at period-end[78](index=78&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=28&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) [Overview of Cash Flows](index=28&type=section&id=Overview%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities was HKD 157,618 thousand, a decrease from the prior year, while net cash used in investing and financing activities both decreased, resulting in a net increase in cash and cash equivalents of HKD 18,885 thousand, bringing the period-end balance to HKD 142,269 thousand Summary of Condensed Consolidated Statement of Cash Flows | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Net Cash From Operating Activities | 157,618 | 192,248 | (34,630) | | Net Cash Used In Investing Activities | (7,494) | (16,885) | 9,391 | | Net Cash Used In Financing Activities | (131,239) | (171,584) | 40,345 | | Net Increase in Cash and Cash Equivalents | 18,885 | 3,779 | 15,106 | | Cash and Cash Equivalents at End of Period | 142,269 | 103,974 | 38,295 | - Net cash from operating activities decreased, but net cash outflows from both investing and financing activities decreased, ultimately leading to a significant increase in net cash and cash equivalents[80](index=80&type=chunk) - New secured bank and other borrowings increased to **HKD 459,282 thousand**, while repayment of secured bank and other borrowings amounted to **HKD 436,912 thousand**[80](index=80&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=29&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [General Information and Basis of Preparation](index=29&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) Tristate Holdings Limited, an investment holding company listed in Hong Kong, primarily manufactures and trades hair products, with financial data presented in HKD and functional currency in USD, prepared under HKAS 34 and Listing Rules, and reviewed by the Audit Committee and external auditor - The Company is a public company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited, primarily engaged in the manufacturing and trading of hair products[81](index=81&type=chunk)[82](index=82&type=chunk) - The condensed consolidated interim financial information is presented in Hong Kong Dollars, with the Company's functional currency being US Dollars, and is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix D2 to the Listing Rules[82](index=82&type=chunk) - The condensed consolidated interim financial information is unaudited but has been reviewed by the Company's Audit Committee and the Company's external auditor in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants[84](index=84&type=chunk) [Principal Accounting Policies](index=30&type=section&id=Principal%20Accounting%20Policies) The condensed consolidated interim financial information is prepared on a historical cost basis, with certain financial instruments and properties measured at fair value or revalued amounts, and accounting policies remain consistent with the 2024 audited financial statements, with no significant impact from new/revised HKFRSs - The condensed consolidated interim financial information has been prepared on the historical cost basis, except for certain financial instruments and properties which are measured at fair value or revalued amounts where applicable[85](index=85&type=chunk) - The accounting policies and methods of computation adopted in the condensed consolidated interim financial information for the six months ended June 30, 2025, are consistent with those followed in the preparation of the 2024 audited financial statements[85](index=85&type=chunk) - The adoption of new/revised Hong Kong Financial Reporting Standards accounting standards relevant to the Group and effective during the period has not had any significant impact on the Group's results or financial position for the current or prior periods[85](index=85&type=chunk) [Revenue and Segment Information](index=31&type=section&id=Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from manufacturing and selling wigs, hair accessories, high-end human hair extension products, and Halloween products, totaling HKD 465,699 thousand for the six months ended June 30, 2025, with the US remaining the primary market, and all revenue recognized upon transfer of goods control, with no seasonal operations Group Revenue by Product | Product Category | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Wigs, Hair Accessories & Other | 423,305 | 441,842 | | High-end Human Hair Extension Products | 21,750 | 65,055 | | Halloween Products | 20,644 | 18,281 | | **Total** | **465,699** | **525,178** | Group Revenue by Location of Delivery to Customers | Delivery Location | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | United States of America | 421,506 | 483,924 | | Germany | 10,309 | 15,215 | | United Kingdom | 14,746 | 11,046 | | Japan | 2,065 | 3,342 | | People's Republic of China | 8,439 | 5,368 | | Other | 8,634 | 6,283 | | **Total** | **465,699** | **525,178** | - The Group's chief operating decision maker considers that operations are not seasonal[89](index=89&type=chunk) [Other Gains and Losses](index=32&type=section&id=Other%20Gains%20and%20Losses) For the six months ended June 30, 2025, total other gains and losses increased to HKD 4,546 thousand, primarily from a net gain of HKD 411 thousand on financial assets measured at fair value through profit or loss and a net foreign exchange gain of HKD 4,092 thousand Details of Other Gains and Losses | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Net gain (loss) on financial assets measured at fair value through profit or loss | 411 | (230) | | Net foreign exchange gain | 4,092 | 3,152 | | Gain on early termination of lease | 43 | – | | **Total** | **4,546** | **2,922** | - Net foreign exchange gain is the main component of other gains and losses and has increased compared to the prior period[90](index=90&type=chunk) [Impairment Assessment of Trade Receivables under Expected Credit Loss Model](index=32&type=section&id=Impairment%20Assessment%20of%20Trade%20Receivables%20under%20Expected%20Credit%20Loss%20Model) For the six months ended June 30, 2025, the Group recognized no impairment provisions for trade receivables, compared to HKD 7 thousand in the prior year, with consistent bases for determining inputs, assumptions, and valuation techniques Impairment Losses on Trade Receivables | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Impairment losses on trade receivables recognized under expected credit loss model, net of reversal | – | 7 | - No impairment losses on trade receivables were recognized in the current period, while a small amount was recognized in the prior period[91](index=91&type=chunk) [Other Expenses](index=32&type=section&id=Other%20Expenses) For the six months ended June 30, 2025, other expenses increased to HKD 377 thousand, primarily due to higher donation expenses Details of Other Expenses | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Donation expenses | 377 | 164 | - Donation expenses increased compared to the prior period[92](index=92&type=chunk) [Finance Costs](index=33&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, total finance costs decreased to HKD 17,574 thousand, mainly due to a reduction in bank borrowing interest from HKD 19,899 thousand to HKD 15,968 thousand Details of Finance Costs | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Interest on bank borrowings | 15,968 | 19,899 | | Interest on lease liabilities | 421 | 336 | | Interest on other borrowings | 325 | 494 | | Interest on amounts due to related companies | 134 | 73 | | Other | 726 | 726 | | **Total** | **17,574** | **21,528** | - Total finance costs decreased, primarily due to a reduction in interest on bank borrowings[93](index=93&type=chunk) [Profit Before Tax](index=33&type=section&id=Profit%20Before%20Tax) For the six months ended June 30, 2025, profit before tax decreased to HKD 24,998 thousand, after deducting cost of inventories sold of HKD 352,955 thousand and depreciation of property, plant and equipment of HKD 17,288 thousand, and including interest income of HKD 1,205 thousand Composition of Profit Before Tax | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Cost of inventories sold | 352,955 | 407,551 | | Depreciation of property, plant and equipment | 17,288 | 19,443 | | Interest income | (1,205) | (1,383) | | Government grants | – | (205) | - Profit before tax decreased, with both cost of inventories sold and depreciation decreasing, but interest income also slightly declined[94](index=94&type=chunk) [Income Tax Expense](index=34&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense significantly increased to HKD 6,167 thousand, primarily due to a substantial rise in current tax in Bangladesh from HKD 916 thousand to HKD 5,339 thousand following the expiration of its income tax holiday Details of Income Tax Expense | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Current tax in Bangladesh | 5,339 | 916 | | Current tax in other jurisdictions | 8 | 81 | | (Over) under-provision in prior years | (715) | 1,753 | | Deferred tax | 1,535 | 1,596 | | **Total** | **6,167** | **4,346** | - Income tax expense significantly increased, primarily due to a substantial rise in current tax in Bangladesh following the expiration of its income tax holiday[95](index=95&type=chunk) [Dividends](index=34&type=section&id=Dividends) For the six months ended June 30, 2025, a final dividend of 2.8 HK cents per share, totaling HKD 18,107 thousand, was declared and paid for the year ended December 31, 2024, and an interim dividend of 2.0 HK cents per share, totaling HKD 12,724 thousand, was declared after the period end Dividend Distribution Status | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Total final dividend paid | 18,107 | 19,014 | | Interim dividend declared (HK cents per share) | 2.0 | - | | Total interim dividend declared | 12,724 | - | - The total final dividend for 2024 slightly decreased, and an interim dividend of **2.0 HK cents per share** was declared for 2025[96](index=96&type=chunk) [Earnings Per Share](index=35&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, basic and diluted earnings per share attributable to owners of the Company decreased by 50% to HKD 0.02, with no potential dilutive ordinary shares in either period Earnings Per Share Overview | Indicator | 2025 H1 (HKD) | 2024 H1 (HKD) | | :--- | :--- | :--- | | Basic and Diluted Earnings Per Share | 0.02 | 0.04 | - Basic and diluted earnings per share decreased by **50%** compared to the prior period[97](index=97&type=chunk) - There were no potential dilutive ordinary shares for the six months ended June 30, 2025, and 2024, hence diluted earnings per share were the same as basic earnings per share[97](index=97&type=chunk) [Property, Plant and Equipment](index=35&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group acquired property, plant, and equipment worth HKD 16,614 thousand, an increase from the prior year, with no revaluation surplus or deficit recognized, and new lease agreements resulted in HKD 6,200 thousand in right-of-use assets and lease liabilities Changes in Property, Plant and Equipment | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Acquisition of property, plant and equipment | 16,614 | 13,260 | | Property revaluation deficit | – | (2,731) | | Recognition of right-of-use assets and lease liabilities | 6,200 | 216 | - Acquisitions of property, plant and equipment increased, no revaluation