[Company Information](index=3&type=section&id=Company%20Information) This section provides essential company details including board members, committee compositions, company secretary, auditors, legal advisors, registered and principal offices, share registrar, principal bankers, stock code, and contact information - The company's board of directors comprises Executive Directors (Mr. Liu Wu-Hsiung, Ms. Wu Jui-Chiao, Mr. Lin Chun-Yu), Non-executive Directors (Ms. Wu Li-Chu, Mr. Chen Hsu-Pin, Mr. Liu Ju-Cheng), and Independent Non-executive Directors (Ms. Lin Ching-Ching, Mr. Chang An-Chieh, Ms. Wu Hui-Lan)[4](index=4&type=chunk) - The chairpersons of the Audit Committee, Remuneration Committee, and Nomination Committee are either Independent Non-executive Director Ms. Lin Ching-Ching or Executive Director Mr. Liu Wu-Hsiung[4](index=4&type=chunk) - The company's auditor is KPMG, and its legal advisor is Norton Rose Fulbright Hong Kong[4](index=4&type=chunk) - The company's stock code is **422**, and its website is www.vmeph.com[5](index=5&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This section details the Group's operating environment, business performance, financial position, and future outlook for the first half of 2025, highlighting significant revenue and net profit growth despite global challenges [Operating Environment](index=4&type=section&id=Operating%20Environment) In H1 2025, global trade and political landscapes shifted, with US tariffs increasing costs and supply chains restructuring, while Vietnam's economy grew robustly, boosting the motorcycle market - Global trade and political landscapes continue to adjust, with increased US tariffs raising corporate operating costs and accelerating supply chain restructuring[7](index=7&type=chunk) - Vietnam's economy performed robustly, with its Gross Domestic Product (GDP) growing by **7.52%** in H1 2025, standing out among ASEAN countries[7](index=7&type=chunk) Vietnam Motorcycle Market Sales Data | Metric | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total motorcycle sales by five major foreign direct investment manufacturers in Vietnam | 1,284,291 units | - | Increased by 6.4% | [Business Review](index=5&type=section&id=Business%20Review) The Group's H1 2025 Vietnam sales increased by 4.7% and export sales by 65.8%, driven by new products, brand promotion, strong Malaysian market performance, and initial success in Europe 2025 H1 Sales Volume Data | Metric | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Sales Volume in Vietnam | approx. 22.4 thousand units | - | Increased by 4.7% | | Scooters | approx. 6.6 thousand units | - | - | | Underbones | approx. 15.8 thousand units | - | - | | Total Export Sales Volume | approx. 18.4 thousand units | - | Increased by 65.8% | - Domestic sales growth in Vietnam is primarily attributed to continuous technological refinement, relentless R&D, design, and innovation of quality products, along with the launch of several new and stylish motorcycle models, national campus motorcycle safety driving education campaigns, and enhanced online brand promotion[8](index=8&type=chunk) - Significant growth in export sales benefited from sales momentum in the Malaysian market, where sales volume increased by approximately **34.3%** compared to the same period last year[9](index=9&type=chunk) - The Group began gradually expanding into the European market in 2024 and commenced full shipments in H1 2025, recording significant sales growth, indicating initial success in its market expansion strategy[9](index=9&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) The Group's H1 2025 revenue grew 42.1% to USD 46.6 million, achieving a net profit of USD 0.04 million, reversing last year's net loss, despite increased finance expenses and impairment losses [Revenue](index=6&type=section&id=Revenue) The Group's H1 2025 revenue reached USD 46.6 million, a 42.1% year-on-year increase, primarily driven by the launch of new motorcycle models boosting both domestic and export sales Revenue Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 46.6 | 32.8 | 13.8 | 42.1% | - Revenue growth is primarily attributed to the launch of new motorcycle models, driving both export and domestic sales performance in Vietnam[11](index=11&type=chunk) [Cost of Sales](index=6&type=section&id=Cost%20of%20Sales) H1 2025 cost of sales increased 37.3% to USD 41.2 million due to higher sales volume, but as a percentage of revenue, it decreased from 91.4% to 88.4%, reflecting improved economies of scale Cost of Sales Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 41.2 | 30.0 | 11.2 | 37.3% | | Cost of Sales as % of Revenue | 88.4% | 91.4% | -3.0% | - | - The increase in cost of sales is mainly due to the overall increase in sales volume[12](index=12&type=chunk) - By centralizing bulk procurement of raw materials, the Group enhanced its bargaining power, reducing production costs and offsetting some of the raw material cost increases[12](index=12&type=chunk) [Gross Profit and Gross Margin](index=6&type=section&id=Gross%20Profit%20and%20Gross%20Margin) H1 2025 gross profit increased to USD 5.4 million, with gross margin rising to 11.6%, primarily due to higher sales volume and a lower cost ratio Gross Profit and Gross Margin Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Gross Profit | 5.4 | 2.8 | 2.6 | | Gross Margin | 11.6% | 8.6% | 3.0% | - The increase in gross profit and gross margin is primarily due to higher sales volume[13](index=13&type=chunk) [Distribution Expenses](index=7&type=section&id=Distribution%20Expenses) H1 2025 distribution expenses slightly increased by 2.6% to USD 1.94 million, mainly due to higher transportation and packaging costs associated with increased export sales volume Distribution Expenses Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Distribution Expenses | 1.94 | 1.89 | 0.05 | 2.6% | - The increase in distribution expenses is mainly due to higher export sales volume, leading to increased transportation and packaging costs[14](index=14&type=chunk) [Administrative and Other Operating Expenses](index=7&type=section&id=Administrative%20and%20Other%20Operating%20Expenses) H1 2025 administrative and other operating expenses decreased by 1.3% to USD 3.07 million, representing 6.6% of total revenue, reflecting enhanced operational efficiency and effective cost control Administrative and Other Operating Expenses Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Administrative and Other Operating Expenses | 3.07 | 3.11 | -0.04 | -1.3% | | % of Total Revenue | 6.6% | - | - | - | - The decrease in expenses reflects the Group's continuous efforts to enhance operational efficiency and effectively control related expenditures[15](index=15&type=chunk) [Results from Operations](index=7&type=section&id=Results%20from%20Operations) The Group recorded a profit from operations of USD 0.9 million in H1 2025, successfully reversing an operating loss of USD 2.1 million in the prior year Results from Operations Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Profit/(Loss) from Operations | 0.9 | (2.1) | 3.0 | [Net Finance Expenses/Income](index=7&type=section&id=Net%20Finance%20Expenses%2FIncome) H1 2025 saw net finance expenses of USD 0.70 million, compared to net finance income of USD 0.03 million in the prior period, mainly due to reduced bank interest income and increased foreign exchange losses Net Finance Expenses/Income Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Net Finance Expenses/(Income) | 0.70 (Expense) | 0.03 (Income) | 0.73 (Increase in Expense) | - Key changes include a **USD 0.12 million** decrease in bank interest income, a **USD 0.63 million** increase in exchange losses due to fluctuations in the New Taiwan Dollar against the US Dollar, and a **USD 0.02 million** decrease in bank interest and lease liability interest expenses[17](index=17&type=chunk) [Impairment Loss on Other Property, Plant and Equipment](index=7&type=section&id=Impairment%20Loss%20on%20Other%20Property%2C%20Plant%20and%20Equipment) The Group recognized an impairment loss of approximately USD 0.1 million on other property, plant and equipment in H1 2025, a decrease from the prior year, reflecting asset revaluation amidst industry competition Impairment Loss on Other Property, Plant and Equipment | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Impairment Loss | 0.1 | 0.282675 | -0.182675 | - The impairment primarily reflects the Group's prudent financial management and re-evaluation of relevant asset values to address intense competition and rising manufacturing costs in the motorcycle industry[18](index=18&type=chunk) [Profit/(Loss) for the Period and Net Profit/(Loss) Margin](index=8&type=section&id=Profit%2F(Loss)%20for%20the%20Period%20and%20Net%20Profit%2F(Loss)%20Margin) The Group reported a net profit of USD 0.04 million in H1 2025, reversing a net loss of USD 2.42 million in the prior period, with net margin improving from -7.4% to 0.1% Profit/(Loss) for the Period and Net Margin Change | Metric | 2025 H1 (million USD) | 2024 H1 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Net Profit/(Loss) | 0.04 | (2.42) | 2.46 | | Net Margin | 0.1% | -7.4% | 7.5% | [Liquidity and Financial Resources](index=8&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, net current assets were USD 38.8 million, slightly down from year-end 2024, with cash and bank balances increasing to USD 58.6 million, but the gearing ratio rose to 97.5% due to increased interest-bearing borrowings Liquidity and Financial Resources | Metric | June 30, 2025 (million USD) | Dec 31, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Net Current Assets | 38.8 | 39.3 | -0.5 | | Current Assets | 105.1 | 95.6 | 9.5 | | Current Liabilities | 66.3 | 56.3 | 10.0 | | Interest-bearing Borrowings Due Within One Year | 43.3 | 33.8 | 9.5 | | Gearing Ratio | 97.5% | 75.2% | 22.3% | | Total Cash and Bank Balances | 58.6 | 54.4 | 4.2 | - The Group regularly and actively reviews and manages its capital structure to strengthen its financial position, with no changes in capital management approach during the period[21](index=21&type=chunk) [Pledge of Assets](index=8&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group pledged USD 19,582,961 in bank time deposits as collateral for bank financing Pledge of Assets | Metric | June 30, 2025 (USD) | | :--- | :--- | | Pledged Bank Time Deposits | 19,582,961 | [Exchange Rate Fluctuation Risk](index=8&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group's primary transaction currencies are VND and USD, and it monitors exchange rate trends, but as of June 30, 2025, no financial instruments were used to hedge foreign exchange risk - The Group's primary transaction currencies are Vietnamese Dong (VND) and US Dollar (USD)[23](index=23&type=chunk) - The Group adopts a prudent cash and financial management policy, with cash generally placed in short-term deposits primarily denominated in VND and USD[23](index=23&type=chunk) - As of June 30, 2025, the Group had not used any financial instruments to hedge its foreign exchange risk[23](index=23&type=chunk) [Human Resources and Remuneration Policy](index=9&type=section&id=Human%20Resources%20and%20Remuneration%20Policy) As of June 30, 2025, the Group employed 1,021 staff with total remuneration costs of approximately USD 5.1 million, offering a competitive compensation package including basic salary, bonuses, and benefits Human Resources and Remuneration Data | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Employees | 1,021 employees | 1,003 employees | | Total Salaries and Related Costs (million USD) | 5.1 | 4.9 | - The remuneration package includes basic salary, bonuses, staff accommodation, training and development opportunities, medical benefits, insurance coverage, and retirement benefits[24](index=24&type=chunk) [Capital Commitments and Contingent Liabilities](index=9&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities - As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities[25](index=25&type=chunk) [Significant Acquisitions or Disposals of Subsidiaries or Associates](index=9&type=section&id=Significant%20Acquisitions%20or%20Disposals%20of%20Subsidiaries%20or%20Associates) For the six months ended June 30, 2025, the Group had no significant acquisitions or disposals of subsidiaries or associates - For the six months ended June 30, 2025, the Group had no significant acquisitions or disposals of subsidiaries or associates[26](index=26&type=chunk) [Material Investments Held](index=9&type=section&id=Material%20Investments%20Held) For the six months ended June 30, 2025, the Group held no material investments - For the six months ended June 30, 2025, the Group held no material investments[27](index=27&type=chunk) [Future Plans for Material Investments or Capital Assets](index=9&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 acquisitions of capital assets - As of June 30, 2025, the Group had no specific plans for material investments or acquisitions of capital assets[28](index=28&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=9&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of its listed securities, and the Company held no treasury shares - For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[29](index=29&type=chunk) - As of June 30, 2025, the Company held no treasury shares[30](index=30&type=chunk) [Changes After December 31, 2024](index=9&type=section&id=Changes%20After%20December%2031%2C%202024) Except as otherwise disclosed, there have been no material changes in the Group's financial position or the information disclosed in the "Management Discussion and Analysis" section of the 2024 annual report since December 31, 2024 - Except as otherwise disclosed in this report, there have been no material changes in the Group's financial position compared to December 31, 2024[31](index=31&type=chunk) [Outlook](index=10&type=section&id=Outlook) For H2 2025, the Group will cautiously navigate global economic adjustments, adapting product and sales strategies, enhancing brand promotion, expanding service networks, and focusing on product innovation for shareholder returns - Looking ahead to H2 2025, the global economy remains in a phase of inflation adjustment and monetary and trade policy rebalancing, with the overall operating environment still presenting challenges[32](index=32&type=chunk) - The Group will continue to prudently respond to international market fluctuations, flexibly adjusting its product strategies and regional sales layouts[32](index=32&type=chunk) - For domestic sales, the Group will precisely target customer segments based on different product positioning and strengthen brand engagement through diverse marketing channels[32](index=32&type=chunk) - For export sales, the Group will continue to enhance global overseas market promotion, improve brand loyalty, constantly introduce new products, strengthen product capabilities, and actively explore new overseas markets[32](index=32&type=chunk) - The Group will continue to adhere to its business philosophy of focusing on core business, prioritizing quality, and ensuring customer satisfaction, with product innovation as a key strategy to continuously enhance product design and core technology development capabilities[32](index=32&type=chunk) [Other Matters](index=11&type=section&id=Other%20Matters) This section covers the application of IPO proceeds, disclosure of directors' and major shareholders' interests, compliance with corporate governance practices, and significant post-reporting period events [Application of Proceeds from Initial Public Offering](index=11&type=section&id=Application%20of%20Proceeds%20from%20Initial%20Public%20Offering) The Company's December 2007 IPO raised approximately USD 76.7 million net, with most funds utilized, and the remaining USD 17.0 million for land development and production site expansion is expected to be used by 2030 - The net proceeds from the Company's initial public offering in December 2007 were approximately **USD 76.7 million**[33](index=33&type=chunk) Use of Proceeds from Initial Public Offering | Purpose | Net Proceeds from IPO as per Prospectus and Announcements (million USD) | Unutilized Balance as of Jan 1, 2025 (million USD) | Amount Utilized in 2025 H1 (million USD) | Unutilized Balance as of June 30, 2025 (million USD) | | :--- | :--- | :--- | :--- | :--- | | Construction and Establishment of R&D Center in Vietnam | 11.7 | – | – | – | | Expansion of Distribution Channels in Vietnam | 19.0 | – | – | – | | Acquisition of Assets or Businesses | 9.0 | – | – | – | | General Working Capital | 2.7 | – | – | – | | Development of Production Site and Relocation of Existing Production Facilities | 15.0 | 2.0 | 0.1 | 1.9 | | Land Development | 19.3 | 15.1 | – | 15.1 | | **Total** | **76.7** | **17.1** | **0.1** | **17.0** | - The unutilized net proceeds are expected to be fully utilized by **2030** or earlier[35](index=35&type=chunk) [Changes in Information of Directors and Chief Executive](index=12&type=section&id=Changes%20in%20Information%20of%20Directors%20and%20Chief%20Executive) As of the report date, there have been no changes in the information of the Company's directors or chief executive requiring disclosure under the Listing Rules since the publication of the 2024 annual report - As of the date of this report, there have been no changes in the information of the Company's directors or chief executive requiring disclosure under Rules 13.51(2) and 13.51(B)(1) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited since the publication of the Company's 2024 annual report[36](index=36&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations](index=12&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20its%20Associated%20Corporations) As of June 30, 2025, certain directors held interests in common shares of Sanyang Industry Co., Ltd. (an associated corporation), with Ms. Wu Li-Chu holding 2.138%, and no other disclosable interests or short positions were held by directors or the chief executive Directors' Interests and Short Positions in Shares of Sanyang Industry Co., Ltd. | Director Name | Share Class | Capacity | Number of Shares Held (shares) | Approximate % of Total Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Liu Wu-Hsiung | Ordinary Shares | Beneficial Owner | 111,380 (L) | 0.014% | | Ms. Wu Li-Chu | Ordinary Shares | Beneficial Owner | 17,046,560 (L) | 2.138% | | Mr. Liu Ju-Cheng | Ordinary Shares | Beneficial Owner | 4,000 (L) | 0.001% | | Mr. Liu Ju-Cheng | Ordinary Shares | Spouse's Interest | 295,000 (L) | 0.037% | - Save as disclosed above, none of the Company's directors or chief executive had any disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or any of its associated corporations[37](index=37&type=chunk) [Major Shareholders' Interests in Shares of the Company](index=13&type=section&id=Major%20Shareholders'%20Interests%20in%20Shares%20of%20the%20Company) As of June 30, 2025, Sanyang Industry Co., Ltd. and its wholly-owned subsidiary SY International Ltd. were the Company's major shareholders, collectively holding 67.07% of the ordinary share capital Major Shareholders' Interests in Shares of the Company | Major Shareholder Name | Share Class | Capacity | Number of Shares/Underlying Shares Held (shares) | Approximate % of Total Share Capital | | :--- | :--- | :--- | :--- | :--- | | Sanyang Industry Co., Ltd. | Ordinary Shares | Interest in Controlled Corporation | 608,818,000 (L) | 67.07% | | SY International Ltd. | Ordinary Shares | Beneficial Owner | 608,818,000 (L) | 67.07% | - SY International Ltd. is a direct wholly-owned subsidiary of Sanyang Industry Co., Ltd[38](index=38&type=chunk) [Directors' Rights to Acquire Shares or Debentures](index=14&type=section&id=Directors'%20Rights%20to%20Acquire%20Shares%20or%20Debentures) For the six months ended June 30, 2025, no directors, their spouses, or minor children were granted rights to acquire the Company's shares or debentures, nor were there any arrangements for directors to benefit from acquiring shares in other corporations - For the six months ended June 30, 2025, none of the Company's directors or their respective spouses or children under 18 years of age were granted any rights to acquire shares or debentures of the Company[40](index=40&type=chunk) - Neither the Company, its holding company, its subsidiaries, nor any of its fellow subsidiaries participated in any arrangements that would enable the Company's directors to acquire rights to purchase shares in any other corporation for their benefit[40](index=40&type=chunk) [Corporate Governance Practices](index=14&type=section&id=Corporate%20Governance%20Practices) For the six months ended June 30, 2025, the Company consistently complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules and will continue to review and monitor its practices - For the six months ended June 30, 2025, the Company consistently complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[41](index=41&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors](index=14&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted the Model Code for securities transactions by its directors and confirmed that all directors complied with its required standards for the six months ended June 30, 2025 - The Company has adopted the Model Code as the code of conduct for its directors' dealings in the Company's securities[42](index=42&type=chunk) - The Company has made specific enquiries with all its directors, who have confirmed their compliance with the required standards set out in the Model Code for the six months ended June 30, 2025[42](index=42&type=chunk) [Sufficiency of Public Float](index=14&type=section&id=Sufficiency%20of%20Public%20Float) For the six months ended June 30, 2025, and up to the latest practicable date before this report's publication, the Company maintained a sufficient public float as required by the Listing Rules - The Company has maintained a sufficient public float as required by the Listing Rules[43](index=43&type=chunk) [Material Events After the Reporting Period](index=14&type=section&id=Material%20Events%20After%20the%20Reporting%20Period) No material events that could affect the Group occurred after June 30, 2025, and up to the date of this report - No material events that could affect the Group occurred after June 30, 2025, and up to the date of this report[44](index=44&type=chunk) [Review of Interim Results](index=15&type=section&id=Review%20of%20Interim%20Results) The unaudited interim results and interim report for the six months ended June 30, 2025, were reviewed by the Company's Audit Committee and by KPMG in accordance with Hong Kong Standard on Review Engagements 2410 - The unaudited interim results and interim report for the six months ended June 30, 2025, have been reviewed by the Company's Audit Committee[45](index=45&type=chunk) - The interim results are unaudited but have been reviewed by the Company's auditor, KPMG, in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[45](index=45&type=chunk) [Interim Dividend](index=15&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[46](index=46&type=chunk) [Acknowledgement](index=15&type=section&id=Acknowledgement) The Group extends its sincere gratitude to its shareholders, suppliers, customers, and all employees for their strong support and diligent contributions - The Group extends its most sincere gratitude to the Company's shareholders, and the Group's suppliers and customers for their strong support[47](index=47&type=chunk) - The Group also thanks every employee for their hard work and contributions to the Group[47](index=47&type=chunk) [Independent Auditor's Review Report](index=15&type=section&id=Independent%20Auditor's%20Review%20Report) KPMG reviewed the Company's interim financial report in accordance with HKSRE 2410, finding no material non-compliance with IAS 34, but did not express an audit opinion as the scope was narrower than an audit - KPMG has completed its review of the interim financial report of Vietnam Manufacturing and Export Processing (Holdings) Limited, contained on pages 16 to 34[49](index=49&type=chunk) - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity," issued by the Hong Kong Institute of Certified Public Accountants[50](index=50&type=chunk) - The auditor has not found any matter that causes them to believe that the interim financial report for the six months ended June 30, 2025, is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting"[51](index=51&type=chunk) - The scope of a review is substantially less than that of an audit conducted in accordance with Hong Kong Standards on Auditing, and consequently, does not enable the auditor to obtain assurance that they would become aware of all significant matters that might be identified in an audit, thus no audit opinion is expressed[50](index=50&type=chunk) [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's unaudited consolidated financial statements for the six months ended June 30, 2025, including statements of profit or loss, financial position, changes in equity, and cash flows, along with detailed notes [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=17&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's revenue grew 42.1% to USD 46.6 million, achieving a net profit of USD 0.04 million, reversing a loss, despite negative impacts from net finance expenses and exchange differences Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Revenue | 46,602,134 | 32,849,975 | | Cost of Sales | (41,202,455) | (30,017,149) | | Gross Profit | 5,399,679 | 2,832,826 | | Results from Operations | 902,973 | (2,110,381) | | Net Finance (Expenses)/Income | (704,475) | 31,296 | | Profit/(Loss) Before Income Tax | 102,432 | (2,418,066) | | Income Tax Expense | (59,835) | (287) | | Profit/(Loss) for the Period | 42,597 | (2,418,353) | | Exchange Differences on Translation of Financial Statements of Foreign Subsidiaries and Associates | (682,459) | (2,320,448) | | Total Comprehensive Income for the Period | (639,862) | (4,738,801) | | Basic and Diluted Earnings/(Loss) Per Share | 0.00005 | (0.00266) | [Consolidated Statement of Financial Position](index=19&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's net current assets were USD 38.8 million, and total assets less current liabilities were USD 46.3 million, with increased cash balances but also higher bank loans and trade payables, leading to a higher gearing ratio Key Data from Consolidated Statement of Financial Position | Metric | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Non-current Assets | 7,490,679 | 7,786,979 | | Current Assets | 105,118,775 | 95,570,913 | | Current Liabilities | 66,272,795 | 56,299,699 | | Net Current Assets | 38,845,980 | 39,271,214 | | Total Assets Less Current Liabilities | 46,336,659 | 47,058,193 | | Non-current Liabilities | 1,994,000 | 2,075,672 | | Net Assets | 44,342,659 | 44,982,521 | | Share Capital and Reserves | 44,338,268 | 44,978,209 | | Non-controlling Interests | 4,391 | 4,312 | | Total Equity | 44,342,659 | 44,982,521 | [Consolidated Statement of Changes in Equity](index=21&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity attributable to owners of the Company decreased from USD 44.98 million to USD 44.34 million, primarily due to the combined effect of profit for the period and other comprehensive income (decrease in exchange reserve) Key Data from Consolidated Statement of Changes in Equity | Metric | June 30, 2025 (USD) | Jan 1, 2024 (USD) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Company | 44,338,268 | 51,133,209 | | Non-controlling Interests | 4,391 | 4,312 | | Total Equity | 44,342,659 | 51,137,521 | | Profit for the Period | 42,518 | (3,844,473) (Loss for the year) | | Other Comprehensive Income (Exchange Differences) | (682,459) | (2,310,527) | [Condensed Consolidated Statement of Cash Flows](index=22&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash outflow from operating activities was USD 6.49 million, with net cash outflow from investing activities of USD 0.35 million, and net cash inflow from financing activities of USD 9.86 million, resulting in a net increase in cash and cash equivalents of USD 3.02 million Key Data from Condensed Consolidated Statement of Cash Flows | Metric | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Net Cash (Used in)/Generated from Operating Activities | (6,494,097) | 6,683,036 | | Net Cash (Used in)/Generated from Investing Activities | (348,034) | 8,385,622 | | Net Cash Generated from/(Used in) Financing Activities | 9,857,701 | (9,122,330) | | Net Increase in Cash and Cash Equivalents | 3,015,570 | 5,946,328 | | Cash and Cash