[Company Information](index=3&type=section&id=Company%20Information) This section provides essential corporate details, including board composition, principal offices, and professional advisers [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section details the composition and changes of the company's Board of Directors and its committees, including executive, non-executive, and independent non-executive directors, during the reporting period - Dr. Pan Honghui serves as CEO and Executive Director[6](index=6&type=chunk) - Mr. Ouyang Yunlong was appointed Non-executive Director effective July 3, 2025, while Mr. Zhang Jiankang, Dr. Lu Yang, and Mr. Huang Mincong resigned as Non-executive Directors[6](index=6&type=chunk) - Ms. Huang Mengying serves as Board Chairman and Remuneration Committee Chairman, and Mr. Wang Yushan was appointed Independent Non-executive Director and Audit Committee Chairman effective February 17, 2025[6](index=6&type=chunk) [Principal Places of Business and Registered Information](index=3&type=section&id=Principal%20Places%20of%20Business%20and%20Registered%20Information) This section provides the company's principal business locations and headquarters in the U.S., China, and Hong Kong, along with details of its registered office and share registrars - U.S. principal place of business and headquarters: Sirnaomics, Inc., located in Germantown, MD 20876, U.S[7](index=7&type=chunk) - China principal place of business and headquarters: Sirnaomics Biopharmaceutical Technology (Suzhou) Co., Ltd., located in Suzhou Industrial Park, Suzhou, China[8](index=8&type=chunk) - Hong Kong principal place of business: 46th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong[8](index=8&type=chunk) [Professional Advisers](index=4&type=section&id=Professional%20Advisers) This section lists the company's auditor, principal bankers, and legal advisers for Hong Kong, China, and Cayman Islands law - The auditor is ZH CPA Limited[9](index=9&type=chunk) - Principal bankers include DBS Bank (Hong Kong) Limited, The Hongkong and Shanghai Banking Corporation Limited, and Wells Fargo Bank, N.A[9](index=9&type=chunk) - Legal advisers include Linklaters (Hong Kong law), Commerce & Finance Law Offices (PRC law), and Maples and Calder (Hong Kong) LLP (Cayman Islands law)[10](index=10&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the company's business, R&D pipeline, core technology platforms, manufacturing, strategic outlook, and financial performance [Business Overview](index=5&type=section&id=Business%20Overview) Sirnaomics is a clinical-stage biopharmaceutical company developing siRNA therapeutics using PNP and GalAhead dual delivery systems across oncology, fibrosis, medical aesthetics, anticoagulation, cardiometabolic, and complement-mediated diseases - Founded in 2007, the company is a pioneer in siRNA therapeutics, aiming to become a global biopharmaceutical leader[12](index=12&type=chunk) - Core candidate STP705 showed positive results in clinical trials for isSCC and BCC tumor indications, with isSCC prioritized for Phase IIb/III pivotal trials[12](index=12&type=chunk) - STP707, an intravenously administered siRNA therapeutic, is being evaluated in a U.S. FDA-regulated Phase I clinical trial for various solid tumors, with the final report expected by the end of 2025[13](index=13&type=chunk) - STP122G, a leading therapeutic candidate based on the GalAhead™ mxRNA platform for anticoagulation and thrombotic diseases, is progressing well in Phase I clinical trials, expected to conclude in 2026[15](index=15&type=chunk) [R&D Pipeline Progress](index=7&type=section&id=R%26D%20Pipeline%20Progress) The company's R&D pipeline, comprising 14 products and 15 programs, made continuous progress in H1 2025, with strategic financial resource allocation prioritizing STP705 and STP122G clinical advancement - In H1 2025, the company maintained strong momentum in pipeline advancement and business development, strategically prioritizing the clinical progress of STP705 and STP122G[19](index=19&type=chunk) [Clinical Programs](index=8&type=section&id=Clinical%20Programs) STP705 showed positive results in Phase II clinical studies for isSCC and BCC, with isSCC advancing to Phase IIb/III pivotal trials, while STP705 for local fat reduction demonstrated excellent safety in Phase I. STP707's Phase I clinical study showed good tolerability and efficacy, expected to conclude by end of 2025. STP122G's Phase I clinical trial showed good preliminary safety data, expected to conclude in 2026 - STP705 is used for isSCC and BCC treatment, with isSCC advancing to Phase IIb/III pivotal trials and BCC Phase IIa completed[20](index=20&type=chunk) - STP705's Phase I clinical study for local fat reduction showed **excellent safety**, supporting advancement to Phase II development[20](index=20&type=chunk) - STP707's Phase I clinical study for various solid tumors demonstrated good tolerability and therapeutic effects, with the final report expected by the end of 2025[21](index=21&type=chunk) - STP122G's Phase I clinical study for anticoagulation treatment showed good preliminary safety data, expected to conclude in 2026[22](index=22&type=chunk) [Pre-clinical Programs](index=9&type=section&id=Pre-clinical%20Programs) The company is advancing STP125G and STP144G towards clinical development and exploring business development opportunities for other pipeline assets. STP125G has completed IND-enabling studies, and STP144G has completed GMP drug manufacturing, with IND submission planned for next year - STP125G (targeting ApoC3 for hypertriglyceridemia) has completed IND-enabling studies and is preparing for IND submission[24](index=24&type=chunk) - STP144G (targeting complement factor B for complement-mediated immunological diseases) has completed GMP drug manufacturing, with IND submission planned for next year[24](index=24&type=chunk) - IND-enabling activities for STP355 and STP369 will commence after the completion of Phase III data readout for STP705 and STP707[24](index=24&type=chunk) [Core Technology Platforms](index=10&type=section&id=Core%20Technology%20Platforms) The company possesses two proprietary delivery platforms: PNP and GalAhead™. The PNP platform utilizes biodegradable polymers for safe and effective siRNA delivery, clinically validated in oncology, fibrosis, and medical aesthetics. The GalAhead™ platform specifically targets hepatocytes via ASGPR-mediated uptake, incorporating mxRNA™ and muRNA™ technologies to enhance safety, delivery efficacy, and enable multi-mRNA targeting - The PNP delivery platform utilizes biodegradable histidine-lysine polymers, holding **exclusive global rights** and a **strong intellectual property portfolio**[26](index=26&type=chunk) - The GalAhead™ delivery platform specifically targets hepatocytes via ASGPR-mediated uptake, incorporating mxRNA™ (miniaturized RNAi triggers) and muRNA™ (multi-unit RNAi triggers)[27](index=27&type=chunk)[29](index=29&type=chunk) [Manufacturing](index=10&type=section&id=Manufacturing) Despite financial constraints, Sirnaomics successfully maintained operations of its clinical-scale GMP manufacturing facility and optimized production capacity. The company strengthened relationships with industry partners to secure API, excipient, and fill-finish supply chains, and utilized CDMO partners for pre-commercialization activities for later-stage programs - The company successfully maintained clinical-scale GMP manufacturing facility operations, optimized production capacity, and strengthened industry partnerships[28](index=28&type=chunk) - The Guangzhou fill-finish facility has been operational since 2021, supporting PNP pipeline development and retaining all key manufacturing functions to advance core therapeutic programs[28](index=28&type=chunk) [Company Strategy and Outlook](index=11&type=section&id=Company%20Strategy%20and%20Outlook) Sirnaomics is pioneering transformative RNA therapeutics to address global unmet medical needs, implementing a comprehensive restructuring plan to enhance operational efficiency and extend financial runway, while actively exploring additional financing and strategic partnerships to accelerate pipeline development and commercialization - The company implemented a comprehensive restructuring plan, streamlining organization, optimizing costs, and reallocating resources to enhance operational efficiency and extend its financial runway[33](index=33&type=chunk) - Actively exploring additional financing opportunities, including selective divestment of non-core assets, evaluating alternative financing options, and seeking business development collaborations[33](index=33&type=chunk) [Leadership Changes](index=11&type=section&id=Leadership%20Changes) The company anticipates adding more leadership team members in 2025 to strengthen the executive team and align its leadership with the strategic focus on advancing RNAi therapeutic pipelines and exploring new therapeutic areas - More leadership team members are expected to be added in 2025 to strengthen the executive team and align with the company's strategic focus[31](index=31&type=chunk) [Future and Prospects](index=11&type=section&id=Future%20and%20Prospects) Sirnaomics is committed to developing transformative RNA therapeutics, focusing on oncology, hepatometabolic diseases, and medical aesthetics, aiming to establish a leading position and drive sustainable growth through proprietary technology platforms, clinical-stage programs, and global R&D and manufacturing infrastructure - The company focuses on RNAi therapeutics in oncology, hepatometabolic diseases, and medical aesthetics, aiming to enhance competitive advantage and drive sustainable growth[32](index=32&type=chunk) [Business Development Strategy and Commercialization](index=12&type=section&id=Business%20Development%20Strategy%20and%20Commercialization) The company is actively seeking global and regional partners for STP705 and STP707, evaluating collaboration opportunities for GalAhead™ platform assets, and discussing the formation of new companies with venture capital funds to optimize R&D expenditures. The goal is to submit the NDA for STP705 as early as 2027 - The business development team is actively seeking global and regional partnerships for STP705 and STP707, and evaluating collaboration opportunities for GalAhead™ platform assets[35](index=35&type=chunk) - Discussions are underway with several venture capital funds to establish new companies, leveraging existing capital to advance product pipelines and optimize R&D expenditures[35](index=35&type=chunk) - The goal is to submit the NDA for STP705 as early as 2027, with commercial success dependent on clinical data, regulatory approvals, and intellectual property protection[36](index=36&type=chunk) [Commitment to Stakeholders and Key Strengths](index=12&type=section&id=Commitment%20to%20Stakeholders%20and%20Key%20Strengths) Sirnaomics is committed to creating sustainable value for shareholders, maintaining strict financial discipline, and achieving long-term growth by advancing its RNAi therapeutic pipeline, expanding its pipeline, and upholding financial discipline. The company's key strengths include clinically validated delivery platforms, a balanced pipeline, global presence, rigorous financial management, and an experienced leadership team - The company is steadfastly committed to creating sustainable value for shareholders while maintaining strict financial discipline[37](index=37&type=chunk) - Key strengths include: clinically validated proprietary RNAi delivery platforms, a balanced pipeline targeting high-value therapeutic areas, a strategic global presence with R&D and manufacturing capabilities, rigorous financial management and operational optimization, and an experienced leadership team with proven drug development expertise[40](index=40&type=chunk) [Financial Review](index=13&type=section&id=Financial%20Review) For the six months ended June 30, 2025, the Group recorded a loss of **$3.4 million**, a significant reduction from **$43.5 million** in the prior year, primarily due to substantial decreases in R&D and administrative expenses, and improved fair value changes in financial assets and liabilities. The company faces liquidity challenges and is actively pursuing external financing and implementing restructuring plans [Loss for the Period Comparison (Six Months Ended June 30)](index=13&type=section&id=Loss%20for%20the%20Period%20Comparison%20(Six%20Months%20Ended%20June%2030)) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Loss for the period | (3,388) | (43,493) | - The significant reduction in loss is primarily attributable to: decreased fair value loss on financial assets at fair value through profit or loss, reduced R&D expenses, lower administrative expenses, and decreased fair value loss on financial liabilities at fair value through profit or loss[57](index=57&type=chunk) [Income Statement Analysis](index=13&type=section&id=Income%20Statement%20Analysis) The Group generated no product sales revenue during the period. Other income significantly decreased by **87%** to **$0.1 million**, mainly due to reduced consulting income and government grants. Other gains and losses shifted from a loss to a gain of **$0.8 million**, primarily from lease modification gains. Administrative and R&D expenses decreased by **75%** and **79%** respectively, driven by restructuring strategies and cost-saving measures - For the six months ended June 30, 2025, the Group generated no product sales revenue[45](index=45&type=chunk) Other Income Comparison (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | Change (thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other income | 124 | 984 | (860) | -87.4% | | - Consulting income | 3 | 683 | (680) | -99.6% | | - Government grants | 64 | 227 | (163) | -71.8% | Administrative Expenses Comparison (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | Change (thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total administrative expenses | 2,553 | 10,160 | (7,607) | -74.9% | | - Directors' emoluments and staff costs | 1,252 | 3,083 | (1,831) | -59.4% | | - Professional and consulting fees | 562 | 5,440 | (4,878) | -89.7% | R&D Expenses Comparison (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | Change (thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total R&D expenses | 3,045 | 14,251 | (11,206) | -78.6% | | - Clinical trial expenses | 68 | 1,449 | (1,381) | -95.3% | | - Toxicology study expenses | 0 | 1,191 | (1,191) | -100.0% | [Cash Flow Analysis](index=17&type=section&id=Cash%20Flow%20Analysis) For the six months ended June 30, 2025, net cash used in operating activities significantly decreased by **68%** to **$4.9 million**, primarily due to slowing R&D activities for certain non-critical projects. Net cash generated from investing activities decreased by **98%** to **$4 thousand**. Financing activities shifted from a net cash outflow to a net inflow of **$20 thousand** Cash Flow Comparison (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | Change (thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (4,893) | (15,365) | 10,472 | -68.1% | | Net cash generated from investing activities | 4 | 201 | (197) | -98.0% | | Net cash generated from/(used in) financing activities | 20 | (696) | 716 | -102.9% | | Net decrease in cash and cash equivalents | (4,869) | (15,860) | 10,991 | -69.3% | - The decrease in net cash used in operating activities is primarily due to the Group slowing down R&D activities for certain non-critical projects[60](index=60&type=chunk) [Liquidity, Funding Sources and Financial Ratios](index=18&type=section&id=Liquidity%2C%20Funding%20Sources%20and%20Financial%20Ratios) As at June 30, 2025, the Group's cash and cash equivalents were **$6.9 million**, current assets **$13.9 million**, and current liabilities **$33.9 million**, resulting in net current liabilities of **$20.1 million**. The current ratio decreased from **52.3%** to **40.9%**, and the debt-to-asset ratio increased from **-2.5%** to **-3.4%**, indicating increased liquidity pressure Liquidity and Financial Ratios Comparison | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | Change (thousand USD) | | :--- | :--- | :--- | | Cash and cash equivalents | 6,872 | 11,769 | (4,897) | | Current assets | 13,891 | 19,459 | (5,568) | | Current liabilities | 33,944 | 37,226 | (3,282) | | Net current liabilities | (20,053) | (17,767) | (2,286) | | Net liabilities | (19,099) | (16,004) | (3,095) | Key Financial Ratios Comparison | Indicator | June 30, 2025 (%) | December 31, 2024 (%) | | :--- | :--- | :--- | | Current ratio | 40.9 | 52.3 | | Debt-to-asset ratio | (3.4) | (2.5) | - The Group relies on equity and debt financing as its primary sources of liquidity, with bank borrowings of **$0.7 million** as at June 30, 2025, and no unutilized bank facilities[61](index=61&type=chunk) [Significant Investments and Asset Status](index=19&type=section&id=Significant%20Investments%20and%20Asset%20Status) The Group previously subscribed to a segregated portfolio, but due to the potential default of a private bond issuer invested by the fund, it recorded a significant fair value loss of **$18.2 million** in 2024. As at June 30, 2025, the Group held no financial assets at fair value through profit or loss. There were no significant acquisitions or disposals during the period, and some property, plant, and equipment were pledged as security for lease liabilities - Due to the potential default of a private bond issuer invested by the fund, the Group recorded a fair value loss of **$18,178,000** on financial assets at fair value through profit or loss for the year ended December 31, 2024[66](index=66&type=chunk) - As at June 30, 2025, and December 31, 2024, the Group had no financial assets at fair value through profit or loss[67](index=67&type=chunk)[180](index=180&type=chunk) - As at June 30, 2025, property, plant and equipment with a carrying value of **$756,000** were pledged as security for lease liabilities[69](index=69&type=chunk)[175](index=175&type=chunk) [Employees and Remuneration](index=21&type=section&id=Employees%20and%20Remuneration) As at June 30, 2025, the Group had **52 employees**, with total remuneration costs of **$2.7 million**, a significant decrease from **$8.5 million** in the prior year, primarily due to restructuring and salary adjustments. The company provides social security schemes for employees and has adopted equity incentive plans to attract and retain talent Number of Employees by Function (As at June 30, 2025) | Function | Number of Employees | | :--- | :--- | | Management | 6 | | Research | 13 | | Manufacturing | 10 | | Clinical and Regulatory | 2 | | General and Administrative | 21 | | **Total** | **52** | Total Remuneration Costs Comparison (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | Change (thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total remuneration costs | 2,700 | 8,500 | (5,800) | -68.2% | | - Share-based payment expenses | 300 | 1,600 | (1,300) | -81.3% | [Corporate Governance and Other Information](index=21&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section covers the company's equity incentive schemes, director and management information, corporate governance compliance, and financial and operational disclosures [Equity Incentive Schemes](index=22&type=section&id=Equity%20Incentive%20Schemes) The company has a Pre-IPO Equity Incentive Scheme, a Restricted Share Unit Scheme, and a Share Option Scheme, designed to attract, retain, and incentivize talent. During the reporting period, the Pre-IPO scheme ceased new grants, and details of share movements under the Restricted Share Unit and Share Option Schemes are disclosed - The company has adopted a Pre-IPO Equity Incentive Scheme, a Restricted Share Unit Scheme, and a Share Option Scheme to incentivize eligible employees[75](index=75&type=chunk) [Pre-IPO Equity Incentive Scheme](index=22&type=section&id=Pre-IPO%20Equity%20Incentive%20Scheme) Adopted on January 21, 2021, this scheme aimed to attract and retain talent. The company terminated the scheme on April 22, 2022, but awards granted before termination remain subject to its terms. As at June 30, 2025, no shares were available for issuance under this scheme - The scheme was adopted on January 21, 2021, and terminated on April 22, 2022, but awards granted before termination remain effective[76](index=76&type=chunk) - As at June 30, 2025, no shares were available for issuance under the Pre-IPO Equity Incentive Scheme[76](index=76&type=chunk) Movement in Outstanding Share Options under Pre-IPO Equity Incentive Scheme (Six Months Ended June 30, 2025) | Category | As at January 1, 2025 (Number of Share Options) | Granted during the period | Exercised during the period | Cancelled during the period | Lapsed during the period | As at June 30, 2025 (Number of Share Options) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Directors | 1,925,000 | – | – | – | – | 1,925,000 | | Top five highest paid individuals (excluding directors) | 2,135,000 | – | – | – | – | 2,135,000 | | Other grantees | 6,763,345 | – | – | – | – | 6,763,345 | | **Total** | **10,823,345** | **–** | **–** | **–** | **–** | **10,823,345** | [Restricted Share Unit Scheme](index=27&type=section&id=Restricted%20Share%20Unit%20Scheme) Adopted on April 22, 2022, with a 10-year validity, this scheme aims to incentivize skilled and experienced personnel. Under transitional arrangements, no new awards can be granted after January 1, 2023, unless the scheme is amended to comply with Listing Rule Chapter 17. As at June 30, 2025, a total of **38,866** restricted share units were granted but unvested - The scheme was adopted on April 22, 2022, with a **10-year validity period**, aiming to recognize contributions, provide proprietary interests, encourage retention, offer additional incentives, attract talent, and maximize company value[91](index=91&type=chunk)[93](index=93&type=chunk)[98](index=98&type=chunk) - Under the transitional arrangements of the Hong Kong Stock Exchange, after January 1, 2023, the company can no longer grant any awards under the Restricted Share Unit Scheme unless it is amended to comply with Chapter 17 of the Listing Rules[104](index=104&type=chunk)[108](index=108&type=chunk) Movement in Outstanding Restricted Share Units under Restricted Share Unit Scheme (Six Months Ended June 30, 2025) | Category | As at January 1, 2025 (Number of Restricted Share Units) | Granted during the period | Vested during the period | Cancelled during the period | Lapsed during the period | As at June 30, 2025 (Number of Restricted Share Units) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Directors (Dr. Lu Yang) | 8,700 | – | – | – | (8,700) | – | | Top five highest paid individuals (excluding directors) | 16,526 | – | – | – | – | 16,526 | | Other senior grantees | 3,850 | – | – | – | (3,850) | – | | Other junior grantees | 26,994 | – | – | – | (4,654) | 22,340 | | **Total** | **56,070** | **–** | **–** | **–** | **(17,204)** | **38,866** | [Share Option Scheme](index=32&type=section&id=Share%20Option%20Scheme) Adopted on June 28, 2022, with a 10-year validity, this scheme aims to recognize contributions, encourage talent retention, provide additional incentives, attract talent, and maximize company value. Under transitional arrangements, the company can continue to grant share options under existing shareholder authorization from June 28, 2022. As at June 30, 2025, a total of **788,999** share options were granted but unexercised - The scheme was adopted on June 28, 2022, with a **10-year validity period**, aiming to recognize contributions, encourage talent retention, provide additional incentives, attract talent, and maximize company value[109](index=109&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Under the transitional arrangements of the Stock Exchange, the company may continue to grant share options under the Share Option Scheme in accordance with the existing plan authorization granted by shareholders on June 28, 2022[109](index=109&type=chunk) Movement in Outstanding Share Options under Share Option Scheme (Six Months Ended June 30, 2025) | Category | As at January 1, 2025 (Number of Share Options) | Granted during the period | Exercised during the period | Cancelled during the period | Lapsed during the period | As at June 30, 2025 (Number of Share Options) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Directors (Dr. Lu Yang) | 218,600 | – | – | – | (58,800) | 159,800 | | Top five highest paid individuals (excluding directors) | 223,800 | – | – | – | – | 223,800 | | Other senior grantees | 220,311 | – | – | – | (19,476) | 200,835 | | Junior grantees — related parties (Dr. Yang Xianbin) | 4,750 | – | – | – | – | 4,750 | | Other junior grantees | 212,092 | – | – | – | (12,278) | 199,814 | | **Total** | **879,553** | **–** | **–** | **–** | **(90,554)** | **788,999** | [Directors and Management Information](index=38&type=section&id=Directors%20and%20Management%20Information) This section discloses changes in director and chief executive information from December 31, 2024, to the end of the reporting period, including resignations, new appointments, remuneration adjustments, and committee role changes, as well as interests and short positions of directors, chief executive, and major shareholders in the company's shares - Mr. Huang Mincong, Ms. Sheng Muxian, and Dr. Lu Yang resigned from their directorships[129](index=129&type=chunk) - Mr. Wang Yushan, Dr. Zhang Peng, and Mr. Ouyang Yunlong were appointed to directorships[129](index=129&type=chunk) - Dr. Pan Honghui beneficially owns **17,527,696 shares**, representing approximately **16.67%** of the issued shares[132](index=132&type=chunk) - Dr. Lu Yang, as beneficial owner and settlor of a discretionary trust, collectively owns **10,586,582 shares**, representing approximately **10.07%** of the issued shares[134](index=134&type=chunk) [Changes in Information of Directors or Chief Executive](index=38&type=section&id=Changes%20in%20Information%20of%20Directors%20or%20Chief%20Executive) Since December 31, 2024, the company's Board of Directors has undergone several changes, including the resignations of Mr. Huang Mincong, Ms. Sheng Muxian, and Dr. Lu Yang, and the appointments of Mr. Wang Yushan, Mr. Ouyang Yunlong, and Dr. Zhang Peng. The remuneration of Dr. Pan Honghui and Mr. Zhang Jiankang was also adjusted - Mr. Huang Mincong resigned as Non-executive Director, and Ms. Sheng Muxian resigned as Independent Non-executive Director, both effective January 1, 2025[129](index=129&type=chunk) - Dr. Lu Yang resigned as Non-executive Director and Chief Scientific Officer, effective February 5, 2025[129](index=129&type=chunk) - Mr. Wang Yushan was appointed Independent Non-executive Director and Chairman of the Audit Committee, effective February 17, 2025[129](index=129&type=chunk) - Mr. Ouyang Yunlong was appointed Non-executive Director, and Dr. Zhang Peng was appointed Independent Non-executive Director, both effective July 3, 2025[129](index=129&type=chunk) [Interests of Directors and Chief Executive](index=39&type=section&id=Interests%20of%20Directors%20and%20Chief%20Executive) As at June 30, 2025, Dr. Pan Honghui beneficially owned **17,527,696 shares**, representing **16.67%** of the company's equity Interests of Directors and Chief Executive in Shares and Underlying Shares (As at June 30, 2025) | Name of Director or Chief Executive | Nature of Interest | Number of Shares/Underlying Shares | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Dr. Pan Honghui | Beneficial interest | 17,527,696 (L) | 16.67% | [Interests of Major Shareholders](index=40&type=section&id=Interests%20of%20Major%20Shareholders) As at June 30, 2025, Dr. Lu Yang, as beneficial owner and settlor of a discretionary trust, collectively owned **10,586,582 shares**, representing **10.07%** of the company's equity Interests of Major Shareholders in Shares and Underlying Shares (As at June 30, 2025) | Name of Major Shareholder | Nature of Interest | Number of Shares/Underlying Shares | Approximate Percentage of Interest in Equity | | :--- | :--- | :--- | :--- | | Dr. Lu Yang | Beneficial interest; Settlor of a discretionary trust | 10,586,582 (L) | 10.07% | [Corporate Governance and Compliance](index=39&type=section&id=Corporate%20Governance%20and%20Compliance) The company previously failed to comply with relevant Listing Rules due to director resignations but has since regained compliance through new appointments. The company has adopted and complies with the Corporate Governance Code and Model Code. The Audit Committee has reviewed the interim financial statements, and the Board does not recommend an interim dividend - The company previously failed to comply with Listing Rules 3.10(1), 3.10(2), 3.21, and 3.27A due to director resignations but has regained compliance through new appointments[131](index=131&type=chunk) - The company has adopted and applied all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[141](index=141&type=chunk) - The Audit Committee, composed of three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025[143](index=143&type=chunk) - The Board does not recommend the payment of any interim dividend for the reporting period[144](index=144&type=chunk) [Non-Compliance with Listing Rules](index=39&type=section&id=Non-Compliance%20with%20Listing%20Rules) The company previously failed to comply with Listing Rules 3.10(1), 3.10(2), 3.21, and 3.27A due to the resignations of Ms. Sheng Muxian and Mr. Huang Mincong. However, following new director appointments in February 2025, the company has regained compliance with the relevant provisions - The company previously failed to comply with Listing Rules 3.10(1), 3.10(2), 3.21, and 3.27A due to director resignations[131](index=131&type=chunk) - Through the appointments of Ms. Huang Mengying, Mr. Wang Yushan, and Dr. Yu Changhai, the company has regained compliance with the relevant Listing Rules[131](index=131&type=chunk) [Compliance with Corporate Governance Code and Model Code](index=42&type=section&id=Compliance%20with%20Corporate%20Governance%20Code%20and%20Model%20Code) The company has adopted and applied all applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules and has adopted its own code of conduct for securities transactions, with terms no less exacting than the Model Code. All directors have confirmed compliance with the Model Code throughout the reporting period - The company has adopted and applied all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[141](index=141&type=chunk) - The company has adopted its own code of conduct for securities transactions, with terms no less exacting than the Model Code, and all directors have confirmed compliance[142](index=142&type=chunk) [Audit Committee](index=42&type=section&id=Audit%20Committee) The Audit Committee comprises three independent non-executive directors, with Mr. Wang Yushan as Chairman. The committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025, and the accounting principles and policies adopted - The Audit Committee comprises three independent non-executive directors: Mr. Wang Yushan (Chairman), Ms. Huang Mengying, and Dr. Yu Changhai[143](index=143&type=chunk) - The committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025, and the accounting principles and policies[143](index=143&type=chunk) [Financial and Operational Disclosures](index=41&type=section&id=Financial%20and%20Operational%20Disclosures) This section discloses the use of proceeds from share subscriptions, primarily for general corporate and working capital purposes. The company was not involved in any material litigation or arbitration and did not undertake significant acquisitions or disposals. No significant events affecting the company occurred after the reporting period - Net proceeds of approximately **$7.5 million** from the subscription of **17,527,696 new shares** are intended for general working capital purposes, expected to be fully utilized by mid-2026[140](index=140&type=chunk) Use of Net Proceeds from Subscription (As at June 30, 2025) | Use | Percentage of Use | Net Proceeds (million USD) | Utilized as at December 31, 2024 (million USD) | Utilized during 2025 Reporting Period (million USD) | Unutilized as at June 30, 2025 (million USD) | Estimated Timeline for Utilization of Net Proceeds from Subscription | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | For general corporate and working capital purposes | 100% | 7.5 | – | 0.7 | 6.8 | By mid-2026 | - For the six months ended June 30, 2025, the company was not involved in any material litigation or arbitration[138](index=138&type=chunk) - No significant events affecting the company occurred from June 30, 2025, up to the date of this interim report[147](index=147&type=chunk) [Use of Proceeds from Subscription of Shares](index=41&type=section&id=Use%20of%20Proceeds%20from%20Subscription%20of%20Shares) On October 2, 2024, the company entered into a subscription agreement with Dr. Pan Honghui to subscribe for **17,527,696 new shares** at **HK$3.36 per share**, yielding net proceeds of approximately **$7.5 million**, all allocated for general working capital and expected to be fully utilized by mid-2026 - Net proceeds of approximately **$7.5 million** from the subscription are entirely for general corporate and working capital purposes[140](index=140&type=chunk) - As at June 30, 2025, **$0.7 million** has been utilized, with **$6.8 million** remaining, expected to be fully utilized by mid-2026[140](index=140&type=chunk) [Material Litigation](index=41&type=section&id=Material%20Litigation) The company faces claims from two registered shareholders, Mike Ghias and Asghar Ghias, regarding restrictive legends on shares and refusal to transfer shares. Court proceedings are in early stages, and management deems it premature to assess the probability of success or the extent of liability, thus no provision has been made - Two shareholders filed claims concerning the company's imposition of restrictive legends on shares and refusal to transfer shares[242](index=242&type=chunk) - Court proceedings are in early stages, and management believes it is premature to assess the probability of success or the extent of liability, thus no provision has been made[242](index=242&type=chunk) [Related Party Transactions and Interim Dividend](index=42&type=section&id=Related%20Party%20Transactions%20and%20Interim%20Dividend) Details of significant related party transactions conducted by the Group in the ordinary course of business are disclosed, with no connected transactions as defined by Chapter 14A of the Listing Rules. The Board does not recommend the payment of any interim dividend for the reporting period - Significant related party transactions were conducted by the Group in the ordinary course of business, with no connected transactions as defined by Chapter 14A of the Listing Rules[145](index=145&type=chunk) - The Board does not recommend the payment of any interim dividend for the reporting period[144](index=144&type=chunk) [Significant Events After Reporting Period](index=43&type=section&id=Significant%20Events%20After%20Reporting%20Period) No significant events affecting the company occurred from June 30, 2025, up to the date of this interim report - No significant events affecting the company occurred from June 30, 2025, up to the date of this interim report[147](index=147&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=43&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section presents the condensed consolidated statement of profit or loss and other comprehensive income, highlighting key financial performance indicators for the period [Key Profit or Loss Items](index=43&type=section&id=Key%20Profit%20or%20Loss%20Items) For the six months ended June 30, 2025, the company recorded a loss for the period of **$3,388 thousand**, a significant reduction from **$43,493 thousand** in the prior year, primarily benefiting from substantial decreases in administrative and R&D expenses, and improved fair value changes in financial assets and liabilities Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Other income | 124 | 984 | | Other gains and losses | 768 | (23) | | Fair value change of financial assets at fair value through profit or loss | – | (18,108) | | Fair value change of financial liabilities at fair value through profit or loss | 1,724 | (1,389) | | Administrative expenses | (2,553) | (10,160) | | R&D expenses | (3,045) | (14,251) | | Finance costs | (402) | (539) | | Loss for the period | (3,388) | (43,493) | [Total Comprehensive Expense](index=43&type=section&id=Total%20Comprehensive%20Expense) The total comprehensive expense for the period was **$3,410 thousand**, a significant decrease from **$43,887 thousand** in the prior year, primarily reflecting the narrowed loss for the period Total Comprehensive Expense for the Period (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Total comprehensive expense for the period | (3,410) | (43,887) | [Loss Per Share](index=43&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic and diluted loss per share was **$0.04**, a significant improvement from **$0.54** in the prior year Loss Per Share (Six Months Ended June 30) | Indicator | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Basic and diluted loss per share | (0.04) | (0.54) | [Condensed Consolidated Statement of Financial Position](index=44&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the condensed consolidated statement of financial position, outlining the Group's assets, liabilities, and equity as at the reporting date [Assets](index=44&type=section&id=Assets) As at June 30, 2025, the Group's total non-current assets were **$7,413 thousand**, and total current assets were **$13,891 thousand**. Cash and cash equivalents amounted to **$6,872 thousand** Assets Summary (As at June 30, 2025) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Non-current assets | 7,413 | 8,870 | | Current assets | 13,891 | 19,459 | | - Cash and cash equivalents | 6,872 | 11,769 | | - Prepayments, deposits and other receivables | 7,019 | 7,690 | [Liabilities](index=44&type=section&id=Liabilities) As at June 30, 2025, the Group's total current liabilities were **$33,944 thousand**, and total non-current liabilities were **$6,459 thousand**. Net current liabilities amounted to **$20,053 thousand**, and net liabilities were **$19,099 thousand** Liabilities Summary (As at June 30, 2025) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Current liabilities | 33,944 | 37,226 | | - Financial liabilities at fair value through profit or loss | 22,024 | 23,748 | | - Trade and other payables | 10,174 | 11,603 | | Non-current liabilities | 6,459 | 7,107 | | Net current liabilities | (20,053) | (17,767) | | Net liabilities | (19,099) | (16,004) | [Capital and Reserves](index=44&type=section&id=Capital%20and%20Reserves) As at June 30, 2025, the deficit attributable to owners of the company was **$5,118 thousand**, non-controlling interests were **$13,981 thousand**, and total deficit was **$19,099 thousand** Capital and Reserves Summary (As at June 30, 2025) | Indicator | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Share capital | 105 | 105 | | Deficit attributable to owners of the Company | (5,118) | (1,680) | | Non-controlling interests | (13,981) | (14,324) | | Total deficit | (19,099) | (16,004) | [Condensed Consolidated Statement of Changes in Equity](index=45&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the condensed consolidated statement of changes in equity, detailing movements in share capital and reserves for the period [Changes in Share Capital and Reserves](index=45&type=section&id=Changes%20in%20Share%20Capital%20and%20Reserves) For the six months ended June 30, 2025, the loss for the period attributable to owners of the company was **$3,698 thousand**, leading to an increase in accumulated losses. Exchange differences arising from the translation of overseas operations resulted in a **$20 thousand** decrease in the exchange reserve Condensed Consolidated Statement of Changes in Equity Summary (Six Months Ended June 30, 2025) | Indicator | As at January 1, 2025 (thousand USD) | Loss/(Profit) for the period (thousand USD) | Exchange differences arising from translation of overseas operations (thousand USD) | Share-based payments recognized (thousand USD) | Share options lapsed/forfeited (thousand USD) | As at June 30, 2025 (thousand USD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share capital | 105 | – | – | – | – | 105 | | Share premium | 522,517 | – | – | – | – | 522,517 | | Exchange reserve | (3,620) | – | (20) | – | – | (3,640) | | Share option reserve | 15,897 | – | – | 239 | (63) | 16,073 | | Share award reserve | 16 | – | – | 41 | – | 57 | | Accumulated losses | (524,022) | (3,698) | – | – | 63 | (527,657) | | Subtotal attributable to owners of the Company | (1,680) | (3,698) | (20) | 280 | – | (5,118) | | Non-controlling interests | (14,324) | 310 | (2) | 35 | – | (13,981) | | **Total** | **(16,004)** | **(3,388)** | **(22)** | **315** | **–** | **(19,099)** | [Impact of Share-based Payments](index=45&type=section&id=Impact%20of%20Share-based%20Payments) Total share-based payments recognized during the period amounted to **$315 thousand**, with **$280 thousand** attributable to owners of the company and **$35 thousand** to non-controlling interests. Lapsed/forfeited share options resulted in a **$63 thousand** decrease in share option reserve and a **$63 thousand** increase in accumulated losses - Total share-based payments recognized during the period amounted to **315 thousand USD**[154](index=154&type=chunk) - Lapsed/forfeited share options resulted in a **63 thousand USD** decrease in share option reserve and a **63 thousand USD** increase in accumulated losses[154](index=154&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=47&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the condensed consolidated statement of cash flows, detailing cash movements from operating, investing, and financing activities [Operating Cash Flow](index=47&type=section&id=Operating%20Cash%20Flow) For the six months ended June 30, 2025, net cash used in operating activities was **$4,893 thousand**, a significant reduction from **$15,365 thousand** in the prior year, reflecting the company's efforts to control operating cash outflows Operating Cash Flow (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Net cash used in operating activities | (4,893) | (15,365) | [Investing Cash Flow](index=47&type=section&id=Investing%20Cash%20Flow) Net cash generated from investing activities was **$4 thousand**, a significant decrease from **$201 thousand** in the prior year, primarily due to reduced proceeds from the disposal of property, plant, and equipment Investing Cash Flow (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Net cash generated from investing activities | 4 | 201 | | - Proceeds from disposal of property, plant and equipment | 47 | 90 | [Financing Cash Flow](index=47&type=section&id=Financing%20Cash%20Flow) Net cash generated from financing activities was **$20 thousand**, an improvement from a net cash outflow of **$696 thousand** in the prior year, mainly due to reduced interest paid on lease liabilities and repayment of lease liabilities Financing Cash Flow (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Net cash generated from (used in) financing activities | 20 | (696) | | - Interest paid on lease liabilities | (87) | (539) | | - Repayment of lease liabilities | (126) | (575) | [Notes to the Condensed Consolidated Financial Statements](index=48&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, covering general information, accounting policies, segment information, and specific items in the profit or loss and balance sheets [General Information and Basis of Preparation](index=48&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) Sirnaomics Ltd. is a public company incorporated in the Cayman Islands, engaged in the development and commercialization of RNAi technology and various therapeutics. The condensed consolidated financial statements are prepared in accordance with IAS 34 and on a going concern basis, despite significant uncertainties including net loss, operating cash outflows, and net current liabilities, with its ability to continue as a going concern dependent on successful financing and restructuring plans - The company is an investment holding company, and its subsidiaries are clinical-stage biotechnology companies engaged in the development and commercialization of RNAi technology and various therapeutics[156](index=156&type=chunk) - For the six months ended June 30, 2025, the Group incurred a net loss of **3,388 thousand USD** and net operating cash outflows of **4,893 thousand USD**, with net current liabilities of **20,053 thousand USD** and net liabilities of **19,099 thousand USD**[157](index=157&type=chunk) - The Group's ability to continue as a going concern largely depends on its capacity to maintain minimum operating cash outflows and sufficient financing resources to meet its financial obligations, actively seeking external financing through equity and debt, exploring business development opportunities, and implementing restructuring plans[157](index=157&type=chunk) [Accounting Policies and Application](index=51&type=section&id=Accounting%20Policies%20and%20Application) The condensed consolidated financial statements are prepared on a historical cost basis, and the accounting policies and methods of computation adopted are consistent with the 2024 annual consolidated financial statements, except for the application of amendments to IFRS accounting standards. The company has not early adopted new and revised IFRS accounting standards issued but not yet effective - The condensed consolidated financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value[160](index=160&type=chunk) - The Group has not early adopted new and revised IFRS accounting standards issued but not yet effective[161](index=161&type=chunk) [Revenue and Segment Information](index=51&type=section&id=Revenue%20and%20Segment%20Information) The Group generated no revenue during the period. The company's executive directors focus on reviewing the Group's overall performance and financial position, resulting in a single operating segment. The Group's operations and non-current assets are primarily located in the U.S. and mainland China - The Group generated no revenue during the period[162](index=162&type=chunk) - The Group has only a single operating segment, and no further analysis of this single segment is presented[163](index=163&type=chunk) Non-Current Assets by Geographical Location (Excluding Financial Instruments) | Region | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | United States | 4,006 | 5,089 | | China | 2,860 | 3,228 | | Hong Kong | 21 | 34 | | **Total** | **6,887** | **8,351** | [Notes to the Statement of Profit or Loss](index=52&type=section&id=Notes%20to%20the%20Statement%20of%20Profit%20or%20Loss) This section provides detailed explanations for changes in various income and expense items in the statement of profit or loss, including other income, other gains and losses, finance costs, income tax expense, composition of loss for the period, and dividend policy - The loss for the period is primarily attributable to reduced fair value loss on financial assets at fair value through profit or loss, decreased R&D expenses, lower administrative expenses, and reduced fair value loss on financial liabilities at fair value through profit or loss[57](index=57&type=chunk) [Other Income](index=52&type=section&id=Other%20Income) For the six months ended June 30, 2025, other income decreased by **87%** to **$0.1 million** from **$1.0 million** in the prior year, primarily due to reductions in consulting income and government grants Other Income Composition (Six Months Ended June 30) | Item | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Government grants | 64 | 227 | | Rental income | 14 | – | | Interest income from bank balances | 8 | 36 | | Consulting income | 3 | 683 | | Others | 35 | 38 | | **Total** | **124** | **984** | - Other income decreased by **0.9 million USD** or **87%**, primarily due to a **0.7 million USD** reduction in consulting income and a **0.2 million USD** reduction in government grants[46](index=46&type=chunk) [Other Gains and Losses](index=53&type=section&id=Other%20Gains%20and%20Losses) The Group's other gains and losses shifted from a loss of **$23 thousand** in the prior year to a gain of **$0.8 million**, primarily due to a **$0.7 million** gain from lease modification and increased gains from the disposal of property, plant, and equipment Other Gains and Losses Composition (Six Months Ended June 30) | Item | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Net exchange loss | (3) | (1) | | Gain (loss) on disposal of property, plant and equipment | 18 | (63) | | Gain arising from lease termination | – | 41 | | Gain arising from lease modification | 746 | – | | Others | 7 | – | | **Total** | **768** | **(23)** | - The change is primarily due to a **0.7 million USD** gain from lease modification for the six months ended June 30, 2025[48](index=48&type=chunk) [Finance Costs](index=53&type=section&id=Finance%20Costs) The Group's finance costs primarily include interest on lease liabilities and bank borrowings. For the six months ended June 30, 2025, finance costs were **$402 thousand**, a **25.4%** decrease from **$539 thousand** in the prior year, mainly due to reduced interest on lease liabilities Finance Costs Composition (Six Months Ended June 30) | Item | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Interest on lease liabilities | 392 | 539 | | Interest on bank borrowings | 10 | – | | **Total** | **402** | **539** | - Interest on lease liabilities decreased by **0.1 million USD** or **27%** to **0.4 million USD**[55](index=55&type=chunk) [Income Tax Expense](index=54&type=section&id=Income%20Tax%20Expense) No Hong Kong profits tax, U.S. corporate income tax and state tax, or PRC corporate income tax was provided for the six months ended June 30, 2025, as no taxable profits were generated by the respective group entities. Some Chinese subsidiaries enjoy preferential tax rates as high-tech enterprises - No Hong Kong profits tax, U.S. corporate income tax and state tax, or PRC corporate income tax was provided as no taxable profits were generated by the respective group entities[56](index=56&type=chunk)[170](index=170&type=chunk) - Guangzhou Sirnaomics and Suzhou Sirnaomics are recognized as 'High and New Technology Enterprises', enjoying a preferential corporate income tax rate of **15%**[169](index=169&type=chunk)[170](index=170&type=chunk) [Composition of Loss for the Period](index=55&type=section&id=Composition%20of%20Loss%20for%20the%20Period) The loss for the period decreased from **$43.5 million** in the prior year to **$3.4 million**, primarily attributable to reduced fair value loss on financial assets, decreased R&D expenses, lower administrative expenses, and reduced fair value loss on financial liabilities. Total depreciation and amortization expenses were **$948 thousand**, and total staff costs were **$2,710 thousand** Loss for the Period Composition Summary (Six Months Ended June 30) | Item | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Outsourcing service fees included in R&D expenses | 270 | 3,565 | | Amortization of intangible assets | 42 | 42 | | Depreciation of property, plant and equipment | 825 | 3,173 | | Depreciation of right-of-use assets | 81 | 621 | | Staff costs (including directors' emoluments) | 2,710 | 8,459 | - The decrease in loss for the period is primarily attributable to reduced fair value loss on financial assets at fair value through profit or loss, decreased R&D expenses, lower administrative expenses, and reduced fair value loss on financial liabilities at fair value through profit or loss[57](index=57&type=chunk) [Dividends](index=56&type=section&id=Dividends) No dividends were paid or proposed to ordinary shareholders of the company during this interim period. The company's directors decided not to pay dividends for this interim period - No dividends were paid or proposed to ordinary shareholders of the Company during the interim period[172](index=172&type=chunk) [Loss Per Share](index=56&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic and diluted loss per share attributable to owners of the company was **$0.04**, a significant improvement from **$0.54** in the prior year. Potential ordinary shares with anti-dilutive effects were not included in the calculation of diluted loss per share Loss Per Share Calculation (Six Months Ended June 30) | Indicator | 2025 (thousand USD) | 2024 (thousand USD) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company for basic and diluted loss per share calculation | (3,698) | (41,065) | | Weighted average number of ordinary shares for basic and diluted loss per share calculation | 93,694,108 | 76,018,628 | | Basic and diluted loss per share (USD) | (0.04) | (0.54) | - The calculation of diluted loss per share did not include potentially dilutive ordinary shares from various preferred shares and outstanding share options, as their inclusion would have an anti-dilutive effect[173](index=173&type=chunk) [Notes to the Statement of Financial Position](index=57&type=section&id=Notes%20to%20the%20Statement%20of%20Financial%20Position) This section details various assets and liabilities in the statement of financial position, including property, plant and equipment, right-of-use assets, financial assets at fair value through profit or loss, prepayments, cash and cash equivalents, trade and other payables, contract liabilities, financial liabilities at fair value through profit or loss, and share capital movements and composition - As at June 30, 2025, the Group's net liabilities increased from **16.0 million USD** as at December 31, 2024, to **19.1 million USD**[62](index=62&type=chunk) [Property, Plant and Equipment](index=57&type=section&id=Property%2C%20Plant%20and%20Equipment) As at June 30, 2025, the carrying value of property, plant and equipment was **$6,075 thousand**, with additions of approximately **$24 thousand** during the period, primarily for laboratory equipment. Some assets were pledged as security for lease liabilities Property, Plant and Equipment Carrying Value (As at June 30, 2025) | Item | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Leasehold improvements | 2,726 | 2,943 | | Furniture and fixtures | 455 | 506 | | Laboratory equipment | 2,662 | 3,137 | | Motor vehicles | 35 | 75 | | Equipment and computers | 125 | 160 | | Construction in progress | 72 | 72 | | **Total** | **6,075** | **6,893** | - As at June 30, 2025, the Group acquired property, plant and equipment of approximately **24 thousand USD**, primarily comprising laboratory equipment[174](index=174&type=chunk) - As at June 30, 2025, property, plant and equipment with a carrying value of **756 thousand USD** were pledged as security for lease liabilities[175](index=175&type=chunk) [Right-of-Use Assets](index=58&type=section&id=Right-of-Use%20Assets) As at June 30, 2025, the carrying value of right-of-use assets was **$122 thousand**. The Group leases various offices and equipment for its operations, with lease contracts typically entered into for fixed terms of one to ten years Right-of-Use Assets Carrying Value (As at June 30, 2025) | Item | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Leased properties | 122 | 728 | - The Group leases various offices and equipment for its operations, with lease contracts typically entered into for fixed terms of one to ten years[176](index=176&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=58&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) The Group previously subscribed for shares in a segregated portfolio of TradArt Flagship Investment SPC, but due to the potential default of a private bond issuer, it recorded a significant fair value loss of **$18.2 million** in 2024. As at June 30, 2025, and December 31, 2024, the Group held no financial assets at fair value through profit or loss - Hong Kong Sirnaomics, a wholly-owned subsidiary, subscribed for shares in a segregated portfolio of TradArt Flagship Investment SPC, with a total subscription amount of **20 million USD**[177](index=177&type=chunk) - Due to the potential default of a private bond issuer invested by the fund, the Group recorded a fair value loss of **18,178 thousand USD** on financial assets at fair value through profit or loss for the year ended December 31, 2024[179](index=179&type=chunk) - As at June 30, 2025, and December 31, 2024, the Group had no financial assets at fair value through profit or loss[180](index=180&type=chunk) [Prepayments, Deposits and Other Receivables](index=60&type=section&id=Prepayments%2C%20Deposits%20and%20Other%20Receivables) As at June 30, 2025, total prepayments, deposits, and other receivables amounted to **$7,545 thousand**, with a current portion of **$7,019 thousand** and a non-current portion of **$526 thousand**. These primarily include prepayments to outsourcing service providers and lease deposits Prepayments, Deposits and Other Receivables Composition (As at June 30, 2025) | Item | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Prepayments to outsourcing service providers | 6,072 | 6,676 | | Lease deposits | 607 | 737 | | Other receivables | 812 | 727 | | **Total** | **7,545** | **8,209** | | Current | 7,019 | 7,690 | | Non-current | 526 | 519 | [Cash and Cash Equivalents](index=60&type=section&id=Cash%20and%20Cash%20Equivalents) As at June 30, 2025, cash and cash equivalents amounted to **$6,872 thousand**, primarily denominated in USD, RMB, and HKD, bearing market interest rates ranging from **0.001%** to **3.8%** - As at June 30, 2025, cash and cash equivalents amounted to **6,872 thousand USD**[151](index=151&type=chunk)[183](index=183&type=chunk) - Cash and cash equivalents are primarily denominated in USD, RMB, and HKD, bearing market interest rates ranging from **0.001% to 3.8%**[183](index=183&type=chunk) [Trade and Other Payables](index=61&type=section&id=Trade%20and%20Other%20Payables) As at June 30, 2025, total trade and other payables amounted to **$10,174 thousand**, a decrease from **$11,603 thousand** as at December 31, 2024. These primarily include trade payables, accrued outsourcing R&D expenses, and accrued other operating expenses Trade and Other Payables Composition (As at June 30, 2025) | Item | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | Trade payables | 3,779 | 4,599 | | Accrued outsourcing R&D expenses | 2,958 | 3,010 | | Accrued other operating expenses | 2,976 | 3,451 | | Accrued staff costs | 437 | 492 | | Payables for acquisition of property, plant and equipment | 24 | 51 | | **Total** | **10,174** | **11,603** | Trade Payables Ageing Analysis (As at June 30, 2025) | Ageing | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--- | :--- | :--- | | 0 to 30 days | 42 | 475 | | 31 to 60 days | 25 | 403 | | 61 to 90 days | 22 | 180 | | Over 90 days | 3,690 | 3,541 | | **Total** | **3,779** | **4,599** | [Contract Liabilities](index=62&type=section&id=Contract%20Liabilities) The Group entered into a license agreement with Yunnan Walvax Biotechnology Co., Ltd., receiving an upfront payment of approximately **$698 thousand**, recognized as contract liabilities. These contract liabilities are expected to be settled within the normal operating cycle and are therefore classified as current liabilities - The Group entered into a license agreement with Yunnan Walvax Biotechnology Co, Ltd, receiving an upfront payment of approximately **698 thousand USD**, recognized as contract liabilities[185](index=185&type=chunk) - The contract liabilities are expected to be settled within the normal operating cycle and are therefore classified as current liabilities[186](index=186&type=chunk) [Financial Liabilities at Fair Value Through Profit or Loss](index=62&type=section&id=Financial%20Liabilities%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) Seed Series Preferred Shares and Series A Preferred Shares issued by RNAimmune are classified as financial liabilities at fair value through profit or loss. As at June 30, 2025, their fair value was **$22,024 thousand**, a decrease from **$23,748 thousand** as at December 31, 2024. These preferred shares carry voting rights, dividend rights, and liquidation preferences, and are convertible into ordinary shares at the option of the holder or mandatorily RNAimmune Issued Preferred Shares (As at June 30, 2025) | Preferred Share | Year of Issue | Number of Investors | Total Preferred Shares Issued | Subscription Price (USD) | Total Consideration (thousand USD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Seed Series Preferred Shares | 2021 | 7 | 7,936,509 | 1.26 | 10,000 | | Series A Preferred Shares | 2022 | 8 | 7,553,390 | 3.09 | 23,340 | | **Total** | | | **15,489,899** | | **33,340** | - Both Seed Series Preferred Shares and Series A Preferred Shares issued by RNAimmune are accounted for as financial liabilities at fair value through profit or loss[197](index=197&type=chunk) - Preferred shareholders possess voting rights, dividend rights, and liquidation preferences, with options for voluntary or mandatory conversion into ordinary shares[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) [Share Capital](index=68&type=section&id=Share%20Capital) As at June 30, 2025, the company's authorized share capital was **$230,000 thousand**, and issued and fully paid share capital was **$105,166 thousand**, consistent with January