deficit was recognized in the current period, and new lease agreements were entered into[98](index=98&type=chunk) [Inventories](index=36&type=section&id=Inventories) As of June 30, 2025, total inventories increased by 7.1% to HKD 523,194 thousand, with finished goods inventories showing the largest increase of 38.8% to HKD 105,746 thousand Composition of Inventories | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Raw materials | 302,972 | 300,717 | 2,255 | +0.7% | | Work in progress | 114,476 | 111,626 | 2,850 | +2.6% | | Finished goods | 105,746 | 76,158 | 29,588 | +38.8% | | **Total Inventories** | **523,194** | **488,501** | **34,693** | **+7.1%** | - Total inventories increased, with finished goods showing the largest increase[99](index=99&type=chunk) [Trade and Other Receivables](index=36&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, total trade and other receivables increased by 3.3% to HKD 283,984 thousand, primarily driven by higher prepayments and deposits for property, plant, and equipment acquisitions, with typical credit terms of 30 to 90 days Details of Trade and Other Receivables | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade receivables (net of provision) | 214,020 | 210,137 | 3,883 | +1.8% | | Other receivables | 16,787 | 19,330 | (2,543) | -13.1% | | Prepayments | 13,360 | 8,555 | 4,805 | +56.2% | | Deposits for acquisition of property, plant and equipment | 14,244 | 9,429 | 4,815 | +51.1% | | **Total** | **283,984** | **275,007** | **8,977** | **+3.3%** | Aging Analysis of Trade Receivables | Aging | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | 0 to 60 days | 144,771 | 147,064 | | 61 to 90 days | 42,227 | 37,026 | | 91 to 120 days | 10,878 | 11,632 | | Over 120 days | 16,144 | 14,415 | - Total trade receivables slightly increased, with prepayments and deposits for property, plant and equipment acquisitions showing larger increases[100](index=100&type=chunk) [Pledged Bank Deposits](index=37&type=section&id=Pledged%20Bank%20Deposits) Pledged bank deposits, classified as current assets, secure the Group's bank facilities and will be released upon settlement of the related bank and other borrowings - Pledged bank deposits refer to deposits pledged for bank facilities granted to the Group and are therefore classified as current assets[103](index=103&type=chunk) - Pledged bank deposits will be released upon settlement of the related bank and other borrowings[103](index=103&type=chunk) [Trade and Other Payables](index=38&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables increased by 2.1% to HKD 138,143 thousand, with trade payables rising by 5.6% to HKD 64,870 thousand, notably with a high proportion of trade payables over 120 days related to a lawsuit involving a Chinese subsidiary, for which management is negotiating an out-of-court settlement Details of Trade and Other Payables | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade payables | 64,870 | 61,418 | 3,452 | +5.6% | | Accrued staff costs | 36,141 | 36,162 | (21) | -0.1% | | Other employee liabilities | 10,622 | 15,879 | (5,257) | -33.1% | | Accruals and other payables | 26,510 | 21,869 | 4,641 | +21.2% | | **Total** | **138,143** | **135,328** | **2,815** | **+2.1%** | Aging Analysis of Trade Payables | Aging | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | 0 to 60 days | 26,183 | 27,304 | | 61 to 120 days | 1,135 | 2 | | Over 120 days | 37,552 | 34,112 | - Total trade payables slightly increased, with a higher proportion of trade payables over 120 days related to a lawsuit involving a Chinese subsidiary, for which management is negotiating an out-of-court settlement with the relevant suppliers[105](index=105&type=chunk) [Secured Bank and Other Borrowings](index=39&type=section&id=Secured%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, total secured bank and other borrowings increased by 11.1% to HKD 624,842 thousand, mainly from bank borrowings and supplier financing, secured by various assets and subject to loan covenants, all of which the Group confirmed compliance with Details of Secured Bank and Other Borrowings | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Bank overdrafts | 199 | – | 199 | - | | Bank borrowings | 504,169 | 472,194 | 31,975 | +6.8% | | Bank borrowings under supplier financing arrangements | 111,274 | 72,850 | 38,424 | +52.7% | | Other borrowings | 9,200 | 17,288 | (8,088) | -46.8% | | **Total** | **624,842** | **562,332** | **62,510** | **+11.1%** | - The average effective annual interest rate for the Group's bank borrowings under floating rate arrangements ranged from **1.98% to 8.37%** (December 31, 2024: 2.90% to 7.59%)[106](index=106&type=chunk) - The Group's bank facilities are secured by bank deposits, land and buildings, investment properties, negative pledges over assets of subsidiaries, and certain life insurance contracts[108](index=108&type=chunk) - The Directors of the Company believe that the Group complied with the loan covenants as at June 30, 2025, and December 31, 2024[109](index=109&type=chunk) [Company's Share Capital](index=40&type=section&id=Company%27s%20Share%20Capital) As of June 30, 2025, the Company's issued and fully paid shares decreased by 1.6% to 636,182,000 shares, following the repurchase and cancellation of 10,492,000 ordinary shares for HKD 6,537 thousand through the Stock Exchange during the period Changes in Company's Share Capital | Indicator | June 30, 2025 (thousand shares) | Dec 31, 2024 (thousand shares) | Change (thousand shares) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Number of issued and fully paid shares | 636,182 | 646,674 | (10,492) | -1.6% | | Shares repurchased and cancelled (thousand shares) | 10,492 | 8,978 | 1,514 | +16.9% | | Total consideration for shares repurchased and cancelled (thousand HKD) | 6,537 | 5,730 | 807 | +14.1% | - The Company repurchased and cancelled **10,492,000** ordinary shares during the period, leading to a reduction in the total number of issued shares[110](index=110&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Share Option Scheme](index=41&type=section&id=Share%20Option%20Scheme) The Group's 2017 share option scheme aims to retain, incentivize, and reward participants by offering ownership interests, with exercise prices based on market closing prices and a 10% limit on total shares, and no options granted as of the authorization date of these interim financial statements - The purpose of the share option scheme is to provide any director and full-time employee of the Group who has contributed or will contribute to the Group with an opportunity to acquire an ownership interest in the Company[115](index=115&type=chunk) - The exercise price of a share option must be at least the highest of the closing price of the shares as stated in the daily quotation sheet of the Stock Exchange on the offer date, the average closing price for the 5 business days immediately preceding the offer date, and the nominal value of the Company's shares[116](index=116&type=chunk) - As of the authorization date of these condensed consolidated interim financial statements, no share options had been granted by the Group[118](index=118&type=chunk) [Fair Value Measurement of Financial Instruments](index=43&type=section&id=Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group's financial instruments are measured across three fair value hierarchy levels, with investment funds and life insurance contracts classified as Level 3, valued based on net asset value and reported account value, respectively, and no transfers between Level 1 and Level 2 occurred, with carrying amounts of financial assets and liabilities at amortized cost approximating their fair values Fair Value Measurement of Financial Assets on a Recurring Basis | Financial Asset | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Fair Value Level | Valuation Techniques and Key Inputs | | :--- | :--- | :--- | :--- | :--- | | Investment funds | 888 | 977 | Level 3 | Based on the net asset value of the investment funds | | Life insurance contracts | 44,856 | 43,789 | Level 3 | Account value reported by the insurance company | | **Total** | **45,744** | **44,766** | | | - Investment funds and life insurance contracts are both Level 3 fair value measurements, primarily based on net asset value or account value reported by the insurance company[120](index=120&type=chunk) - No transfers between Level 1 and Level 2 occurred during the period, and the carrying amounts of financial assets and financial liabilities carried at amortized cost approximate their respective fair values[121](index=121&type=chunk)[124](index=124&type=chunk) [Major Non-Cash Transactions](index=44&type=section&id=Major%20Non-Cash%20Transactions) Major non-cash transactions for the six months ended June 30, 2025, included recognizing HKD 6,200 thousand in right-of-use assets and lease liabilities from new lease agreements, and approximately HKD 145,029 thousand in direct payments to suppliers by banks under supply chain financing arrangements - For the six months ended June 30, 2025, the Group entered into new lease agreements for the use of leased land, leased properties, and plant buildings, recognizing right-of-use assets of **HKD 6,200 thousand** and lease liabilities of approximately **HKD 6,200 thousand**[125](index=125&type=chunk) - Bank borrowings of approximately **HKD 145,029 thousand** under supply chain financing arrangements refer to amounts directly paid to suppliers by the relevant banks[125](index=125&type=chunk) [Related Party Transactions](index=45&type=section&id=Related%20Party%20Transactions) The Group engaged in related party transactions, including computer product and service expenses of HKD 540 thousand with Sunshine Software Limited, controlled by Mr. Cheung Yau Chuen, and total remuneration for directors and key management personnel increased to HKD 3,229 thousand Details of Related Party Transactions | Related Party Transaction | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Computer products and services expenses | 540 | 540 | | Key management personnel remuneration | 3,229 | 2,938 | - Computer product and service expenses were incurred with Sunshine Software Limited, controlled by Mr. Cheung Yau Chuen, and key management personnel remuneration increased[127](index=127&type=chunk)[128](index=128&type=chunk) [Capital Commitments](index=45&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group's capital commitments contracted but not provided for in the condensed consolidated financial information for the purchase of construction land decreased to HKD 3,185 thousand Overview of Capital Commitments | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Contracted but not provided for in the condensed consolidated financial information for the purchase of construction land | 3,185 | 6,566 | - Capital commitments for the purchase of construction land decreased compared to the end of last year[129](index=129&type=chunk)

中國旅遊集團中免股份有限公司 China Tourism Group Duty Free Corporation Limited 股份代號 STOCK CODE : 601888.SH 1880.HK INTERIM REPORT 中期報告 2025 2025 INTERIM REPORT 中期報告 China Tourism Group Duty Free Corporation Limited 中國旅遊集團中免股份有限公司 目 錄 | 02 | 公司資料 | | --- | --- | | 05 | 管理層討論與分析 | | 16 | 其他資料 | | 22 | 獨立審閱報告 | | 23 | 中期簡明綜合損益及其他綜合收益表 | | 24 | 中期簡明綜合財務狀況表 | | 26 | 中期簡明綜合權益變動表 | | 27 | 中期簡明綜合現金流量表 | | 29 | 中期簡明綜合財務資料附註 | | 58 | 釋義 | 02 中國旅遊集團中免股份有限公司 • 2025 中期報告 公司資料 董事會 非執行董事 范雲軍先生 （主席） 劉昆女士 （副主席） 執行董事 常築軍先生 王月浩先生 王軒先生 獨立非執 ...