Equivalents as of June 30 | 17,044,992 | 21,972,259 | [Notes to the Unaudited Interim Financial Report](index=23&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed notes to the condensed consolidated financial statements, covering corporate information, basis of preparation, accounting policy changes, revenue, segment data, profit/loss before tax, income tax, EPS, dividends, PPE, inventories, receivables, cash, payables, bank loans, fair value measurements, and related party transactions [Corporate Information](index=23&type=section&id=Corporate%20Information) Vietnam Manufacturing and Export Processing (Holdings) Limited was incorporated in the Cayman Islands on June 20, 2005, primarily manufacturing and selling motorcycles and related parts, and listed on the HKEX Main Board on December 20, 2007 - The Company was incorporated as an exempted company in the Cayman Islands on **June 20, 2005**[60](index=60&type=chunk) - The Group's principal activities are the manufacturing and sale of motorcycles and related spare parts and engines[61](index=61&type=chunk) - The Company has been listed on the Main Board of The Stock Exchange of Hong Kong Limited since **December 20, 2007**[62](index=62&type=chunk) [Basis of Preparation](index=23&type=section&id=Basis%20of%20Preparation) This interim financial report is prepared in accordance with HKEX Listing Rules and IAS 34 "Interim Financial Reporting," using consistent accounting policies with the 2024 financial statements, and has been reviewed by KPMG - This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board[63](index=63&type=chunk) - This financial report was authorized for issue by the Board of Directors on **August 11, 2025**[63](index=63&type=chunk) - The interim financial report is unaudited but has been reviewed by KPMG, the Company's auditor, in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[64](index=64&type=chunk) [Changes in Accounting Policies](index=24&type=section&id=Changes%20in%20Accounting%20Policies) The Group applied amendments to IAS 21 "The Effects of Changes in Foreign Exchange Rates—Lack of Exchangeability," which had no material impact as the Group had no foreign currency transactions where currency was not exchangeable, and no new standards effective this period were adopted - The Group has applied the amendments to International Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates—Lack of Exchangeability" issued by the International Accounting Standards Board to the interim financial report for the current accounting period[65](index=65&type=chunk) - As the Group did not enter into any foreign currency transactions where a foreign currency was not exchangeable into another currency, these amendments had no material impact on this interim report[65](index=65&type=chunk) - The Group has not early adopted any new standards or interpretations that are not yet effective for the current accounting period[66](index=66&type=chunk) [Revenue and Segment Information](index=24&type=section&id=Revenue%20and%20Segment%20Information) The Group has two reportable segments: manufacturing and selling motorcycles (USD 41.8 million revenue in H1 2025) and manufacturing and selling spare parts and engines (USD 4.8 million revenue), with Vietnam as the main market and significant growth in overseas markets - The Group has identified two reportable segments: manufacturing and sales of motorcycles, and manufacturing and sales of spare parts and engines[67](index=67&type=chunk) Revenue by Major Product or Service | Product or Service | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Manufacturing and Sales of Motorcycles | 41,798,757 | 28,704,173 | | Manufacturing and Sales of Spare Parts and Engines | 4,803,377 | 4,145,802 | | **Total** | **46,602,134** | **32,849,975** | Revenue by Customer Geographical Location | Region | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Vietnam | 18,348,302 | 17,467,360 | | Malaysia | 11,534,868 | 7,120,613 | | Greece | 3,522,944 | 1,778,689 | | Philippines | 2,903,796 | 2,639,203 | | Thailand | 2,362,185 | 1,484,395 | | Spain | 1,997,629 | – | | Belgium | 1,490,656 | – | | China | 971,370 | 122,872 | | United Arab Emirates | – | 1,783,994 | | Other Regions | 3,470,384 | 452,849 | Segment Revenue and Profit | Segment | 2025 H1 Revenue from External Customers (USD) | 2025 H1 Reportable Segment Profit (USD) | | :--- | :--- | :--- | | Manufacturing and Sales of Motorcycles | 41,798,757 | 1,372,593 | | Manufacturing and Sales of Spare Parts and Engines | 4,803,377 | 62,011 | | **Total** | **46,602,134** | **1,434,604** | [Profit/(Loss) Before Income Tax](index=28&type=section&id=Profit%2F(Loss)%20Before%20Income%20Tax) The Group's H1 2025 profit before income tax was USD 102,432, influenced by net finance expenses, staff costs, inventory write-back, and R&D expenses, with impairment loss on property, plant and equipment decreasing from the prior year Components of Profit/(Loss) Before Income Tax | Item | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Bank Interest Income | (1,121,808) | (1,242,306) | | Net Finance Expenses | 704,475 | (31,296) | | Wages, Salaries and Other Benefits | 4,543,328 | 4,327,554 | | Defined Contribution Retirement Plan Contributions | 552,773 | 557,285 | | Depreciation of Investment Properties and Other Property, Plant and Equipment | 120,503 | 124,237 | | Inventories (Write-back)/Write-down | (994,606) | 652,246 | | Reversal of Impairment Loss on Trade Receivables | (191,641) | (345,771) | | Research and Development Expenses | 823,681 | 728,748 | | Impairment Loss on Other Property, Plant and Equipment | 125,278 | 282,675 | - The inventory write-back of **USD 994,606** was due to the sale of aged inventory[89](index=89&type=chunk) - The impairment loss primarily reflects the Group's prudent financial management and re-evaluation of relevant asset values to address intense competition and rising manufacturing costs in the motorcycle industry[78](index=78&type=chunk) [Income Tax Expense](index=29&type=section&id=Income%20Tax%20Expense) The Group's H1 2025 income tax expense was USD 59,835, with no income tax payable in the Cayman Islands, and varying corporate income tax rates applied to subsidiaries in Vietnam and Taiwan based on local tax laws Income Tax Expense | Metric | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Current Tax - Current Provision | 59,835 | 287 | - The Group is not subject to any income tax in the Cayman Islands[82](index=82&type=chunk) - Corporate income tax rates for Vietnamese subsidiaries vary by business type: **18%** for motorcycle assembly and production, **10%** for engine assembly and production, and **20%** for other businesses[83](index=83&type=chunk) - Taiwanese subsidiaries are subject to a **20%** tax rate if net profit for the year exceeds NTD 120,000, otherwise they are exempt from income tax[83](index=83&type=chunk) [Earnings/(Loss) Per Share](index=30&type=section&id=Earnings%2F(Loss)%20Per%20Share) The Group's H1 2025 basic earnings per share was USD 0.00005, reversing a basic loss per share of USD 0.00266 in the prior period, with diluted earnings per share being the same due to no potential dilutive ordinary shares Earnings/(Loss) Per Share | Metric | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Basic Earnings/(Loss) Per Share | 0.00005 | (0.00266) | | Weighted Average Number of Ordinary Shares in Issue (shares) | 907,680,000 | 907,680,000 | - For the six months ended June 30, 2025, and 2024, diluted earnings/(loss) per share were the same as basic earnings/(loss) per share, as there were no potential dilutive ordinary shares[85](index=85&type=chunk) [Dividends](index=30&type=section&id=Dividends) For the six months ended June 30, 2025, the Company neither paid nor declared any dividends - For the six months ended June 30, 2025, the Company neither paid nor declared any dividends (six months ended June 30, 2024: nil)[86](index=86&type=chunk) [Other Property, Plant and Equipment](index=30&type=section&id=Other%20Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group recognized costs of USD 125,278 for other property, plant and equipment items, with an equivalent impairment loss recognized in the statement of profit or loss Cost and Impairment Loss of Other Property, Plant and Equipment | Metric | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Cost of Items Recognized | 125,278 | 282,675 | | Impairment Loss Recognized | 125,278 | 282,675 | [Inventories](index=31&type=section&id=Inventories) For the six months ended June 30, 2025, the Group recognized an inventory write-back of USD 994,606 due to sales of aged inventory, compared to a write-down of USD 652,246 in the prior period for slow-moving inventory Inventory Write-back/Write-down | Metric | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | | Inventories (Write-back)/Write-down | (994,606) (Write-back) | 652,246 (Write-down) | - The write-back in H1 2025 was due to the sale of aged inventory[89](index=89&type=chunk) - The write-down in H1 2024 was due to certain inventories being slow-moving, leading to a decrease in their estimated net realizable value[89](index=89&type=chunk) [Trade and Other Receivables and Prepayments](index=31&type=section&id=Trade%20and%20Other%20Receivables%20and%20Prepayments) As of June 30, 2025, total trade and other receivables and prepayments amounted to USD 21.25 million, with trade receivables primarily within three months and the largest debtor accounting for 63% of total trade receivables Trade and Other Receivables and Prepayments | Metric | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Trade Receivables | 9,396,308 | 9,234,648 | | Non-trade Receivables | 9,948,033 | 7,336,432 | | Prepayments | 494,964 | 487,591 | | Amounts Due from Related Parties | 1,409,234 | 1,827,863 | | **Total** | **21,248,539** | **18,886,534** | Aging Analysis of Trade Receivables | Aging | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Within 3 months | 10,193,165 | 8,860,451 | | Over 3 months but within 1 year | 612,377 | 2,116,279 | | Over 1 year but within 2 years | – | 85,354 | - The largest debtor accounted for **63%** of the Group's total trade receivables (December 31, 2024: 45%)[90](index=90&type=chunk) - Non-trade receivables primarily consist of recoverable Value Added Tax of **USD 5,544,687** and refundable import duties of **USD 2,143,936**[91](index=91&type=chunk) [Cash and Bank Balances](index=32&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2025, the Group's total cash and bank balances were USD 58.59 million, comprising USD 17.04 million in cash and cash equivalents and USD 41.55 million in time deposits maturing over three months Cash and Bank Balances | Metric | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Bank Deposits and Cash on Hand | 10,274,703 | 6,051,603 | | Time Deposits Maturing Within 3 Months | 6,770,289 | 8,226,601 | | Cash and Cash Equivalents in Condensed Consolidated Statement of Cash Flows | 17,044,992 | 14,278,204 | | Time Deposits Maturing Over 3 Months | 41,545,181 | 40,113,263 | | **Total** | **58,590,173** | **54,391,467** | [Trade and Other Payables](index=32&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables amounted to USD 22.91 million, with trade payables (including amounts due to related parties) of USD 17.29 million, primarily due within three months Trade and Other Payables | Metric | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Trade Payables | 3,726,062 | 4,340,713 | | Other Payables and Accrued Operating Expenses | 2,891,912 | 3,277,014 | | Contract Liabilities - Payments Received in Advance | 1,088,497 | 1,191,403 | | Provisions | 1,643,301 | 1,705,450 | | Amounts Due to Related Parties | 13,564,859 | 11,705,866 | | **Total** | **22,914,631** | **22,220,446** | Aging Analysis of Trade Payables | Aging | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Within 3 months | 17,273,568 | 15,292,974 | | Over 3 months but within 1 year | 12,661 | 736,989 | | Over 1 year but within 5 years | 3,031 | 7,153 | [Bank Loans](index=33&type=section&id=Bank%20Loans) As of June 30, 2025, the Group's total pledged time deposits for bank loans amounted to USD 19,582,961 Pledged Time Deposits for Bank Loans | Metric | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Total Pledged Time Deposits | 19,582,961 | 19,413,093 | [Financial Instruments Measured at Fair Value](index=33&type=section&id=Financial%20Instruments%20Measured%20at%20Fair%20Value) As of June 30, 2025, and December 31, 2024, there were no material differences between the carrying amounts and fair values of the Group's financial instruments accounted for at cost or amortized cost - As of June 30, 2025, and December 31, 2024, there were no material differences between the carrying amounts and fair values of the Group's financial instruments accounted for at cost or amortized cost[94](index=94&type=chunk) [Related Party Transactions](index=33&type=section&id=Related%20Party%20Transactions) The Group engages in various related party transactions with its ultimate holding company and its subsidiaries/associates, including sales and purchases of finished goods, raw materials, and equipment, as well as technical transfer fees and advertising subsidies - Related parties include the ultimate holding company, Sanyang Industry Co., Ltd., and its subsidiaries (Sanyang Global (Xiamen) Industrial Co., Ltd., Xiamen Xia Xing Motorcycle Co., Ltd., Sanyang Motor Colombia S.A.S) and associate (Sanyang Vietnam Machinery Industry Co., Ltd.)[95](index=95&type=chunk) Recurring Related Party Transactions | Transaction Type | Transacting Party | 2025 H1 (USD) | 2024 H1 (USD) | | :--- | :--- | :--- | :--- | | Sales of Finished Goods and Spare Parts | Ultimate Holding Company | 9,303,151 | 332,203 | | | Fellow Subsidiaries | 972,802 | 122,872 | | Purchases of Raw Materials and Finished Goods | Ultimate Holding Company | 3,075,842 | 1,217,114 | | | Fellow Subsidiaries | 18,690,800 | 8,609,869 | | | Associates | 1,633,415 | 1,170,819 | | Technical Transfer Fees | Ultimate Holding Company | 56,674 | 71,710 | | Advertising Subsidies | Ultimate Holding Company | 300,000 | – | Amounts Due from Related Parties | Type | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Trade | 1,409,234 | 1,827,436 | | Non-trade | – | 427 | | **Total** | **1,409,234** | **1,827,863** | Amounts Due to Related Parties | Type | June 30, 2025 (USD) | Dec 31, 2024 (USD) | | :--- | :--- | :--- | | Trade | 13,563,198 | 11,696,403 | | Non-trade | 1,661 | 9,463 | | **Total** | **13,564,859** | **11,705,866** |

Chairman's Report [Performance](index=1&type=section&id=Performance) The group's underlying profit attributable to shareholders slightly increased to **HK$21.855 billion**, with reported profit also up despite a fair value decrease in investment properties Key Performance Indicators | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Underlying Profit Attributable to Shareholders | 21,855 | 21,739 | Increase 116 | | Basic Underlying EPS | $7.54 | $7.50 | Increase $0.04 | | Reported Profit Attributable to Shareholders | 19,277 | 19,046 | Increase 231 | | Reported EPS | $6.65 | $6.57 | Increase $0.08 | | Decrease in Fair Value of Investment Properties (net of deferred tax and non-controlling interests) | 742 | 2,412 | Decrease 1,670 | [Dividends](index=1&type=section&id=Dividends) The Board proposed a final dividend of **HK$2.80 per share**, maintaining the full-year dividend at **HK$3.75 per share** for the year ended June 30, 2025 Dividend Details | Dividend Type | Amount Per Share (HK$) | Payment Date | | :--- | :--- | :--- | | Final Dividend (2025) | $2.80 | November 20, 2025 | | Interim Dividend | $0.95 | (Already Paid) | | Total Annual Dividend | $3.75 | | [Property Development Profit and Rental Income](index=2&type=section&id=Property%20Development%20Profit%20and%20Rental%20Income) Profit from property sales increased to **HK$8.29 billion**, with total contract sales attributable to the group's interest at approximately **HK$46.6 billion**, while total rental income decreased by 2% Property Business Financials | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Property Sales Profit | 8,290 | 7,850 | Increase 440 | | Total Contract Sales | 46,600 | (Not Provided) | | | Total Rental Income | 24,461 | (Not Provided) | Decrease 2% | | Net Rental Income | 18,392 | (Not Provided) | Decrease 3% | [Hong Kong Property Business](index=2&type=section&id=Hong%20Kong%20Property%20Business) The group expanded its Hong Kong land bank by acquiring five residential sites, achieved **HK$42.3 billion** in contract sales, and managed rental properties amidst economic uncertainties [Land Bank (Hong Kong)](index=2&type=section&id=Land%20Bank%20(Hong%20Kong)) The group acquired five new residential sites with a total attributable gross floor area of approximately **1.6 million sq ft**, bringing its Hong Kong land bank to **57.4 million sq ft** - Five new residential sites added, with a total gross floor area of approximately **1.6 million sq ft**[6](index=6&type=chunk) New Residential Land Acquisitions | Location | Property Use | Group's Interest (%) | Attributable Gross Floor Area (sq ft) | | :--- | :--- | :--- | :--- | | Hung Shui Kiu Town Lot No. 5 | Residential/Retail | 50 | 524,000 | | Tung Chung Town Lot No. 55 | Residential | 100 | 401,000 | | Fanling North Fanling/Sheung Shui Town Lot No. 307 | Residential/Retail | 100 | 308,000 | | Tai Wai Sha Tin Town Lot No. 651 | Residential | 100 | 194,000 | | Siu Lek Yuen Sha Tin Town Lot No. 623 | Residential | 100 | 157,000 | | **Total** | | | **1,584,000** | - As of June 30, 2025, Hong Kong land bank was approximately **57.4 million sq ft**, with **13.3 million sq ft** for residential development, sufficient for 6-7 years of development[7](index=7&type=chunk) - Government resumption of land in Hung Shui Kiu/Ha Tsuen New Development Area is expected to generate approximately **HK$3 billion** in cash compensation, recognized in FY2024/25[8](index=8&type=chunk) [Property Development (Hong Kong)](index=3&type=section&id=Property%20Development%20(Hong%20Kong)) Hong Kong's residential market stabilized, leading to **HK$42.3 billion** in contract sales, the highest in five years, with **HK$35.6 billion** in unbooked sales - Hong Kong's residential market stabilized, driven by relaxed mortgage restrictions, falling local mortgage rates, and continuous inflow of talent and students[9](index=9&type=chunk) - Hong Kong contract sales reached approximately **HK$42.3 billion**, the highest in the past five financial years, primarily from projects like Grand Mayfair Phase 1, Pak Shek Kok Development Phase 1A(2) and 1B Sierra Sea[10](index=10&type=chunk) Completed Development Projects (Hong Kong) | Project | Location | Property Use | Group's Interest (%) | Attributable Gross Floor Area (sq ft) | | :--- | :--- | :--- | :--- | :--- | | YOHO WEST Phase 1 | Tin Shui Wai | Residential/Retail | Joint Development | 748,000 | | NOVO LAND Phase 3A and 3B | Tuen Mun | Residential | 100 | 694,000 | | Pak Shek Kok GO PARK | Pak Shek Kok | Retail | 100 | 108,000 | | The Horizon Phase 2 | Castle Peak Road - Tai Lam | Residential | 59.1 | 104,000 | | **Total** | | | | **1,654,000** | - As of June 30, 2025, unbooked Hong Kong contract sales were approximately **HK$35.6 billion**, with about **HK$30.1 billion** expected to be recognized in FY2025/26[11](index=11&type=chunk) [Property Investment (Hong Kong)](index=4&type=section&id=Property%20Investment%20(Hong%20Kong)) Hong Kong rental income slightly declined by 2% to **HK$17.531 billion**, but overall occupancy remained satisfactory, with new retail concepts and office market consolidation - Hong Kong rental business total rental income slightly decreased by **2%** year-on-year to **HK$17.531 billion**, with overall occupancy maintained at a satisfactory level[12](index=12&type=chunk) - The retail property portfolio recorded an occupancy rate of approximately **95%**, with a significant narrowing of tenant sales decline in the first half of 2025[13](index=13&type=chunk) - Pak Shek Kok GO PARK, Hong Kong's first sports-themed commercial complex, has attracted over **2 million visitors** since its opening in early 2025[14](index=14&type=chunk) - The Point mall membership program has over **3 million members**, with the launch of "The Point Gold" VIP membership to enhance customer loyalty[15](index=15&type=chunk) - Hong Kong's Grade A office market maintained an average occupancy rate of approximately **90%**, with downward adjustments in renewal rents, though landmark projects IFC and ICC achieved about **92%** occupancy[17](index=17&type=chunk)[18](index=18&type=chunk) - Over the next two to three years, new malls like Kwun Tong Scramble Hill will open in phases from H2 2025, and Kai Tak Grand Mayfair Mall is planned to open in phases from Q4 2025[19](index=19&type=chunk)[20](index=20&type=chunk) - The group is committed to developing West Kowloon into another core business district outside Central, with pre-leasing underway for the High Speed Rail West Kowloon Station Development Project office tower IGC, scheduled for tenant handover in early 2026[21](index=21&type=chunk)[22](index=22&type=chunk) [Mainland China Property Business](index=8&type=section&id=Mainland%20China%20Property%20Business) As of June 30, 2025, the group's Mainland land bank was approximately **65.3 million sq ft**, with **RMB4 billion** in contract sales, and rental income slightly decreased [Land Bank (Mainland China)](index=8&type=section&id=Land%20Bank%20(Mainland%20China)) As of June 30, 2025, the group's Mainland land bank totaled approximately **65.3 million sq ft**, with **44.2 million sq ft** under development - As of June 30, 2025, Mainland land bank was approximately **65.3 million sq ft**, with **44.2 million sq ft** under development[23](index=23&type=chunk) [Property Development (Mainland China)](index=8&type=section&id=Property%20Development%20(Mainland%20China)) The Mainland residential market benefited from supportive policies, leading to approximately **RMB4 billion** in contract sales and **RMB8.1 billion** in unbooked sales - The Mainland residential market was supported by positive policies such as reduced loan prime rates, lower reserve requirement ratios, and relaxed home purchase restrictions[24](index=24&type=chunk) - Mainland contract sales were approximately **RMB4 billion**, primarily from the joint development project Suzhou Lakeside Seasons Phase 2, and new residential units at Guangzhou Royal Park and The Cullinan[24](index=24&type=chunk) Completed Development Projects (Mainland China) | Project | Location | Property Use | Group's Interest (%) | Attributable Gross Floor Area (sq ft) | | :--- | :--- | :--- | :--- | :--- | | Royal Park Phase 3A | Huadu District, Guangzhou | Residential | 100 | 477,000 | | Arch Central Phase 3 | Lujiazui, Shanghai | Residential | 100 | 465,000 | | The Cullinan Phase 1A and 1B | Panyu District, Guangzhou | Residential | 100 | 347,000 | | The Paragon Phase 6B | Chancheng District, Foshan | Residential | 50 | 245,000 | | **Total** | | | | **1,534,000** | - As of June 30, 2025, unbooked Mainland contract sales reached **RMB8.1 billion**, with most expected to be recognized in FY2025/26[25](index=25&type=chunk) [Property Investment (Mainland China)](index=9&type=section&id=Property%20Investment%20(Mainland%20China)) Mainland rental property portfolio's total rental income decreased by 2% to **RMB5.713 billion**, but key malls maintained competitiveness and high occupancy rates - Mainland rental property portfolio's total rental income decreased by **2%** year-on-year to **RMB5.713 billion**[26](index=26&type=chunk) - Shanghai IFC Mall actively adapts to market trends by offering premium services, art installations, and diverse events to create immersive experiences[27](index=27&type=chunk) - Guangzhou Parc Central and IGC malls leverage outdoor spaces and expand the pet economy, while Nanjing IFC Mall's occupancy has risen since its July 2024 opening, contributing new revenue[28](index=28&type=chunk) - The Mainland office market faces challenges, but the group's ITC Phase 3 Tower A achieved an occupancy rate of nearly **80%**, contributing to recurring income[29](index=29&type=chunk) - The remaining parts of the large-scale Shanghai ITC Phase 3 project (Tower B office building, flagship mall ITC Maison, and Andaz Shanghai Xujiahui) are expected to be completed by the end of 2025[30](index=30&type=chunk) [Other Businesses](index=11&type=section&id=Other%20Businesses) The group's diverse businesses, including hotels, telecommunications, and infrastructure, showed stable performance and strategic growth [Hotels](index=11&type=section&id=Hotels) Hong Kong hotel business performed satisfactorily due to increased tourism and events, with Mainland hotels also growing steadily and new openings planned - Hong Kong hotel business benefited from increased overseas and Mainland visitors, major events, and the "concert economy," leading to continuous improvement in room revenue and high occupancy rates[32](index=32&type=chunk) - Driven by expanded visa-free policies in Mainland China, international visitor numbers increased, and The Ritz-Carlton Shanghai, Pudong maintained high occupancy[33](index=33&type=chunk) - The Andaz Shanghai Xujiahui, part of the ITC Phase 3 integrated project, is expected to open by the end of 2025[33](index=33&type=chunk) [Telecommunications and Information Technology](index=11&type=section&id=Telecommunications%20and%20Information%20Technology) SmarTone maintained stable performance with improved profitability and network quality, while SUNeVision's data center business saw strong growth with new facilities - SmarTone maintained stable performance with further improved profitability, offering the highest per-customer available spectrum resources in Hong Kong[34](index=34&type=chunk) - SmarTone launched new services, including high-speed 5G home broadband supporting WiFi 7, and uses AI to test network blind spots[34](index=34&type=chunk) - SUNeVision's business showed strong growth, with robust demand for data center services, and MEGA IDC Phase 1 in Tseung Kwan O commenced operations in Q2 2024[36](index=36&type=chunk) [Infrastructure and Other Businesses](index=12&type=section&id=Infrastructure%20and%20Other%20Businesses) The group's infrastructure and transport businesses remained resilient, with stable performance in parking and aviation, and YATA focusing on supermarket operations - The group's infrastructure and transport businesses continued to perform resiliently, with Wilson Group's car park and tunnel management businesses recording stable results[38](index=38&type=chunk) - Hong Kong Business Aviation Centre's business performance was stable, with flight movements nearing pre-pandemic levels, and major terminal upgrade works nearing completion[38](index=38&type=chunk) - YATA has adjusted its operating model to focus on its more stable supermarket business, optimizing product mix and introducing new specialty products[39](index=39&type=chunk) [Group Financials](index=13&type=section&id=Group%20Financials) The group maintained a robust financial position with a net debt-to-equity ratio of **15.1%** and interest coverage of **6 times**, showing improvement from the previous year - The group's financial position remained robust, with a net debt-to-equity ratio of **15.1%** and interest coverage of **6 times**, indicating improved financial ratios year-on-year[40](index=40&type=chunk) - The group's A1 rating was affirmed by Moody's with an upgraded outlook to stable, while S&P maintained its A+ rating (outlook negative)[40](index=40&type=chunk) - The group successfully secured sufficient RMB financing, including a **RMB700 million** three-year offshore RMB bond and a second batch of **RMB2 billion** commercial mortgage-backed securities, to lower borrowing costs and balance RMB assets and liabilities[40](index=40&type=chunk) - The group does not engage in speculative derivative or structured product trading, with all USD borrowings hedged via cross-currency swaps, and RMB debt naturally hedged by Mainland assets[41](index=41&type=chunk) [Corporate Governance](index=14&type=section&id=Corporate%20Governance) The group upholds high corporate governance standards with an 18-member board, including seven independent non-executive directors, ensuring diverse experience and independent oversight - The Board comprises **18 members**, including **7 Independent Non-Executive Directors**, whose diverse experience, expertise, and backgrounds meet the group's strategic, governance, and business needs[42](index=42&type=chunk) - The Board