GEM Listing Statement and Directors' Responsibility Statement [GEM Market Features and Risk Disclosure](index=2&type=section&id=GEM%E7%9A%84%E7%89%B9%E8%89%B2) The report highlights the GEM market as a listing platform for SMEs, noting higher investment risks, market volatility, and no guarantee of high liquidity, urging investors to understand potential risks - The GEM market targets small and medium-sized companies, entailing **higher investment risks**, potential for **significant market volatility** in securities, and **no guarantee of high liquidity**[3](index=3&type=chunk) [Directors' Responsibility Statement](index=2&type=section&id=%E8%91%A3%E4%BA%8B%E8%B2%AC%E4%BB%BB%E8%81%B2%E6%98%8E) The company's directors collectively and individually assume full responsibility for this report, confirming its accuracy, completeness, and absence of misleading or fraudulent content, with all opinions based on careful consideration and fair assumptions - Directors confirm the report's information is **accurate and complete in all material aspects**, free from misleading or fraudulent content, and without material omissions[4](index=4&type=chunk) - Directors declare all opinions in this report are formed after **careful consideration** and based on **fair and reasonable grounds and assumptions**[4](index=4&type=chunk) Unaudited Condensed Consolidated Financial Statements [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, revenue decreased by 24.16% to RMB9.91 million, gross profit fell by 62.66%, loss for the period expanded by 146.18% to RMB0.613 million, and basic loss per share increased to RMB0.0012 Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | Year-on-Year Change (RMB Thousand) | Year-on-Year Change Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 9,910 | 13,067 | (3,157) | -24.16% | | Cost of Sales | (9,447) | (11,827) | 2,380 | -20.12% | | Gross Profit | 463 | 1,240 | (777) | -62.66% | | Other Income | 1 | 2 | (1) | -50.00% | | Selling Expenses | (158) | (176) | 18 | -10.23% | | Administrative Expenses | (819) | (1,311) | 492 | -37.53% | | Finance Costs | (100) | – | (100) | - | | Loss Before Tax | (613) | (245) | (368) | 150.20% | | Income Tax Expense | – | (4) | 4 | -100.00% | | Loss and Total Comprehensive Loss for the Period | (613) | (249) | (364) | 146.18% | | Basic Loss Per Share (RMB Cents) | (0.12) | (0.05) | (0.07) | 140.00% | [Unaudited Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the company's net current liabilities increased to RMB54.17 million, capital deficiency expanded to RMB54.058 million, bank balances and cash significantly decreased, while trade receivables substantially increased Key Data from Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | Change (RMB Thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Property, Plant and Equipment | 112 | 121 | (9) | -7.44% | | Inventories | – | 25 | (25) | -100.00% | | Trade Receivables | 2,522 | 12 | 2,510 | 20916.67% | | Bank Balances and Cash | 3,535 | 11,999 | (8,464) | -70.54% | | Total Current Assets | 6,057 | 12,041 | (5,984) | -49.70% | | Trade Payables | 5,523 | 3,695 | 1,828 | 49.47% | | Amount Due to a Shareholder of the Ultimate Holding Company | 740 | 7,740 | (7,000) | -90.44% | | Amount Due to a Key Shareholder | 46,000 | 46,000 | – | 0.00% | | Total Current Liabilities | (60,227) | (65,607) | 5,380 | -8.20% | | Net Current Liabilities | (54,170) | (53,566) | (604) | 1.13% | | Net Liabilities | (54,058) | (53,445) | (613) | 1.15% | | Capital Deficiency | (54,058) | (53,445) | (613) | 1.15% | [Condensed Consolidated Statement of Changes in Equity (Unaudited)](index=5&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8%EF%BC%88%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%EF%BC%89) For the six months ended June 30, 2025, total equity further decreased due to the loss for the period, with accumulated losses continuously expanding, reflecting a deteriorating financial position Key Data from Condensed Consolidated Statement of Changes in Equity | Indicator | January 1, 2024 (RMB Thousand) | June 30, 2024 (RMB Thousand) | January 1, 2025 (RMB Thousand) | June 30, 2025 (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | | Share Capital | 50,000 | 50,000 | 50,000 | 50,000 | | Capital Reserve | 40,449 | 40,449 | 40,449 | 40,449 | | Other Reserves | 291,319 | 291,319 | 291,319 | 291,319 | | Statutory Surplus Reserve | 25,465 | 25,465 | 25,465 | 25,465 | | Accumulated Losses | (459,380) | (459,629) | (460,678) | (461,291) | | Total (Capital Deficiency) | (52,147) | (52,396) | (53,445) | (54,058) | - Loss for the period and total comprehensive loss led to a continuous expansion of accumulated losses, increasing from **RMB460.678 million** as of January 1, 2025, to **RMB461.291 million** as of June 30, 2025[7](index=7&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, net cash from operating activities turned from an inflow to an outflow of RMB4.526 million, leading to an expanded net decrease in cash and cash equivalents and a 70.54% drop in period-end cash balance Key Data from Condensed Consolidated Statement of Cash Flows | Indicator | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | Year-on-Year Change (RMB Thousand) | Year-on-Year Change Rate | | :--- | :--- | :--- | :--- | :--- | | Net Cash (Used In) / From Operating Activities | (4,526) | 7 | (4,533) | -64757.14% | | Net Cash From Investing Activities | 1 | 1 | – | 0.00% | | Net Cash Used In Financing Activities | (3,939) | (9,050) | 5,111 | -56.47% | | Net Decrease in Cash and Cash Equivalents | (8,464) | (9,042) | 578 | -6.39% | | Cash and Cash Equivalents at Beginning of Period | 11,999 | 12,768 | (769) | -6.02% | | Cash and Cash Equivalents at End of Period | 3,535 | 3,726 | (191) | -5.13% | - Period-end bank balances and cash significantly decreased from **RMB11.999 million** at the beginning of the period to **RMB3.535 million**, indicating cash flow pressure[8](index=8&type=chunk) Notes to the Condensed Consolidated Interim Financial Statements [Note 1. General Information](index=7&type=section&id=1.%20General%20Information) Zhejiang Ruiyuan Intelligent Control Technology Co Ltd is a GEM-listed company incorporated in China, primarily engaged in selling electronic equipment and component control systems, and manufacturing and selling CNC machine tool bare machines, with financial statements denominated in RMB - The company is a joint stock limited company incorporated in the People's Republic of China, with its shares listed on the **GEM of The Stock Exchange of Hong Kong Limited**[9](index=9&type=chunk) - The Group's principal activities in China involve selling **controller systems for electronic equipment and components** used in electronic products, and **manufacturing and selling CNC machine tool bare machine products**[9](index=9&type=chunk) - The unaudited consolidated financial statements are presented in **RMB**, which is also the company's functional currency[10](index=10&type=chunk) [Note 2. Basis of Preparation](index=7&type=section&id=2.%20Basis%20of%20Preparation) The Group's unaudited condensed consolidated results are prepared under HKFRS and reviewed by the Audit Committee; despite significant going concern uncertainties, the Board believes the Group can continue operating for at least twelve months due to shareholder support and cost controls - The Group's unaudited condensed consolidated results are prepared in accordance with **Hong Kong Financial Reporting Standards**, **Hong Kong Generally Accepted Accounting Principles**, disclosure requirements of the **Hong Kong Companies Ordinance**, and the **GEM Listing Rules**[11](index=11&type=chunk) - The period recorded a net loss of approximately **RMB0.613 million**, net current liabilities of approximately **RMB54.17 million**, and a capital deficiency of approximately **RMB54.058 million**, indicating **significant operating uncertainties**[12](index=12&type=chunk) - The Board believes, considering the controlling shareholder's commitment to provide sufficient financial support and enhanced cost control measures, the Group will have **adequate working capital** to meet its needs for the next twelve months, thus preparing the consolidated financial statements on a **going concern basis**[12](index=12&type=chunk)[13](index=13&type=chunk) [Note 3. Changes in Accounting Policies and Disclosures](index=8&type=section&id=3.%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) Accounting policies for the condensed consolidated financial statements are consistent with the prior year, adopting only new standards effective January 1, 2025, with no material impact on reported amounts or disclosures - Accounting policies adopted for the condensed consolidated financial statements are consistent with those followed for the Group's annual consolidated financial statements for the year ended December 31, 2024, except for the adoption of **new standards effective January 1, 2025**[14](index=14&type=chunk) - The application of new and revised standards during the reporting period had **no material impact** on the amounts reported and/or disclosures in these condensed consolidated financial statements[15](index=15&type=chunk) [Note 4. Revenue and Other Income](index=9&type=section&id=4.%20Revenue%20and%20Other%20Income) Total revenue for H1 2025 was RMB9.91 million, a 24.16% year-on-year decrease, with controller system sales slightly up and CNC machine tool bare machine sales significantly down by 74.62% Revenue and Other Income Details | Goods Type | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | Year-on-Year Change (RMB Thousand) | Year-on-Year Change Rate | | :--- | :--- | :--- | :--- | :--- | | Sales of controller systems for electronic equipment and components and electronic product parts | 8,629 | 8,019 | 610 | 7.61% | | Sales of CNC machine tool bare machine products | 1,281 | 5,048 | (3,767) | -74.62% | | **Total Revenue** | **9,910** | **13,067** | **(3,157)** | **-24.16%** | | Other Income | 1 | 2 | (1) | -50.00% | [Note 5. Segment Information](index=10&type=section&id=5.%20Segment%20Information) The Group operates two reportable segments: controller systems and bare machine products; controller systems saw revenue growth but expanded losses, while bare machine products experienced significant revenue decline and a shift from profit to loss, with all revenue and assets in China and high customer concentration - The Group's operating and reportable segments are: (i) **sales of controller systems for electronic products**; and (ii) **sales of bare machine products**[18](index=18&type=chunk) Segment Revenue and Results | Segment | H1 2025 Revenue (RMB Thousand) | H1 2024 Revenue (RMB Thousand) | Revenue Change Rate | H1 2025 Results (RMB Thousand) | H1 2024 Results (RMB Thousand) | Results Change Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Controller Systems | 8,629 | 8,019 | 7.61% | (437) | (348) | 25.57% (Loss expanded) | | Sales of Bare Machine Products | 1,281 | 5,048 | -74.62% | 49 | 434 | -88.71% (Profit significantly decreased) | | **Consolidated Revenue** | **9,910** | **13,067** | **-24.16%** | **(388)** | **86** | **-551.16% (Shift from profit to loss)** | - All of the Group's revenue is derived from customers in **China**, and all segment assets are located in **China**[23](index=23&type=chunk)[24](index=24&type=chunk) Major Customer Turnover Contribution | Customer | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | | :--- | :--- | :--- | | Customer A1 | 6,160 | 6,560 | | Customer B1 | 2,675 | –* | | Customer C2 | –* | 5,047 | | **Total** | **8,835** | **11,607** | *Represents revenue for the period accounting for less than 10% of the Group's total revenue [Note 6. Finance Costs](index=13&type=section&id=6.%20Finance%20Costs) For the six months ended June 30, 2025, the Group incurred finance costs of approximately RMB0.1 million, compared to zero in the prior corresponding period - For the six months ended June 30, 2025, finance costs were approximately **RMB0.1 million** (six months ended June 30, 2024: zero)[25](index=25&type=chunk) [Note 7. Loss Before Tax](index=13&type=section&id=7.%20Loss%20Before%20Tax) Loss before tax for H1 2025 expanded to RMB0.613 million from RMB0.245 million in the prior period, primarily driven by staff costs and inventory costs recognized as expenses Components of Loss Before Tax | Item | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | | :--- | :--- | :--- | | Loss Before Tax | (613) | (245) | | Staff Costs (excluding remuneration for Chairman, Directors and Supervisors) | 274 | 361 | | Depreciation of Property, Plant and Equipment | 9 | 13 | | Cost of Inventories Recognized as Expense | 9,447 | 11,816 | - Total staff costs decreased from **RMB0.361 million** in H1 2024 to **RMB0.274 million** in H1 2025[26](index=26&type=chunk) [Note 8. Income Tax Expense](index=14&type=section&id=8.%20Income%20Tax%20Expense) The company incurred no income tax expense in H1 2025, compared to RMB0.004 million in the prior period, with some Chinese subsidiaries benefiting from a 5% preferential corporate income tax rate as small low-profit enterprises Income Tax Expense | Item | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | | :--- | :--- | :--- | | China Corporate Income Tax | – | 4 | | **Income Tax Expense** | **–** | **4** | - For eligible small low-profit enterprises, the corporate income tax rate is **5%** on annual taxable income not exceeding **RMB3 million** (inclusive)[28](index=28&type=chunk) - No provision for Hong Kong profits tax was made for the periods ended June 30, 2025, and 2024, as the Group generated **no assessable profits in Hong Kong** during those periods[28](index=28&type=chunk) [Note 9. Dividends](index=14&type=section&id=9.%20Dividends) No dividends were distributed during the reporting period, and the Board does not recommend paying any dividends for the six months ended June 30, 2025 - No dividends were distributed during the reporting period, and the Board does not recommend paying dividends for the six months ended June 30, 2025[29](index=29&type=chunk) [Note 10. Loss Per Share](index=15&type=section&id=10.%20Loss%20Per%20Share) Basic loss per share for H1 2025 increased to RMB0.0012 from RMB0.0005 in the prior period, mainly due to expanded losses, with no potentially dilutive ordinary shares - Loss per share is calculated based on the Group's loss attributable to shareholders of approximately **RMB0.613 million** for the six months ended June 30, 2025 (six months ended June 30, 2024: **RMB0.245 million**), and **500 million** issued shares during the respective periods[30](index=30&type=chunk) - No diluted loss per share is presented as the company had **no potentially dilutive ordinary shares** during any period[30](index=30&type=chunk) [Note 11. Trade Receivables](index=15&type=section&id=11.%20Trade%20Receivables) As of June 30, 2025, trade receivables significantly increased to RMB2.522 million from RMB0.012 million on December 31, 2024, with all receivables aged within 90 days and an average credit period of 90 days Trade Receivables | Item | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Trade Receivables | 2,522 | 12 | | Less: Accumulated Impairment Losses | – | – | | **Trade Receivables, Net of Impairment** | **2,522** | **12** | - The aging analysis of trade receivables shows all **RMB2.522 million** are within **0 to 90 days**[31](index=31&type=chunk) - The Group grants an average credit period of **90 days** to its trade customers[31](index=31&type=chunk) [Note 12. Trade Payables](index=16&type=section&id=12.%20Trade%20Payables) As of June 30, 2025, trade payables increased to RMB5.523 million from RMB3.695 million on December 31, 2024, with most payables aged within 90 days and an average credit period for purchases of 90 days Trade Payables | Aging | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | 0 to 90 days | 5,482 | 3,695 | | 91 to 180 days | 41 | – | | 181 to 365 days | – | – | | Over 365 days | – | – | | **Total** | **5,523** | **3,695** | - The average credit period for purchases of goods is **90 days**[32](index=32&type=chunk) [Note 13. Contingent Liabilities](index=17&type=section&id=13.%20Contingent%20Liabilities) The company faces a 2016 labor tribunal claim of approximately HKD2.6 million from a former employee, currently suspended indefinitely, for which a provision of RMB0.086 million has been made, considered the best estimate of liability - Around November 7, 2016, a former employee, dismissed around October 5, 2016, initiated labor tribunal proceedings against the company and its former subsidiary, Hong Kong Man Ho Enterprise Limited, claiming approximately **HKD2.6 million** (equivalent to approximately **RMB2.34 million**)[33](index=33&type=chunk) - The labor tribunal proceedings were **indefinitely suspended** by an order dated May 5, 2017[33](index=33&type=chunk) - As of December 31, 2016, the Group made a claim provision of approximately **RMB0.086 million**, with no further provisions since, and directors consider this amount the **best estimate of liability** as of June 30, 2025, based on legal advice[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 14. Events After the Reporting Period](index=17&type=section&id=14.%20Events%20After%20the%20Reporting%20Period) As of the report date, the Group has no significant events after the reporting period - As of the report date, the Group has **no significant events after the reporting period**[36](index=36&type=chunk) Management Discussion and Analysis [Business Review](index=18&type=section&id=Business%20Review) The Group's core business involves designing, manufacturing, and selling CNC machine tool bare machines and electronic equipment controller systems, primarily operating in China, with plans to expand into industrial electronic intelligent control equipment and high-end CNC products to enhance innovation and market reach - The Group's principal activities include designing, manufacturing, and selling **CNC machine tool bare machine products**, and selling **controller systems for electronic equipment and components** for electronic products[37](index=37&type=chunk) - The Group's operations are primarily in **China**, with revenue mainly derived from **Chinese customers**[38](index=38&type=chunk) - The Group continues to actively develop businesses in **industrial electronic intelligent control equipment, mechanical equipment, industrial control computer numerical control (CNC) systems, and general parts processing and manufacturing**, with plans to launch various **high-end CNC machine tool bare machine products**[38](index=38&type=chunk) - The Group has signed letters of intent with multiple agents and will continue to expand its business in cities like Hangzhou, Jiaxing, and Shanghai, continuously adding new sales customers[38](index=38&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) For the six months ended June 30, 2025, the Group's turnover decreased by 24.16% to RMB9.91 million, mainly due to reduced downstream customer export orders; loss attributable to shareholders expanded by 146.18% to RMB0.613 million due to lower revenue, increased cost of sales, and finance costs; gross margin declined to 4.67% due to rising raw material costs without product price increases; administrative expenses decreased - For the six months ended June 30, 2025, the Group recorded a turnover of approximately **RMB9.91 million**, a decrease of approximately **RMB3.157 million**, primarily due to a significant reduction in sales customer orders from a downstream client engaged in international export trade, facing high export taxes and fees[39](index=39&type=chunk) - Loss attributable to shareholders was approximately **RMB0.613 million**, an increase of approximately **RMB0.364 million**, mainly due to decreased revenue and increased cost of sales and finance costs[39](index=39&type=chunk) - Gross profit margin was **4.67%** (six months ended June 30, 2024: **9.49%**), a decrease primarily due to **rising raw material costs** without a corresponding increase in product selling prices[39](index=39&type=chunk) - Administrative expenses were approximately **RMB0.819 million**, a decrease of approximately **RMB0.492 million** compared to the prior period, mainly because some partners' Q3 2025 expenses were not settled as of June 30, 2025[40](index=40&type=chunk) [Prospects](index=19&type=section&id=Prospects) The Group is committed to product innovation and quality, having formed strategic partnerships to expand its intelligent control system trade and sales markets, with current products gaining market acceptance and promising prospects for industrial electronic intelligent control systems and CNC machine tool bare machine applications - The Group recognizes the critical importance of its **competitive strength in product innovation and quality** for future sales growth and has established **strategic partnerships** with several companies[41](index=41&type=chunk) - Currently marketed products, including **electronic components, industrial electronic intelligent control systems, AC servo motors, and CNC machine tool bare machines**, have progressively gained **market and customer recognition**[41](index=41&type=chunk) - The development of **industrial electronic intelligent control systems and CNC machine tool bare machine applications** has gradually integrated into the market, providing the Group with **favorable market and development prospects**[41](index=41&type=chunk) [Dividends](index=19&type=section&id=Dividends) No dividends were distributed during the reporting period, and the Board does not recommend paying any dividends for the six months ended June 30, 2025 - No dividends were distributed during the reporting period, and the Board does not recommend paying dividends for the six months ended June 30, 2025[42](index=42&type=chunk) [Financial Resources and Liquidity](index=20&type=section&id=Financial%20Resources%20and%20Liquidity) As of June 30, 2025, the Group's net current liabilities increased to RMB54.17 million, with significant reductions in current assets and bank balances and cash, indicating increased liquidity pressure, and no capital gearing ratio - As of June 30, 2025, the Group's net current liabilities were approximately **RMB54.17 million** (December 31, 2024: **RMB53.566 million**), indicating an increase in net current liabilities[43](index=43&type=chunk) - As of June 30, 2025, current assets were approximately **RMB6.057 million** (December 31, 2024: **RMB12.041 million**), with bank balances and cash at approximately **RMB3.535 million** (December 31, 2024: **RMB11.999 million**), reflecting a **significant decrease in both current assets and cash**[43](index=43&type=chunk) - The Group had **no capital gearing ratio** as of June 30, 2025[43](index=43&type=chunk) [Currency Risk](index=20&type=section&id=Currency%20Risk) The Group primarily operates in China, with most transactions denominated and settled in RMB, thus facing no foreign exchange risk; management monitors currency risk and will consider hedging significant exposures if necessary - The Group operates in China, with most transactions denominated and settled in **RMB**, and all financial assets measured at amortized cost are denominated in RMB, thus facing **no foreign exchange risk**[44](index=44&type=chunk) - The Group currently has **no foreign currency hedging policy**; however, management monitors foreign exchange risk and will consider hedging significant exposures when necessary[44](index=44&type=chunk) [Outlook and Future Developments](index=20&type=section&id=Outlook%20and%20Future%20Developments) Facing China's economic slowdown and intensified competition in the controller system market, the Group will continue strict cost control measures in 2025 and explore business opportunities in intelligent control systems for heavy industry, such as those used in industrial robots - With China's overall economic growth slowing in recent years, competition in the **controller system market has intensified**[45](index=45&type=chunk) - The Group will continue to implement **strict cost control measures** in 2025 and explore business opportunities for **intelligent control systems used in heavy industry**, such as those applied in industrial robots[45](index=45&type=chunk) [Significant Acquisitions or Disposals of Subsidiaries, Associates and Joint Ventures](index=20&type=section&id=Significant%20Acquisitions%20or%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) For the six months ended June 30, 2025, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures - For the six months ended June 30, 2025, the Group had **no significant acquisitions or disposals** of subsidiaries, associates, or joint ventures[46](index=46&type=chunk) [Employees and Remuneration Policy](index=20&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 10 employees, with remuneration determined by market terms, individual performance, qualifications, and experience, including bonuses and retirement benefit scheme contributions - As of June 30, 2025, the Group had **10 employees** (December 31, 2024: 11 employees)[47](index=47&type=chunk) - Remuneration is determined by **market terms, individual performance, qualifications, and experience**, with performance-based bonuses and contributions to retirement benefit schemes as other benefits[47](index=47&type=chunk) [Pledge of Assets](index=21&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no pledged assets - As of June 30, 2025, the Group had **no pledged assets** (December 31, 2024: nil)[48](index=48&type=chunk) [Contingent Liabilities](index=21&type=section&id=Contingent%20Liabilities) Details of contingent liabilities are provided in Note 13 to the unaudited condensed consolidated interim financial statements - Details of contingent liabilities are provided in **Note 13** to the unaudited condensed consolidated interim financial statements[49](index=49&type=chunk) [Material Investments Held](index=21&type=section&id=Material%20Investments%20Held) As of June 30, 2025, the Group held no material investments - As of June 30, 2025, the Group held **no material investments**[50](index=50&type=chunk) [Future Plans for Material Investments or Capital Assets](index=21&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) As of June 30, 2025, the Group had no specific plans for material investments or capital asset acquisitions - As of June 30, 2025, the Group had **no specific plans for material investments or capital asset acquisitions**[51](index=51&type=chunk) [Events After the Reporting Period](index=21&type=section&id=Events%20After%20the%20Reporting%20Period) As of the report date, the Group has no significant events after the reporting period - As of the report date, the Group has **no significant events after the reporting period**[52](index=52&type=chunk) Other Information [Directors, Chief Executive and Supervisors' Rights to Acquire Shares](index=21&type=section&id=Directors%2C%20Chief%20Executive%20and%20Supervisors'%20Rights%20to%20Acquire%20Shares) For the six months ended June 30, 2025, no directors, chief executive, or supervisors, nor their spouses or children under 18, were granted or exercised any rights to acquire shares in the company or its associated corporations - For the six months ended June 30, 2025, no directors, chief executive (if any), or supervisors, nor their spouses or children under 18, were granted or exercised any rights to acquire shares in the company or its associated corporations[53](index=53&type=chunk) [Pledge of Shares by Controlling Shareholder](index=22&type=section&id=Pledge%20of%20Shares%20by%20Controlling%20Shareholder) Zhejiang Ruiyuan Intelligent Robot Co Ltd, the controlling shareholder, pledged 322,675,000 domestic shares, representing approximately 64.535% of the company's total issued share capital, to an independent third party for its own purposes and obligations - A total of **322,675,000 domestic shares** held by Zhejiang Ruiyuan Intelligent Robot Co Ltd ("Ruiyuan Robot"), the company's controlling shareholder, have been **pledged to an independent third party**[54](index=54&type=chunk) - The pledged shares represent approximately **64.535%** of the company's total issued share capital as of the announcement date[54](index=54&type=chunk) - The purpose of the pledge is for **Ruiyuan Robot's own use and to fulfill its obligations**[54](index=54&type=chunk) [Directors, Chief Executive and Supervisors' Interests and Short Positions](index=22&type=section&id=Directors%2C%20Chief%20Executive%20and%20Supervisors'%20Interests%20and%20Short%20Positions) As of June 30, 2025, Mr He Keng held 74.00% of the company's domestic shares through controlled corporations and beneficially owned 1,000 H shares, while Ms Zou Jing beneficially owned 4,225,000 H shares, representing 0.845% of the registered capital, with no other directors, chief executive, or supervisors holding interests or short positions Directors' Long Positions in Shares | Director Name | Number of Shares Held | Nature of Interest | Approximate Percentage of Shares Held in the Same Class of Securities | Approximate Percentage of Shares Held in Registered Capital | | :--- | :--- | :--- | :--- | :--- | | Mr He Keng | 370,000,000 Domestic Shares | Interest in controlled corporation | 100.00% | 74.00% | | Mr He Keng | 1,000 H Shares | Beneficial owner | 0.0008% | 0.0002% | | Ms Zou Jing | 4,225,000 H Shares | Beneficial owner | 3.25% | 0.845% | - Except as disclosed, as of June 30, 2025, no directors, chief executive, or supervisors (including their spouses and children under 18) held any interests in the shares of the company or its associated corporations, nor were they granted or exercised any rights to subscribe for such shares[56](index=56&type=chunk) [Interests of Substantial Shareholders in Shares or Underlying Shares of the Company](index=24&type=section&id=Interests%20of%20Substantial%20Shareholders%20in%20Shares%20or%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2025, Ruiyuan Robot and its concert parties collectively held 74.00% of the company's domestic shares, with Hangzhou Qindie, Zhuji Jinfu, Mr Tang Jingfeng, Mr Zhao Zhongxin, and Mr He Yanggen indirectly holding the same proportion through controlled corporations; Shaoxing Qinyuan held 9.47% domestic shares as a nominee, and Martin Currie China Hedge Fund Limited and its affiliates held 2.85% H shares as investment managers Substantial Shareholders' Long Positions in Shares | Name of Substantial Shareholder | Number of Shares Held | Nature of Interest | Approximate Percentage of Shares Held in the Same Class of Securities | Approximate Percentage of Shares Held in Registered Capital | | :--- | :--- | :--- | :--- | :--- | | Ruiyuan Robot | 370,000,000 Domestic Shares | Beneficial owner | 100.00% | 74.00% | | Hangzhou Qindie Electromechanical Equipment Co Ltd | 370,000,000 Domestic Shares | Interest in controlled corporation | 100.00% | 74.00% | | Zhuji Jinfu Electromechanical Equipment Co Ltd | 370,000,000 Domestic Shares | Interest in controlled corporation | 100.00% | 74.00% | | Shaoxing Qinyuan Electronic Technology Co Ltd | 47,325,000 Domestic Shares | Nominee | 12.79% | 9.47% | | Mr Tang Jingfeng | 370,000,000 Domestic Shares | Interest in controlled corporation | 100.00% | 74.00% | | Mr Zhao Zhongxin | 370,000,000 Domestic Shares | Interest in controlled corporation | 100.00% | 74.00% | | Mr He Yanggen | 370,000,000 Domestic Shares | Interest in controlled corporation | 100.00% | 74.00% | | Martin Currie China Hedge Fund Limited | 14,245,000 H Shares | Investment manager | 10.96% | 2.85% | | Martin Currie Investment Management Limited | 14,245,000 H Shares | Investment manager | 10.96% | 2.85% | - Ruiyuan Robot is a joint stock limited company incorporated in China, **55% owned by Hangzhou Qindie** and **45% by Zhuji Jinfu**[59](index=59&type=chunk) - Shaoxing Qinyuan (transferee of the second batch of sale shares) is a nominee of Ruiyuan Robot, **60% owned by Mr He Keng** and **40% by Mr Tang Jingfeng**[59](index=59&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=26&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and as of June 30, 2025, the company held no treasury shares - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities (including the sale of treasury shares)[61](index=61&type=chunk) - As of June 30, 2025, the company held **no treasury shares**[62](index=62&type=chunk) [Competing Interests](index=26&type=section&id=Competing%20Interests) During the reporting period, no directors, supervisors, controlling shareholders, or their respective associates held interests in any business directly or indirectly competing with the Group's business, nor were there any other conflicts of interest - During the reporting period, no directors, supervisors, controlling shareholders, or their respective associates held interests in any business directly or indirectly competing with the Group's business, nor were there any other conflicts of interest[63](index=63&type=chunk) [Securities Transactions by Directors and Supervisors](index=26&type=section&id=Securities%20Transactions%20by%20Directors%20and%20Supervisors) The Group adopted the Model Code for Securities Transactions by Directors and Supervisors under the GEM Listing Rules, and all directors and supervisors confirmed compliance during the reporting period after specific inquiries - The Group adopted the **Model Code for Securities Transactions by Directors and Supervisors** as set out in Rules 5.48 to 5.67 of the GEM Listing Rules for its directors and supervisors[64](index=64&type=chunk) - Following specific inquiries to all directors and supervisors, they confirmed compliance with the **Model Code for Securities Transactions** for the six months ended June 30, 2025[64](index=64&type=chunk) [Changes in Information of Directors and Supervisors](index=26&type=section&id=Changes%20in%20Information%20of%20Directors%20and%20Supervisors) There were no changes in directors' and supervisors' information requiring disclosure under GEM Listing Rule 17.50A(1) - There were **no changes in directors' and supervisors' information** requiring disclosure under GEM Listing Rule 17.50A(1)[65](index=65&type=chunk) [Corporate Governance](index=26&type=section&id=Corporate%20Governance) For the six months ended June 30, 2025, the company complied with all code provisions of the Corporate Governance Code in Appendix C1 of the GEM Listing Rules, except for a deviation from code provision C.2.1 regarding the absence of a Chief Executive Officer title, with the Board believing its current operational model ensures a balance of power and accountability - For the six months ended June 30, 2025, the company complied with all code provisions of the **Corporate Governance Code** in Appendix C1 of the GEM Listing Rules, except for a deviation from code provision C.2.1: the company has **no Chief Executive Officer title**[66](index=66&type=chunk) - The Board believes that operating with a board composed of experienced individuals, meeting regularly to discuss matters affecting the company's operations, is sufficient to ensure a **balance of power and accountability**[66](index=66&type=chunk) [Share Scheme](index=27&type=section&id=Share%20Scheme) During the reporting period and as of the report date, the company had no share schemes, nor were any share options or awards granted or agreed to be granted to any directors, supervisors, or employees of the company or its subsidiaries - During the reporting period and as of the report date, the company had **no share schemes**, nor were any share options or awards granted or agreed to be granted to any directors, supervisors, or employees of the company or its subsidiaries[67](index=67&type=chunk) [Audit Committee](index=27&type=section&id=Audit%20Committee) The company's Audit Committee, comprising three independent non-executive directors, reviewed the Group's accounting standards and practices, and discussed internal controls and financial reporting matters, including the unaudited consolidated financial statements for the six months ended June 30, 2025 - The Audit Committee comprises **three independent non-executive directors**: Mr Guo Jianxiong (Chairman of the Audit Committee), Mr Zhou Weibo, and Ms Sheng Ting[68](index=68&type=chunk) - The Audit Committee reviewed the Group's accounting standards and practices with senior management and discussed internal controls and financial reporting matters, including the **unaudited consolidated financial statements for the six months ended June 30, 2025**[68](index=68&type=chunk) [By Order of the Board](index=27&type=section&id=By%20Order%20of%20the%20Board) This report is issued by Mr He Keng, Chairman and Executive Director, on behalf of the Board, listing current Board members including executive and independent non-executive directors - This report is issued by **Mr He Keng**, Chairman and Executive Director of the Board[69](index=69&type=chunk) - Board members include Executive Directors **Mr He Keng (Chairman), Mr Yao Yongtao, Mr Chen Weiqiang, Ms Zou Jing**, and Independent Non-executive Directors **Mr Zhou Weibo, Ms Sheng Ting, Mr Guo Jianxiong**[69](index=69&type=chunk)

[Definitions](index=3&type=section&id=Definitions) [Glossary of Terms](index=3&type=section&id=Glossary%20of%20Terms) This chapter defines key terms and abbreviations used in the interim report, covering company articles, regulatory bodies, and financial products - The 'Bank' refers to Bank of Gansu Co., Ltd., incorporated in Gansu Province, China on November 18, 2011[3](index=3&type=chunk) - The 'National Financial Regulatory Administration' replaced the former 'China Banking and Insurance Regulatory Commission' in March 2023[3](index=3&type=chunk)[5](index=5&type=chunk) - The 'Reporting Period' refers to the six months ended June 30, 2025 (i.e., January 1, 2025 to June 30, 2025)[7](index=7&type=chunk) [About the Bank](index=7&type=section&id=About%20the%20Bank) [Basic Information of the Bank](index=7&type=section&id=Basic%20Information%20of%20the%20Bank) This section provides the Bank's legal name, representative, addresses, contact, and H-share listing information - The legal Chinese name is Bank of Gansu Co., Ltd., with Liu Qing as the legal representative[8](index=8&type=chunk) - The Bank's H-shares were listed on the Main Board of the Hong Kong Stock Exchange on January 18, 2018, with stock code **2139**[8](index=8&type=chunk)[11](index=11&type=chunk) [History of the Bank](index=8&type=section&id=History%20of%20the%20Bank) Bank of Gansu was established on November 18, 2011, as a provincial-level city commercial bank to promote Gansu's economic development - Bank of Gansu was officially established on November 18, 2011, as a provincial-level corporate city commercial bank in Gansu Province[9](index=9&type=chunk) - The Bank is not an authorized institution as defined by the Hong Kong Banking Ordinance, is not supervised by the HKMA, and is not permitted to conduct banking business and/or accept deposits in Hong Kong[10](index=10&type=chunk) [Awards Received by the Bank in H1 2025](index=8&type=section&id=Awards%20Received%20by%20the%20Bank%20in%20H1%202025) The Bank received multiple honors in H1 2025, including a global ranking and digital marketing innovation awards Major Honors in H1 2025 | Award and Honor | Awarding Body/Media | | :--- | :--- | | Ranked 356th in The Banker's Top 1000 World Banks 2025, 73rd among Chinese banks | The Banker magazine (UK) | | Awarded "Most Innovative Digital Marketing Brand Award" at the 2025 Golden Mouse International Digital Marketing Festival | Netwin World | [Financial Highlights](index=9&type=section&id=Financial%20Highlights) [Overview of Operating Results](index=9&type=section&id=Overview%20of%20Operating%20Results) Net profit increased by **1.1%** to **RMB 399.0 million**, while operating income decreased by **13.9%** due to market rates and concessions Overview of Operating Results in H1 2025 (RMB million) | Indicator | H1 2025 | H1 2024 | Change Percentage (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | 2,247.1 | 2,537.1 | (11.4) | | Net Fee and Commission Income | 228.3 | 218.9 | 4.3 | | Net Trading Gains | 107.4 | 344.0 | (68.8) | | Net Gains from Investment Securities | 130.1 | 35.1 | 270.7 | | Operating Income | 2,717.4 | 3,156.8 | (13.9) | | Operating Expenses | (1,060.1) | (1,075.7) | (1.5) | | Asset Impairment Losses | (1,317.9) | (1,742.5) | (24.4) | | Profit for the Period | 399.0 | 394.5 | 1.1 | | Basic Earnings Per Share (RMB) | 0.03 | 0.03 | 0.0 | [Key Balance Sheet Indicators](index=10&type=section&id=Key%20Balance%20Sheet%20Indicators) Total assets reached **RMB 427,481.6 million**, up **3.1%**, with customer loans and deposits growing by **4.5%** and **4.1%** respectively Key Balance Sheet Indicators as of June 30, 2025 (RMB million) | Indicator | June 30, 2025 | December 31, 2024 | Change Percentage (%) | | :--- | :--- | :--- | :--- | | Total Assets | 427,481.6 | 414,707.6 | 3.1 | | Of which: Total Customer Loans and Advances (including accrued interest) | 241,906.0 | 231,414.3 | 4.5 | | Total Liabilities | 393,360.1 | 380,869.7 | 3.3 | | Of which: Total Customer Deposits (including accrued interest) | 334,421.3 | 321,379.3 | 4.1 | | Total Equity | 34,121.5 | 33,837.9 | 0.8 | [Profitability and Asset Quality Indicators](index=10&type=section&id=Profitability%20and%20Asset%20Quality%20Indicators) Net interest margin and spread narrowed by **13.4%** and **15.2%**; NPL ratio decreased by **4.1%** to **1.85%**, and provision coverage ratio increased by **2.0%** to **136.79%** Profitability and Asset Quality Indicators in H1 2025 (%) | Indicator | H1 2025 | H1 2024 | Change Percentage (%) | | :--- | :--- | :--- | :--- | | Return on Assets | 0.19 | 0.19 | 0.0 | | Return on Equity | 2.35 | 2.36 | (0.4) | | Net Interest Spread | 0.97 | 1.12 | (13.4) | | Net Interest Margin | 1.12 | 1.32 | (15.2) | | Net Fee and Commission Income to Operating Income Ratio | 8.40 | 6.93 | 21.2 | | Cost-to-Income Ratio | 37.28 | 32.45 | 14.9 | | Non-Performing Loan Ratio | 1.85 | 1.94 | (4.1) | | Provision Coverage Ratio | 136.79 | 134.71 | 2.0 | | Provision to Total Loans Ratio | 2.53 | 2.61 | (2.3) | | Loan-to-Deposit Ratio | 70.44 | 73.17 | 0.4 | - As a non-systemically important bank in China, the Bank's provision to total loans ratio is maintained at a minimum standard of **2.5%**[16](index=16&type=chunk) [Management Discussion and Analysis](index=12&type=section&id=Management%20Discussion%20and%20Analysis) [Environment and Outlook](index=12&type=section&id=Environment%20and%20Outlook) China's economy grew by **5.3%** in H1 2025, with easing monetary policy; Gansu's GDP grew by **6.3%**, and the banking sector focuses on financial strength - China's GDP in H1 2025 was **RMB 66,053.6 billion**, a year-on-year increase of **5.3%**[18](index=18&type=chunk) - Prudent monetary policy shifted to moderately loose in H1, with RRR cuts and policy rate reductions, leading to new corporate loan weighted average interest rates falling to **3.3%** and personal housing loan rates to **3.1%**, both historical lows[19](index=19&type=chunk) - As of end-June 2025, Gansu Province's GDP was **RMB 646.88 billion**, a year-on-year increase of **6.3%**, with the provincial economy continuing its stable and improving trend[20](index=20&type=chunk) [Development Strategy](index=14&type=section&id=Development%20Strategy) The Bank aims to be a 'high-quality listed city commercial bank and preferred regional comprehensive financial service provider,' balancing scale, profitability, risk, and capital - The Bank's development strategy centers on 'value creation' and 'high-quality development,' aiming for balanced growth in scale, profitability, risk, and capital[22](index=22&type=chunk) - The Bank plans to establish government-related finance as a cornerstone business, transform traditional retail and corporate businesses, and develop emerging businesses like special asset management as new profit drivers[22](index=22&type=chunk) - The Bank will continuously enhance core capabilities in risk and internal control compliance, asset-liability management, omni-channel management, and digitalization, while strengthening risk control and promoting light-capital transformation[22](index=22&type=chunk) [Overall Business Review](index=15&type=section&id=Overall%20Business%20Review) Operating income decreased by **13.9%** to **RMB 2,717.4 million**, net profit increased by **1.1%** to **RMB 399.0 million**; assets, loans, and deposits grew, and NPL ratio improved - The Bank's total operating income was **RMB 2,717.4 million**, a **13.9%** decrease year-on-year, with net profit increasing by **1.1%** to **RMB 399.0 million**[23](index=23&type=chunk) - As of June 30, 2025, total assets were **RMB 427,481.6 million**, total customer loans and advances were **RMB 241,906.0 million**, and total customer deposits were **RMB 334,421.3 million**, representing increases of **3.1%**, **4.5%**, and **4.1%** respectively from year-end 2024[23](index=23&type=chunk) - The non-performing loan ratio was **1.85%**, a decrease of **0.08 percentage points** from early 2025[23](index=23&type=chunk) [Consolidated Income Statement Analysis](index=15&type=section&id=Consolidated%20Income%20Statement%20Analysis) Net interest income decreased by **11.4%**; net gains from investment securities increased by **270.7%**, while net trading gains decreased by **68.8%**, resulting in a **1.1%** profit increase - Net interest income decreased by **11.4%** year-on-year to **RMB 2,247.1 million**, primarily due to declining market interest rates and the Bank's proactive interest rate reductions to support the real economy[23](index=23&type=chunk)[26](index=26&type=chunk) Changes in Non-Interest Income in H1 2025 (RMB million) | Indicator | H1 2025 | H1 2024 | Change Percentage (%) | | :--- | :--- | :--- | :--- | | Net Fee and Commission Income | 228.3 | 218.9 | 4.3 | | Net Trading Gains | 107.4 | 344.0 | (68.8) | | Net Gains from Investment Securities | 130.1 | 35.1 | 270.7 | | Net Exchange (Loss)/Gain | (15.9) | 15.9 | (200.0) | | Other Net Operating Income | 20.4 | 5.8 | 251.7 | - Asset impairment losses decreased by **24.4%** year-on-year to **RMB 1,317.9 million**, primarily due to improved asset quality and reduced provision accruals[24](index=24&type=chunk)[65](index=65&type=chunk) - Net interest spread decreased from **1.12%** in H1 2024 to **0.97%** in H1 2025, and net interest margin decreased from **1.32%** to **1.12%**, mainly due to a larger decrease in the average yield on interest-earning assets than in the average cost of interest-bearing liabilities[50](index=50&type=chunk) [Consolidated Balance Sheet Analysis](index=28&type=section&id=Consolidated%20Balance%20Sheet%20Analysis) Total assets reached **RMB 427,481.6 million**, up **3.1%**; customer loans grew **4.5%** to **55.2%** of assets, and deposits grew **4.1%** to **85.0%** of liabilities Composition of Total Assets as of June 30, 2025 (RMB million) | Asset Category | June 30, 2025 | Percentage of Total (%) | December 31, 2024 | Percentage of Total (%) | | :--- | :--- | :--- | :--- | :--- | | Net Customer Loans and Advances | 235,969.1 | 55.2 | 225,595.6 | 54.4 | | Investment Securities and Other Financial Assets | 141,968.7 | 33.2 | 137,451.3 | 33.1 | | Due from Banks and Other Financial Institutions and Placements with Banks and Other Financial Institutions | 13,905.5 | 3.3 | 6,030.5 | 1.5 | | Cash and Balances with Central Bank | 19,988.9 | 4.7 | 23,171.6 | 5.6 | | Financial Assets Held Under Resale Agreements | 1,855.3 | 0.4 | 8,989.2 | 2.2 | - Total customer loans and advances (including accrued interest) increased by **4.5%** from year-end 2024 to **RMB 241,906.0 million**, with both corporate and retail loans growing[23](index=23&type=chunk)[70](index=70&type=chunk)[73](index=73&type=chunk) Composition of Total Liabilities as of June 30, 2025 (RMB million) | Liability Category | June 30, 2025 | Percentage of Total (%) | December 31, 2024 | Percentage of Total (%) | | :--- | :--- | :--- | :--- | :--- | | Total Customer Deposits (including accrued interest) | 334,421.3 | 85.0 | 321,379.3 | 84.4 | | Due to Banks and Other Financial Institutions | 9,967.2 | 2.5 | 15,708.6 | 4.1 | | Debt Instruments Issued | 31,914.2 | 8.1 | 27,392.6 | 7.2 | - Total customer deposits increased by **4.1%** from year-end 2024 to **RMB 334,421.3 million**, primarily due to the Bank's increased marketing efforts[23](index=23&type=chunk)[83](index=83&type=chunk) [Asset Quality Analysis](index=34&type=section&id=Asset%20Quality%20Analysis) NPL ratio was **1.85%**, down **0.08 percentage points**, showing improved asset quality; retail NPLs decreased, corporate NPLs slightly increased, and secured loans remain dominant Non-Performing Loans and NPL Ratio as of June 30, 2025 (RMB million) | Indicator | June 30, 2025 | December 31, 2024 | Change in Percentage Points | | :--- | :--- | :--- | :--- | | Total Non-Performing Loans | 4,340.0 | 4,340.7 | (0.7) | | Non-Performing Loan Ratio | 1.85% | 1.93% | (0.08) | - The non-performing loan ratio for retail loans decreased from **4.01%** as of December 31, 2024, to **3.63%** as of June 30, 2025, while that for corporate loans increased from **1.42%** to **1.46%**[97](index=97&type=chunk) - Mortgage loans, pledged loans, and guaranteed loans collectively accounted for **78.2%** of total customer loans and advances, with secured loans remaining the primary form[75](index=75&type=chunk) [Segment Information](index=38&type=section&id=Segment%20Information) The Bank operates corporate, retail, and financial markets segments; corporate banking remains the largest revenue source, but its share decreased, while financial markets' share increased, with most operations in Gansu Operating Income Contribution by Business Segment in H1 2025 (%) | Business Segment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Corporate Banking Business | 39.3 | 43.6 | | Retail Banking Business | 31.5 | 32.3 | | Financial Markets Business | 27.5 | 22.2 | - The majority of the Group's business is conducted in Gansu Province, China, with all non-current assets and income originating from operations in this region[102](index=102&type=chunk) [Off-Balance Sheet Commitments](index=39&type=section&id=Off-Balance%20Sheet%20Commitments) Off-balance sheet commitments increased by **14.9%** to **RMB 25,409.6 million**, mainly due to increases in letters of credit, bank acceptance bills, and unused credit card limits Off-Balance Sheet Commitments as of June 30, 2025 (RMB million) | Commitment Type | June 30, 2025 | December 31, 2024 | Change Percentage (%) | | :--- | :--- | :--- | :--- | | Bank Acceptance Bills | 7,173.1 | 6,583.5 | 8.9 | | Guarantees | 1,250.1 | 1,276.5 | (2.0) | | Letters of Credit | 6,222.9 | 4,103.9 | 51.6 | | Unused Credit Card Limits | 10,718.2 | 10,109.9 | 6.0 | | Subtotal | 25,364.3 | 22,073.8 | 14.9 | | Capital Commitments | 45.3 | 47.0 | (3.6) | | Total | 25,409.6 | 22,120.8 | 14.9 | [Other Matters](index=39&type=section&id=Other%20Matters) The Bank disbursed **RMB 20.7 million** in ADB re-lending and **RMB 6.52 billion** in inclusive small and micro loans, achieving growth, cost reduction, and structural optimization - The Bank cumulatively disbursed **RMB 20.7 million** in Asian Development Bank re-lending[105](index=105&type=chunk) - As of June 30, 2025, the Bank cumulatively extended **RMB 6.52 billion** in inclusive small and micro loans, effectively achieving the overall goals of 'increasing volume, reducing costs, and optimizing structure' for inclusive finance business[105](index=105&type=chunk) [Business Review](index=40&type=section&id=Business%20Review) This section reviews the operations, products, and financial performance of corporate, retail, and financial markets segments, including distribution network, subsidiaries, and IT systems [Corporate Banking Business](index=40&type=section&id=Corporate%20Banking%20Business) Corporate banking generated **RMB 1,067.5 million** in H1 2025, **39.3%** of total income, offering diverse products and supporting the real economy - Corporate banking business operating income was **RMB 1,067.5 million**, accounting for **39.3%** of total operating income, a year-on-year decrease of **22.4%**[106](index=106&type=chunk)[107](index=107&type=chunk) - As of June 30, 2025, total corporate loans were **RMB 158,048.4 million**, and total corporate deposits were **RMB 85,672.8 million**[106](index=106&type=chunk) - The Bank's domestic settlement transaction volume was approximately **RMB 545.35 billion**, and international settlement transaction volume was **USD 229.9 million**, both showing growth[114](index=114&type=chunk) [Retail Banking Business](index=42&type=section&id=Retail%20Banking%20Business) Retail banking generated **RMB 856.8 million** in H1 2025, **31.5%** of total income, expanding its customer base with diverse products and enhancing brand recognition - Retail banking business operating income was **RMB 856.8 million**, accounting for **31.5%** of total operating income, a year-on-year decrease of **15.9%**[116](index=116&type=chunk)[117](index=117&type=chunk) - As of June 30, 2025, total retail loans were **RMB 56,081.8 million**, and total retail deposits were **RMB 232,393.8 million**[116](index=116&type=chunk) - Cumulative debit card issuance was approximately **8.9 million** cards, credit card issuance was **1,022,300** cards, and acquiring business merchants reached **220,000**[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Total sales of retail wealth management products were **RMB 16,789.65 million**, agency insurance sales were **RMB 103.29 million**, and agency wealth management sales were **RMB 11,253.41 million**[128](index=128&type=chunk)[129](index=129&type=chunk) [Financial Markets Business](index=46&type=section&id=Financial%20Markets%20Business) Financial markets business generated **RMB 747.1 million** in H1 2025, **27.5%** of total income, up **6.7%**, involving money market, investment, and wealth management, with optimized strategies enhancing returns - Financial markets business operating income was **RMB 747.1 million**, accounting for **27.5%** of total operating income, a year-on-year increase of **6.7%**[132](index=132&type=chunk)[133](index=133&type=chunk) - Net interest income significantly increased by **59.3%** year-on-year to **RMB 500.5 million**, but net trading gains decreased by **68.8%**[133](index=133&type=chunk) - Total investment securities and other financial assets increased by **3.3%** to **RMB 141,968.7 million**, with a significant increase in the proportion of financial assets measured at fair value through profit or loss[14