Financial Performance - New business value increased by 14% to $2.838 billion[3] - After-tax operating profit reached $3.609 billion, representing a 12% increase per share[3] - Basic earnings per share rose by 10% to $3.569 billion[3] - Annualized embedded value operating return improved to 17.8%, up 290 basis points from 14.9% in 2024[3] - The company returned $3.71 billion to shareholders through dividends and share buybacks in the first half of 2025[3] - Operating profit increased to $5.893 billion, with earnings per share rising by 15%[16] - The total intrinsic value equity profit for the six months ended June 30, 2025, was $4.4 billion, after accounting for the global minimum tax of $51 million[58] - The company reported a net profit of $2.53 billion for the six months ending June 30, 2025, compared to $3.31 billion for the same period in 2024[95] Dividends and Shareholder Returns - Interim dividend increased by 10% to HKD 0.49 per share[3] - The company announced a 10% increase in the interim dividend per share to HKD 0.49[45] - The company returned $3.71 billion to shareholders through dividends and share buybacks in the first half of 2025[95] - The company returned $1.768 billion in dividends and $1.942 billion in share buybacks during the first half of 2025, resulting in an ending free surplus of $9.898 billion[111] New Business Growth - Active agents increased due to investments in generative AI, driving a 17% growth in new business value from agents[2] - New business value for the six months ended June 30, 2025, reached $2,838 million, representing a 14% increase year-over-year[8] - New business value from the agency channel rose by 17% to $2.220 billion[20] - New business value in Hong Kong grew by 24% to $1.063 billion, with active new agents increasing by 25%[29] - New business value in China was $743 million, with a 10% growth before economic assumption changes[30] - Thailand's new business value surged by 35% to $522 million, benefiting from a strong sales increase[31] - Singapore's new business value rose by 16% to $259 million, supported by a 22% increase in agent productivity[31] Capital Management - Shareholder capital ratio as of June 30, 2025, stood at 219%[3] - The embedded value equity as of June 30, 2025, was $73.67 billion, reflecting a 5% increase per share[41] - The total embedded value increased by 8% to $77.38 billion before returning $3.71 billion to shareholders through dividends and share buybacks[54] - The group’s local capital coverage ratio remained strong at 254% as of June 30, 2025[130] Investment Performance - The company reported a negative investment return variance of $1.397 billion, primarily related to market changes in Thailand, offset by positive foreign exchange translation effects[53] - The net investment performance after expenses reached $1.536 billion, a decrease of $116 million compared to the first half of 2024[64] - The total investment return from non-dividend and surplus assets was $4.686 billion for the first half of 2025[80] Operational Efficiency - The company achieved a 255% increase in operational variance, rising to $231 million compared to $71 million in the previous year[67] - The company reported a strong operating profit margin of 15.1%, with a return on equity of 16.2%, an increase of 140 basis points year-over-year[63] - Operating expenses increased by 2% to $1.751 billion for the six months ended June 30, 2025, with an expense ratio improvement of 80 basis points to 7.3%[86] Market Performance - AIA Group achieved a new business value growth of 14% to $2.838 billion in the first half of 2025, supporting profit growth[39] - The company has over 19,000 MDRT agents, more than double that of its closest multinational competitor[21] - The overall new business value across eleven markets grew by 14%, with nine markets reporting increases[178] Future Outlook - The company aims for a compound annual growth rate of 9% to 11% in after-tax operating profit per share from 2023 to 2026[3] - The company aims for a compound annual growth rate of 40% in new business value from new regions in mainland China from 2025 to 2030[168]

Financial Performance - For the first half of 2025, Li Auto achieved a total revenue of RMB 56.17 billion, a decrease of 2.0% compared to RMB 57.31 billion in the same period of 2024[9]. - The net profit for the first half of 2025 was RMB 1.74 billion, an increase of 3.0% from RMB 1.69 billion in the same period of 2024[9]. - The pre-tax profit for the first half of 2025 was RMB 2.06 billion, reflecting an increase of 11.3% compared to RMB 1.85 billion in the first half of 2024[9]. - The company reported a non-GAAP net profit of RMB 2.48 billion for the first half of 2025, a decrease of 10.7% from RMB 2.78 billion in the same period of 2024[9]. - Total revenue decreased by 2.0% from RMB 57,312 million for the six months ended June 30, 2024, to RMB 56,172 million for the six months ended June 30, 2025[30]. - Vehicle sales revenue decreased by 1.8% from RMB 54,571 million to RMB 53,563 million, primarily due to a lower average selling price influenced by product mix and increased sales incentives[30]. - Gross profit decreased by 0.7% from RMB 11,461 million to RMB 11,385 million, while gross margin increased from 20.0% to 20.3%[32]. - Operating profit improved to RMB 1,098 million for the six months ended June 30, 2025, compared to an operating loss of RMB 116.9 million for the same period in 2024[36]. - Net profit for the six months ended June 30, 2025, was RMB 1,743 million, showing relative stability compared to RMB 1,692 million for the same period in 2024[39]. Vehicle Deliveries and Market Position - The total vehicle deliveries for the first half of 2025 reached 203,938 units, representing a year-on-year growth of 7.9%[14]. - Li Auto's cumulative market share in the RMB 200,000 and above new energy vehicle market reached 13.6% in the first half of 2025, maintaining its position as the top-selling Chinese automotive brand[14]. - The company launched the Li MEGA Ultra Smart Refresh and the Li L Series Smart Refresh in the first half of 2025, enhancing user experience through product upgrades[15]. - The Li MEGA Home Special Edition became the best-selling MPV in the RMB 500,000 and above category since May 2025, and the top-selling pure electric vehicle in the same price range since June 2025[16]. - The company launched the Li Xiang i8, a six-seat pure electric SUV, featuring a 720 km CLTC range and a price of RMB 339,800, with deliveries starting on August 20, 2025[26]. - The company plans to launch the Li Xiang i6, a five-seat pure electric SUV, in September 2025, as part of its strategy to enrich its product matrix[27]. Research and Development - The company established its first overseas R&D center in Munich, Germany, in January 2025, focusing on next-generation technology research in four key areas[19]. - The company has developed a new generation of driver assistance technology, VLA driver model, enhancing user experience with advanced 3D spatial understanding and adaptive capabilities[17]. - The company allocated $44.2 million for R&D of next-generation electric vehicle technologies, $212.2 million for developing future platforms and vehicle models, and $213.2 million for working capital and general corporate purposes, utilizing approximately 89% of the net proceeds[119]. Financial Position and Cash Flow - Cash position as of June 30, 2025, was RMB 106.9 billion, down from RMB 112.8 billion as of December 31, 2024[40]. - The company's debt-to-asset ratio improved to 54.3% as of June 30, 2025, from 56.1% as of December 31, 2024[46]. - Total assets as of June 30, 2025, amounted to RMB 161,286,005, a slight decrease from RMB 162,349,078 as of December 31, 2024[134]. - Total liabilities decreased to RMB 87,657,512 as of June 30, 2025, from RMB 91,028,696 as of December 31, 2024, representing a reduction of 3.73%[134]. - Cash and cash equivalents decreased to RMB 49,790,369 as of June 30, 2025, from RMB 65,901,123 as of December 31, 2024, a decline of 24.48%[132]. - The company experienced a net cash outflow from financing activities, which shifted from RMB 80,514,000 inflow in 2024 to RMB 8,631,000 outflow in 2025[140]. Corporate Governance - The company has established three committees: Audit Committee, Remuneration Committee, and Nomination and Corporate Governance Committee to oversee specific areas of the company's affairs[63]. - The Audit Committee is responsible for reviewing and supervising the group's financial reporting procedures, risk management, and internal control systems[64]. - The company emphasizes high standards of corporate governance to protect shareholder interests and enhance corporate value[57]. - The company confirms compliance with the securities trading standards throughout the reporting period[62]. - The company will continue to regularly review and monitor its corporate governance practices to ensure adherence to high standards[65]. Employee and Shareholder Information - As of June 30, 2025, the company had a total of 31,018 employees, with 5,868 in R&D, 9,705 in production, 12,862 in sales, and 2,583 in general and administration[52]. - The total number of Class A shares held by Mr. Li is 108,557,400, representing 5.07% of the issued share capital[54]. - Mr. Li holds approximately 21.69% of the company's issued shares and controls about 68.15% of the voting rights for non-reserved matters[56]. - The company has adopted share incentive plans for 2019, 2020, and 2021[52]. - The company has a structured training system for employee skill enhancement, including pre-job training for new hires[51]. Regulatory and Compliance Risks - The variable interest entity structure may face regulatory risks due to restrictions on foreign investment in specific business sectors in China[155]. - The management believes the likelihood of incurring losses due to changes in ownership structure or contractual arrangements with VIEs is low[158]. - The company anticipates potential regulatory risks related to variable interest entities (VIEs) that could significantly impact business operations if legal compliance is not maintained[158]. - The management emphasizes that the enforceability of contracts with VIEs is subject to Chinese law, which may introduce uncertainties in legal protections[158].

[Preliminary Information](index=2&type=section&id=01%20%E5%89%8D%E5%B0%8E%E4%BF%A1%E6%81%AF) [Key Operating Highlights](index=4&type=section&id=%E7%BB%8F%E8%90%A5%E4%BA%AE%E7%82%B9%E6%8C%87%E6%A0%87) In the first half of 2025, China Life demonstrated strong performance across key operating indicators, with total assets exceeding RMB 7 trillion, total premiums reaching a five-year high, rapid growth in new business value, a 6.9% increase in net profit, and high solvency levels | Indicator | Amount (RMB Million) | Notes | | :--- | :--- | :--- | | Number of effective long-term policies | 327 million policies | As of the end of this reporting period | | New business value for H1 | 28,546 | | | Equity attributable to company shareholders | 523,619 | | | Embedded value | 1,477,827 | | | Net profit attributable to company shareholders | 40,931 | | | Total investment income | 127,506 | | | Total premiums | 525,088 | A new high for the same period in the last five years | | Total assets | 7,292,355 | Exceeded RMB 7 trillion | | Comprehensive solvency ratio | 190.94% | Maintained at a high level | [Financial Summary](index=5&type=section&id=%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) The company's consolidated financial position showed robust growth in H1 2025, with increases in total assets and liabilities, steady growth in shareholders' equity and net assets per share, a 2.2% rise in total revenue, a 6.9% increase in net profit attributable to shareholders, and a 7.1% increase in net cash flow from operating activities Consolidated Statement of Financial Position Items | Consolidated Statement of Financial Position Items | June 30, 2025 (RMB Million) | December 31, 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 7,292,355 | 6,769,546 | 7.7% | | Of which: Investment Assets | 7,127,153 | 6,611,071 | 7.8% | | Total Liabilities | 6,756,756 | 6,248,298 | 8.1% | | Of which: Insurance Contract Liabilities | 6,285,132 | 5,825,026 | 7.9% | | Equity attributable to company shareholders | 523,619 | 509,675 | 2.7% | | Net assets per share attributable to company shareholders (RMB/share) | 18.53 | 18.03 | 2.7% | | Asset-liability ratio (%) | 92.66 | 92.30 | Increased by 0.36 percentage points | Consolidated Statement of Comprehensive Income Items | Consolidated Statement of Comprehensive Income Items | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 239,488 | 234,235 | 2.2% | | Profit before tax | 42,371 | 47,900 | -11.5% | | Net profit attributable to company shareholders | 40,931 | 38,278 | 6.9% | | Earnings per share (basic and diluted) (RMB/share) | 1.45 | 1.35 | 6.9% | | Weighted average return on net assets (%) | 7.83 | 7.79 | Increased by 0.04 percentage points | | Net cash flow from operating activities | 300,442 | 280,552 | 7.1% | | Net cash flow from operating activities per share (RMB/share) | 10.63 | 9.93 | 7.1% | Consolidated Statement of Financial Position Items with Major Changes | Consolidated Statement of Financial Position Items | June 30, 2025 (RMB Million) | December 31, 2024 (RMB Million) | Change (%) | Main Reasons for Change | | :--- | :--- | :--- | :--- | :--- | | Equity instrument investments at fair value through other comprehensive income | 252,792 | 171,817 | 47.1% | Increase in investment asset scale | | Cash and cash equivalents | 119,643 | 85,505 | 39.9% | Due to liquidity management needs | | Financial assets sold under repurchase agreements | 209,785 | 151,564 | 38.4% | Due to liquidity management needs | | Financial liabilities at fair value through profit or loss | 69,915 | 53,521 | 30.6% | Subsidiary engaged in commercial endowment insurance business | Consolidated Statement of Comprehensive Income Items with Major Changes | Consolidated Statement of Comprehensive Income Items | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | Main Reasons for Change | | :--- | :--- | :--- | :--- | :--- | | Income tax | 415 | 8,856 | -95.3% | Comprehensive impact of taxable income and deferred income tax | [Chairman's Address](index=6&type=section&id=02%20%E8%91%A3%E4%BA%8B%E9%95%B7%E8%87%B4%E8%BE%AD) [Chairman's Address](index=6&type=section&id=%E8%91%A3%E4%BA%8B%E9%95%B7%E8%87%B4%E8%BE%9E) Chairman Cai Xiliang noted the company's stable and progressive operations in H1 2025, with key performance indicators reaching new highs, total assets exceeding RMB 7 trillion, rapid growth in total premiums and new business value, and a 6.9% increase in net profit, while actively serving national strategies and promoting high-quality development - The company's total assets exceeded **RMB 7 trillion**, reaching **RMB 7.29 trillion**, with net assets of **RMB 535.599 billion** and embedded value of **RMB 1.48 trillion**[16](index=16&type=chunk) - Total premiums reached **RMB 525.088 billion**, with a growth rate setting a new high for the same period in the last five years[16](index=16&type=chunk) - New business value for the first half of the year reached **RMB 28.546 billion**, achieving rapid growth[16](index=16&type=chunk) - Net profit attributable to company shareholders was **RMB 40.931 billion**, a year-on-year increase of **6.9%**[16](index=16&type=chunk) - The Board of Directors proposed an interim cash dividend of **RMB 2.38 per 10 shares** (tax inclusive) for 2025, totaling **RMB 6.727 billion** in interim cash dividends[16](index=16&type=chunk) - Actively participated in undertaking critical illness insurance and long-term care insurance, with long-term care insurance business scale continuously growing, providing risk protection of approximately **RMB 2.7 trillion** for small and micro enterprises and individual businesses[17](index=17&type=chunk) - Broadly participated in the development of the third pillar of elder care, with personal pension insurance premiums significantly increasing year-on-year, and commercial insurance annuity accumulation for future liabilities nearing **RMB 4 trillion**[17](index=17&type=chunk) - Steadily promoted the entry of medium and long-term funds into the market, with public market equity scale increasing by over **RMB 150 billion** from the beginning of the year, and cumulative capital contribution to private equity funds of **RMB 35 billion**[18](index=18&type=chunk) - Investment assets grew by **7.8%** from the beginning of the year, with good investment income performance[19](index=19&type=chunk) - In the first half of the year, over **48 million claims** were paid, with claim expenditures totaling **RMB 160.9 billion**, of which health insurance liability claim expenditures exceeded **RMB 34 billion**[20](index=20&type=chunk) - Maintained an **A-class rating** in the comprehensive risk rating of insurance companies for **28 consecutive quarters**[21](index=21&type=chunk) [Management Discussion and Analysis](index=8&type=section&id=03%20%E7%AE%A1%E7%90%86%E5%B1%A4%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [Business Overview](index=8&type=section&id=%E4%B8%9A%E5%8A%A1%E7%BB%BC%E8%BF%B0) In the first half of 2025, the company maintained high-quality development, achieving total premiums of RMB 525.088 billion, a 7.3% year-on-year increase, and steadily increasing market share, with first-year regular premiums ranking first in the industry and new business value growing by 20.3% to RMB 28.546 billion - Total premiums reached **RMB 525.088 billion**, a year-on-year increase of **7.3%**, setting a new historical high for the same period[25](index=25&type=chunk) - First-year regular premiums reached **RMB 81.249 billion**, ranking first in the industry; first-year regular premiums for ten years and above reached **RMB 30.305 billion**, accounting for **37.30%** of first-year regular premiums[25](index=25&type=chunk) - Total sales force numbered **641,000 people**, maintaining a leading position in sales team size[25](index=25&type=chunk) - The proportion of floating-income business in first-year regular premiums increased by over **45 percentage points** compared to the same period last year[26](index=26&type=chunk) - The 14-month policy persistency rate reached **92.10%**, a year-on-year increase of **0.6 percentage points**[26](index=26&type=chunk) - New business value for the first half of the year reached **RMB 28.546 billion**, a year-on-year increase of **20.3%** compared to the restated results for the same period in 2024[26](index=26&type=chunk) - Total assets and investment assets both exceeded **RMB 7 trillion**, reaching **RMB 7.29 trillion** and **RMB 7.13 trillion** respectively[26](index=26&type=chunk) - Net profit attributable to company shareholders was **RMB 40.931 billion**, a year-on-year increase of **6.9%**[27](index=27&type=chunk) [Insurance Business Analysis](index=10&type=section&id=%E4%BF%9D%E9%99%A9%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) The company's insurance business achieved steady growth in H1 2025, with total premiums reaching RMB 525.088 billion, primarily driven by life insurance, while health and accident insurance also developed, with bancassurance showing significant growth and internet insurance expanding rapidly | Indicator | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Premiums | 525,088 | 489,566 | 7.3% | | New Premiums | 161,255 | 160,266 | 0.6% | | Of which: First-year regular premiums | 81,249 | 97,294 | -16.5% | | First-year regular premiums for ten years and above | 30,305 | 42,616 | -28.8% | | Renewal Premiums | 363,833 | 329,300 | 10.5% | | New business value for H1 | 28,546 | 23,733 | 20.3% | | Policy persistency rate (14 months) (%) | 92.10 | 91.50 | Increased by 0.6 percentage points | | Policy persistency rate (26 months) (%) | 88.60 | 84.40 | Increased by 4.2 percentage points | | Surrender rate (%) | 0.52 | 0.48 | Increased by 0.04 percentage points | - The company's new business value for the first half of the year increased by **20.3%**, reaching **RMB 28.546 billion**, continuing to lead the industry[30](index=30&type=chunk) - Embedded value as of June 30, 2025, was **RMB 1,477.827 billion**, an increase of **5.5%** from December 31, 2024[32](index=32&type=chunk) [Total Premium Data](index=10&type=section&id=%E7%B8%BD%E4%BF%9D%E8%B2%BB%E6%95%B8%E6%93%9A) In the first half of 2025, the company's total premiums reached RMB 525.088 billion, with life insurance contributing the most at RMB 439.134 billion, while renewal premiums were the main growth driver, and first-year regular and single premiums varied across different insurance types | Business Type | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | | :--- | :--- | :--- | | Life Insurance Business | 439,134 | 404,645 | | 　First-year Business | 100,513 | 101,147 | | 　　First-year regular premiums | 80,485 | 96,221 | | 　　Single premiums | 20,028 | 4,926 | | 　Renewal Business | 338,621 | 303,498 | | Health Insurance Business | 78,958 | 77,423 | | 　First-year Business | 53,892 | 51,799 | | 　　First-year regular premiums | 764 | 1,073 | | 　　Single premiums | 53,128 | 50,726 | | 　Renewal Business | 25,066 | 25,624 | | Accident Insurance Business | 6,996 | 7,498 | | 　First-year Business | 6,850 | 7,320 | | 　　Single premiums | 6,850 | 7,320 | | Total | 525,088 | 489,566 | [Business Analysis](index=12&type=section&id=%E6%A5%AD%E5%8B%99%E5%88%86%E6%9E%90) The company's business performance varied across channels, with individual agency channel showing steady growth driven by renewal premiums and floating-income products, while bancassurance achieved significant increases in both premium scale and new business value, and internet insurance business grew substantially | Channel | Jan-Jun 2025 Total Premiums (RMB Million) | Jan-Jun 2024 Total Premiums (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Individual Agency Channel | 400,448 | 390,134 | 2.6% | | Bancassurance Channel | 72,444 | 49,730 | 45.7% | | Group Insurance Channel | 14,437 | 14,778 | -2.3% | | Other Channels | 37,759 | 34,924 | 8.1% | | Total | 525,088 | 489,566 | 7.3% | [Individual Agency Channel](index=12&type=section&id=%E5%80%8B%E9%9A%AA%E6%B8%A0%E9%81%93) The individual agency channel's total premiums increased by 2.6% to RMB 400.448 billion, with renewal premiums growing by 10.4%, and floating-income products significantly contributing to new regular premiums, while new business value rose by 9.5% to RMB 24.337 billion - Total premiums for the individual agency channel were **RMB 400.448 billion**, a year-on-year increase of **2.6%**[39](index=39&type=chunk) - Renewal premiums were **RMB 326.563 billion**, a year-on-year increase of **10.4%**[39](index=39&type=chunk) - First-year regular premiums for ten years and above were **RMB 30.280 billion**, accounting for over **45%** of first-year regular premiums[39](index=39&type=chunk) - Participating insurance (dividend-paying insurance) accounted for over **50%** of first-year regular premiums in the individual agency channel[39](index=39&type=chunk) - New business value for the individual agency channel in the first half of the year reached **RMB 24.337 billion**, a year-on-year increase of **9.5%**[39](index=39&type=chunk) - The individual agency sales force numbered **592,000 people**, with an increase in high-quality agents by **27.6%** year-on-year[41](index=41&type=chunk) [Bancassurance Channel](index=12&type=section&id=%E9%8A%80%E4%BF%9D%E6%B8%A0%E9%81%93) The bancassurance channel achieved total premiums of RMB 72.444 billion, a 45.7% year-on-year increase, with new policy premiums growing by 111.1% and first-year regular premiums by 34.4% to RMB 17.032 billion, while customer manager per capita productivity significantly improved - Total premiums for the bancassurance channel reached **RMB 72.444 billion**, a year-on-year increase of **45.7%**[42](index=42&type=chunk) - New policy premiums reached **RMB 35.873 billion**, a year-on-year increase of **111.1%**[42](index=42&type=chunk) - First-year regular premiums reached **RMB 17.032 billion**, a year-on-year increase of **34.4%**[42](index=42&type=chunk) - Per capita productivity of bancassurance customer managers significantly increased by **51.8%** year-on-year[42](index=42&type=chunk) [Group Insurance Channel](index=13&type=section&id=%E5%9C%98%E9%9A%AA%E6%B8%A0%E9%81%93) The group insurance channel's total premiums were RMB 14.437 billion, with short-term insurance premiums at RMB 13.162 billion, demonstrating a significant reduction in the comprehensive cost ratio for short-term insurance and improved efficiency, while the sales team's per capita productivity increased by 6.7% - Total premiums for the group insurance channel were **RMB 14.437 billion**, of which short-term insurance