delegates specific roles to four committees: Executive Committee, Remuneration Committee, Nomination Committee, and Audit and Risk Management Committee, each with clearly defined terms of reference[43](index=43&type=chunk) - The group received multiple major awards from leading financial publications during the year, including being named "Overall Best Developer" in Hong Kong, China, Asia Pacific, and globally by Euromoney[43](index=43&type=chunk) [Sustainability](index=15&type=section&id=Sustainability) The group achieved an improved MSCI ESG rating of **AA**, focusing on sustainable building practices, renewable energy, and active community engagement - The group's MSCI ESG rating was upgraded to **AA**, and it received recognition from several major global indices, including inclusion in the Dow Jones Sustainability Asia Pacific Index and S&P Global Sustainability Yearbook 2025 (and its China edition)[44](index=44&type=chunk) [Environment](index=15&type=section&id=Environment) The group prioritizes sustainable construction, aiming for LEED Gold or Platinum certification for new core commercial projects, and has installed approximately **20,000 solar panels** - The group places high importance on sustainable construction, aiming for LEED Gold or Platinum certification for all new core commercial projects, and has obtained approximately **150 green building certifications** in Hong Kong as of end-June 2025[45](index=45&type=chunk) - International Commerce Centre became the first building in Asia to receive **LEED v5.0 Existing Buildings: Operations & Maintenance Platinum certification**[45](index=45&type=chunk) - The group has installed approximately **20,000 solar panels** across its managed properties and construction sites, forming Hong Kong's largest solar power network, and is building the city's first private solar farm on a landfill with a joint venture partner[45](index=45&type=chunk) - To promote low-carbon transportation, the group has installed nearly **100 EV fast-charging devices** across all 18 districts in Hong Kong and plans to further expand its network[46](index=46&type=chunk) [Society](index=16&type=section&id=Society) The group actively fulfills its corporate social responsibility by providing free venues for community services, promoting youth education, and advocating for sports and cultural exchange - The group provides free venues for operating the "Ko Shan Road Community Living Room," offering facilities and services to families living in subdivided units[47](index=47&type=chunk) - The group continues to promote reading and STEM education among youth through the "Reading Club" and organizes aerospace-themed activities[47](index=47&type=chunk) - Pak Shek Kok GO PARK, the group's unique sports-themed commercial complex, offers international standard professional facilities for over ten popular and emerging sports, and has hosted over **160 sports events**[48](index=48&type=chunk) - Ma Wan Park Phase 2 "Ma Wan 1868" officially opened, integrating conservation, nature, art, culture, and leisure, and supports young entrepreneurs with rent-free shops through the "Co-create Entrepreneur 2.0" program[49](index=49&type=chunk) [Outlook](index=17&type=section&id=Outlook) Despite global economic volatility, the group anticipates economic growth driven by accommodative monetary policies and AI, with confidence in Hong Kong and Mainland China's long-term prospects - The global economic environment is expected to remain volatile and uncertain, but accommodative monetary policies in major economies and rising expectations of US interest rate cuts are conducive to economic growth[50](index=50&type=chunk) - Mainland China's economy shows good performance in key indicators and is expected to maintain stable and positive development, with proactive fiscal and moderately loose monetary policies fostering a favorable business environment[50](index=50&type=chunk) - Hong Kong's economy is in a transition phase, with an active financial market and improving tourism expected to drive moderate growth in the short term, and buyer confidence and residential transaction volumes anticipated to improve[51](index=51&type=chunk) - The group is committed to enhancing asset turnover in its property development business to maintain strong cash flow, while preserving substantial recurring income through a diversified portfolio of rental properties and non-property businesses[52](index=52&type=chunk) - Over the next ten months, the group plans to launch existing units of Grand Mayfair Phase 2 and Grand Mayfair Sea Phase 2 in Kai Tak, and major residential projects like Pak Shek Kok Development Phase 2A and 2B in Hong Kong[53](index=53&type=chunk) - Over the next two to three years, newly completed investment properties in Hong Kong and Mainland China, including the new Kwun Tong mall Scramble Hill and Kai Tak Grand Mayfair Mall, will progressively contribute to the group's recurring income[55](index=55&type=chunk) [Acknowledgements](index=19&type=section&id=Acknowledgements) The Chairman extends sincere gratitude to all employees for their resilience in a dynamic market, the Board for their guidance, and shareholders and customers for their enduring trust and support - The Chairman thanks all employees for their dedication and tireless efforts, the Board members for their wise guidance, and shareholders and customers for their enduring trust and support for the group[57](index=57&type=chunk) Notices [Consolidated Income Statement](index=20&type=section&id=Consolidated%20Income%20Statement) For the year ended June 30, 2025, the group's revenue increased to **HK$79.721 billion**, with operating profit at **HK$26.078 billion**, and profit attributable to shareholders at **HK$19.277 billion** Consolidated Income Statement Summary | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Revenue | 79,721 | 71,506 | | Operating Profit | 26,078 | 26,752 | | Change in Fair Value of Investment Properties | (2,730) | (1,481) | | Net Finance Costs | (2,485) | (3,567) | | Profit Before Tax | 24,753 | 23,583 | | Profit for the Year | 19,884 | 19,605 | | Profit Attributable to Company Shareholders | 19,277 | 19,046 | | Basic Underlying EPS | $7.54 | $7.50 | | Reported EPS | $6.65 | $6.57 | [Consolidated Statement of Comprehensive Income](index=21&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) For the year ended June 30, 2025, the group's total comprehensive income significantly increased to **HK$22.519 billion**, primarily due to a reversal from loss to gain in exchange differences from Mainland subsidiaries Consolidated Statement of Comprehensive Income Summary | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Profit for the Year | 19,884 | 19,605 | | Exchange Differences on Translation of Mainland Subsidiaries' Accounts | 1,810 | (355) | | Other Comprehensive Income/(Loss) for the Year | 2,635 | (944) | | Total Comprehensive Income for the Year | 22,519 | 18,661 | | Total Comprehensive Income Attributable to Company Shareholders | 21,889 | 18,089 | [Consolidated Statement of Financial Position](index=22&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the group's total non-current assets were **HK$581.181 billion**, with total equity attributable to shareholders at **HK$617.851 billion** Consolidated Statement of Financial Position Summary | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Non-Current Assets | 581,181 | 569,431 | | Current Assets | 235,712 | 248,663 | | Current Liabilities | (70,092) | (62,012) | | Net Assets | 622,374 | 611,071 | | Equity Attributable to Shareholders | 617,851 | 606,717 | | Bank Balances and Cash | 16,919 | 16,221 | [Notes to the Consolidated Financial Statements](index=23&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details the basis of preparation, segment information, other net income, net finance costs, taxation, earnings per share, dividends, investment property valuation, and trade receivables/payables [Basis of Preparation](index=23&type=section&id=Basis%20of%20Preparation) The consolidated financial statements are prepared under HKFRS and the Companies Ordinance, primarily using historical cost, with no significant impact from new accounting standards - The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622) and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[63](index=63&type=chunk) - Except for investment properties and certain financial instruments measured at fair value, these consolidated financial statements are prepared on a historical cost basis[63](index=63&type=chunk) - During the year, the group adopted several amendments to Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, with no significant impact on the group's financial statements[64](index=64&type=chunk) [Segment Information](index=24&type=section&id=Segment%20Information) The group operates across property development, investment, hotels, telecom, infrastructure, data centers, and other businesses, with Hong Kong contributing **83%** of total revenue Segment Revenue and Results | Segment | 2025 Revenue (HK$ million) | 2025 Results (HK$ million) | 2024 Revenue (HK$ million) | 2024 Results (HK$ million) | | :--- | :--- | :--- | :--- | :--- | | Property Development | 33,880 | 8,007 | 25,106 | 6,563 | | Property Leasing | 19,855 | 14,892 | 20,366 | 15,504 | | Hotel Operations | 4,416 | 486 | 4,421 | 521 | | Telecommunications | 6,253 | 752 | 6,221 | 701 | | Transport Infrastructure and Logistics | 4,441 | 1,188 | 4,571 | 1,294 | | Data Centre Operations | 2,938 | 1,489 | 2,674 | 1,266 | | Other Businesses | 7,938 | 959 | 8,147 | 1,125 | | **Total Segments** | **79,721** | **27,773** | **71,506** | **26,974** | Geographical Revenue Breakdown | Region | 2025 Revenue (HK$ million) | 2024 Revenue (HK$ million) | | :--- | :--- | :--- | | Hong Kong | 66,165 | 65,267 | | Mainland China | 13,495 | 6,187 | | Other | 61 | 52 | | **Total** | **79,721** | **71,506** | [Other Net Income](index=26&type=section&id=Other%20Net%20Income) Other net income was **HK$288 million**, including **HK$1.137 billion** from land resumption and **HK$390 million** from investment property sales, partially offset by **HK$1.384 billion** in impairment provisions Other Net Income Components | Item | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Gain on Land Resumption | 1,137 | 1,095 | | Profit on Disposal of Investment Properties | 390 | 343 | | Impairment Provision for Development Properties | (1,384) | - | | Others | 145 | 328 | | **Total** | **288** | **1,766** | - The impairment provision for development properties was primarily attributable to the Grand Mayfair residential project[71](index=71&type=chunk) [Net Finance Costs](index=26&type=section&id=Net%20Finance%20Costs) Net finance costs significantly decreased to **HK$2.485 billion** from **HK$3.567 billion** last year, mainly due to reduced interest expenses on bank and other borrowings Net Finance Costs Breakdown | Item | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Interest and Other Finance Expenses on Bank and Other Borrowings | 4,604 | 6,090 | | Less: Amount Capitalized | (1,895) | (2,199) | | Interest Income from Bank Deposits | (371) | (479) | | **Net Finance Costs** | **2,485** | **3,567** | [Profit Before Tax](index=27&type=section&id=Profit%20Before%20Tax) Profit before tax was **HK$24.753 billion**, with key deductions including property sales costs and employee expenses, and income from investments Profit Before Tax Components | Item | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Cost of Properties Sold | 22,612 | 16,480 | | Employee Expenses (including directors' emoluments and retirement scheme contributions) | 10,559 | 10,605 | | Depreciation of Property, Plant and Equipment | 3,105 | 3,088 | | Dividend Income from Investments | 67 | 75 | | Interest Income from Investments | 32 | 69 | [Taxation](index=28&type=section&id=Taxation) Total income tax expense was **HK$4.869 billion**, comprising **HK$2.423 billion** in Hong Kong profits tax and **HK$3.372 billion** in overseas taxes, with a deferred tax credit of **HK$926 million** Taxation Breakdown | Item | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 2,439 | 2,549 | | (Overprovision)/Underprovision in Prior Years | (16) | 14 | | Taxation Outside Hong Kong | 3,372 | 1,336 | | Deferred Tax (Credit)/Expense | (926) | 79 | | **Total Income Tax Expense** | **4,869** | **3,978** | [Earnings Per Share](index=28&type=section&id=Earnings%20Per%20Share) Reported basic and diluted earnings per share was **HK$6.65**, while underlying earnings per share was **HK$7.54**, excluding fair value changes of investment properties Earnings Per Share Metrics | Indicator | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Reported EPS (Basic and Diluted) | $6.65 | $6.57 | | Underlying EPS (Basic and Diluted) | $7.54 | $7.50 | - Basic and diluted earnings per share are the same as there were no dilutive potential ordinary shares during the year[74](index=74&type=chunk) [Dividends (Notes)](index=30&type=section&id=Dividends%20(Notes)) The Board proposed a final dividend of **HK$2.80 per share**, bringing the full-year dividend to **HK$3.75 per share**, consistent with the prior year Dividend Declaration Details | Dividend Type | Amount Per Share (HK$) | Total Amount (HK$ million) | | :--- | :--- | :--- | | Interim Dividend Declared and Paid | $0.95 | 2,753 | | Proposed Final Dividend | $2.80 | 8,114 | | **Total Annual Dividend** | **$3.75** | **10,867** | [Investment Properties (Notes)](index=30&type=section&id=Investment%20Properties%20(Notes)) As of June 30, 2025, total investment properties were valued at **HK$417.045 billion**, with a fair value decrease of **HK$2.730 billion** for the year Investment Property Values | Item | 2025 (HK$ million) | 2024 (HK$ million) | | :--- | :--- | :--- | | Completed Investment Properties | 351,394 | 349,214 | | Investment Properties Under Development | 65,651 | 59,210 | | **Total Investment Properties** | **417,045** | **408,424** | | Decrease in Fair Value | (2,730) | (1,481) | - The group's investment properties were revalued at market value as of June 30, 2025, and June 30, 2024, by Knight Frank Petty Limited (an independent qualified surveyor)[79](index=79&type=chunk) - Completed investment properties are valued using the income capitalization approach, while investment properties under development are valued using the residual method[79](index=79&type=chunk) [Trade and Other Receivables](index=32&type=section&id=Trade%20and%20Other%20Receivables) Trade receivables totaled **HK$3.252 billion**, with **59%** less than 30 days old and **18%** over 90 days - Trade receivables amounted to **HK$3.252 billion** (2024: HK$3.645 billion), with an aging analysis showing **59%** less than 30 days, **13%** between 31 and 60 days, **10%** between 61 and 90 days, and **18%** over 90 days[81](index=81&type=chunk) [Trade and Other Payables](index=32&type=section&id=Trade%20and%20Other%20Payables) Trade payables totaled **HK$2.476 billion**, with **59%** less than 30 days old and **31%** over 90 days - Trade payables amounted to **HK$2.476 billion** (2024: HK$3.07 billion), with an aging analysis showing **59%** less than 30 days, **7%** between 31 and 60 days, **3%** between 61 and 90 days, and **31%** over 90 days[82](index=82&type=chunk) Financial Review [Review of 2024/25 Results](index=33&type=section&id=Review%20of%202024%2F25%20Results) Underlying profit attributable to shareholders increased by **HK$116 million** to **HK$21.855 billion**, driven by higher property development and investment property sales profit and reduced finance costs, with total revenue up 8% Key Financial and Operational Metrics | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Underlying Profit Attributable to Shareholders | 21,855 | 21,739 | Increase 116 | | Reported Profit Attributable to Shareholders | 19,277 | 19,046 | Increase 231 | | Total Revenue (including joint ventures and associates) | 90,119 | 83,636 | Increase 8% | | Property Development Revenue (including joint ventures and associates) | 34,556 | 27,422 | Increase 26% | | Overall Rental Income (including joint ventures and associates) | 24,461 | 24,991 | Decrease 2% | | Property Development Profit (including joint ventures and associates) | 8,290 | 7,850 | Increase 6% | | Recurring Profit | 23,898 | 24,509 | Decrease | | Net Rental Income | 18,392 | 19,000 | Decrease | - Hong Kong property development profit decreased by **51%** to **HK$3.2 billion**, primarily due to a decline in gross profit margin to **12%**[86](index=86&type=chunk) - Mainland China property development revenue increased by **214%** to **HK$8.417 billion**, with profit increasing by **281%** to **HK$5.09 billion**, mainly from higher profits on the sale of Arch Central Phase 3 residential units[87](index=87&type=chunk) - As of June 30, 2025, the group's unrecognised contract sales revenue from properties (including investment properties and attributable share of joint ventures) amounted to **HK$44.4 billion**[87](index=87&type=chunk) - Hong Kong property investment rental income decreased by **2%** to **HK$17.531 billion**, with net rental income decreasing by **3%** to **HK$12.956 billion**; residential and serviced apartment property portfolio rental income increased by **12%** year-on-year[88](index=88&type=chunk) - Mainland China investment property portfolio rental income, in HKD terms, decreased by **2%** to **HK$6.173 billion**, with net rental income decreasing by **3%** to **HK$4.864 billion**[89](index=89&type=chunk) - The hotel segment recorded stable revenue of **HK$5.25 billion**, with improved room revenue and high occupancy rates, averaging **90%**[89](index=89&type=chunk) - SmarTone's operating profit increased by **7%** to **HK$752 million**, mainly from a one-off gain on the disposal of its Macau business and reduced service costs and operating expenses through cost control and efficiency measures[90](index=90&type=chunk) - SUNeVision's revenue increased by **10%** to **HK$2.938 billion**, with operating profit increasing by **18%** to **HK$1.489 billion**, primarily due to new customers moving into newly completed data centers, enhancing utilization[90](index=90&type=chunk) - The group (including its share of joint ventures and associates) recorded a net decrease in fair value of investment properties of **HK$1.557 billion**, with Hong Kong decreasing by **HK$1.105 billion**, Mainland China by **HK$1.232 billion**, and Singapore increasing by **HK$780 million**[92](index=92&type=chunk) - The group's net finance costs before capitalization decreased by **24%** to **HK$4.38 billion**, with the average cost of debt falling to **3.7%**; interest coverage ratio was **6 times**[93](index=93&type=chunk) [Financial Management](index=37&type=section&id=Financial%20Management) The group adopts a proactive and prudent financial management approach, maintaining a robust balance sheet and diversified funding sources [Gearing Ratio](index=37&type=section&id=Gearing%20Ratio) As of June 30, 2025, net debt decreased by **16%** to **HK$93.298 billion**, resulting in a gearing ratio of **15.1%**, reflecting improved financial health Gearing Ratio and Debt Profile | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | 617,851 | 606,717 | Increase 11,134 | | Net Debt | 93,298 | 110,866 | Decrease 17,568 (16%) | | Gearing Ratio | 15.1% | 18.3% | Improvement | - The group's total debt amounted to **HK$110.217 billion**, with **63%** from bank borrowings and **37%** from notes and bonds[98](index=98&type=chunk) - The group's debt maturity profile remains healthy, with approximately **70%** of debt repayable in over two years, and the weighted average repayment period for the total debt portfolio is **3.1 years**[98](index=98&type=chunk) [Financial Resources](index=39&type=section&id=Financial%20Resources) The group's strong financial strength enables it to raise long-term funds at competitive rates and maintain ample unutilized committed bank facilities with a balanced maturity structure - The group's strong financial strength enables it to raise long-term funds at competitive rates through various channels[101](index=101&type=chunk) - The group consistently ensures ample unutilized committed bank facilities, mostly arranged on a medium-to-long-term basis with a balanced maturity structure, which helps reduce refinancing risk and enhance financing flexibility[101](index=101&type=chunk) [Foreign Exchange Risk Management](index=39&type=section&id=Foreign%20Exchange%20Risk%20Management) The group has minimal foreign exchange risk due to its HKD-denominated asset base, with Mainland net investments naturally hedged by RMB borrowings, and uses derivatives for risk management - The group has minimal foreign exchange risk due to its substantial HKD-denominated asset base and business cash flows[102](index=102&type=chunk) - The group does not use foreign currency derivatives to hedge the translation risk of its Mainland investments and maintains adequate RMB financial resources to meet funding needs[102](index=102&type=chunk) - The appreciation of RMB against HKD by approximately **2.3%** resulted in an exchange gain of approximately **HK$2.4 billion** when these RMB assets were translated into HKD at the June 30, 2025 exchange rate[102](index=102&type=chunk) - The group entered into interest rate swap agreements, cross-currency interest rate swap agreements, and foreign exchange forward contracts with a total notional principal of **HK$16.389 billion** to manage interest rate and foreign exchange risks, without engaging in speculative derivative or structured product trading[103](index=103&type=chunk) [Bank Balances and Cash](index=40&type=section&id=Bank%20Balances%20and%20Cash) As of June 30, 2025, bank balances and cash totaled **HK$16.919 billion**, with **61%** in HKD and **28%** in RMB, all held with high-credit-rated banks - As of June 30, 2025, the group's bank balances and cash amounted to **HK$16.919 billion**, with **61%** in HKD and **28%** in RMB[104](index=104&type=chunk) - All deposits are held with high-credit-rated banks, with appropriate credit limits set based on their credit ratings, and risks of financial counterparties are regularly monitored[104](index=104&type=chunk) [Pledged Assets](index=40&type=section&id=Pledged%20Assets) Group subsidiaries pledged **HK$45 million** in bank deposits as security for bank guarantees and **HK$17.492 billion** in other assets as security for bank borrowings - Group subsidiaries pledged bank deposits totaling **HK$45 million** as security for bank guarantees[105](index=105&type=chunk) - Group subsidiaries pledged certain assets with a total book value of **HK$17.492 billion** as security for bank borrowings[105](index=105&type=chunk) [Contingent Liabilities](index=40&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the group's contingent liabilities totaled **HK$1.955 billion**, primarily comprising guarantees for joint venture borrowings and other guarantees - As of June 30, 2025, the group's contingent liabilities amounted to **HK$1.955 billion**, primarily related to guarantees for bank borrowings granted to joint ventures and other guarantees[106](index=106&type=chunk) Other Corporate Information [Group Remuneration Policy and Long-Term Incentive Schemes](index=41&type=section&id=Group%20Remuneration%20Policy%20and%20Long-Term%20Incentive%20Schemes) The group employs over **38,000 staff** with total remuneration of approximately **HK$15.122 billion**, based on market levels, individual performance, and comprehensive benefits - As of June 30, 2025, the group employed over **38,000 staff**, with total employee remuneration before reimbursement of expenses amounting to approximately **HK$15.122 billion** for the year[107](index=107&type=chunk) - The group's remuneration policy is determined based on market levels, individual employee performance, and contributions, with widespread use of performance-based bonuses[107](index=107&type=chunk) [Criteria for Determining Directors' Remuneration](index=41&type=section&id=Criteria%20for%20Determining%20Directors'%20Remuneration) Directors' remuneration is determined by market benchmarks, individual capabilities and contributions, and the company's affordability, with appropriate benefits for executive directors - In determining the remuneration level for each director, the company considers market benchmarks, individual capabilities and contributions, and the company's affordability[108](index=108&type=chunk) [Dividends (Company Announcement)](index=41&type=section&id=Dividends%20(Company%20Announcement)) The Board proposed a final dividend of **HK$2.80 per share**, maintaining the full-year dividend at **HK$3.75 per share**, payable on November 20, 2025 - The Board of Directors proposed a final dividend of **HK$2.80 per share** for the year ended June 30, 2025, which, together with the interim dividend of **HK$0.95 per share** paid on March 20, 2025, brings the total annual dividend for the year ended June 30, 2025, to **HK$3.75 per share**, the same as last year[109](index=109&type=chunk) - If the proposed final dividend is approved at the upcoming Annual General Meeting, it will be paid in cash on **Thursday, November 20, 2025**, to shareholders whose names appear on the company's register of members on **Wednesday, November 12, 2025**[109](index=109&type=chunk) [Annual General Meeting](index=41&type=section&id=Annual%20General%20Meeting) The 2025 Annual General Meeting will be held on November 6, 2025, with the relevant notice to be sent to shareholders in due course - The 2025 Annual General Meeting will be held on **Thursday, November 6, 2025**[110](index=110&type=chunk) [Closure of Register of Members](index=42&type=section&id=Closure%20of%20Register%20of%20Members) The company's register of members will be closed from November 3 to November 6, 2025, to determine eligibility for the AGM, and on November 12, 2025, for final dividend entitlement - To ascertain eligibility to attend and vote at the 2025 Annual General Meeting, the company's register of members will be closed from **Monday, November 3, 2025, to Thursday, November 6, 2025** (both dates inclusive)[114](index=114&type=chunk) - To ascertain entitlement to the proposed final dividend, the company's register of members will be closed on **Wednesday, November 12, 2025**[114](index=114&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=42&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities during the year ended June 30, 2025 - During the year ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[112](index=112&type=chunk) [Audit and Risk Management Committee](index=42&type=section&id=Audit%20and%20Risk%20Management%20Committee) The annual results for the year ended June 30, 2025, were reviewed by the Audit and Risk Management Committee, and the consolidated financial statements were audited with an unmodified opinion - The annual results for the year ended June 30, 2025, have been reviewed by the company's Audit and Risk Management Committee, and the group's consolidated financial statements have been audited by the company's auditor, Deloitte Touche Tohmatsu, who issued an unmodified opinion[113](index=113&type=chunk) [Compliance with Corporate Governance Code](index=43&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company complied with the Corporate Governance Code, with the exception of combining Chairman and CEO roles, which the board deems balanced due to independent oversight - During the year ended June 30, 2025, the company complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules, except that the company did not separate the roles of Chairman and Chief Executive Officer as required by code provision C.2.1[115](index=115&type=chunk) - The Board includes two Non-Executive Directors and seven Independent Non-Executive Directors, who provide diverse experience, expertise, independent advice, and perspectives, thus the Board believes that the power distribution is balanced and adequately safeguarded[115](index=115&type=chunk) [Annual Report](index=43&type=section&id=Annual%20Report) The 2024-2025 Annual Report, containing all financial and other relevant information, will be published by the end of October 2025 on HKEX and company websites and sent to shareholders - The 2024-2025 Annual Report, containing all financial and other relevant information as required by the Listing Rules, will be published by the end of October 2025 on the website of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the company's website (www.shkp.com), and sent to shareholders[116](index=116&type=chunk)

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk tha ...