[Company Information](index=3&type=section&id=Company%20Information) This section details the company's key personnel, board committees, and administrative information, noting recent changes in directorships [Executive Directors](index=4&type=section&id=Executive%20Directors) This section lists the company's executive directors, noting Ms. Li Zhiying's resignation during the reporting period - Ms. Li Zhiying resigned as Executive Director on June 30, 2025[10](index=10&type=chunk) [Non-Executive Director](index=4&type=section&id=Non-Executive%20Director) This section lists the company's non-executive directors, with Mr. Chen Zongxian serving as Chairman - Mr. Chen Zongxian serves as Non-Executive Director and Chairman[9](index=9&type=chunk)[10](index=10&type=chunk) [Independent Non-Executive Directors](index=4&type=section&id=Independent%20Non-Executive%20Directors) This section lists the company's independent non-executive directors, noting Ms. Tam Hon Shan's resignation and Mr. Wu Zhou's appointment during the reporting period - Ms. Tam Hon Shan resigned as Independent Non-Executive Director on May 21, 2025[10](index=10&type=chunk) - Mr. Wu Zhou was appointed as Independent Non-Executive Director on August 20, 2025[10](index=10&type=chunk) [Company Secretary](index=4&type=section&id=Company%20Secretary) This section lists Mr. Cai Benli as the company's Company Secretary - Mr. Cai Benli serves as Company Secretary[9](index=9&type=chunk)[10](index=10&type=chunk) [Authorised Representatives](index=4&type=section&id=Authorised%20Representatives) This section lists Ms. Liang Wei and Mr. Cai Benli as the company's authorised representatives - Ms. Liang Wei and Mr. Cai Benli serve as Authorised Representatives[9](index=9&type=chunk)[10](index=10&type=chunk) [Board Committees](index=4&type=section&id=Board%20Committees) The Board has an Audit Committee, Remuneration Committee, and Nomination Committee, with some changes in members and chairpersons during the reporting period [Audit Committee](index=4&type=section&id=Audit%20Committee) The Audit Committee experienced a change in its chairman during the reporting period - Ms. Tam Hon Shan resigned as Chairman of the Audit Committee on May 21, 2025, and Mr. Wu Zhou was appointed as Chairman on August 20, 2025[9](index=9&type=chunk)[10](index=10&type=chunk) [Remuneration Committee](index=4&type=section&id=Remuneration%20Committee) The Remuneration Committee experienced a change in its membership during the reporting period - Ms. Tam Hon Shan resigned as a member of the Remuneration Committee on May 21, 2025, and Mr. Wu Zhou was appointed as a member on August 20, 2025[9](index=9&type=chunk)[10](index=10&type=chunk) [Nomination Committee](index=5&type=section&id=Nomination%20Committee) The Nomination Committee experienced a change in its membership during the reporting period - Ms. Tam Hon Shan resigned as a member of the Nomination Committee on May 21, 2025, and Mr. Wu Zhou was appointed as a member on August 20, 2025[11](index=11&type=chunk) [Registered Office](index=5&type=section&id=Registered%20Office) This section provides the company's registered office address in the Cayman Islands - The registered office is located in the Cayman Islands[11](index=11&type=chunk) [Principal Place of Business in the PRC](index=5&type=section&id=Principal%20Place%20of%20Business%20in%20the%20PRC) This section provides the company's principal place of business address in Guangzhou, China - The principal place of business in the PRC is located at Room 601, Fuli Yingxin Building, No. 28 Huaxia Road, Zhujiang New Town, Tianhe District, Guangzhou, Guangdong Province, China[11](index=11&type=chunk)[12](index=12&type=chunk) [Principal Place of Business in Hong Kong](index=5&type=section&id=Principal%20Place%20of%20Business%20in%20Hong%20Kong) This section provides the company's principal place of business address in Hong Kong - The principal place of business in Hong Kong is located at Room 1701, 17/F, Wai Fung Centre, 664 Nathan Road, Mong Kok, Kowloon[12](index=12&type=chunk)[13](index=13&type=chunk) [Principal Share Registrar and Transfer Office in the Cayman Islands](index=5&type=section&id=Principal%20Share%20Registrar%20and%20Transfer%20Office%20in%20the%20Cayman%20Islands) This section provides information on the company's principal share registrar and transfer office in the Cayman Islands - The Principal Share Registrar and Transfer Office in the Cayman Islands is Ogier Global (Cayman) Limited[12](index=12&type=chunk)[13](index=13&type=chunk) [Hong Kong Branch Share Registrar and Transfer Office](index=6&type=section&id=Hong%20Kong%20Branch%20Share%20Registrar%20and%20Transfer%20Office) This section provides information on the company's Hong Kong branch share registrar and transfer office - The Hong Kong Branch Share Registrar and Transfer Office is Boardroom Share Registrars (HK) Limited[14](index=14&type=chunk) [Principal Bankers](index=6&type=section&id=Principal%20Bankers) This section lists the company's principal bankers - Principal bankers include Bank of China, Agricultural Bank of China, and Wing Lung Bank[14](index=14&type=chunk) [Company's Website](index=6&type=section&id=Company's%20Website) This section provides the company's official website address - The company's website is http://www.iconspace.com/[14](index=14&type=chunk) [Listing Information](index=6&type=section&id=Listing%20Information) This section provides information on the company's listing venue, stock code, and board lot size - The company is listed on GEM of the Stock Exchange, with stock code **8500** and board lot size of **10,000 shares**[14](index=14&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) This section presents key financial performance indicators for the six months ended June 30, 2025, highlighting revenue, gross profit, and net profit trends Financial Highlights for the Six Months Ended June 30, 2025 | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 12,703 | 20,258 | (37.3) | | Gross Profit | 7,225 | 3,271 | 120.9 | | Profit for the Period | 431 | 252 | 71.0 | - In the first half of 2025, creative design, public relations, marketing activities, and other services accounted for **64.0% of total revenue**, traditional offline media advertising services for **33.6%**, and online media advertising services for **2.4%**[16](index=16&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business performance, future outlook, and detailed financial review for the reporting period [Business Review](index=8&type=section&id=Business%20Review) The Group, as an integrated multimedia advertising and marketing service provider, experienced a decline in revenue due to increased market competition and cautious client budgets, but gross profit margin improved. The Group is transforming from a single advertising placement model, actively exploring new business growth points, and has obtained memberships in several industry associations - The Group is an integrated multimedia advertising and marketing service provider based in Guangzhou, China, offering traditional offline media, internet media, and multimedia integrated platform services[17](index=17&type=chunk)[19](index=19&type=chunk) - For the six months ended June 30, 2025, the Group's turnover was approximately **RMB 12.7 million**, a year-on-year decrease of **37.3%** (2024: RMB 20.3 million)[22](index=22&type=chunk)[23](index=23&type=chunk) - The decrease in revenue was primarily due to the decline in traditional advertising business and the lower gross profit margins (averaging below **5%**) of new businesses like new media and trade operations, where only gross profit is recognized as revenue[22](index=22&type=chunk)[23](index=23&type=chunk) - The Group aims to achieve significant revenue contribution from new businesses within 2025 or the first half of 2026[22](index=22&type=chunk)[23](index=23&type=chunk) - The Group was approved as a Vice Chairman Unit and Member Unit of several industry associations during this period, including the Industrial Culture and Tourism Research Center of China Industrial News and the China Advertising Association[18](index=18&type=chunk)[20](index=20&type=chunk) [Prospect](index=10&type=section&id=Prospect) Facing global economic slowdown and domestic demand challenges, the Group will consolidate traditional advertising business and actively expand into full-chain integrated services, particularly in cultural tourism and education, utilizing AI and other technological tools to develop digital cultural and creative products - The UN and World Bank predict a slowdown in global economic growth in 2025, with China's economy growing by **5.3%** in the first half, but still facing complex challenges in the second half, including domestic demand and employment pressure[24](index=24&type=chunk)[26](index=26&type=chunk) - In the advertising and marketing sector, online advertising is the fastest-growing channel, and the integration of new technologies like AI has led to a new advertising industry landscape where algorithms and creativity coexist[25](index=25&type=chunk)[27](index=27&type=chunk) - The Group's business strategy will upgrade from "execution intermediary" to "strategic partner," expanding into cultural tourism projects (e.g., transparent factories, study tour bases) and education industry services[28](index=28&type=chunk)[29](index=29&type=chunk) - The Group plans to leverage AI and other technological tools to independently design digital cultural and creative products, create popular items through its own platforms, and achieve commercialization, collection, and trading of digital products[30](index=30&type=chunk)[34](index=34&type=chunk) [Financial Review](index=12&type=section&id=Financial%20Review) This period saw a decrease in Group revenue, but an increase in gross profit and profit for the period, with a significant improvement in gross profit margin, alongside increased administrative expenses and a shift to net impairment loss recognition [Revenue](index=12&type=section&id=Revenue) This section provides an overview of the Group's revenue performance, detailing the decrease and its primary drivers Revenue Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 12,703 | 20,258 | (37.3) | - The decrease in revenue was primarily due to the decline in traditional advertising business and the lower gross profit margins (e.g., below **5%**) of new businesses like new media and trade operations, where only gross profit is recognized as revenue[31](index=31&type=chunk)[35](index=35&type=chunk) [Gross Profit and Gross Profit Margin](index=12&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) This section presents the Group's gross profit and gross profit margin, highlighting significant improvements during the period Gross Profit and Gross Profit Margin Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 7,225 | 3,271 | 118.0 | | Gross Profit Margin | 56.7% | 16.1% | +40.6 percentage points | [Other Revenue](index=12&type=section&id=Other%20Revenue) This section provides an overview of the Group's other revenue for the reporting period Other Revenue Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Other Revenue | 247 | 84 | 100.0 | [Selling Expenses](index=13&type=section&id=Selling%20Expenses) This section details the Group's selling expenses for the reporting period Selling Expenses Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Selling Expenses | 1,091 | 1,174 | (8.3) | [Administrative Expenses](index=13&type=section&id=Administrative%20Expenses) This section outlines the Group's administrative expenses, noting the increase and its main causes Administrative Expenses Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 3,619 | 2,859 | 24.0 | - The increase in administrative expenses was mainly due to increased intermediary fees for service companies[39](index=39&type=chunk)[45](index=45&type=chunk) [Impairment losses reversed/(recognised) under the expected credit loss model, net](index=13&type=section&id=Impairment%20losses%20reversed%2F(recognised)%20under%20the%20expected%20credit%20loss%20model,%20net) This section details the net impairment losses under the expected credit loss model, noting the shift from reversal to recognition due to collection issues Impairment Losses Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Impairment losses (recognised)/reversed, net | (2,237) | 1,033 | - Net impairment losses of **RMB 2.2 million** were recognized in this period, compared to a reversal of **RMB 1.0 million** in the same period last year, mainly due to collection issues and an increase in accounts receivable balances over one year old[40](index=40&type=chunk)[46](index=46&type=chunk) [Profit for the period](index=13&type=section&id=Profit%20for%20the%20period) This section presents the Group's profit for the period Profit for the Period Overview | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Profit for the Period | 431 | 252 | [Liquidity and Finance Resources](index=13&type=section&id=Liquidity%20and%20Finance%20Resources) As of June 30, 2025, the Group's net current assets and cash and cash equivalents both decreased, and the current ratio slightly declined but remained healthy, with an outstanding fixed-rate bank loan and a low gearing ratio Liquidity Overview | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Net Current Assets | 33,824 | 34,216 | | Cash and Cash Equivalents | 1,003 | 4,070 | | Current Ratio | 2.0 times | 2.4 times | - As of June 30, 2025, the Group had an outstanding fixed-rate bank loan of **RMB 1.5 million**, with a gearing ratio of **4.4%**[49](index=49&type=chunk)[50](index=50&type=chunk) [Fund Raising Activities](index=14&type=section&id=Fund%20Raising%20Activities) The Group conducted fundraising activities in 2024 through placing new shares and a rights issue, with proceeds primarily used for general working capital, event organization, new media operation services, cross-border live streaming e-commerce business development, and strategic cooperation or acquisitions [Placing of New Shares Under General Mandate](index=14&type=section&id=Placing%20of%20New%20Shares%20Under%20General%20Mandate) This section details the placing of new shares under general mandate, including the number of shares, placing price, and utilization of proceeds - The placing was completed on March 15, 2024, with the issuance of **36,000,000 new shares** at a placing price of **HK$0.488 per share**[50](index=50&type=chunk)[51](index=51&type=chunk) Use of Net Proceeds from Placing (as of December 30, 2024) | Purpose | Net Proceeds from Placing (HK$ '000) | Unutilized Balance as of June 30, 2024 (HK$ '000) | Proceeds Utilized as of December 30, 2024 (HK$ '000) | Unutilized Balance as of December 30, 2024 (HK$ '000) | | :--- | :--- | :--- | :--- | :--- | | General Working Capital | 17,392 | 15,202 | 15,202 | – | [Rights Issue](index=15&type=section&id=Rights%20Issue) This section provides details on the rights issue, including net proceeds and their utilization across various business development and operational areas - On August 13, 2024, the net proceeds from the rights issue were approximately **HK$53 million**[53](index=53&type=chunk) Use of Net Proceeds from Rights Issue (as of June 30, 2025) | Purpose | Intended Use of Net Proceeds (HK$ '000) | Amount Utilized as of December 31, 2024 (HK$ '000) | Remaining Balance as of December 31, 2024 (HK$ '000) | Unutilized Net Proceeds with Revised Allocation (HK$ '000) | Remaining Balance of Unutilized Net Proceeds as of December 31, 2024 (HK$ '000) | Proceeds Utilized During the Reporting Period (HK$ '000) | Remaining Balance of Unutilized Net Proceeds as of June 30, 2025 (HK$ '000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Organizing and Coordinating Events, Exhibitions, and Fairs | 19,900 | – | 19,900 | – | 1,800 | 1,800 | – | | Provision of New Media Operation Services | 16,600 | – | 16,600 | – | – | – | – | | Development of Cross-border Live Streaming E-commerce Business | 6,600 | – | 6,600 | – | – | – | – | | Strategic Cooperation or Acquisitions | 6,600 | 6,600 | – | – | – | – | – | | General Working Capital | 3,300 | 1,600 | 1,700 | – | 1,700 | 1,700 | – | | Trading Goods | – | – | – | 37,300 | – | – | – | | Loans to Business Partners in Advertising Business | – | – | – | 4,000 | – | – | – | | Subtotal | 53,000 | 8,200 | 44,800 | 41,300 | 3,500 | 3,500 | – | [Capital Structure](index=16&type=section&id=Capital%20Structure) As of the report date, the company's total issued shares amounted to 432,000,000 shares - As of the date of this report, the company has **432,000,000 issued shares**[56](index=56&type=chunk)[62](index=62&type=chunk) [Pledge of Assets](index=16&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, approximately RMB 7.1 million of the Group's trade receivables were pledged as collateral for bank borrowings, a decrease from the end of 2024 Pledge of Assets Overview | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Pledged Trade Receivables | 7.1 | 12.1 | [Dividend](index=16&type=section&id=Dividend) The Board of Directors resolved not to declare an interim dividend for this period - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025[58](index=58&type=chunk)[64](index=64&type=chunk) [Foreign Exchange Exposure](index=16&type=section&id=Foreign%20Exchange%20Exposure) Each member company within the Group has limited foreign currency exposure, as most transactions are conducted in the same currency as their functional currency - Each member company within the Group has limited foreign currency exposure, as most transactions are conducted in the same currency as their functional currency[59](index=59&type=chunk)[65](index=65&type=chunk) [Significant Investments Held](index=16&type=section&id=Significant%20Investments%20Held) During the reporting period, the Group did not hold any significant investments - During this period, the Group did not hold any significant investments[60](index=60&type=chunk)[66](index=66&type=chunk) [Future Plans for Material Investments and Capital Assets](index=16&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) During the reporting period, the Group had no plans for material investments and capital assets - During this period, the Group had no plans for material investments and capital assets[61](index=61&type=chunk)[67](index=67&type=chunk) [Contingent Liabilities](index=17&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had a potential legal claim and obligation of approximately RMB 4.0 million related to a 2019 documentary sponsorship and content cooperation agreement, which is still under negotiation due to the supplier's incomplete fulfillment of obligations - As of June 30, 2025, the Group had a potential legal claim and obligation of approximately **RMB 4.0 million**, related to a 2019 documentary sponsorship and content cooperation agreement[68](index=68&type=chunk)[70](index=70&type=chunk) - The Group believes the supplier has not fulfilled all performance obligations due to delays in documentary production and failure to broadcast on designated channels, and is currently negotiating with the supplier[68](index=68&type=chunk)[70](index=70&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=17&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries,%20Associates%20and%20Joint%20Ventures) During the reporting period, the Group did not have any material acquisitions or disposals of subsidiaries, associates, and joint ventures - During this period, the Group did not have any material acquisitions or disposals of subsidiaries, associates, and joint ventures[69](index=69&type=chunk)[71](index=71&type=chunk) [Employee and Remuneration Policies](index=18&type=section&id=Employee%20and%20Remuneration%20Policies) As of June 30, 2025, the Group had 30 employees, a decrease from the end of 2024, with remuneration policies based on responsibilities, qualifications, and performance, and key executive remuneration reviewed by the Remuneration Committee Employee Headcount Overview | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Employee Headcount | 30 | 39 | - Employee remuneration is determined based on responsibilities, qualifications, performance, experience, and seniority, and is regularly reviewed[72](index=72&type=chunk)[75](index=75&type=chunk) - Remuneration for key executives is reviewed by the Board's Remuneration Committee based on the Group's performance and individual contributions[73](index=73&type=chunk)[76](index=76&type=chunk) [Event After the Reporting Period](index=19&type=section&id=Event%20After%20the%20Reporting%20Period) No significant events occurred after June 30, 2025, other than those already disclosed - No significant events occurred after June 30, 2025, other than those mentioned above[78](index=78&type=chunk)[79](index=79&type=chunk) [Risks and Hurdles](index=19&type=section&id=Risks%20and%20Hurdles) The Group faces multiple business risks, including unstable advertising resource supply, competition and costs in expanding to online advertising, credit risk from delayed settlement of accounts receivable by clients, and potential reduction in client advertising budgets due to economic slowdown - The Group may not be able to retain or renew existing advertising resource supplies, or acquire new ones, leading to client loss and business decline[80](index=80&type=chunk) - Expansion from traditional advertising to online advertising may face significant competition and additional costs[80](index=80&type=chunk) - Clients may delay settlement of accounts receivable, posing credit risk[80](index=80&type=chunk) - Economic slowdown may lead clients to reduce advertising budgets[80](index=80&type=chunk) [Corporate Governance and Other Information](index=19&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the Group's corporate governance practices, directors' securities transactions, competing interests, share option scheme, and substantial shareholders' interests [Corporate Governance](index=20&type=section&id=Corporate%20Governance) This section describes the Group's corporate governance practices, emphasizing adherence to the principles and provisions of the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules - The company's corporate governance practices are based on the principles and provisions of the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules[81](index=81&type=chunk)[84](index=84&type=chunk) - During the reporting period, the company complied with all provisions of the Corporate Governance Code and will continue to do so[81](index=81&type=chunk)[84](index=84&type=chunk) [Model Code for Securities Transactions by the Directors](index=20&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20the%20Directors) The company has adopted a code of conduct for directors' securities transactions identical to the GEM Listing Rules and regularly reminds directors to comply with blackout period requirements, with all directors confirming compliance during the reporting period - The company has adopted a code of conduct for directors' securities transactions identical to the required standards for dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules[82](index=82&type=chunk)[85](index=85&type=chunk) - All directors confirmed compliance with the required standards for dealings and the code of conduct during the reporting period[83](index=83&type=chunk)[85](index=85&type=chunk) [Competing Interest](index=21&type=section&id=Competing%20Interest) During the reporting period, none of the company's directors, substantial shareholders, or their close associates engaged in any business that competes or may compete with the Group's business, or held any related interests - During the reporting period, none of the company's directors or substantial shareholders or their respective close associates engaged in any business that directly or indirectly competes or may compete with the Group's business, or held any interests in such businesses[86](index=86&type=chunk)[88](index=88&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=21&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the reporting period, neither the company nor any of its subsidiaries redeemed, purchased, or sold any listed securities, nor issued or granted any convertible securities, options, warrants, or similar rights - During the reporting period, the company did not redeem its listed securities, nor did the company or any of its subsidiaries purchase or sell any such securities[87](index=87&type=chunk)[89](index=89&type=chunk) - Neither the company nor any of its subsidiaries issued or granted any convertible securities, options, warrants, or similar rights during this period[87](index=87&type=chunk)[89](index=89&type=chunk) [Share Option Scheme](index=22&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme in 2019, effective from 2020, with no outstanding share options or activity during the reporting period, and a total of 18,000,000 shares available for issue - The company conditionally adopted a share option scheme on December 11, 2019, effective for a period of **10 years** from January 14, 2020[90](index=90&type=chunk)[92](index=92&type=chunk) - As of June 30, 2025, there were no outstanding share options, and no share options were granted, exercised, cancelled, or lapsed during this period[91](index=91&type=chunk)[92](index=92&type=chunk) - As of the date of this report, the total number of shares available for issue under the share option scheme is **18,000,000 shares**, representing **4.17%** of the company's issued share capital as of this report date[91](index=91&type=chunk)[92](index=92&type=chunk) [Directors' and Chief Executives' Interests and Short Positions in Shares, Underlying Shares and Debentures](index=23&type=section&id=Directors'%20and%20Chief%20Executives'%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) As of June 30, 2025, none of the company's directors and chief executives had any disclosable interests or short positions in the shares, underlying shares, and debentures of the company and its associated corporations - As of June 30, 2025, none of the company's directors and chief executives had any interests or short positions in the shares, underlying shares, and debentures of the company and its associated corporations that are required to be notified to the company and the Stock Exchange under Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance[93](index=93&type=chunk)[94](index=94&type=chunk) [Substantial Shareholders' Interests in Shares, Underlying Shares and Debentures](index=24&type=section&id=Substantial%20Shareholders'%20Interests%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) As of June 30, 2025, several entities were disclosed as substantial shareholders, holding interests or short positions in the company's shares, with Baocheng Holdings Limited holding the highest percentage Substantial Shareholders' Shareholding Overview (as of June 30, 2025) | Director Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | | Shining Icon | Beneficial Owner | 45,000,000 shares (L) | 10.42% | | Capital Link Financial Holdings Group Limited | Beneficial Owner | 42,750,000 shares (L) | 19.79% | | Focus Wonder Limited | Beneficial Owner | 33,750,000 shares (L) | 7.81% | | China Huishang Entrepreneurs Association International Group Limited | Beneficial Owner | 20,000,000 shares (L) | 9.26% | | Master Connection Limited | Beneficial Owner | 13,500,000 shares (L) | 3.13% | | Maofu Trading Co., Ltd. | Beneficial Owner | 31,383,000 | 7.26% | | Baocheng Holdings Limited | Beneficial Owner | 56,334,000 | 13.04% | - Shining Icon is wholly owned by Mr. Zhou Zitao, who is deemed to have an interest in the shares held by Shining Icon[99](index=99&type=chunk) - Capital Link Financial Holdings Group Limited is listed on The Stock Exchange of Hong Kong Limited (Stock Code: **204**)[99](index=99&type=chunk) [Audit Committee and Review of Interim Results](index=26&type=section&id=Audit%20Committee%20and%20Review%20of%20Interim%20Results) The Audit Committee, composed of three independent non-executive directors, is responsible for reviewing the Group's financial reporting process, risk management, and internal control systems, and has reviewed the unaudited consolidated results for this period, finding them compliant - The Audit Committee comprises three independent non-executive directors: Mr. Tian Tao, Mr. Liu Lihan, and Mr. Wu Zhou[106](index=106&type=chunk)[107](index=107&type=chunk) - The Audit Committee, together with management, has reviewed the accounting policies and practices adopted by the Group and discussed the company's internal controls and financial reporting matters, including the review of the Group's unaudited consolidated results for this period[106](index=106&type=chunk)[107](index=107&type=chunk) - The Audit Committee believes that the preparation of the results complies with applicable accounting standards, GEM Listing Rules, and legal requirements, and that adequate disclosures have been made[106](index=106&type=chunk)[107](index=107&type=chunk) [Consolidated Statement of Profit or Loss](index=27&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) This section presents the Group's consolidated statement of profit or loss, highlighting revenue, cost of sales, gross profit, and net profit for the reporting period Key Data from Consolidated Statement of Profit or Loss | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Revenue | 12,703 | 20,258 | | Cost of Sales | (5,478) | (16,987) | | Gross Profit | 7,225 | 3,271 | | Other Revenue | 247 | 84 | | Selling Expenses | (1,091) | (1,174) | | Administrative Expenses | (3,619) | (2,859) | | Impairment losses (recognised)/reversed, net | (2,237) | 1,033 | | Operating Profit | 525 | 355 | | Finance Costs | (94) | (103) | | Profit Before Taxation | 431 | 252 | | Profit for the Period | 431 | 252 | | Basic Earnings Per Share | 0.001 | 0.001 | | Diluted Earnings Per Share | 0.001 | 0.001 | - Revenue decreased by **37.3%** year-on-year, but gross profit increased by **120.9%** year-on-year, and profit for the period increased by **71.0%** year-on-year[109](index=109&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=28&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section presents the Group's consolidated statement of profit or loss and other comprehensive income, detailing profit for the period and the impact of exchange differences Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Profit for the Period | 431 | 252 | | Exchange differences on translation of financial statements of entities with non-RMB functional currencies | (970) | 22 | | Total comprehensive (expense)/income for the period attributable to equity holders of the Company | (539) | 274 | - In the first half of 2025, exchange differences led to a shift from comprehensive income to comprehensive expense[111](index=111&type=chunk) [Consolidated Statement of Financial Position](index=29&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This section presents the Group's consolidated statement of financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Key Data from Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 505 | 652 | | Total Non-Current Assets | 505 | 652 | | Trade Receivables | 17,108 | 2,316 | | Other Receivables, Deposits and Prepayments | 48,006 | 51,447 | | Cash and Cash Equivalents | 1,003 | 4,070 | | Total Current Assets | 66,124 | 57,840 | | Trade and Other Payables | 11,802 | 11,079 | | Contract Liabilities | 16,290 | 5,249 | | Bank Loans | 1,500 | 4,500 | | Total Current Liabilities | 32,300 | 23,624 | | Net Current Assets | 33,824 | 34,216 | | Net Assets | 34,329 | 34,868 | | Share Capital | 3,906 | 3,906 | | Reserves | 30,423 | 30,962 | | Total Equity | 34,329 | 34,868 | - Trade receivables significantly increased from **RMB 2,316 thousand** at the end of 2024 to **RMB 17,108 thousand** as of June 30, 2025[113](index=113&type=chunk) - Contract liabilities significantly increased from **RMB 5,249 thousand** at the end of 2024 to **RMB 16,290 thousand** as of June 30, 2025[113](index=113&type=chunk) [Consolidated Statement of Changes in Equity](index=31&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the Group's consolidated statement of changes in equity, detailing movements in share capital, reserves, and accumulated losses for the reporting period Key Data from Consolidated Statement of Changes in Equity | Indicator | Share Capital (RMB '000) | Share Premium (RMB '000) | Other Reserves (RMB '000) | Statutory Reserve (RMB '000) | Exchange Reserve (RMB '000) | Accumulated Losses (RMB '000) | Total (RMB '000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of January 1, 2025 | 3,906 | 154,874 | (11,907) | 8,407 | 1,622 | (122,034) | 34,868 | | Profit for the Period | – | – | – | – | – | 431 | 431 | | Other Comprehensive Expense | – | – | – | – | (970) | – | (970) | | Total Comprehensive (Expense)/Income | – | – | – | – | (970) | 431 | (539) | | Balance as of June 30, 2025 | 3,906 | 154,874 | (11,907) | 8,407 | 652 | (121,603) | 34,329 | - In the first half of 2025, exchange reserve decreased from **RMB 1,622 thousand** to **RMB 652 thousand**, resulting in a total comprehensive expense of **RMB 539 thousand**[117](index=117&type=chunk) [Condensed Consolidated Cash Flow Statement](index=32&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) This section presents the Group's condensed consolidated cash flow statement, detailing cash flows from operating, investing, and financing activities for the reporting period Key Data from Condensed Consolidated Cash Flow Statement | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Net cash used in operating activities | 1,019 | (9,842) | | Net cash used in investing activities | (28) | (39) | | Net cash (used in)/generated from financing activities | (3,088) | 13,006 | | Net (decrease)/increase in cash and cash equivalents | (2,097) | 3,125 | | Cash and cash equivalents at January 1 | 4,070 | 13,667 | | Effect of foreign exchange rate changes | (970) | 22 | | Cash and cash equivalents at June 30 | 1,003 | 16,814 | - Cash flow from operating activities shifted from a net outflow of **RMB 9,842 thousand** in the first half of 2024 to a net inflow of **RMB 1,019 thousand** in the first half of 2025[119](index=119&type=chunk) - Cash flow from financing activities shifted from a net inflow of **RMB 13,006 thousand** in the first half of 2024 to a net outflow of **RMB 3,088 thousand** in the first half of 2025, mainly due to repayment of bank loans and reduced proceeds from share placement[120](index=120&type=chunk) [Notes to the Unaudited Interim Financial Report](index=34&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed notes to the unaudited interim financial report, covering significant accounting policies, revenue and segment information, profit before taxation, income tax, earnings per share, and various financial balances [Significant Accounting Policies](index=35&type=section&id=Significant%20Accounting%20Policies) This section outlines the significant accounting policies adopted in the interim financial report, noting its preparation in accordance with HKAS 34 and consistency with prior annual statements, with no material impact from recent accounting policy changes [Basis of preparation](index=35&type=section&id=Basis%20of%20preparation) This section details the basis of preparation for the interim financial report, adhering to GEM Listing Rules and HKAS 34 - This interim financial report has been prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants[121](index=121&type=chunk)[124](index=124&type=chunk) [Changes in accounting policies](index=36&type=section&id=Changes%20in%20accounting%20policies) This section outlines changes in accounting policies, noting consistency with prior annual statements and no material impact from recent HKAS 21 (Revised) developments - Except for changes in accounting policies expected to be reflected in the 2025 annual financial statements, the interim financial report has been prepared in accordance with the same accounting policies adopted in the 2024 annual financial statements[122](index=122&type=chunk)[125](index=125&type=chunk) - Developments such as the lack of exchangeability under HKAS 21 (Revised) had no significant impact on the manner in which the Group's results and financial position for the current or prior periods are prepared or presented in this interim financial report[128](index=128&type=chunk)[130](index=130&type=chunk) [Revenue and Segment Information](index=37&type=section&id=Revenue%20and%20Segment%20Information) This section details the Group's revenue by service line and segment, providing disaggregated revenue and Adjusted EBITDA for each reportable segment [Revenue](index=37&type=section&id=Revenue_Note) This section provides a detailed breakdown of the Group's revenue from customer contracts by major service lines - The Group's principal activities are providing traditional offline media advertising, online media advertising, creative design, public relations, marketing activities, and other services[129](index=129&type=chunk)[131](index=131&type=chunk) Revenue from Customer Contracts by Major Service Lines | Service Line | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Traditional offline media advertising services – as principal | 4,269 | 5,855 | | Traditional offline media advertising services – as agent | 7 | – | | Online media advertising services – as principal | 303 | 2,295 | | Online media advertising services – as agent | – | 1 | | Creative design, public relations, marketing activities and other services – as principal | 8,071 | 12,107 | | Creative design, public relations, marketing activities and other services – as agent | 53 | – | | **Total** | **12,703** | **20,258** | [Segment information](index=39&type=section&id=Segment%20information) This section presents the Group's reportable segment information, including revenue and Adjusted EBITDA for each business line - The Group's reportable segments are categorized by business line, including traditional offline media advertising services, online media advertising services, and creative design, public relations, marketing activities, and other services[135](index=135&type=chunk)[137](index=137&type=chunk) - The measure used for reportable segment profit is "Adjusted EBITDA" (Adjusted Earnings Before Finance Costs, Interest Income, Tax, and Depreciation)[142](index=142&type=chunk)[143](index=143&type=chunk) Reportable Segment Revenue and Profit (as of June 30, 2025) | Segment | Revenue (RMB '000) | Profit (Adjusted EBITDA) (RMB '000) | | :--- | :--- | :--- | | Traditional offline media advertising services | 4,276 | 2,730 | | Online media advertising services | 303 | 194 | | Creative design, public relations, marketing activities and other services | 8,124 | 5,201 | | **Total** | **12,703** | **8,125** | Reportable Segment Revenue and Profit (as of June 30, 2024) | Segment | Revenue (RMB '000) | Profit (Adjusted EBITDA) (RMB '000) | | :--- | :--- | :--- | | Traditional offline media advertising services | 5,855 | 2,786 | | Online media advertising services | 2,296 | 348 | | Creative design, public relations, marketing activities and other services | 12,107 | 1,656 | | **Total** | **20,258** | **4,790** | [Profit Before Taxation](index=45&type=section&id=Profit%20Before%20Taxation) This section details the components of profit before taxation, including finance costs, staff costs, and other operating expenses [Finance costs](index=45&type=section&id=Finance%20costs) This section provides an overview of the Group's finance costs, including interest on bank loans and bank charges Finance Costs Overview | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Interest on bank loans | 88 | 68 | | Interest on lease liabilities | – | 21 | | Bank charges | 6 | 14 | | **Total** | **94** | **103** | [Staff costs (including directors' emoluments)](index=46&type=section&id=Staff%20costs%20(including%20directors'%20emoluments)) This section details the Group's staff costs, including salaries, wages, bonuses, benefits, and retirement plan contributions Staff Costs Overview | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Salaries, wages, bonuses and benefits | 2,842 | 3,833 | | Contributions to retirement benefit schemes | 303 | 392 | | **Total** | **3,145** | **4,225** | [Other items](index=47&type=section&id=Other%20items) This section presents an overview of other items affecting profit before taxation, such as media costs, marketing expenses, depreciation, and impairment losses Other Items Overview | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Media costs | 3,038 | 6,053 | | Public relations, marketing activities and other services costs | 1,538 | 9,415 | | Depreciation expense – property, plant and equipment | 163 | – | | Depreciation expense – right-of-use assets | – | – | | Impairment losses (recognised)/(reversed) – trade receivables | 2,237 | (933) | | Impairment losses (recognised)/(reversed) – other receivables | – | (100) | [Income Tax](index=48&type=section&id=Income%20Tax) This section details the Group's income tax for the reporting period, which was zero for deferred tax Income Tax Overview | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Deferred tax – arising from temporary differences | – | – | [Earnings Per Share](index=48&type=section&id=Earnings%20Per%20Share) This section details the Group's basic and diluted earnings per share, which remained consistent with the prior year, with no potentially dilutive ordinary shares issued [Basic earnings per share](index=48&type=section&id=Basic%20earnings%20per%20share) This section explains the calculation of basic earnings per share based on profit attributable to shareholders and the weighted average number of ordinary shares - Basic earnings per share are calculated based on the profit attributable to ordinary equity holders of the Company of **RMB 0.4 million** for the period (2024: RMB 0.3 million) and the weighted average number of ordinary shares outstanding of **432,000,000 shares** for the period (2024: 201,000,000 shares)[156](index=156&type=chunk)[157](index=157&type=chunk) Weighted Average Number of Ordinary Shares | Item | 2025 | 2024 | | :--- | :--- | :--- | | Ordinary shares outstanding at January 1 | 432,000,000 | 180,000,000 | | Effect of placing of new shares on March 15, 2024 | – | 21,000,000 | | Weighted average number of ordinary shares at June 30 | 432,000,000 | 201,000,000 | [Diluted earnings per share](index=49&type=section&id=Diluted%20earnings%20per%20share) This section confirms that no potentially dilutive ordinary shares were issued during the reporting period, resulting in no difference between basic and diluted EPS - No potentially dilutive ordinary shares were issued for the six months ended June 30, 2025 and 2024[159](index=159&type=chunk)[160](index=160&type=chunk) [Trade Receivables](index=49&type=section&id=Trade%20Receivables) This section provides an ageing analysis of the Group's trade receivables, highlighting a significant increase and the proportion due within one month Ageing Analysis of Trade Receivables (net of loss allowance) | Ageing | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Within one month | 16,121 | 598 | | One to three months | 266 | 368 | | Three to twelve months | 721 | 1,350 | | **Total** | **17,108** | **2,316** | - Total trade receivables significantly increased from **RMB 2,316 thousand** at the end of 2024 to **RMB 17,108 thousand** as of June 30, 2025[162](index=162&type=chunk) [Other Receivables, Deposits and Prepayments](index=50&type=section&id=Other%20Receivables,%20Deposits%20and%20Prepayments) This section details the Group's other receivables, deposits, and prepayments, identifying major components and recognized impairment losses Other Receivables, Deposits and Prepayments Overview | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Prepayments for media costs | 5,156 | 6,949 | | Prepayments to media service providers (net of impairment losses) | – | – | | Prepayments for commodity trading to suppliers (net of impairment losses) | 34,619 | 34,619 | | Deposits paid for acquisition of investments (net of impairment losses) | 6,159 | 6,159 | | Others (net of impairment losses) | 2,072 | 3,720 | | Loan receivables (net of impairment losses) | – | – | | **Total** | **48,006** | **51,447** | - Prepayments to media service providers and loan receivables have been fully provided for impairment losses[165](index=165&type=chunk) [Trade and Other Payables](index=51&type=section&id=Trade%20and%20Other%20Payables) This section provides an ageing analysis of trade payables and an overview of other payables, detailing their composition and changes Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Within one month | 710 | 816 | | One to three months | 3,276 | 1,595 | | Three to twelve months | – | 33 | | Over twelve months | 1,173 | 1,735 | | **Total Trade Payables** | **5,159** | **4,179** | Other Payables Overview | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Other taxes payable | – | 89 | | Accrued salaries | 612 | 547 | | Advances from customers | 4,000 | 4,000 | | Others | 2,031 | 2,264 | | **Total** | **11,802** | **11,079** | [Bank Loans](index=52&type=section&id=Bank%20Loans) This section details the Group's bank loan balance, guarantees, pledged assets, and compliance with loan covenants, noting all loans are repayable within one year Bank Loans Overview | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Bank Loans | 1.5 | 4.5 | | Pledged Receivables | 7.1 | 12.1 | - Bank loans are guaranteed by the Group's major shareholder and pledged with receivables[169](index=169&type=chunk) - As of June 30, 2025, the Group had not breached any covenants related to drawn loans[170](index=170&type=chunk)[171](index=171&type=chunk) - Bank loans are repayable within one year[172](index=172&type=chunk) [Capital, Reserves and Dividends](index=53&type=section&id=Capital,%20Reserves%20and%20Dividends) This section outlines the Group's share capital structure, dividend policy, and capital management objectives, emphasizing continuous operation and balanced shareholder returns [Share capital](index=53&type=section&id=Share%20capital) This section provides an overview of the company's authorized, issued, and fully paid share capital Share Capital Overview | Item | Number of Shares (par value HK$0.1 per share) | Par Value (HK$) | | :--- | :--- | :--- | | Authorized share capital (December 31, 2024 and June 30, 2025) | 2,000,000,000 | 20,000,000 | | Issued and fully paid share capital (December 31, 2024 and January 1, 2025) | 432,000,000 | 4,320,000 | | Issued and fully paid share capital (June 30, 2025) | 432,000,000 | 4,320,000 | [Dividends](index=53&type=section&id=Dividends_Note) This section confirms that the Board did not recommend an interim dividend for the reporting period - The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[175](index=175&type=chunk)[176](index=176&type=chunk) [Capital management](index=54&type=section&id=Capital%20management) This section describes the Group's capital management objectives, focusing on safeguarding continuous operation and balancing shareholder returns with a sound capital position - The Group's primary objective in managing capital is to safeguard its ability to continue as a going concern, provide returns for shareholders, and benefits for other stakeholders[177](index=177&type=chunk)[181](index=181&type=chunk) - The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowing and the benefits and security afforded by a sound capital position[178](index=178&type=chunk)[179](index=179&type=chunk) [Material Related Party Transactions](index=55&type=section&id=Material%20Related%20Party%20Transactions) This section discloses the Group's material transactions with related parties, including key management personnel compensation, provision of media services, procurement of media resources, and office leases [Key management personnel compensation](index=55&type=section&id=Key%20management%20personnel%20compensation) This section provides an overview of compensation for key management personnel, including salaries, benefits, and retirement plan contributions Key Management Personnel Compensation Overview | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Salaries and other benefits | 623 | 674 | | Defined contribution retirement plans | 67 | 65 | | **Total** | **690** | **739** | [Other material related parties transactions and balances](index=56&type=section&id=Other%20material%20related%20parties%20transactions%20and%20balances) This section details other material related party transactions and balances, including media services, resource purchases, office leases, and bank loan guarantees - The Group provided media services to related parties, with service revenue of **RMB 0.4 million** in the first half of 2025 (2024: RMB 1.7 million) and trade receivables of **RMB 1.4 million** (2024: RMB 1.8 million)[185](index=185&type=chunk)[186](index=186&type=chunk) - The Group purchased media resources from related parties, with purchase amounts of **RMB 0.5 million** in the first half of 2025 (2024: RMB 1.2 million) and payables of **RMB 0.9 million** (2024: RMB 0.5 million)[185](index=185&type=chunk)[186](index=186&type=chunk) - The Group leased offices from related parties, with rent and management fees of **RMB 0.3 million** in the first half of 2025 (2024: RMB 0.9 million) and deposits receivable of **RMB 0.1 million** (2024: RMB 0.3 million)[186](index=186&type=chunk)[187](index=187&type=chunk) - As of June 30, 2025, bank loans were guaranteed by the Company and the Group's major shareholders[187](index=187&type=chunk)