premiums were **RMB 13.162 billion**[45](index=45&type=chunk) - The comprehensive cost ratio for short-term insurance in the group insurance channel significantly decreased, effectively improving efficiency[45](index=45&type=chunk) - The group insurance sales force numbered **31,000 people**, with per capita productivity increasing by **6.7%** compared to the same period last year[45](index=45&type=chunk) [Other Channels](index=13&type=section&id=%E5%85%B6%E4%BB%96%E6%B8%A0%E9%81%93) Other channels achieved total premiums of RMB 37.759 billion, a year-on-year increase of 8.1%, with the company actively undertaking policy-based health insurance business, including over 200 critical illness insurance projects, 70 long-term care insurance projects, and 140 city-customized commercial medical insurance projects - Total premiums for other channels reached **RMB 37.759 billion**, a year-on-year increase of **8.1%**[47](index=47&type=chunk) - Participated in undertaking over **200 critical illness insurance projects**, **70 long-term care insurance projects**, and **140 city-customized commercial medical insurance projects**[47](index=47&type=chunk) [Internet Insurance Business](index=13&type=section&id=%E4%BA%92%E8%81%AF%E7%B6%B2%E4%BF%9D%E9%9A%AA%E6%A5%AD%E5%8B%99) In the first half of 2025, the company's internet insurance business achieved total premiums of RMB 70.486 billion, a significant year-on-year increase, as it continued to refine its centralized operation and unified management system - In the first half of 2025, total premiums for the internet insurance business reached **RMB 70.486 billion**, a significant year-on-year increase[48](index=48&type=chunk) [Insurance Product Analysis](index=13&type=section&id=%E4%BF%9D%E9%99%AA%E7%94%A2%E5%93%81%E5%88%86%E6%9E%90) In the first half of the year, the company launched over eighty new products, deepening supply-side reform, focusing on national development, strengthening commercial pension, health, and inclusive insurance product R&D, and building a diversified floating-income product system to support business transformation - In the first half of 2025, the company launched over **eighty products**, continuously building a rich and market-adapted product supply system[49](index=49&type=chunk) - Expanded the commercial pension insurance product library, increased innovation in health insurance products, broadened the coverage of inclusive insurance, and launched several first-time health insurance products[49](index=49&type=chunk) - Focused on key inclusive groups such as "new employment forms," "elderly," "small and micro enterprises," and "rural areas," providing customized solutions including exclusive products[49](index=49&type=chunk) - Built a diversified floating-income product system covering various product types and adapting to market conditions, actively supporting the company's business transformation and development[50](index=50&type=chunk) [“Insurance + Services” Ecosystem Development](index=14&type=section&id=%E3%80%8C%E4%BF%9D%E9%9A%AA%2B%E6%9C%8D%E5%8B%99%E3%80%8D%E7%94%9F%E6%85%8B%E5%BB%BA%E8%A8%AD) The company is committed to a "customer-centric" philosophy, vigorously promoting the "Insurance + Services" ecosystem through integrated financial and big health/elder care ecosystem development, providing comprehensive, full-lifecycle financial and insurance services to customers [Integrated Financial Ecosystem](index=14&type=section&id=%E7%B6%9C%E5%90%88%E9%87%91%E8%9E%8D%E7%94%9F%E6%85%8B%E5%9C%88) Leveraging the group's synergistic advantages in insurance, investment, and banking, the company achieved RMB 12.584 billion in property insurance sales in H1, with policy count increasing by 9.5%, while Guangfa Bank acted as an agent for RMB 1.302 billion in bancassurance first-year regular premiums - In the first half of 2025, synergistic sales of property insurance company business premiums reached **RMB 12.584 billion**, with policy count increasing by **9.5%** year-on-year[52](index=52&type=chunk) - Guangfa Bank acted as an agent for the company's bancassurance first-year regular premiums totaling **RMB 1.302 billion**[52](index=52&type=chunk) - Synergistic sales of pension insurance subsidiary business reached **RMB 8.876 billion**[52](index=52&type=chunk) [Big Health and Big Elder Care Ecosystem Development](index=14&type=section&id=%E5%A4%A7%E5%81%A5%E5%BA%B7%E5%A4%A7%E9%A4%8A%E8%80%81%E7%94%9F%E6%85%8B%E5%BB%BA%E8%A8%AD) The company is innovating in big health and elder care services, building a health management service ecosystem with online consultation, and steadily advancing multi-modal elder care service provision, having established 19 institutional elder care projects in 15 cities and launched four "Suixinju" travel products - Integrated internal and external resources to build a health management service ecosystem, launching inclusive services such as online consultations and VIP value-added services[53](index=53&type=chunk) - Has cumulatively established **19 institutional elder care projects** in **15 cities**, launched four "Suixinju" travel products, and is exploring the development of home-based elder care services[53](index=53&type=chunk) [Investment Business Analysis](index=15&type=section&id=%E6%8A%95%E8%B3%87%E6%A5%AD%E5%8B%99%E5%88%86%E6%9E%90) In H1 2025, the company navigated a complex market, adhering to asset-liability matching and long-term, value-oriented, stable investment principles, optimizing asset allocation, resulting in a 7.8% increase in investment assets, higher equity and fund allocation, and good investment returns - As of the end of this reporting period, the company's investment assets reached **RMB 7.127153 trillion**, an increase of **7.8%** from the end of 2024[57](index=57&type=chunk) - The allocation ratio of stocks and funds (excluding money market funds) increased from **12.18%** at the end of 2024 to **13.60%**[57](index=57&type=chunk) - In the first half of 2025, net investment income reached **RMB 96.067 billion**, with a net investment yield of **2.78%**[59](index=59&type=chunk) - Total investment income reached **RMB 127.506 billion**, with a total investment yield of **3.29%**[59](index=59&type=chunk) [Investment Asset Status](index=15&type=section&id=%E6%8A%95%E8%B3%87%E8%B3%87%E7%94%A2%E6%83%85%E6%B3%81) As of June 30, 2025, the company's total investment assets were RMB 7,127.153 billion, with fixed-maturity financial assets accounting for 73.56% and equity financial assets for 20.00%, showing stable allocation in bonds, time deposits, and debt-type financial products, with an increase in stocks and funds | Item | June 30, 2025 Amount (RMB Million) | June 30, 2025 Proportion | December 31, 2024 Amount (RMB Million) | December 31, 2024 Proportion | | :--- | :--- | :--- | :--- | :--- | | Fixed-maturity financial assets | 5,242,536 | 73.56% | 4,911,524 | 74.29% | | Equity financial assets | 1,425,659 | 20.00% | 1,269,086 | 19.19% | | Investment properties | 12,199 | 0.17% | 12,319 | 0.19% | | Cash and others | 129,235 | 1.81% | 116,065 | 1.76% | | Investments in associates and joint ventures | 317,524 | 4.46% | 302,077 | 4.57% | | Total | 7,127,153 | 100.00% | 6,611,071 | 100.00% | - The allocation ratio of stocks and funds (excluding money market funds) increased from **12.18%** at the end of 2024 to **13.60%**[57](index=57&type=chunk) [Investment Income](index=16&type=section&id=%E6%8A%95%E8%B3%87%E6%94%B6%E7%9B%8A) In the first half of 2025, the company achieved net investment income of RMB 96.067 billion, with a net investment yield of 2.78%, and total investment income of RMB 127.506 billion, with a total investment yield of 3.29%, showing a significant increase in realized disposal gains and a decrease in unrealized gains/losses | Item | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | | :--- | :--- | :--- | | Total investment income | 127,506 | 122,366 | | Net investment income | 96,067 | 92,413 | | Realized disposal gains | 30,374 | (17,674) | | Unrealized gains/losses | 1,029 | 47,778 | | Net investment yield | 2.78% | 3.03% | | Total investment yield | 3.29% | 3.59% | [Credit Risk Management](index=16&type=section&id=%E4%BF%A1%E7%94%A8%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The company's credit asset investments primarily include credit bonds and debt-type financial products, mainly in banking, transportation, and non-bank financial sectors, with over 98% of credit bonds and 99% of debt-type financial products holding AAA external ratings, indicating good asset quality and controllable risk - The company's holdings of credit bonds with external AAA ratings exceeded **98%**[60](index=60&type=chunk) - Debt-type financial products with external AAA ratings exceeded **99%**[60](index=60&type=chunk) [Significant Investments](index=16&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) During this reporting period, the company had no significant equity or non-equity investments that met the disclosure standards - During this reporting period, the company had no significant equity or non-equity investments that met the disclosure standards[61](index=61&type=chunk) [Digital and Intelligent Operations Services](index=17&type=section&id=%E6%95%B8%E6%99%BA%E5%8C%96%E9%81%8B%E7%87%9F%E6%9C%8D%E5%8B%99) In H1 2025, the company advanced digital finance, applying AI, big data, and cloud computing to enhance operational efficiency and customer experience, achieving a 95.8% intelligent underwriting review rate and over 95% accuracy for smart customer service robots, with over 75% of commercial insurance claims processed digitally - Digital underwriters increased the intelligent underwriting review rate to **95.8%**[63](index=63&type=chunk) - The new version of the smart customer service robot achieved an answer accuracy rate of over **95%**[63](index=63&type=chunk) - In the first half of 2025, commercial insurance claims exceeded **12 million cases**, with digital and intelligent services accounting for over **75%** of claims[64](index=64&type=chunk) - The life insurance service quality index ranked first in the industry for **two consecutive years**, and consumer protection regulatory evaluation remained at the highest level for **four consecutive years**[64](index=64&type=chunk) [Special Analysis](index=18&type=section&id=%E5%B0%88%E9%A0%85%E5%88%86%E6%9E%90) This section provides a special analysis of insurance service revenue, expenses, underwriting financial gains/losses, insurance contract liabilities, cash flow, solvency, significant asset disposals, and core competitiveness, noting slight increases in revenue and expenses, a 6.8% growth in underwriting financial gains/losses, and a 7.9% increase in insurance contract liabilities [Insurance Service Revenue](index=18&type=section&id=%E4%BF%9D%E9%99%AA%E6%9C%8D%E5%8B%99%E6%94%B6%E5%85%A5) In the first half of 2025, the company's insurance service revenue was RMB 106.874 billion, a slight year-on-year increase of 0.2%, with contracts not measured using the premium allocation approach contributing RMB 82.243 billion and contracts measured using the premium allocation approach contributing RMB 24.631 billion | Item | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Insurance service revenue | 106,874 | 106,622 | 0.2% | | Contracts not measured using the premium allocation approach | 82,243 | 81,937 | 0.4% | | Contracts measured using the premium allocation approach | 24,631 | 24,685 | -0.2% | [Insurance Service Expenses](index=18&type=section&id=%E4%BF%9D%E9%99%AA%E6%9C%8D%E5%8B%99%E8%B2%BB%E7%94%A8) In the first half of 2025, the company's insurance service expenses were RMB 88.202 billion, a year-on-year increase of 5.2%, with expenses for contracts not measured using the premium allocation approach growing by 9.8% and those for contracts measured using the premium allocation approach decreasing by 4.6% | Item | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Insurance service expenses | 88,202 | 83,822 | 5.2% | | Contracts measured using the premium allocation approach | 25,273 | 26,491 | -4.6% | | Contracts not measured using the premium allocation approach | 62,929 | 57,331 | 9.8% | [Underwriting Financial Gains/Losses](index=18&type=section&id=%E6%89%BF%E4%BF%9D%E8%B2%A1%E5%8B%99%E6%90%8D%E7%9B%8A) In the first half of 2025, the company's underwriting financial gains/losses were RMB 97.978 billion, a year-on-year increase of 6.8%, reflecting the impact of insurance contracts