[Summary](index=2&type=section&id=Summary) The Group reported a significant increase in loss attributable to equity holders and a decrease in revenue for the six months ended June 30, 2025, alongside a reduction in net operating cash flow - For the six months ended June 30, 2025, the Group's **loss attributable to equity holders** was approximately **RMB 185.8 million**, an increase in loss of approximately **RMB 56.1 million** compared to the same period last year[4](index=4&type=chunk) - For the six months ended June 30, 2025, the Group's unaudited **net cash outflow from operating activities** before changes in working capital and payment of income tax and interest was approximately **RMB 32.8 million**, a decrease of approximately **RMB 95.7 million** compared to a net cash inflow of approximately **RMB 62.9 million** in the same period last year[4](index=4&type=chunk) - For the six months ended June 30, 2025, the Group's unaudited **revenue** was approximately **RMB 1,100 million**, a decrease of approximately **14.1%** compared to the same period last year, primarily due to lower product selling prices[4](index=4&type=chunk) - For the six months ended June 30, 2025, the Group's unaudited **basic loss per share** was approximately **RMB 3.08 cents**[4](index=4&type=chunk) - The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2025[5](index=5&type=chunk) [Interim Results](index=3&type=section&id=Interim%20Results) This section presents the unaudited condensed consolidated financial statements, including the income statement, balance sheet, cash flow statement, and statement of changes in equity, for the interim period [Condensed Consolidated Income Statement](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Income%20Statement) For the six months ended June 30, 2025, the Group recorded a significant loss, primarily due to a 14.1% decrease in revenue and a negative gross profit, leading to a 43.8% increase in loss for the period year-on-year | Metric | For the six months ended June 30, 2025 (RMB thousands) | For the six months ended June 30, 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Revenue | 1,099,955 | 1,279,855 | (179,900) | | Cost of sales | (1,131,957) | (1,200,229) | 68,272 | | Gross profit | (32,002) | 79,626 | (111,628) | | Operating profit | (112,267) | (5,462) | (106,805) | | Finance costs | (102,629) | (110,385) | 7,756 | | Loss before tax | (214,896) | (115,847) | (99,049) | | Loss for the period | (194,281) | (135,073) | (59,208) | | Loss attributable to equity holders of the Company | (185,789) | (129,665) | (56,124) | | Basic loss per share (RMB cents) | (3.08) | (2.15) | (0.93) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets decreased by 10.3%, mainly due to a 57.4% drop in current assets, particularly pledged bank deposits, while total equity declined by 54.0% reflecting the period's losses | Metric | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Non-current assets | 4,424,935 | 4,401,085 | 23,850 | | Current assets | 431,482 | 1,012,722 | (581,240) | | Total assets | 4,856,417 | 5,413,807 | (557,390) | | **Equity** | | | | | Equity attributable to owners of the Company | 217,430 | 403,219 | (185,789) | | Total equity | 165,304 | 359,585 | (194,281) | | **Liabilities** | | | | | Non-current liabilities | 994,207 | 788,143 | 206,064 | | Current liabilities | 3,696,906 | 4,266,079 | (569,173) | | Total liabilities | 4,691,113 | 5,054,222 | (363,109) | | Net current liabilities | (3,265,424) | (3,253,357) | (12,067) | [Condensed Consolidated Cash Flow Statement](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2025, net cash generated from operating activities significantly increased, but net cash used in investing activities also rose sharply due to increased fixed asset purchases, resulting in a net increase in cash and cash equivalents | Metric | For the six months ended June 30, 2025 (RMB thousands) | For the six months ended June 30, 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 199,535 | 113,343 | 86,192 | | Net cash used in investing activities | (86,871) | (8,299) | (78,572) | | Net cash used in financing activities | (69,487) | (79,383) | 9,896 | | Increase/(Decrease) in cash and cash equivalents | 20,937 | (10,174) | 31,111 | | Cash and cash equivalents at end of period | 29,036 | 52,754 | (23,718) | - Payments for the purchase of property, plant and equipment and construction in progress significantly increased from **RMB 15,702 thousand** in 2024 to **RMB 92,256 thousand** in 2025, leading to a substantial increase in cash outflow from investing activities[10](index=10&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, the Group's total equity significantly decreased from RMB 359,585 thousand at the beginning of the year to RMB 165,304 thousand, primarily due to the net loss for the period | Metric | As of June 30, 2025 (RMB thousands) | As of January 1, 2025 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Share capital | 520,569 | 520,569 | 0 | | Reserves | (303,139) | (117,350) | (185,789) | | Equity attributable to owners of the Company | 217,430 | 403,219 | (185,789) | | Non-controlling interests | (52,126) | (43,634) | (8,492) | | Total equity | 165,304 | 359,585 | (194,281) | - The **net loss for the period** was **RMB 194,281 thousand**, of which **RMB 185,789 thousand** was attributable to equity holders of the Company[12](index=12&type=chunk) [Notes to the Financial Statements](index=8&type=section&id=Notes%20to%20the%20Financial%20Statements) This section details the basis of preparation, significant accounting policies, and specific financial disclosures for revenue, taxation, earnings per share, and various balance sheet items [Basis of Preparation](index=8&type=section&id=Basis%20of%20Preparation) The Group, an investment holding company, primarily engages in the production and sale of chemical products and fertilizers in Mainland China, with interim financial statements prepared in accordance with HKAS 34 and Appendix 16 of the Listing Rules - The Company is an investment holding company, and the Group primarily engages in the production and sale of chemical products and chemical fertilizers in Mainland China[13](index=13&type=chunk) - The unaudited interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[13](index=13&type=chunk) [Significant Accounting Policies](index=8&type=section&id=Significant%20Accounting%20Policies) The interim financial statements apply consistent accounting policies with the prior year, are prepared on a historical cost basis, and assume going concern, anticipating positive cash flows and successful bank loan restructuring despite net current liabilities - The significant accounting policies applied in the unaudited interim financial statements are consistent with those followed in the Group's financial statements for the year ended December 31, 2024[14](index=14&type=chunk) - As of June 30, 2025, the Group had **net current liabilities** of **RMB 3,696,906 thousand**[14](index=14&type=chunk) - The Directors have adopted the going concern basis, relying on the assumption that the Guang'an Plant and Dazhou Plant will generate positive cash flows and that the Group will successfully negotiate with banks to restructure outstanding bank loans[14](index=14&type=chunk) - The financial statements are unaudited but have been reviewed by the Company's Audit Committee[15](index=15&type=chunk) [Revenue](index=9&type=section&id=Revenue) Current period revenue was RMB 1,099,955 thousand, a 14.1% year-on-year decrease primarily due to lower product selling prices, with methanol sales increasing while urea, ammonia, NMP, and DMF sales declined - Revenue represents the net amounts received and receivable for chemical products and fertilizers sold during the six-month period, after deducting returns, discounts, and value-added tax (if applicable), with the Group's revenue primarily derived from the People's Republic of China[17](index=17&type=chunk) | Product | For the six months ended June 30, 2025 (RMB thousands) | Share (%) | For the six months ended June 30, 2024 (RMB thousands) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Urea | 305,929 | 27.8 | 355,449 | 27.8 | | Ammonia | 324,247 | 29.5 | 431,285 | 33.7 | | Methanol | 468,471 | 42.6 | 419,183 | 32.7 | | N-Methylpyrrolidone (NMP) | 222 | 0.0 | 2,149 | 0.2 | | N,N-Dimethylformamide (DMF) | 1,086 | 0.1 | 3,013 | 0.2 | | Others | – | – | 68,776 | 5.4 | | **Total** | **1,099,955** | **100** | **1,279,855** | **100** | [Reconciliation of Loss Before Tax to Cash Generated from Operations](index=10&type=section&id=Reconciliation%20of%20Loss%20Before%20Tax%20to%20Cash%20Generated%20from%20Operations) Despite an increased loss before tax, the Group's net cash generated from operating activities improved year-on-year, driven by a significant increase in trade and other payables and contract liabilities | Metric | For the six months ended June 30, 2025 (RMB thousands) | For the six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss before tax | (214,896) | (115,847) | | Operating cash flow before changes in working capital | (32,832) | 62,913 | | Cash generated from operations | 199,555 | 132,569 | | Net cash generated from operating activities after tax | 199,535 | 113,343 | - The increase in **trade and other payables** by **RMB 154,371 thousand** and **contract liabilities** by **RMB 44,381 thousand** positively impacted cash flow from operating activities[19](index=19&type=chunk) [Taxation](index=11&type=section&id=Taxation) The Group's Mainland China subsidiaries are subject to a 25% income tax rate, but no profit tax provision was made for Cayman Islands, BVI, or Hong Kong due to absence of taxable profits, with current period tax primarily reflecting deferred income tax credit - The Group has not made any provision for profit tax in the Cayman Islands, British Virgin Islands, or Hong Kong, as no assessable profits arose from or were derived from these jurisdictions for the six months ended June 30, 2025[21](index=21&type=chunk) - In 2025, the applicable income tax rate for all subsidiaries located in Mainland China was **25%**[22](index=22&type=chunk) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | PRC Enterprise Income Tax | 20 | 26,258 | | Deferred income tax | (20,635) | (7,032) | | **Total** | **(20,615)** | **19,226** | [Earnings Per Share](index=12&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, basic and diluted loss per share increased to RMB 3.08 cents, up from RMB 2.15 cents in the prior period, reflecting a higher net loss | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Loss for the period (RMB thousands) | (185,789) | (129,665) | | Weighted average number of shares for basic earnings per share (thousands of shares) | 6,028,043 | 6,028,043 | | Basic loss per share (RMB cents) | (3.08) | (2.15) | | Diluted loss per share (RMB cents) | (3.08) | (2.15) | [Dividends](index=13&type=section&id=Dividends) The Board of Directors does not recommend the payment of any dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the payment of any dividend for the six months ended June 30, 2025[27](index=27&type=chunk) [Trade and Other Receivables](index=13&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, total trade and other receivables decreased to RMB 156,008 thousand, mainly due to a reduction in prepayments and other receivables, with credit terms typically zero to three months and most trade receivables aged within three months | Metric | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables | 2,436 | 2,407 | | Prepayments, deposits for purchases and other deposits | 19,888 | 40,658 | | Bills receivable | 1,253 | 21 | | Other receivables | 132,431 | 151,693 | | **Total** | **156,008** | **194,779** | - The Group grants credit terms of **zero to three months**[30](index=30&type=chunk) - As of June 30, 2025, all trade receivables were aged less than **three months**[30](index=30&type=chunk) [Trade and Other Payables](index=15&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables increased to RMB 830,231 thousand, primarily driven by a significant rise in accrued expenses and other payables, with most trade payables aged within one year | Metric | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 50,030 | 41,812 | | Payables for construction work | 230,667 | 218,132 | | Accrued expenses and other payables | 549,534 | 342,094 | | **Total** | **830,231** | **602,038** | - As of June 30, 2025, **RMB 41,646 thousand** of trade payables were aged less than **one year**, and **RMB 8,384 thousand** were aged over **one year but not exceeding two years**[32](index=32&type=chunk) [Borrowings](index=16&type=section&id=Borrowings) As of June 30, 2025, the Group's total borrowings decreased to RMB 2,165,310 thousand, with the majority (RMB 1,925,926 thousand) repayable within one year, typically secured by fixed assets and pledged cash deposits at annual interest rates ranging from 3.00% to 8.70% | Repayment Period | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Less than one year | 1,925,926 | 2,720,656 | | One to two years | 128,373 | 74,290 | | Two to five years | 111,011 | – | | Over five years | – | – | | **Total borrowings** | **2,165,310** | **2,794,946** | - Borrowings are generally secured by certain of the Group's **property, plant and equipment** and **pledged bank deposits**[33](index=33&type=chunk) - These borrowings bear interest at annual rates ranging from **3.00% to 8.70%** (2024: 3.45% to 8.64%)[33](index=33&type=chunk) [Deferred Income Tax](index=17&type=section&id=Deferred%20Income%20Tax) As of June 30, 2025, the Group's deferred income tax assets increased to RMB 36,834 thousand, primarily due to losses available for offset against future taxable profits, while deferred income tax liabilities remained unchanged | Metric | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Deferred income tax assets | 36,834 | 16,199 | | Deferred income tax liabilities | (114,033) | (114,033) | - The increase in **deferred income tax assets** was primarily due to **RMB 20,635 thousand** recognized in the income statement[36](index=36&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's financial performance, business operations, industry trends, and strategic initiatives for the reporting period [Financial Performance](index=18&type=section&id=Financial%20Performance) The Group's first-half revenue decreased by 14.1% to RMB 1,100 million, leading to a RMB 56.1 million increase in loss attributable to shareholders to RMB 185.8 million, with gross profit margin turning negative to -2.9% due to declining product market prices despite slight sales volume growth and controlled administrative expenses - For the six months ended June 30, 2025, the Group recorded **revenue** of approximately **RMB 1,100 million**, a decrease of approximately **14.1%** compared to the same period last year, primarily due to lower product selling prices[38](index=38&type=chunk) - The **loss attributable to equity holders** was approximately **RMB 185.8 million**, an increase of approximately **RMB 56.1 million** compared to the loss in the same period last year, mainly due to a decrease in gross profit margin[38](index=38&type=chunk) - The Group's **gross profit margin** decreased from approximately **6.2%** in the same period last year to **-2.9%**, primarily due to declining product market prices[38](index=38&type=chunk) - Total sales volume (excluding trading portion) reached approximately **546,000 tons**, a slight increase of approximately **1.3%** compared to the same period last year[38](index=38&type=chunk) - Cost of sales decreased by approximately **5.7%**, mainly due to technical improvements at the Guang'an Plant; administrative expenses decreased by approximately **13.8%** due to strict cost control[38](index=38&type=chunk) [Business Review](index=19&type=section&id=Business%20Review) In the first half, the Group actively operated under the principle of 'higher standards, better methods, stronger execution,' optimizing production, technology, and management to reduce costs and enhance risk resistance, achieving record-best results in cost control and plant operation despite overall performance being slightly below expectations due to low product selling prices, with new projects poised for future growth - The Group and its subsidiaries actively and steadily operated under the management objectives of 'higher standards, better methods, stronger execution,' continuously exploring energy-saving potential in production facilities and reducing production costs to improve the Company's operating efficiency[40](index=40&type=chunk) - Sales models continued to be adjusted, dynamically balancing bidding and contract signing ratios based on product performance in different markets to further enhance company profitability and optimize customer structure[40](index=40&type=chunk) - New projects successfully completed further optimization and improvements, poised for launch to extend the industrial chain and enhance the Company's overall strength[40](index=40&type=chunk) - In the first half of 2025, performance in safety, environmental protection, production volume, consumption, marketing, and cost control all improved once again compared to the historical best levels of 2024[41](index=41&type=chunk) - Product market conditions fluctuated downwards and remained at a low level; despite the severe external environment, the Group's internal efforts ensured stable overall operations, though business performance was slightly below expectations[41](index=41&type=chunk) [Guang'an Jiuyuan Plant](index=20&type=section&id=Guang%27an%20Jiuyuan%20Plant) The Guang'an Jiuyuan Plant resumed production on January 3, 2025, after major overhaul, achieving improved output and energy consumption through technical upgrades and cost control, yet its operating performance fell short of expectations due to low product selling prices - After successfully completing the major overhaul, the Guang'an Jiuyuan Plant's methanol-ammonia co-production unit resumed production on **January 3, 2025**[42](index=42&type=chunk) - Through equipment technical upgrades, cost control, and operational stability competitions, both **output** and **energy consumption** continued to improve beyond the historical best levels of 2024[42](index=42&type=chunk) - Despite achieving historical best results in cost control and plant operation, the operating performance did not meet expectations due to low finished product selling prices[42](index=42&type=chunk) [Dazhou Jiuyuan Plant](index=20&type=section&id=Dazhou%20Jiuyuan%20Plant) The Dazhou Jiuyuan Plant resumed synthetic ammonia and urea production in February after its annual overhaul, achieving good output and energy consumption levels through continuous optimization, but its operating performance also fell short of expectations due to low product selling prices - The Dazhou Jiuyuan Plant underwent its annual overhaul at the beginning of the year, resuming unit startup on **February 10**, with synthetic ammonia and urea units resuming production on **February 13**[43](index=43&type=chunk) - Through the annual overhaul, existing problems and hidden dangers in the units were effectively resolved; after resuming production, continuous optimization and adjustments led to good levels of **output** and **energy consumption**[43](index=43&type=chunk) - Despite achieving historical best results in cost control and plant operation, the operating performance did not meet expectations due to low finished product selling prices[43](index=43&type=chunk) [Guang'an Jiuyuan Electronic Materials Plant](index=21&type=section&id=Guang%27an%20Jiuyuan%20Electronic%20Materials%20Plant) The Guang'an Jiuyuan Electronic Materials Plant was idled in the first half of 2025 due to weak market demand but actively pursued technical upgrades, significantly improving DMF unit stability and NMP capacity while reducing production costs, with plans to resume production based on market conditions - The Guang'an Jiuyuan Electronic Materials Plant's units were idled in the first half of 2025 due to weak market demand[45](index=45&type=chunk) - Active optimization and capacity-increasing technical upgrades significantly improved the **stability of the DMF unit** and **capacity of the NMP unit**, effectively reducing production costs and enhancing product competitiveness[45](index=45&type=chunk) - Production will resume opportunistically based on product market conditions[45](index=45&type=chunk) [Jiangsu Blue Planet Plant](index=21&type=section&id=Jiangsu%20Blue%20Planet%20Plant) Jiangsu Blue Planet Environmental Technology Co., Ltd.'s 400,000 tons/year propylene oxide project is nearing completion of main construction, entering the commissioning and approval phase, with an estimated annual sales increase of approximately RMB 4 billion upon production - Jiangsu Blue Planet Environmental Technology Co., Ltd.'s **400,000 tons/year propylene oxide project** has largely completed its main construction and is entering the commissioning, testing, and approval stages[46](index=46&type=chunk) - Upon commencement of operations, this project is expected to generate approximately **RMB 4 billion** in additional annual sales[46](index=46&type=chunk) [Industry Review and Outlook](index=21&type=section&id=Industry%20Review%20and%20Outlook) In the first half of 2025, key chemical product markets (DMF, NMP, methanol, synthetic ammonia, urea) generally faced challenges of supply-demand imbalance, volatile or depressed prices, with the overall market environment remaining severe despite brief price rebounds for some products [Dimethylformamide (DMF)](index=21&type=section&id=Dimethylformamide%20%28DMF%29) The DMF market exhibited an 'M'-shaped trend in the first half, with overall prices lower than the prior year, seeing pre-holiday price increases due to reduced supply and demand stocking, followed by post-holiday declines due to increased supply and weak demand, and a brief mid-April surge before falling under pressure again - In the first half of 2025, domestic DMF total capacity was **1.8 million tons** (of which **300,000 tons** were long-term idled, effective capacity was **1.5 million tons**), with an industry operating rate of **48.5%** and supply of approximately **437,000 tons**[47](index=47&type=chunk) - In the first half of 2025, the domestic DMF market showed an 'M'-shaped trend; although prices rebounded during the period, the overall market remained below the level of the same period last year[47](index=47&type=chunk) - Prices steadily climbed before the Spring Festival driven by demand; after the holiday, due to previously high prices, weak downstream restocking interest, and increased DMF supply, prices gradually fell to a low point; prices rose to a half-year high in mid-April but subsequently fell under pressure again due to supply-demand imbalance[48](index=48&type=chunk) [N-Methylpyrrolidone (NMP)](index=23&type=section&id=N-Methylpyrrolidone%20%28NMP%29) The NMP market remained sluggish in the first half, with ample supply from synthetic and recycled capacities, but mature downstream recycling technology squeezed the synthetic market; however, BDO supply tightness and NMP recycled liquid shortages in June drove NMP prices significantly up to a half-year high of RMB 10,200 per ton - In the first half of 2025, the NMP market continued to struggle with a sluggish trend; synthetic liquid supply capacity was approximately **1.01 million tons**, with a capacity utilization rate of approximately **20%**, while recycled capacity approached **2.8 million tons**, indicating ample market supply[50](index=50&type=chunk) - Many large downstream manufacturers have built their own recycling production lines or are deeply tied to recycling plants, with recycling having taken a dominant position in the NMP market, further compressing the market space for synthetic liquid[50](index=50&type=chunk) - Before June, raw material BDO prices remained low; entering June, BDO production plant shutdowns led to a short-term supply decrease, and NMP prices followed the BDO price increase, reaching a half-year high of **RMB 10,200 per ton**[50](index=50&type=chunk) [Methanol](index=24&type=section&id=Methanol) In the first half, domestic methanol production and operating rates both increased, with market conditions initially rising then falling; demand-driven price increases in Q1 were followed by declines in Q2 due to macroeconomic factors and ample supply, and a brief June surge from Middle East conflict was reversed by falling crude oil prices - From January to June 2025, domestic methanol production was approximately **42.74 million tons**, an **8%** increase year-on-year, with the average operating rate of the domestic methanol industry at **81%**, a **4%** increase year-on-year[51](index=51&type=chunk) - In the first half of 2025, the methanol market was dominated by macroeconomic regulation and supply-demand structure, with market conditions initially rising then falling[51](index=51&type=chunk) - In June, the outbreak of the Middle East conflict led to a significant increase in crude oil prices, which in turn boosted domestic futures and spot markets, causing methanol market prices to surge; however, the upward trend lasted only about **10 days**, as the easing of the conflict and gradual decline in crude oil prices led to a fall in both futures and spot prices[51](index=51&type=chunk) [Synthetic Ammonia](index=24&type=section&id=Synthetic%20Ammonia) In the first half, domestic synthetic ammonia production increased by 4% while operating rates slightly decreased; market conditions saw an initial decline, then a rise, and then another fall, with prices under pressure in January, firm in February, rapidly increasing in March, but returning to weakness from April to June due to increased supply and weak downstream demand, continuously hitting new lows - In the first half of 2025, domestic synthetic ammonia production was approximately **30.98 million tons**, a **4%** increase year-on-year; the average industry operating rate was **79%**, a **1%** decrease year-on-year[52](index=52&type=chunk) - In 2025, the synthetic ammonia market showed a trend of initial decline, then rise, then decline again[54](index=54&type=chunk) - From April to June, the synthetic ammonia market returned to weakness; as previously idled maintenance units resumed production across various regions, market supply pressure continuously increased, and the downstream phosphate and compound fertilizer industry entered the off-season for spring and summer fertilizers, leading to declining operating rates, which caused market conditions to gradually fall and prices to continuously hit new lows[54](index=54&type=chunk) [Urea](index=25&type=section&id=Urea) In the first half, domestic urea production and operating rates both increased, with market conditions characterized by an initial strength followed by weakness; Q1 saw price increases driven by export expectations and spring farming demand, while Q2 experienced volatile declines due to high supply, weak demand, and less-than-expected export policies, leading to continuous price reductions - From January to June 2025, domestic urea production was approximately **35.67 million tons**, a **10%** increase year-on-year, with the average operating rate of the domestic urea industry at approximately **84%**, a **6.7%** increase year-on-year[55](index=55&type=chunk) - In the first half of 2025, the urea market exhibited a 'strong first, then weak' phased characteristic; in Q1, strong export expectations led to a robust market rally[55](index=55&type=chunk) - In Q2, high supply and weak demand led to volatile downward market conditions; industrial and agricultural demand gradually weakened in April; in May, export policies fell short of market expectations, causing prices to surge and then fall back; in June, loose supply and demand dominated the market, with weak domestic demand leading manufacturers to continuously lower prices[56](index=56&type=chunk) [Strategies](index=26&type=section&id=Strategies) Facing a challenging market, the Group implemented technical upgrades, cost controls, and sales model optimization in the first half, and for the second half, will focus on securing raw material supply, continuous cost reduction, performance-based assessments, employee training, sales model enhancements (developing new urea products, expanding customer base), major overhaul preparations, inventory management reform, procurement cost reduction, authorization system reform, and new project development to upgrade products and strengthen competitiveness - In the first half, through technical upgrades and major overhaul work, issues such as declining performance of methanol and synthesis tower catalysts were effectively resolved, reducing production operating costs and achieving historically low production unit consumption; by optimizing the full-category bidding model, dynamically adjusting bidding and contract signing ratios, profitability was maximized[57](index=57&type=chunk) - Second-half strategies include: continuing to organize and coordinate production raw materials such as water, electricity, and gas to ensure long-term, high-load operation of the Dazhou Jiuyuan Plant and Guang'an Jiuyuan Plant units[57](index=57&type=chunk) - Continuously promoting special improvements, identifying and implementing various 'increase revenue, reduce expenditure, cut costs, and enhance efficiency' measures to lower operating costs and reduce waste[59](index=59&type=chunk) - Continuously promoting measures such as performance appraisal, salary reform, special bonuses, and skill assessment, guided by the Company's operating results, to stimulate team creativity and execution[59](index=59&type=chunk) - Implementing sales model optimization: for chemical products, intensifying efforts to develop small and medium-sized end customers to further expand the high-quality customer base; for fertilizer products, developing new types of urea to achieve product iteration and upgrades, further enhancing product market competitiveness[59](index=59&type=chunk) - Preparing for annual unit overhauls to reduce unplanned shutdowns during the year, increase output, and lower consumption; exploring the feasibility of extending unit overhaul cycles from one year to two years[59](index=59&type=chunk) - Promoting spare parts inventory reform to gradually reduce inventory capital occupation; gradually reducing the proportion of sole suppliers and adopting a bidding model for procurement to lower procurement costs and improve procurement quality[60](index=60&type=chunk) - Driving the approval, commencement, and construction of new projects, revitalizing existing assets, and gradually achieving enterprise product upgrades, transitioning from pure basic chemicals to fine chemicals based on basic chemicals, thereby enhancing the Group's competitiveness[60](index=60&type=chunk) [Acknowledgements](index=29&type=section&id=Acknowledgements) The Chairman, on behalf of the Board, thanks all employees for their teamwork in navigating market volatility, ensuring stable plant operations, and achieving optimal efficiency, with the Group planning to stabilize basic chemical businesses and pursue new