[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides essential corporate details, including governance, key personnel, and identifying information [Company Basic Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E4%BF%A1%E6%81%AF) This section provides an overview of Everest Medicines' fundamental details, including governance, key personnel, and corporate identifiers - Joint Company Secretary Ms. Liu Xuxin resigned on **April 15, 2025**, with Mr. Yang Jinghang appointed concurrently[4](index=4&type=chunk) - The company's auditor is **Ernst & Young**[4](index=4&type=chunk) - The company's stock code is **1952**, and its website is **www.everestmedicines.com**[5](index=5&type=chunk) [Business Summary](index=5&type=section&id=%E6%A5%AD%E5%8B%99%E6%91%98%E8%A6%81) This section highlights the company's strategic advancements, significant sales growth, and pipeline progress across key therapeutic areas [Overall Business Overview](index=5&type=section&id=%E6%95%B4%E4%BD%93%E4%B8%9A%E5%8B%99%E6%A6%82%E8%A7%88) The company significantly grew sales revenue and advanced its innovative pipeline by deepening its "dual-driver" strategy and strengthening its Asian market presence - The company deepened its **"dual-driver" strategy**, achieving significant sales revenue growth and smooth progress in its innovative product pipeline[6](index=6&type=chunk) - Three commercialized products cover kidney, infectious, and autoimmune diseases, with estimated combined peak sales revenue exceeding **RMB 10 billion**[6](index=6&type=chunk) - Nefecon® is included in the **NRDL** and received **full NMPA approval**, leading to rapid sales growth[6](index=6&type=chunk) [Renal Pipeline](index=5&type=section&id=%E8%85%8E%E7%97%85%E7%AE%A1%E7%B7%9A) Nefecon®, a key product for IgA nephropathy, received full NMPA approval and NRDL inclusion, enhancing patient access, while EVER001 showed positive efficacy and safety in its Phase 1b/2a trial for primary membranous nephropathy - Nefecon® implemented new medical insurance pricing in **January 2025**, enhancing patient accessibility[8](index=8&type=chunk) - In **May 2025**, Nefecon® received **full NMPA approval**, removing proteinuria restrictions and becoming the first and only fully approved causal treatment for IgA nephropathy[9](index=9&type=chunk) - EVER001 (sibrotuzumab) Phase 1b/2a trial showed anti-PLA2R autoantibody reduction of approximately **93%** at 24 weeks, significant proteinuria decrease, stable renal function, and good safety[12](index=12&type=chunk) - Nefecon® production expansion approval will boost capacity to meet growing clinical demand in China and Asia more efficiently[13](index=13&type=chunk) [Infectious Disease Pipeline](index=8&type=section&id=%E6%84%9F%E6%9F%93%E6%80%A7%E7%96%BE%E7%97%85%E7%AE%A1%E7%B7%9A) The in vitro susceptibility testing standard for Eravacycline (Yijia®) was published, guiding clinical use, while EVER001's Phase 1b/2a trial reaffirmed positive efficacy and safety in primary membranous nephropathy - In **June 2025**, the "Eravacycline In Vitro Drug Susceptibility Testing Guidelines (2025)" were published, standardizing testing and interpretation[15](index=15&type=chunk) - EVER001 Phase 1b/2a interim data showed anti-PLA2R autoantibody reduction maintained above **93%**, proteinuria levels decreased to **76.7%** and **80.6%** at 36 weeks, and high immunological complete remission rates[16](index=16&type=chunk) [Autoimmune Disease Pipeline](index=9&type=section&id=%E8%87%AA%E8%BA%AB%E5%85%8D%E7%96%AB%E6%80%A7%E7%96%BE%E7%97%85%E7%AE%A1%E7%B7%9A) Etrasimod for ulcerative colitis demonstrated long-term safety and significant clinical benefits in global 4-year follow-up and Asian Phase III studies, gaining approval in Hong Kong, acceptance in Korea and Taiwan, and initiating local production - Etrasimod's global 4-year safety follow-up data confirmed good long-term safety and tolerability[19](index=19&type=chunk) - Etrasimod's Asian multi-center Phase III study showed significant clinical and endoscopic benefits, with consistent safety profiles[20](index=20&type=chunk) - Etrasimod Jiaxing factory production project launched, with an estimated annual capacity of **50 million tablets** upon operation[20](index=20&type=chunk) - In **April 2025**, Etrasimod received formal marketing approval from the Hong Kong Department of Health, China[20](index=20&type=chunk) - Etrasimod was strongly recommended in the **"2025 ACG Clinical Guidelines: Adult Ulcerative Colitis"** for moderate to severe active UC induction and maintenance[20](index=20&type=chunk) [mRNA Technology Platform](index=10&type=section&id=mRNA%E6%8A%80%E8%A1%93%E5%B9%B3%E5%8F%B0) The company established a leading AI+mRNA platform, advancing mRNA therapeutic cancer vaccines and self-generating CAR-T projects, with EVM16 in clinical trials, EVM14 gaining US FDA IND approval and China NMPA acceptance, and the CAR-T platform showing preclinical efficacy - The company developed an **AI-driven "Miaosuan" neoantigen algorithm**, advancing mRNA therapeutic cancer vaccines and self-generating CAR-T platforms[21](index=21&type=chunk) - Personalized therapeutic cancer vaccine **EVM16** completed first patient dosing and has dosed **nine patients** at Peking University Cancer Hospital[7](index=7&type=chunk)[23](index=23&type=chunk) - Universal therapeutic cancer vaccine **EVM14** IND application received **US FDA approval** and **China NMPA acceptance**, with clinical sample production completed[7](index=7&type=chunk)[23](index=23&type=chunk) - The self-generating CAR-T platform was validated in humanized mouse and non-human primate models, offering off-the-shelf, lymphodepletion-free, and dose-controllable advantages[21](index=21&type=chunk) [Corporate Development](index=11&type=section&id=%E5%85%AC%E5%8F%B8%E7%99%BC%E5%B1%95) The company removed its 'B' share designation, reflecting enhanced R&D and commercialization, successfully raised approximately HKD 1.55 billion for pipeline and commercialization acceleration, and became I-Mab's largest shareholder with a 16.1% stake, deepening its oncology immunotherapy strategy - In **April 2025**, the "B" designation was removed from Everest Medicines' stock short name, reflecting enhanced R&D, commercialization, and overall business fundamentals[28](index=28&type=chunk) - In **July 2025**, the company raised approximately **HKD 1.55 billion** through a placing of **22,561,000 shares**, with several times oversubscription[28](index=28&type=chunk) - In **August 2025**, the company strategically increased its stake in I-Mab to approximately **16.1%**, becoming its largest shareholder[28](index=28&type=chunk) [Financial Highlights](index=12&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section presents key financial performance indicators, including revenue growth, margin changes, and adjusted loss, based on IFRS and non-IFRS measures [IFRS Figures](index=12&type=section&id=%E5%9C%8B%E9%9A%9B%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87%E6%95%B8%E5%AD%97) For the six months ended June 30, 2025, revenue significantly increased by 48.0% to RMB 446.1 million, driven by Nefecon® and Yijia® growth, while gross margin decreased due to Nefecon®'s NRDL price adjustment, R&D expenses were optimized, and distribution and selling expenses rose with market expansion 2025 H1 Key Financial Data (IFRS) | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 446.1 | 301.5 | 48.0% | | Gross Margin | 67.1% | 76.6% | -9.5% | | Gross Margin (excl. intangible asset amortization) | 76.4% | 83.0% | -6.6% | | R&D Expenses | 195.2 | 253.2 | -22.9% | | G&A Expenses | 110.8 | 87.0 | 27.4% | | Distribution and Selling Expenses | 314.7 | 200.4 | 57.0% | - Revenue growth was primarily driven by the sustained growth of **Nefecon®** and **Yijia®** in commercialized markets[30](index=30&type=chunk) - Gross margin decreased primarily due to **Nefecon®'s NRDL price reduction** in mainland China and optimized product costs[32](index=32&type=chunk) [Non-IFRS Measures](index=13&type=section&id=%E9%9D%9E%E5%9C%8B%E9%9A%9B%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87%E8%A8%88%E9%87%8F) For the six months ended June 30, 2025, adjusted loss significantly narrowed to RMB 146.9 million, and loss for the period substantially decreased to RMB 249.8 million, driven by strong product sales, improved operational efficiency, and the one-time impact of mRNA COVID-19 vaccine-related intangible asset impairment loss in the prior year 2025 H1 Non-IFRS Key Financial Data | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (RMB million) | | :--- | :--- | :--- | :--- | | Adjusted Loss for the Period | (146.9) | (212.6) | 65.7 (narrowed) | | Loss for the Period | (249.8) | (632.4) | 382.6 (decreased) | - Total operating expenses as a percentage of sales decreased by **40.1 percentage points**, reflecting improved business and operational efficiency and focused resource allocation[36](index=36&type=chunk) - As of **June 30, 2025**, cash and cash equivalents and bank deposits totaled **RMB 1,585.9 million**[36](index=36&type=chunk) [Management Discussion and Analysis](index=14&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section provides a comprehensive review of the company's operational performance, product pipeline, commercialization strategies, and financial results for the period [Overview](index=14&type=section&id=%E6%A6%82%E8%A7%88) As an integrated biopharmaceutical company, the company made significant progress in H1, including the removal of its 'B' share designation and a successful HKD 1.55 billion equity placement, bolstering capital reserves for its "dual-driver" strategy - The company is committed to creating value through a differentiated innovative medicine portfolio and building sustainable shareholder growth[41](index=41&type=chunk) - The **"dual-driver" strategy** focuses on organic pipeline growth via mRNA technology and synergistic effects through business expansion and in-licensing[41](index=41&type=chunk) - Nefecon®'s full-year sales are projected to reach **RMB 1.2 to 1.4 billion**, with total company full-year revenue expected to be **RMB 1.6 to 1.8 billion**[39](index=39&type=chunk)[40](index=40&type=chunk) [Product Pipeline](index=16&type=section&id=%E7%94%A2%E5%93%81%E7%AE%A1%E7%B7%9A) The company boasts a robust pipeline in renal, anti-infective, and autoimmune diseases, featuring first-in-class or best-in-class assets like approved Nefecon®, Yijia®, and Etrasimod, alongside clinical-stage candidates and advanced mRNA platform projects - The company's product pipeline includes first-in-class or best-in-class assets across renal, anti-infective, and autoimmune disease areas[43](index=43&type=chunk) Key Product Pipeline and Development Status | Molecule (Therapy) | Partner | Commercial Rights | Indication | R&D Progress | | :--- | :--- | :--- | :--- | :--- | | NEFECON® | Greater China, Singapore, South Korea | IgA Nephropathy | Approved in Mainland China, Macau, Hong Kong, Taiwan, South Korea, and Singapore | | Yijia® (Eravacycline) | Greater China, South Korea, Southeast Asia | Complicated Intra-abdominal Infections | Approved in Mainland China, Hong Kong, Taiwan, and Singapore | | Etrasimod | Greater China, South Korea, Singapore | Ulcerative Colitis | Approved in Macau, Hong Kong, and Singapore | | Cefepime-Taniborbactam | Greater China, South Korea, Southeast Asia | Complicated Urinary Tract Infections | Priority Review in Mainland China | | Zetomipzomib | Greater China, South Korea, Southeast Asia | Autoimmune Hepatitis | Phase 2a | | EVER001 (XNW1011) | Global | Membranous Nephropathy | Phase 1b/2a | | Personalized Cancer Vaccine | In-house R&D | Global | Oncology | IIT initiated | | Tumor-Associated Antigen Vaccine | In-house R&D | Global | Oncology | US IND approved | [Business Review](index=17&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) This section reviews pipeline and commercialization progress, highlighting Nefecon®'s full approval across Asia, Etrasimod's Hong Kong approval and regulatory submissions, positive EVER001 Phase 1b/2a data, and significant advancements in proprietary mRNA cancer vaccines EVM16 and EVM14, with EVM14 achieving dual US and China filings - Nefecon® achieved **full approval** across all authorized regions, solidifying its cornerstone position as a first-line treatment for IgA nephropathy in Asia[46](index=46&type=chunk) - Etrasimod received new drug marketing approval in **Hong Kong SAR**, with applications accepted in South Korea and Taiwan, and **NMPA approval in mainland China expected in H1 2026**[46](index=46&type=chunk) - EVER001 Phase 1b/2a trial for primary membranous nephropathy showed positive data, with anti-PLA2R antibody levels decreasing by nearly **100%** and proteinuria levels by approximately **80%**[47](index=47&type=chunk) - Personalized mRNA cancer vaccine **EVM16 IIT** completed dosing for **9 patients**, with preliminary data expected in H2 this year[48](index=48&type=chunk) - Universal TAA mRNA vaccine candidate **EVM14** received **US FDA IND approval** and **China NMPA acceptance**, achieving dual US and China filings[48](index=48&type=chunk) [Pipeline Outlook](index=17&type=section&id=%E7%AE%A1%E7%B7%9A%E5%B1%95%E6%9C%9B) Nefecon® achieved full approval across Asia, solidifying its IgA nephropathy treatment status, Etrasimod gained Hong Kong approval and is under review in Korea and Taiwan, with mainland China approval expected in H1 2026, EVER001 showed positive Phase 1b/2a data, and mRNA cancer vaccines EVM16 and EVM14, along with self-generating CAR-T projects, made significant progress - Nefecon® achieved **full approval** across all authorized regions, solidifying its cornerstone position as a first-line treatment for IgA nephropathy in Asia, and promoting treatment standardization[46](index=46&type=chunk) - Etrasimod received new drug marketing approval in **Hong Kong SAR**, with applications accepted in South Korea and Taiwan, and **NMPA approval in mainland China expected in H1 2026**[46](index=46&type=chunk) - EVER001 Phase 1b/2a trial for primary membranous nephropathy showed positive data, with anti-PLA2R antibody levels decreasing by nearly **100%** and proteinuria levels by approximately **80%**[47](index=47&type=chunk) - Personalized mRNA cancer vaccine **EVM16 IIT** completed dosing for **9 patients**, with preliminary data expected in H2 this year[48](index=48&type=chunk) - Universal TAA mRNA vaccine **EVM14** received **US FDA IND approval** and **China NMPA acceptance**, with US clinical studies planned for **H2 2025**[48](index=48&type=chunk) [Commercialization](index=18&type=section&id=%E5%95%86%E6%A5%AD%E5%8C%96) In H1 2025, Nefecon® and Yijia® generated RMB 446 million in sales revenue, with Nefecon® experiencing rapid growth due to NRDL inclusion and expanded hospital coverage, Yijia® showing steady growth with increased hospital penetration, and Etrasimod initiating early use in Guangdong and local production - In **H1 2025**, **Nefecon®** and **Yijia®** generated **RMB 446 million** in sales revenue[50](index=50&type=chunk) - Nefecon®'s inclusion in the **NRDL** on **January 1, 2025**, led to rapid H1 sales growth and over **20,000 new patients**[50](index=50&type=chunk) - Nefecon® was recommended as the preferred causal treatment in the **"Chinese Clinical Practice Guidelines for Adult IgA Nephropathy and IgA Vasculitis (Pre-review Version)"**[51](index=51&type=chunk) - Yijia®'s penetration increased in approximately **300 core hospitals**, showing steady sales growth, with its China breakpoint approved by CDE and updated in the package insert[53](index=53&type=chunk) - Etrasimod is in early use in **9 medical institutions** in Guangdong via the "Hong Kong and Macao Medicine and Medical Device Connect" policy, and the Jiaxing factory launched localized production with an estimated annual capacity of **5 million bottles**[56](index=56&type=chunk) [Commercialization Outlook](index=21&type=section&id=%E5%95%86%E6%A5%AD%E5%8C%96%E5%B1%95%E6%9C%9B) In H2 2025, the company will accelerate commercialization and expand access to innovative therapies, with Nefecon® fully integrated into medical insurance and projected for RMB 1.2-1.4 billion in annual sales, Yijia® deepening hospital penetration, and Etrasimod advancing mainland China launch preparations - Nefecon® will achieve full medical insurance coverage in H2 and is expected to be included in the **2025 KDIGO IgA Nephropathy Guideline** and China's first IgA nephropathy clinical guideline[57](index=57&type=chunk) - Nefecon®'s production capacity expansion approval paves the way for significant H2 2025 sales growth, with full-year sales projected at **RMB 1.2 to 1.4 billion**[58](index=58&type=chunk) - Yijia® will continue deep penetration in core hospitals, targeting high-potential institutions and optimizing its CSO cooperation model[58](index=58&type=chunk) - Combined full-year revenue for **Nefecon®** and **Yijia®** is projected to reach **RMB 1.6 to 1.8 billion** in 2025[58](index=58&type=chunk) - Etrasimod's mainland China launch preparations are advancing, setting the stage for rapid market entry post-NMPA approval in **H1 2026**[59](index=59&type=chunk) [In-house R&D](index=21&type=section&id=%E8%87%AA%E4%B8%BB%E7%A0%94%E7%99%BC) H1 2025 marked a critical execution period for the company's "dual-driver" strategy and mRNA platform, with personalized mRNA cancer vaccine EVM16 completing dosing for 9 patients showing good immunogenicity, universal TAA mRNA cancer vaccine EVM14 achieving dual US and China filings and releasing GMP clinical samples, and the mRNA self-generating CAR-T platform yielding multiple preclinical validation results - The company successfully hosted the **"2025 Everest Medicines mRNA Innovation Technology Platform R&D Day,"** showcasing advancements in its proprietary AI-driven mRNA technology platform[60](index=60&type=chunk) - Personalized mRNA therapeutic cancer vaccine **EVM16 IIT** completed dosing for **9 patients**, showing good immunogenicity by eliciting specific T-cell responses even at low starting doses[62](index=62&type=chunk) - Universal TAA mRNA cancer vaccine **EVM14** achieved dual US and China filings and released the first batch of **GMP clinical trial samples**, validating the company's full-chain mRNA platform[63](index=63&type=chunk) - The mRNA self-generating CAR-T platform achieved multiple preclinical validation results, demonstrating efficacy in humanized mouse and non-human primate models, potentially revolutionizing traditional CAR-T therapies[64](index=64&type=chunk) - In **H2 2025**, personalized cancer vaccine **EVM16** is expected to complete Phase Ia enrollment, **EVM14** will start US dosing and may receive China IND approval, and the self-generating CAR-T platform is expected to identify clinical candidates[65](index=65&type=chunk) [Business Development](index=23&type=section&id=%E6%A5%AD%E5%8B%99%E6%8B%93%E5%B1%95) The 2025 business development strategy focuses on high clinical value, differentiated first-in-class or best-in-class assets in renal, autoimmune, and anti-infective diseases, seeking in-licensing opportunities for commercial or near-commercial assets, and global partnerships for early-stage assets like EVER001 and mRNA platform projects, while strategically increasing I-Mab equity to become its largest shareholder, deepening oncology immunotherapy - Business development focuses on high clinical value, differentiated first-in-class or best-in-class assets, prioritizing renal, autoimmune, and anti-infective diseases[66](index=66&type=chunk) - The company will seek in-licensed assets at commercial or near-commercial stages and actively pursue international collaboration for early-stage global assets[66](index=66&type=chunk)[67](index=67&type=chunk) - One-year follow-up data for primary membranous nephropathy patients in the **EVER001 (sibrotuzumab) Ib/IIa clinical trial** is expected in **September**[67](index=67&type=chunk) - mRNA-based therapeutic cancer vaccine projects **EVM16** and **EVM14** will yield key preliminary human data in **H2 this year** and **H1 next year**, respectively, supporting potential global collaborations[67](index=67&type=chunk) - The company strategically increased its stake in I-Mab to approximately **16.1%**, becoming its largest shareholder and advancing its global next-generation oncology immunotherapy pipeline[68](index=68&type=chunk) [Financial Review](index=24&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) For the six months ended

Corporate Information [Board of Directors](index=4&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) The Board of Directors comprises executive, non-executive, and independent non-executive directors, with established committees ensuring sound corporate governance - The Board of Directors includes Mr. Craig Billings (Executive Director and CEO), Ms. Linda Chen (Executive Director, Vice Chairman, and President), and Mr. Frederic Luvisutto (Executive Director and COO)[6](index=6&type=chunk) - Independent Non-Executive Directors include Dr. Allan Zeman (Chairman), The Hon. Jeffrey Lam Kin-fung, Mr. Bruce Rockowitz, Mr. Nicholas Sallnow-Smith, and Ms. Xiaowei Ye[6](index=6&type=chunk) - The Audit and Risk Committee and Remuneration Committee are chaired by Mr. Nicholas Sallnow-Smith, while the Nomination and Corporate Governance Committee is chaired by The Hon. Jeffrey Lam Kin-fung[6](index=6&type=chunk) [Legal Advisors](index=4&type=section&id=%E6%B3%95%E5%BE%8B%E9%A1%A7%E5%95%8F) The company retains professional legal advisors in Hong Kong, Macau, and the Cayman Islands to handle legal affairs across different jurisdictions - Hong Kong legal advisors are Kirkland & Ellis and Mayer Brown[7](index=7&type=chunk) - Macau legal advisor is Nuno Simões & Associados[7](index=7&type=chunk) - Cayman Islands legal advisor is Maples and Calder[7](index=7&type=chunk) [Registered Office and Principal Place of Business](index=5&type=section&id=%E8%A8%BB%E5%86%8A%E8%BE%A6%E4%BA%8B%E8%99%95%E5%8F%8A%E4%B8%BB%E8%A6%81%E7%87%9F%E6%A5%AD%E5%9C%B0%E9%BB%9E) The company's registered office is in the Cayman Islands, with its principal share registrar also located there, while its Hong Kong share registrar and Macau headquarters are in their respective regions - The registered office is located at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands[9](index=9&type=chunk) - The principal place of business in Hong Kong is at Suite 1928, 19th Floor, One Pacific Place, 88 Queensway, Hong Kong[9](index=9&type=chunk) - The headquarters in Macau is located at Wynn Palace, Cotai, Macau SAR[9](index=9&type=chunk) [Stock Code and Company Website](index=5&type=section&id=%E8%82%A1%E4%BB%BD%E4%BB%A3%E8%99%9F%E5%8F%8A%E5%85%AC%E5%8F%B8%E7%B6%B2%E5%9D%80) The company's stock code is 1128, and it maintains an official website for corporate information - The company's stock code is 1128[9](index=9&type=chunk) - The company's website is www.wynnmacaulimited.com[9](index=9&type=chunk) Summary [Financial Highlights](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) For the six months ended June 30, 2025, the company's financial performance declined year-over-year, with significant decreases in casino revenues and profit attributable to owners Financial Highlights for the Six Months Ended June 30 | Metric | 2025 (HKD, in thousands) | 2024 (HKD, in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Casino Revenues | 11,385,785 | 12,089,797 | -5.82% | | Other Revenues | 2,240,620 | 2,644,337 | -15.34% | | Adjusted EBITDA | 3,466,842 | 4,352,599 | -20.35% | | Profit Attributable to Owners | 230,620 | 1,592,122 | -85.52% | | Earnings Per Share — Basic | 0.04 | 0.30 | -86.67% | | Earnings Per Share — Diluted | 0.04 | 0.30 | -86.67% | Management Discussion and Analysis [Overview](index=7&type=section&id=%E6%A6%82%E8%A6%BD) The company develops, owns, and operates two integrated casino resorts in Macau, Wynn Palace and Wynn Macau, focusing on facility investment, talent development, and sustainable growth - The company operates Wynn Palace and Wynn Macau, both located in the Greater Bay Area of the People's Republic of China, offering world-class hotel, dining, retail, and entertainment facilities[12](index=12&type=chunk) - The company's strategy includes investments in its integrated resorts, talent, and the broader community, attracting customers through renovations and expansions, and nurturing approximately 11,600 Macau employees[12](index=12&type=chunk) - Through the "Wynn Care" program and the "Wynn Care Foundation," the company is committed to community sustainable development, volunteer services, responsible gaming, and sustainability[12](index=12&type=chunk) [Wynn Palace](index=8&type=section&id=%E6%B0%B8%E5%88%A9%E7%9A%87%E5%AE%AE) Opened in 2016, Wynn Palace is a 6 million square-foot resort offering diverse facilities and is currently in the design phase for its next expansion - Wynn Palace opened on August 22, 2016, in Cotai, Macau, occupying 6 million square feet with convenient transportation[13](index=13&type=chunk) - It is currently in the design phase for its next stage of development, which is expected to feature expanded event spaces, signature dining, and other non-gaming projects[13](index=13&type=chunk) - Features include approximately **468,000 square feet of casino space** (302 table games, 619 slot machines), **1,706 luxury rooms**, 12 food and beverage outlets, approximately 107,000 square feet of high-end retail space, and approximately 37,000 square feet of meeting space[14](index=14&type=chunk) [Wynn Macau](index=9&type=section&id=%E6%B0%B8%E5%88%A9%E6%BE%B3%E9%96%80) Opened in 2006 in central Macau Peninsula and expanded with Encore in 2010, Wynn Macau provides comprehensive gaming, hotel, dining, retail, and convention facilities - Wynn Macau opened on September 6, 2006, in the center of the Macau Peninsula, occupying 3 million square feet, with expansions completed in 2007, 2009, and 2010[16](index=16&type=chunk) - Features include approximately **294,000 square feet of casino space** (258 table games, 822 slot machines), **1,010 luxury rooms**, 11 food and beverage outlets, approximately 76,900 square feet of high-end retail space, and approximately 31,000 square feet of meeting space[17](index=17&type=chunk) [Factors Affecting Operating Results and Financial Condition](index=10&type=section&id=%E5%BD%B1%E9%9F%BF%E7%B6%93%E7%87%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E7%9A%84%E5%9B%A0%E7%B4%A0) The company's performance is influenced by various factors including Macau's gaming regulations, concession terms, market competition, tourism trends, credit policies, and facility renovations [Regulation and Licensing](index=10&type=section&id=%E7%9B%A3%E7%AE%A1%E5%8F%8A%E8%A8%B1%E5%8F%AF) The company's subsidiary WRM holds a 10-year Macau gaming concession, subject to strict government regulation, compliance requirements, and approval for major corporate decisions - WRM entered into a **10-year gaming concession contract** with the Macau government on December 16, 2022, allowing it to operate games of fortune from January 1, 2023, to December 31, 2032[19](index=19&type=chunk) - Concessionaires and their shareholders, officers, directors, and key employees must comply with suitability requirements regarding background, connections, and reputation, and meet minimum capital and ongoing financial capacity requirements[19](index=19&type=chunk) - WRM is required to pay a **special gaming tax of 35% of gross gaming revenue** and contribute up to 5% annually for public interest, social security, infrastructure, and tourism[22](index=22&type=chunk) - The Macau government can terminate the concession if WRM fails to fulfill its obligations or endangers national security, in which case all casino and gaming assets will be transferred to the government without compensation[23](index=23&type=chunk) - WRM must obtain prior approval from Macau authorities for various changes in corporate status and financial decisions, and submit annual investment plan proposals and execution reports[24](index=24&type=chunk)[25](index=25&type=chunk) [Macau Gaming Concession](index=13&type=section&id=%E6%BE%B3%E9%96%80%E5%8D%9A%E5%BD%A9%E6%89%B9%E7%B5%A6) WRM has committed to investing MOP 21.03 billion in non-gaming and gaming projects, alongside paying premiums, special levies, and gaming taxes under its concession agreement - WRM has committed to a **non-gaming and gaming investment of MOP 21.03 billion** (approximately HKD 20.42 billion) over the ten-year term of the gaming concession contract, with MOP 19.80 billion allocated to non-gaming capital projects and event planning[27](index=27&type=chunk) - An annual fixed premium of MOP 30 million and a variable premium based on the number of table games and slot machines are required, with the amount not being less than that payable for the regular operation of 500 gaming tables and 1,000 gaming machines[28](index=28&type=chunk) - If the annual average gross gaming revenue minimums of MOP 7 million per gaming table and MOP 300,000 per gaming machine are not met, WRM must pay a special premium[28](index=28&type=chunk) - WRM is required to pay a **special levy of 5% of gross gaming revenue** (subject to reduction) and a **special gaming tax of 35%**[28](index=28&type=chunk) - WRM has provided an independent bank guarantee of **MOP 1.00 billion** (approximately HKD 970.9 million) to ensure the fulfillment of its legal and contractual obligations[29](index=29&type=chunk) [Macau Market Overview](index=14&type=section&id=%E6%BE%B3%E9%96%80%E5%B8%82%E5%A0%B4%E6%A6%82%E6%B3%81) As a special administrative region in the Greater Bay Area, Macau's gaming industry has grown significantly since 2004, but faces intense competition from local and regional casinos - Macau, located in the Greater Bay Area and approximately 37 miles from Hong Kong, is one of the world's largest concentrations of potential gaming customers and tourists[30](index=30&type=chunk) - For the six months ended June 30, 2025, Macau's casino gaming revenue was **HKD 115.31 billion**, an increase of **4.4%** compared to the same period in 2024[30](index=30&type=chunk) - The company faces competition from the other 28 casinos in Macau, as well as potential competition from the legalization of gaming in other Asian countries and regions such as Singapore, South Korea, the Philippines, Japan, Taiwan, and Thailand[31](index=31&type=chunk) [Tourism](index=15&type=section&id=%E6%97%85%E9%81%8A%E6%A5%AD) Macau's tourism and overall gaming activity are key business drivers, with visitor arrivals growing in H1 2025, though the industry remains vulnerable to uncontrollable factors - In the first half of 2025, visitor arrivals to Macau **increased by 14.9%** compared to the same period in 2024[33](index=33&type=chunk) - Macau's tourism industry is affected by various factors, including economic conditions in mainland China and Asia, foreign exchange controls, travel restrictions, visa policies, and competition from other regions[33](index=33&type=chunk) - Natural and man-made disasters, extreme weather, infectious disease outbreaks, and public violence could lead to a decrease in visitor arrivals to Macau and disrupt operations, causing a significant adverse impact on the business[34](index=34&type=chunk) [Credit in VIP Gaming](index=15&type=section&id=%E9%AB%98%E7%AB%AF%E5%AE%A2%E6%88%B6%E5%8D%9A%E5%BD%A9%E4%B9%8B%E8%B2%B8%E6%AC%BE) The company selectively extends credit to premium customers following stringent procedures to ensure debt enforceability, typically secured by customer checks - The company selectively grants credit based on the customer's financial background and payment history[35](index=35&type=chunk) - A series of credit procedures are followed and documentation is required to ensure the debt is legally enforceable in the customer's jurisdiction of residence[35](index=35&type=chunk) - Customers granted credit are generally required to provide a check for the amount of their applicable credit line as security for the credit granted[35](index=35&type=chunk) [Table Game and Slot Machine Count and Mix](index=15&type=section&id=%E8%B3%AD%E6%9F%B1%E5%92%8C%E8%A7%92%E5%AD%90%E6%A9%9F%E7%9A%84%E6%95%B8%E7%9B%AE%E5%92%8C%E7%B5%84%E5%90%88) The company adjusts its mix of VIP tables, mass market tables, and slot machines based on market demand and competition, which can impact casino profitability - The mix of VIP tables, mass market tables, and slot machines at the resorts is adjusted from time to time to respond to changes in market demand and industry competition[36](index=36&type=chunk) - Adjustments to the gaming mix may affect the profitability of the casinos[36](index=36&type=chunk) [Renovation, Development, and Construction Projects](index=16&type=section&id=%E7%BF%BB%E6%96%B0%E3%80%81%E9%96%8B%E7%99%BC%E5%8F%8A%E5%B7%A5%E7%A8%8B%E9%A0%85%E7%9B%AE) Current projects face significant development and construction risks, including cost overruns and regulatory changes, which could delay or impede successful completion - Renovation, development, and construction projects face significant risks such as unexpected costs or cost increases, shortages of qualified labor, changes in laws and regulations, and unforeseen engineering problems[37](index=37&type=chunk) - Engineering, equipment, or employee problems, or difficulties in obtaining necessary licenses, permits, and authorizations, could cause cost increases, delays, or hinder construction or opening[37](index=37&type=chunk) - Failure to complete projects on time or within budget could have a material adverse effect on the company and its ability to repay its debts[37](index=37&type=chunk) [Adjusted EBITDA](index=16&type=section&id=%E7%B6%93%E8%AA%BF%E6%95%B4EBITDA) Adjusted EBITDA, a key performance metric for gaming companies, stood at HKD 3.47 billion for the period, reflecting a year-over-year decline - Adjusted EBITDA is defined as earnings before finance costs, finance revenues, net foreign exchange differences, change in fair value of derivative instruments, income tax, depreciation and amortization, pre-opening costs, property charges and other, share-based payments, corporate expenses of Wynn Macau, Limited, and other non-operating income and expenses[38](index=38&type=chunk) - Adjusted EBITDA is widely used to measure the performance of gaming companies and as a basis for valuation[38](index=38&type=chunk) Reconciliation of Adjusted EBITDA to Operating Profit | Metric | For the Six Months Ended June 30, 2025 (HKD, in thousands) | For the Six Months Ended June 30, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | Operating profit | 2,018,395 | 2,911,485 | | Add: Depreciation and amortization | 1,210,315 | 1,196,055 | | Add: Pre-opening costs | 32,639 | — | | Add: Property charges and other | 56,579 | 95,053 | | Add: Share-based payments | 55,419 | 54,749 | | Add: Corporate expenses of Wynn Macau, Limited | 93,495 | 95,257 | | **Adjusted EBITDA** | **3,466,842** | **4,352,599** | [Review of Historical Operating Results](index=18&type=section&id=%E6%AD%B7%E5%8F%B2%E7%B6%93%E7%87%9F%E6%A5%AD%E7%B8%BE%E5%9B%9E%E9%A1%A7) For the six months ended June 30, 2025, total operating revenues decreased by 7.5% year-over-year, leading to an 85.5% drop in net profit attributable to owners [Summary of Analytical Tables](index=18&type=section&id=%E5%88%86%E6%9E%90%E8%A1%A8%E6%A6%82%E8%A6%81) Total operating revenues fell from HKD 14.73 billion to HKD 13.63 billion year-over-year, driven by declines across most segments at both Wynn Palace and Wynn Macau Total Operating Revenues (by Segment and Property) | Property/Segment | For the Six Months Ended June 30, 2025 (HKD, in thousands) | For the Six Months Ended June 30, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | **Wynn Palace:** | | | | Casino | 6,953,811 | 7,185,603 | | Rooms | 584,807 | 814,449 | | Food and beverage | 484,360 | 484,086 | | Retail and other | 354,487 | 392,243 | | **Wynn Macau:** | | | | Casino | 4,431,974 | 4,904,194 | | Rooms | 350,961 | 409,445 | | Food and beverage | 279,026 | 320,789 | | Retail and other | 186,979 | 223,325 | | **Total Operating Revenues** | **13,626,405** | **14,734,134** | Wynn Palace Gaming Operations Data | Metric | For the Six Months Ended June 30, 2025 (HKD, in thousands) | For the Six Months Ended June 30, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | **VIP:** | | | | VIP table games turnover | 62,916,868 | 52,642,274 | | VIP table games win | 1,722,265 | 1,913,867 | | VIP table games win as a % of turnover | 2.74% | 3.64% | | Average number of table games | 54 | 58 | | Table games win per unit per day | 177,170 | 181,409 | | **Mass Market:** | | | | Mass market table games drop | 27,641,138 | 27,532,677 | | Mass market table games win | 6,494,996 | 6,622,343 | | Mass market table games win % | 23.50% | 24.05% | | Average number of table games | 248 | 244 | | Table games win per unit per day | 144,587 | 148,904 | | **Slot Machines:** | | | | Slot machine handle | 11,624,233 | 9,685,006 | | Slot machine win | 481,660 | 442,345 | | Average number of slot machines | 638 | 590 | | Slot machine win per unit per day | 4,169 | 4,120 | Wynn Macau Gaming Operations Data | Metric | For the Six Months Ended June 30, 2025 (HKD, in thousands) | For the Six Months Ended June 30, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | **VIP:** | | | | VIP table games turnover | 18,833,971 | 21,534,996 | | VIP table games win | 383,082 | 620,758 | | VIP table games win as a % of turnover | 2.03% | 2.88% | | Average number of table games | 25 | 30 | | Table games win per unit per day | 83,991 | 114,404 | | **Mass Market:** | | | | Mass market table games drop | 24,617,990 | 25,699,287 | | Mass market table games win | 4,435,496 | 4,748,367 | | Mass market table games win % | 18.02% | 18.48% | | Average number of table games | 226 | 222 | | Table games win per unit per day | 108,405 | 117,688 | | **Slot Machines:** | | | | Slot machine handle | 14,506,731 | 11,982,617 | | Slot machine win | 386,071 | 407,985 | | Average number of slot machines | 740 | 600 | | Slot machine win per unit per day | 2,883 | 3,737 | Reconciliation of Total Casino Revenues | Metric | For the Six Months Ended June 30, 2025 (HKD, in thousands) | For the Six Months Ended June 30, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | VIP table games win | 2,105,347 | 2,534,625 | | Mass market table games win | 10,930,492 | 11,370,710 | | Slot machine win | 867,731 | 850,330 | | Poker revenue | 47,152 | 73,219 | | Commissions and other (including promotional allowances) | (2,564,937) | (2,739,087) | | **Total Casino Revenues** | **11,385,785** | **12,089,797** | [Discussion of Operating Results](index=22&type=section&id=%E7%B6%93%E7%87%9F%E6%A5%AD%E7%B8%BE%E8%A8%8E%E8%AB%96) For the six months ended June 30, 2025, total operating revenues decreased by 7.5% to HKD 13.63 billion, primarily due to lower VIP table games win as a percentage of turnover and reduced mass market table games win, as well as a lower average daily rate [Operating Revenues](index=22&type=section&id=%E7%B6%93%E7%87%9F%E6%94%B6%E7%9B%8A) Total operating revenues decreased by 7.5% from HKD 14.73 billion to HKD 13.63 billion year-over-year, mainly driven by a lower VIP table games win as a percentage of turnover, decreased mass market table games win, and a lower average daily rate - Total operating revenues **decreased by 7.5%** year-over-year, from HKD 14.73 billion to HKD 13.63 billion[50](index=50&type=chunk) - The main reasons were a **decrease in VIP table games win as a percentage of turnover** and mass market table games win, as well as a lower average daily rate in the Macau operations[50](index=50&type=chunk) [Casino Revenues](index=22&type=section&id=%E5%A8%9B%E6%A8%82%E5%A0%B4%E6%94%B6%E7%9B%8A) Casino revenues decreased by 5.8% year-over-year to HKD 11.39 billion, primarily due to a lower VIP table games win as a percentage of turnover and decreased mass market table games win, despite growth in slot machine revenue - Casino revenues **decreased by 5.8%** year-over-year, from HKD 12.09 billion to HKD 11.39 billion, accounting for 83.6% of total operating revenues[51](index=51&type=chunk) - **VIP table games win decreased by 16.9%** to HKD 2.11 billion; although total turnover increased by 10.2%, it was offset by a lower VIP table games win as a percentage of turnover[51](index=51&type=chunk) - **Mass market table games win decreased by 3.9%** to HKD 10.93 billion, with total mass market table games drop decreasing by 1.8%[51](index=51&type=chunk) - **Slot machine win increased by 2.0%** to HKD 867.7 million, with total slot machine handle increasing by 20.6%[52](index=52&type=chunk) [Non-Casino Revenues](index=23&type=section&id=%E9%9D%9E%E5%A8%9B%E6%A8%82%E5%A0%B4%E6%94%B6%E7%9B%8A) Net non-casino revenues decreased by 15.3% year-over-year to HKD 2.24 billion, mainly due to a 23.5% decrease in room revenues from a lower average daily rate, a 5.2% decrease in food and beverage revenues, and a 12.0% decrease in retail and other revenues - Net non-casino revenues **decreased by 15.3%** year-over-year, from HKD 2.64 billion to HKD 2.24 billion, accounting for 16.4% of total operating revenues[54](index=54&type=chunk) - **Room revenues decreased by 23.5%** to HKD 935.8 million, primarily due to a lower average daily rate[54](index=54&type=chunk) Room Revenue Data | Metric | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Wynn Palace:** | | | | Average Daily Rate (ADR) | HKD 1,768 | HKD 2,552 | | Occupancy | 98.5% | 98.9% | | Revenue Per Available Room (RevPAR) | HKD 1,742 | HKD 2,523 | | **Wynn Macau:** | | | | Average Daily Rate (ADR) | HKD 1,753 | HKD 2,032 | | Occupancy | 99.2% | 99.4% | | Revenue Per Available Room (RevPAR) | HKD 1,740 | HKD 2,020 | - **Food and beverage revenues decreased by 5.2%** to HKD 763.4 million, mainly due to a lower average check amount[56](index=56&type=chunk) - **Retail and other revenues decreased by 12.0%** to HKD 541.5 million, primarily due to lower retail sales[56](index=56&type=chunk) [Operating Costs and Expenses](index=24&type=section&id=%E7%B6%93%E7%87%9F%E6%88%90%E6%9C%AC%E5%8F%8A%E9%96%8B%E6%94%AF) Total operating costs and expenses decreased by 1.8% year-over-year to HKD 11.61 billion, mainly due to lower gaming taxes and premiums and a decrease in property charges and other expenses, partially offset by an increase in advertising and promotional expenses - Total operating costs and expenses **decreased by 1.8%** year-over-year, from HKD 11.82 billion to HKD 11.61 billion[58](index=58&type=chunk) - **Gaming taxes and premiums decreased by 4.1%** to HKD 5.96 billion, mainly due to lower casino revenues[57](index=57&type=chunk) - **Staff costs remained relatively flat** at HKD 2.20 billion[57](index=57&type=chunk) - **Other operating expenses remained relatively flat** at HKD 2.18 billion, with an increase in advertising and promotional expenses offset by a decrease in license fees and other support services[57](index=57&type=chunk) - **Property charges and other decreased by 40.5%** to HKD 56.6 million, mainly due to lower costs associated with the retirement or disposal of assets[58](index=58&type=chunk) [Finance Revenues](index=25&type=section&id=%E8%9E%8D%E8%B3%87%E6%94%B6%E7%9B%8A) Finance revenues decreased by 42.7% year-over-year to HKD 185.9 million, primarily due to lower average cash and investment balances and lower average interest rates - Finance revenues **decreased by 42.7%** year-over-year, from HKD 324.2 million to HKD 185.9 million[60](index=60&type=chunk) - The main reason was a **decrease in average cash and investment balances and average interest rates**[60](index=60&type=chunk) [Finance Costs](index=25&type=section&id=%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) Finance costs decreased by 14.3% year-over-year to HKD 1.42 billion, mainly due to the repayment of the WML 2024 Notes and lower average loan balances and average interest rates on the WM Cayman II Credit Facilities - Finance costs **decreased by 14.3%** year-over-year, from HKD 1.66 billion to HKD 1.42 billion[61](index=61&type=chunk) - The main reasons were the **repayment of the WML 2024 Notes in October 2024** and lower average loan balances and average interest rates on the WM Cayman II Credit Facilities[61](index=61&type=chunk) [Change in Fair Value of Derivative Instruments](index=25&type=section&id=%E8%A1%8D%E7%94%9F%E5%B7%A5%E5%85%B7%E5%85%AC%E5%85%81%E5%80%BC%E8%AE%8A%E5%8B%95) The company recorded a loss of HKD 177.3 million on the change in fair value of derivative instruments, including losses related to the conversion feature of the WML Convertible Bonds and foreign currency swaps, compared to a gain in the prior year period - A **loss of HKD 177.3 million** was recorded on the change in fair value of derivative instruments[62](index=62&type=chunk) - This included a **loss of HKD 77.2 million** related to the conversion feature of the WML Convertible Bonds and a **loss of HKD 100.1 million** related to foreign currency swaps[62](index=62&type=chunk) - The prior year period saw a gain of HKD 13.1 million related to the conversion feature of the WML Convertible Bonds[62](index=62&type=chunk) [Income Tax Expense](index=25&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense was HKD 25.3 million, relatively flat compared to HKD 26.4 million in the prior year period, mainly related to current tax expense under the WRM shareholder dividend tax agreement - Income tax expense was **HKD 25.3 million**, compared to HKD 26.4 million in the prior year period[63](index=63&type=chunk) - This was mainly related to the **current tax expense under the WRM shareholder dividend tax agreement**[63](index=63&type=chunk) [Net Profit Attributable to Owners of the Company](index=25&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%93%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%94%E7%B4%94%E5%88%A9) Net profit attributable to owners of the Company decreased significantly by 85.5% from HKD 1.59 billion in the prior year period to HKD 230.6 million - Net profit attributable to owners of the Company **decreased significantly by 85.5%** year-over-year, from HKD 1.59 billion to HKD 230.6 million[64](index=64&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=%E6%B5%81%E5%8B%95%E6%80%A7%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90) The company maintains adequate liquidity with approximately HKD 11.58 billion in cash, having successfully increased its credit facility and issued new senior notes to optimize its debt structure [Capital Resources](index=26&type=section&id=%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90) As of June 30, 2025, the company held approximately HKD 11.58 billion in cash and cash equivalents and had access to the WM Cayman II Credit Facilities. The company paid a dividend of HKD 972.5 million in June 2025, increased its revolving credit facility in July, and issued new senior notes due 2034 in August - As of June 30, 2025, cash and cash equivalents were approximately **HKD 11.58 billion**[65](index=65&type=chunk) - On June 11, 2025, WML paid a cash dividend of **HKD 0.185 per share** for the year ended December 31, 2024, totaling HKD 972.5 million[65](index=65&type=chunk) - In July 2025, the borrowing limit of the WM Cayman II Credit Facilities was increased by an additional **USD 1.00 billion equivalent** (approximately HKD 7.80 billion), bringing the total commitment to USD 2.50 billion equivalent (approximately HKD 19.52 billion)[66](index=66&type=chunk) - On August 19, 2025, the company issued **USD 1.00 billion** (approximately HKD 7.85 billion) of 6.750% senior notes due 2034, with the net proceeds intended for general corporate purposes, including repayment of outstanding debt[66](index=66&type=chunk) [Gearing Ratio](index=27&type=section&id=%E8%B3%87%E6%9C%AC%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) As of June 30, 2025, the company's gearing ratio was 151.2%, an increase from 148.9% as of December 31, 2024, reflecting an increase in net debt - The gearing ratio is calculated as net debt divided by total capital deficit plus net debt[69](index=69&type=chunk) Gearing Ratio Calculation | Metric | As of June 30, 2025 (HKD, in thousands) | As of December 31, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | Interest-bearing borrowings | 45,439,412 | 44,838,547 | | Net debt | 41,253,279 | 40,443,882 | | Deficit in assets | (13,969,381) | (13,290,297) | | Total capital deficit | (13,969,381) | (13,290,297) | | Capital and net debt | 27,283,898 | 27,153,585 | | **Gearing Ratio** | **151.2%** | **148.9%** | [Cash Flows](index=28&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) For the six months ended June 30, 2025, net cash from operating activities was HKD 3.37 billion, net cash used in investing activities was HKD 860.5 million, and net cash used in financing activities was HKD 2.36 billion, resulting in cash and cash equivalents of HKD 11.58 billion at period-end Cash Flow Summary | Metric | For the Six Months Ended June 30, 2025 (HKD, in millions) | For the Six Months Ended June 30, 2024 (HKD, in millions) | | :--- | :--- | :--- | | Net cash from operating activities | 3,373.1 | 3,805.0 | | Net cash (used in)/from investing activities | (860.5) | 1,153.7 | | Net cash used in financing activities | (2,357.1) | (4,453.6) | | Net increase in cash and cash equivalents | 155.5 | 505.1 | | Cash and cash equivalents at beginning of period | 11,333.4 | 10,300.2 | | Effect of foreign exchange rate changes, net | 89.6 | (7.5) | | **Cash and cash equivalents at end of period** | **11,578.5** | **10,797.8** | - **Net cash from operating activities decreased**, primarily due to lower operating profit and changes in working capital accounts[73](index=73&type=chunk) - **Investing activities shifted from a net inflow to a net outflow of HKD 860.5 million**, mainly including HKD 1.06 billion in non-gaming and other related capital projects and maintenance capital expenditure costs[74](index=74&type=chunk) - **Net cash used in financing activities decreased to HKD 2.36 billion**, primarily due to interest payments, final dividend payments, and payments of financial liabilities related to intangible assets[76](index=76&type=chunk) [Indebtedness](index=29&type=section&id=%E5%82%B5%E9%A0%85) As of June 30, 2025, the company's total interest-bearing borrowings amounted to HKD 45.439 billion, primarily consisting of bank loans, senior notes, and convertible bonds. The company has extended the maturity and increased the size of its WM Cayman II Credit Facilities and issued new WML 2034 Notes to optimize its debt structure Summary of Indebtedness | Metric | As of June 30, 2025 (HKD, in thousands) | As of December 31, 2024 (HKD, in thousands) | | :--- | :--- | :--- | | Bank loans | 8,962,383 | 8,941,565 | | Senior notes | 32,183,806 | 31,826,747 | | Convertible bonds | 4,709,825 | 4,657,573 | | WML Convertible Bonds conversion option derivative | 337,502 | 256,219 | | Unamortized debt financing costs, debt discount and premium, net | (754,104) | (843,557) | | **Total interest-bearing borrowings** | **45,439,412** | **44,838,547** | [WM Cayman II Credit Facilities](index=30&type=section&id=WM%20Cayman%20II%E5%BE%AA%E7%92%B0%E4%BF%A1%E8%B2%B8) The maturity of the WM Cayman II Credit Facilities was extended to September 16, 2028, in September 2024, and the total commitment was increased to an equivalent of HKD 19.52 billion in July 2025 through an accordion feature. The facilities are subject to various financial covenants and events of default, including a change of control - The WM Cayman II Credit Facilities have a total amount of **HKD 11.72 billion equivalent**, with an additional increase of USD 1.00 billion (approximately HKD 7.80 billion) available[79](index=79&type=chunk) - On September 20, 2024, the maturity date of the outstanding loans was **extended from September 16, 2025, to September 16, 2028**[80](index=80&type=chunk) - In July 2025, the total commitment of the WM Cayman II Credit Facilities was **increased to USD 2.50 billion equivalent** (approximately HKD 19.52 billion)[83](index=83&type=chunk) - The credit agreement contains restrictions on dividend payments, incurrence of debt, and asset liens, and requires maintenance of a leverage ratio and interest coverage ratio[81](index=81&type=chunk) - It is a mandatory prepayment event if the Group loses its gaming operations or if Wynn Resorts, Limited ceases to directly or indirectly control more than 50% of the issued share capital of WM Cayman II[81](index=81&type=chunk) - As of June 30, 2025, the Group had approximately **HKD 2.75 billion** available for drawing under the WM Cayman II Credit Facilities[81](index=81&type=chunk) [WML Senior Notes](index=31&type=section&id=WML%E5%84%AA%E5%85%88%E7%A5%A8%E6%93%9A) The company has issued several series of senior notes, including the WML 2026, 2027, 2028, and 2029 Notes, and repaid the WML 2024 Notes in October 2024. In August 2025, the company issued new USD 1 billion senior notes due 2034 for general corporate purposes and debt repayment. The senior notes are unsecured obligations and are subject to various covenants and change of control provisions - The company repaid the principal amount of **USD 600.0 million** (approximately HKD 4.66 billion) of the WML 2024 Notes on October 1, 2024[84](index=84&type=chunk) - Issued notes include the **WML 2027 Notes** (USD 750 million, due 2027), **WML 2029 Notes** (USD 1 billion, due 2029), **WML 2026 Notes** (USD 1 billion, due 2026), and **WML 2028 Notes** (USD 1.35 billion, due 2028)[84](index=84&type=chunk)[85](index=85&type=chunk) - The WML Senior Notes are **unsecured obligations**, ranking equally with all existing and future senior unsecured debt, and are subject to certain covenants that restrict the company's ability to merge, transfer assets, and incur additional debt[86](index=86&type=chunk) - In the event of a loss of gaming license or a change of control, noteholders have the right to require the company to repurchase the notes[87](index=87&type=chunk)[89](index=89&type=chunk) - On August 19, 2025, the company issued **USD 1.00 billion** (approximately HKD 7.85 billion) of 6.750% senior notes due 2034, with the net proceeds intended for general corporate purposes, including repayment of outstanding debt[90](index=90&type=chunk) [WML Convertible Bonds](index=34&type=section&id=WML%E5%8F%AF%E8%BD%89%E6%8F%9B%E5%82%B5%E5%88%B8) The