related to the time value of money and financial risks | Item | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Underwriting financial gains/losses | 97,978 | 91,735 | 6.8% | [Insurance Contract Liabilities](index=19&type=section&id=%E4%BF%9D%E9%99%AA%E5%90%88%E5%90%8C%E8%B2%A0%E5%82%B5) As of June 30, 2025, the company's total insurance contract liabilities were RMB 6,285.132 billion, an increase of 7.9% from the end of 2024, primarily due to new and renewal business accumulation and market interest rate changes, while the contractual service margin grew by 1.6% to RMB 754.730 billion | Item | June 30, 2025 (RMB Million) | December 31, 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total insurance contract liabilities | 6,285,132 | 5,825,026 | 7.9% | | Of which: Contractual service margin | 754,730 | 742,488 | 1.6% | - The contractual service margin for insurance contracts initially recognized during the period was **RMB 26.209 billion**, a year-on-year decrease of **31.0%**, mainly due to changes in market interest rates[75](index=75&type=chunk) [Cash Flow Analysis](index=19&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E5%88%86%E6%9E%90) The company's liquidity sources primarily include premiums, interest, and dividend income, as well as investment asset disposals, with sufficient liquidity evidenced by RMB 119.643 billion in cash and cash equivalents and RMB 457.234 billion in time deposits as of the reporting period end - As of the end of this reporting period, cash and cash equivalents amounted to **RMB 119.643 billion**[77](index=77&type=chunk) - As of the end of this reporting period, the company's time deposits amounted to **RMB 457.234 billion**[77](index=77&type=chunk) [Sources of Liquidity](index=19&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E7%9A%84%E4%BE%86%E6%BA%90) The company's cash income primarily stems from received premiums, interest and dividends, and the sale and maturity of investment assets, with cash and cash equivalents of RMB 119.643 billion and time deposits of RMB 457.234 billion at period-end, ensuring ample liquidity - The company's cash income primarily comes from received premiums, interest and dividends, and the sale and maturity of investment assets[76](index=76&type=chunk) - As of the end of this reporting period, cash and cash equivalents amounted to **RMB 119.643 billion**[77](index=77&type=chunk) - As of the end of this reporting period, the company's time deposits amounted to **RMB 457.234 billion**[77](index=77&type=chunk) [Uses of Liquidity](index=19&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E7%9A%84%E4%BD%BF%E7%94%A8) The company's primary cash expenditures include payments for insurance product-related liabilities, operating expenses, income tax, and dividends, with insurance business cash outflows mainly for claims, surrenders, withdrawals, and policy loans, and management believes current liquidity is sufficient - The company's main cash expenditures involve payments for liabilities related to various life insurance, annuity, accident, and health insurance products, operating expenses, income tax, and dividends declared to shareholders[78](index=78&type=chunk) - The company believes that its liquidity is sufficient to meet current cash needs[79](index=79&type=chunk) [Consolidated Cash Flow](index=20&type=section&id=%E5%90%88%E4%BD%B5%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) In the first half of 2025, the company's net cash flow from operating activities increased by 7.1% to RMB 300.442 billion, while net cash flow from investing activities saw a significant outflow increase of 45.9% to RMB -301.032 billion, and net cash flow from financing activities turned positive at RMB 34.719 billion | Item | Jan-Jun 2025 (RMB Million) | Jan-Jun 2024 (RMB Million) | Change (%) | Main Reasons for Change | | :--- | :--- | :--- | :--- | :--- | | Net cash flow from operating activities | 300,442 | 280,552 | 7.1% | Increase in company business scale | | Net cash flow from investing activities | (301,032) | (206,303) | 45.9% | Due to investment management needs | | Net cash flow from financing activities | 34,719 | (133,616) | Not applicable | Due to liquidity management needs | [Solvency Status](index=20&type=section&id=%E5%84%9F%E4%BB%98%E8%83%BD%E5%8A%9B%E7%8B%80%E6%B3%81) As of June 30, 2025, the company's comprehensive solvency ratio was 190.94% and core solvency ratio was 139.54%, both decreasing from the end of 2024 but remaining at a high level, primarily due to increased equity asset allocation and market interest rate fluctuations | Item | June 30, 2025 (RMB Million) | December 31, 2024 (RMB Million) | | :--- | :--- | :--- | | Core Capital | 749,372 | 767,446 | | Actual Capital | 1,025,432 | 1,039,821 | | Minimum Capital | 537,044 | 500,489 | | Core Solvency Ratio | 139.54% | 153.34% | | Comprehensive Solvency Ratio | 190.94% | 207.76% | - The comprehensive solvency ratio decreased by **16.82 percentage points** from the end of 2024; the core solvency ratio decreased by **13.80 percentage points**[85](index=85&type=chunk) - The decrease was mainly due to the growth in equity asset allocation scale and market interest rate fluctuations[85](index=85&type=chunk) [Disposal of Significant Assets and Equity](index=20&type=section&id=%E9%87%8D%E5%A4%A7%E8%B3%87%E7%94%A2%E5%92%8C%E8%82%A1%E6%AC%8A%E5%87%BA%E5%94%AE) During this reporting period, the company had no significant asset or equity disposals - During this reporting period, the company had no significant asset or equity disposals[87](index=87&type=chunk) [Core Competitiveness Analysis](index=20&type=section&id=%E6%A0%B8%E5%BF%83%E7%AB%B6%E7%88%AD%E5%8A%9B%E5%88%86%E6%9E%90) During this reporting period, there were no significant changes in the company's core competitiveness - During this reporting period, there were no significant changes in the company's core competitiveness[87](index=87&type=chunk) [Major Controlled and Invested Companies](index=21&type=section&id=%E4%B8%BB%E8%A6%81%E6%8E%A7%E8%82%A1%E5%8F%83%E8%82%A1%E5%85%AC%E5%8F%B8%E6%83%85%E6%B3%81) The company's major subsidiaries, China Life Asset Management Company Limited and China Life Pension Company Limited, both achieved profitability during the reporting period, positively impacting the company's net profit, with no associate companies affecting net profit by more than 10% | Company Name | Company Type | Registered Capital (RMB Million) | Total Assets (RMB Million) | Net Assets (RMB Million) | Net Profit (RMB Million) | | :--- | :--- | :--- | :--- | :--- | :--- | | China Life Asset Management Company Limited | Subsidiary | 4,000 | 26,578 | 21,947 | 2,076 | | China Life Pension Company Limited | Subsidiary | 3,400 | 77,521 | 8,451 | 685 | - During this reporting period, there were no associate companies whose impact on the company's net profit exceeded **10%**[89](index=89&type=chunk) [Acquisition and Disposal of Subsidiaries during the Reporting Period](index=21&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%85%A7%E5%8F%96%E5%BE%97%E5%92%8C%E8%99%95%E7%BD%AE%E5%AD%90%E5%85%AC%E5%8F%B8%E7%9A%84%E6%83%85%E5%86%B5) Information regarding the acquisition and disposal of subsidiaries during the reporting period can be found in Note 16 to the interim condensed consolidated financial statements - Information regarding the acquisition and disposal of subsidiaries during the reporting period can be found in Note 16 to the interim condensed consolidated financial statements[90](index=90&type=chunk) [Structured Entities Controlled by the Company](index=21&type=section&id=%E5%85%AC%E5%8F%B8%E6%8E%A7%E5%88%B6%E7%9A%84%E7%B5%90%E6%A7%8B%E5%8C%96%E4%B8%BB%E9%AB%94%E6%83%85%E5%86%B5) Information regarding significant structured entities controlled by the company can be found in Note 16 to the interim condensed consolidated financial statements - Information regarding significant structured entities controlled by the company can be found in Note 16 to the interim condensed consolidated financial statements[91](index=91&type=chunk) [Risk Management](index=22&type=section&id=%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The company has established a comprehensive risk management system, with the Board of Directors bearing ultimate responsibility, encompassing a five-level organizational structure and three lines of defense, and has built a "1+7+N" risk management framework, maintaining high solvency risk management capabilities and an A-class comprehensive risk rating for 28 consecutive quarters - The company has established a comprehensive risk management organizational system with the Board of Directors bearing ultimate responsibility and management directly leading, setting up a **five-level risk management organizational structure**[92](index=92&type=chunk) - A "1+7+N" comprehensive risk management system has been built, with the "Comprehensive Risk Management Regulations" as the纲领, and seven major risk management systems covering insurance risk, market risk, credit risk, operational risk, strategic risk, reputational risk, and liquidity risk as the core[92](index=92&type=chunk) - The company's solvency risk management capability consistently ranks among the top life insurance companies in the industry's SARMRA assessment, and its comprehensive risk rating has maintained an **A-class rating for 28 consecutive quarters**[93](index=93&type=chunk) - Actively promoted the digital and intelligent transformation of risk control, strengthening the application of new technologies such as big data and artificial intelligence in risk prevention and control[93](index=93&type=chunk) [Future Outlook](index=22&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B) The company anticipates an accelerated industry shift from scale expansion to value creation and efficiency, with competition focusing on long-term customer value, service quality, risk pricing, and cost control, while the company plans to prioritize quality and efficiency, strengthen asset-liability management, transform sales channels, and enhance digital empowerment - The industry's operating logic will accelerate its transformation from scale expansion to value creation and efficiency improvement, with competition focusing comprehensively on long-term customer value management, service quality experience, risk pricing capabilities, and refined cost control[95](index=95&type=chunk) - In the second half of the year, the company will adhere to quality first and efficiency priority, strengthen asset-liability linkage management, steadily promote the transformation and upgrading of sales channels, accelerate the construction of a health and elder care ecosystem, strengthen digital empowerment and application, earnestly protect consumer rights and interests, and firmly guard the bottom line of risk prevention and control[96](index=96&type=chunk) - Pressure from overall investment portfolio return volatility persists, and the industry is in a period of development rhythm transition and transformation and upgrading, with the foundation for high-quality development needing further consolidation[97](index=97&type=chunk) [Industry Landscape and Trends](index=22&type=section&id=%E8%A1%8C%E6%A5%AD%E6%A0%BC%E5%B1%80%E5%92%8C%E8%B6%A8%E5%8B%A2) As regulatory policies deepen, the insurance industry will accelerate its shift from scale expansion to value creation and efficiency, with competition focusing on long-term customer value, service quality, risk pricing, and refined cost control, while enhancing asset-liability matching, product transformation, and health/elder care ecosystem development will be key - The industry's operating logic will accelerate its transformation from scale expansion to value creation and efficiency improvement, with competition focusing comprehensively on long-term customer value management, service quality experience, risk pricing capabilities, and refined cost control[95](index=95&type=chunk) - Enhancing asset-liability matching management capabilities, accelerating product transformation, and developing a health and elder care ecosystem will become key priorities for high-quality industry development[95](index=95&type=chunk) - Achieving cost reduction and efficiency improvement through technological empowerment of operations, building a professional and vocational sales force, and deepening comprehensive services based on the customer's entire lifecycle will be key pathways for the industry to achieve