projects in the second half - Under the leadership of the Board and management, all employees united to conduct production and operation activities market-oriented, promptly tracking market conditions and performing real-time calculations to ensure optimal operational efficiency and long-term stable operation of the units[62](index=62&type=chunk) - In the second half of the year, the Group will continue to follow the Board's decisions and strategies, under the leadership of management, to stabilize basic chemical businesses, explore new projects, and seize market opportunities[62](index=62&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=30&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) This section details the Group's liquidity position, including net current liabilities, available financial resources, capital commitments, gearing ratio, and contingent liabilities [Liquidity](index=30&type=section&id=Liquidity) As of June 30, 2025, the Group faced net current liabilities of approximately RMB 3,265,424 thousand, with limited cash and bank deposits within current assets, and current liabilities primarily comprising borrowings and amounts due to a related company - As of June 30, 2025, the Group had **net current liabilities** of approximately **RMB 3,265,424 thousand**[63](index=63&type=chunk) - Current assets as of June 30, 2025, included **cash and bank balances** of approximately **RMB 29,036 thousand** and **restricted and pledged bank deposits** of approximately **RMB 60,918 thousand**[63](index=63&type=chunk) - Current liabilities as of June 30, 2025, included **borrowings** of approximately **RMB 1,925,926 thousand** and **amounts due to a related company** of approximately **RMB 837,257 thousand**[63](index=63&type=chunk) [Capital Commitments](index=30&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had outstanding capital commitments of approximately RMB 215,918 thousand - As of June 30, 2025, the Group had outstanding capital commitments of approximately **RMB 215,918 thousand**[64](index=64&type=chunk) [Financial Resources](index=30&type=section&id=Financial%20Resources) As of June 30, 2025, the Group's financial resources included cash and bank balances of approximately RMB 29,036 thousand and restricted and pledged bank deposits of approximately RMB 60,918 thousand, with no available unutilized bank facilities, and plans to fund future operations and capital expenditures through existing balances and operating cash flows - As of June 30, 2025, the Group had **cash and bank balances** of approximately **RMB 29,036 thousand** and **restricted and pledged bank deposits** of approximately **RMB 60,918 thousand**, with no unutilized bank facilities[65](index=65&type=chunk) - The Company intends to fund the Group's future operations, capital expenditures, and other capital needs through existing bank balances and cash flows generated from operating activities[65](index=65&type=chunk) [Gearing Ratio](index=30&type=section&id=Gearing%20Ratio) As of June 30, 2025, the Group's gearing ratio increased to 94%, up from 88% as of December 31, 2024 - As of June 30, 2025, and December 31, 2024, the Group's **gearing ratio** was **94%** and **88%**, respectively[66](index=66&type=chunk) - The gearing ratio is calculated based on net debt divided by total capital[66](index=66&type=chunk) [Contingent Liabilities](index=30&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[67](index=67&type=chunk) [Other Significant Information](index=31&type=section&id=Other%20Significant%20Information) This section covers material acquisitions/disposals, segment information, future investment plans, employee data, pledge of assets, and foreign exchange risk [Material Acquisitions/Disposals](index=31&type=section&id=Material%20Acquisitions%2FDisposals) For the six months ended June 30, 2025, the Group did not undertake any material acquisitions or disposals - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals[68](index=68&type=chunk) [Segment Information](index=31&type=section&id=Segment%20Information) Segment information is not presented as the Group's operations are primarily conducted in China and fall within the same business segment - The Group's operations are primarily conducted in China and fall within the same business segment; therefore, no segment information is presented for the six months ended June 30, 2025[69](index=69&type=chunk) [Future Investment Plans](index=31&type=section&id=Future%20Investment%20Plans) Apart from the disclosed plans for three new production lines at Dazhou, Guang'an Chemical, and Guang'an Materials plants, and the Jiangsu plant, the Group has no other significant investment plans - Save for the plans disclosed in the Chairman's Statement in this interim report, the Company's circular dated December 4, 2020 (establishment of three new production lines at Dazhou Plant, Guang'an Chemical Plant, and Guang'an Materials Plant), and the Company's circular dated November 19, 2021 (Jiangsu Plant), there are no other significant investment plans[70](index=70&type=chunk) [Employee Information](index=31&type=section&id=Employee%20Information) As of June 30, 2025, the Group's total workforce decreased to 709 employees (from 821 in 2024), with the majority (707 employees) stationed in China | Category | As of June 30, 2025 (Number of persons) | 2024 (Number of persons) | | :--- | :--- | :--- | | Management | 4 | 3 | | Finance and Administration | 109 | 112 | | Production | 588 | 693 | | Sales, Marketing and R&D | 8 | 13 | | **Total** | **709** | **821** | - Of these employees, **707** were stationed in China and **2** in Hong Kong[71](index=71&type=chunk) [Pledge of the Group's Assets](index=32&type=section&id=Pledge%20of%20the%20Group%27s%20Assets) As of June 30, 2025, the Group's assets, including land use rights, buildings, equipment, machinery, mining rights, and bank deposits, were pledged as collateral for borrowings and bills payable, with the total pledged assets decreasing from the previous year | Pledged Assets | As of June 30, 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Land use rights and buildings | 317,414 | 492,526 | | Equipment and machinery | 650,105 | 912,999 | | Mining rights | 334,306 | 334,306 | | Bank deposits | 60,412 | 576,600 | [Foreign Exchange Risk](index=32&type=section&id=Foreign%20Exchange%20Risk) The Group is exposed to foreign exchange risk due to certain foreign currency-denominated loans, primarily in Hong Kong Dollars, with management continuously monitoring and considering hedging when necessary - The Group is exposed to foreign exchange risk as certain portions of its loans are denominated in foreign currencies, primarily **Hong Kong Dollars**[73](index=73&type=chunk) - Management monitors foreign exchange risk and considers hedging significant foreign exchange exposures when necessary[73](index=73&type=chunk) [Equity and Corporate Governance](index=33&type=section&id=Equity%20and%20Corporate%20Governance) This section outlines the Company's share option scheme, outstanding convertible securities, directors' and substantial shareholders' interests, changes in board information, directors' interests in competing businesses, going concern status, code of conduct for securities transactions, share dealings, post-reporting period events, audit committee, and corporate governance practices [Share Option Scheme](index=33&type=section&id=Share%20Option%20Scheme) As of June 30, 2025, a total of 363,992 thousand share options remained unexercised under the Company's share option scheme, with 14,820 thousand forfeited/lapsed during the period, and the 2020 scheme having approximately 5.3 years remaining and 186,312,259 options available for grant | Metric | As of January 1, 2025 (thousands of units) | Granted during the period (thousands of units) | Forfeited/Lapsed during the period (thousands of units) | As of June 30, 2025 (thousands of units) | | :--- | :--- | :--- | :--- | :--- | | Directors | 300,000 | – | – | 300,000 | | Employees | 78,812 | – | (14,820) | 63,992 | | **Total** | **378,812** | **–** | **(14,820)** | **363,992** | - Share Option A has an exercise price of **HK$0.151**, Share Option B **HK$0.141**, and Share Option C **HK$0.182**[75](index=75&type=chunk) - As of June 30, 2025, **186,312,259 share options** were available for grant under the Company's share option scheme adopted on October 23, 2020, representing approximately **3.09%** of the Company's shares as of June 30, 2025[76](index=76&type=chunk) - The remaining term of the share option scheme adopted on October 23, 2020, was approximately **5.3 years** as of June 30, 2025[76](index=76&type=chunk) [Outstanding Convertible Securities](index=34&type=section&id=Outstanding%20Convertible%20Securities) As of June 30, 2025, the Company had 7,700,000 thousand outstanding convertible securities maturing on November 29, 2026, with a conversion price of HK$0.108 and no redemption capability, which, if fully converted, would lead to significant share capital dilution and a diluted loss per share of RMB 1.35 cents | Metric | Details | | :--- | :--- | | Maturity date of outstanding convertible securities | November 29, 2026 | | Conversion price | HK$0.108 | | Number of shares convertible | 7,700,000 thousand units | | Redemption capability | None | - Assuming all outstanding convertible securities were converted into Company shares as of June 30, 2025, the total number of shares of the Company after conversion would be **13,728,042,599 shares**[78](index=78&type=chunk) - Assuming full conversion of all outstanding convertible securities, Mr. Tang Kwok Keung's equity percentage would increase from **2.82% to 57.33%**[78](index=78&type=chunk) - The diluted loss per share for the year ended June 30, 2025, assuming full conversion of all outstanding convertible securities, would be **RMB 1.35 cents**[79](index=79&type=chunk) [Disclosure of Interests](index=36&type=section&id=Disclosure%20of%20Interests) This section discloses the interests of directors and substantial shareholders in the Company's shares, related shares, or debentures as of June 30, 2025, in compliance with the Securities and Futures Ordinance and Listing Rules [Directors' Interests in the Company](index=36&type=section&id=Directors%27%20Interests%20in%20the%20Company) As of June 30, 2025, Mr. Tang Kwok Keung held 169,800,000 shares and 7,700,000,000 bonds in the Company, totaling 130.55% of the issued share capital (assuming conversion), with Mr. Shi Jianmin and Mr. Zhang Weihua also holding significant shares and share options | Director | Long position in shares (Beneficial owner) | Long position in bonds (Beneficial owner) | Total long position in shares and related shares | Interest in issued share capital (%) | | :--- | :--- | :--- | :--- | :--- | | Tang Kwok Keung | 169,800,000 | 7,700,000,000 | 7,869,800,000 | 130.55% | | Shi Jianmin | 107,000,000 | 300,000,000 | 407,000,000 | 6.75% | | Zhang Weihua | 500,000,000 | – | 500,000,000 | 8.29% | - As of June 30, 2025, **69,800,000 shares** of Mr. Tang Kwok Keung's **169,800,000 shares** long position were held by Coherent Gallery International Limited, wholly owned by Mr. Tang Kwok Keung[81](index=81&type=chunk) - As of June 30, 2025, Mr. Zhang Weihua indirectly owned China Mass Enterprises Limited through Jiangsu Kangtai Holding Group Co., Ltd., which held a total of **500,000,000 shares** in the Company[81](index=81&type=chunk) [Substantial Shareholders' Interests in the Company](index=37&type=section&id=Substantial%20Shareholders%27%20Interests%20in%20the%20Company) As of June 30, 2025, the Company was not aware of any persons, other than the disclosed directors, holding 10% or more interests in shares or related shares requiring disclosure under the Securities and Futures Ordinance - As of June 30, 2025, to the best knowledge of any Director or chief executive of the Company, save as disclosed above, no person (other than a Director or chief executive of the Company) had an interest or short position in the shares or related shares of the Company which would fall to be disclosed to the Company and The Stock Exchange of Hong Kong Limited under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance, or which was recorded in the register required to be kept under Section 336 of the Securities and Futures Ordinance, or was deemed, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company[83](index=83&type=chunk) [Interests of Other Persons in the Company](index=37&type=section&id=Interests%20of%20Other%20Persons%20in%20the%20Company) As of June 30, 2025, the Company was not aware of any persons (other than directors or chief executives) holding 5% or more interests in shares or related shares requiring disclosure under the Securities and Futures Ordinance - As of June 30, 2025, to the best knowledge of any Director or chief executive of the Company, save as disclosed above, no person (other than a Director or chief executive of the Company) had an interest or short position in the shares or related shares of the Company which would fall to be disclosed to the Company and The Stock Exchange of Hong Kong Limited under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance, or which was recorded in the register required to be kept under Section 336 of the Securities and Futures Ordinance, or was deemed, directly or indirectly, to be interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company[84](index=84&type=chunk) [Changes in Board and Directors' Information](index=37&type=section&id=Changes%20in%20Board%20and%20Directors%27%20Information) There have been no other changes to the Board and directors' information since the date of the 2024 annual report, except for the appointment of Mr. Fan Chao as an executive director effective May 1, 2025 - Save as disclosed in the Company's announcement dated April 30, 2025, regarding the appointment of Mr. Fan Chao as an executive director with effect from **May 1, 2025**, there have been no other changes to the Board and directors' information since the date of the Company's annual report for the year ended December 31, 2024[85](index=85&type=chunk) [Directors' Interests in Competing Businesses](index=38&type=section&id=Directors%27%20Interests%20in%20Competing%20Businesses) During the review period, none of the Company's directors, management shareholders, or their associates held any business interests that competed or might compete with the Company's business - During the review period, none of the Company's Directors or management shareholders and their respective associates held any business interests that competed or might compete with the Company's business[86](index=86&type=chunk) [Going Concern and Mitigation Measures](index=38&type=section&id=Going%20Concern%20and%20Mitigation%20Measures) The Group is involved in litigation with banks but has implemented various measures to improve liquidity and financial position, including successfully restructuring most bank loans, with the latest information disclosed as of June 30, 2025 - The Group is involved in certain litigation with banks, and the Group has taken various measures to improve its liquidity and financial position, as detailed in the Company's 2024 annual report[87](index=87&type=chunk) - The Group has been negotiating with banks to renew or restructure loans, and most bank loans have been restructured[87](index=87&type=chunk) [Code of Conduct for Securities Transactions by Directors](index=38&type=section&id=Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code and confirms that all directors have complied with it - For the six months ended June 30, 2025, the Company adopted a code of conduct for directors' securities transactions with terms no less exacting than the Model Code for Securities Transactions by Directors of Listed Issuers[88](index=88&type=chunk) - The Company has also made specific enquiries with all Directors, and the Company is not aware of any non-compliance by any Director with the required standards for securities transactions and the code of conduct for securities transactions by Directors[88](index=88&type=chunk) [Purchase, Sale or Redemption of Shares](index=38&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Shares) During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed shares - During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed shares[89](index=89&type=chunk) [Events After Reporting Period](index=38&type=section&id=Events%20After%20Reporting%20Period) No significant events occurred after the reporting period and up to the date of approval of this report - No significant events occurred after the reporting period and up to the date of approval of this report[90](index=90&type=chunk) [Audit Committee](index=39&type=section&id=Audit%20Committee) Established in 2003, the Audit Committee comprises three independent non-executive directors responsible for reviewing and monitoring the Group's financial reporting processes and internal control systems, and has reviewed the unaudited interim financial statements for the current period - The Audit Committee was established on **June 10, 2003**, and its terms of reference are set out in writing in accordance with the Corporate Governance Code[91](index=91&type=chunk) - As of the date of this interim report, the Audit Committee comprises **three members**, including three independent non-executive directors: Mr. Xu Congcai, Mr. Le Yiren, and Ms. Lu Yi[91](index=91&type=chunk) - The Audit Committee has reviewed the accounting principles and practices adopted by the Company and the Group with management and discussed internal control and financial reporting matters, including the unaudited interim financial statements of the Company and the Group for the six months ended June 30, 2025[91](index=91&type=chunk) [Corporate Governance](index=39&type=section&id=Corporate%20Governance) The Company has established Board practices and procedures in accordance with the Code set out in Appendix 14 of the Listing Rules since January 1, 2005, and has taken appropriate actions to comply with the Code provisions - Since **January 1, 2005**, the Board's practices and procedures have been established in accordance with the Code set out in Appendix 14 of the Listing Rules[92](index=92&type=chunk) - The Company has taken appropriate actions to comply with the Code, and the Group has complied with the Code provisions contained therein[92](index=92&type=chunk)

[Company Profile](index=4&type=section&id=公司簡介) Luzhou Bank, established in 1997 and listed on the HKEX in 2018, is a commercial bank with 41 branches and a substantial asset base [Company Overview](index=4&type=section&id=一、%20公司概況) Luzhou Bank Co., Ltd. was registered in Luzhou, Sichuan Province, China on September 15, 1997, with its H-shares listed on the HKEX in 2018 - Legal Chinese name: Luzhou Bank Co., Ltd., Legal English name: LUZHOU BANK CO., LTD[8](index=8&type=chunk) - Registered capital: **RMB 2,717,752,062**[8](index=8&type=chunk) - H-shares listed on the main board of the Hong Kong Stock Exchange on **December 17, 2018**, stock code **1983**[8](index=8&type=chunk)[10](index=10&type=chunk) [Company Status](index=5&type=section&id=二、%20公司情況) Luzhou Bank operates 41 branches, reporting total assets of **RMB 192.254 billion** and customer deposits of **RMB 155.082 billion** - The bank operates 41 branches, including Chengdu, Meishan, and Suining branches[9](index=9&type=chunk) Key Scale Indicators as of the End of the Reporting Period | Indicator | Amount (RMB billion) | | :--- | :--- | | Total Assets | 192.254 | | Total Customer Loans | 117.594 | | Total Customer Deposits | 155.082 | [Financial Highlights](index=6&type=section&id=財務摘要) Luzhou Bank reported increased net profit and asset growth for H1 2025, with improved loan quality and stable capital ratios [Financial Highlights](index=6&type=section&id=財務摘要) For H1 2025, Luzhou Bank achieved **RMB 902 million** net profit, **11.65% YoY growth**, with assets up **12.43%** and deposits up **14.61%** Operating Performance for the Six Months Ended June 30 (RMB thousand) | Item | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | 1,897,023 | 1,757,680 | 7.93 | | Net Fee and Commission Income | 78,660 | 82,592 | (4.76) | | Operating Income | 2,422,775 | 2,835,908 | (14.57) | | Operating Expenses | (968,254) | (898,069) | 7.82 | | Expected Credit Losses / Other Asset Impairment Losses | (215,577) | (903,809) | (76.15) | | Profit Before Tax | 1,239,926 | 1,035,133 | 19.78 | | Net Profit | 902,489 | 808,336 | 11.65 | | Net Profit Attributable to Shareholders | 902,489 | 808,336 | 11.65 | | Basic Earnings Per Share (RMB) | 0.30 | 0.26 | 0.04 | Scale Indicators as of June 30, 2025 (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | Change Rate (%) | | :--- | :--- | :--- | :--- | | Total Assets | 192,253,762 | 170,999,572 | 12.43 | | Net Customer Loans | 111,900,229 | 98,585,035 | 13.51 | | Total Liabilities | 179,260,751 | 158,559,168 | 13.06 | | Customer Deposits | 155,081,860 | 135,314,340 | 14.61 | | Equity Attributable to Shareholders | 12,993,011 | 12,440,404 | 4.44 | Asset Quality and Capital Adequacy Ratios as of June 30, 2025 (%) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Non-performing Loan Ratio | 1.18 | 1.19 | (0.01) | | Provision Coverage Ratio | 411.53 | 435.19 | (23.66) | | Core Tier 1 Capital Adequacy Ratio | 8.01 | 8.27 | (0.26) | | Tier 1 Capital Adequacy Ratio | 9.82 | 10.15 | (0.33) | | Capital Adequacy Ratio | 12.66 | 13.12 | (0.46) | [Management Discussion and Analysis](index=8&type=section&id=管理層討論與分析) This section covers Luzhou Bank's operating environment, strategy, financial performance, asset quality, capital, and risk management [Environment and Outlook](index=8&type=section&id=1.%20環境與展望) H1 2025 saw weak global recovery, while China's economy grew **5.3%** and Sichuan's GDP **5.6%**, with banking facing challenges - H1 2025 China's GDP reached **RMB 66.1 trillion**, a **5.3% year-on-year increase**[13](index=13&type=chunk) - Sichuan Province's GDP reached **RMB 3.2 trillion**, a **5.6% year-on-year increase**, **0.3 percentage points higher** than the national average[13](index=13&type=chunk) - The banking industry faces multiple challenges, including continuous narrowing of net interest margins and intensified "involutionary" competition[14](index=14&type=chunk) [Development Strategy](index=8&type=section&id=2.%20發展戰略) Luzhou Bank will focus on high-quality development, business transformation, asset optimization, and risk control in H2 2025 - Anchor high-quality development goals, unswervingly promote business transformation, and continuously optimize asset structure[15](index=15&type=chunk) - Continuously reduce liability costs through innovative measures and increase the proportion of high-quality customers[15](index=15&type=chunk) - Further strengthen full-process credit risk control and proactively prevent reputational risks[15](index=15&type=chunk) - Continue to increase investment in financial technology and solidify the financial technology foundation[15](index=15&type=chunk) - Closely align with the Chengdu-Chongqing economic circle and Luzhou's "one body, two wings" development strategy, actively integrating into the regional economic development landscape[15](index=15&type=chunk) [Income Statement Analysis](index=9&type=section&id=3.%20利潤表分析) H1 2025 profit before tax grew **19.78%** to **RMB 1.24 billion**, net profit rose **11.65%** to **RMB 902 million**, despite revenue decline Impact of Major Profit and Loss Items on Profit Before Tax (RMB thousand) | Item | Amount | | :--- | :--- | | Profit Before Tax for the Six Months Ended June 30, 2024 | 1,035,133 | | Change in Net Interest Income | 139,343 | | Change in Net Fee and Commission Income | (3,932) | | Change in Net Gains from Trading Activities, Financial Investments, and Other Operating Income | (548,544) | | Change in Operating Expenses | (70,185) | | Change in Expected Credit Losses / Other Asset Impairment Losses | 688,232 | | Change in Share of Profit of Associates | (121) | | Profit Before Tax for the Six Months Ended June 30, 2025 | 1,239,926 | [Financial Performance Summary](index=9&type=section&id=3.1%20財務業績摘要) H1 2025 profit before tax increased by **19.78%** to **RMB 1.24 billion**, and net profit grew by **11.65%** to **RMB 902 million** - Profit before tax **RMB 1.24 billion**, a **19.78% year-on-year increase**[18](index=18&type=chunk) - Net profit **RMB 902 million**, an **11.65% year-on-year increase**[18](index=18&type=chunk) [Operating Income](index=10&type=section&id=3.2%20營業收入) H1 2025 operating income decreased by **14.57%** to **RMB 2.423 billion**, with net interest income comprising **78.30%** - H1 2025 operating income **RMB 2.423 billion**, a **14.57% year-on-year decrease**[20](index=20&type=chunk) Operating Income Composition (%) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Interest Income | 78.30 | 61.98 | | Net Fee and Commission Income | 3.25 | 2.91 | | Net Gains from Trading Activities, Financial Investments, and Other Operating Income | 18.45 | 35.11 | | Total | 100.00 | 100.00 | [Net Interest Income](index=10&type=section&id=3.3%20利息淨收入) H1 2025 net interest income grew **7.93%** to **RMB 1.897 billion**, driven by asset growth and lower liability costs, despite margin decline - Net interest income **RMB 1.897 billion**, a **7.93% year-on-year increase**[22](index=22&type=chunk) - Net interest margin **2.44%**, a **0.11 percentage point year-on-year decrease**; net interest spread **2.71%**, a **0.06 percentage point year-on-year decrease**[27](index=27&type=chunk) Net Interest Income Change Analysis (RMB thousand) | Item | Scale Factor | Interest Rate Factor | Net Change (Increase/Decrease) | | :--- | :--- | :--- | :--- | | Change in Interest Income | 466,459 | (339,869) | 126,590 | | Change in Interest Expense | 292,072 | (304,825) | (12,753) | | Change in Net Interest Income | 174,387 | (35,044) | 139,343 | [Interest Income](index=12&type=section&id=3.4%20利息收入) H1 2025 interest income grew **3.38%** to **RMB 3.872 billion**, primarily from interest-earning asset growth, with customer loan interest up - Interest income **RMB 3.872 billion**, a **3.38% year-on-year increase**, primarily due to growth in interest-earning assets[30](index=30&type=chunk) - Customer loan interest income **RMB 3.354 billion**, a **7.15% year-on-year increase**[31](index=31&type=chunk) - Investment interest income **RMB 421 million**, a **19.46% year-on-year decrease**, mainly due to a decline in average investment yield[34](index=34&type=chunk) [Interest Expense](index=14&type=section&id=3.5%20利息支出) H1 2025 interest expense decreased **0.64%** to **RMB 1.975 billion**, mainly due to lower average cost of interest-bearing liabilities - Interest expense **RMB 1.975 billion**, a **0.64% year-on-year decrease**, primarily due to a decline in the average cost of interest-bearing liabilities[37](index=37&type=chunk) - Customer deposit interest expense **RMB 1.713 billion**, a **2.79% year-on-year increase**[38](index=38&type=chunk) - Interbank and other financial institutions' deposit and borrowing interest expense **RMB 38 million**, a **45.85% year-on-year decrease**[41](index=41&type=chunk) - Interest expense on issued bonds **RMB 172 million**, an **8.84% year-on-year decrease**[42](index=42&type=chunk) [Net Non-Interest Income](index=15&type=section&id=3.6%20非利息淨收入) H1 2025 net non-interest income significantly decreased by **51.24%** to **RMB 526 million** - Net non-interest income **RMB 526 million**, a **51.24% year-on-year decrease**[44](index=44&type=chunk) [Net Fee and Commission Income](index=15&type=section&id=3.7%20手續費及佣金淨收入) H1 2025 net fee and commission income decreased by **RMB 3.932 million** to **RMB 78,660 thousand** - Net fee and commission income **RMB 78,660 thousand**, a **RMB 3,932 thousand year-on-year decrease**[45](index=45&type=chunk) Fee and Commission Income Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Wealth Management Business Fee Income | 78,907 | 94,274 | | Agency Business Fee Income | 5,301 | 1,254 | | Guarantee and Commitment Business Fee Income | 13,342 | 3,991 | [Net Gains from Trading Activities, Financial Investments, and Other Operating Income](index=16&type=section&id=3.8%20交易活動淨收益、金融投資淨收益及其他營業收入) H1 2025 combined net gains from trading activities, financial investments, and other operating income totaled **RMB 447 million**, a **55.09% decrease** - Net gains from trading activities, financial investments, and other operating income totaled **RMB 447 million**, a **55.09% year-on-year decrease**[48](index=48&type=chunk) Composition of Net Gains from Trading Activities, Financial Investments, and Other Operating Income (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Gains from Trading Activities | 321,174 | 492,091 | | Net Gains from Financial Investments | 88,745 | 197,435 | | Other Operating Income | 37,173 | 306,110 | [Operating Expenses](index=16&type=section&id=3.9%20營業費用) H1 2025 operating expenses increased by **7.82%** to **RMB 968 million**, primarily due to higher staff costs - Operating expenses **RMB 968 million**, a **7.82% year-on-year increase**[50](index=50&type=chunk) Major Components of Operating Expenses (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Staff Costs | 478,589 | 444,107 | | Business and Administrative Expenses | 281,049 | 296,844 | | Depreciation and Amortization | 99,327 | 84,888 | [Expected Credit Losses / Other Asset Impairment Losses](index=17&type=section&id=3.10%20預期信用損失╱其他資產減值損失) H1 2025 expected credit losses and other asset impairment losses significantly decreased by **76.15%** to **RMB 216 million** - Expected credit losses / other asset impairment losses **RMB 216 million**, a **76.15% year-on-year decrease**[53](index=53&type=chunk) - Expected credit losses on loans (including bill discounts) **RMB 452 million**, a **28.60% year-on-year decrease**[55](index=55&type=chunk) [Analysis of Key Balance Sheet Items](index=18&type=section&id=4.