company issued USD 600 million of 4.50% convertible bonds due 2029 in March 2023. Bondholders may elect to convert into shares or require redemption. The conversion price has been adjusted due to the 2024 final dividend payment. The bonds contain a conversion option derivative measured at fair value and are subject to various covenants - The company completed the offering of **USD 600.0 million** (approximately HKD 4.71 billion) of 4.50% convertible bonds due 2029 on March 7, 2023[91](index=91&type=chunk) - Holders of the WML Convertible Bonds may elect to convert into shares at an adjusted conversion price of approximately **HKD 9.66905 per share**[92](index=92&type=chunk)[93](index=93&type=chunk) - Assuming full conversion, Wynn Resorts, Limited's shareholding would be diluted from **71.34% to 65.29%**, with bondholders holding 8.48%[95](index=95&type=chunk) - Bondholders may elect to require redemption on March 7, 2027, or upon the occurrence of specific events (such as delisting of shares, change of control, or public float falling below 25%)[96](index=96&type=chunk) - The convertible bond trust deed contains covenants that restrict the company's ability to create liens, merge, or sell substantially all of its assets[97](index=97&type=chunk) [Off-Balance Sheet Arrangements](index=36&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8%E5%A4%96%E5%AE%89%E6%8E%92) Other than the WML Convertible Bonds conversion option derivative and foreign currency swaps, the company has not entered into any transactions with special purpose entities nor has it engaged in any transactions involving derivative instruments - Other than the WML Convertible Bonds conversion option derivative and foreign currency swaps, the Group has not entered into any transactions with special purpose entities nor has it engaged in any transactions involving derivative instruments[98](index=98&type=chunk) [Other Liquidity Matters](index=36&type=section&id=%E5%85%B6%E4%BB%96%E6%B5%81%E5%8B%95%E6%80%A7%E4%BA%8B%E5%AE%9C) The company expects to fund its operating and capital expenditures with cash from operations, cash on hand, and available credit facilities, and believes it holds sufficient liquid assets to meet current and anticipated needs, but cannot guarantee that operating cash flow will be sufficient for all purposes or that additional financing can be obtained on acceptable terms - The Group expects to fund its operating and capital expenditure needs with cash generated from operations, cash on hand, and available borrowings under the WM Cayman II Credit Facilities[99](index=99&type=chunk) - The company cannot be certain that its operating cash flow will be sufficient for all purposes or that it will be able to refinance its debt on acceptable terms[99](index=99&type=chunk) - The company believes it holds sufficient liquid assets to meet its current and anticipated working capital and operating needs[101](index=101&type=chunk) [Material Risk Factors](index=37&type=section&id=%E9%87%8D%E5%A4%A7%E9%A2%A8%E9%9A%AA%E5%9B%A0%E7%B4%A0) The company faces significant risks including economic downturns, strict regulations, geopolitical tensions, litigation, talent retention, cybersecurity threats, and high leverage [Risks Relating to the Business](index=37&type=section&id=%E8%88%87%E6%A5%AD%E5%8B%99%E7%9B%B8%E9%97%9C%E7%9A%84%E9%A2%A8%E9%9A%AA) The company's business is susceptible to macroeconomic conditions, regulatory compliance costs, geopolitical tensions, visa and travel restrictions, litigation, loss of key talent, terrorist threats, reputational damage, reliance on a limited number of resorts, holding company structure, intense competition, gaming credit recovery risks, anti-money laundering and anti-corruption law compliance, corporate responsibility events, changing laws and regulations, system failures, information breaches, fraud, and intellectual property challenges - The business is particularly vulnerable to reductions in consumer discretionary spending, and a negative macroeconomic environment could adversely affect the business, operating results, financial condition, and cash flows[104](index=104&type=chunk) - Compliance with Macau laws and regulations is required, and the cost of compliance or failure to comply with such regulations and government authorities could negatively impact the business[106](index=106&type=chunk) - Demand for products and services may be adversely affected by geopolitical tensions, visa and travel restrictions or difficulties, international currency remittance restrictions, and other policies or measures implemented by regional governments[109](index=109&type=chunk) - Investigations, litigation, and other disputes may divert management's attention, damage reputation, and could lead to negative publicity and additional scrutiny from regulators[111](index=111&type=chunk) - The company relies on the continued service of key management and employees, and the business would be harmed if it cannot retain key personnel or attract and retain other highly skilled employees[112](index=112&type=chunk) - The business is particularly susceptible to customers' willingness to travel and spend leisure time at the resorts, and terrorist acts, infectious disease outbreaks, regional political events, and developments could severely disrupt travel patterns[114](index=114&type=chunk) - **All cash flow is dependent on a limited number of resorts**, exposing the company to greater risks than gaming companies with more operating properties[117](index=117&type=chunk) - As a parent company, the primary source of current and future cash flow is distributions from its subsidiaries[120](index=120&type=chunk) - The authorized casino operating areas, hotels, convention, and other facilities and supplies face **intense competition**, which may intensify in the future[121](index=121&type=chunk) - The business relies on high-end customers for a certain portion of its gaming revenue, often extending credit to customers, and may not be able to collect gaming receivables from credit customers or credit gaming may decrease[123](index=123&type=chunk) - Any violation of applicable anti-money laundering laws and regulations, the Foreign Corrupt Practices Act, and other anti-corruption laws, or the resulting sanctions and penalties, could have an adverse effect on the business, performance, prospects, value, financial condition, and operating results[124](index=124&type=chunk) - Adverse events or negative publicity related to the resorts or corporate responsibility could damage the brand and reputation, thereby negatively impacting financial results[127](index=127&type=chunk) - Compliance with evolving laws and regulations and their interpretations is costly and creates compliance risks[128](index=128&type=chunk) - **System failures, information breaches**, and the cost of adequately maintaining cybersecurity could adversely affect the business[129](index=129&type=chunk) - Fraud, scams, and theft could adversely affect the business, and fraudulent websites could also damage the reputation[136](index=136&type=chunk)[137](index=137&type=chunk) - If third parties successfully challenge the company's right to own or use Wynn-related trademarks and/or service marks, the business or operating results could be harmed[140](index=140&type=chunk) [Risks Relating to Our Operations in Macau](index=51&type=section&id=%E8%88%87%E6%88%91%E5%80%91%E6%96%BC%E6%BE%B3%E9%96%80%E7%87%9F%E9%81%8B%E7%9B%B8%E9%97%9C%E7%9A%84%E9%A2%A8%E9%9A%AA) The Macau operations face risks from adverse political and economic conditions, smoking control legislation, extreme weather, termination of the gaming concession without compensation, unfavorable exchange rate movements, currency exchange controls, conflicts of interest, and a cap on the number of gaming tables - The Macau business faces significant political, economic, and social risks in operating in an emerging market, and its future success depends on the political and economic conditions in Macau and mainland China[143](index=143&type=chunk) - **Macau's smoking control legislation** could have an adverse effect on the business, financial condition, operating results, and cash flows[144](index=144&type=chunk) - Extreme weather conditions (such as typhoons and heavy rain) could adversely affect the Macau business, leading to loss of earnings or closure of the resorts[145](index=145&type=chunk) - If the Macau business fails to comply with the gaming concession contract or applicable Macau laws and administrative regulations, the Macau government could **terminate the concession without compensation**, which would have a material adverse effect on the business and financial condition[146](index=146&type=chunk) - Unfavorable movements in exchange rates (especially the Macau Pataca and Hong Kong Dollar against the US Dollar) could negatively impact the Macau business, affecting operating results, financial condition, and debt servicing ability[148](index=148&type=chunk) - Currency exchange controls and currency remittance restrictions (such as restrictions on the remittance of Renminbi) could have a negative impact on the Macau business and inhibit the growth of the gaming industry[150](index=150&type=chunk) - Conflicts of interest may arise as certain directors and senior officers are also directors of WRL[151](index=151&type=chunk) - The Macau government has set a **cap on the number of gaming tables** that can operate in Macau, and failure to adjust the table mix according to market demand could negatively impact operating results[152](index=152&type=chunk) [Risks Relating to Indebtedness](index=54&type=section&id=%E8%88%87%E5%82%B5%E5%8B%99%E7%9B%B8%E9%97%9C%E7%9A%84%E9%A2%A8%E9%9A%AA) The company has a high leverage ratio, and future cash flows may not be sufficient to meet its obligations, and it may be difficult to obtain additional financing. The debt financing agreements contain restrictive covenants that may impair the company's ability to respond to business changes and expose it to interest rate risk from floating-rate credit facilities - The company has a **high leverage ratio**, and future cash flows may not be sufficient to meet its obligations, and it may be difficult to obtain additional financing[153](index=153&type=chunk) - The debt could have significant consequences, such as acceleration of debt upon failure to meet payment obligations, foreclosure on collateralized assets or bankruptcy, and the use of a substantial portion of cash flow to service debt[155](index=155&type=chunk) - The agreements governing the debt financing contain certain **restrictive covenants** that limit the company's ability to engage in specific transactions and may impair its ability to respond to business and economic conditions[156](index=156&type=chunk) - The company is exposed to **interest rate risk** related to credit facilities that bear interest at floating rates, and interest rate fluctuations could negatively impact operating results[159](index=159&type=chunk) [Related Party Transactions](index=37&type=section&id=%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) The company engages in multiple related party transactions with the WRL Group, including share-based compensation, intellectual property licensing, and corporate support services - Other than share-based compensation expenses arising from WRL, the related party transactions for the six months ended June 30, 2025, as disclosed in Note 19 to the interim financial information, constitute continuing connected transactions of the company under Chapter 14A of the Listing Rules[102](index=102&type=chunk) - The directors have confirmed that all related party transactions comply with the requirements of Chapter 14A of the Listing Rules and have been conducted on normal commercial terms that are fair and reasonable[102](index=102&type=chunk) Directors and Senior Management [Our Directors](index=57&type=section&id=%E6%88%91%E5%80%91%E7%9A%84%E8%91%A3%E4%BA%8B) The company's Board of Directors is composed of executive, non-executive, and independent non-executive directors, each with extensive industry experience and professional backgrounds, ensuring the professionalism and diversity of corporate governance Board of Directors | Name | Age | Position | Date of Appointment as Director | | :--- | :--- | :--- | :--- | | Craig Billings | 52 | Executive Director and Chief Executive Officer | August 17, 2018 | | Linda Chen | 58 | Executive Director, Vice Chairman of the Board and President | September 16, 2009 | | Frederic Luvisutto | 53 | Executive Director and Chief Operating Officer | August 11, 2022 | | Ellen Fae Whittemore | 68 | Non-Executive Director | January 1, 2023 | | Julie Mireille Cameron-Doe | 55 | Non-Executive Director | May 26, 2023 | | Dr. Allan Zeman | 77 | Chairman of the Board and Independent Non-Executive Director | September 16, 2009 | | The Hon. Jeffrey Lam Kin-fung | 73 | Independent Non-Executive Director | September 16, 2009 | | Bruce Philip Rockowitz | 66 | Independent Non-Executive Director | September 16, 2009 | | Nicholas Sallnow-Smith | 75 | Independent Non-Executive Director | September 16, 2009 | | Xiaowei Ye | 67 | Independent Non-Executive Director | April 1, 2019 | [Executive Directors](index=58&type=section&id=%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B) The executive directors include CEO Mr. Craig Billings, Vice Chairman and President Ms. Linda Chen, and COO Mr. Frederic Luvisutto, who have extensive leadership experience in gaming, hospitality, and integrated resort operations - **Mr. Craig Billings** was re-designated as Executive Director and Chief Executive Officer on February 1, 2022, and also serves as CEO and a member of the Board of Directors of Wynn Resorts, Limited, with leadership and innovation experience in the domestic and international gaming industry[163](index=163&type=chunk) - **Ms. Linda Chen** has served as President, Vice Chairman of the Board, and Executive Director of the company since March 1, 2023, responsible for the overall operations, business, and strategic development of Wynn Macau and Wynn Palace, with over 30 years of industry experience[164](index=164&type=chunk)[166](index=166&type=chunk) - **Mr. Frederic Luvisutto** has served as Executive Director and Chief Operating Officer since August 11, 2022, responsible for overseeing the gaming operations of Wynn Macau and Wynn Palace, with over 25 years of experience in the hotel and gaming industry[168](index=168&type=chunk) [Non-Executive Directors](index=60&type=section&id=%E9%9D%9E%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B) The non-executive directors include Ms. Ellen F. Whittemore and Ms. Julie M. Cameron-Doe, who have extensive experience in legal, financial, and corporate management, providing professional guidance to the company - **Ms. Ellen F. Whittemore** has served as a Non-Executive Director since January 1, 2023, and was formerly Executive Vice President, General Counsel, and Secretary of Wynn Resorts, Limited[169](index=169&type=chunk) - **Ms. Julie M. Cameron-Doe** has served as a Non-Executive Director since May 26, 2023, and has been the Chief Financial Officer of Wynn Resorts, Limited since April 2022, and is a Fellow of the Institute of Chartered Accountants in England and Wales[170](index=170&type=chunk) [Independent Non-Executive Directors](index=60&type=section&id=%E7%8D%A8%E7%AB%8B%E9%9D%9E%E5%9F%B7%E8%A1%8C%E8%91%A3%E4%BA%8B) The independent non-executive directors include Dr. Allan Zeman, The Hon. Jeffrey Lam Kin-fung, Mr. Bruce Rockowitz, Mr. Nicholas Sallnow-Smith, and Ms. Xiaowei Ye, who have extensive professional knowledge and experience in business, public service, finance, and law, providing independent oversight and strategic advice to the company - **Dr. Allan Zeman** was appointed Non-Executive Chairman on February 7, 2018, and has been an Independent Non-Executive Director since March 29, 2014, with extensive experience in the business and public service sectors in Hong Kong[171](index=171&type=chunk) - **The Hon. Jeffrey Lam Kin-fung** has served as an Independent Non-Executive Director since September 16, 2009, and is a member of the Legislative Council and a non-official member of the Executive Council of the Hong Kong Special Administrative Region, with extensive experience in business and public service[175](index=175&type=chunk) - **Mr. Bruce Rockowitz** has served as an Independent Non-Executive Director since September 16, 2009, and was formerly the CEO and Vice Chairman of Global Brands Group Holding Limited, with extensive experience in retail and brand management[178](index=178&type=chunk) - **Mr. Nicholas Sallnow-Smith** has served as an Independent Non-Executive Director since September 16, 2009, and was formerly the Chairman and an Independent Non-Executive Director of Link Asset Management Limited, with over 30 years of experience in finance in Asia and the UK[180](index=180&type=chunk) - **Ms. Xiaowei Ye** has served as an Independent Non-Executive Director since April 1, 2019, with over 25 years of experience in the legal fields of China and the United States, and was formerly a Senior Vice President at Qualcomm, Inc[183](index=183&type=chunk) [Our Senior Management](index=65&type=section&id=%E6%88%91%E5%80%91%E7%9A%84%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4) The company's senior management team consists of the General Counsel, President – Finance and Administration, President – Casino Marketing, President – Integrated Resort Marketing, and Senior Vice President – Human Resources, each responsible for their respective areas to jointly drive the company's business development Senior Management Team | Name | Age | Position | | :--- | :--- | :--- | | Jay M. Schall | 52 | General Counsel | | Craig Fullalove | 43 | President – Finance and Administration | | Chung Cho Yee | 59 | President – Casino Marketing | | Michael Weaver | 44 | President – Integrated Resort Marketing | | Zuleika Mok | 64 | Senior Vice President – Human Resources | - **Mr. Jay M. Schall** is the General Counsel, with over 20 years of experience in the legal fields of Macau and Hong Kong[187](index=187&type=chunk) - **Mr. Craig Fullalove** is the President – Finance and Administration, responsible for leading and overseeing the finance, business development, information technology, human resources, and other administrative departments, with over 20 years of international financial experience[188](index=188&type=chunk) - **Mr. Chung Cho Yee** has served as President – Casino Marketing since March 2025, responsible for leading the gaming marketing efforts of the Macau operations, with over 25 years of experience in the integrated resort sector[189](index=189&type=chunk) - **Ms. Michael Weaver** has served as President – Integrated Resort Marketing since February 13, 2023, responsible for the non-gaming business marketing strategy of the Macau operations[189](index=189&type=chunk) - **Ms. Zuleika Mok** is the Senior Vice President – Human Resources, responsible for overseeing and leading the human resources department, with 30 years of experience in the hotel and human resources fields[191](index=191&type=chunk) [Our Company Secretary](index=67&type=section&id=%E6%88%91%E5%80%91%E7%9A%84%E5%85%AC%E5%8F%B8%E7%A7%98%E6%9B%B8) Ms. Ho Wing Tsz, Wendy has served as the Company Secretary since February 28, 2013, with over 25 years of experience in the corporate services field, and is a Chartered Secretary and a council member of The Hong Kong Chartered Governance Institute - **Ms. Ho Wing Tsz, Wendy** has served as the Company Secretary since February 28, 2013[192](index=192&type=chunk) - She is the Executive Director of the Corporate Services Division of Tricor Services Limited, with over 25 years of experience in various corporate services fields[192](index=192&type=chunk) - She is a Chartered Secretary, a Chartered Governance Professional, a Fellow of The Hong Kong Chartered Governance Institute and The Chartered Governance Institute in the United Kingdom, and a council member of The Hong Kong Chartered Governance Institute[192](index=192&type=chunk) Other Information [Dividends](index=68&type=section&id=%E8%82%A1%E6%81%AF) The company paid a final dividend of HKD 0.185 per share for the year ended December 31, 2024, in June 2025, and declared an interim dividend of HKD 0.185 per share for the six months ended June 30, 2025, in August 2025 - On March 27, 2025, the Board of Directors recommended the payment of a **final dividend of HKD 0.185 per share** for the year ended December 31, 2024, which was paid on June 11, 2025[193](index=193&type=chunk) - On August 20, 2025, the Board of Directors resolved to declare an **interim dividend of HKD 0.185 per share** for the six months ended June 30, 2025, which is expected to be paid on September 17, 2025[193](index=193&type=chunk) [Directors’ and Chief Executives’ Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company and any Associated Corporation](index=68&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E5%8F%8A%E4%BB%BB%E4%BD%95%E7%9B%B8%E8%81%AF%E6%B3%95%E5%9C%98%E7%9A%84%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E5%88%B8%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As of June 30, 2025, several directors and chief executives held shares or share options in the company, with Mr. Frederic Luvisutto holding the highest percentage at 0.15%. Additionally, Mr. Craig Billings, Ms. Linda Chen, Ms. Ellen F. Whittemore, Ms. Julie M. Cameron-Doe, and Mr. Frederic Luvisutto also held shares or share options in the associated corporations Wynn Resorts, Limited and Wynn Interactive Ltd Directors' Interests in Shares of the Company (Long Position) | Name of Director | Personal Interest | Family Interest | Other Interest | Total Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | :--- | | Dr. Allan Zeman | 662,800 | — | 14,326,000 (Share Options) | 14,988,800 | 0.01% | | Nicholas Sallnow-Smith | — | 10,000 | 276,000 + 6,892,000 (Share Options) | 7,178,000 | 0.01% | | Bruce Rockowitz | 662,800 | — | 6,796,000 (Share Options) | 7,458,800 | 0.01% | | The Hon. Jeffrey Lam Kin-fung | — | — | 6,796,000 (Share Options) | 6,796,000 | — | | Xiaowei Ye | — | — | 5,735,000 (Share Options) | 5,735,000 | — | | Frederic Luvisutto | 7,680,055 | — | — | 7,680,055 | 0.15% | Directors' Interests in Shares of Associated Corporations (Long Position) | Name of Director | Company | Personal Interest | Other Interest | Total Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | :--- | | Craig Billings | Wynn Resorts, Limited | 271,310 | 156,189 | 427,499 | 0.41% | | | Wynn Interactive Ltd. | 3,650 | — | 3,650 | 0.24% | | Linda Chen | Wynn Resorts, Limited | 417,827 | — | 417,827 | 0.40% | | Ellen F. Whittemore | Wynn Resorts, Limited | 104,108 | — | 104,108 | 0.10% | | | Wynn Interactive Ltd. | 3,650 | — | 3,650 | 0.24% | | Julie M. Cameron-Doe | Wynn Resorts, Limited | 41,417 | 57,078 | 98,495 | 0.09% | | Frederic Luvisutto | Wynn Resorts, Limited | 4,322 | — | 4,322 | 0.00% | [Substantial Shareholders’ Interests and Short Positions in Shares and Underlying Shares of the Company](index=72&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As of June 30, 2025, WM Cayman Holdings Limited I and its ultimate parent company, Wynn Resorts, Limited, were the largest shareholders of the company, holding 71.34% of the shares. The Goldman Sachs Group, Inc. also held a long position of 9.02% and a short position of 3.42% Substantial Shareholders' Interests in Shares of the Company | Name | Capacity/Nature of Interest | Number of Shares | Percentage of Issued Share Capital of the Company | | :--- | :--- | :--- | :--- | | WM Cayman Holdings Limited I | Beneficial Interest (Long Position) | 3,750,000,000 | 71.34% | | Wynn Group Asia, Inc. | Interest of Controlled Corporation (Long Position) | 3,750,000,000 | 71.34% | | Wynn Resorts Finance, LLC | Interest of Controlled Corporation (Long Position) | 3,750,000,000 | 71.34% | | Wynn Resorts Holdings, LLC | Interest of Controlled Corporation (Long Position) | 3,750,000,000 | 71.34% | | Wynn Resorts, Limited | Interest of Controlled Corporation (Long Position) | 3,750,000,000 | 71.34% | | The Goldman Sachs Group, Inc. | Interest of Controlled Corporation (Long Position) | 474,238,177 | 9.02% | | | Interest of Controlled Corporation (Short Position) | 179,918,385 | 3.42% | - WM Cayman Holdings Limited I and its parent companies, including Wynn Resorts, Limited, are deemed to be jointly interested in **71.34% of the company's shares**[205](index=205&type=chunk) - The shares held by The Goldman Sachs Group, Inc. (long position), after excluding stock borrowing, amount to 14,463,192 shares, representing approximately **0.28% of the total issued shares**, and are included in the public float[205](index=205&type=chunk) [Remuneration Policy](index=74&type=section&id=%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) The company's remuneration policy is based on employee performance, qualifications, job capabilities, and contributions, and includes a defined contribution retirement benefit plan and a non-mandatory central provident fund system, as well as an employee share ownership plan and a share option scheme to incentivize employees - The Group has approximately **11,600 employees**, and selection, remuneration, and promotion are based on performance, qualifications, job capabilities, and contributions[206](index=206&type=chunk) - The remuneration of key executives is determined by the Remuneration Committee based on the Group's performance and individual contributions[206](index=206&type=chunk) - A defined contribution retirement benefit plan and a non-mandatory central provident fund system are in place, where the company makes matching contributions equal to employee contributions, which vest to the employee at a rate of 10% per year[207](index=207&type=chunk) - The company has also established an Employee Share Ownership Plan and a Share Option Scheme[207](index=207&type=chunk) [Employee Share Ownership Plan](index=75&type=section&id=%E5%83%B1%E5%93%A1%E8%82%A1%E4%BB%BD%E6%93%81%E6%9C%89%E8%A8%88%E5%8A%83) The company has 2014 and 2023 Employee Share Ownership Plans, granting unvested shares to employees and management as part of their remuneration to incentivize them. As of June 30, 2025, 7,946,612 unvested shares had been granted with a total fair value of HKD 429 million - The company adopted Employee Share Ownership Plans in 2014 and 2023, granting unvested shares to employees and management[209](index=209&type=chunk)[210](index=210&type=chunk) - The plan mandate limit for the 2023 Employee Share Ownership Plan is **523,843,160 shares**, with a service provider sub-limit of 10,476,863 shares[210](index=210&type=chunk) - For the six months ended June 30, 2025, the company issued **7,330,000 shares** under the 2023 Employee Share Ownership Plan[210](index=210&type=chunk) - For the six months ended June 30, 2025, the company awarded a total of **7,946,612 unvested shares** to selected participants under the 2023 Employee Share Ownership Plan[212](index=212&type=chunk) Total Number and Fair Value of Shares Granted to Selected Participants | Category | Number of Selected Participants | Number of Shares | Fair Value (HKD) | | :--- | :--- | :--- | :--- | | Total Vested Shares | 14,565 | 54,917,986 | 297,655,484 | | Total Unvested Shares | 2,622 | 24,314,737 | 131,785,875 | | **Total as of June 30, 2025** | **16,669** | **79,232,723** | **429,441,359** | Movement in Unvested Awards (for the six months ended June 30, 2025) | Grantee | Unvested as of January 1, 2025 | Granted during the period | Vested during the period | Forfeited during the period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Frederic Luvisutto | 8,298,516 | 515,269 | (2,564,983) | — | 6,248,802 | | Employees | 16,223,933 | 7,378,144 | (4,633,884) | (955,457) | 18,012,736 | | Service Providers | — | 53,199 | — | — | 53,199 | [Share Option Scheme](index=79&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company has 2019 and 2023 Share Option Schemes to incentivize employees. As of the date of this interim report, there were 22,744,000 outstanding share options under the 2019 Share Option Scheme and 10,000,000 outstanding share options under the 2023 Share Option Scheme. No new share options were granted during the period - The company adopted Share Option Schemes in 2019 and 2023; share options do not immediately confer ownership of the underlying shares and require payment of an exercise price[222](index=222&type=chunk) - As of the date of this interim report, there were **22,744,000 outstanding share options** under the 2019 Share Option Scheme, representing approximately 0.43% of the issued shares[225](index=225&type=chunk) - As of the date of this interim report, there were **10,000,000 outstanding share options** under the 2023 Share Option Scheme, representing approximately 1.91% of the plan mandate limit and approximately 0.19% of the total issued shares[226](index=226&type=chunk) - For the six months ended June 30, 2025, **no share options were granted** under the 2023 Share Option Scheme[224](index=224&type=chunk) Details of Movements in Outstanding Share Options (for the six months ended June 30, 2025) | Grantee | As of January 1, 2025 | Granted during the period | Exercised during the period | Lapsed during the period | Cancelled during the period | As of June 30, 2025 | Exercise Price per Share (HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Dr. Allan Zeman | 190,200 | — | — | (190,200) | — | — | 15.46 | | Dr. Allan Zeman (Other) | 13,949,000 | — | — | — | — | 13,949,000 | 4.71-29.73 | | Nicholas Sallnow-Smith | 317,000 | — | — | (317,000) | — | — | 15.46 | | Nicholas Sallnow-Smith (Other) | 6,580,000 | — | — | — | — | 6,580,000 | 4.71-29.73 | | Bruce Rockowitz | 190,200 | — | — | (190,200) | — | — | 15.46 | | Bruce Rockowitz (Other) | 6,580,000 | — | — | — | — | 6,580,000 | 4.71-29.73 | | The

Company Information [Board of Directors](index=3&type=section&id=Board%20of%20Directors) The Board comprises executive, non-executive, and independent non-executive directors, with Dr Zonghai Li serving as Chairman[7](index=7&type=chunk) - The Board of Directors includes executive directors Dr Zonghai Li (Chairman), Dr Huamao Wang, and Dr Hua Jiang; non-executive directors Mr Bingsen Guo, Mr Ronggang Xie, and Mr Huaqing Guo; and independent non-executive directors Dr Guangmei Yan, Dr Wen Zhou, and Ms Xiangke Zhao[7](index=7&type=chunk) - The Audit Committee is chaired by Ms Xiangke Zhao, the Remuneration Committee by Dr Wen Zhou, and the Nomination and Corporate Governance Committee by Dr Zonghai Li[7](index=7&type=chunk)[8](index=8&type=chunk) [Company Contact Information](index=3&type=section&id=Company%20Contact%20Information) The company provides detailed contact information for its headquarters, principal business places, and key service providers[7](index=7&type=chunk)[8](index=8&type=chunk) - The company's headquarters is located at 1/F, Building 2, 466 Yindu Road, Xuhui District, Shanghai, China, with its principal place of business in Hong Kong at Room 1918, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay[7](index=7&type=chunk) - The auditor is Ernst & Young, and the company's website is www.carsgen.com[8](index=8&type=chunk) Financial Highlights [Revenue](index=4&type=section&id=Revenue) For the six months ended June 30, 2025, revenue was primarily generated from the ex-factory delivery of Zevor-cel Revenue Overview | Metric | Six Months Ended June 30, 2025 (RMB million) | | :--- | :--- | | Revenue | 51 | - Revenue is mainly derived from Zevor-cel (zevogenleucel injection), calculated at the ex-factory price and recognized upon product delivery[9](index=9&type=chunk) [Gross Profit](index=4&type=section&id=Gross%20Profit) The company achieved a gross profit of approximately RMB 29 million, reflecting a strong cost advantage from in-house production Gross Profit Overview | Metric | Six Months Ended June 30, 2025 (RMB million) | | :--- | :--- | | Gross Profit | 29 | - The company demonstrates a strong cost advantage in the commercialization stage, mainly due to stable and high-yield in-house production of plasmids and vectors[10](index=10&type=chunk) [Net Loss](index=4&type=section&id=Net%20Loss) Net loss significantly narrowed by RMB 277 million, driven by positive net other income/losses and reduced operating expenses Net Loss Change | Metric | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Net Loss | (75) | (352) | 277 decrease | - The reduction in loss was primarily due to: (i) a shift in other net losses and gains from a loss of **RMB 54 million** to a gain of **RMB 58 million**; (ii) a **RMB 116 million** decrease in R&D expenses to **RMB 130 million**; (iii) a **RMB 47 million** decrease in administrative expenses to **RMB 39 million**; and (iv) an increase in gross profit from **RMB 1.6 million** to **RMB 29 million**[11](index=11&type=chunk) [Adjusted Net Loss](index=4&type=section&id=Adjusted%20Net%20Loss) Adjusted net loss decreased by approximately RMB 270 million, reflecting improved operational efficiency and cost control Adjusted Net Loss Change | Metric | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Adjusted Net Loss | (72) | (342) | 270 decrease | - The decrease in adjusted net loss was mainly due to an increase in other net income, reduced R&D and administrative expenses, higher gross profit, and lower share-based compensation[12](index=12&type=chunk) [Cash and Bank Balances](index=4&type=section&id=Cash%20and%20Bank%20Balances) Cash reserves decreased due to operational and capital expenditures, but the company maintains sufficient liquidity through 2028 Cash and Bank Balances Change | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 1,261 | 1,479 | 218 decrease | - The decrease in cash was primarily due to payments for R&D expenses, administrative expenses, and capital expenditures[13](index=13&type=chunk) - The company expects its cash, cash equivalents, and deposits to be **no less than RMB 1,100 million** by the end of 2025, with sufficient cash to support operations into 2028[13](index=13&type=chunk) Business Highlights [Zevor-cel® (CT053)](index=5&type=section&id=Zevor-cel%C2%AE%20(CT053)) Zevor-cel® has been approved in China for relapsed/refractory multiple myeloma and is being commercialized with Huadong Medicine - Zevor-cel® has received NMPA approval in China for the treatment of adult patients with relapsed or refractory multiple myeloma[15](index=15&type=chunk) - The company is collaborating with Huadong Medicine for the commercialization of Zevor-cel® in mainland China, having established a dedicated commercial team and leveraging China's multi-tiered insurance system to improve patient access[15](index=15&type=chunk) Zevor-cel® Commercialization Progress | Metric | First Half of 2025 | | :--- | :--- | | Provinces/Cities Covered | 20+ | | Valid Orders | 111 | [Surri-cel (CT041)](index=5&type=section&id=Surri-cel%20(CT041)) The New Drug Application for Surri-cel, targeting Claudin18.2, has been accepted by China's CDE for advanced gastric cancer - The NDA for Surri-cel has been accepted by the CDE of China's NMPA for the treatment of advanced gastric/gastroesophageal junction adenocarcinoma with positive Claudin18.2 expression after at least two prior lines of therapy[16](index=16&type=chunk) - The product was granted **Priority Review** by the CDE in May 2025 and received **Breakthrough Therapy Designation (BTD)** in March 2025[16](index=16&type=chunk) - Results from the confirmatory Phase II clinical trial in China (NCT04581473) were published in *The Lancet* and presented orally at the 2025 ASCO Annual Meeting[16](index=16&type=chunk) [Allogeneic CAR-T Cell Products](index=5&type=section&id=Allogeneic%20CAR-T%20Cell%20Products) The company is advancing multiple allogeneic CAR-T products using its proprietary THANK-uCAR® and THANK-u Plus™ platforms - CARsgen is advancing differentiated allogeneic CAR-T cell products using its proprietary THANK-uCAR® platform and has developed the upgraded THANK-u Plus™ platform to overcome the potential impact of NKG2A expression levels on efficacy[17](index=17&type=chunk) - Allogeneic CAR-T products in development include: **CT0596** (BCMA, R/R MM/PCL), **KJ-C2219** (CD19/CD20, B-cell tumors/autoimmune diseases), **KJ-C2320** (CD38, AML), **KJ-C2114** (solid tumors), and **KJ-C2526** (NKG2DL, AML/other malignancies/cellular senescence)[17](index=17&type=chunk) Management Discussion and Analysis [I. Overview](index=6&type=section&id=I.%20Overview) CARsgen is a biopharmaceutical company focused on developing innovative CAR-T cell therapies for hematologic malignancies and solid tumors - CARsgen is a biopharmaceutical company dedicated to developing innovative CAR-T cell therapies to address unmet clinical needs in hematologic malignancies, solid tumors, and autoimmune diseases[18](index=18&type=chunk) - The company has established end-to-end capabilities for CAR-T cell research and development, from target discovery and preclinical research to clinical development and commercial-scale manufacturing[18](index=18&type=chunk) - CARsgen's mission is to become a global leader in biopharmaceuticals, providing innovative and differentiated cell therapies to make cancer and other diseases curable for patients worldwide[18](index=18&type=chunk) [II. Business Review](index=6&type=section&id=II.%20Business%20Review) The company has made significant progress in its product pipeline, technological innovation, and manufacturing capabilities - The company continues to optimize its strategic focus and business layout, concentrating on developing breakthrough CAR-T cell products for patients with significant unmet medical needs[19](index=19&type=chunk) - The NDA for Surri-cel has been accepted by the NMPA, making it the **world's first and only CAR-T cell therapy for solid tumors to reach the NDA stage**[20](index=20&type=chunk) - The company is advancing several allogeneic CAR-T cell products using its proprietary THANK-uCAR® technology and the upgraded THANK-u Plus™ platform[20](index=20&type=chunk) [Products and Pipeline](index=6&type=section&id=Products%20and%20Pipeline) The company's diverse CAR-T pipeline includes marketed, NDA-stage, and clinical-stage products for various cancers and autoimmune diseases Major Products and Pipeline Overview | Candidate Product | Target | Indication | Clinical Stage/Status | | :--- | :--- | :--- | :--- | | Zevor-cel® (CT053) | BCMA | Relapsed/refractory multiple myeloma (4L+) | Marketed | | Surri-cel (CT041) | Claudin18.2 | Gastric/GEJ adenocarcinoma, pancreatic cancer, etc | NDA Stage/Phase II | | CT071 | GPRC5D | Relapsed/refractory multiple myeloma, plasma cell leukemia | Phase I/IIT | | CT011 | GPC3 | Hepatocellular carcinoma | IND Approved | | CT0596 (Allogeneic) | BCMA | Relapsed/refractory multiple myeloma, plasma cell leukemia | IIT | | KJ-C2219 (Allogeneic) | CD19/CD20 | B-cell tumors, SLE, and systemic sclerosis | IIT | | KJ-C2320 (Allogeneic) | CD38 | Acute myeloid leukemia | IIT | - Zevor-cel® was approved by the NMPA on February 23, 2024, and is being commercialized in mainland China in collaboration with Huadong Medicine, having received a **RMB 75 million** regulatory milestone payment with rights to up to **RMB 1,025 million** in further milestones[24](index=24&type=chunk) - Surri-cel's NDA has been accepted by the CDE with Priority Review and Breakthrough Therapy Designation, and its confirmatory Phase II trial data showed significant PFS improvement and clinically meaningful OS benefits in advanced G/GEJA patients compared to standard therapies[30](index=30&type=chunk)[31](index=31&type=chunk) - CT071, developed via the CARcelerate® platform, reduces manufacturing time to **around 30 hours**; an IIT study for newly diagnosed multiple myeloma showed an **ORR of 100%**, with **70% achieving sCR**[39](index=39&type=chunk)[40](index=40&type=chunk) - The allogeneic CAR-T product CT0596 (THANK-u Plus™) has shown encouraging efficacy signals in R/R MM patients, with **3 of 5 patients (60%)** achieving sCR/CR and **4 of 5 (80%)** achieving bone marrow MRD negativity at the first 4-week assessment, with a favorable safety profile[43](index=43&type=chunk) - Certain subsidiaries entered an agreement with a fund managed by SBG-Qihang (Zhuhai) Equity Investment Management Enterprise (Limited Partnership), where the investor subscribed to an **8% stake** in UCaThera Bio (Shanghai) Co, Ltd for **RMB 80,000,000**, granting UCaThera exclusive rights for allogeneic CAR-T products in mainland China[45](index=45&type=chunk) [Continuous R&D and Technological Innovation](index=12&type=section&id=Continuous%20R&D%20and%20Technological%20Innovation) The company leverages proprietary platforms like THANK-uCAR®, CARcelerate®, and CycloCAR® to address key challenges in CAR-T therapy - The company has established a comprehensive R&D platform covering the entire CAR-T development cycle, including target discovery, vector design, manufacturing, and quality control[46](index=46&type=chunk) - The **THANK-u Plus™ platform**, an upgrade to THANK-uCAR®, is designed to overcome the potential impact of NKG2A expression on allogeneic CAR-T efficacy and has shown significantly superior anti-tumor effects in animal studies[47](index=47&type=chunk) - The **CARcelerate® platform** can reduce CAR-T cell manufacturing time to approximately **30 hours**, producing younger, more potent cells, thereby improving efficiency, lowering costs, and increasing patient access[48](index=48&type=chunk) - **CycloCAR® technology**, through co-expression of cytokine IL-7 and chemokine CCL21, aims to enhance efficacy in solid tumors and reduce the need for lymphodepletion preconditioning[50](index=50&type=chunk) - **LADAR™ technology** (Local Action Driven by Artificial Receptor) is designed to address target availability challenges by precisely controlling immune cell action on cancer cells, reducing on-target, off-tumor toxicity[50](index=50&type=chunk) Intellectual Property Overview | Metric | As of June 30, 2025 | | :--- | :--- | | Total Patents | 300+ | | Granted Patents Worldwide | 140 | | New Patents Granted (since Jan 1, 2025) | 11 | | New Patent Applications (since Jan 1, 2025) | 16 | [Manufacturing](index=15&type=section&id=Manufacturing) The company has established vertically integrated, GMP-compliant manufacturing capabilities in both China and the United States - The company has established in-house, GMP-compliant, vertically integrated manufacturing capabilities for plasmids, lentiviral vectors, and CAR-T cell products to enhance efficiency, control, and cost-effectiveness[53](index=53&type=chunk) - The Jinshan manufacturing facility supports the commercial production of Zevor-cel® and is expected to provide stable support for the commercial production of Surri-cel[53](index=53&type=chunk) - In September 2024, the FDA re-inspected the RTP manufacturing facility in Durham, NC, which **passed with zero findings (no Form 483)**, leading to the lifting of the clinical hold in the US on October 31, 2024[54](index=54&type=chunk) [Industry Overview](index=16&type=section&id=Industry%20Overview) The global CAR-T cell therapy market continues to grow, driven by rising cancer incidence and technological advancements - The global CAR-T cell therapy market has experienced strong growth since the first product approval in 2017 and is expected to expand further[56](index=56&type=chunk) - As of the date of this report, **seven CAR-T cell products** have been approved by the US FDA, and **seven CAR-T cell products** have been approved by the China NMPA[56](index=56&type=chunk) - Significant unmet medical needs remain for cancer patients globally, particularly for innovative CAR-T cell products for the treatment of solid tumors[56](index=56&type=chunk) [Future and Outlook](index=16&type=section&id=Future%20and%20Outlook) The company will focus on advancing its lead products, developing innovative technologies, and expanding its global manufacturing footprint - The company will continue to focus on rapidly advancing the clinical development of Zevor-cel® and Surri-cel in China and overseas, with plans to promote these products in earlier lines of therapy[57](index=57&type=chunk) - The company will continue to develop innovative CAR-T technologies to further optimize the efficacy, safety, and affordability of its CAR-T cell therapy products[57](index=57&type=chunk) - The company will continue to expand its manufacturing capacity in China and the US to support clinical trials and future commercialization, while also establishing more external collaborations with leading research institutions and pharmaceutical companies[57](index=57&type=chunk) [III. Financial Review](index=17&type=section&id=III.%20Financial%20Review) The company's financial performance improved with a significantly narrowed net loss, driven by revenue growth and reduced expenses - The company has incurred operating losses annually since inception, with operating losses of **RMB 77 million** and **RMB 362 million** for the six months ended June 30, 2025 and 2024, respectively[58](index=58&type=chunk) - Net loss for the six months ended June 30, 2025, was **RMB 75 million**, a decrease of **RMB 277 million** from **RMB 352 million** in the same period last year[59](index=59&type=chunk) - The reduction in loss was primarily due to decreased R&D expenses, lower administrative expenses, higher net foreign exchange gains, and increased gross profit[59](index=59&type=chunk) [Overview](index=17&type=section&id=Overview) The company began generating revenue from Zevor-cel® sales but continues to experience operating losses from R&D and administrative activities - The company has one product, Zevor-cel®, approved for commercial sale on February 23, 2024, and has since generated revenue from product sales[58](index=58&type=chunk) Operating Loss Overview | Metric | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | | :--- | :--- | :--- | | Operating Loss | (77) | (362) | [Loss for the Period](index=17&type=section&id=Loss%20for%20the%20Period) Net loss for the period decreased substantially by RMB 277 million, reflecting improved revenue and effective cost management Net Loss for the Period Change | Metric | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Net Loss | (75) | (352) | 277 decrease | - The decrease in loss was mainly due to reduced R&D expenses, lower administrative expenses, higher net foreign exchange gains, and increased gross profit[59](index=59&type=chunk) [Non-IFRS Measures](index=17&type=section&id=Non-IFRS%20Measures) Adjusted net loss, a non-IFRS measure, is provided to better reflect the company's core business performance - Adjusted net loss and adjusted net loss per share are non-IFRS measures that exclude the impact of adjusted items such as share-based compensation[60](index=60&type=chunk) Reconciliation of Loss to Adjusted Loss | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the period | (75,483) | (351,558) | | Add: Share-based compensation | 3,684 | 9,190 | | Adjusted net loss | (71,799) | (342,368) | Reconciliation of Loss Per Share to Adjusted Loss Per Share | Metric | Six Months Ended June 30, 2025 (RMB) | Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Loss per share for the period | (0.14) | (0.63) | | Add: Share-based compensation per share | 0.01 | 0.02 | | Adjusted net loss per share | (0.13) | (0.61) | [Revenue](index=19&type=section&id=Revenue) Revenue grew significantly to RMB 50,961 thousand, primarily driven by the commercial sales of Zevor-cel® Revenue Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 50,961 | 6,340 | [R&D Expenses](index=19&type=section&id=R&D%20Expenses) R&D expenses decreased by RMB 116 million due to lower employee benefits, depreciation, and clinical trial costs R&D Expenses Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Employee benefit expenses | 68,170 | 121,842 | | Testing and clinical expenses | 28,514 | 79,035 | | Depreciation of property, plant and equipment | 8,019 | 15,503 | | Total | 130,221 | 245,555 | - The **RMB 116 million** decrease in R&D expenses was mainly due to reductions in employee benefit expenses, depreciation of property, plant and equipment, and testing and clinical expenses[63](index=63&type=chunk) [Administrative Expenses](index=20&type=section&id=Administrative%20Expenses) Administrative expenses decreased by RMB 47 million, primarily from reduced employee benefits and professional service fees Administrative Expenses Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Employee benefit expenses | 21,620 | 32,447 | | Professional service fees | 5,816 | 22,863 | | Depreciation of property, plant and equipment | 533 | 15,346 | | Total | 39,029 | 86,313 | - The **RMB 47 million** decrease in administrative expenses was mainly due to reductions in employee benefit expenses, professional service fees, and depreciation of property, plant and equipment[64](index=64&type=chunk) [Employee Benefit Expenses and Share-Based Payments](index=21&type=section&id=Employee%20Benefit%20Expenses%20and%20Share-Based%20Payments) Total employee benefit expenses decreased due to a reduction in headcount and lower share-based compensation Employee Benefit Expenses Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Wages and salaries | 65,036 | 121,937 | | Pension costs | 7,546 | 10,367 | | Share-based compensation | 3,644 | 9,106 | | Other employee benefits | 13,564 | 12,879 | | Total | 89,790 | 154,289 | - The decrease in employee benefit expenses was mainly due to a reduction in headcount and lower employee salaries and share-based compensation, partially offset by annual salary increases and other employee benefits from severance compensation[65](index=65&type=chunk) Share-Based Compensation Expenses Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Administrative expenses | 779 | 2,398 | | R&D expenses | 2,865 | 6,708 | | Cost of sales | 40 | 84 | | Total | 3,684 | 9,190 | [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company relies on equity and debt financing, with cash balances decreasing due to net cash used in operating activities - The company relies on equity and debt financing as its primary sources of liquidity[67](index=67&type=chunk) Cash Flow Overview | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (196,308) | (255,947) | | Net cash from investing activities | 1,715 | 6,584 | | Net cash (used in)/from financing activities | (29,635) | 24,688 | | Net decrease in cash and cash equivalents | (224,228) | (224,675) | - As of June 30, 2025, cash and bank balances were **RMB 1,261 million**, a decrease of **RMB 218 million** from **RMB 1,479 million** on December 31, 2024, mainly due to investments in R&D, administrative, and capital expenditures[72](index=72&type=chunk) [Borrowings and Gearing Ratio](index=24&type=section&id=Borrowings%20and%20Gearing%20Ratio) The company's total borrowings were reduced to zero, significantly lowering its gearing ratio to 7.2% Borrowings and Gearing Ratio Change | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Borrowings (RMB million) | 0 | 89 | | Gearing Ratio | 7.2% | 15.75% | [Lease Liabilities](index=24&type=section&id=Lease%20Liabilities) Lease liabilities for offices and dormitories decreased slightly during the period Lease Liabilities Change | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Lease Liabilities | 69 | 77 | [Material Investments, Acquisitions, and Disposals](index=24&type=section&id=Material%20Investments,%20Acquisitions,%20and%20Disposals) The company did not engage in any material investments, acquisitions, or disposals during the reporting period - As of June 30, 2025, the company did not hold any significant investments valued at or exceeding **5% of its total assets**[77](index=77&type=chunk) - For the six months ended June 30, 2025, the company had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[78](index=78&type=chunk) [Foreign Exchange Risk](index=25&type=section&id=Foreign%20Exchange%20Risk) The company is exposed to foreign exchange risk from operations in the US and China but currently has no hedging instruments - The Group's entities operate in the United States and the People's Republic of China, and certain cash balances, receivables, and payables are denominated in currencies other than the functional currencies of the respective entities[79](index=79&type=chunk) - As of June 30, 2025, the Group did not have any foreign exchange hedging instruments or policies, but management continuously monitors foreign exchange risk and will consider appropriate hedging measures[79](index=79&type=chunk) [Capital Expenditure](index=25&type=section&id=Capital%20Expenditure) Capital expenditure for the period totaled approximately RMB 2.8 million, primarily for equipment and software purchases Capital Expenditure Overview | Metric | Six Months Ended June 30, 2025 (RMB million) | | :--- | :--- | | Total Capital Expenditure | 2.8 | - The majority of capital expenditure was for the purchase of property, plant and equipment, and software[80](index=80&type=chunk) [Pledge of Assets and Contingent Liabilities](index=25&type=section&id=Pledge%20of%20Assets%20and%20Contingent%20Liabilities) The company had no pledged assets or material contingent liabilities as of the reporting date - As of June 30, 2025, and December 31, 2024, the Group had not pledged any assets[81](index=81&type=chunk) - As of June 30, 2025, the Group did not have any material contingent liabilities[82](index=82&type=chunk) [Employees and Remuneration Policy](index=25&type=section&id=Employees%20and%20Remuneration%20Policy) The company's employee count decreased, while it maintained competitive remuneration policies to attract and retain talent Employee Headcount Change | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Employees | 371 | 468 | - The company's employee remuneration includes salaries, bonuses, share incentive plans, social insurance contributions, and other benefits[84](index=84&type=chunk) - The company invests in continuous education and training programs and offers competitive salaries, project incentives, and stock incentive plans, especially for key employees[84](index=84&type=chunk) [Future Investment Plans and Expected Funding](index=26&type=section&id=Future%20Investment%20Plans%20and%20Expected%20Funding) The company plans to expand globally through organic growth and potential acquisitions, funded by a mix of financing channels - The Group will continue to expand in China and global markets through in-house R&D, mergers and acquisitions, and other means[85](index=85&type=chunk) - The company will utilize a variety of financing channels to fund capital expenditures, including internal funds, capital markets, and bank loans, and currently has sufficient bank credit facilities[85](index=85&type=chunk) [IV. Principal Risks and Uncertainties](index=26&type=section&id=IV.