intensive and intrinsic development[95](index=95&type=chunk) [Company Development Strategy and Business Plan](index=22&type=section&id=%E5%85%AC%E5%8F%B8%E7%99%BC%E5%B1%95%E6%88%B0%E7%95%A5%E5%8F%8A%E7%B6%93%E7%87%9F%E8%A8%88%E5%8A%83) In the second half of 2025, the company will prioritize quality and efficiency, strengthen asset-liability linkage management, steadily advance sales channel transformation, accelerate the development of its health and elder care ecosystem, enhance digital empowerment, protect consumer rights, and firmly maintain risk control to build sustainable competitiveness - The company will adhere to quality first and efficiency priority, strengthen asset-liability linkage management, steadily promote the transformation and upgrading of sales channels, and accelerate the construction of a health and elder care ecosystem[96](index=96&type=chunk) - Strengthen digital empowerment and application, earnestly protect consumer rights and interests, and firmly guard the bottom line of risk prevention and control[96](index=96&type=chunk) [Potential Risks](index=22&type=section&id=%E5%8F%AF%E8%83%BD%E9%9D%A2%E5%B0%8D%E7%9A%84%E9%A2%A8%E9%9A%AA) The company faces macroeconomic risks, with persistent pressure from overall investment portfolio return volatility, and the industry is in a transition period requiring further consolidation of high-quality development, though funds are expected to meet H2 business and investment needs - Pressure from overall investment portfolio return volatility still exists[97](index=97&type=chunk) - The industry is in a period of development rhythm transition and transformation and upgrading, with the foundation for high-quality development needing further consolidation[97](index=97&type=chunk) - It is expected that in the second half of 2025, the company's funds will be able to meet insurance business expenditures and the demand for new general investment projects[97](index=97&type=chunk) [Embedded Value](index=23&type=section&id=04%20%E5%85%A7%E5%90%AB%E5%83%B9%E5%80%BC) [Background](index=23&type=section&id=%E8%83%8C%E6%99%AF) Embedded value is an actuarially estimated economic value of an insurance company based on future experience assumptions, with half-year new business value representing the economic value generated by new business, providing useful information to investors but not replacing accounting measures and subject to significant changes with assumption variations - Embedded value is an actuarially estimated economic value of an insurance company based on a set of assumptions about future experience[100](index=100&type=chunk) - Half-year new business value represents the economic value generated by new business sold in the six months prior to the valuation date, based on a set of assumptions about future experience[100](index=100&type=chunk) - The calculation of embedded value involves a large number of complex techniques, and the estimation of embedded value and half-year new business value can change significantly with changes in key assumptions[101](index=101&type=chunk) [Definition of Embedded Value and Half-Year New Business Value](index=24&type=section&id=%E5%85%A7%E5%90%AB%E5%83%B9%E5%80%BC%E5%92%8C%E4%B8%8A%E5%8D%8A%E5%B9%B4%E6%96%B0%E6%A5%AD%E5%8B%99%E5%83%B9%E5%80%BC%E7%9A%84%E5%AE%9A%E7%BE%A9) The embedded value of a life insurance company is defined as the sum of its adjusted net asset value and the value of in-force business after deducting the cost of required capital, with both in-force business value and half-year new business value calculated using traditional deterministic discounted cash flow methods - The embedded value of a life insurance company is defined as the sum of its adjusted net asset value and the value of in-force business after considering the deduction of the cost of required capital[102](index=102&type=chunk) - "Adjusted net asset value" equals the sum of net assets, relevant adjustments for after-tax differences between the market value and book value of assets, and certain liabilities[103](index=103&type=chunk)[107](index=107&type=chunk) - The value of in-force business and half-year new business value are calculated using traditional deterministic discounted cash flow methods, implicitly reflecting all risks and the economic cost of required capital not considered elsewhere in the valuation process through the use of risk-adjusted discount rates[104](index=104&type=chunk) [Preparation and Review](index=24&type=section&id=%E7%B7%A8%E8%A3%BD%E5%92%8C%E5%AF%A9%E9%96%B1) The company's embedded value and half-year new business value were prepared by the company in accordance with the "Actuarial Practice Standard: Embedded Value Assessment Standard for Life Insurance" issued by the China Association of Actuaries and reviewed by KPMG Advisory (China) Limited - The embedded value and half-year new business value were prepared by the company in accordance with relevant provisions of the "Actuarial Practice Standard: Embedded Value Assessment Standard for Life Insurance" issued by the China Association of Actuaries[105](index=105&type=chunk) - KPMG Advisory (China) Limited reviewed the company's embedded value and half-year new business value[105](index=105&type=chunk) [Assumptions](index=24&type=section&id=%E5%81%87%E8%A8%AD) The assumptions for the 2025 interim embedded value assessment are consistent with those used in the 2024 year-end assessment - The assumptions for the 2025 interim embedded value assessment are consistent with those used in the 2024 year-end assessment[106](index=106&type=chunk) [Summary of Results](index=25&type=section&id=%E7%B5%90%E6%9E%9C%E7%B8%BD%E7%B5%90) As of June 30, 2025, the company's embedded value was RMB 1,477.827 billion, a 5.5% increase from the end of 2024, with half-year new business value at RMB 28.546 billion, a 20.3% year-on-year increase, and the individual agency channel's half-year new business value ratio at 32.4% by first-year premiums Embedded Value | Item | As of June 30, 2025 (RMB Million) | As of December 31, 2024 (RMB Million) | | :--- | :--- | :--- | | Adjusted net asset value | 949,200 | 897,831 | | Value of in-force business after deducting cost of required capital | 528,627 | 503,315 | | Embedded value | 1,477,827 | 1,401,146 | Half-Year New Business Value | Item | As of June 30, 2025 (RMB Million) | As of June 30, 2024 (RMB Million) | | :--- | :--- | :--- | | Half-year new business value after deducting cost of required capital | 28,546 | 23,733 | | Of which: Individual agency channel half-year new business value | 24,337 | 22,223 | Half-Year New Business Value Ratio for Individual Agency Channel | Item | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Based on first-year premiums | 32.4% | 23.2% | | Based on first-year annualized premiums | 32.7% | 23.5% | [Analysis of Changes](index=26&type=section&id=%E8%AE%8A%E5%8B%95%E5%88%86%E6%9E%90) In the first half of 2025, the company's embedded value increased from RMB 1,401.146 billion at the beginning of the period to RMB 1,477.827 billion at the end, primarily driven by expected return on embedded value, new business value, operating experience differences, investment return differences, and market value adjustments, partially offset by shareholder dividend distribution Changes in Embedded Value | Item | Amount (RMB Million) | | :--- | :--- | | Beginning embedded value | 1,401,146 | | Expected return on embedded value | 37,499 | | New business value for the period | 28,546 | | Differences in operating experience | 3,647 | | Differences in investment returns | 616 | | Market value and other adjustments | 18,363 | | Shareholder dividend distribution and capital changes | (12,719) | | Embedded value as of June 30, 2025 | 1,477,827 | [Sensitivity Results](index=27&type=section&id=%E6%95%8F%E6%84%9F%E6%80%A7%E7%B5%90%E6%9E%9C) Sensitivity tests reveal that the company's value of in-force business and half-year new business value are sensitive to changes in risk discount rates, investment return rates, expense ratios, mortality rates, lapse rates, and morbidity rates, with investment return rate changes having the most significant impact on the value of in-force business Sensitivity Analysis of Value of In-Force Business and Half-Year New Business Value | Assumption Change | Value of In-Force Business after Deducting Cost of Required Capital (RMB Million) | Half-Year New Business Value after Deducting Cost of Required Capital (RMB Million) | | :--- | :--- | :--- | | Base Scenario | 528,627 | 28,546 | | Risk discount rate increased by 50 basis points | 498,586 | 27,233 | | Risk discount rate decreased by 50 basis points | 561,177 | 29,953 | | Investment return rate increased by 10% | 663,591 | 33,122 | | Investment return rate decreased by 10% | 394,271 | 23,979 | | Expense ratio increased by 10% | 520,455 | 26,440 | | Expense ratio decreased by 10% | 536,799 | 30,653 | | Mortality rate for non-annuity products increased by 10%; mortality rate for annuity products decreased by 10% | 523,631 | 28,075 | | Mortality rate for non-annuity products decreased by 10%; mortality rate for annuity products increased by 10% | 533,601 | 29,021 | | Lapse rate increased by 10% | 532,519 | 28,017 | | Lapse rate decreased by 10% | 524,716 | 29,113 | | Morbidity rate increased by 10% | 519,012 | 27,391 | | Morbidity rate decreased by 10% | 538,304 | 29,702 | | Value of in-force business considering diversification effect | 565,538 | – | [Independent Actuarial Review Report on China Life Insurance Company Limited's Embedded Value](index=28&type=section&id=%E9%97%9C%E6%96%BC%E4%B8%AD%E5%9C%8B%E4%BA%BA%E5%A3%BD%E4%BF%9D%E9%9A%AA%E8%82%A1%E4%BB%BD%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8%E5%85%A7%E5%90%AB%E5%83%B9%E5%80%BC%E7%9A%84%E7%8D%A8%E7%AB%8B%E7%B2%BE%E7%AE%97%E5%B8%AB%E5%AF%A9%E9%96%B1%E5%A0%B1%E5%91%8A) KPMG Advisory (China) Limited conducted an independent review of China Life's embedded value results as of June 30, 2025, concluding that the company's valuation methods and assumptions comply with actuarial practice standards, are consistent with market information, and the overall results are reasonable - KPMG Advisory (China) Limited reviewed China Life's embedded value results[115](index=115&type=chunk) - The review opinion stated that China Life's embedded value assessment methods and assumptions comply with relevant provisions in the "Actuarial Practice Standard: Embedded Value Assessment Standard for Life Insurance" and are consistent with available market information[118](index=118&type=chunk) - The review opinion concluded that China Life's embedded value results are consistent with the methods and assumptions described in the embedded value section, and on this basis, the overall results are reasonable[118](index=118&type=chunk) [Significant Matters](index=29&type=section&id=05%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A0%85) [Significant Litigation and Arbitration Matters](index=29&type=section&id=%E9%87%8D%E5%A4%A7%E8%A8%B4%E8%A8%9F%E3%80%81%E4%BB%B2%E8%A3%81%E4%BA%8B%E9%A0%85) During this reporting period, the company had no significant litigation or arbitration matters - During this reporting period, the company had no significant litigation or arbitration matters[120](index=120&type=chunk) [Significant Related Party Transactions](index=29&type=section&id=%E9%87%8D%E5%A4%A7%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) The company engaged in various continuing connected transactions during the reporting period, including insurance business agency, sales, and entrusted investment management agreements with group companies and subsidiaries, all complying with HKEX Listing Rules, and also participated in other significant related party transactions for equity investments - During this reporting period, the company engaged in several continuing connected transactions that require reporting, announcement, and annual review under Chapter 14A of the HKEX Listing Rules but are exempt from independent shareholder approval, including the insurance business agency agreement with the Group Company, the insurance sales business framework agreement with the Property Insurance Company, the insurance fund entrusted investment management agreement with the Asset Management Subsidiary, the framework agreement signed with China Life Capital Company, and the framework agreements signed by the company, the Group Company, and China Life Investment Holding Company with China