%20財務狀況表主要項目分析) As of June 2025, Luzhou Bank's total assets grew **12.43%** to **RMB 192.254 billion**, liabilities **13.06%** to **RMB 179.261 billion**, and equity **4.44%** to **RMB 12.993 billion** - As of the end of June 2025, total assets **RMB 192.254 billion**, a **12.43% increase** from the end of the previous year[56](index=56&type=chunk) - As of the end of June 2025, total liabilities **RMB 179.261 billion**, a **13.06% increase** from the end of the previous year[77](index=77&type=chunk) - As of the end of June 2025, shareholders' equity **RMB 12.993 billion**, a **4.44% increase** from the end of the previous year[83](index=83&type=chunk) [Assets](index=18&type=section&id=4.1%20資產) As of June 2025, total assets grew **12.43%** to **RMB 192.254 billion**, with net customer loans up **13.51%** and corporate loans at **88.26%** Total Assets Composition (RMB thousand) | Item | June 30, 2025 Amount | Percentage of Total % | | :--- | :--- | :--- | | Net Customer Loans | 111,900,229 | 58.20 | | Financial Investments - Financial Assets at Fair Value Through Profit or Loss | 35,550,571 | 18.49 | | Financial Investments - Measured at Amortized Cost | 20,638,532 | 10.74 | | Cash and Balances with Central Bank | 11,334,465 | 5.90 | | Total Assets | 192,253,762 | 100.00 | - Total customer loans **RMB 117.594 billion**, a **13.15% increase** from the end of the previous year[60](index=60&type=chunk) - Corporate loans totaled **RMB 103.784 billion**, a **15.78% increase** from the end of the previous year, accounting for **88.26%** of total customer loans[62](index=62&type=chunk) - Personal loans **RMB 12.845 billion**, a **4.37% decrease** from the end of the previous year, accounting for **10.92%** of total customer loans[64](index=64&type=chunk) - Investment book value **RMB 63.610 billion**, a **9.88% increase** from the end of the previous year[65](index=65&type=chunk) [Liabilities](index=22&type=section&id=4.2%20負債) As of June 2025, total liabilities grew **13.06%** to **RMB 179.261 billion**, with customer deposits up **14.61%** to **RMB 155.082 billion** Total Liabilities Composition (RMB thousand) | Item | June 30, 2025 Amount | Percentage of Total % | | :--- | :--- | :--- | | Customer Deposits | 155,081,860 | 86.51 | | Issued Bonds | 14,366,963 | 8.01 | | Borrowings from Central Bank | 5,609,509 | 3.13 | | Total Liabilities | 179,260,751 | 100.00 | - Total customer deposits **RMB 155.082 billion**, a **14.61% increase** from the end of the previous year[79](index=79&type=chunk) - Issued bonds **RMB 14.367 billion**, a **12.72% increase** from the end of the previous year[82](index=82&type=chunk) [Shareholders' Equity](index=24&type=section&id=4.3%20股東權益) As of June 2025, shareholders' equity increased by **4.44%** to **RMB 12.993 billion** - Shareholders' equity **RMB 12.993 billion**, a **4.44% increase** from the end of the previous year[83](index=83&type=chunk) [Other Financial Information](index=24&type=section&id=5.%20其他財務信息) At period-end, Luzhou Bank's off-balance sheet credit commitments were **RMB 4.042 billion**, with no overdue debt and some pledged assets - Credit commitment balance **RMB 4.042 billion**[85](index=85&type=chunk) - At the end of the reporting period, the bank had no overdue and unpaid debts[86](index=86&type=chunk) - At the end of the reporting period, some of the bank's assets were pledged to the central bank as collateral in accordance with agreements[87](index=87&type=chunk) [Loan Quality Analysis](index=25&type=section&id=6.%20貸款質量分析) Total loans grew **13.13%** to **RMB 116.829 billion**, NPL ratio slightly down **0.01 percentage points** to **1.18%**, with coverage at **411.53%** - At the end of the reporting period, total loans **RMB 116.829 billion**, a **13.13% increase** from the end of the previous year[88](index=88&type=chunk) - Total non-performing loans **RMB 1.384 billion**, an increase of **RMB 156 million** from the end of the previous year; non-performing loan ratio **1.18%**, a **0.01 percentage point decrease** from the end of the previous year[88](index=88&type=chunk) Loan Distribution by Five-Category Classification (RMB thousand) | Item | June 30, 2025 Amount | Percentage of Total % | | :--- | :--- | :--- | | Normal Loans | 113,599,469 | 97.24 | | Special Mention Loans | 1,845,647 | 1.58 | | Total Non-performing Loans | 1,384,379 | 1.18 | | Total Customer Loans | 116,829,495 | 100.00 | - Corporate non-performing loans primarily include real estate, leasing and business services, and construction industries, accounting for **88.10%** of total corporate non-performing loans[92](index=92&type=chunk) - Retail loan non-performing loan ratio increased by **0.52 percentage points** to **4.18%** from the end of the previous year[98](index=98&type=chunk) - At the end of the reporting period, overdue loans **RMB 1.788 billion**, an increase of **RMB 238 million** from the end of the previous year; the ratio of overdue loans to total loans was **1.53%**, an increase of **0.03 percentage points** from the end of the previous year[108](index=108&type=chunk) - Strengthen post-loan management and risk early warning to promptly identify risk hidden dangers[111](index=111&type=chunk) - Formulate "one household, one policy" disposal plans to improve collection efficiency[111](index=111&type=chunk) - Revitalize existing judicial resources and unblock litigation collection channels[111](index=111&type=chunk) [Capital Adequacy Ratio Analysis](index=31&type=section&id=7.%20資本充足率分析) Luzhou Bank's capital adequacy ratios exceed regulatory standards despite a slight decline due to slower capital growth relative to risk-weighted assets - The bank's capital management aims to meet regulatory requirements and continuously improve capital risk resilience and capital returns[114](index=114&type=chunk) Capital Adequacy Ratio Related Indicators (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Net Capital | 16,722,739 | 16,025,971 | | Core Tier 1 Capital Adequacy Ratio | 8.01% | 8.27% | | Tier 1 Capital Adequacy Ratio | 9.82% | 10.15% | | Capital Adequacy Ratio | 12.66% | 13.12% | - During the reporting period, the growth rate of the bank's net capital was slightly lower than the growth rate of risk-weighted assets, leading to a decrease in capital adequacy ratios compared to the end of the previous year, but all levels of capital adequacy ratios remained above regulatory standards[117](index=117&type=chunk) - The liquidity ratio was **76.30%**, **51.30 percentage points higher** than the regulatory requirement[119](index=119&type=chunk)[131](index=131&type=chunk) [Risk Management](index=33&type=section&id=8.%20風險管理) Luzhou Bank manages credit, operational, market, and liquidity risks through optimized structures, enhanced approvals, internal controls, and stress testing - The bank's risk management policy aims to identify, analyze, set limits, monitor, and control various financial risks[351](index=351&type=chunk) - The Board of Directors is the highest risk management body for the entire bank, and senior management is responsible for the overall implementation of risk management[352](index=352&type=chunk) [Credit Risk](index=33&type=section&id=信用風險) Luzhou Bank strengthens credit risk management through optimizing credit allocation, enhancing approvals, intensifying post-loan management, and NPL recovery - Adhere to policy guidance, optimize and adjust credit structure, and promote the continuous healthy development of credit business[120](index=120&type=chunk) - Strengthen credit approval, strictly implement hierarchical authorization management for credit business, and enhance group credit management[120](index=120&type=chunk) - Strengthen post-loan management, strictly control risks in the post-loan stage, and promptly identify adverse changes and take control measures[123](index=123&type=chunk) - Strengthen monitoring of overdue loans and risk early warning loans, formulate "one household, one policy" plans, and intensify collection and disposal efforts[123](index=123&type=chunk) [Operational Risk](index=34&type=section&id=操作風險) Luzhou Bank strengthens operational risk prevention, aiming for zero major events by solidifying internal controls, promoting compliance, and enhancing tech risk control - As of the end of the reporting period, major operational risk events and case-related risk events were zero[122](index=122&type=chunk) - Solidify internal control levels, improve systems, processes, and standards, and strengthen special inspections and risk assessments[125](index=125&type=chunk) - Promote compliance culture, embedding the philosophy of "internal control first, compliance as fundamental"[125](index=125&type=chunk) - Strengthen case risk control, regularly investigate abnormal employee behavior, and conduct special screening work[125](index=125&type=chunk) - Enhance technological risk control, ensure secure system operation, and guarantee the completeness, compliance, and effectiveness of information technology outsourcing management[125](index=125&type=chunk) [Market Risk](index=36&type=section&id=市場風險) Luzhou Bank manages interest rate and exchange rate risks within reasonable limits through a comprehensive market risk management system - The market risks faced by the bank primarily include interest rate risk and exchange rate risk[126](index=126&type=chunk) - Interest rate risk is primarily managed by regularly measuring interest rate sensitivity gaps, assessing the impact of interest rate changes on net profit and net worth, and adjusting asset-liability product portfolios and maturity structures[127](index=127&type=chunk) - Exchange rate risk primarily arises from temporary conversion risks due to exchange rate fluctuations in interbank and customer foreign exchange settlement and sales businesses, currently within controllable limits[128](index=128&type=chunk) [Liquidity Risk](index=37&type=section&id=流動性風險) Luzhou Bank manages liquidity risk to ensure sufficient funds in all scenarios, with ratios significantly exceeding regulatory requirements - The purpose of liquidity risk management is to ensure sufficient funds in both normal operating scenarios and stressed conditions to meet maturing debt payments and business operating capital needs[129](index=129&type=chunk) Liquidity Indicators (%) | Indicator | June 30, 2025 | Regulatory Requirement | | :--- | :--- | :--- | | Liquidity Ratio | 76.30 | 25.00 | | High-Quality Liquid Assets Adequacy Ratio | 143.16 | 100.00 | | Liquidity Matching Ratio | 154.76 | 100.00 | - Strengthen deposit marketing efforts, promote growth in various deposits, and improve the overall stability of liabilities[133](index=133&type=chunk) - Continuously monitor various liquidity risk indicators and limit management through the liquidity risk management information system[133](index=133&type=chunk) - Regularly conduct liquidity risk stress tests[133](index=133&type=chunk) [Information Technology Risk Management](index=38&type=section&id=信息科技風險管理) Luzhou Bank's IT risk management ensures stable system operation, with zero major events, by addressing cybersecurity, business continuity, and outsourcing risks - As of the end of the reporting period, major information technology risk events were zero[132](index=132&type=chunk) - Implement strict network segmentation, logically isolating internet information systems from internal systems, and regularly conduct system penetration tests and vulnerability scans[135](index=135&type=chunk) - Develop a business continuity management system, identify important businesses and information systems, and formulate business continuity plans and emergency response plans[135](index=135&type=chunk) - Strengthen outsourcing management, ensure data security through de-sensitization technology, and formulate and exercise outsourcing emergency plans[135](index=135&type=chunk) [Segment Reporting](index=40&type=section&id=9.%20分部報告) Luzhou Bank reports results across corporate, retail, financial markets, and other segments, with corporate banking contributing **50.14%** of PBT Profit Before Tax by Business Segment (RMB thousand) | Item | 2025 Segment Profit Before Tax | 2025 Percentage % | 2024 Segment Profit Before Tax | 2024 Percentage % | | :--- | :--- | :--- | :--- | :--- | | Corporate Banking Business | 621,731 | 50.14 | 601,212 | 58.08 | | Retail Banking Business | 108,804 | 8.78 | 117,248 | 11.33 | | Financial Markets Business | 479,902 | 38.70 | 307,217 | 29.68 | | Other | 29,489 | 2.38 | 9,456 | 0.91 | | Total | 1,239,926 | 100.00 | 1,035,133 | 100.00 | Operating Income by Business Segment (RMB thousand) | Item | 2025 Segment Operating Income | 2025 Percentage % | 2024 Segment Operating Income | 2024 Percentage % | | :--- | :--- | :--- | :--- | :--- | | Corporate Banking Business | 1,596,677 | 65.90 | 1,732,096 | 61.07 | | Retail Banking Business | 344,775 | 14.23 | 323,213 | 11.40 | | Financial Markets Business | 444,148 | 18.33 | 769,010 | 27.12 | | Other | 37,175 | 1.54 | 11,589 | 0.41 | | Total | 2,422,775 | 100.00 | 2,835,908 | 100.00 | [Business Review](index=41&type=section&id=10.%20業務回顧) Luzhou Bank's business segments developed steadily, with corporate loans up **15.78%**, retail deposits up **7.73%**, and bond investments up **24.09%** [Corporate Banking Business](index=41&type=section&id=公司銀行業務) Corporate banking loans grew **15.78%** to **RMB 103.784 billion**, with small and micro enterprise loans at **59.46%** and customer accounts up **7.53%** - Corporate loan balance **RMB 103.784 billion**, a **15.78% increase** from the beginning of the year[141](index=141&type=chunk) - Small and micro enterprise loans **RMB 61.714 billion**, accounting for **59.46%** of total corporate loans[141](index=141&type=chunk) - Corporate banking customer accounts totaled **57,671**, a **7.53% increase** from the beginning of the year[146](index=146&type=chunk) - Inclusive small and micro loan balance **RMB 14.411 billion**, with **8,492 accounts**, and a weighted average interest rate of **5.09%**[147](index=147&type=chunk) [Retail Banking Business](index=43&type=section&id=零售銀行業務) Retail banking serves **1.5283 million customers**, with deposits up **7.73%** to **RMB 85.892 billion**, and **RMB 8.617 billion** in wealth products sold - As of June 30, 2025, the bank had **1.5283 million** retail banking customers[148](index=148&type=chunk) - Retail deposit balance **RMB 85.892 billion**, a **7.73% increase** from the end of the previous year[149](index=149&type=chunk) - Total retail loans **RMB 12.845 billion**[150](index=150&type=chunk) - In H1 2025, the bank sold wealth management products totaling **RMB 8.617 billion**, and agency-sold trust schemes totaling **RMB 989 million**[152](index=152&type=chunk)[153](index=153&type=chunk) [Financial Markets Business](index=44&type=section&id=金融市場業務) Financial markets business remained stable, with bond investments up **24.09%** to **RMB 49.380 billion**, while SPV investments decreased **26.68%** - Placements with other banks and financial institutions balance **RMB 1.571 billion**, a **584.45% increase** from the beginning of the year[158](index=158&type=chunk) - Interbank loans had no balance, a **RMB 300 million decrease** from the beginning of the year, a **100.00% reduction**[159](index=159&type=chunk) - Bond investment scale **RMB 49.380 billion**, a **24.09% increase** from the beginning of the year[164](index=164&type=chunk) - Special purpose vehicle investment scale **RMB 11.664 billion**, a **26.68% decrease** from the beginning of the year, mainly due to reduced public fund investments[165](index=165&type=chunk) [Financial Consumer Rights Protection](index=46&type=section&id=金融消費者權益保護情況) Luzhou Bank enhances consumer rights protection by integrating it into governance, establishing systems, upholding customer-centric service, and managing across the product lifecycle - Incorporate consumer rights protection into corporate governance, corporate culture construction, and business development strategies[167](index=167&type=chunk) - Establish and improve a consumer rights protection system that matches the bank's organizational structure and business development[168](index=168&type=chunk) - Adhere to the philosophy of "customer-centric" and "service creates value," providing "standardized, rigorous, honest, and reliable" financial services[169](index=169&type=chunk) - Achieve full-process, full-coverage, and all-round management of consumer rights protection in product design, service items, pricing management, agreement formulation, approval access, and marketing promotion[170](index=170&type=chunk) [Share Capital Changes and Shareholder Information](index=47&type=section&id=股本變動及股東情況) This section details Luzhou Bank's stable share capital structure, with no changes during the reporting period, and provides an overview of its major shareholders - As of the end of the reporting period, the bank's total shares were **2,717,752,062**, comprising **1,964,632,062 domestic shares** and **753,120,000 H-shares**[173](index=173&type=chunk) [Share Capital Changes](index=47&type=section&id=一、%20股本變動情況) Luzhou Bank's share capital remained unchanged during the reporting period - The bank's share capital remained unchanged during the reporting period[171](index=171&type=chunk) [Shareholding Structure Table](index=47&type=section&id=二、%20股份結構情況表) As of June 30, 2025, Luzhou Bank's total share capital was **2,717,752,062 shares**, with domestic shares at **72.29%** and H-shares at **27.71%** Shareholding Structure (shares, %) | Item | June 30, 2025 Quantity | June 30, 2025 Proportion | | :--- | :--- | :--- | | Total Share Capital | 2,717,752,062 | 100.00 | | Domestic Corporate Shares | 1,914,695,969 | 70.45 | | Domestic Individual Shares | 49,936,093 | 1.84 | | H-shares | 753,120,000 | 27.71 | [Purchase, Sale or Redemption of the Bank's Listed Securities](index=47&type=section&id=三、%20購買、出售或贖回本行之上市證券情況) During the reporting period, Luzhou Bank did not purchase, sell, or redeem any of its listed securities and held no treasury shares - During the reporting period, the bank did not purchase, sell, or redeem any of its listed securities[172](index=172&type=chunk) - As of the end of the reporting period, the bank held no treasury shares[172](index=172&type=chunk) [Shareholder Details](index=47&type=section&id=四、%20股東詳情) As of period-end, Luzhou Bank had **2,717,752,062 total shares**, with Luzhou Laojiao Group as the largest domestic shareholder at **14.37%** [Top 10 Domestic Shareholders](index=47&type=section&id=（一）%20本行內資股前10大股東持股情況) Luzhou Laojiao Group Co., Ltd. held **14.37%** of domestic shares, while Sichuan Jiale Enterprise Group Co., Ltd. and Luzhou Xinfu Mining Group Co., Ltd. each held **11.97%** Top 10 Domestic Shareholders (shares, %) | No. | Shareholder Name | Number of Shares Held | Shareholding Proportion | | :--- | :--- | :--- | :--- | | 1 | Luzhou Laojiao Group Co., Ltd. | 390,528,000 | 14.37 | | 2 | Sichuan Jiale Enterprise Group Co., Ltd. | 325,440,000 | 11.97 | | 3 | Luzhou Xinfu Mining Group Co., Ltd. | 325,440,000 | 11.97 | | 4 | Luzhou Municipal Finance Bureau | 193,853,760 | 7.13 | | 5 | Luzhou State-owned Assets Management Co., Ltd. | 173,568,000 | 6.39 | [Interests and Short Positions of Major Shareholders and Other Persons in Shares and Underlying Shares under Hong Kong Regulations](index=48&type=section&id=（二）%20香港法規下主要股東及其他人士於股份及相關股份擁有之權益及淡倉) Luzhou Laojiao Group and its controlled entities held **15.97%** of shares, Sichuan Jiale Enterprise Group and associates held **11.97%**, and OTX ADVISORY HOLDINGS, INC. held **4.99%** of H-shares - Luzhou Laojiao Group Co., Ltd. directly and indirectly held **433,920,000 domestic shares**, accounting for **15.97%** of the bank's issued shares[175](index=175&type=chunk) - Sichuan Jiale Enterprise Group Co., Ltd. beneficially owned **325,440,000 domestic shares**, accounting for **11.97%** of the bank's issued shares[175](index=175&type=chunk) - OTX ADVISORY HOLDINGS, INC. beneficially owned **135,672,000 H-shares**, accounting for **4.99%** of the bank's issued shares[178](index=178&type=chunk) [Major Shareholders of the Bank](index=52&type=section&id=（三）%20本行主要股東情況) Major shareholders are those holding over **5%** of shares or voting rights, or having significant influence on management - A major shareholder of a commercial bank refers to a shareholder who holds or controls **more than 5%** of the commercial bank's shares or voting rights, or who holds less than **5%** of the total capital or shares but has a significant influence on the commercial bank's operation and management[185](index=185&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=54&type=section&id=董事、監事、高級管理人員及員工) This section outlines the composition of Luzhou Bank's governance bodies, personnel changes, compliance, and employee demographics, training, and compensation [Directors, Supervisors, Senior Management, and Employees](index=54&type=section&id=一、%20董事、監事、高級管理人員及員工) Luzhou Bank's Board has 11 directors, the Supervisory Board has 5 supervisors, and senior management comprises 11 members - The Board of Directors has **11 directors**, including **2 executive directors**, **4 non-executive directors**, and **5 independent non-executive directors**[188](index=188&type=chunk) - The Board of Supervisors has **5 supervisors**, including **1 shareholder supervisor**, **2 employee supervisors**, and **2 external supervisors**[189](index=189&type=chunk) - The bank has **11 senior management members**, including the President, Vice Presidents, Chief Information Officer, and Board Secretary[190](index=190&type=chunk) [Changes in Directors, Supervisors and Senior Management](index=55&type=section&id=二、%20董事、監事和高級管理人員變動情況) Mr. Fan Jingdong became an independent non-executive director in April 2025, Mr. Wang Chong was appointed vice president, and Mr. Luo Huoming assumed new leadership roles - Mr. Fan Jingdong was elected as an independent non-executive director by the general meeting and took office on **April 27, 2025**, after obtaining approval for his qualifications[192](index=192&type=chunk) - There were no changes in supervisory board members during the reporting period and up to the latest practicable date[194](index=194&type=chunk) - Mr. Wang Chong was appointed as Vice President by the bank's Board of Directors on **January 23, 2025**, and will officially assume duties after obtaining regulatory approval[195](index=195&type=chunk) - Mr. Luo Huoming, the bank's non-executive director, has served as Chairman of Luzhou Development Holdings Group Co., Ltd., Chairman of Luzhou Industrial Development Investment Group Co., Ltd., and concurrently Chairman of Luzhou Tianhua (Group) Co., Ltd. since **April 2025**[196](index=196&type=chunk) [Securities Transactions by Directors and Supervisors](index=55&type=section&id=三、%20董事及監事進行的證券交易) Luzhou Bank adopted the Model Code for directors' and supervisors' securities transactions, with all confirming compliance during the period - The bank has adopted the Model Code as the code governing securities transactions by its directors and supervisors[197](index=197&type=chunk) - All directors and supervisors of the bank confirmed their compliance with the Model Code during the reporting period[197](index=197&type=chunk) [Employee Information](index=56&type=section&id=四、%20員工情況) As of June 30, 2025, Luzhou Bank had **1,615 employees** with an average age of **34.80**, **64.71%** holding bachelor's degrees or higher - As of June 30, 2025, the bank had a total of **1,615 employees**, with an average age of **34.80 years**[198](index=198&type=chunk) Employee Age Distribution | Age Group | Number of People | Percentage % | | :--- | :--- | :--- | | 20 (inclusive) to 30 years old | 490 | 30.34 | | 30 (inclusive) to 40 years old | 762 | 47.18 | | 40 (inclusive) to 50 years old | 238 | 14.74 | | 50 (inclusive) and above | 125 | 7.74 | Employee Education Distribution | Education Level | Number of People | Percentage % | | :--- | :--- | :--- | | Master's Degree and Above | 345 | 21.36 | | Bachelor's Degree | 1,045 | 64.71 | | Junior College and Below | 225 | 13.93 | - The bank has a total of **158 technology professionals**, accounting for **9.78%** of the total workforce[202](index=202&type=chunk) [Employee Training](index=57&type=section&id=五、%20員工培訓) Luzhou Bank's employee training aligns with its strategy, expanding platforms, enriching resources, and optimizing programs, with **120 sessions** for **6,000+ participants** - The bank's employee training is conducted in conjunction with its development strategic goals and the actual capabilities of its employees, continuously expanding training platforms, enriching training resources, optimizing training programs, and improving talent development mechanisms[204](index=204&type=chunk) - During the reporting period, approximately **120 types of internal and external training sessions** were organized, with **over 6,000 participants**[204](index=204&type=chunk) [Employee Compensation Policy](index=57&type=section&id=六、%20員工薪酬政策) In 2025, Luzhou Bank implemented a market-oriented compensation system with dual career paths, linking pay to performance and providing comprehensive benefits - In 2025, the bank implemented a market-oriented compensation system based on position salary, with performance-based compensation that can fluctuate upwards or downwards[205](index=205&type=chunk) - The bank established dual career paths for employee salary progression based on dual career development paths, expanding salary progression opportunities for professional series employees[205](index=205&type=chunk) - Position salary is closely linked to position value and individual ability, while performance-based compensation is closely linked to value creation, performance contribution, and performance[205](index=205&type=chunk) - The bank contributes to "five insurances and one housing fund" for employees, purchases supplementary medical insurance, and establishes an enterprise annuity plan[205](index=205&type=chunk) - A mechanism for deferred payment and clawback of performance-based compensation has been established[205](index=205&type=chunk) [Significant Matters](index=58&type=section&id=重要事項) This section covers Luzhou Bank's corporate governance, 2024 dividend, absence of major litigation or penalties, and interim financial review [Corporate Governance](index=58&type=section&id=公司治理) Luzhou Bank strictly complied with laws and Listing Rules, continuously improving its corporate governance structure and adopting the Corporate Governance Code - During the reporting period, the bank strictly adhered to laws and regulations such as the "Company Law of the People's Republic of China" and the "Commercial Bank Law of the People's Republic of China," as well as relevant provisions of the "Listing Rules," continuously improving its corporate governance structure and enhancing its corporate governance level[206](index=206&type=chunk) - The bank has also adopted Part 2 of the Corporate Governance Code in Appendix C1 of the "Listing Rules," meeting the management requirements and corporate governance standards for domestic commercial banks[206](index=206&type=chunk) [Dividend Distribution](index=58&type=section&id=股息分派) Luzhou Bank distributed a **RMB 326.13 million** final dividend for 2024 on July 29, 2025, and has no plans for a H1 2025 interim dividend - The bank distributed a final dividend for 2024 of **RMB 1.2 per 10 shares** (tax inclusive), totaling **RMB 326.13 million** (tax inclusive), to shareholders registered on the bank's share register as of **July 11, 2025**[208](index=208&type=chunk) - The bank has not declared and has no plans to declare an interim dividend for the six months ended **June 30, 2025**[209](index=209&type=chunk) [Major Litigation and Arbitration Matters](index=58&type=section&id=重大訴訟及仲裁事項) During the reporting period, Luzhou Bank had no litigation or arbitration matters that significantly impacted its operations - During the reporting period, the bank had no litigation or arbitration matters that significantly impacted its operations[210](index=210&type=chunk) [Penalties Imposed on the Bank, its Directors, Supervisors, and Senior Management](index=58&type=section&id=本行及本行董事、監事及高級管理人員受處罰的情況) During the reporting period, Luzhou Bank and its directors, supervisors, and senior management received no significant penalties from regulatory bodies - During the reporting period, the bank and all its directors, supervisors, and senior management were not subject to investigations, administrative penalties, public criticisms by the China Securities Regulatory Commission or public condemnations by the Hong Kong Stock Exchange, nor did they receive any other penalties from regulatory bodies that had a significant impact on the bank's operations[211](index=211&type=chunk) [Major Contracts and Their Performance](index=58&type=section&id=重大合同及其履行情況) During the reporting period, Luzhou Bank had no major contracts or their performance to report - During the reporting period, the bank had no major contracts or their performance to report[212](index=212&type=chunk) [Review of Interim Results](index=59&type=section&id=審閱中期業績) Luzhou Bank's unaudited H1 2025 financial information was reviewed by Deloitte Touche Tohmatsu, receiving an unmodified report, and approved by the Audit Committee and Board - The bank's unaudited interim financial information for 2025, prepared in accordance with International Financial Reporting Standards, has been reviewed by Deloitte Touche Tohmatsu, which issued an unmodified review report[214](index=214&type=chunk) - The bank's 2025 interim report and unaudited interim financial information for 2025 have been reviewed by the bank's Audit Committee and Board of Directors[215](index=215&type=chunk) [Major Asset Acquisitions, Disposals, and Business Combinations](index=59&type=section&id=重大資產收購、出售及企業合併事項) During the reporting period, Luzhou Bank did not engage in any major asset acquisitions, disposals, or business combinations - During the reporting period, the bank did not engage in any major asset acquisitions, disposals, or business combinations[216](index=216&type=chunk) [Major Post-Balance Sheet Events](index=59&type=section&id=重大期後事項) From the end of the reporting period to the latest practicable date, Luzhou Bank had no major post-balance sheet events - From the end of the reporting period to the latest practicable date, the bank had no major post-balance sheet events[217](index=217&type=chunk) [Independent Auditor's Report](index=60&type=section&id=獨立核數師報告) This section presents the independent auditor's report on Luzhou Bank's interim condensed financial statements, confirming the scope of review and an unmodified conclusion [Introduction](index=60&type=section&id=引言) Deloitte Touche Tohmatsu reviewed Luzhou Bank's H1 2025 interim condensed financial statements, prepared under HKEX Listing Rules and IAS 34 - Deloitte Touche Tohmatsu reviewed the interim condensed financial statements of Luzhou Bank Co., Ltd[218](index=218&type=chunk) - The interim condensed financial statements were prepared in accordance with the requirements of the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited" and "International Accounting Standard 34 – Interim Financial Reporting"[218](index=218&type=chunk) [Scope of Review](index=60&type=section&id=審閱範圍) The review, conducted under ISRE 2410, involved inquiries and analytical procedures, being less extensive than an audit, thus no audit opinion is expressed - The review was conducted in accordance with "International Standard on Review Engagements 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity"[219](index=219&type=chunk) - The scope of a review is substantially less than that of an audit conducted in accordance with International Standards on Auditing, and consequently, we do not express an audit opinion on these financial statements[219](index=219&type=chunk) [Conclusion](index=60&type=section&id=結論) Based on the review, no matters were identified suggesting the interim condensed financial statements were not prepared in all material respects under IAS 34 - Based on our review, nothing has come to our attention that causes us to believe that the interim condensed financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34[220](index=220&type=chunk) [Financial Statements and Notes](index=61&type=section&id=財務報表及附註) This section includes Luzhou Bank's interim condensed financial statements and detailed notes, providing essential context on its financial position and performance - The bank's main business lines include corporate banking, retail banking, and financial markets business[230](index=230&type=chunk) - This unaudited interim condensed financial statement is prepared in accordance with the requirements of "International Accounting Standard 34 – Interim Financial Reporting" issued by the International Accounting Standards Board, and the disclosure requirements of the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited"[232](index=232&type=chunk) - The bank has not adopted any new standards, amendments, or interpretations that are not yet effective for the current accounting period[235](index=235&type=chunk) [Interim Condensed Statement of Profit or Loss and Other Comprehensive Income](index=61&type=section&id=中期簡明損益及其他綜合收益表) H1 2025 net profit was **RMB 902,489 thousand**, total comprehensive income **RMB 874,170 thousand**, with net interest income up but overall operating income down Interim Condensed Statement of Profit or Loss and Other Comprehensive Income Summary (RMB thousand) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net Interest Income | 1,897,023 | 1,757,680 | | Operating Income | 2,422,775 | 2,835,908 | | Expected Credit Losses | (214,757) | (903,775) | | Net Profit | 902,489 | 808,336 | | Total Comprehensive Income Attributable to Shareholders | 874,170 | 766,349 | | Basic and Diluted Earnings Per Share (RMB) | 0.30 | 0.26 | [Interim Condensed Statement of Financial Position](index=62&type=section&id=中期簡明財務狀況表) As of June 30, 2025, total assets were **RMB 192,253,762 thousand**, total liabilities **RMB 179,260,751 thousand**, and total shareholders' equity **RMB 12,993,011 thousand** Interim Condensed Statement of Financial Position Summary (RMB thousand) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Total Assets | 192,253,762 | 170,999,572 | | Customer Loans | 111,900,229 | 98,585,035 | | Financial Investments - Financial Assets at Fair Value Through Profit or Loss | 35,550,571 | 32,867,602 | | Total Liabilities | 179,260,751 | 158,559,168 | | Customer Deposits | 155,081,860 | 135,314,340 | | Total Shareholders' Equity | 12,993,011 | 12,440,404 | [Interim Condensed Statement of Changes in Equity](index=64&type=section&id=中期簡明權益變動表) As of June 30, 2025, total shareholders' equity reached **RMB 12,993,011 thousand**, driven by **RMB 902,489 thousand** net profit and **RMB 874,170 thousand** comprehensive income - As of June 30, 2025, total shareholders' equity (unaudited) was **RMB 12,993,011 thousand**[225](index=225&type=chunk) - Net profit for the period was **RMB 902,489 thousand**, and total comprehensive income was **RMB 874,170 thousand**[225](index=225&type=chunk) - Capital contributed by holders of other equity instruments was **RMB 1,799,667 thousand**[225](index=225&type=chunk) - Dividends paid to ordinary shareholders were **RMB 326,130 thousand**[225](index=225&type=chunk) [Interim Condensed Statement of Cash Flows](index=66&type=section&id=中期簡明現金流量表) H1 2025 operating activities generated **RMB 1,030,248 thousand** net cash inflow, investing activities had **RMB 1,439,896 thousand** net outflow, and financing activities had **RMB 1,438,126 thousand** net inflow Interim Condensed Statement of Cash Flows Summary (RMB thousand) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 1,030,248 | 5,495,278 | | Net Cash (Outflow) / Inflow from Investing Activities | (1,439,896) | 455,878 | | Net Cash Inflow / (Outflow) from Financing Activities | 1,438,126 | (2,710,242) | | Net Increase in Cash and Cash Equivalents | 1,028,245 | 3,240,934 | | Cash and Cash Equivalents at End of Period | 4,550,408 | 6,321,672 | [Notes to the Interim Condensed Financial Information](index=67&type=section&id=中期簡明財務資料附註) These notes detail Luzhou Bank's background, accounting policies, financial item changes, risk management, related party transactions, and fair value measurements [General Information](index=67&type=section&id=1.