%20Principal%20Risks%20and%20Uncertainties) The company faces risks including sustained net losses, reliance on product success, intense competition, and regulatory hurdles - The company has incurred **significant net losses and net operating cash outflows** since its inception and expects to continue incurring them for the foreseeable future, with no guarantee of achieving profitability[86](index=86&type=chunk) - The company is heavily dependent on the success of its product candidates, most of which are in preclinical or clinical development; failure to successfully complete development, obtain regulatory approval, and commercialize them would severely harm the business[89](index=89&type=chunk) - The clinical development process for biopharmaceutical products is **lengthy, costly, and fraught with uncertainty**[89](index=89&type=chunk) - All major aspects of biopharmaceutical product R&D, manufacturing, and commercialization are subject to **strict regulation**, and failure to comply could negatively impact the business[89](index=89&type=chunk) - The company's product candidates are cell therapies with **complex manufacturing processes**, which may lead to difficulties, delays, or an inability to maintain a commercially viable cost structure[90](index=90&type=chunk) - Failure to obtain and maintain adequate patent and other intellectual property protection for product candidates could allow third parties to develop and commercialize similar or identical products, adversely affecting the company[94](index=94&type=chunk) Corporate Governance and Other Information [I. Interim Dividend](index=29&type=section&id=I.%20Interim%20Dividend) The Board of Directors has recommended not to pay an interim dividend for the reporting period - The Board of Directors recommends that no interim dividend be paid to shareholders for the reporting period[96](index=96&type=chunk) [II. Compliance with the Model Code for Securities Transactions](index=29&type=section&id=II.%20Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions) The company has adopted and complied with the Model Code, with all directors confirming their adherence during the period - The company has adopted the Model Code, and upon specific inquiry, all directors confirmed their compliance with the Model Code during the reporting period[97](index=97&type=chunk) - During the reporting period, the company was not aware of any instances of non-compliance with the Model Code by its employees[97](index=97&type=chunk) [III. Compliance with the Corporate Governance Code](index=29&type=section&id=III.%20Compliance%20with%20the%20Corporate%20Governance%20Code) The company complied with all applicable provisions of the Corporate Governance Code, except for the separation of Chairman and CEO roles - During the reporting period, the company complied with all applicable code provisions of the Corporate Governance Code, with the exception of code provision C.2.1[98](index=98&type=chunk) - Dr Zonghai Li currently serves as both Chairman and Chief Executive Officer; the Board believes this arrangement facilitates effective execution of strategic plans and enhances communication between management and the Board[98](index=98&type=chunk) [IV. Audit Committee](index=30&type=section&id=IV.%20Audit%20Committee) The Audit Committee has reviewed the interim financial results and confirmed their compliance with accounting standards - The Audit Committee consists of three members: Ms Xiangke Zhao (Chairlady), Mr Huaqing Guo, and Dr Wen Zhou[99](index=99&type=chunk) - The Audit Committee has reviewed and endorsed the accounting principles and practices adopted by the Group and has discussed internal control and financial reporting matters with management[99](index=99&type=chunk) - The Audit Committee is of the opinion that the interim financial results for the six months ended June 30, 2025, have been prepared in compliance with relevant accounting standards, rules, and regulations, and that appropriate disclosures have been made[99](index=99&type=chunk) [V. Changes in Information of Directors and Chief Executive under Rule 13.51B(1) of the Listing Rules](index=30&type=section&id=V.%20Changes%20in%20Information%20of%20Directors%20and%20Chief%20Executive%20under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) There have been no changes to the information of directors and the chief executive that require disclosure under the Listing Rules - Since the publication of the company's 2024 annual report, there have been no changes in the information of the directors and the chief executive that require disclosure under Rule 13.51B(1) of the Listing Rules[100](index=100&type=chunk) - Dr Wen Zhou has confirmed his independence and has no financial or other interests, nor any connections with any core connected persons of the company[100](index=100&type=chunk) [VI. Interests and Short Positions of Directors and Chief Executive in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=31&type=section&id=VI.%20Interests%20and%20Short%20Positions%20of%20Directors%20and%20Chief%20Executive) Several directors are deemed to have a collective interest of 37.79% in the company's shares through controlled corporations Long Positions of Directors and Chief Executive in the Company's Shares | Name of Director/Chief Executive | Capacity | Number of Shares/Nature | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Dr Zonghai Li | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Mr Bingsen Guo | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Dr Huamao Wang | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Mr Huaqing Guo | Beneficial owner, interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Dr Hua Jiang | Beneficial owner | 3,390,156/Long position | 0.59% | - Dr Zonghai Li, Mr Bingsen Guo, Dr Huamao Wang, Mr Huaqing Guo, Mr Haiou Chen, indirect entities, Ms Xuehong Yang, Yide Holdings, Ms Xiaojing Guo, and Quanzhou Dingwo (Limited Partnership) entered into a Concert Party Agreement on February 22, 2021, under which each party is deemed to be interested in the shares held by the others[101](index=101&type=chunk) [VII. Interests and Short Positions of Substantial Shareholders](index=32&type=section&id=VII.%20Interests%20and%20Short%20Positions%20of%20Substantial%20Shareholders) Yijie Biotech and its associated parties are deemed to have a collective interest of 37.79% in the company's shares Long Positions of Substantial Shareholders in the Company's Shares | Name of Shareholder | Capacity | Number of Shares/Nature | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | CART Biotech Limited | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Redelle Holding Limited | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | He Xi Holdings Limited | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | CANDOCK Holdings Limited | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Mr Haiou Chen | Beneficial interest, interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Accure Biotech Limited | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Ms Xuehong Yang | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Yide Holdings | Beneficial interest & concert party | 217,648,730/Long position | 37.79% | | Ms Xiaojing Guo | Interest of controlled corporation & concert party | 217,648,730/Long position | 37.79% | | Quanzhou Dingwo (LP) | Beneficial interest & concert party | 217,648,730/Long position | 37.79% | | Yijie Biotech | Beneficial interest & concert party | 217,648,730/Long position | 37.79% | - Yijie Biotech is owned by CART Biotech Limited (69.00%), Redelle Holding Limited (10.20%), He Xi Holdings Limited (10.00%), Candock Holdings Limited (10.00%), and Accure Biotech Limited (0.80%)[107](index=107&type=chunk) [VIII. Directors' Rights to Acquire Shares or Debentures](index=33&type=section&id=VIII.%20Directors'%20Rights%20to%20Acquire%20Shares%20or%20Debentures) No directors or their associates were granted or exercised rights to acquire shares or debentures during the period - At the end of the reporting period, no director or their respective spouse or children under 18 had been granted or had exercised any rights to benefit by the acquisition of shares or debentures of the company[105](index=105&type=chunk) [IX. Legal Proceedings](index=33&type=section&id=IX.%20Legal%20Proceedings) The company and its subsidiaries were not involved in any material litigation or arbitration as of the reporting date - As of June 30, 2025, to the best of the company's knowledge, neither the company nor its subsidiaries were involved in any material litigation or arbitration, and there were no material pending or threatened claims against them[106](index=106&type=chunk) [X. Purchase, Sale or Redemption of the Company's Listed Securities](index=34&type=section&id=X.%20Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period - Neither the company nor any of its subsidiaries acquired, sold, or redeemed any of the company's listed securities during the reporting period[108](index=108&type=chunk) - As of June 30, 2025, the company did not hold any treasury shares, and there were no shares that had been repurchased but not cancelled[109](index=109&type=chunk) [XI. Use of Proceeds from the Global Offering](index=34&type=section&id=XI.%20Use%20of%20Proceeds%20from%20the%20Global%20Offering) The net proceeds from the 2021 global offering have been largely utilized as intended, with the remainder expected to be used by 2026 - The company's shares were listed on the Stock Exchange on June 18, 2021, raising net proceeds of approximately **HK$3,008 million** from the global offering[110](index=110&type=chunk) Use of Net Proceeds from the Global Offering (as of June 30, 2025) | Use of Proceeds | Planned Allocation (HK$ million) | Amount Utilized (as of June 30, 2025) (RMB million) | Balance (as of June 30, 2025) (RMB million) | | :--- | :--- | :--- | :--- | | Further development of core product BCMA CAR-T (CT053) | 902.4 | 851.7 | 0 | | R&D for other ongoing and planned pipeline candidates | 932.5 | 759.6 | 90.3 | | Building comprehensive manufacturing and commercialization capabilities | 601.6 | 415.2 | 133.1 | | Upgrading CAR-T technology and early-stage R&D | 300.8 | 214.7 | 59.4 | | Working capital and other general corporate purposes | 270.7 | 255.5 | 0 | | **Total** | **3,008.0** | **2,496.7** | **282.8** | - The unutilized net proceeds are expected to be fully used for their intended purposes by 2026, later than originally planned due to cost savings from improved operational efficiency and insourcing of previously outsourced services[111](index=111&type=chunk) [XII. Events After the Reporting Period](index=35&type=section&id=XII.%20Events%20After%20the%20Reporting%20Period) There were no significant events after the reporting period that would require disclosure or adjustment - As of the date of this report, the Group has had no significant events after the reporting period that would require additional disclosure or adjustment[113](index=113&type=chunk) [XIII. Continuing Disclosure Obligations under the Listing Rules](index=35&type=section&id=XIII.%20Continuing%20Disclosure%20Obligations%20under%20the%20Listing%20Rules) The company has no other disclosure obligations under Rules 13.20, 13.21, and 13.22 of the Listing Rules - The company has no other disclosure obligations under Rules 13.20, 13.21, and 13.22 of the Listing Rules[114](index=114&type=chunk) [XIV. Share Incentive Schemes](index=36&type=section&id=XIV.%20Share%20Incentive%20Schemes) The company operates three share incentive schemes to attract, motivate, and retain qualified participants - The company has adopted three share incentive schemes: the 2019 Equity Incentive Plan, the Post-IPO RSU Scheme, and the Post-IPO Share Option Scheme[115](index=115&type=chunk) - These schemes are designed to attract, motivate, retain, and reward certain employees, directors, and other qualified individuals of the Group by aligning their interests with those of the Group through share ownership[116](index=116&type=chunk)[127](index=127&type=chunk)[130](index=130&type=chunk) [2019 Equity Incentive Plan](index=36&type=section&id=2019%20Equity%20Incentive%20Plan) This plan aims to incentivize and reward employees, directors, and other eligible persons for their contributions to the Group - The 2019 Equity Incentive Plan is designed to attract, motivate, retain, and reward certain employees, directors, and other qualified persons of the Group[116](index=116&type=chunk) Outstanding Options under the 2019 Equity Incentive Plan | Metric | Number of Shares Underlying Options Outstanding at Jan 1, 2025 | Number of Shares Underlying Options Outstanding at June 30, 2025 | | :--- | :--- | :--- | | Total | 10,290,851 | 7,768,259 | Unvested Share Awards under the 2019 Equity Incentive Plan | Metric | Number of Shares Underlying Unvested RSUs at Jan 1, 2025 | Number of Shares Underlying Unvested RSUs at June 30, 2025 | | :--- | :--- | :--- | | Total | 155,179 | 63,475 | [Post-IPO RSU Scheme](index=39&type=section&id=Post-IPO%20RSU%20Scheme) This scheme aligns the interests of eligible participants with the Group's long-term development through share ownership - The purpose of the Post-IPO RSU Scheme is to align the interests of eligible persons with those of the Group through share ownership, encouraging and retaining them to contribute to the Group's long-term development and interests[127](index=127&type=chunk) Unvested Share Awards under the Post-IPO RSU Scheme | Metric | Number of Shares Underlying Unvested RSUs at Jan 1, 2025 | Number of Shares Underlying Unvested RSUs at June 30, 2025 | | :--- | :--- | :--- | | Total | 1,756,495 | 2,705,545 | - During the reporting period, the number of shares issuable under share awards granted through the Post-IPO RSU Scheme represented **0.30%** of the weighted average number of issued shares (excluding treasury shares, if any)[127](index=127&type=chunk) [Post-IPO Share Option Scheme](index=40&type=section&id=Post-IPO%20Share%20Option%20Scheme) This scheme rewards employees for their past contributions and encourages their continued commitment to the company's success - The Post-IPO Share Option Scheme aims to reward employees who have contributed to the company's achievements and to encourage their further contributions[130](index=130&type=chunk) Outstanding Options under the Post-IPO Share Option Scheme | Metric | Number of Shares Underlying Options Outstanding at Jan 1, 2025 | Number of Shares Underlying Options Outstanding at June 30, 2025 | | :--- | :--- | :--- | | Total | 8,802,310 | 8,860,838 | - During the reporting period, the number of shares issuable under options granted through the Post-IPO Share Option Scheme represented **0.62%** of the weighted average number of issued shares (excluding treasury shares, if any)[130](index=130&type=chunk) [Summary of Share Incentive Schemes](index=43&type=section&id=Summary%20of%20Share%20Incentive%20Schemes) This section outlines the key terms of the company's three share incentive plans, including purpose, eligibility, and award limits - All three schemes aim to attract, motivate, and retain talent by aligning participant interests with the company's long-term development[138](index=138&type=chunk) - Eligible participants include employees, directors, officers, and consultants, with specific limits on the maximum number of shares and individual entitlements under each plan[138](index=138&type=chunk)[139](index=139&type=chunk) - The vesting and exercise periods for options and share awards are determined by the Board on a case-by-case basis, with corresponding provisions for exercise or purchase prices[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) Financial Statements [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=47&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The company reported revenue of RMB 50,961 thousand and a significantly narrowed net loss of RMB 75,483 thousand Summary of Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 50,961 | 6,340 | | Gross Profit | 29,369 | 1,617 | | Operating Loss | (76,704) | (361,540) | | Loss for the period attributable to owners of the parent | (75,483) | (351,558) | | Total comprehensive loss for the period attributable to owners of the parent | (125,730) | (265,132) | | Basic and diluted loss per share (RMB) | (0.14) | (0.63) | [Interim Condensed Consolidated Statement of Financial Position](index=48&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were RMB 1,513,391 thousand, with net assets of RMB 962,133 thousand Summary of Interim Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 133,498 | 142,759 | | Total current assets | 1,379,893 | 1,530,275 | | Total current liabilities | 213,799 | 254,007 | | Total non-current liabilities | 337,459 | 362,320 | | Net assets | 962,133 | 1,056,707 | | Total equity | 962,133 | 1,056,707 | [Condensed Consolidated Statement of Changes in Equity](index=49&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity decreased, primarily due to the loss for the period and exchange differences, partially offset by share-based payments Summary of Condensed Consolidated Statement of Changes in Equity | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total attributable to owners of the parent | 962,133 | 1,056,707 | | Loss for the period | (75,483) | (8,987,961) (Accumulated losses) | | Other comprehensive income | (50,247) | (50,247) | | Share-based payments | 3,684 | 3,684 | | Issue of shares to employees under employee incentive schemes | 26,478 | 26,478 | [Interim Condensed Consolidated Statement of Cash Flows](index=50&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash used in operating activities was RMB 196,308 thousand, resulting in a decrease in cash and cash equivalents Summary of Interim Condensed Consolidated Statement of Cash Flows | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (196,308) | (255,947) | | Net cash from investing activities | 1,715 | 6,584 | | Net cash (used in)/from financing activities | (29,635) | 24,688 | | Net decrease in cash and cash equivalents | (224,228) | (224,675) | | Cash and cash equivalents at end of period | 1,260,793 | 1,652,569 | Notes to the Interim Condensed Consolidated Financial Information [1. General Information](index=51&type=section&id=1.%20General%20Information) CARsgen Therapeutics Holdings Limited is a Cayman Islands-incorporated investment holding company with biopharmaceutical operations in China and the US - CARsgen Therapeutics Holdings Limited was incorporated in the Cayman Islands on February 9, 2018, as a limited liability company and acts as an investment holding company[150](index=150&type=chunk) - The Group operates as a biopharmaceutical company in mainland China and the United States, with end-to-end CAR-T cell R&D capabilities from target discovery to commercial-scale manufacturing[150](index=150&type=chunk) [2. Basis of Preparation](index=51&type=section&id=2.%20Basis%20of%20Preparation) The interim financial information has been prepared in accordance with IAS 34 and should be read with the 2024 annual financial statements - The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 Interim Financial Reporting[151](index=151&type=chunk) - This interim financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements for the year ended December 31, 2024[151](index=151&type=chunk) [3. Changes in Accounting Policies and Disclosures](index=51&type=section&id=3.%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The accounting policies adopted are consistent with the 2024 annual report, with no material impact from newly adopted IFRS amendments - The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2024, except for the adoption of the amendment to IAS 21 Lack of Exchangeability[152](index=152&type=chunk)[153](index=153&type=chunk) - The amendments had no impact on the interim condensed consolidated financial information as the currencies used for transactions and the functional currencies of the Group's entities are exchangeable[153](index=153&type=chunk) [4. Segment Information](index=52&type=section&id=4.%20Segment%20Information) The Group operates as a single business segment, with a significant portion of revenue derived from one major customer - The executive directors of the Group consider that the Group's business is operated and managed as a single operating segment, and therefore no further operating segment analysis is presented[154](index=154&type=chunk) Revenue from Major Customers | Customer | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer A | 50,961 | 6,340 | [5. Revenue and Other Income](index=52&type=section&id=5.%20Revenue%20and%20Other%20Income) Revenue was primarily from pharmaceutical product sales in mainland China, while other income included government grants and interest Revenue Analysis | Revenue Source | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Sales of pharmaceutical products | 48,263 | 5,925 | | Provision of cryopreservation services | 2,698 | 415 | | **Total** | **50,961** | **6,340** | - All revenue is derived from mainland China and is primarily from the sale of goods transferred at a point in time[156](index=156&type=chunk) Other Income Analysis | Other Income Source | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Government grants | 1,143 | 2,907 | | Interest income from time deposits | 4,495 | 20,155 | | **Total** | **5,638** | **23,062** | [6. Other Net Income/(Losses)](index=54&type=section&id=6.%20Other%20Net%20Income/(Losses)) The company recorded other net income of RMB 58,481 thousand, driven by significant net foreign exchange gains Other Net Income/(Losses) Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net foreign exchange gains/(losses) | 59,841 | (53,476) | | Others | (1,360) | (154) | | **Total** | **58,481** | **(53,630)** | [7. Loss Before Tax](index=54&type=section&id=7.%20Loss%20Before%20Tax) Loss before tax from continuing operations narrowed significantly due to broad-based reductions in operating expenses Loss Before Tax and Major Expenses Change | Metric | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss before income tax | (75,483) | (351,558) | | Employee benefit expenses | 99,370 | 154,288 | | Testing and clinical expenses | 28,514 | 79,035 | | Depreciation of property, plant and equipment | 9,307 | 31,708 | | Professional service expenses | 5,816 | 22,664 | | R&D expenses | 130,221 | 245,555 | | Administrative expenses | 39,029 | 86,313 | [8. Income Tax Expense](index=55&type=section&id=8.%20Income%20Tax%20Expense) No income tax provision was made for the period as the company did not generate taxable profits in its operating jurisdictions - The company is incorporated in the Cayman Islands as an exempted company and is therefore exempt from Cayman Islands income tax[160](index=160&type=chunk) - The mainland China subsidiary, CARsgen Pharmaceutical, was recognized as a High and New Technology Enterprise in 2023, qualifying for a preferential tax rate of **15%** for three years starting from 2023[162](index=162&type=chunk) - No provision for mainland China corporate income tax or US corporate income tax was made as there were no assessable profits[163](index=163&type=chunk)[165](index=165&type=chunk) [9. Dividend](index=56&type=section&id=9.%20Dividend) No dividend was declared or paid by the company for the six months ended June 30, 2025 - No dividend was declared or paid by the company for the six months ended June 30, 2025[169](index=169&type=chunk) [10. Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=56&type=section&id=10.%20Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) Basic and diluted loss per share narrowed to RMB 0.14, with no dilution adjustment due to the anti-dilutive effect of potential shares Loss Per Share Calculation | Metric | Six Months Ended June 30, 2025 (RMB thousand/thousand shares/RMB) | Six Months Ended June 30, 2024 (RMB thousand/thousand shares/RMB) | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the parent | (75,483) | (351,558) | | Weighted average number of ordinary shares for basic and diluted loss per share | 551,391 | 557,030 | | Basic and diluted loss per share | (0.14) | (0.63) | - No adjustment has been made to the basic loss per share amounts presented for the period in respect of dilution, as the impact of outstanding potential ordinary shares related to share-based payments and the put option for non-controlling interests of a subsidiary had an anti-dilutive effect[170](index=170&type=chunk) [11. Property, Plant and Equipment and Right-of-Use Assets](index=56&type=section&id=11.%20Property,%20Plant%20and%20Equipment%20and%20Right-of-Use%20Assets) The company incurred costs for property, plant, and equipment and recognized an impairment loss during the period Cost of Additions to Property, Plant and Equipment and Right-of-Use Assets | Asset Type | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 1,219 | 3,109 | | Right-of-use assets | 56 | 5,736 | - For the six months ended June 30, 2025, an impairment loss of **RMB 2,338 thousand** was recognized for property, plant and equipment[172](index=172&type=chunk) [12. Trade Receivables](index=57&type=section&id=12.%20Trade%20Receivables) Trade receivables increased, with all balances due from a single customer, posing a credit concentration risk Aging Analysis of Trade Receivables | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 17,745 | 8,768 | | 1 to 2 years | 800 | – | | **Net carrying amount** | **18,545** | **8,768** | - Trade receivables are non-interest-bearing, and as of June 30, 2025, and December 31, 2024, the company had trade receivables of **RMB 18,545,000** and **RMB 8,768,000**, respectively, due from a single customer, indicating a credit concentration risk[173](index=173&type=chunk) [13. Other Current Assets and Prepayments](index=57&type=section&id=13.%20Other%20Current%20Assets%20and%20Prepayments) Other current assets and prepayments increased significantly, mainly due to a prepayment for a share repurchase Other Current Assets and Prepayments Change | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Recoverable value-added tax | 5,067 | 5,528 | | Prepayment for share repurchase | 30,987 | – | | Prepayments to suppliers | 12,096 | 10,651 | | **Total** | **48,150** | **16,179** | [14. Accrued Expenses and Other Payables](index=57&type=section&id=14.%20Accrued%20Expenses%20and%20Other%20Payables) Accrued expenses and other payables decreased, with accrued expenses primarily related to R&D activities Accrued Expenses and Other Payables Change | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Accrued expenses | 109,017 | 121,830 | | Payroll and welfare payables | 22,773 | 44,189 | | Amount due to employees for sale of shares under share incentive schemes | 16,861 | 4,857 | | **Total** | **157,116** | **181,623** | - Accrued expenses are mainly expenses incurred for research and development activities[175](index=175&type=chunk) [15. Contract Liabilities](index=58&type=section&id=15.%20Contract%20Liabilities) Contract liabilities primarily consist of customer advances from an exclusive agency agreement with Huadong Medicine Contract Liabilities Change | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Advances from customers (grant of exclusive agency agreement) | 235,827 | 249,907 | | Non-current | 203,091 | 222,284 | | Current | 32,736 | 27,623 | - Contract liabilities include an upfront payment received for granting exclusive agency rights related to the commercialization of zevogenleucel injection with Huadong Medicine[176](index=176&type=chunk) - The company has received an upfront payment of **RMB 200,000,000** and a milestone payment of **RMB 75,000,000** under the agreement[176](index=176&type=chunk) [16. Other Financial Liabilities](index=58&type=section&id=16.%20Other%20Financial%20Liabilities) The company recognized other financial liabilities related to a put option granted to Series A investors of a subsidiary Other Financial Liabilities Change | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Put option liabilities | 71,602 | – | - Other financial liabilities primarily represent a put option granted to Series A investors of a subsidiary, which allows them to require the Group or founding shareholders to repurchase their shares at the original investment cost plus **6% simple annual interest** if the subsidiary fails to complete a qualified IPO or business sale by 2032[178](index=178&type=chunk) [17. Share Capital](index=59&type=section&id=17.%20Share%20Capital) The company issued new ordinary shares to employees and a trustee under its incentive schemes during the period Issued and Fully Paid Share Capital | Metric | June 30, 2025 (thousand shares/RMB thousand) | December 31, 2024 (thousand shares/RMB thousand) | | :--- | :--- | :--- | | Number of ordinary shares | 575,904 | 571,671 | | RMB equivalent | 1 | 1 | - On April 16, 2025, the company allotted and issued **1,698,000 shares** to Carfe Unity Limited, a wholly-owned subsidiary of the Post-IPO RSU Scheme trustee, to be held in trust[180](index=180&type=chunk) - During the six months ended June 30, 2025, the company issued **2,535,450 ordinary shares** to employees under its employee incentive schemes for a consideration of **RMB 26,478 thousand**[180](index=180&type=chunk) Treasury Shares Movement | Metric | June 30, 2025 (thousand shares) | December 31, 2024 (thousand shares) | | :--- | :--- | :--- | | Treasury shares at end of period | 22,176 | 22,261 | [18. Reserves](index=61&type=section&id=18.%20Reserves) Total reserves decreased due to the loss for the period and negative currency translation differences Overview of Changes in Reserves | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Capital reserve | 54,800 | 54,800 | | Share premium | 9,415,636 | 9,388,164 | | Currency translation reserve | 456,558 | 506,805 | | Share-based compensation | 98,582 | 94,898 | | Accumulated losses | (9,063,444) | (8,987,961) | | **Total** | **962,132** | **1,056,706** | - The loss for the period and exchange differences led to a decrease in reserves, while share-based payments and the issuance of shares under employee incentive schemes increased reserves[184](index=184&type=chunk) [19. Commitments](index=62&type=section&id=19.%20Commitments) The company had minor capital expenditure commitments for property, plant, and equipment as of the reporting date Capital Expenditure Commitments | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 61 | 15 | [20. Related Party Transactions](index=62&type=section&id=20.%20Related%20Party%20Transactions) Compensation for key management personnel decreased compared to the same period last year Key Management Personnel Compensation | Compensation Category | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Basic salaries, share-based payments, other allowances and benefits in kind | 3,913 | 8,799 | | Discretionary bonuses | 1,536 | 1,701 | | Social security expenses | 383 | 476 | | **Total** | **5,832** | **10,976** | [21. Approval of the Financial Statements](index=62&type=section&id=21.%20Approval%20of%20the%20Financial%20Statements) The interim condensed consolidated financial statements were approved and authorized for issue by the Board of Directors on August 14, 2025 - The interim condensed consolidated financial statements were approved and authorized for issue by the Board of Directors on August 14, 2025[188](index=188&type=chunk) Forward-Looking Statements This report contains forward-looking statements based on current views and assumptions, which are subject to significant risks and uncertainties - All statements in this report that are not historical facts or do not relate to current facts or conditions are forward-looking statements[190](index=190&type=chunk) - Such forward-looking statements are based on a number of assumptions and factors beyond the Group's control and are therefore subject to significant risks and uncertainties, and actual events or results may differ materially from these forward-looking statements[190](index=190&type=chunk) - The company makes no representation or warranty as to the achievement or reasonableness of, and should not be relied upon for, any projections, targets, estimates or forecasts[190](index=190&type=chunk) Definitions This section defines key terms and abbreviations used throughout the report to ensure accurate understanding - This section defines key terms used in the report, such as "HK$", "2019 Equity Incentive Plan", "Affiliate", "Audit Committee", "China", "the Company", and "Core Product"[191](index=191&type=chunk)[192](index=192&type=chunk) - It also includes explanations for important concepts like "Huadong Medicine", "Listing Rules", "Model Code", "NMPA", "Post-IPO RSU Scheme", "Post-IPO Share Option Scheme", "RMB", and "SFO"[194](index=194&type=chunk)[195](index=195&type=chunk) Glossary This section provides definitions for technical and clinical terms related to the biopharmaceutical industry used in the report - This section provides definitions for technical terms in the biopharmaceutical field, such as "Antigen", "CRS" (Cytokine Release Syndrome), "ASCO" (American Society of Clinical Oncology), "ASH" (American Society of Hematology), and "BCMA" (B-cell Maturation Antigen)[198](index=198&type=chunk) - It also includes CAR-T related technologies such as "CycloCAR®" (a next-generation CAR-T technology), "LADAR™" (Local Action Driven by Artificial Receptor technology), and "THANK-uCAR®" (a proprietary CAR-T cell technology)[199](index=199&type=chunk)[201](index=201&type=chunk) - It covers disease names (e.g, "MM" or "R/R MM" for multiple myeloma, "HCC" for hepatocellular carcinoma), regulatory agencies (e.g, "FDA" for the US Food and Drug Administration, "EMA" for the European Medicines Agency), and clinical trial phases (e.g, "Phase I", "Phase II", "confirmatory trial")[199](index=199&type=chunk)[201](index=201&type=chunk)

[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) [Board of Directors and Key Personnel](index=3&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%8F%8A%E4%B8%BB%E8%A6%81%E4%BA%BA%E5%93%A1) This section outlines Fangyuan Life Services Group Co., Ltd.'s corporate details, including board changes, auditors, and key operational information - Board member changes include Mr. Fang Ming's re-designation as Executive Director, Mr. Sun Ligong's appointment as CEO, Mr. Cao Bingchang's resignation, and the appointment or re-designation of Ms. Chen Zhuoman, Ms. Xie Lihua, and Mr. Du Chenghua[4](index=4&type=chunk) - The auditor is Zhongrui Hexin Certified Public Accountants Co., Ltd[5](index=5&type=chunk) - Major banks include Industrial Bank, Agricultural Bank of China, and Shanghai Pudong Development Bank[5](index=5&type=chunk) [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) [Profit or Loss Overview](index=4&type=section&id=%E6%90%8D%E7%9B%8A%E6%A6%82%E8%A7%88) For H1 2025, the Group's net loss significantly narrowed to **RMB 6.52 million**, a **47.0% improvement** from the prior year, primarily due to reduced financial asset impairment losses | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 168,431 | 186,085 | | Service Costs | (135,000) | (148,094) | | Gross Profit | 33,431 | 37,991 | | Loss Before Income Tax | (9,212) | (13,313) | | Loss for the Period | (6,520) | (12,310) | | Loss Per Share (RMB cents) | (1.50) | (3.67) | - Net impairment losses on financial assets significantly decreased from **RMB 32,816 thousand** in H1 2024 to **RMB 23,576 thousand** in H1 2025[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statement of Financial Position](index=5&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) [Balance Sheet Overview](index=5&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%A6%82%E8%A7%88) As of June 30, 2025, the Group's net current liabilities increased to **RMB 36.17 million**, total assets and shareholders' equity decreased, reflecting ongoing liquidity pressure | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 120,813 | 121,564 | | Total Current Assets | 227,426 | 245,178 | | Total Current Liabilities | 263,593 | 273,193 | | Net Current Liabilities | (36,167) | (28,015) | | Net Assets | 77,620 | 85,724 | | Equity Attributable to Owners of the Company | 29,812 | 34,055 | - Trade receivables decreased from **RMB 83,956 thousand** as of December 31, 2024, to **RMB 79,689 thousand** as of June 30, 2025[11](index=11&type=chunk) - Bank balances and cash decreased from **RMB 64,765 thousand** as of December 31, 2024, to **RMB 44,036 thousand** as of June 30, 2025[11](index=11&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) [Equity Movement Analysis](index=7&type=section&id=%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E5%88%86%E6%9E%90) For H1 2025, equity attributable to owners decreased to **RMB 29.81 million**, mainly due to a period loss of **RMB 5.999 million** and dividends paid to non-controlling interests - Equity attributable to owners of the Company decreased from **RMB 34,055 thousand** as of January 1, 2025, to **RMB 29,812 thousand** as of June 30, 2025[13](index=13&type=chunk) - Loss for H1 2025 was **RMB 5,999 thousand**, a significant narrowing from **RMB 14,673 thousand** in H1 2024[13](index=13&type=chunk) - Dividends paid to non-controlling interests in H1 2025 amounted to **RMB 3,340 thousand**[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) [Cash Flow Overview](index=8&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E6%A6%82%E8%A7%88) For H1 2025, net cash used in operating activities was **RMB 18.76 million**, an improvement from the prior year, but net cash and cash equivalents decreased by **RMB 20.73 million**, with the period-end balance at **RMB 44.04 million** | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (18,762) | (22,551) | | Net Cash Used in Investing Activities | (276) | (1,016) | | Net Cash Used in Financing Activities | (1,689) | (10,392) | | Net Decrease in Cash and Cash Equivalents | (20,727) | (33,959) | | Cash and Cash Equivalents at End of Period | 44,036 | 54,317 | - Dividends paid to non-controlling interests in H1 2025 were **RMB 1,535 thousand**, a decrease from **RMB 3,845 thousand** in the prior year[14](index=14&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [1. General Information](index=9&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) This note outlines the company's registration, listing status, and primary business activities of providing professional property management and value-added services in China - The Company is incorporated in the Cayman Islands, with its shares listed on the Main Board of The Stock Exchange of Hong Kong Limited[15](index=15&type=chunk) - The Group's principal activities are providing residential and non-residential property management services and value-added services in China[15](index=15&type=chunk) - Mr. Fang Ming, Ms. Xie Lihua, and Mr. Huang Peng are parties acting in concert and the ultimate controlling shareholders of the Group[16](index=16&type=chunk) [2. Basis of Preparation](index=9&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) This note details the basis of preparation for the consolidated financial statements, highlighting significant going concern uncertainties and management's liquidity mitigation efforts - As of June 30, 2025, the Group recorded a net loss of approximately **RMB 6.52 million** and its current liabilities exceeded current assets by approximately **RMB 36.17 million**, raising significant doubt about its ability to continue as a going concern[20](index=20&type=chunk) - Management has taken measures to alleviate liquidity pressure, including financial support from shareholders, negotiating repayment arrangements with suppliers, cost and capital expenditure reductions, and expecting positive cash flow from operating activities[21](index=21&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) [3. Significant Accounting Policies](index=10&type=section&id=3.%20%E9%87%8D%E5%A4%A7%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%B3%87%E6%96%99) This note confirms interim financial statement accounting policies are consistent with annual statements, with new HKFRS standards expected to have no material impact - The accounting policies used in preparing these interim financial statements are consistent with those used in the 2024 annual financial statements, except for new and revised Hong Kong Financial Reporting Standards[24](index=24&type=chunk) - The Directors anticipate that the application of new and revised HKFRS will not have any material impact on the financial statements[24](index=24&type=chunk) [4. Segment Reporting](index=10&type=section&id=4.%20%E5%88%86%E9%83%A8%E5%A0%B1%E5%91%8A) This note identifies the Group's operating segments, integrated real estate agency and professional property management, detailing their revenue and profit/loss - The Group's reportable operating segments are integrated real estate agency services and professional property management services[26](index=26&type=chunk) | Segment | H1 2025 Revenue (RMB thousand) | H1 2024 Revenue (RMB thousand) | | :--- | :--- | :--- | | Real Estate Agency Services | 692 | 5,432 | | Property Management Services | 167,739 | 180,653 | | Total | 168,431 | 186,085 | - The chief operating decision-maker does not regularly review segment assets and liabilities, thus total assets and liabilities for each operating segment are not presented[29](index=29&type=chunk) [5. Revenue](index=12&type=section&id=5.%20%E6%94%B6%E7%9B%8A) This note details the Group's revenue breakdown and recognition, showing property management as the primary income source, despite a decline across all service revenues | Revenue Type | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Real Estate Agency Services Revenue | 692 | 5,432 | | Property Management Services Revenue | 147,455 | 152,648 | | Non-owner Value-Added Services Revenue | 4,881 | 7,983 | | Community Value-Added Services Revenue (Other Value-Added Services) | 15,240 | 19,511 | | Community Value-Added Services Revenue (Goods Sales) | 163 | 511 | | Total | 168,431 | 186,085 | [6. Other Income, Losses and Gains, Net](index=12&type=section&id=6.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E3%80%81%E虧%E6%90%8D%E5%8F%8A%E6%94%B6%E7%9B%8A%E6%B7%A8%E9%A1%8D) This note presents the Group's other income, losses, and gains, net, showing a net loss of **RMB 359 thousand** in H1 2025, compared to a net gain of **RMB 795 thousand** in the prior year | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Fair Value Loss on Investment Properties | (291) | - | | Government Grants | 109 | 52 | | Interest Income | 3 | 105 | | Net Exchange Gain | (382) | 105 | | Fair Value Gain on Financial Assets at FVTPL | 148 | 199 | | Other Income, Losses and Gains, Net | (359) | 795 | - Government grants primarily refer to refunds of value-added tax and other tax incentives received from Chinese tax authorities[33](index=33&type=chunk) [7. Loss Before Income Tax](index=13&type=section&id=7.%20%E6%89%80%E5%BE%97%E7%A8%85%E5%89%8D%E虧%E6%90%8D) This note details loss before income tax components, highlighting net impairment losses on financial assets as a key factor, significantly reduced in H1 2025 | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Employee Benefit Expenses | 65,531 | 71,136 | | Net Impairment Losses on Financial Assets | 23,576 | 32,816 | | - Trade Receivables | 16,468 | 19,755 | | - Amounts Due from Associates | 6,894 | 4,987 | | - Amounts Due from Non-controlling Interests | 199 | 50 | | - Other Receivables | 15 | 901 | - Net impairment losses on financial assets primarily consist of impairment provisions for trade receivables and amounts due from associates[34](index=34&type=chunk) [8. Income Tax](index=14&type=section&id=8.%20%E6%89%80%E5%BE%97%E7%A8%85) This note explains income tax composition, including current and deferred tax, and outlines applicable Chinese corporate income tax rates and preferential policies | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Tax - PRC Corporate Income Tax | 1,924 | 1,431 | | Deferred Tax | (4,616) | (2,434) | | Total Income Tax | (2,692) | (1,003) | - Chinese entities are subject to a 25% income tax rate, but certain subsidiaries enjoy a **5%** preferential income tax rate for qualifying as small and micro enterprises[39](index=39&type=chunk) [9. Dividends](index=14&type=section&id=9.%20%E8%82%A1%E6%81%AF) This note confirms the Company neither paid nor declared any dividends for H1 2025 or since the reporting period end - The Company neither paid nor declared any dividends for the six months ended June 30, 2025, nor has it proposed any dividends since the end of this reporting period[36](index=36&type=chunk) [10. Loss Per Share](index=14&type=section&id=10.%20%E6%AF%8F%E8%82%A1%E虧%E6%90%8D) This note provides basic and diluted loss per share calculations, showing a H1 2025 loss of **RMB 1.50 cents**, an improvement from **RMB 3.67 cents** in the prior year | Metric | H1 2025 (Unaudited) | H1 2024 (Unaudited) | | :--- | :--- | :--- | | Loss for the Period Attributable to Owners of the Company (RMB thousand) | (5,999) | (14,673) | | Weighted Average Number of Ordinary Shares | 400,000,000 | 400,000,000 | | Loss Per Share (RMB cents) | (1.50) | (3.67) | - Diluted loss per share is the same as basic loss per share due to the absence of potentially dilutive ordinary shares[37](index=37&type=chunk) [11. Property, Plant and Equipment](index=14&type=section&id=11.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99) This note discloses the Group's property, plant, and equipment acquisitions and disposals, showing reduced acquisition costs and a loss from disposals in H1 2025 - Total cost of property, plant and equipment acquired in H1 2025 was **RMB 855 thousand**, a decrease from **RMB 930 thousand** in the prior year[38](index=38&type=chunk) - Disposals of property, plant and equipment in H1 2025 resulted in a loss of **RMB 10 thousand**, compared to a gain of **RMB 202 thousand** in the prior year[38](index=38&type=chunk) [12. Investment Properties](index=15&type=section&id=12.%20%E6%8A%95%E8%B3%87%E7%89%A9%E6%A5%AD) This note clarifies the Group's purpose for holding investment properties, primarily for rental income or capital appreciation, and lists their composition as of June 30, 2025 - The Group holds investment properties, including shops, commercial properties, residential properties, and parking spaces, primarily for rental income or capital appreciation[40](index=40&type=chunk) [13. Leases](index=15&type=section&id=13.%20%E7%A7%9F%E8%B3%83) This note details the Group's lease agreements, including property types, lease terms, and changes in right-of-use assets and lease liabilities - The Group has entered into various lease agreements for offices, shops, and parking spaces in China, with lease terms ranging from two to seven years[41](index=41&type=chunk) | Lease Liabilities | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Liabilities | 303 | 298 | | Non-current Liabilities | 564 | 696 | | Total | 867 | 994 | [14. Trade Receivables](index=16&type=section&id=14.%20%E6%87%89%E6%94%B6%E8%B2%BF%E6%98%93%E6%AC%BE%E9%A0%85) This note provides detailed information on trade receivables, including composition, aging analysis, and impairment provisions, indicating a decrease in total trade receivables | Trade Receivables | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Trade Receivables | 178,425 | 166,224 | | Less: Impairment Losses | (98,736) | (82,268) | | Net | 79,689 | 83,956 | | Aging Analysis (Net of Impairment Losses) | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within One Year | 39,192 | 61,946 | | One to Two Years | 26,890 | 17,975 | | Over Two Years | 13,607 | 4,035 | - An additional provision of **RMB 16,468 thousand** was made for total trade receivables in H1 2025[45](index=45&type=chunk) [15. Amounts Due from/to Fellow Subsidiaries/Associates, Associates and Non-controlling Interests](index=17&type=section&id=15.%20%E6%87%89%E6%94%B6%2F%E6%87%89%E4%BB%98%E5%90%8C%E7%B3%BB%E9%99%84%E5%B1%AC%2F%E9%97%9C%E8%81%AF%E5%85%AC%E5%8F%B8%E3%80%81%E9%97%9C%E8%81%AF%E5%85%AC%E5%8F%B8%E5%8F%8A%E9%9D%9E%E6%8E%A7%E8%82%A1%E6%AC%8A%E7%9B%8A%E6%AC%BE%E9%A0%85) This note details the nature, aging analysis, and impairment provisions for amounts due from/to related parties, showing an increase in amounts due from associates - Amounts due from/to fellow subsidiaries/associates, associates, and non-controlling interests are trade-related, unsecured, and interest-free[46](index=46&type=chunk) | Amounts Due from Associates | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Amounts Due from Associates | 170,910 | 63,802 | | Less: Impairment Losses | (130,077) | (42,363) | | Net | 40,833 | 21,439 | - An additional provision of **RMB 7,093 thousand** was made for amounts due from associates and non-controlling interests in H1 2025[48](index=48&type=chunk) [16. Financial Assets at Fair Value Through Profit or Loss](index=20&type=section&id=16.%20%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E5%85%A5%E6%90%8D%E7%9B%8A%E7%9A%84%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2) This note discloses the Group's financial assets at fair value through profit or loss, primarily unlisted partnership investments, which have increased in fair value | Financial Asset Type | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Unlisted Partnership Investments | 5,555 | 5,407 | | Unlisted Investments | - | 1,016 | | Total | 5,555 | 6,423 | - Fair value changes of partnership investments are recognized in "Other income, losses and gains, net" in the consolidated statement of profit or loss and other comprehensive income[50](index=50&type=chunk) [17. Restricted Bank Balances, Bank Balances and Cash](index=20&type=section&id=17.%20%E5%8F%97%E9%99%90%E5%88%B6%E9%8A%80%E8%A1%8C%E7%B5%90%E9%A4%98%E3%80%81%E9%8A%80%E8%A1%8C%E7%B5%90%E9%A4%98%E5%8F%8A%E7%8F%BE%E9%87%91) This note provides details on the Group's bank balances and cash, showing a decrease in both total and cash equivalents, with most balances denominated in RMB | Bank Balances | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Bank Balances and Cash | 45,337 | 66,550 | | Less: Restricted Bank Balances | (1,301) | (1,785) | | Cash and Cash Equivalents | 44,036 | 64,765 | - Approximately **RMB 44.57 million** of bank deposits are denominated in RMB, which is not freely convertible[51](index=51&type=chunk) [18. Trade Payables](index=21&type=section&id=18.%20%E6%87%89%E4%BB%98%E8%B2%BF%E6%98%93%E6%AC%BE%E9%A0%85) This note presents the composition and aging analysis of trade payables, primarily commissions to real estate agents and property management suppliers, with a slight decrease in total amount | Trade Payables | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within One Year | 61,028 | 62,696 | | Over One Year | 10,032 | 11,770 | | Total | 71,060 | 74,466 | [19. Share Capital](index=21&type=section&id=19.%20%E8%82%A1%E6%9C%AC) This note provides details of the Company's issued share capital, indicating that the number and amount of share capital remained unchanged at the reporting period end | Share Capital Information | Number | Amount (RMB thousand) | | :--- | :--- | :--- | | Ordinary Shares of HKD 0.01 each (Issued and Fully Paid) | 400,000,000 | 3,403 | [20. Commitments and Contingent Liabilities](index=21&type=section&id=20.%20%E6%89%BF%E6%93%94%E5%8F%8A%E6%88%96%E6%9C%89%E8%B2%A0%E5%82%B5) This note confirms the Group had no significant capital commitments or contingent liabilities at the reporting period end - As of June 30, 2025, the Group had no significant capital commitments[55](index=55&type=chunk) - As of June 30, 2025, the Group had no significant contingent liabilities[55](index=55&type=chunk) [21. Related Party Transactions](index=22&type=section&id=21.