Life AMP Asset Management[121](index=121&type=chunk) - The company has complied with the disclosure requirements of Chapter 14A of the HKEX Listing Rules and followed the pricing policies and guidelines established at the time of entering into the transactions[122](index=122&type=chunk) - The company established a partnership to invest in infrastructure securities investment funds, with a subscribed capital of **RMB 3.5 billion**[136](index=136&type=chunk) - The company established a partnership to invest in equity related to the silver economy industry, with a subscribed capital of **RMB 2 billion**[137](index=137&type=chunk) - The company established a partnership to invest in equity of nuclear power enterprises, with a subscribed capital of **RMB 1.2 billion**[138](index=138&type=chunk) [Continuing Connected Transactions](index=29&type=section&id=%E6%8C%81%E7%BA%8C%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) The company engaged in various continuing connected transactions during the reporting period, including agreements with the Group Company, Property Insurance Company, Asset Management Subsidiary, China Life Capital Company, China Life Investment Holding Company, and China Life AMP Asset Management, covering insurance business agency, sales, and entrusted investment management, all in compliance with HKEX Listing Rules - During this reporting period, the company engaged in several continuing connected transactions that require reporting, announcement, and annual review under Chapter 14A of the HKEX Listing Rules but are exempt from independent shareholder approval, including the insurance business agency agreement with the Group Company, the insurance sales business framework agreement with the Property Insurance Company, the insurance fund entrusted investment management agreement with the Asset Management Subsidiary, the framework agreement signed with China Life Capital Company, and the framework agreements signed by the company, the Group Company, and China Life Investment Holding Company with China Life AMP Asset Management[121](index=121&type=chunk) - During this reporting period, the company also engaged in certain continuing connected transactions exempt from reporting, announcement, annual review, and independent shareholder approval under Chapter 14A of the HKEX Listing Rules, including the insurance fund entrusted investment management agreement between the Group Company and the Asset Management Subsidiary[122](index=122&type=chunk) [Insurance Business Agency Agreement](index=30&type=section&id=%E4%BF%9D%E9%99%AA%E6%A5%AD%E5%8B%99%E4%BB%A3%E7%90%86%E5%8D%94%E8%AD%B0) The company signed a 2025-2027 insurance business agency agreement with the Group Company to provide policy management services and collect service fees, totaling RMB 223.84 million in H1 2025 - The company and the Group Company signed the 2025-2027 insurance business agency agreement on December 31, 2024, effective from January 1, 2025, to December 31, 2027[123](index=123&type=chunk) - In the first half of 2025, the company collected a total of **RMB 223.84 million** in policy agency service fees from the Group Company[123](index=123&type=chunk) [Insurance Sales Business Framework Agreement](index=30&type=section&id=%E4%BF%9D%E9%99%AA%E9%8A%B7%E5%94%AE%E6%A5%AD%E5%8B%99%E6%A1%86%E6%9E%B6%E5%8D%94%E8%AD%B0) The company signed the 2024 insurance sales business framework agreement with the Property Insurance Company to act as an agent for property insurance products and collect agency fees, totaling RMB 811 million in H1 2025 - The company and the Property Insurance Company signed the 2024 insurance sales business framework agreement on February 23, 2024, effective from March 8, 2024, to March 7, 2027[124](index=124&type=chunk) - In the first half of 2025, the company collected a total of **RMB 811.00 million** in agency fees from the Property Insurance Company[124](index=124&type=chunk) [Insurance Fund Entrusted Investment Management Agreement](index=30&type=section&id=%E4%BF%9D%E9%99%AA%E8%B3%87%E9%87%91%E5%A7%94%E8%A8%97%E6%8A%95%E8%B3%87%E7%AE%A1%E7%90%86%E5%8D%94%E8%AD%B0) The company signed a 2023-2025 entrusted investment management agreement with the Asset Management Subsidiary, entrusting it with asset management and paying service fees, totaling RMB 2.09447 billion in H1 2025, while the Asset Management Subsidiary also collected RMB 64.43 million from the Group Company - The company and the Asset Management Subsidiary signed the 2023-2025 entrusted investment management agreement on January 1, 2023[125](index=125&type=chunk) - In the first half of 2025, the company paid a total of **RMB 2.09447 billion** in insurance fund entrusted investment management service fees to the Asset Management Subsidiary[126](index=126&type=chunk) - In the first half of 2025, the Asset Management Subsidiary collected a total of **RMB 64.43 million** in investment asset management service fees from the Group Company[127](index=127&type=chunk) [Company's Alternative Investment Entrusted Management and Operation Service Agreement with China Life Investment Holding Company](index=30&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%88%87%E5%9C%8B%E5%A3%BD%E6%8A%95%E8%B3%87%E5%85%AC%E5%8F%B8%E4%BF%9D%E9%9A%AA%E8%B3%87%E9%87%91%E5%8F%A6%E9%A1%9E%E6%8A%95%E8%B3%87%E5%A7%94%E8%A8%97%E6%8A%95%E8%B3%87%E7%AE%A1%E7%90%86%E5%8F%8A%E9%81%8B%E7%87%9F%E6%9C%8D%E5%8B%99%E5%8D%94%E8%AD%B0) The company signed a 2023-2025 alternative investment entrusted management and operation service agreement with China Life Investment Holding Company, entrusting it with alternative investment management and operation services, paying RMB 332.65 million in fees and signing new entrusted investment management assets worth RMB 21.51973 billion in H1 2025 - The company signed the 2023-2025 insurance fund alternative investment entrusted management and operation service agreement with China Life Investment Holding Company on June 30, 2023[128](index=128&type=chunk) - In the first half of 2025, the company paid a total of **RMB 332.65 million** in investment and management service fees and operation service entrusted operation fees to China Life Investment Holding Company[129](index=129&type=chunk) - The contracted amount for newly entrusted investment management assets was **RMB 21.51973 billion**[129](index=129&type=chunk) [Company's Insurance Fund Investment Management Cooperation Framework Agreement with China Life Capital Company](index=31&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%88%87%E5%9C%8B%E5%A3%BD%E8%B3%87%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%BF%9D%E9%99%AA%E8%B3%87%E9%87%91%E6%8A%95%E8%B3%87%E7%AE%A1%E7%90%86%E5%90%88%E4%BD%9C%E6%A1%86%E6%9E%B6%E5%8D%94%E8%AD%B0) The company signed a 2023-2025 framework agreement with China Life Capital Company to subscribe to its fund products, with no subscriptions made in H1 2025, but China Life Capital Company collected RMB 80.63 million in management fees as manager - The company signed the 2023-2025 annual framework agreement with China Life Capital Company on December 28, 2022[130](index=130&type=chunk) - In the first half of 2025, the amount subscribed by the company as a limited partner to fund products where China Life Capital Company or its subsidiaries served as general partners was **RMB 0 million**[130](index=130&type=chunk) - China Life Capital Company, as the general partner or manager of the fund products, collected management fees totaling **RMB 80.63 million**[130](index=130&type=chunk) [Framework Agreement with China Life AMP Asset Management](index=31&type=section&id=%E8%88%87%E5%9C%8B%E5%A3%BD%E5%AE%89%E4%BF%9D%E5%9F%BA%E9%87%91%E6%A1%86%E6%9E%B6%E5%8D%94%E8%AD%B0) The company signed a 2023-2025 framework agreement with China Life AMP Asset Management for fund product subscriptions and redemptions, and private asset management, with H1 subscriptions totaling RMB 7.012 billion and redemptions RMB 4.61175 billion, while the Group Company and China Life Investment Holding Company also have similar agreements - The company signed the 2023-2025 annual framework agreement with China Life AMP Asset Management on December 30, 2022[131](index=131&type=chunk) - In the first half of 2025, the subscription amount for fund products and corresponding subscription fees totaled **RMB 7.012 billion**, and the redemption amount for fund products and corresponding redemption fees totaled **RMB 4.61175 billion**[132](index=132&type=chunk) - The Group Company had no related transactions with China Life AMP Asset Management, while China Life Investment Holding Company and its subsidiaries had subscription amounts of **RMB 175 million** and redemption amounts of **RMB 70 million**[134](index=134&type=chunk)[135](index=135&type=chunk) [Other Significant Related Party Transactions](index=32&type=section&id=%E5%85%B6%E4%BB%96%E9%87%8D%E5%A4%A7%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) The company participated in establishing several partnerships for equity investments, including RMB 3.5 billion for an infrastructure securities investment fund, RMB 2 billion for silver economy industry equity, and RMB 1.2 billion for nuclear power enterprise equity, all one-off related party transactions complying with HKEX Listing Rules - The company subscribed **RMB 3.5 billion** to establish Beijing Pingzhun Infrastructure Real Estate Equity Investment Fund Partnership (Limited Partnership), primarily investing in infrastructure securities investment funds[136](index=136&type=chunk) - The company subscribed **RMB 2 billion** to establish Hebei Chengda Linkong Equity Investment Fund Partnership (Limited Partnership), primarily for equity investments in unlisted enterprises within the silver economy industry chain and related fields[137](index=137&type=chunk) - The company subscribed **RMB 1.2 billion** to establish CNNC Tianwan (Beijing) Nuclear Power Equity Investment Fund Partnership (Limited Partnership), intending to make equity investments in nuclear power enterprises[138](index=138&type=chunk) [Purchase, Sale or Redemption of Company Securities](index=32&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%E8%AD%89%E5%88%B8) During this reporting period, the company and its subsidiaries did not purchase, sell, or redeem any of the company's listed securities, and held no treasury shares at the end of the period - During this reporting period, the company and its subsidiaries did not purchase, sell, or redeem any of the company's listed securities[141](index=141&type=chunk) - As of the end of this reporting period, the company held no treasury shares[141](index=141&type=chunk) [Significant Contracts and Their Performance](index=32&type=section&id=%E9%87%8D%E5%A4%A7%E5%90%88%E5%90%8C%E5%8F%8A%E5%85%B6%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) During this reporting period, the company had no significant trust, contracting, or leasing contracts impacting profit, no external guarantees, and its controlled subsidiary had outstanding external guarantees of RMB 253 million, while investment asset management primarily utilized entrusted investment models with diverse managers - During this reporting period, there were no trust, contracting, or leasing of other company assets, or other companies entrusting, contracting, or leasing company assets, that resulted in gains or losses exceeding **10%** (inclusive) of the company's total profit for the reporting period, nor were there any such matters from previous periods continuing into this reporting period[142](index=142&type=chunk) - During this reporting period, China Life Insurance Company Limited had no external guarantees and did not provide guarantees to its controlled subsidiaries; as of the end of this reporting period, the outstanding external guarantees of the company's controlled subsidiaries amounted to **RMB 253 million**[142](index=142&type=chunk) - The company's investment asset management primarily adopts an entrusted investment management model, forming a diversified entrusted investment management structure with internal China Life system managers as the main force and external managers as effective supplements[143](index=143&type=chunk) [Pension Plans](index=33&type=section&id=%E9%80%80%E4%BC%91%E9%87%91%E8%A8%88%E5%8A%83) The company's full-time employees participate in government-supported basic social old-age insurance and enterprise annuity plans, with monthly contributions made t