%20基本情況) Luzhou Bank Co., Ltd., established in 1997 and renamed in 2019, was listed on the HKEX in 2018, with core businesses in corporate, retail, and financial markets - The bank was listed and traded on the main board of The Stock Exchange of Hong Kong Limited on **December 17, 2018**[229](index=229&type=chunk) - The bank's main business lines include corporate banking business, retail banking business, and financial markets business[230](index=230&type=chunk) [Basis of Preparation and Accounting Policies](index=67&type=section&id=2.%20編製基礎及會計政策) The unaudited interim condensed financial statements are prepared under IAS 34 and HKEX Listing Rules, reviewed by Deloitte, with no significant impact from IAS 21 (amendment) - This unaudited interim condensed financial statement is prepared in accordance with the requirements of "International Accounting Standard 34 – Interim Financial Reporting" issued by the International Accounting Standards Board, and the disclosure requirements of the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited"[232](index=232&type=chunk) - This interim condensed financial statement is unaudited but has been reviewed by the bank's independent auditor, Deloitte Touche Tohmatsu, in accordance with "International Standard on Review Engagements 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the International Auditing and Assurance Standards Board[232](index=232&type=chunk) - The adoption of "International Accounting Standard 21 (Amendment): Lack of Exchangeability" has not had a significant impact on the bank's financial position and financial performance[234](index=234&type=chunk) [Net Interest Income](index=69&type=section&id=3.%20利息淨收入) H1 2025 net interest income was **RMB 1,897,023 thousand**, an increase from prior year, mainly from customer loans and financial investments Net Interest Income Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Total Interest Income | 3,871,606 | 3,745,016 | | Total Interest Expense | (1,974,583) | (1,987,336) | | Net Interest Income | 1,897,023 | 1,757,680 | [Net Fee and Commission Income](index=70&type=section&id=4.%20手續費及佣金淨收入) H1 2025 net fee and commission income was **RMB 78,660 thousand**, a decrease from prior year, with wealth management fees as the main component Net Fee and Commission Income Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Total Fee and Commission Income | 102,556 | 104,615 | | Fee and Commission Expense | (23,896) | (22,023) | | Net Fee and Commission Income | 78,660 | 82,592 | [Net Gains from Trading Activities](index=70&type=section&id=5.%20交易活動淨收益) H1 2025 net gains from trading activities were **RMB 321,174 thousand**, a decrease from prior year, mainly from realized bond gains Net Gains from Trading Activities Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Bonds - Realized Gains/Losses | 436,561 | 403,354 | | Bonds - Unrealized Gains/Losses | (111,110) | 86,094 | | Exchange Gains/Losses | (4,277) | 2,643 | | Total | 321,174 | 492,091 | [Net Gains from Financial Investments](index=71&type=section&id=6.%20金融投資淨收益) H1 2025 net gains from financial investments were **RMB 88,745 thousand**, a significant decrease, mainly due to unrealized FVTPL gains turning to losses Net Gains from Financial Investments Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Realized Gains/Losses on Financial Assets at Fair Value Through Profit or Loss | 114,766 | 137,272 | | Unrealized Gains/Losses on Financial Assets at Fair Value Through Profit or Loss | (29,286) | 59,945 | | Trading Spreads on Financial Assets at Fair Value Through Other Comprehensive Income | 3,265 | 218 | | Total | 88,745 | 197,435 | [Other Operating Income](index=71&type=section&id=7.%20其他營業收入) H1 2025 other operating income was **RMB 37,173 thousand**, a significant decrease from prior year, mainly due to lower non-current asset disposal gains Other Operating Income Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Rewards and Subsidies | 34,649 | 6,248 | | Rental Income | 1,396 | 4,582 | | Gains from Disposal of Non-current Assets | 95 | 294,603 | | Total | 37,173 | 306,110 | [Operating Expenses](index=72&type=section&id=8.%20營業費用) H1 2025 operating expenses increased to **RMB 968,254 thousand**, with staff costs being the largest component, including higher salaries and defined contribution plan expenses Major Components of Operating Expenses (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Staff Costs | 478,589 | 444,107 | | Business and Administrative Expenses | 281,049 | 296,844 | | Depreciation and Amortization | 99,327 | 84,888 | | Total | 968,254 | 898,069 | Staff Costs Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Salaries and Bonuses | 332,072 | 327,282 | | Defined Contribution Plans | 53,038 | 45,676 | | Employee Welfare Expenses | 32,183 | 35,126 | | Total | 478,589 | 444,107 | [Expected Credit Losses / Other Asset Impairment Losses](index=74&type=section&id=9.%20預期信用損失╱其他資產減值損失) H1 2025 expected credit losses and other asset impairment losses significantly decreased to **RMB 215,577 thousand**, with customer loan ECL remaining the largest component Expected Credit Losses / Other Asset Impairment Losses Composition (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Expected Credit Losses on Customer Loans Measured at Amortized Cost | 451,919 | 630,126 | | Expected Credit Losses on Credit-related Financial Investments | (231,868) | 22,072 | | Expected Credit Losses on Financial Investments Measured at Amortized Cost | 4,446 | 248,389 | | Total | 214,757 | 903,775 | | Other Asset Impairment Losses | 820 | 34 | [Income Tax](index=74&type=section&id=10.%20所得稅) Income tax is calculated at a **25%** statutory rate, with differences from theoretical amounts due to tax-exempt income and non-deductible expenses - Income tax is calculated based on the estimated taxable income for each corresponding year/period at a statutory rate of **25%** as determined by Chinese income tax laws[246](index=246&type=chunk) Income Tax Reconciliation (RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Profit Before Tax | 1,239,926 | 1,035,133 | | Tax Calculated at 25% | 309,982 | 258,783 | | Tax Impact of Tax-Exempt Income | (35,943) | (36,924) | | Tax Impact of Non-Deductible Expenses | 52,481 | 4,938 | | Income Tax Expense | 337,437 | 226,797 | [Basic and Diluted Earnings Per Share](index=75&type=section&id=11.%20基本和稀釋每股盈利) H1 2025 basic earnings per share increased to **RMB 0.30**, with no difference from diluted EPS due to no potential dilutive shares - Basic earnings per share is calculated by dividing the net profit attributable to the bank's shareholders for the period by the weighted average number of ordinary shares outstanding during the period[248](index=248&type=chunk) Earnings Per Share Calculation (RMB) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Profit Attributable to Ordinary Shareholders | 807,389 | 713,236 | | Weighted Average Number of Ordinary Shares (thousand shares) | 2,717,752 | 2,717,752 | | Basic Earnings Per Share (RMB) | 0.30 | 0.26 | - As the bank has no potential dilutive shares, there is no difference between basic and diluted earnings per share[249](index=249&type=chunk) [Cash and Balances with Central Bank](index=76&type=section&id=12.%20現金及存放中央銀行款項) As of June 30, 2025, cash and central bank balances totaled **RMB 11,334,465 thousand**, with statutory reserve deposits as the main component Cash and Balances with Central Bank Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | 132,694 | 104,095 | | Statutory Reserve Deposits with Central Bank | 7,991,905 | 7,028,146 | | Excess Reserve Deposits with Central Bank | 3,168,501 | 2,924,529 | | Total | 11,334,465 | 10,234,384 | - Statutory reserve deposits are general deposit reserves and foreign exchange risk reserves deposited by the bank with the People's Bank of China as required, and cannot be used for the bank's daily operating activities[250](index=250&type=chunk) [Placements with and Loans to Banks and Other Financial Institutions](index=76&type=section&id=13.%20存放和拆放於同業及其他金融機構的款項) As of June 30, 2025, placements with and loans to banks and other financial institutions totaled **RMB 1,572,590 thousand**, a significant increase Placements with and Loans to Banks and Other Financial Institutions Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Placements with Banks and Other Financial Institutions | 1,570,689 | 229,482 | | Loans to Banks | – | 300,000 | | Debt Instruments Purchased Under Resale Agreements | – | 200,000 | | Total | 1,572,590 | 729,137 | [Customer Loans](index=77&type=section&id=14.%20客戶貸款) As of June 30, 2025, net customer loans were **RMB 111,900,229 thousand**, with total ECL provisions of **RMB 5,693,367 thousand** Customer Loans Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Loans Measured at Amortized Cost | 117,393,334 | 103,725,354 | | Less: Loan Credit Loss Provisions Measured at Amortized Cost | (5,693,367) | (5,342,538) | | Loans (Bill Discounts) at Fair Value Through Other Comprehensive Income | 200,262 | 202,219 | | Net Customer Loans | 111,900,229 | 98,585,035 | [Financial Investments - Credit-related Financial Assets](index=84&type=section&id=15.%20金融投資－信貸類金融資產) As of June 30, 2025, credit-related financial investments totaled **RMB 2,803,825 thousand**, primarily corporate loans via trust and asset management schemes Financial Investments - Credit-related Financial Assets Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trust and Asset Management Schemes | 2,903,598 | 2,449,967 | | Less: Expected Credit Loss Provisions | (257,272) | (513,551) | | Total | 2,803,825 | 2,110,510 | [Financial Investments - Financial Assets at Fair Value Through Profit or Loss](index=87&type=section&id=16.%20金融投資－以公允價值計量且其變動計入當期損益的金融資產) As of June 30, 2025, FVTPL financial assets totaled **RMB 35,550,571 thousand**, with unlisted assets, particularly short-term financing and commercial bank bonds, as the main components Financial Investments - Financial Assets at Fair Value Through Profit or Loss Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Listed Outside Hong Kong | 5,343,561 | 6,048,815 | | Unlisted | 30,207,010 | 26,690,603 | | Total | 35,550,571 | 32,867,602 | Unlisted Financial Assets Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Short-term Financing Bonds | 10,033,870 | 4,069,953 | | Commercial Bank Bonds | 9,240,839 | 7,495,494 | | Fund Investments | 5,125,284 | 9,725,797 | | Total | 30,207,010 | 26,690,603 | [Financial Investments - Financial Assets at Fair Value Through Other Comprehensive Income](index=88&type=section&id=17.%20金融投資－以公允價值計量且其變動計入其他綜合收益的金融資產) As of June 30, 2025, FVOCI financial assets totaled **RMB 4,617,080 thousand**, with unlisted assets, particularly government and local government bonds, as the main components Financial Investments - Financial Assets at Fair Value Through Other Comprehensive Income Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Listed Outside Hong Kong | 45,869 | 478,718 | | Unlisted | 4,498,825 | 2,773,642 | | Total | 4,617,080 | 3,349,139 | Unlisted Financial Assets Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Government Bonds | 2,007,882 | 1,246,036 | | Local Government Bonds | 1,826,881 | 213,945 | | Policy Bank Bonds | 437,084 | 1,043,228 | | Total | 4,498,825 | 2,773,642 | [Financial Investments - Financial Assets at Amortized Cost](index=90&type=section&id=18.%20金融投資－以攤餘成本計量的金融資產) As of June 30, 2025, net financial assets at amortized cost totaled **RMB 20,638,532 thousand**, with unlisted assets, particularly policy bank and government bonds, as the main components Financial Investments - Financial Assets at Amortized Cost Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Listed Outside Hong Kong | 2,593,594 | 2,701,168 | | Unlisted | 18,213,075 | 17,009,362 | | Less: Expected Credit Loss Provisions | (581,941) | (577,495) | | Net Amount | 20,638,532 | 19,564,015 | Unlisted Financial Investments Composition (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Policy Bank Bonds | 10,783,165 | 11,341,242 | | Government Bonds | 3,437,623 | 2,133,428 | | Collective Trust Schemes | 1,924,828 | 1,758,196 | | Total | 18,213,075 | 17,009,362 | [Investments in Associates](index=92&type=section&id=19.%20對聯營企業投資) As of June 30, 2025, investments in associates totaled **RMB 58,524 thousand**, primarily in Luxian Yuantong Rural Bank, with a **30%** stake - As of June 30, 2025, investments in associates totaled **RMB 58,524 thousand**[278](index=278&type=chunk) - The bank invested in Luxian Yuantong Rural Bank on **April 8, 2009**, holding a **30%** stake[279](index=279&type=chunk) - The share of profit after tax for the current period was **RMB 982 thousand**[278](index=278&type=chunk) [Property and Equipment](index=93&type=section&id=20.%20物業及設備) As of June 30, 2025, net book value of property and equipment was **RMB 1,069,651 thousand**, with buildings as the main component Property and Equipment Net Book Value (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Buildings | 641,115 | 662,180 | | Electronic Equipment | 53,526 | 66,370 | | Construction in Progress | 349,862 | 298,682 | | Total | 1,069,651 | 1,054,569 | [Deferred Income Tax](index=95&type=section&id=21.%20遞延所得稅) As of June 30, 2025, net deferred income tax assets totaled **RMB 1,628,913 thousand**, mainly from asset impairment provisions and employee compensation Deferred Income Tax Assets and Liabilities Composition (RMB thousand) | Item | June 30, 2025 Deferred Income Tax Assets / (Liabilities

Company Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section outlines the composition of the Board of Directors and its committees, including executive, non-executive, and independent non-executive members - The Board comprises three executive, two non-executive, and three independent non-executive directors, demonstrating **high independence**[87](index=87&type=chunk) - Mr. Xiao Jian serves concurrently as Chairman and CEO, an arrangement the company believes ensures **internal leadership consistency and strategic planning efficiency**[87](index=87&type=chunk) [Company Basic Information](index=3&type=section&id=Company%20Basic%20Information) This section provides essential company details, including registration, operational locations, professional advisors, and stock information - The company's registered office is in the Cayman Islands, with headquarters in Shenzhen, Guangdong, China, and its principal Hong Kong business location in Central[4](index=4&type=chunk)[5](index=5&type=chunk) - The company's stock code is **0302**, with principal bankers including China Guangfa Bank, China Merchants Bank, Guangdong Huaxing Bank, and China Everbright Bank[6](index=6&type=chunk) Financial Highlights [Key Financial Indicators](index=5&type=section&id=Key%20Financial%20Indicators) For H1 2025, revenue significantly decreased by 38.1% to RMB 763.034 million, net loss expanded, and total assets and equity declined from year-end 2024 Key Financial Data for the Six Months Ended June 30 | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 763,034 | 1,233,336 | | Loss for the period | (644,254) | (241,051) | | Loss for the period attributable to owners of the parent | (638,550) | (236,220) | | Adjusted net loss | (638,550) | (208,036) | | Basic and diluted loss per share (RMB) | (21.32) cents | (8.58) cents | | Adjusted basic and diluted loss per share (RMB) | (21.32) cents | (7.56) cents | Assets and Liabilities Data as of June 30 | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Total assets | 4,405,428 | 5,082,064 | | Total liabilities | 1,164,805 | 1,186,144 | | Total equity | 3,240,623 | 3,895,920 | Management Discussion and Analysis [Business Review](index=6&type=section&id=Business%20Review) In H1 2025, the Group's revenue declined by 38.1%, and net loss expanded to RMB 644.3 million, mainly due to underperforming self-developed games and high marketing expenses - Group's business revenue was **RMB 763.0 million**, a **38.1% year-on-year decrease**[9](index=9&type=chunk) - Net loss for the period was **RMB 644.3 million**, mainly impacted by "Sword and Fairy: World" underperformance, write-offs of prepayments, and fair value losses on financial assets totaling **RMB 266.2 million**[9](index=9&type=chunk) - Overseas business revenue reached **RMB 235.0 million**, a **significant 33.2% year-on-year increase**, accounting for **30.8% of total revenue**[10](index=10&type=chunk) - Net cash flow from operating activities was **RMB 108.7 million**, with a rich product pipeline expected to reverse the operating situation in H2[10](index=10&type=chunk) [Key Performance Indicators](index=6&type=section&id=Key%20Performance%20Indicators) H1 2025 saw declines in average monthly active users, paying users, ARPPU, and new registered users, indicating challenges in user engagement and monetization Key Performance Indicators for the Six Months Ended June 30 | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Average Monthly Active Users (thousands) | 11,573 | 14,392 | | Average Monthly Paying Users (thousands) | 833 | 1,027 | | ARPPU (RMB) | 152.7 | 200.2 | | Total New Registered Users (thousands) | 42,824 | 47,297 | [Global Distribution of IP Premium Games and Innovative Mini-Games](index=7&type=section&id=Global%20Distribution%20of%20IP%20Premium%20Games%20and%20Innovative%20Mini-Games) The Group launched new IP premium and innovative mini-games, with domestic titles underperforming, but overseas distribution showed strong growth, increasing revenue by 33.2% - For the six months ended June 30, 2025, the Group's distribution business revenue was **RMB 656.4 million**[12](index=12&type=chunk) - Overseas business revenue reached **RMB 235.0 million**, a **significant 33.2% year-on-year increase**, accounting for **30.8% of the Group's total revenue**[17](index=17&type=chunk) [Domestic Distribution of IP Premium Games](index=7&type=section&id=Domestic%20Distribution%20of%20IP%20Premium%20Games) Domestic IP premium games like "Three Thousand Fantasy Worlds" and "Daily Life of a Chat Group" underperformed due to low user conversion, while "New Romance of the Three Kingdoms: Cao Cao's Story" maintained stable performance - "Three Thousand Fantasy Worlds" achieved 1 on the Apple App Store free chart in its first month, but **revenue fell short of expectations** due to low paying user conversion efficiency[13](index=13&type=chunk) - "Daily Life of a Chat Group" revenue performance was below expectations after launch, with **ongoing updates and promotion strategy adjustments planned**[13](index=13&type=chunk) - "New Romance of the Three Kingdoms: Cao Cao's Story" maintained **stable market performance and player reputation**, receiving high ratings on TapTap and the Apple App Store[14](index=14&type=chunk) [Domestic Distribution of Innovative Mini-Games](index=7&type=section&id=Domestic%20Distribution%20of%20Innovative%20Mini-Games) Innovative mini-games became a key growth driver, with "Chunqiu Xuanqi" exceeding RMB 100 million in cumulative revenue within three months, and other mini-games contributing profits - "Chunqiu Xuanqi" ranked 24 on WeChat Game's best-selling list in its first month, rising to 10 in the second month, with **cumulative revenue exceeding RMB 100 million within three months**, surpassing expectations[15](index=15&type=chunk) - Multiple past mini-games, including "Lingxiao Zhanji", "Xiaoge Chuizi", and "Quanmin Qiangshen: Bianjing Wangzhe", are **operating steadily and continuously contributing profits**[15](index=15&type=chunk) [Overseas Game Distribution](index=8&type=section&id=Overseas%20Game%20Distribution) Overseas markets performed strongly, with "Niu Tou Ren GO" topping free charts and IP mobile games like "Battle Through the Heavens: Wushuang" achieving excellent rankings and revenue, despite some LTV challenges - "Niu Tou Ren GO" reached 1 on multiple Apple App Store free charts in Hong Kong, Macau, Taiwan, Singapore, and Malaysia, but **LTV was lower than expected**[16](index=16&type=chunk) - "Battle Through the Heavens: Wushuang" achieved 1 on Taiwan and Hong Kong Apple App Store free game charts in its first month after launch in Hong Kong, Macau, Taiwan, Singapore, and Malaysia, with **good sales performance**[16](index=16&type=chunk) - "Douluo Dalu: Shrek Academy" reached 1 on the Apple App Store free chart and 9 on the best-selling chart in Vietnam in its first month; "Douluo Dalu: Reversal of Time and Space" achieved 1 on the Taiwan Apple App Store free game chart and 19 on the best-selling chart in Hong Kong, Macau, and Taiwan in its first month[17](index=17&type=chunk) [Long-Term Game Operations](index=8&type=section&id=Long-Term%20Game%20Operations) The Group maintains long-term operations for multiple IP premium games and innovative mini-games, such as "One Piece: Burning Will," which continued to contribute stable revenue and profit in H1 2025 - "One Piece: Burning Will" has been online for over 9 years, and "Quanmin Qiangshen: Bianjing Wangzhe" for over 6 years, both **continuously contributing revenue and profit**[18](index=18&type=chunk) - Multiple IP premium games like "New Sword and Fairy: Love and Destiny", "One Piece: Blood Route", and "Dynasty Warriors: Overlord", along with innovative mini-games such as "Lingxiao Zhanji", are all **operating steadily**[18](index=18&type=chunk) [Self-Developed Games](index=8&type=section&id=Self-Developed%20Games) Self-developed game "Sword and Fairy: World" severely underperformed, causing significant financial losses; the Group has since restructured the project, redesigned monetization, and will focus on core competencies and risk control - Self-developed game "Sword and Fairy: World" underperformed after launch, revealing quality defects such as **excessive size, low graphic precision, and poor user guidance**, leading to **significantly lower-than-expected revenue and substantial financial losses**[19](index=19&type=chunk) - The Group has optimized the organizational structure and personnel for "Sword and Fairy: World", replaced the project leader, and **redesigned the monetization model to recover initial investments**[19](index=19&type=chunk) - Wenmai Interactive's self-developed Three Kingdoms strategy game "City Lord's World" (overseas version "Three Kingdoms: Heroes' Uprising") has launched in Hong Kong, Macau, Taiwan, Singapore, and Malaysia, achieving **1 on the Taiwan Apple App Store free chart**[20](index=20&type=chunk) - Wenmai Interactive's self-developed new legend-genre game "Code: Dark Night Legend" will be **delayed until H2 2025**, aiming to become a benchmark product in its category[20](index=20&type=chunk) [《仙剑奇侠传》IP Operations](index=9&type=section&id=%E3%80%8A%E4%BB%99%E5%89%91%E5%A5%87%E4%BE%A0%E4%BC%A0%E3%80%8BIP%E8%BF%90%E8%90%A5) The Group actively builds the "Sword and Fairy IP Universe" with diverse 30th-anniversary activities across games, film, and literature, collaborating on animated and live-action productions, resulting in a **134.8% increase in IP licensing revenue** - The Group actively builds the "Sword and Fairy IP Universe", launching 30th-anniversary events across **games, film, interactive entertainment, licensed merchandise, and physical derivatives**[22](index=22&type=chunk) - Collaborating with Tencent Penguin Pictures for "Sword and Fairy 3" animated series, and with Bilibili for "Sword and Fairy 4" and "Sword and Fairy 1" animated works[22](index=22&type=chunk) - Upcoming original live-action dramas "Sword and Fairy: Stained Dust Returns" and "Sword and Fairy 2 Gaiden: Yiru's Story" are set to **capitalize on the popularity of three new Sword and Fairy TV series** released in early 2024[22](index=22&type=chunk) - For the six months ended June 30, 2025, "Sword and Fairy" IP licensing revenue was **RMB 33.1 million**, a **134.8% increase** compared to the same period in 2024[25](index=25&type=chunk) [Large-Scale Application of AIGC Technology](index=10&type=section&id=%E5%A4%A7%E8%A7%84%E6%A8%A1%E5%BA%94%E7%94%A8%E4%BA%BA%E5%B7%A5%E6%99%BA%E8%83%BDAIGC%E6%8A%80%E6%9C%AF) The Group is vigorously applying AIGC technology in game development, marketing, and operations, integrating it into daily processes to significantly enhance creative generation and operational efficiency - AIGC technology is now a daily part of marketing and distribution, used for generating **creative scripts, content, and promotional images**[26](index=26&type=chunk) - AI content engine intelligently generates gameplay designs and event plans, **significantly improving game operational efficiency**[26](index=26&type=chunk) [Awards and Honors](index=11&type=section&id=%E5%A5%96%E9%A1%B9%E5%8F%8A%E8%8D%A3%E8%AA%89) The Group was re-recognized as a "National Key Cultural Export Enterprise" and received multiple industry awards, highlighting its achievements in game quality, ESG disclosure, and cultural dissemination - The Group was successfully re-selected as a **National Key Cultural Export Enterprise**, acknowledging its efforts in exploring the internationalization of Chinese stories[27](index=27&type=chunk) Major Awards and Honors in 2025 | Award/Honor | Date of Award | Awarding Body/Authority | | :--- | :--- | :--- | | 2025 National Key Cultural Export Enterprise | May 2025 | Ministry of Commerce | | ESG Information Disclosure Excellence Enterprise | July 2025 | Gamma Data | | Content Co-creation Pioneer Award ("Battle Through the Heavens: Peak Showdown") | July 2025 | Huawei Game Center | | 2025 Strong Foundation Leading Game Enterprise "White Horse Award" | August 2025 | Gamma Data | | Most Influential Enterprise in Smart Terminal Field | August 2025 | China Software Industry Association Smart Cloud Branch (Hardcore Alliance) | | Smart Terminal Annual Most Anticipated Game ("Naruto: Konoha Masters") | August 2025 | China Software Industry Association Smart Cloud Branch (Hardcore Alliance) | [Social Responsibility](index=12&type=section&id=Social%20Responsibility) The Group actively practices social responsibility, integrating environmental concepts, supporting the "CMGE Dream Library" project, and promoting industry self-regulation to protect minors, with underage players contributing less than 0.01% of China's game revenue - The Group adheres to environmental principles, reducing carbon emissions through paperless approvals and online meetings, and was recognized as an **"ESG Information Disclosure Excellence Enterprise"** by Gamma Data in July 2025[29](index=29&type=chunk) - Long-term support for the **"CMGE Dream Library" project**, having established 13 libraries, focusing on healthy learning and growth for youth[29](index=29&type=chunk) - Actively promotes industry self-regulation, participates in multiple online game standard developments, strictly adheres to national regulations for real-name authentication and anti-addiction systems, with **underage players (under 18) accounting for less than 0.01% of China's game revenue**[30](index=30&type=chunk) [H2 2025 Outlook](index=13&type=section&id=2025%E5%B9%B4%E4%B8%8B%E5%8D%8A%E5%B9%B4%E5%B1%95%E6%9C%9B) The Group will execute a "business focus + cost control" strategy, expanding mini-game distribution and overseas markets, focusing self-development on legend-genre games, leveraging AI, and pursuing a Web3 strategy including "Sword and Fairy" IP RWA on-chain and "KKFun Esports" - The Group will firmly execute its **"business focus + cost control" development strategy**, deepening innovative mini-game distribution and overseas