%20%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) This note lists various related party transactions, including revenue from real estate agency, property management, and non-owner value-added services, all conducted on mutually agreed terms | Transaction Type | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Property Management Services Revenue from Associates | 8,297 | - | | Property Management Services Revenue from Fellow Subsidiaries/Associates | - | 2,272 | | Non-owner Value-Added Services Revenue from Associates | 2,942 | - | | Short-term Lease Expenses Paid to Associates | 1,091 | - | | Short-term Lease Expenses Paid to Fellow Subsidiaries/Associates | - | 1,708 | - All related party transactions were conducted on mutually agreed terms[56](index=56&type=chunk) [Management Discussion and Analysis](index=23&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Review](index=23&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) Management reviewed the Group's H1 2025 business performance, emphasizing business structure optimization and resource focus on property management services, noting declines in both real estate agency and property management revenues - The Company continues to optimize its business structure, further focusing on the development of property management services and supporting community value-added services, shifting primary resources to the property management sector[57](index=57&type=chunk) - Total revenue for H1 2025 was approximately **RMB 168.4 million**, a decrease of approximately **9.5%** from the prior year, primarily due to a decrease of approximately **RMB 4.7 million** in real estate agency services revenue and approximately **RMB 12.9 million** in property management services revenue[57](index=57&type=chunk) - Real estate agency services revenue decreased by **87.3%** year-on-year, mainly due to the continued downturn in the real estate industry and the Company's strategic decision[58](index=58&type=chunk) - Professional property management services segment revenue decreased by **7.1%** year-on-year, primarily due to a reduction in contracted and GFA under management[59](index=59&type=chunk) [Integrated Real Estate Agency Services Segment](index=23&type=section&id=%E7%B6%9C%E5%90%88%E6%88%BF%E5%9C%B0%E7%94%A2%E4%BB%A3%E7%90%86%E6%9C%8D%E5%8B%99%E5%88%86%E9%83%A8) - Real estate agency services revenue for H1 2025 was approximately **RMB 0.7 million**, a **87.3%** decrease from **RMB 5.4 million** in the prior year[58](index=58&type=chunk) - The decrease in revenue was primarily due to the continued downturn in the real estate industry and the Company's strategic decision to shift its main resources to property management services[58](index=58&type=chunk) [Professional Property Management Services Segment](index=23&type=section&id=%E5%B0%88%E6%A5%AD%E7%89%A9%E6%A5%AD%E7%AE%A1%E7%90%86%E6%9C%8D%E5%8B%99%E5%88%86%E9%83%A8) - The professional property management services segment recorded revenue of approximately **RMB 167.7 million** in H1 2025, a **7.1%** decrease from the prior year[59](index=59&type=chunk) - The decrease in revenue was primarily due to a reduction in contracted area and GFA under management[59](index=59&type=chunk) - Property management services revenue was approximately **RMB 147.5 million**, a **3.4%** year-on-year decrease[60](index=60&type=chunk) - Non-owner value-added services revenue was approximately **RMB 4.9 million**, a **38.9%** year-on-year decrease, mainly affected by financing difficulties faced by real estate developers[61](index=61&type=chunk) - Community value-added services revenue was approximately **RMB 15.4 million**, a **23.1%** year-on-year decrease, primarily due to reduced owner demand and a decrease in contracted/GFA under management[62](index=62&type=chunk) [Industry Review and Outlook](index=24&type=section&id=%E8%A1%8C%E6%A5%AD%E5%9B%9E%E9%A1%A7%E8%88%87%E5%B1%95%E6%9C%9B) This section analyzes China's H1 2025 economy and real estate sector, noting market stabilization amid caution, and the property service industry's shift from scale to value creation, with future competitiveness relying on service depth, operational efficiency, and technology integration - In H1 2025, China's GDP achieved the government's target growth rate of approximately **5%**, with the real estate market showing initial signs of stabilization through policy intervention[63](index=63&type=chunk) - The property services industry is transitioning from scale-driven to value creation and operational excellence, with competitive advantage increasingly dependent on technology empowerment and value-added service capabilities[63](index=63&type=chunk) - Future competitiveness will depend on deepening professional services, enhancing operational efficiency, and integrating technology applications[63](index=63&type=chunk) - The Company actively explores intelligent service models, promotes co-management and co-governance, innovates the "property + life services" model, and introduces trust-based property services[64](index=64&type=chunk) [Financial Review](index=25&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides a detailed financial review of the Group's performance, including key metrics such as revenue, costs, expenses, impairment losses, net profit margin, period loss, liquidity, and financial resources, analyzing their changes and causes - Revenue for H1 2025 was approximately **RMB 168.4 million**, a year-on-year decrease of approximately **RMB 17.7 million**, primarily due to reduced revenue from real estate agency services and property management services[65](index=65&type=chunk) - Service costs were approximately **RMB 135.0 million**, a year-on-year decrease of approximately **8.8%**, mainly due to reduced business scale and proactive cost optimization measures[66](index=66&type=chunk) - Net impairment losses on financial assets were approximately **RMB 23.6 million**, a year-on-year decrease of approximately **28.2%**, primarily due to poor collection of trade receivables and amounts due from associates[68](index=68&type=chunk) - Loss for the period was approximately **RMB 6.5 million**, a year-on-year decrease of **47.0%**, with the net profit margin narrowing to **-3.9%**[69](index=69&type=chunk)[70](index=70&type=chunk) - As of June 30, 2025, net current liabilities were approximately **RMB 36.2 million**, and total bank balances and cash were approximately **RMB 45.3 million**, indicating ongoing liquidity challenges[72](index=72&type=chunk)[73](index=73&type=chunk) - The capital gearing ratio (total liabilities divided by total assets) was **78%** as of June 30, 2025, slightly higher than **77%** as of December 31, 2024[78](index=78&type=chunk) - As of June 30, 2025, the Group had 1,478 employees, a decrease of 151 from the prior year, primarily due to reduced business demand[79](index=79&type=chunk) [Disclosure of Interests](index=27&type=section&id=%E6%AC%8A%E7%9B%8A%E6%8A%AB%E9%9C%B2) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=27&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E6%AC%8A%E8%AD%89%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) This section discloses the interests of the Company's directors and chief executives in the Company's shares and confirms their compliance with the Model Code for Securities Transactions by Directors - Mr. Fang Ming and Ms. Xie Lihua beneficially own 225,948,000 shares through controlled corporations and legal/beneficial ownership, representing a **56.49%** shareholding[81](index=81&type=chunk) - Mr. Han Shuguang beneficially owns 4,500,000 shares through a controlled corporation, representing a **1.125%** shareholding[81](index=81&type=chunk) - All Directors confirm compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules for the six months ended June 30, 2025[80](index=80&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares and Debentures](index=28&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E6%96%BC%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E4%BB%A5%E5%8F%8A%E5%82%B5%E6%AC%8A%E8%AD%89%E4%B8%AD%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) This section lists the interests of substantial shareholders and other persons in the Company's shares, noting that multiple parties are deemed to jointly own **56.49%** of the interests due to acting in concert agreements | Name/Entity | Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Ms. He Kangkang | Interest of Spouse | 225,948,000 | 56.49% | | Mr. Zheng Muming | Interest of Spouse | 225,948,000 | 56.49% | | Mr. Huang Peng | Interest in Controlled Corporation, Interest of Spouse and Legal & Beneficial Owner | 225,948,000 | 56.49% | | Ms. Zheng Hui | Interest of Spouse and Legal & Beneficial Owner | 225,948,000 | 56.49% | | Mansion Green | Legal & Beneficial Owner | 97,200,000 | 24.3% | | Aspiring Vision | Legal & Beneficial Owner | 64,800,000 | 16.2% | | Huiyu Investment | Legal & Beneficial Owner | 60,000,000 | 15% | - Multiple substantial shareholders are deemed to have interests in the total number of shares held by Mr. Fang, Mr. Huang, and Ms. Xie due to an acting in concert agreement[83](index=83&type=chunk)[84](index=84&type=chunk) [Other Information](index=29&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Directors' Right to Acquire Shares or Debentures](index=29&type=section&id=%E8%91%A3%E4%BA%8B%E8%B3%BC%E8%B2%B7%E8%82%A1%E4%BB%BD%E6%88%96%E5%82%B5%E6%AC%8A%E8%AD%89%E4%B9%8B%E6%AC%8A%E5%88%A9) This section confirms that neither the Company nor its subsidiaries entered into any arrangements during the reporting period enabling directors and chief executives to benefit from acquiring the Company's shares or debentures - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries or associated corporations entered into any arrangements enabling the Company's directors and chief executives to benefit from acquiring shares or relevant shares or debentures of the Company or its associated corporations[86](index=86&type=chunk) [Changes in Directors' Information](index=29&type=section&id=%E8%91%A3%E4%BA%8B%E8%B3%87%E6%96%99%E4%B9%8B%E8%AE%8A%E5%8B%95) This section discloses changes in directors' information, specifically Mr. Leung Wai Hung's resignation as an independent non-executive director of Wing Lee Engineering Holdings Limited - Mr. Leung Wai Hung resigned as an independent non-executive director of Wing Lee Engineering Holdings Limited (stock code: 9639) on July 14, 2025[87](index=87&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=29&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) This section confirms that neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities during the reporting period, and the Company held no treasury shares - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[88](index=88&type=chunk) - As of June 30, 2025, the Company held no treasury shares[88](index=88&type=chunk) [Share Option Scheme](index=29&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) This section outlines the Company's share option scheme status, confirming no options were granted, exercised, or lapsed during the reporting period, with **40,000,000** options still available for grant - The Company adopted a share option scheme on October 23, 2017[89](index=89&type=chunk) - As of June 30, 2025, no share options had been granted, agreed, exercised, cancelled, or lapsed under the scheme, and no outstanding share options existed[89](index=89&type=chunk) - As of the date of this interim report, a total of **40,000,000** shares, representing **10%** of the Company's issued share capital on the same date, remained available for issue under the scheme[89](index=89&type=chunk) [Compliance with Corporate Governance Code](index=29&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) This section confirms the Company's compliance with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules during the reporting period - The Board has reviewed the Group's corporate governance practices and is satisfied that the Company complied with all code provisions set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025[90](index=90&type=chunk) [Directors' Interests in Competing Business and Conflicts of Interest](index=29&type=section&id=%E8%91%A3%E4%BA%8B%E6%96%BC%E7%AB%B6%E7%88%AD%E6%A5%AD%E5%8B%99%E4%B9%8B%E6%AC%8A%E7%9B%8A%E5%8F%8A%E5%88%A9%E7%9B%8A%E8%A1%9D%E7%AA%81) This section confirms that during the reporting period, no directors, controlling shareholders, or their close associates engaged in any business competing with the Group, nor were there any other conflicts of interest - The Directors are unaware of any business or interest of the Company's Directors or controlling shareholders or their respective close associates that directly or indirectly competes or may compete with the Group's business, or any other conflicts of interest with the Group for the six months ended June 30, 2025[91](index=91&type=chunk)[92](index=92&type=chunk) [Pledges of Assets](index=30&type=section&id=%E8%B3%87%E7%94%A2%E8%B3%AA%E6%8A%BC) This section discloses that a subsidiary previously secured a bank loan using trade receivables and approximately **68.9%** equity in Guangzhou Fangyuan Modern Life Services as collateral; the loan is repaid, but the equity pledge release is pending - A subsidiary of the Company previously obtained a bank loan secured by certain trade receivables of Guangzhou Fangyuan Modern Life Services Co., Ltd. up to approximately **RMB 28.152 million** and a pledge of approximately **68.9%** of its equity interest[93](index=93&type=chunk) - The bank loan was fully repaid before its due date, but the relevant procedures for releasing the equity pledge had not been completed as of the date of this interim report[93](index=93&type=chunk) [Holdings of Material Investments, Major Acquisitions and Disposals](index=30&type=section&id=%E6%8C%81%E6%9C%89%E9%87%8D%E8%A6%81%E6%8A%95%E8%B3%87%E3%80%81%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE) This section confirms the Group made no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[94](index=94&type=chunk) [Progress of Past Connected Transactions](index=30&type=section&id=%E9%81%8E%E5%BE%80%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93%E9%80%B2%E5%B1%95) This section reports on the progress of connected transactions involving 23 property exchange agreements, noting that properties remain undelivered as of the interim report date, and the Company will consider legal action to recover outstanding receivables - Guangzhou Fangyuan Life Services Co., Ltd. entered into an exchange agreement with Heshan Fudu Property Development Co., Ltd. involving the transfer of 23 properties to offset outstanding receivables of approximately **RMB 16.0 million**[95](index=95&type=chunk) - As of the date of this interim report, the delivery of these 23 properties had not yet been completed[95](index=95&type=chunk) - Should Heshan Fudu fail to fulfill its obligations by the final deadline (November 28, 2025), the Company will consider taking necessary legal measures to recover the outstanding receivables[95](index=95&type=chunk) [Outstanding Earnest Money Balance](index=30&type=section&id=%E6%9C%AA%E5%84%9F%E9%82%84%E8%AA%A0%E6%84%8F%E9%87%91%E7%B5%90%E9%A4%98) This section details the background and recovery progress of outstanding earnest money, including civil litigation for approximately **RMB 14.18 million** against Fangyuan Huijin, resulting in favorable judgments and enforcement orders, with ongoing efforts to recover the remaining balance - The outstanding earnest money balance accumulated due to industry practice in the real estate agency services business, involving upfront earnest money payments to property developers for exclusive agency rights[96](index=96&type=chunk) - The Company initiated civil legal proceedings for approximately **RMB 14.18 million** in outstanding earnest money owed by Fangyuan Huijin, obtaining favorable judgments and enforcement orders on October 23, 2024, and March 20, 2025, respectively[97](index=97&type=chunk) - The court will take enforcement measures against Fangyuan Huijin to fulfill its obligations as stipulated in the judgment, and the Company is still communicating and negotiating with relevant member companies of Fangyuan Group to recover the remaining balance[97](index=97&type=chunk)[98](index=98&type=chunk) [Interim Dividend](index=31&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) This section confirms the Board does not recommend paying an interim dividend for the six months ended June 30, 2025 - The Board does not recommend paying an interim dividend for the six months ended June 30, 2025[99](index=99&type=chunk) [Review by Audit Committee](index=31&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83%E9%80%B2%E8%A1%8C%E5%AF%A9%E9%96%B1) This section states the Audit Committee has reviewed the Group's unaudited interim results for H1 2025, deeming them compliant with applicable accounting standards and Listing Rules - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[100](index=100&type=chunk) - The Audit Committee believes that the unaudited interim results comply with applicable accounting standards and the Listing Rules, and adequate disclosures have been made[100](index=100&type=chunk) [Acknowledgement](index=31&type=section&id=%E8%87%B4%E8%AC%9D) This section expresses the Board's sincere gratitude to shareholders, business partners, clients, and all directors, management, and staff for their support, hard work, and dedication during the reporting period - The Board extends its sincere gratitude to shareholders, business partners, and clients for their continuous support to the Group[101](index=101&type=chunk) - The Board also expresses its appreciation to all Directors, management, and staff for their hard work and dedication during the period[101](index=101&type=chunk)

Company Information [Company Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section lists the company's basic information, including board members, committee compositions, company secretary, registered and principal offices, share registrars, auditors, and principal bankers - Mr. Hao Weibao serves as Chairman and Chief Executive Officer, and Mr. Wang Xinli is the Chief Financial Officer[11](index=11&type=chunk) - Mr. Lu Dong chairs the Audit Committee and Risk Management Committee, Mr. Lyu Dequan chairs the Remuneration Committee, and Mr. Hao Weibao chairs the Nomination Committee[11](index=11&type=chunk) - The company's registered office is in Bermuda, with its head office and principal place of business in Hong Kong, Kowloon, International Commerce Centre, 1 Austin Road West[12](index=12&type=chunk) Financial Performance [Condensed Consolidated Statement of Profit or Loss](index=6&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%88%A9%E6%BD%A4%E8%A1%A8) For the six months ended June 30, 2025, the company's revenue significantly increased, but gross profit and profit for the period substantially decreased year-on-year, primarily due to higher cost of sales and reduced share of profit from joint ventures Condensed Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 9,382,263 | 3,944,594 | 137.9% | | Cost of sales | (9,181,798) | (3,535,237) | 159.7% | | Gross profit | 200,465 | 409,357 | (51.0%) | | Profit before tax | 204,549 | 457,206 | (55.3%) | | Profit for the period | 165,762 | 374,496 | (55.7%) | | Attributable to ordinary equity holders of the Company | 151,671 | 353,113 | (57.0%) | | Basic earnings per share (HK cents) | 1.93 | 4.49 | (57.0%) | [Condensed Consolidated Statement of Comprehensive Income](index=7&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E5%88%A9%E6%BD%A4%E8%A1%A8) For the six months ended June 30, 2025, the company recorded a total comprehensive loss, mainly due to a significant loss from fair value changes of financial assets at fair value through other comprehensive income, as well as exchange differences and share of other comprehensive loss from joint ventures Condensed Consolidated Statement of Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Profit for the period | 165,762 | 374,496 | | Financial assets at fair value through other comprehensive income: Fair value changes during the period | (527,082) | – | | Exchange differences arising from translation of overseas operations | (34,443) | (59,665) | | Total comprehensive (loss) / income for the period | (207,251) | 280,332 | | Attributable to ordinary equity holders of the Company | (223,198) | 264,832 | - In the first half of 2025, fair value changes of financial assets at fair value through other comprehensive income resulted in a **loss of HKD 527,082 thousand**, with no such item in the prior year period[15](index=15&type=chunk) [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E5%A0%B1%E8%A1%A8) As of June 30, 2025, the company's total assets and total liabilities both significantly increased, with notable growth in cash and deposits, trade receivables, and bank and other borrowings, leading to a higher debt-to-asset ratio but a slight decrease in net current assets Condensed Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 8,904,595 | 9,209,528 | (3.3%) | | Total current assets | 7,030,234 | 3,463,615 | 103.0% | | Total current liabilities | 6,202,603 | 2,577,447 | 140.6% | | Net current assets | 827,631 | 886,168 | (6.6%) | | Total assets less current liabilities | 9,732,226 | 10,095,696 | (3.6%) | | Total non-current liabilities | 1,930,705 | 1,882,623 | 2.6% | | Net assets | 7,801,521 | 8,213,073 | (5.0%) | | Total equity | 7,801,521 | 8,213,073 | (5.0%) | - Cash and deposits increased by **117.5%** from **HKD 2,031,447 thousand** as of December 31, 2024, to **HKD 4,419,129 thousand** as of June 30, 2025[16](index=16&type=chunk) - Bank and other borrowings increased by **228.2%** from **HKD 1,010,990 thousand** as of December 31, 2024, to **HKD 3,318,456 thousand** as of June 30, 2025[16](index=16&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) For the six months ended June 30, 2025, total equity attributable to ordinary equity holders of the Company decreased from HKD 8,082,540 thousand as of December 31, 2024, to HKD 7,655,041 thousand, primarily due to the total comprehensive loss for the period and final dividend distribution Condensed Consolidated Statement of Changes in Equity Key Data (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Equity attributable to ordinary equity holders of the Company | 7,655,041 | 8,082,540 | | Non-controlling interests | 146,480 | 130,533 | | Total equity | 7,801,521 | 8,213,073 | - The total comprehensive loss for the period was **HKD 207,251 thousand**, compared to a total comprehensive income of **HKD 280,332 thousand** in the first half of 2024[18](index=18&type=chunk) - A final dividend of **HKD 204,301 thousand** was distributed in the first half of 2025[18](index=18&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=12&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, net cash flow from operating activities decreased year-on-year, and cash flow from investing activities shifted from net inflow to net outflow, but net cash flow from financing activities significantly increased, leading to a substantial rise in net increase in cash and cash equivalents Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 245,511 | 441,953 | (44.5%) | | Net cash (used in) / generated from investing activities | (921,238) | 85,392 | (1178.0%) | | Net cash generated from / (used in) financing activities | 2,195,674 | (495,156) | 543.5% | | Net increase in cash and cash equivalents | 1,519,947 | 32,189 | 4623.0% | | Cash and cash equivalents at end of period | 2,486,879 | 765,249 | 225.0% | - Net cash flow from investing activities shifted from an inflow of **HKD 85,392 thousand** in the first half of 2024 to an outflow of **HKD 921,238 thousand** in the first half of 2025, primarily due to changes in deposits with fellow subsidiaries[20](index=20&type=chunk) - Net cash flow from financing activities significantly increased from an outflow of **HKD 495,156 thousand** in the first half of 2024 to an inflow of **HKD 2,195,674 thousand** in the first half of 2025, mainly driven by a substantial increase in bank borrowings[20](index=20&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) This section provides detailed notes to the condensed consolidated financial statements, covering the basis of preparation, changes in accounting policies, operating segment information, revenue composition, financing costs, income tax, earnings per share, dividends, asset and liability details, litigation, commitments, related party transactions, and fair value of financial instruments, offering essential context and explanations for understanding the reported data - The financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" issued by the HKICPA and the disclosure requirements of Appendix D2 to the Listing Rules[21](index=21&type=chunk) - HKAS 21 (Amendments) "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" was first adopted from January 1, 2025, but had no significant impact on these financial statements[23](index=23&type=chunk)[24](index=24&type=chunk) - The Group's reportable operating segments include crude oil, import and export commodities, electrolytic aluminum, and coal businesses[27](index=27&type=chunk) [1. Basis of Preparation](index=13&type=section&id=1.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) This section outlines the basis for preparing the condensed consolidated financial statements, which adhere to HKAS 34 "Interim Financial Reporting" issued by the HKICPA and the disclosure requirements of the Listing Rules, and should be read in conjunction with the annual consolidated financial statements - The financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and the applicable disclosure provisions of Appendix D2 to the Listing Rules[21](index=21&type=chunk) - The accounting policies and methods of computation adopted are consistent with those used in the annual consolidated financial statements for the year ended December 31, 2024, except for the adoption of new and revised standards effective from January 1, 2025[21](index=21&type=chunk) [2. Changes in Accounting Policies and Disclosures](index=13&type=section&id=2.%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E5%92%8C%E6%8A%AB%E9%9C%B2%E7%9A%84%E8%AE%8A%E5%8B%95) This section explains that the Group first adopted new or revised HKFRSs issued by the HKICPA effective from January 1, 2025, with HKAS 21 (Amendments) "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" having no material impact on these financial statements - The Group has first adopted new or revised HKFRSs issued by the HKICPA, effective from January 1, 2025[23](index=23&type=chunk) - HKAS 21 (Amendments) "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" has no material impact on these financial statements, as the Group has no transactions involving non-exchangeable foreign currencies[24](index=24&type=chunk) [3. Issued but Not Yet Effective Hong Kong Financial Reporting Standards](index=14&type=section&id=3.%20%E5%B7%B2%E9%A0%92%E5%B8%83%E6%83%9F%E6%9C%AA%E7%94%9F%E6%95%88%E7%9A%84%E9%A6%99%E6%B8%AF%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87) This section lists new and revised Hong Kong Financial Reporting Standards that have been issued but are not yet effective for the current accounting period, including HKFRS 9 and HKFRS 7 (Amendments), HKFRS 18, and HKFRS 19, which will become effective in future accounting periods - The Group has not applied new and revised HKFRSs that have been issued but are not yet effective for the current accounting period[25](index=25&type=chunk) - HKFRS 9 and HKFRS 7 (Amendments) "Classification and Measurement of Financial Instruments" and HKFRS Annual Improvements – Volume 11 will be effective for accounting periods beginning on or after January 1, 2026[27](index=27&type=chunk) - HKFRS 18 "Presentation and Disclosure in Financial Statements" and HKFRS 19 "Subsidiaries without Public Accountability: Disclosures" will be effective for accounting periods beginning on or after January 1, 2027[27](index=27&type=chunk) [4. Operating Segment Information](index=14&type=section&id=4.%20%E7%B6%93%E7%87%9F%E5%88%86%E9%A1%9E%E8%B3%87%E6%96%99) The Group is organized into four reportable operating segments based on products and services: crude oil, import and export commodities, electrolytic aluminum, and coal, with management monitoring segment performance, measured by adjusted profit/loss before tax, for resource allocation and performance assessment - The Group is organized into four reportable operating segments based on products and services: crude oil, import and export commodities, electrolytic aluminum, and coal[27](index=27&type=chunk) - Segment performance is assessed based on adjusted profit/loss before tax, excluding interest income, finance costs, share of profit from associates and joint ventures, and head office and corporate expenses[28](index=28&type=chunk) Segment Revenue for the First Half of 2025 (HKD thousands) | Segment | Sales to External Customers | Other Income, Gains and Losses, Net | Total | Segment Results | | :--- | :--- | :--- | :--- | :--- | | Crude Oil | 574,477 | 2,608 | 577,085 | 202,519 | | Import and Export Commodities | 7,625,837 | 1,068 | 7,626,905 | 1,798 | | Electrolytic Aluminum | 885,207 | 39,850 | 925,057 | (8,415) | | Coal | 296,742 | 9,857 | 306,599 | (8,673) | | **Total** | **9,382,263** | **53,383** | **9,435,646** | **187,229** | Segment Revenue for the First Half of 2024 (HKD thousands) | Segment | Sales to External Customers | Other Income, Gains and Losses, Net | Total | Segment Results | | :--- | :--- | :--- | :--- | :--- | | Crude Oil | 730,952 | 2,278 | 733,230 | 326,548 | | Import and Export Commodities | 2,206,755 | (117) | 2,206,638 | 733 | | Electrolytic Aluminum | 601,642 | 27,983 | 629,625 | 39,797 | | Coal | 405,245 | 15,578 | 420,823 | 26,963 | | **Total** | **3,944,594** | **45,722** | **3,990,316** | **394,041** | [5. Revenue, Other Income, Gains and Losses, Net](index=17&type=section&id=5.%20%E6%94%B6%E5%85%A5%E3%80%81%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E3%80%81%E6%94%B6%E7%9B%8A%E5%92%8C%E8%99%A7%E6%90%8D%E6%B7%A8%E9%A1%8D) For the six months ended June 30, 2025, the Group's revenue primarily derived from sales of goods, with significant growth in import and export commodities revenue, while crude oil and coal revenue decreased; other income, gains, and losses, net, substantially increased, mainly driven by interest income, dividend income, and fair value gains on derivative financial instruments Revenue Composition for the First Half of 2025 (HKD thousands) | Sales of Goods | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Crude Oil | 574,477 | 730,952 | (21.4%) | | Import and Export Commodities | 7,625,837 | 2,206,755 | 245.6% | | Electrolytic Aluminum | 885,207 | 601,642 | 47.1% | | Coal | 296,742 | 405,245 | (26.7%) | | **Total** | **9,382,263** | **3,944,594** | **137.9%** | Other Income, Gains and Losses, Net for the First Half of 2025 (HKD thousands) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Interest income | 48,841 | 27,568 | 77.2% | | Dividend income | 12,417 | – | N/A | | Fair value gains on derivative financial instruments | 29,640 | 16,562 | 79.0% | | **Total** | **117,217** | **49,295** | **137.8%** | - In the first half of 2025, revenue from Mainland China was **HKD 1,389,194 thousand**, from Hong Kong was **HKD 2,229,844 thousand**, and from other Asian countries was **HKD 5,218,682 thousand**[32](index=32&type=chunk) [6. Finance Costs](index=18&type=section&id=6.%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, the Group's finance costs decreased year-on-year, primarily due to a reduction in interest expense on bank and other borrowings Finance Costs for the First Half of 2025 (HKD thousands) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Interest expense on bank and other borrowings | 33,202 | 37,176 | (10.7%) | | Interest expense on lease liabilities | 695 | 510 | 36.3% | | **Total interest expense** | **33,897** | **37,686** | **(10.0%)** | | Other finance costs | 12,223 | 14,992 | (18.5%) | | **Total** | **46,120** | **52,678** | **(12.5%)** | [7. Profit Before Tax](index=18&type=section&id=7.%20%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) For the six months ended June 30, 2025, the Group's profit before tax was influenced by a combination of factors including depreciation, amortization, loss on disposal of property, plant and equipment, as well as fair value gains on derivative financial instruments and net exchange gains Factors Affecting Profit Before Tax for the First Half of 2025 (HKD thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 252,359 | 254,238 | | Depreciation of right-of-use assets | 7,818 | 21,072 | | Loss / (gain) on disposal of property, plant and equipment, net | 2,894 | (1,447) | | Fair value gains on derivative financial instruments | (29,640) | (16,562) | | Net exchange gains | (5,639) | (475) | [8. Income Tax Expense](index=19&type=section&id=8.%20%E6%89%80%E5%BE%97%E7%A8%85%E6%94%AF%E5%87%BA) For the six months ended June 30, 2025, the Group's income tax expense significantly decreased year-on-year, primarily due to reduced current period expense and a negative impact from deferred tax; the Group applies different corporate tax rates across various jurisdictions and is subject to top-up tax under the "Pillar Two Model Rules" from January 1, 2025 Income Tax Expense for the First Half of 2025 (HKD thousands) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Current period expense | 53,439 | 99,403 | (46.2%) | | Deferred tax | (14,673) | (16,714) | (12.2%) | | **Total tax expense for the period** | **38,787** | **82,710** | **(53.1%)** | - The Group has no assessable profit in Hong Kong, hence no Hong Kong profits tax provision[36](index=36&type=chunk) - Applicable corporate tax rates are **30%** in Australia, **25%** (15% for some businesses) in Indonesia, **25%** in Mainland China, and **20%** in Kazakhstan[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - From January 1, 2025, the Group is subject to top-up tax under the "Pillar Two Model Rules" and has applied the temporary mandatory exemption from deferred tax accounting[41](index=41&type=chunk)[42](index=42&type=chunk) [9. Earnings Per Share Attributable to Ordinary Equity Holders of the Company](index=19&type=section&id=9.%20%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%99%AE%E9%80%9A%E8%82%A1%E8%82%A1%E6%9D%B1%E6%87%89%E4%BD%B5%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) For the six months ended June 30, 2025, basic earnings per share attributable to ordinary equity holders of the Company was 1.93 HK cents, a significant year-on-year decrease, primarily due to reduced profit for the period Earnings Per Share for the First Half of 2025 (HK cents) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Basic earnings per share | 1.93 | 4.49 | | Diluted earnings per share | 1.93 | 4.49 | - Basic earnings per share is calculated based on profit attributable to ordinary equity holders of the Company of **HKD 151,671 thousand** (2024: **HKD 353,113 thousand**) and a weighted average number of ordinary shares outstanding of **7,857,727,149 shares**[43](index=43&type=chunk) [10. Dividends](index=20&type=section&id=10.%20%E8%82%A1%E6%81%AF) The Board of Directors resolved not to declare an interim dividend for the first half of 2025, while the final dividend of 2.60 HK cents per share for the year ended December 31, 2024, was distributed on July 17, 2025 - The Board of Directors resolved not to declare an interim dividend for the first half of 2025[45](index=45&type=chunk) - A final dividend of **2.60 HK cents** per ordinary share, totaling approximately **HKD 204,301 thousand**, for the year ended December 31, 2024, was distributed on July 17, 2025[45](index=45&type=chunk) [11. Property, Plant and Equipment](index=20&type=section&id=11.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%92%8C%E8%A8%AD%E5%82%99) During the period, the Group acquired property, plant and equipment with a total cost of approximately HKD 147,698 thousand and disposed of property, plant and equipment with a total carrying amount of HKD 3,862 thousand - Total cost of property, plant and equipment acquired during the period was approximately **HKD 147,698 thousand** (2024: **HKD 167,864 thousand**)[46](index=46&type=chunk) - Property, plant and equipment with a total carrying amount of **HKD 3,862 thousand** (2024: **HKD 1,346 thousand**) were disposed of[46](index=46&type=chunk) [12. Prepayments, Deposits and Other Receivables](index=20&type=section&id=12.%20%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85%E3%80%81%E6%8C%89%E9%87%91%E5%92%8C%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE) As of June 30, 2025, total prepayments, deposits, and other receivables amounted to HKD 89,599 thousand, with non-current portion of HKD 21,270 thousand, and other receivables of HKD 53,632 thousand were impaired and fully provided for Prepayments, Deposits and Other Receivables for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepayments | 19,990 | 23,556 | | Deposits and other receivables | 123,241 | 137,669 | | Impairment allowance | (53,632) | (53,632) | | **Total** | **89,599** | **107,593** | | Classified as current portion | (68,329) | (91,130) | | Non-current portion | 21,270 | 16,463 | - As of June 30, 2025, other receivables of approximately **HKD 53,632 thousand** were impaired and fully provided for[47](index=47&type=chunk) [13. Inventories](index=20&type=section&id=13.%20%E5%AD%98%E8%B2%A8) As of June 30, 2025, the Group's total inventories amounted to HKD 441,542 thousand, a decrease from December 31, 2024, primarily due to reductions in raw materials, work-in-progress, and finished goods Inventories Composition for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Raw materials | 211,600 | 286,359 | (26.1%) | | Work-in-progress | 38,594 | 46,086 | (16.3%) | | Finished goods | 191,348 | 229,799 | (16.8%) | | **Total** | **441,542** | **562,244** | **(21.4%)** | [14. Trade Receivables](index=21&type=section&id=14.%20%E6%87%89%E6%94%B6%E8%B2%BF%E6%98%93%E8%B3%B4%E6%AC%BE) As of June 30, 2025, the Group's trade receivables significantly increased to HKD 1,982,341 thousand, with all balances aged within one month, reflecting a substantial growth in business volume Trade Receivables Ageing Analysis for the First Half of 2025 (HKD thousands) | Ageing | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Within 1 month | 1,982,341 | 689,541 | 187.5% | - The Group generally grants credit terms of **30 to 120 days** to approved customers[50](index=50&type=chunk) [15. Derivative Financial Instruments](index=21&type=section&id=15.%20%E8%A1%8D%E7%94%9F%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7) As of June 30, 2025, the Group held derivative financial assets of HKD 118,893 thousand related to Power Contract III, used to hedge against fluctuations in LME aluminum prices and foreign exchange rates, while foreign exchange contract liabilities were reduced to zero Derivative Financial Instruments for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 (Assets) | December 31, 2024 (Assets) | June 30, 2025 (Liabilities) | December 31, 2024 (Liabilities) | | :--- | :--- | :--- | :--- | :--- | | Power Contract III | 118,893 | 89,253 | – | – | | Foreign exchange contracts | – | – | – | 12,782 | - Power Contract III is used to hedge against fluctuations in LME aluminum prices and foreign exchange rates, with fair value changes recognized in the consolidated statement of profit or loss[51](index=51&type=chunk) - The Group hedges foreign exchange risk through forward foreign exchange contracts, which are classified as cash flow hedges[51](index=51&type=chunk) [16. Cash and Deposits](index=21&type=section&id=16.%20%E7%8F%BE%E9%87%91%E5%92%8C%E5%AD%98%E6%AC%BE) As of June 30, 2025, the Group's total cash and deposits significantly increased to HKD 4,419,129 thousand, with a notable rise in time deposits, indicating ample liquidity Cash and Deposits for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and bank balances | 511,128 | 562,005 | (9.0%) | | Time deposits | 2,119,624 | 515,531 | 311.1% | | Deposits with fellow subsidiaries | 1,932,250 | 1,088,628 | 77.5% | | **Total** | **4,419,129** | **2,031,447** | **117.5%** | [17. Trade Payables](index=22&type=section&id=17.%20%E6%87%89%E4%BB%98%E8%B3%B4%E6%AC%BE) As of June 30, 2025, the Group's total trade payables significantly increased to HKD 1,836,169 thousand, with a notable rise in payables aged one to three months, reflecting increased business procurement Trade Payables Ageing Analysis for the First Half of 2025 (HKD thousands) | Ageing | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Within 1 month | 48,837 | 731,421 | (93.3%) | | 1 to 3 months | 1,781,045 | 13,813 | 12794.0% | | Over 3 months | 6,287 | 1,047 | 500.5% | | **Total** | **1,836,169** | **746,281** | **146.0%** | - Trade payables are non-interest bearing and generally settled within **30 to 90 days**[53](index=53&type=chunk) [18. Bank and Other Borrowings](index=22&type=section&id=18.%20%E9%8A%80%E8%A1%8C%E5%92%8C%E5%85%B6%E4%BB%96%E5%80%9F%E8%B2%B8) As of June 30, 2025, the Group's total bank and other borrowings significantly increased to HKD 4,304,136 thousand, with most being current liabilities due within one year, primarily denominated in RMB and bearing interest at HIBOR or LPR-linked rates Bank and Other Borrowings for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Bank borrowings—unsecured | 2,376,584 | 1,010,990 | 135.1% | | Other borrowings—unsecured | 1,927,552 | 957,780 | 101.3% | | **Total** | **4,304,136** | **1,968,770** | **118.6%** | | Current portion | (3,318,456) | (1,010,990) | 228.2% | | Non-current portion | 985,680 | 957,780 | 2.9% | - Bank borrowings include secured loans from fellow subsidiaries and external banks, bearing interest at HIBOR plus a spread or LPR minus a spread[54](index=54&type=chunk) - Other borrowings are primarily secured loans from fellow subsidiaries, bearing interest at HIBOR plus a spread or LPR minus a spread[54](index=54&type=chunk) [19. Share Capital](index=23&type=section&id=19.%20%E8%82%A1%E6%9C%AC) As of June 30, 2025, the Company's authorized share capital and issued and fully paid share capital remained unchanged, consisting of 10,000,000,000 ordinary shares of HKD 0.05 each and 7,857,727,149 issued ordinary shares Share Capital for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Authorized share capital (10,000,000,000 shares) | 500,000 | 500,000 | | Issued and fully paid share capital (7,857,727,149 shares) | 392,886 | 392,886 | - There were no changes in the Company's share capital during the period[105](index=105&type=chunk) [20. Litigation](index=23&type=section&id=20.%20%E8%A8%B4%E8%A8%9F) CACT, a wholly-owned subsidiary, is involved in a letter of credit fraud claim with Weihai Bank; the Shandong court initially ruled in favor of CACT, but the Supreme People's Court ordered a retrial, with the latest ruling finding CACT not guilty of fraud but liable for approximately RMB 1.15 million in compensation, and both parties have appealed, with the Supreme People's Court scheduled to review the case on September 4, 2025 - CACT is involved in a letter of credit fraud claim by Weihai Bank, concerning three letters of credit totaling **USD 28.4 million**[57](index=57&type=chunk) - The Shandong court initially ruled in favor of CACT, but the Supreme People's Court on December 12, 2022, ordered the first-instance judgment to be set aside and remanded for retrial[57](index=57&type=chunk)[58](index=58&type=chunk) - On July 30, 2024, the Shandong court's retrial judgment found CACT not to have committed letter of credit fraud and to be without fault, but ordered CACT to pay approximately **RMB 1.15 million** in compensation based on the principle of fairness[58](index=58&type=chunk) - Both Weihai Bank and CACT have appealed, and the Supreme People's Court is scheduled to review the case on **September 4, 2025**[58](index=58&type=chunk) [21. Commitments](index=24&type=section&id=21.%20%E6%89%BF%E6%93%94) As of June 30, 2025, the Group's total contracted but unprovided capital expenditure commitments amounted to HKD 115,733 thousand, primarily for infrastructure projects and acquisition of property, plant and equipment, with an additional HKD 46,051 thousand in capital expenditure commitments attributable to joint ventures Capital Expenditure Commitments for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Contracted but unprovided capital expenditure of the Group | 115,733 | 56,257 | 105.7% | | Capital expenditure commitments attributable to joint ventures | 46,051 | 29,850 | 54.3% | [22. Related Party Transactions and Connected Transactions](index=25&type=section&id=22.%20%E9%97%9C%E9%80%A3%E4%BA%BA%E5%A3%AB%E4%BA%A4%E6%98%93%E5%92%8C%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) The Group engaged in several significant related party transactions, including interest expense and income with fellow subsidiaries, and amounts payable to related parties for cash and deposits, bank and other borrowings, and lease liabilities, while key management personnel compensation remained stable Related Party Transactions for the First Half of 2025 (HKD thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Fellow subsidiaries: Interest expense on lease liabilities | 124 | 126 | | Fellow subsidiaries: Interest expense on bank and other borrowings | 28,288 | 29,000 | | Fellow subsidiaries: Interest income on deposits | 34,516 | 12,695 | Amounts Payable to Related Parties for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fellow subsidiaries: Cash and deposits | 1,948,824 | 1,268,111 | | Fellow subsidiaries: Bank borrowings | 1,062,344 | 1,010,990 | | Fellow subsidiaries: Other borrowings | 1,927,552 | 957,780 | - Total compensation paid to the Group's key management personnel was **HKD 2,589 thousand** (first half of 2024: **HKD 2,591 thousand**)[61](index=61&type=chunk) [23. Fair Value and Fair Value Hierarchy of Financial Instruments](index=26&type=section&id=23.%20%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E7%9A%84%E5%85%AC%E5%85%81%E5%83%B9%E5%80%BC%E5%92%8C%E5%85%AC%E5%85%81%E5%83%B9%E5%80%BC%E5%88%86%E5%B1%A4) The Group's financial instruments are primarily measured at fair value using quoted prices in active markets (Level 1) and significant observable inputs (Level 2), with fair values of financial assets at fair value through other comprehensive income and derivative financial instruments changing during the reporting period - The fair value of financial assets and liabilities is recognized at the amount at which the instrument could be exchanged in a current transaction between willing parties[63](index=63&type=chunk) - The fair value of non-current time deposits and bank and other borrowings is calculated by discounting expected future cash flows[63](index=63&type=chunk) - Derivative financial instruments, including forward currency contracts and Power Contract III, are measured using valuation techniques such as present value calculations based on similar forward pricing and discounted cash flow models[63](index=63&type=chunk) Financial Assets Measured at Fair Value for the First Half of 2025 (HKD thousands) | Item | June 30, 2025 (Total) | December 31, 2024 (Total) | | :--- | :--- | :--- | | Financial assets at fair value through other comprehensive income | 1,762,621 | 2,289,703 | | Derivative financial instruments | 118,893 | 89,253 | [24. Events After the Reporting Period](index=27&type=section&id=24.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) As of the date of this report, the Kazakhstan Supreme Court has issued a final ruling on the tax claim against KBM, and the Group is not required to make any provision for it - The Kazakhstan Supreme Court has issued a final and binding ruling on the tax claim against KBM, and the Group will not make any provision for this tax claim[66](index=66&type=chunk) Other Information [Business Review and Outlook](index=28&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E5%92%8C%E5%B1%95%E6%9C%9B) In the first half of 2025, the Group faced challenges from declining commodity prices and geopolitical conflicts but achieved significant revenue growth by deepening its "investment + trade" dual-driven strategy, though net profit attributable to owners decreased due to falling crude oil and coal prices and high alumina costs; going forward, the Group will consolidate existing businesses, expand oil and gas trade, and focus on upstream mining and quality oil and gas development project investments - In the first half of 2025, commodity prices continued to decline, with international crude oil prices moving lower, coal prices remaining low, and aluminum prices slightly increasing[68](index=68&type=chunk) - The Group achieved operating revenue of approximately **HKD 9.38 billion**, a **137.9% year-on-year increase**, primarily driven by the steady expansion of its oil and gas trading business[69](index=69&type=chunk) - Net profit attributable to owners was approximately **HKD 150 million**, a **57.0% year-on-year decrease**, mainly due to falling crude oil and coal prices and high raw material alumina prices[69](index=69&type=chunk) - The Group will deepen its "investment + trade" dual-driven strategy, consolidate existing businesses, steadily expand its oil and gas trade, and focus on upstream mining and quality oil and gas development project investments[72](index=72&type=chunk) [Operating Environment](index=28&type=section&id=%E7%B6%93%E7%87%9F%E7%92%B0%E5%A2%83) In the first half of 2025, the global commodity market faced challenges, with international crude oil prices trending lower, a supply-demand imbalance in the coal market, and a slight increase in aluminum prices driven by industrial demand recovery and supply constraints, further exacerbated by geopolitical conflicts, trade frictions, and accelerated new energy substitution - In 2025, the international crude oil price center generally moved lower, with Brent crude averaging **USD 71.8 per barrel**, a year-on-year decrease of approximately **14.5%**[68](index=68&type=chunk) - The global coal market continued its supply-strong, demand-weak pattern, with pulverized coal injection (PCI) averaging **USD 138.5 per ton**, a year-on-year decrease of approximately **15.3%**[68](index=68&type=chunk) - The average price of LME aluminum ingots was **USD 2,536.6 per ton**, a year-on-year increase of approximately **5.0%**, supported by demand from new energy sectors and supply constraints[68](index=68&type=chunk) [Operating Results and Analysis](index=28&type=section&id=%E7%B6%93%E7%87%9F%E6%88%90%E6%9E%9C%E5%92%8C%E5%88%86%E6%9E%90) By actively responding to commodity price fluctuations and implementing measures to increase reserves, production, and reduce costs and enhance efficiency, the Group achieved operating revenue of HKD 9.38 billion, a 137.9% year-on-year increase, but net profit attributable to owners decreased by 57.0% due to falling crude oil and coal prices and high alumina costs; the company maintained a healthy financial position with ample liquidity Operating Results for the First Half of 2025 (HKD thousands) | Indicator | First Half 2025 | First Half 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Operating revenue | 9,382,263 | 3,944,594 | 137.9% | | Net profit attributable to owners | 151,671 | 353,113 | (57.0%) | - Oil and gas trading business revenue was **HKD 7.63 billion**, accounting for **81.3%** of total revenue[69](index=69&type=chunk) - As of June 30, 2025, total assets were approximately **HKD 15.93 billion**, net assets attributable to owners were approximately **HKD 7.66 billion**, the asset-liability ratio was approximately **51.0%**, and the annualized return on equity was approximately **3.9%**[69](index=69&type=chunk) [Oil and Gas Business](index=29&type=section&id=%E6%B2%B9%E6%B0%A3%E6%A5%AD%E5%8B%99) In the first half of 2025, the Group's oil and gas business actively responded to declining international oil prices, with the Kazakhstan oilfield optimizing its production and transportation system and the Yuedong oilfield advancing new drilling plans, but equity production decreased by 1.7% year-on-year, operating revenue decreased by 21.4% year-on-year, and net profit attributable to owners decreased by 39.4% - The Kazakhstan oilfield optimized its surface production and transportation system, increasing water injection and fluid production; the Yuedong oilfield advanced new drilling plans to explore resource potential[70](index=70&type=chunk) Oil and Gas Business Performance for the First Half of 2025 | Indicator | First Half 2025 | First Half 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Equity production | 4.643 million barrels | N/A | (1.7%) | | Operating revenue | HKD 570 million | N/A | (21.4%) | | Net profit attributable to owners | HKD 130 million | N/A | (39.4%) | [Non-Oil and Gas Business](index=29&type=section&id=%E9%9D%9E%E6%B2%B9%E6%B0%A3%E6%A5%AD%E5%8B%99) In the first half of 2025, the Group's non-oil and gas business exercised shareholder rights to assist electrolytic aluminum and coal projects in improving efficiency and expanded its oil and gas trading business, achieving operating revenue of HKD 7.63 billion and trading volume of approximately 13.3 million barrels; however, non-oil and gas business performance decreased by approximately HKD 50.4 million year-on-year, affected by falling PCI coal prices, rising alumina prices, and extreme weather and port delays in Australia - Actively assisted electrolytic aluminum and coal projects in planning efficiency improvement strategies and conveyed demands for cost reduction and efficiency enhancement to operators[71](index=71&type=chunk) - Oil and gas trading business achieved operating revenue of approximately **HKD 7.63 billion** and a trading volume of approximately **13.3 million barrels**[71](index=71&type=chunk) - Non-oil and gas business performance decreased by approximately **HKD 50.4 million** year-on-year, mainly due to falling PCI coal prices, rising raw material alumina prices, and extreme weather and port delays in Australia in March and April 2025[71](index=71&type=chunk) [Outlook](index=29&type=section&id=%E5%B1%95%E6%9C%9B) The Group will continue to adhere to a "seeking progress while maintaining stability" strategy, deepen its "investment + trade" dual-driven development strategy, consolidate high-quality development of existing businesses, steadily expand its oil and gas trading footprint, and focus on upstream mining investments centered on aluminum products and quality oil and gas development projects, continuously enhancing enterprise value through improved operational efficiency, optimized market value management, and strengthened risk control - Despite accelerated development of renewable energy, oil and gas will remain crucial in the energy mix but face uncertainties from carbon reduction policies, market volatility, and geopolitical conflicts[72](index=72&type=chunk) - Demand for aluminum business will be driven by industrialization and urbanization in developing countries, as well as rapid development in new energy and electric vehicle sectors[72](index=72&type=chunk) - The Group will deepen its "investment + trade" dual-driven strategy, focusing on upstream mining investments centered on aluminum products and quality oil and gas development projects[72](index=72&type=chunk) [Financial Review](index=30&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides a detailed review of the Group's financial performance for the first half of 2025, including operating results, financial position, and specific performance and influencing factors for each business segment (electrolytic aluminum, coal, commodity trading, bauxite mining and alumina refining, crude oil business), revealing a trend of revenue growth but declining profit, and analyzing the main reasons - The Group recorded a profit attributable to ordinary equity holders of the Company of approximately **HKD 151.7 million** for the first half of 2025, a year-on-year decrease of approximately **57.0%**[75](index=75&type=chunk) - The decline in profit was primarily attributed to a significant decrease in average selling prices of crude oil and coal, a substantial increase in raw material alumina costs, reduced share of profit from associates due to no longer holding AWC equity, and a decrease in share of profit from joint ventures[75](index=75&type=chunk)[77](index=77&type=chunk) - As of June 30, 2025, cash and deposits amounted to approximately **HKD 4,419.1 million**, indicating a sound financial position[75](index=75&type=chunk) [Operating Results and Ratios](index=30&type=section&id=%E7%87%9F%E9%81%8B%E6%A5%AD%E7%B8%BE%E5%92%8C%E6%AF%94%E7%8E%87) For the six months ended June 30, 2025, the Group's revenue significantly increased by 137.9%, but EBITDA and net profit attributable to owners decreased by 35.8% and 57.0% respectively, with basic earnings per share also decreasing accordingly Operating Results and Ratios for the First Half of 2025 (HKD thousands) | Indicator | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 9,382,263 | 3,944,594 | 137.9% | | EBITDA | 510,846 | 795,550 | (35.8%) | | Adjusted EBITDA | 754,682 | 1,096,569 | (31.2%) | | Profit attributable to ordinary equity holders of the Company | 151,672 | 353,113 | (57.0%) | | Earnings per share (basic) (HK cents) | 1.93 | 4.49 | (57.0%) | [Financial Position and Ratios](index=30&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E5%92%8C%E6%AF%94%E7%8E%87) As of June 30, 2025, the Group's cash and deposits and total debt both significantly increased by over 116%, total assets grew by 25.7%, but total equity decreased by 5.0%, with the asset-liability ratio and interest-bearing debt ratio rising significantly, and the current ratio slightly decreasing Financial Position and Ratios for the First Half of 2025 (HKD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and deposits | 4,419,129 | 2,031,447 | 117.5% | | Total assets | 15,934,829 | 12,673,143 | 25.7% | | Total debt | 4,363,325 | 2,011,520 | 116.9% | | Net cash | 55,804 | 19,927 | 180.0% | | Total equity | 7,801,521 | 8,213,073 | (5.0%) | | Current ratio | 1.1 times | 1.3 times | (15.4%) | | Asset-liability ratio | 51.0% | 35.2% | 44.9% | | Interest-bearing debt ratio | 27.0% | 15.5% | 74.2% | [Electrolytic Aluminum](index=31&type=section&id=%E9%9B%BB%E8%A7%A3%E9%8B%81) In the first half of 2025, electrolytic aluminum business revenue grew by 47%, with both average selling price and sales volume increasing, but the segment recorded a loss of HKD 8.4 million due to abnormally high alumina prices leading to increased production costs; the company has entered into a 2026 power hedging agreement to ensure power supply and price predictability, and plans to further restart electrolytic cells in the second half to boost capacity Electrolytic Aluminum Business Performance for the First Half of 2025 (HKD millions) | Indicator | First Half 2025 | First Half 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Segment revenue | 885.2 | 601.6 | 47% | | Segment results | Loss 8.4 | Profit 39.8 | N/A | - Aluminum prices showed resilience, slightly increasing year-on-year, supported by industrial demand recovery and supply constraints[78](index=78&type=chunk) - Increased production costs were primarily attributed to abnormally high alumina prices from late 2024 to early 2025[78](index=78&type=chunk) - A nine-year power hedging agreement for 2026 has been entered into, supplying **300 MW** of power to the electrolytic aluminum plant, equivalent to approximately **95%** of the energy required for rated capacity[80](index=80&type=chunk) - The smelter restarted more electrolytic cells, increasing capacity to approximately **80%**, with further restarts planned for the second half of 2025[80](index=80&type=chunk) [Coal](index=32&type=section&id=%E7%85%A4) In the first half of 2025, coal business revenue decreased by 27%, and segment results shifted from profit to a gross loss of HKD 8.7 million, primarily due to a significant decline in PCI coal prices, weak demand in Asian markets, geopolitical tensions, and extreme weather affecting sales and production volumes Coal Business Performance for the First Half of 2025 (HKD millions) | Indicator | First Half 2025 | First Half 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 296.7 | 405.2 | (27%) | | Segment results | Gross loss 8.7 | Profit 27.0 | N/A | - PCI coal prices significantly declined, with average selling price and sales volume decreasing by approximately **21%** and **7%** respectively compared to the prior year period[80](index=80&type=chunk) - The decrease in production and sales volume was mainly due to weak demand in Asian markets, geopolitical tensions, economic uncertainties, and severe rainfall and thunderstorms from March to April 2025[80](index=80&type=chunk) [Commodity Trading](index=33&type=section&id=%E5%95%86%E5%93%81%E8%B2%BF%E6%98%93) In the first half of 2025, the Group's commodity trading business revenue significantly increased by 246% to HKD 7,625.8 million, and segment results grew by 145% to HKD 1.8 million, primarily driven by the signing of back-to-back crude oil trading contracts and a substantial increase in trading volume Commodity Trading Business Performance for the First Half of 2025 (HKD millions) | Indicator | First Half 2025 | First Half 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 7,625.8 | 2,206.8 | 246% | | Segment results | 1.8 | 0.7 | 145% | - The first back-to-back crude oil trading contract was signed in January 2024, with approximately **13.3 million barrels** of crude oil sold during the period[85](index=85&type=chunk) - This section also mentions the progress of CACT's letter of credit fraud claim with Weihai Bank, with the Supreme People's Court scheduled to review the case on **September 4, 2025**[82](index=82&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk) [Bauxite Mining and Alumina Refining](index=33&type=section&id=%E9%8B%81%E5%9C%9F%E7%A4%A6%E9%96%8B%E6%8E%A1%E5%92%8C%E6%B0%A7%E5%8C%96%E9%8B%81%E5%86%B6%E7%85%89) The Group ceased to hold equity interest in AWC from July 18, 2024, and now holds approximately 3.03% equity in Alcoa, which is classified as a financial asset at fair value through other comprehensive income; in the first half of 2025, the fair value of this investment decreased by approximately HKD 527.1 million, mainly due to a decline in Alcoa's share price, but dividends of approximately HKD 12.4 million were received - From July 18, 2024, the Group no longer holds any equity interest in AWC, instead holding approximately **3.03%** equity in Alcoa (ASX: AAI; NYSE: AA)[88](index=88&type=chunk) - The investment in Alcoa is classified as a financial asset at fair value through other comprehensive income, with its fair value changes entirely dependent on Alcoa's share price movements[88](index=88&type=chunk) - In the first half of 2025, the fair value of the investment in Alcoa decreased by approximately **HKD 527.1 million**, primarily due to a decline in Alcoa's share price[88](index=88&type=chunk) - Dividends of approximately **HKD 12.4 million** were received from Alcoa during the period[88](index=88&type=chunk) [Crude Oil (Seram Block)](index=34&type=section&id=%E5%8E%9F%E6%B2%B9%EF%BC%88Seram%E5%8D%80%E5%A1%8A%EF%BC%89) In the first half of 2025, Seram Energy (operator of the Seram Block) recorded a segment loss of approximately HKD 0.5 million, mainly due to no revenue or cost of sales recognized in the period following an adjustment to sales arrangements, and declining production and sales volumes due to natural depletion of existing wells; the company is proceeding with the transfer of a 10% participating interest to MEA and is involved in litigation with the Indonesian tax authority - Seram Energy recorded a segment loss of approximately **HKD 0.5 million** (first half of 2024: profit of approximately **HKD 8.7 million**)[89](index=89&type=chunk) - No revenue or cost of sales was recognized in the period due to an adjustment in sales arrangements for the second half of 2025, changing the sales frequency from twice a year to once a year[89](index=89&type=chunk) - Total production and sales volume decreased by approximately **12%** year-on-year, and daily production and sales volume decreased by approximately **12%**, primarily due to the natural depletion of existing wells[89](index=89&type=chunk)[90](index=90&type=chunk) - Seram Energy is proceeding with the transfer of a **10%** participating interest in the oil sharing contract to MEA and is involved in ongoing litigation with the Indonesian tax authority[91](index=91&type=chunk) [Crude Oil (Hainan-Yuedong Block)](index=36&type=section&id=%E5%8E%9F%E6%B2%B9%EF%BC%88%E6%B5%B7%E5%8D%97%EF%BC%8D%E6%9C%88%E6%9D%B1%E5%8D%80%E5%A1%8A%EF%BC%89) In the first half of 2025, CITIC Haiyue recorded a segment profit of approximately HKD 207.1 million in the Hainan-Yuedong Block, a 34.8% year-on-year decrease, primarily due to a decline in average crude oil realized prices and reduced sales volume, as well as decreasing production and sales volumes from natural depletion of existing wells; the company is implementing strict cost control and promoting new technologies to improve production efficiency - CITIC Haiyue recorded a segment profit of approximately **HKD 207.1 million**, a year-on-year decrease of approximately **34.8%**[92](index=92&type=chunk) - Revenue decreased by approximately **18%**, mainly due to a decrease of approximately **13%** in average crude oil realized prices and a decrease of approximately **6%** in sales volume[92](index=92&type=chunk) - Total production and sales volume decreased by approximately **4%** year-on-year, and daily production and sales volume decreased by approximately **4%**, primarily due to the continuous natural depletion of existing wells[92](index=92&type=chunk) - Cost of sales per barrel increased by approximately **0.6%** year-on-year, but the company is implementing strict cost control and promoting new technologies to improve production efficiency[92](index=92&type=chunk) [Crude Oil and Bitumen (Karazhanbas Oilfield, Kazakhstan)](index=37&type=section&id=%E5%8E%9F%E6%B2%B9%E5%8F%8A%E6%B7%BF%E9%9D%92%EF%BC%88%E5%93%88%E8%96%A9%E5%85%8B%E6%96%AF%E5%9D%A6Karazhanbas%E6%B2%B9%E7%94%B0%EF%BC%89) In the first half of 2025, KBM achieved a net profit attributable to owners of approximately HKD 27.2 million, an 81.2% year-on-year decrease, primarily due to falling average realized prices for crude oil and bitumen, despite an increase in crude oil sales volume; the company reduced its cost of sales and distribution per barrel through tenge depreciation and cost control measures - KBM achieved a net profit attributable to owners of approximately **HKD 27.2 million**, a year-on-year decrease of approximately **81.2%**[94](index=94&type=chunk) - Crude oil revenue decreased by approximately **7%** year-on-year, mainly due to a decrease of approximately **16%** in average crude oil realized prices, although sales volume increased by approximately **11%**[94](index=94&type=chunk)[95](index=95&type=chunk) - Bitumen revenue decreased by approximately **29%** year-on-year, mainly due to a decrease of approximately **20%** in sales volume and a decrease of approximately **11%** in average selling price[94](index=94&type=chunk)[95](index=95&type=chunk) - Cost of sales per barrel decreased by approximately **1%** year-on-year, and selling and distribution costs per barrel decreased by approximately **9%** year-on-year, primarily benefiting from tenge depreciation and reduced export duties and taxes[95](index=95&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=39&type=section&id=%E6%B5%81%E5%8B%95%E7%8F%BE%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%92%8C%E8%B3%87%E6%9C%AC%E7%B5%90%E6%A7%8B) This section details the Group's liquidity, financial resources, and capital structure, showing ample cash and deposits as of June 30, 2025, a significant increase in total debt primarily for trade financing, and sufficient bank credit facilities; the Group manages financial risks through diversified businesses and derivative instruments and believes it has adequate resources to meet working capital needs - As of June 30, 2025, the Group's cash and deposit balances amounted to approximately **HKD 4,419.1 million**, a significant increase from December 31, 2024[98](index=98&type=chunk) - Total debt was approximately **HKD 4,363.3 million**, an increase of approximately **HKD 2,351.8 million** from December 31, 2024, mainly due to a net increase in bank and other borrowings[100](index=100&type=chunk) - The Group has sufficient credit facilities from related parties and external banks, with a portion already utilized[101](index=101&type=chunk) - The Board of Directors believes the Group has sufficient resources to meet foreseeable working capital requirements[111](index=111&type=chunk) [Cash and Deposits](index=39&type=section&id=%E7%8F%BE%E9%87%91%E5%92%8C%E5%AD%98%E6%AC%BE) As of June 30, 2025, the Group's cash and deposit balances significantly increased to HKD 4,419.1 million, primarily denominated in USD, AUD, RMB, and HKD, indicating ample liquidity Cash and Deposits for the First Half of 2025 (HKD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and deposit balances | 4,419,129 | 2,031,447 | 117.5% | - The Group's cash and cash equivalents are primarily denominated in **USD, AUD, RMB, and HKD**[99](index=99&type=chunk) [Borrowings and Bank Facilities](index=39&type=section&id=%E5%80%9F%E8%B2%B8%E5%8F%8A%E9%8A%80%E8%A1%8C%E4%BF%A1%E8%B2%B8) As of June 30, 2025, the Group's total debt significantly increased to HKD 4,363.3 million, primarily comprising unsecured bank borrowings, other borrowings, and lease liabilities, with most being short-term, denominated in RMB, and bearing interest at market rates; the company aims to maintain reasonable cash and credit facilities to meet future needs Total Debt Composition for the First Half of 2025 (HKD millions) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Unsecured bank borrowings | 2,376.6 | 1,011.0 | 135.1% | | Unsecured other borrowings | 1,927.6 | 957.8 | 101.3% | | Lease liabilities | 59.2 | 42.7 | 38.6% | | **Total debt** | **4,363.3** | **2,011.5** | **116.9%** | - Most transactions in the Group's import and export commodities business are financed by borrowings, which are typically self-liquidating, transaction-specific, and short-term[100](index=100&type=chunk) - As of June 30, 2025, all the Group's bank and other borrowings are denominated in **RMB** and bear interest at HIBOR plus a spread or LPR minus a spread[100](index=100&type=chunk) - The Group has sufficient credit facilities from related parties and external banks, with a portion already utilized[101](index=101&type=chunk) [Trade Finance](index=40&type=section&id=%E8%B2%BF%E6%98%93%E8%9E%8D%E8%B3%87) The Group's trading business has secured trade finance loans of USD 765.0 million (approximately HKD 5,967.0 million), primarily for issuing letters of credit to suppliers; as of June 30, 2025, approximately 36.3% of the trade finance credit facilities have been utilized - The Group's trading business has secured trade finance loans of **USD 765.0 million** (approximately **HKD 5,967.0 million**), primarily for issuing letters of credit to suppliers[103](index=103&type=chunk) - As of June 30, 2025, approximately **36.3%** of the trade finance credit facilities have been utilized, amounting to **USD 278.0 million** (approximately **HKD 2,168.4 million**)[103](index=103&type=chunk) [Finance Leases](index=40&type=section&id=%E8%9E%8D%E8%B3%87%E7%A7%9F%E8%B3%83) As of June 30, 2025, the Group's finance lease liabilities for its aluminum and coal mining businesses amounted to approximately HKD 3.1 million, a decrease from December 31, 2024 Finance Lease Liabilities for the First Half of 2025 (HKD millions) | Indicator | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Finance lease liabilities | 3.1 | 7.2 | (57.0%) | [Share Capital](index=40&type=section&id=%E8%82%A1%E6%9C%AC) The Company's share capital remained unchanged during the period, with issued share capital maintained at 7,857,727,149 ordinary shares of HKD 0.05 each - There were no changes in the Company's share capital during the period[105](index=105&type=chunk) - The issued share capital consists of **7,857,727,149 ordinary shares** of **HKD 0.05** each[56](index=56&type=chunk) [Financial Risk Management](index=40&type=section&id=%E8%B2%A1%E5%8B%99%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The Group manages market risks (including foreign currency, price, interest rate, and inflation risks), credit risk, and liquidity risk through a set of internal policies and procedures, utilizing forward currency contracts and derivative instruments (such as power hedging agreements) to hedge foreign currency and price risks - The Group manages various risks, including market risks (foreign currency, price, interest rate, and inflation), credit risk, and liquidity risk[106](index=106&type=chunk) - Foreign currency risk is hedged through forward currency contracts, and price risk is managed using derivative instruments such as power hedging agreements[106](index=106&type=chunk)[107](index=107&type=chunk) [New Investments](index=40&type=section&id=%E6%96%B0%E6%8A%95%E8%B3%87) The Group made no new investments during the period - The Group made no new investments during the period[108](index=108&type=chunk) [Pledged Assets](index=41&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group had no pledged assets - As of June 30, 2025, the Group had no pledged assets[109](index=109&type=chunk) [Contingent Liabilities](index=41&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[110](index=110&type=chunk) [Opinion](index=41&type=section&id=%E6%84%8F%E8%A6%8B) The Board of Directors believes that, considering currently available borrowing facilities and internal resources, the Group has sufficient resources to meet foreseeable working capital requirements - The Board of Directors believes the Group has sufficient resources to meet foreseeable working capital requirements[111](index=111&type=chunk) [Employees and Remuneration Policy](index=41&type=section&id=%E5%83%B1%E5%93%A1%E5%92%8C%E9%85%AC%E9%87%91%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group had 189 full-time employees with total remuneration of approximately HKD 26.1 million; additionally, employee remuneration shared with outsourcing contractors and joint venture projects amounted to approximately HKD 183.6 million, involving 1,709 employees. The Group's remuneration policy aims to provide fair market compensation to attract and motivate high-quality staff and includes contributory retirement benefit schemes - As of June 30, 2025, the Group had **189 full-time employees**, with remuneration of approximately **HKD 26.1 million**[112](index=112&type=chunk) - Employee remuneration shared with outsourcing contractors and jointly owned investments amounted to approximately **HKD 183.6 million**, involving a total of approximately **1,709 employees**[112](index=112&type=chunk) - The remuneration policy aims to provide fair market compensation, determined based on individual knowledge, skills, responsibilities, and performance, as well as the Group's performance[112](index=112&type=chunk) - The Group has established contributory retirement benefit schemes for employees in **Mainland China, Australia, and Hong Kong**[112](index=112&type=chunk)[113](index=113&type=chunk) [Events After the Reporting Period](index=42&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) From July 1, 2025, to the date of this report, other than the final ruling on the KBM tax claim already disclosed, the Group has no other significant matters or transactions requiring disclosure to shareholders - From July 1, 2025, to the date of this report, there are no other significant matters or transactions requiring disclosure, except for the final ruling on the KBM tax claim[114](index=114&type=chunk) [Corporate Governance Code](index=42&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The Company has consistently adopted the principles of the Corporate Governance Code in Appendix C1 of the Listing Rules during the period and complied with applicable code provisions, although the roles of Chairman and Chief Executive Officer are combined by Mr. Hao Weibao, which the Board believes facilitates business strategic planning and execution, and the Board's structure provides adequate checks and balances - The Company adopts the principles of the Corporate Governance Code in Appendix C1 of the Listing Rules[115](index=115&type=chunk) - The roles of Chairman and Chief Executive Officer are combined by Mr. Hao Weibao, deviating from code provision C.2.1, but the Board believes this arrangement facilitates business strategic planning and execution[116](index=116&type=chunk) - The Board's structure, comprising one non-executive director and three independent non-executive directors, provides adequate checks and balances[116](index=116&type=chunk) [Standard Securities Dealing Code for Directors](index=42&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The Company has adopted a code of conduct for directors' dealings in company securities, and after specific inquiries, all directors confirmed compliance with the required standards of the code during the period - The Company has adopted a code of conduct for directors' dealings in the Company's securities[117](index=117&type=chunk) - All directors confirmed compliance with the required standards of the securities dealing code during the period[118](index=118&type=chunk) [Directors' and Chief Executive's Interests in Shares and Underlying Shares](index=43&type=section&id=%E8%91%A3%E4%BA%8B%E5%92%8C%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E5%9C%A8%E8%82%A1%E4%BB%BD%E5%92%8C%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E7%9A%84%E6%AC%8A%E7%9B%8A) As of June 30, 2025, Mr. Chen Jian held 10.01% of the Company's shares through controlled corporations, and Mr. Lyu Dequan beneficially owned 0.01% of shares; Mr. Hao Weibao held 62,000 ordinary shares of CITIC Limited Directors' and Chief Executive's Long Positions in the Company's Shares for the First Half of 2025 | Director's Name | Nature of Interest | Number of Ordinary Shares Held | Percentage of Total Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Chen Jian | Interest in controlled corporation | 786,558,488 | 10.01% | | Mr. Lyu Dequan | Beneficial owner | 908,000 | 0.01% | Directors' Long Positions in Shares of Associated Corporations for the First Half of 2025 | Director's Name | Name of Associated Corporation | Shares/Equity Derivatives | Nature of Interest | | :--- | :--- | :--- | :--- | | Mr. Hao Weibao | CITIC Limited | 62,000 ordinary shares | Beneficial owner | [Share Option Scheme](index=44&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The Company's share option scheme adopted on June 27, 2014, expired on June 26, 2024, and no share options were granted under the scheme from its adoption date until its expiry date - The Company's share option scheme expired on **June 26, 2024**[121](index=121&type=chunk) - No share options were granted under the share option scheme from its adoption date until its expiry date[121](index=121&type=chunk) [Substantial Shareholders' and Other Persons' Interests in Shares and Underlying Shares](index=44&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%92%8C%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E5%9C%A8%E8%82%A1%E4%BB%BD%E5%92%

Corporate Information [Board and Committee Composition](index=2&type=section&id=Board%20and%20Committee%20Composition) The company's board members and committee compositions are outlined, including key corporate information - The Board of Directors includes Chairman Gu Haiou and Vice Chairman Le Zheng, with Audit, Nomination, and Remuneration Committees established[3](index=3&type=chunk) - The Company Secretary is Tsang Fung Yi, and the authorized representatives are Gu Haiou and Yan Han[3](index=3&type=chunk) - The Hong Kong share registrar is Computershare Hong Kong Investor Services Limited, the auditor is Ernst & Young, and the stock code is 3613[3](index=3&type=chunk) Financial Highlights [Financial Performance for the First Half of 2025](index=3&type=section&id=Financial%20Performance%20for%20the%20First%20Half%20of%202025) Key financial indicators for the six months ended June 30, 2025, show revenue and profit growth Key Financial Data for the Six Months Ended June 30 | Indicator | 2025 (HK$ thousands) | 2024 (HK$ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 761,736 | 664,518 | 14.6% | | Gross Profit | 463,038 | 451,770 | 2.5% | | Profit Before Income Tax | 289,671 | 283,642 | 2.1% | | Profit for the Period | 245,936 | 240,344 | 2.3% | | Profit Attributable to Owners of the Company | 234,866 | 219,782 | 6.9% | | Earnings Per Share | HK$0.28 | HK$0.26 | HK$0.02 | Key Balance Sheet Data as of June 30, 2025 | Indicator | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 2,005,545 | 1,819,753 | 10.2% | | Total Assets | 4,534,467 | 4,559,525 | -0.5% | | Total Equity | 4,222,210 | 4,246,434 | -0.6% | Management Discussion and Analysis [Business Overview](index=4&type=section&id=Business%20Overview) The Group achieved revenue and profit growth in H1 2025 despite global economic challenges - The global economy faces weakening growth momentum, rising protectionism, trade fragmentation, and high debt levels[12](index=12&type=chunk) - The retail sectors in Hong Kong and Macau are under pressure from shifting consumption patterns, increased competition, and external economic volatility[12](index=12&type=chunk) Group Core Financial Performance for H1 2025 | Indicator | H1 2025 (HK$ million) | H1 2024 (HK$ million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Sales Revenue | 761.7 | 664.5 | 14.6% | | Profit Attributable to Owners of the Company | 234.9 | 219.8 | 6.9% | [Market Expansion](index=5&type=section&id=Market%20Expansion) The Group expanded its retail presence, enhanced brand promotion, and advanced international strategic cooperation - Added one new retail terminal in Yuen Long, Hong Kong, and upgraded the image of offline stores[14](index=14&type=chunk) - Updated packaging designs for products like Rhodiola Capsules and promoted the brand through various media platforms[14](index=14&type=chunk) - Participated in Hong Kong community events to showcase traditional Chinese medicine products and culture[14](index=14&type=chunk) - Conducted anti-counterfeiting operations in Hong Kong, collaborating with customs to combat infringing goods[15](index=15&type=chunk) - Launched campus cultural activities and a student ambassador program to promote traditional Chinese medicine culture[15](index=15&type=chunk) - Signed a strategic cooperation agreement with China Duty Free International to promote the global value of traditional Chinese medicine[18](index=18&type=chunk) - Successfully launched the Arabic edition of the "Illustrated Handbook of Chinese Materia Medica" to expand influence in the Middle East[18](index=18&type=chunk) - Visited the Ministry of Health of Cambodia to discuss product registration and co-organized cultural exchange events[19](index=19&type=chunk) [Production and R&D](index=7&type=section&id=Production%20and%20R&D) The Group enhanced production efficiency, achieved R&D milestones, and deepened industry-academia-research collaboration - The Taipo production and R&D base passed Hong Kong GMP and ISO22000 certifications and upgraded its layout to enhance automation and reduce costs[21](index=21&type=chunk) - The self-developed Dendrobii Nobilis Powder received a registration certificate for proprietary Chinese medicine in Hong Kong[21](index=21&type=chunk) - A subsidiary obtained a patent for an anti-aging product's preparation method and use from the National Intellectual Property Administration[21](index=21&type=chunk) - The clinical trial protocol for a Ganoderma and Turmeric compound capsule passed expert review[21](index=21&type=chunk) - Beijing Tong Ren Tang deer products were launched in New Zealand, combining traditional processing techniques with standardized production[22](index=22&type=chunk) - Established cooperative research platforms with universities in Hong Kong and Macau to foster a deeply integrated innovation system[22](index=22&type=chunk) [Outlook](index=8&type=section&id=Outlook) The Group will deepen R&D innovation and expand its business footprint to seize opportunities in the evolving pharmaceutical industry - The pharmaceutical industry is in a key period of rapid development, with growing demand driven by an aging population and rising health awareness[24](index=24&type=chunk) - The Group will deepen its R&D innovation strategy, enrich its product pipeline, and build new growth engines[24](index=24&type=chunk) - The Group will focus on a strategy of deep integration between online and offline channels to accelerate business expansion and enhance core competitiveness[24](index=24&type=chunk) [Human Resources](index=8&type=section&id=Human%20Resources) The Group maintained a stable workforce and reviewed its remuneration policies to attract and retain talent Employee Numbers and Costs | Indicator | June 30, 2025 | 2024 | | :--- | :--- | :--- | | Number of Employees | 789 | 779 | | Staff Costs (HK$ thousands) | 113,500 | 104,500 | - The Group regularly reviews its remuneration policies and provides discretionary bonuses based on performance to attract and retain high-caliber employees[25](index=25&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) The Group maintained a sound financial position with sufficient liquidity, though no interim dividend was proposed [Financial Resources and Liquidity](index=8&type=section&id=Financial%20Resources%20and%20Liquidity) The Group maintained a strong financial position with a significant increase in cash and bank balances Cash and Bank Balances | Indicator | June 30, 2025 (HK$ million) | December 31, 2024 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 2,005.5 | 1,819.8 | 10.2% | - The increase in cash and bank balances was mainly due to the collection of trade receivables and increased revenue and profit[26](index=26&type=chunk) - The Group has sufficient liquidity and financial resources to meet its daily operational and working capital needs[26](index=26&type=chunk) - Cash and bank balances are primarily held in HKD, RMB, and MOP with reputable financial institutions and mature within one year[26](index=26&type=chunk) [Capital Expenditure](index=9&type=section&id=Capital%20Expenditure) Capital expenditure increased in the first half of 2025, primarily for retail terminal renovations and equipment purchases Capital Expenditure | Indicator | H1 2025 (HK$ million) | H1 2024 (HK$ million) | | :--- | :--- | :--- | | Capital Expenditure | 16.4 | 11.2 | - Capital expenditure was mainly used for the renovation of retail terminals and the purchase of machinery and equipment for production and operation[29](index=29&type=chunk) [Foreign Currency Risk](index=9&type=section&id=Foreign%20Currency%20Risk) The Group's exposure to foreign currency risk was not significant, and no hedging instruments were used - The Group's transactions, monetary assets, and liabilities are mainly denominated in HKD, RMB, and MOP[30](index=30&type=chunk) - Exchange rate fluctuations did not have a significant impact on the Group during the period[30](index=30&type=chunk) - The Group did not engage in any derivative activities or use any financial instruments to hedge against foreign exchange risk[31](index=31&type=chunk) [Material Investments, Acquisitions, and Disposals](index=9&type=section&id=Material%20Investments%2C%20Acquisitions%2C%20and%20Disposals) The Group had no material investments, acquisitions, or disposals during the first half of 2025 - During the period, the Group had no material investments, acquisitions, or disposals[32](index=32&type=chunk) [Pledge of Group Assets](index=9&type=section&id=Pledge%20of%20Group%20Assets) No assets of the Group were pledged as of June 30, 2025 - As of June 30, 2025, the Group had no pledged assets[33](index=33&type=chunk) [Contingent Liabilities](index=9&type=section&id=Contingent%20Liabilities) The Group had no significant contingent liabilities as of June 30, 2025 - As of June 30, 2025, the Group had no significant contingent liabilities[34](index=34&type=chunk) [Dividends](index=9&type=section&id=Dividends) The Board of Directors did not recommend the payment of an interim dividend for the first half of 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[35](index=35&type=chunk) Condensed Consolidated Statement of Profit or Loss [Condensed Consolidated Statement of Profit or Loss for the First Half of 2025](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20for%20the%20First%20Half%20of%202025) The Group's revenue and profit attributable to owners increased, driven by sales growth Key Data from the Condensed Consolidated Statement of Profit or Loss | Indicator | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Revenue | 761,736 | 664,518 | | Cost of Sales | (298,698) | (212,748) | | Gross Profit | 463,038 | 451,770 | | Distribution and Selling Expenses | (102,641) | (129,014) | | General and Administrative Expenses | (88,659) | (74,685) | | Net Impairment Losses (Charged)/Reversed on Financial Assets | (7,334) | 6,907 | | Operating Profit | 265,341 | 258,878 | | Net Finance Income | 24,141 | 31,746 | | Profit Before Income Tax | 289,671 | 283,642 | | Profit for the Period | 245,936 | 240,344 | | Profit Attributable to Owners of the Company | 234,866 | 219,782 | | Basic and Diluted Earnings Per Share (HK$) | 0.28 | 0.26 | Condensed Consolidated Statement of Comprehensive Income [Condensed Consolidated Statement of Comprehensive Income for the First Half of 2025](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income%20for%20the%20First%20Half%20of%202025) Total comprehensive income increased, primarily due to a positive turn in currency translation differences Key Data from the Condensed Consolidated Statement of Comprehensive Income | Indicator | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Profit for the Period | 245,936 | 240,344 | | Currency Translation Differences Attributable to Owners of the Company | 12,086 | (5,133) | | Net Currency Translation Differences Attributable to Non-controlling Interests | 2,564 | (1,389) | | Fair Value Change of Financial Assets at FVTOCI | (825) | 990 | | Other Comprehensive Income/(Loss) for the Period | 13,825 | (5,532) | | Total Comprehensive Income for the Period | 259,761 | 234,812 | | Comprehensive Income Attributable to Owners of the Company | 246,127 | 215,639 | | Comprehensive Income Attributable to Non-controlling Interests | 13,634 | 19,173 | Condensed Consolidated Statement of Financial Position [Condensed Consolidated Statement of Financial Position as of June 30, 2025](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position%20as%20of%20June%2030%2C%202025) The Group's total assets remained stable, with shifts in the composition of current assets Key Data from the Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 609,567 | 593,778 | | Current Assets | 3,924,900 | 3,965,747 | | Total Assets | 4,534,467 | 4,559,525 | | **Equity and Liabilities** | | | | Equity Attributable to Owners of the Company | 4,028,502 | 4,075,360 | | Non-controlling Interests | 193,708 | 171,074 | | Total Equity | 4,222,210 | 4,246,434 | | Non-current Liabilities | 96,279 | 77,737 | | Current Liabilities | 215,978 | 235,354 | | Total Liabilities | 312,257 | 313,091 | Condensed Consolidated Statement of Changes in Equity [Condensed Consolidated Statement of Changes in Equity for the First Half of 2025](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity%20for%20the%20First%20Half%20of%202025) Total equity slightly decreased due to dividend payments offsetting the profit generated during the period Summary of the Condensed Consolidated Statement of Changes in Equity | Indicator | June 30, 2025 (HK$ thousands) | January 1, 2025 (HK$ thousands) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Company | 4,028,502 | 4,075,360 | | Non-controlling Interests | 193,708 | 171,074 | | Total Equity | 4,222,210 | 4,246,434 | - Profit for the period was HK$234,866 thousand, but dividends paid of HK$292,985 thousand led to a decrease in retained earnings[49](index=49&type=chunk) - Non-controlling interests increased, mainly due to profit for the period of HK$11,070 thousand and capital contributions from non-controlling shareholders of HK$9,000 thousand[49](index=49&type=chunk) Condensed Consolidated Statement of Cash Flows [Condensed Consolidated Statement of Cash Flows for the First Half of 2025](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows%20for%20the%20First%20Half%20of%202025) Net cash from operating activities turned positive, while financing activities were dominated by dividend payments Summary of the Condensed Consolidated Statement of Cash Flows | Indicator | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Net Cash Generated from/(Used in) Operating Activities | 480,494 | (303,857) | | Net Cash (Used in)/Generated from Investing Activities | (158,081) | 1,350,425 | | Net Cash Used in Financing Activities | (318,064) | (320,226) | | Net Increase in Cash and Cash Equivalents | 4,349 | 726,342 | | Cash and Cash Equivalents at End of Period | 1,788,954 | 1,721,491 | - Net cash from operating activities turned positive in H1 2025 from a negative value in the same period of 2024, indicating improved operational efficiency[52](index=52&type=chunk) - Cash outflow from investing activities increased, mainly due to an increase in short-term bank deposits with an original maturity of more than three months of HK$169,912 thousand[52](index=52&type=chunk) - Cash outflow from financing activities was primarily for the payment of dividends to the Company's shareholders amounting to HK$292,985 thousand[52](index=52&type=chunk) Notes to the Condensed Consolidated Interim Financial Information [1 General Information](index=16&type=section&id=1%20General%20Information) The Group is engaged in the production and sale of Chinese medicine products and provides TCM diagnostic services - The Group is engaged in the production, retail, and wholesale of Chinese medicine products and health products, and provides TCM diagnostic services[54](index=54&type=chunk) - The Company's immediate holding company is Beijing Tong Ren Tang Technologies Co Ltd, and the ultimate holding company is China Beijing Tong Ren Tang Group Co, Ltd[54](index=54&type=chunk) - The Company's shares were transferred to the Main Board of the Stock Exchange on May 29, 2018[54](index=54&type=chunk) [2 Basis of Preparation](index=16&type=section&id=2%20Basis%20of%20Preparation) The unaudited interim financial information was prepared in accordance with HKAS 34 and approved by the Board - The condensed consolidated interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the Listing Rules[56](index=56&type=chunk) - This financial information was approved for issue by the Board of Directors on August 22, 2025, and has not been audited[54](index=54&type=chunk)[55](index=55&type=chunk) [3 Significant Accounting Policies](index=17&type=section&id=3%20Significant%20Accounting%20Policies) The accounting policies adopted are consistent with the 2024 annual financial statements - The accounting policies adopted are consistent with those of the annual financial statements for the year ended December 31, 2024[58](index=58&type=chunk) - The Group has adopted amendments to HKAS 21 "Lack of Exchangeability," which had no significant financial impact on this interim financial information[60](index=60&type=chunk) [4 Estimates](index=17&type=section&id=4%20Estimates) The preparation of interim financial information requires management to make judgments, estimates, and assumptions - The preparation of interim financial information requires management to make judgments, estimates, and assumptions, and actual results may differ[61](index=61&type=chunk) - The key sources of estimation uncertainty are consistent with those applied in the annual financial statements for the year ended December 31, 2024[61](index=61&type=chunk) [5 Financial Risk Management](index=18&type=section&id=5%20Financial%20Risk%20Management) The Group's financial risk management policies and procedures have not changed significantly since the last year-end - The Group's activities expose it to market risk, credit risk, and liquidity risk[63](index=63&type=chunk) - The risk management policies and procedures have not changed since the last year-end[64](index=64&type=chunk) - There has been no significant change in the contractual undiscounted cash outflows for financial liabilities compared to December 31, 2024[65](index=65&type=chunk) [6 Revenue and Segment Information](index=18&type=section&id=6%20Revenue%20and%20Segment%20Information) The Group's revenue is primarily derived from product sales, with Hong Kong being the largest geographical segment Revenue Composition | Revenue Source | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Sales of Goods | 739,820 | 642,311 | | Service Income | 21,847 | 21,996 | | Brand Usage Fee Income | 69 | 211 | | **Total Revenue** | **761,736** | **664,518** | - The Group has three reportable operating segments: Hong Kong, Mainland China, and Overseas (including Macau)[70](index=70&type=chunk)[73](index=73&type=chunk) Revenue from External Customers by Region for H1 2025 | Region | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Hong Kong | 434,934 | 333,807 | | Mainland China | 117,993 | 116,342 | | Overseas | 208,809 | 214,369 | | **Total** | **761,736** | **664,518** | Total Assets and Liabilities by Region as of June 30, 2025 | Region | Total Assets (HK$ thousands) | Total Liabilities (HK$ thousands) | | :--- | :--- | :--- | | Hong Kong | 3,558,697 | (154,559) | | Mainland China | 384,502 | (38,670) | | Overseas | 591,268 | (119,028) | | **Total** | **4,534,467** | **(312,257)** | [7 Expenses by Nature](index=23&type=section&id=7%20Expenses%20by%20Nature) The cost of inventories sold increased significantly, while promotion and advertising expenses decreased sharply Major Expense Items | Expense Item | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Cost of Inventories Sold | 262,616 | 169,295 | | Employee Benefit Expense | 113,545 | 104,467 | | Depreciation of Right-of-use Assets | 35,769 | 32,569 | | Amortisation of Intangible Assets | 3,065 | 1,686 | | Depreciation of Property, Plant and Equipment | 9,218 | 8,655 | | Net Impairment Charge/(Reversal) on Trade Receivables | 7,334 | (6,907) | | Promotion and Advertising Expenses | 9,879 | 40,371 | - **Promotion and advertising expenses decreased significantly** from HK$40,371 thousand in 2024 to HK$9,879 thousand in 2025[81](index=81&type=chunk) [8 Net Finance Income](index=24&type=section&id=8%20Net%20Finance%20Income) Net finance income decreased due to lower bank interest income Composition of Net Finance Income | Item | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Bank Interest Income | 27,520 | 34,965 | | Finance Costs on Lease Liabilities | (3,379) | (3,215) | | **Net Finance Income** | **24,141** | **31,746** | [9 Income Tax Expense](index=24&type=section&id=9%20Income%20Tax%20Expense) Income tax expense remained relatively stable, with the Group assessing the impact of Pillar Two legislation Income Tax Expense | Item | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Current Income Tax | 39,623 | 25,684 | | Deferred Income Tax | 4,112 | 17,614 | | **Income Tax Expense** | **43,735** | **43,298** | - Hong Kong profits tax is calculated at 16.5%, and China corporate income tax is calculated at 25%[84](index=84&type=chunk) - The Group has assessed the impact of Pillar Two legislation and does not expect to face significant top-up tax risk in Macau or other jurisdictions[87](index=87&type=chunk) - The Group has adopted the temporary mandatory exception provided by the HKICPA and does not recognise or disclose deferred tax assets and liabilities related to Pillar Two income taxes[87](index=87&type=chunk) [10 Earnings Per Share](index=25&type=section&id=10%20Earnings%20Per%20Share) Basic and diluted earnings per share increased to HK$0.28, with no potential dilutive shares outstanding Calculation of Earnings Per Share | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (HK$ thousands) | 234,866 | 219,782 | | Weighted Average Number of Ordinary Shares in Issue (thousands) | 837,100 | 837,100 | | **Earnings Per Share (HK$)** | **0.28** | **0.26** | - There were no potential dilutive shares outstanding for the six months ended June 30, 2025[89](index=89&type=chunk) [11 Dividends](index=26&type=section&id=11%20Dividends) The final dividend for the year 2024 was paid in June 2025, and no interim dividend for 2025 was proposed Dividends Paid | Dividend Year | Payment Date | Amount (HK$) | | :--- | :--- | :--- | | Year ended December 31, 2024 | June 2025 | 292,985,000 | | Year ended December 31, 2023 | June 2024 | 276,243,000 | - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[92](index=92&type=chunk) [12 Property, Plant and Equipment](index=26&type=section&id=12%20Property%2C%20Plant%20and%20Equipment) The net book value of property, plant, and equipment saw a slight increase during the period Net Book Value Movement of Property, Plant and Equipment | Item | Amount (HK$ thousands) | | :--- | :--- | | January 1, 2025 (Audited) | 211,111 | | Additions | 8,345 | | Disposals | (37) | | Depreciation Charge | (9,218) | | Currency Translation Differences | 4,990 | | **June 30, 2025 (Unaudited)** | **215,191** | - As of June 30, 2025, no land and buildings were pledged to secure bank borrowings[93](index=93&type=chunk) [13 Intangible Assets](index=27&type=section&id=13%20Intangible%20Assets) The net book value of intangible assets decreased slightly due to amortization Net Book Value Movement of Intangible Assets | Item | Goodwill (HK$ thousands) | Computer Software (HK$ thousands) | Other Intangible Assets (HK$ thousands) | Total (HK$ thousands) | | :--- | :--- | :--- | :--- | :--- | | January 1, 2025 (Audited) | 49,419 | 17,677 | 217 | 67,313 | | Additions | — | 1,700 | — | 1,700 | | Amortisation | — | (2,848) | (217) | (3,065) | | Currency Translation Differences | — | 5 | — | 5 | | **June 30, 2025 (Unaudited)** | **49,419** | **16,534** | **—** | **65,953** | [14 Inventories](index=27&type=section&id=14%20Inventories) Total inventories decreased compared to the end of 2024, mainly due to a reduction in raw materials and finished goods Composition of Inventories | Item | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | | :--- | :--- | :--- | | Raw Materials | 1,284,360 | 1,361,708 | | Work in Progress | 16,247 | 15,281 | | Finished Goods and Trading Goods | 156,690 | 212,027 | | **Total** | **1,457,297** | **1,589,016** | [15 Trade Receivables and Other Current Assets](index=28&type=section&id=15%20Trade%20Receivables%20and%20Other%20Current%20Assets) The balance of trade receivables and other current assets decreased from the end of the previous year Composition of Trade Receivables and Other Current Assets | Item | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | | :--- | :--- | :--- | | Trade Receivables, Gross | 459,345 | 543,452 | | Less: Loss Allowance | (50,496) | (42,374) | | **Net Trade Receivables** | **408,849** | **501,078** | | Prepayments | 21,423 | 17,761 | | Other Receivables | 12,856 | 23,963 | | Deposits | 17,331 | 13,206 | | **Total** | **462,058** | **556,978** | Ageing Analysis of Trade Receivables (June 30, 2025) | Ageing | Amount (HK$ thousands) | | :--- | :--- | | Up to 90 days | 204,134 | | 91 to 180 days | 82,616 | | 181 to 365 days | 57,327 | | Over 365 days | 115,268 | | **Total** | **459,345** | [16 Share Capital](index=29&type=section&id=16%20Share%20Capital) The Company's issued and fully paid share capital remained unchanged during the period Share Capital Information | Item | Number of Shares | Share Capital (HK$ thousands) | | :--- | :--- | :--- | | Issued and fully paid ordinary shares at Jan 1, 2025 and June 30, 2025 | 837,100,000 | 938,789 | [17 Trade and Other Payables](index=29&type=section&id=17%20Trade%20and%20Other%20Payables) Total trade and other payables decreased, primarily due to a reduction in accrued expenses and other payables Composition of Trade and Other Payables | Item | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | | :--- | :--- | :--- | | Trade Payables | 50,412 | 38,345 | | Accrued Expenses and Other Payables | 68,454 | 113,825 | | Contract Liabilities | 7,441 | 5,138 | | **Total** | **126,307** | **157,308** | Ageing Analysis of Trade Payables (June 30, 2025) | Ageing | Amount (HK$ thousands) | | :--- | :--- | | 90 days | 40,974 | | 91 to 180 days | 1,580 | | 181 to 365 days | 690 | | Over 365 days | 7,168 | | **Total** | **50,412** | [18 Commitments](index=30&type=section&id=18%20Commitments) The Group had capital commitments for property, plant, equipment, and intangible assets Capital Commitments | Item | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | | :--- | :--- | :--- | | Contracted but not provided for — property, plant and equipment and intangible assets | 13,234 | 16,050 | Lease Commitments (Short-term and Low-value Leases) | Period | June 30, 2025 (HK$ thousands) | December 31, 2024 (HK$ thousands) | | :--- | :--- | :--- | | Within one year | 1,867 | 1,013 | - As of June 30, 2025, the Group had no relevant lease commitments for leases not yet commenced[102](index=102&type=chunk) [19 Significant Related Party Transactions](index=31&type=section&id=19%20Significant%20Related%20Party%20Transactions) The Group engaged in various transactions with related parties, including sales, purchases, and rental expenses Sales of Goods to Related Parties | Related Party | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Intermediate holding companies | 5,558 | — | | Fellow subsidiaries | 68,999 | 71,024 | | Joint ventures | — | 685 | | **Total** | **74,557** | **71,709** | Purchases of Goods from Related Parties | Related Party | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Immediate holding company | 9,319 | 30,494 | | Intermediate holding companies | 21,447 | 51,924 | | Fellow subsidiaries | 413 | 352 | | **Total** | **31,179** | **82,770** | Rental Expenses to Related Parties | Related Party | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Immediate holding company | 504 | 504 | | Fellow subsidiaries | 2,265 | 2,294 | | **Total** | **2,769** | **2,798** | Key Management Personnel Remuneration | Item | 2025 (HK$ thousands) | 2024 (HK$ thousands) | | :--- | :--- | :--- | | Salaries and other short-term employee benefits | 5,070 | 3,835 | | Pension costs | 448 | 325 | | **Total** | **5,518** | **4,160** | - Brand usage fees are charged annually at the higher of 1% of the joint venture's operating revenue or 1.5% of its profit before tax[108](index=108&type=chunk) [20 Comparative Figures](index=32&type=section&id=20%20Comparative%20Figures) Certain comparative figures have been reclassified to conform with the current period's presentation - Certain comparative figures have been reclassified to conform with the presentation and disclosure of the current period[109](index=109&type=chunk) Other Information [Directors' and Chief Executives' Interests in Shares](index=33&type=section&id=Directors'%20and%20Chief%20Executives'%20Interests%20in%20Shares) No directors or chief executives held any interests in the shares of the Company or its associated corporations - As of June 30, 2025, no director or chief executive of the Company had any interest in the shares, underlying shares, or debentures of the Company or any of its associated corporations that required notification under Part XV of the SFO[111](index=111&type=chunk) [Substantial Shareholders](index=33&type=section&id=Substantial%20Shareholders) The Company's substantial shareholders include Tong Ren Tang Technologies, Tong Ren Tang Shares, and Tong Ren Tang Group Substantial Shareholders' Interests | Shareholder Name | Capacity | Number of Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Tong Ren Tang Technologies | Beneficial owner | 318,540,000 | 38.05% | | Tong Ren Tang Shares | Beneficial owner | 281,460,000 | 33.62% | | Tong Ren Tang Shares | Interest in a controlled corporation | 318,540,000 | 38.05% | | Tong Ren Tang Group Co | Interest in a controlled corporation | 600,000,000 | 71.67% | - Tong Ren Tang Group Co holds a total interest of **71.67%** in the Company through its control over Tong Ren Tang Shares and Tong Ren Tang Technologies[112](index=112&type=chunk)[117](index=117&type=chunk) [Rights to Acquire Shares or Debentures](index=34&type=section&id=Rights%20to%20Acquire%20Shares%20or%20Debentures) No arrangements were in place to grant directors or chief executives rights to subscribe for the Company's securities - During the period, no arrangements were made by the Company, its subsidiaries, or fellow subsidiaries that would grant directors, chief executives, or their associates the right to subscribe for securities of the Company or any associated corporation[116](index=116&type=chunk) [Competing Business Interests](index=35&type=section&id=Competing%20Business%20Interests) A Deed of Non-competition is in place to delineate business activities and prevent competition with controlling shareholders - The Company entered into a Deed of Non-competition in 2013 with its controlling shareholders to define respective business areas and avoid competition[118](index=118&type=chunk) - Restricted businesses include the R&D, manufacturing, and sale of certain products outside Mainland China and new overseas registrations under the "Tong Ren Tang" brand[118](index=118&type=chunk)[119](index=119&type=chunk) - A Competition Executive Committee, comprising two disinterested directors, was established to conduct quarterly checks to ensure compliance with the deed[122](index=122&type=chunk)[125](index=125&type=chunk) - A Monitoring Committee, comprising three independent non-executive directors, reviews the records of the Competition Executive Committee quarterly[122](index=122&type=chunk)[125](index=125&type=chunk) [Purchase, Sale, or Redemption of the Company's Listed Securities](index=37&type=section&id=Purchase%2C%20Sale%2C%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) The Company did not purchase, sell, or redeem any of its listed securities during the period - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[122](index=122&type=chunk) - As of June 30, 2025, the Company did not hold any treasury shares[123](index=123&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers](index=37&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors%20of%20Listed%20Issuers) All directors have complied with the required standards for securities transactions throughout the period - The Company has adopted the Model Code as set out in Appendix C3 to the Listing Rules[124](index=124&type=chunk) - All directors confirmed that they have complied with the Model Code and the Company's code of conduct for securities transactions by directors during the period[124](index=124&type=chunk) [Corporate Governance Code](index=38&type=section&id=Corporate%20Governance%20Code) The Company has complied with the Corporate Governance Code throughout the first half of 2025 - During the period, the Company has complied with the provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules[126](index=126&type=chunk) [Changes in Directors' Information](index=38&type=section&id=Changes%20in%20Directors'%20Information) There were several changes to the Board of Directors and their roles in May 2025 - Mr. Chen Fei resigned as an Executive Director, Executive Vice General Manager, and member of the Competition Executive Committee on May 12, 2025[127](index=127&type=chunk) - Mr. Le Zheng was appointed as an Executive Director and Vice Chairman of the Board on May 12, 2025[127](index=127&type=chunk) - Mr. Yan Han was appointed as an Executive Director, member of the Competition Executive Committee, and an authorized representative on May 12, 2025[127](index=127&type=chunk) [Risk Management and Internal Control](index=38&type=section&id=Risk%20Management%20and%20Internal%20Control) The Group maintains a "three lines of defense" model for its risk management and internal control systems - The Group's risk management and internal control system is based on a "three lines of defense" model, including daily operational management, risk and compliance management, and independent supervision[128](index=128&type=chunk) - The Group proactively and systematically identifies and assesses operational risks, clarifies control responsibilities, and reviews the effectiveness of measures[130](index=130&type=chunk) - Risk monitoring results are compiled into a group risk management report and presented to the Audit Committee and the Board for ongoing supervision[130](index=130&type=chunk) [Audit Committee](index=39&type=section&id=Audit%20Committee) The Audit Committee has reviewed the unaudited interim financial information and report for the period - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial information and interim report for the six months ended June 30, 2025[131](index=131&type=chunk) - There were no disagreements between the Board and the Audit Committee regarding the accounting treatments adopted by the Company[131](index=131&type=chunk)