business expansion[31](index=31&type=chunk) - Self-development will focus on **legend-genre games with proven success**, strictly controlling R&D costs, and cautiously exploring self-developed innovative mini-games[31](index=31&type=chunk) - Will accelerate the **RWA on-chain plan for the top-tier "Sword and Fairy" IP**, launch a Web3 aggregated payment tool, and plan to launch the decentralized Web3 esports game platform "KKFun Esports"[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Product Pipeline](index=13&type=section&id=Product%20Pipeline) The Group plans to launch multiple new games in H2 2025, including "Naruto: Konoha Masters" and "Code: Dark Night Legend," across various genres and targeting markets like mainland China, Southeast Asia, Korea, and Japan Planned Product Pipeline for H2 2025 | Project | Latest Progress | Platform | Type | Distribution Region | License | | :--- | :--- | :--- | :--- | :--- | :--- | | Naruto: Konoha Masters | Launched | Mobile | Idle Card | Mainland China | Obtained | | Code: Dark Night Legend | Fourth Test | Mobile | Legend | Mainland China | Applying | | New Zhen Hun Jie | Under Development | Mini-Game/Mobile | Idle Card | Mainland China | Obtained | | Code: Immortal (formerly Code C) | Under Development | Mini-Game | Card | Mainland China | Applying | | Code: Legend (formerly Code D) | Under Development | Mini-Game | Card | Mainland China | Applying | | Douluo Dalu: Reversal of Time and Space | Under Development | Mobile | RPG | Southeast Asia | / | | Douluo Dalu: Shrek Academy | Under Development | Mobile | MMORPG | Korea | / | | Dynasty Warriors: Overlord | Under Development | Mobile | ACT | Japan | / | | Three Kingdoms: Heroes' Uprising (formerly Code A) | HK, Macau, Taiwan Launched | Mobile | Strategy | HK, Macau, Taiwan, Vietnam | / | | Three Kingdoms: Heroes' Uprising (formerly Code B) | Under Development | Mobile | Strategy | Korea | / | [Global Distribution of IP Premium Games and Innovative Mini-Games (H2 Outlook)](index=14&type=section&id=IP%E7%B2%BE%E5%93%81%E6%B8%B8%E6%88%8F%E5%92%8C%E5%88%9B%E6%96%B0%E5%B0%8F%E6%B8%B8%E6%88%8F%E5%85%A8%E7%90%83%E5%8F%91%E8%A1%8C%20(H2%20Outlook)) In H2, the Group will continue to launch IP premium games like "Naruto: Konoha Masters" and plans to release mini-game versions of "Code: Immortal," "Code: Legend," and "New Zhen Hun Jie," while expanding "Douluo Dalu: Reversal of Time and Space" to Southeast Asia, "Douluo Dalu: Shrek Academy" to Korea, and "Dynasty Warriors: Overlord" to Japan - "Naruto: Konoha Masters" launched in mainland China in July 2025, achieving **1 on the Apple App Store free chart in its first month**[33](index=33&type=chunk) - Plans to launch multiple new mini-games in H2 2025, including "Code: Immortal" (Xianxia theme), "Code: Legend" (simulation management), and a mini-game version of "New Zhen Hun Jie"[34](index=34&type=chunk) - "Douluo Dalu: Reversal of Time and Space" is planned for launch in Southeast Asia in October 2025; "Douluo Dalu: Shrek Academy" in Korea within 2025; and "Dynasty Warriors: Overlord" in Japan in H2 2025[35](index=35&type=chunk) [Self-Developed Games (H2 Outlook)](index=14&type=section&id=Self-Developed%20Games%20(H2%20Outlook)) Wenmai Interactive's "Three Kingdoms: Heroes' Uprising" launched in HK/Macau/Taiwan/Singapore/Malaysia, with further launches planned, while the new legend-genre game "Code: Dark Night Legend" is set for 2025 launch, aiming for breakthroughs in user scale and brand influence - Wenmai Interactive's self-developed Three Kingdoms strategy mobile game "City Lord's World" (overseas version "Three Kingdoms: Heroes' Uprising") officially launched in Hong Kong, Macau, Taiwan, Singapore, and Malaysia on July 31, 2025, with **subsequent launches in Vietnam and Korea**[36](index=36&type=chunk) - Wenmai Interactive's self-developed new legend-genre game "Code: Dark Night Legend" has undergone multiple tests and is set for official launch in 2025, expected to achieve **breakthroughs in user scale, revenue contribution, and brand influence**[38](index=38&type=chunk) [《仙剑奇侠传》IP Operations (H2 Outlook)](index=15&type=section&id=%E3%80%8A%E4%BB%99%E5%89%91%E5%A5%87%E4%BE%A0%E4%BC%A0%E3%80%8BIP%E8%BF%90%E8%90%A5%20(H2%20Outlook)) The "Sword and Fairy" IP matrix will expand across games, comics, film, and merchandise, with collaborations for live-action dramas, radio dramas, digital collectibles, and a continued 30th-anniversary touring exhibition to enhance IP value - The "Sword and Fairy" IP matrix now covers **games, comics, literature, content experience, entertainment real estate, film, animation, music, virtual idols, and derivative products**[39](index=39&type=chunk) - Original live-action dramas "Sword and Fairy: Stained Dust Returns" and "Sword and Fairy 2 Gaiden: Yiru's Story" are in preparation, and a "Sword and Fairy" radio drama co-produced with RabbitU Platform is expected to be released in 2025[39](index=39&type=chunk) - Collaborating with Ant Group's Jingtan Technology to launch the **"Sword and Fairy 30th Anniversary: Companionship Memorial Card" digital collectible**, and with professional model agencies for limited edition statues and movable figures[40](index=40&type=chunk)[41](index=41&type=chunk) - Following the successful "Sword and Fairy One Side" national touring exhibition in H1 2025, it will continue in multiple cities in H2, **vigorously promoting Sword and Fairy IP culture**[42](index=42&type=chunk) [Web3 Strategic Layout](index=16&type=section&id=Web3%20Strategic%20Layout) The Group is accelerating its Web3 strategy, including "Sword and Fairy" IP RWA on-chain, a Web3 aggregated payment tool, and "KKFun Esports," forming partnerships to capitalize on new Hong Kong stablecoin regulations and expand its Web3 ecosystem - Accelerating the **RWA on-chain plan for the top-tier "Sword and Fairy" IP**, unlocking new vitality and commercial potential[45](index=45&type=chunk) - Plans to launch a **Web3 aggregated payment tool**, integrating fiat, global mainstream cryptocurrencies, and stablecoin payments, deeply embedding it into the game ecosystem and overseas business scenarios to optimize cross-border payment efficiency[45](index=45&type=chunk) - Plans to launch the **decentralized Web3 esports game platform "KKFun Esports"**, expected to go live in overseas markets from late 2025 to early 2026[46](index=46&type=chunk) - Formed strategic partnerships with Hong Kong Monetary Authority stablecoin sandbox issuers, OSL Group, and Pangu to **seize market opportunities from new Hong Kong stablecoin regulations**[47](index=47&type=chunk)[48](index=48&type=chunk) [Conclusion](index=17&type=section&id=Conclusion) The Group will continue its "IP premium games and innovative mini-games global distribution + self-development" strategy, focusing on "Sword and Fairy" IP operations to build core competitiveness and promote Chinese traditional culture - The Group will continue its **"IP premium games and innovative mini-games global distribution + self-development" strategy**[49](index=49&type=chunk) - Will focus on **"Sword and Fairy" IP operations** to build core competitiveness and promote excellent Chinese traditional culture[49](index=49&type=chunk) Other Information [Use of Proceeds from Subscription of New Shares](index=28&type=section&id=Use%20of%20Proceeds%20from%20Subscription%20of%20New%20Shares) As of June 30, 2025, net proceeds from new share subscriptions were HKD 94.2 million, with HKD 25.0 million used for IP game business and the remaining HKD 69.2 million expected to be fully utilized by June 30, 2026 Use of Proceeds from Subscription of New Shares | Purpose | Net Proceeds (HKD millions) | Net Proceeds Utilized as of June 30, 2025 (HKD millions) | Net Proceeds Unutilized as of June 30, 2025 (HKD millions) | Expected Timeline for Full Utilization of Remaining Unutilized Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | Further enhancing IP game distribution and development business through acquisitions and/or investments | 94.2 | 25.0 | 69.2 | By June 30, 2026 | [Dividends](index=29&type=section&id=Dividends) The Board of Directors does not recommend the declaration of any interim dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the declaration of an interim dividend for the six months ended June 30, 2025[85](index=85&type=chunk) [Changes in Directors' Information](index=29&type=section&id=Changes%20in%20Directors'%20Information) Mr. Weng Han Di was appointed a Justice of the Peace effective July 1, 2025; no other director information changes required disclosure during the period - Mr. Weng Han Di was appointed a Justice of the Peace by the Government of the Hong Kong Special Administrative Region, effective **July 1, 2025**[86](index=86&type=chunk) [Corporate Governance Practices](index=29&type=section&id=Corporate%20Governance%20Practices) The Company complied with the Corporate Governance Code, except for the combined Chairman and CEO roles held by Mr. Xiao Jian, which the Board believes ensures leadership consistency and strategic efficiency, supported by high board independence - The Company complied with the Corporate Governance Code, but deviated from Code Provision C.2.1, which requires the roles of Chairman and CEO to be separate[87](index=87&type=chunk) - Mr. Xiao Jian concurrently serves as Chairman and CEO, an arrangement the Board believes ensures **internal leadership consistency and enhances strategic planning efficiency**[87](index=87&type=chunk) [Directors' Securities Transactions](index=30&type=section&id=Directors'%20Securities%20Transactions) The Company adopted the Model Code for securities transactions by directors, senior management, and employees, with all directors confirming full compliance during the period - The Company adopted the Model Code as the code of conduct for securities transactions by **directors, senior management, and employees**[88](index=88&type=chunk) - All directors confirmed full compliance with the Model Code from **January 1, 2025, to June 30, 2025**[88](index=88&type=chunk) [Employee Remuneration and Relations](index=30&type=section&id=Employee%20Remuneration%20and%20Relations) As of June 30, 2025, the Group had 346 full-time employees, a significant reduction from 837 in 2024, offering competitive remuneration and training to attract and retain talent - As of June 30, 2025, the Group had approximately **346 full-time employees** (June 30, 2024: 837 employees)[91](index=91&type=chunk) - The company provides **competitive remuneration, a performance-based promotion system, and training programs** to attract, retain, and motivate employees[91](index=91&type=chunk) [Post-IPO Share Option Scheme](index=31&type=section&id=Post-IPO%20Share%20Option%20Scheme) The Company's Post-IPO Share Option Scheme, adopted in 2019, had 126,492,000 unexercised options as of June 30, 2025, representing approximately 4.22% of weighted average shares, to incentivize participants Changes in Outstanding Share Options for the Six Months Ended June 30, 2025 | Name of Grantee | Date of Grant | Closing Price of Shares on Grant Date (HKD) | Number of Shares for Unexercised Options as of January 1, 2025 | Number of Shares for Unexercised Options as of June 30, 2025 | Exercise Price per Share Option (HKD) | Option Exercise Period | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Xiao | Jan 20, 2023 | 1.96 | 2,750,000 | 2,750,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Mr. Xiao | Apr 24, 2024 | 1.22 | 2,750,000 | 2,750,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Mr. Weng | Jan 20, 2023 | 1.96 | 2,750,000 | 2,750,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Mr. Weng | Apr 24, 2024 | 1.22 | 2,750,000 | 2,750,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Mr. Fan Yingjie | Jan 20, 2023 | 1.96 | 800,000 | 800,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Mr. Fan Yingjie | Apr 24, 2024 | 1.22 | 800,000 | 800,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Mr. Zhang Shengyan | Jan 20, 2023 | 1.96 | 200,000 | 200,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Mr. Zhang Shengyan | Apr 24, 2024 | 1.22 | 200,000 | 200,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Mr. Jiang Yukai | Apr 24, 2024 | 1.22 | 200,000 | 200,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Ms. Wu Qiqin | Jan 20, 2023 | 1.96 | 200,000 | 200,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Ms. Wu Qiqin | Apr 24, 2024 | 1.22 | 200,000 | 200,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Mr. Tang Liang | Jan 20, 2023 | 1.96 | 200,000 | 200,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Mr. Tang Liang | Apr 24, 2024 | 1.22 | 200,000 | 200,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Mr. Ho You Kai | Jan 20, 2023 | 1.96 | 200,000 | 200,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Mr. Ho You Kai | Apr 24, 2024 | 1.22 | 200,000 | 200,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | Other Employees | Jan 20, 2023 | 1.96 | 40,715,000 | 40,715,000 | 2.50 | Jan 20, 2023 to Jan 19, 2026 | | Other Employees | Apr 24, 2024 | 1.22 | 72,700,000 | 71,377,000 | 1.50 | Apr 24, 2024 to Apr 24, 2027 | | **Total** | | | **127,815,000** | **126,492,000** | | | - As of June 30, 2025, the ratio of outstanding share options (126,492,000) under all schemes to the weighted average number of issued shares (2,995,413,777) for the period was approximately **4.22%**[93](index=93&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures](index=33&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares,%20and%20Debentures) As of June 30, 2025, directors and the chief executive held interests in Company shares and associated corporations through discretionary trusts, controlled entities, beneficial interests, and share options Directors' and Chief Executive's Interests in Shares | Name of Director/Chief Executive | Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of Company's Interest | | :--- | :--- | :--- | :--- | | Mr. Xiao | Founder of discretionary trust, controlled corporate interest, beneficial interest, and other | 785,358,067(L) | 26.21% | | Mr. Weng | Controlled corporate interest, beneficial interest, and other | 824,887,663(L) | 27.53% | | Mr. Fan Yingjie | Beneficial interest | 2,518,000(L) | 0.08% | | Mr. Zhang Shengyan | Beneficial interest | 400,000(L) | 0.01% | | Mr. Jiang Yukai | Beneficial interest | 200,000(L) | 0.00% | | Ms. Wu Qiqin | Beneficial interest | 400,000(L) | 0.01% | | Mr. Tang Liang | Beneficial interest | 400,000(L) | 0.01% | | Mr. Ho You Kai | Beneficial interest | 400,000(L) | 0.01% | Directors' Interests in Associated Corporations | Name of Director | Name of Associated Corporation | Approximate Percentage of Shareholding | | :--- | :--- | :--- | | Mr. Xiao | Chengdu Zhuoxing | 31.53% | | Mr. Xiao | Shenzhen CMGE | 31.53% | | Mr. Xiao | Shenzhen Douyue | 31.53% | [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares](index=35&type=section&id=Substantial%20Shareholders'%20and%20Other%20Persons'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, substantial shareholders, including Mr. Xiao, Mr. Weng, and their controlled entities, along with other investors, held interests in the Company's shares, reflecting a complex ownership structure Substantial Shareholders' and Other Persons' Interests in Shares | Name of Shareholder/Person | Nature of Interest | Number of Shares Held | Approximate Percentage of Company's Interest | | :--- | :--- | :--- | :--- | | Mr. Xiao | Founder of discretionary trust, controlled corporate interest, beneficial owner, and other | 785,358,067(L) | 26.21% | | Trident Trust Company (B.V.I.) Limited | Trustee of trust | 763,908,067(L) | 25.50% | | ZSY Holding | Controlled corporate interest | 763,908,067(L) | 25.50% | | CMGE Brothers BVI | Beneficial owner and controlled corporate interest | 70,598,642(L) and 693,309,425(L) | 2.36% and 23.14% | | Mr. Weng | Controlled corporate interest, beneficial owner, and other | 824,887,663(L) | 27.53% | | Silver Joyce | Beneficial owner and controlled corporate interest | 123,750,238(L) and 693,309,425(L) | 4.13% and 23.14% | | Fairview Ridge | Beneficial owner | 693,309,425(L) | 23.14% | | Zhongrong Trust | Controlled corporate interest | 369,461,107(L) | 12.33% | | Yuanfu Investment Co., Ltd. | Beneficial owner | 295,032,214(L) | 9.84% | - Changpei Cayman is held 0.004% by general partner Ambitious Profit and **99.996% by limited partner Zhejiang Century Huatong Group Co., Ltd.**[99](index=99&type=chunk) Review Report on Interim Condensed Consolidated Financial Statements [Introduction](index=37&type=section&id=Introduction) This section confirms the review of the interim condensed consolidated financial statements for H1 2025, conducted in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" - The Group's interim condensed consolidated financial statements for the six months ended June 30, 2025, have been reviewed[102](index=102&type=chunk) - The review was conducted in accordance with **Hong Kong Accounting Standard 34 "Interim Financial Reporting"** issued by the Hong Kong Institute of Certified Public Accountants[102](index=102&type=chunk) [Scope of Review](index=37&type=section&id=Scope%20of%20Review) The review was conducted under Hong Kong Standard on Review Engagements 2410, with a scope narrower than an audit, therefore no audit opinion is expressed - The review was conducted in accordance with **Hong Kong Standard on Review Engagements 2410**, with a scope narrower than an audit[103](index=103&type=chunk) - **No audit opinion is expressed**[103](index=103&type=chunk) [Conclusion](index=37&type=section&id=Conclusion) The review found no material matters indicating that the interim condensed consolidated financial statements were not prepared in accordance with Hong Kong Accounting Standard 34 - No matters were identified indicating that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with **Hong Kong Accounting Standard 34**[104](index=104&type=chunk) Interim Condensed Consolidated Statement of Profit or Loss [Profit or Loss Statement Overview](index=38&type=section&id=Profit%20or%20Loss%20Statement%20Overview) For H1 2025, Group revenue significantly decreased to RMB 763.034 million, and loss for the period expanded to RMB 644.254 million Interim Condensed Consolidated Statement of Profit or Loss (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 763,034 | 1,233,336 | | Cost of sales | (504,455) | (860,572) | | Gross profit | 258,579 | 372,764 | | Other income and gains, net | 8,072 | 4,631 | | Selling and distribution expenses | (372,861) | (148,554) | | Administrative expenses | (85,829) | (82,257) | | Research and development costs | (93,908) | (110,173) | | Net impairment losses on financial assets | (52,291) | (62,859) | | Impairment of goodwill | (11,524) | (16,844) | | Write-off of prepayments | (189,487) | (65,240) | | Fair value losses on financial assets at fair value through profit or loss | (76,728) | (59,099) | | Impairment of other intangible assets | — | (24,251) | | Other expenses | (6,569) | (10,396) | | Finance costs | (10,360) | (11,109) | | Share of profits and losses of associates | (11,646) | 2,780 | | Loss before tax | (644,552) | (210,607) | | Income tax credit/(expense) | 298 | (30,444) | | Loss for the period | (644,254) | (241,051) | | Attributable to owners of the parent | (638,550) | (236,220) | | Basic and diluted loss per share | RMB (21.32) cents | RMB (8.58) cents | Interim Condensed Consolidated Statement of Comprehensive Income [Comprehensive Income Statement Overview](index=39&type=section&id=Comprehensive%20Income%20Statement%20Overview) For H1 2025, the Group recorded a loss of RMB 644.254 million, and with other comprehensive loss of RMB 11.043 million, total comprehensive loss reached RMB 655.297 million Interim Condensed Consolidated Statement of Comprehensive Income (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss for the period | (644,254) | (241,051) | | Exchange differences on translating foreign operations | 18,599 | 1,693 | | Exchange differences on translating functional currency to presentation currency | (29,642) | 10,636 | | Other comprehensive (loss)/income for the period, net of tax | (11,043) | 12,329 | | Total comprehensive loss for the period | (655,297) | (228,722) | | Attributable to owners of the parent | (649,593) | (223,891) | | Non-controlling interests | (5,704) | (4,831) | Interim Condensed Consolidated Statement of Financial Position [Financial Position Statement Overview](index=40&type=section&id=Financial%20Position%20Statement%20Overview) As of June 30, 2025, total assets decreased to RMB 4,405.428 million, with total liabilities at RMB 1,164.805 million, total equity at RMB 3,240.623 million, a current ratio of 1.15x, and gearing ratio of 13.6% Interim Condensed Consolidated Statement of Financial Position (as of June 30) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total non-current assets | 3,134,603 | 3,484,768 | | Total current assets | 1,270,825 | 1,597,296 | | **Total assets** | **4,405,428** | **5,082,064** | | Total current liabilities | 1,108,357 | 1,110,080 | | Total non-current liabilities | 56,448 | 76,064 | | **Total liabilities** | **1,164,805** | **1,186,144** | | Equity attributable to owners of the parent | 3,252,703 | 3,902,296 | | Non-controlling interests | (12,080) | (6,376) | | **Total equity** | **3,240,623** | **3,895,920** | | Current ratio | **1.15 times** | 1.44 times | | Gearing ratio | **13.6%** | 13.2% | Interim Condensed Consolidated Statement of Changes in Equity [Equity Changes Statement Overview](index=41&type=section&id=Equity%20Changes%20Statement%20Overview) For H1 2025, total equity attributable to owners of the parent decreased from RMB 3,902.296 million to RMB 3,252.703 million, mainly due to a loss of RMB 638.550 million and exchange differences Interim Condensed Consolidated Statement of Changes in Equity (for the six months ended June 30) | Indicator | January 1, 2025 (Audited) (RMB thousands) | Loss for the period (RMB thousands) | Exchange differences on translation (RMB thousands) | June 30, 2025 (Unaudited) (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the parent | 3,902,296 | (638,550) | (11,043) | 3,252,703 | | Non-controlling interests | (6,376) | (5,704) | — | (12,080) | | **Total equity** | **3,895,920** | **(644,254)** | **(11,043)** | **3,240,623** | Interim Condensed Consolidated Statement of Cash Flows [Cash Flow Statement Overview](index=43&type=section&id=Cash%20Flow%20Statement%20Overview) For H1 2025, the Group generated RMB 108.732 million from operations and RMB 14.145 million from investing, while using RMB 90.470 million in financing, ending with RMB 133.349 million in cash and equivalents Interim Condensed Consolidated Statement of Cash Flows (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net cash from operating activities | 108,732 | 12,134 | | Net cash from/(used in) investing activities | 14,145 | (59,517) | | Net cash used in financing activities | (90,470) | (4,585) | | Net increase/(decrease) in cash and cash equivalents | 32,407 | (51,968) | | Cash and cash equivalents at beginning of period | 101,756 | 210,609 | | Net effect of exchange rate changes on cash and cash equivalents | (814) | 6,141 | | Cash and cash equivalents at end of period | 133,349 | 164,782 | Notes to the Interim Condensed Consolidated Financial Statements [1. Company and Group Information](index=45&type=section&id=1.%20Company%20and%20Group%20Information) The Company, incorporated in the Cayman Islands on March 20, 2018, primarily engages in mobile game publishing, development, and IP licensing across Asia, alongside investment activities in mainland China - The Company was incorporated in the Cayman Islands on **March 20, 2018**[117](index=117&type=chunk) - The Company's subsidiaries are primarily engaged in **mobile game publishing, game development, and intellectual property licensing** in mainland China, Hong Kong, Taiwan, Korea, and Japan, as well as investment activities in mainland China[117](index=117&type=chunk) [2. Basis of Preparation](index=45&type=section&id=2.%20Basis%20of%20Preparation) These interim condensed consolidated financial statements are prepared under Hong Kong Accounting Standard 34 and should be read with the 2024 annual report - The interim condensed consolidated financial statements have been prepared in accordance with **Hong Kong Accounting Standard 34 "Interim Financial Reporting"**[118](index=118&type=chunk) - They should be read in conjunction with the **2024 annual report**[118](index=118&type=chunk) [3. Accounting Policies](index=45&type=section&id=3.%20Accounting%20Policies) The Group applied consistent accounting policies and methods as in the 2024 annual report, with new 2025 amendments having no significant impact - The Group has applied the **same accounting policies and calculation methods** as in the 2024 annual report[119](index=119&type=chunk) - New amendments first applied in 2025 had **no significant impact** on the Group's accounting policies[119](index=119&type=chunk) [4. Operating Segment Information](index=46&type=section&id=4.%20Operating%20Segment%20Information) The Group's operating segments include game publishing, development, and IP licensing, all of which experienced significant revenue declines in H1 2025 Operating Segment Revenue (for the six months ended June 30) | Segment | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Game publishing | 656,364 | 999,925 | | Game development | 73,193 | 126,330 | | Intellectual property licensing | 33,477 | 107,081 | | **Total** | **763,034** | **1,233,336** | [5. Revenue](index=48&type=section&id=5.%20Revenue) Group revenue decreased by 38.1% to RMB 763.0 million in H1 2025, driven by declines in game publishing, development, and IP licensing, despite increased overseas revenue Revenue by Type of Goods or Services (for the six months ended June 30) | Type of Goods or Services | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Mobile game publishing services | 656,364 | 999,925 | | Game development related services | 73,193 | 126,330 | | Intellectual property licensing | 33,477 | 107,081 | | **Total revenue** | **763,034** | **1,233,336** | Revenue by Geographical Market (for the six months ended June 30) | Geographical Market | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 528,055 | 1,056,960 | | Other countries/regions | 234,979 | 176,376 | | **Total** | **763,034** | **1,233,336** | - Revenue decrease primarily due to a **34.4% decline in game publishing revenue**, a **42.1% decline in game development revenue**, and a **68.7% decline in IP licensing revenue** (excluding a 134.8% increase in "Sword and Fairy" IP licensing revenue)[54](index=54&type=chunk) [6. Other Income and Gains, Net](index=50&type=section&id=6.%20Other%20Income%20and%20Gains,%20Net) For H1 2025, other income and gains, net, increased by 74.3% to RMB 8.072 million, primarily due to higher government grants and exchange gains Other Income and Gains, Net (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Bank interest income | 137 | 1,047 | | Government grants | 3,203 | 2,171 | | Exchange gains | 2,578 | — | | Others | 2,154 | 1,413 | | **Total** | **8,072** | **4,631** | - Other income and gains increased by **74.3%**, primarily due to **increased government grants**[57](index=57&type=chunk) [7. Finance Costs](index=50&type=section&id=7.%20Finance%20Costs) For H1 2025, finance costs decreased by 6.7% to RMB 10.360 million, mainly due to lower interest expenses from reduced bank and other borrowings Finance Costs (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest expense on bank and other borrowings | 9,980 | 10,364 | | Interest expense on lease liabilities | 380 | 745 | | **Total** | **10,360** | **11,109** | - Finance costs decreased by **6.7%**, primarily due to **lower interest expenses** resulting from a decrease in total bank and other borrowings[65](index=65&type=chunk) [8. Loss Before Tax](index=51&type=section&id=8.%20Loss%20Before%20Tax) For H1 2025, loss before tax significantly increased to RMB 644.552 million, driven by higher selling and distribution expenses, prepayment write-offs, financial asset fair value losses, and associate losses Major Components of Loss Before Tax (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Commissions to distribution channels and third-party game developers | 389,675 | 683,585 | | Promotion expenses | 364,282 | 136,027 | | Employee benefit expenses | 130,703 | 188,198 | | Write-off of prepayments | 189,487 | 65,240 | | Fair value losses on financial assets at fair value through profit or loss | 76,728 | 59,099 | | Share of profits and losses of associates | (11,646) | 2,780 | | **Loss before tax** | **(644,552)** | **(210,607)** | - Selling and distribution expenses increased by **151.0% to RMB 372.9 million**, primarily due to marketing and promotion expenses for "Sword and Fairy: World" and several new games[60](index=60&type=chunk) - Other expenses increased by **61.7% to RMB 284.3 million**, mainly due to write-off of prepayments of **RMB 189.5 million** and fair value losses on financial assets of **RMB 76.7 million**[64](index=64&type=chunk) [9. Income Tax](index=52&type=section&id=9.%20Income%20Tax) The Group's income tax shifted from an expense to a credit in H1 2025 due to deferred tax credits, with subsidiaries benefiting from preferential tax rates and a 200% R&D super deduction policy Major Components of Income Tax (Credit)/Expense for the Period (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current tax expense | 12,656 | 6,489 | | Deferred tax (credit)/expense | (12,954) | 23,955 | | **Total tax (credit)/expense for the period** | **(298)** | **30,444** | - Income tax shifted from an expense to a credit, primarily due to the **recognition of deferred income tax credits of RMB 13.0 million**[68](index=68&type=chunk) - Shenzhen Douyue, Shenzhen CMGE, Chengdu Zhuoxing, Beijing Wenmai Interactive Technology Co., Ltd., Shengyue Software (Shenzhen) Co., Ltd., and others are recognized as high-tech enterprises, enjoying a **preferential enterprise income tax rate of 15%**[129](index=129&type=chunk)[131](index=131&type=chunk) - Enterprises engaged in R&D activities are entitled to deduct **200% of R&D expenses incurred** when determining taxable profits[133](index=133&type=chunk) [10. Dividends](index=54&type=section&id=10.%20Dividends) The Company's Board of Directors resolved not to pay an interim dividend to shareholders for the six months ended June 30, 2025 - The Board of Directors resolved not to pay an interim dividend to shareholders for the six months ended June 30, 2025[135](index=135&type=chunk) [11. Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=55&type=section&id=11.%20Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) For H1 2025, basic and diluted loss per share attributable to ordinary equity holders of the parent were RMB (21.32) cents, with diluted loss matching basic loss due to option exercise prices exceeding market prices Loss Per Share Attributable to Ordinary Equity Holders of the Parent (for the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the parent used in calculating basic and diluted loss per share (RMB thousands) | (638,550) | (236,220) | | Weighted average number of ordinary shares in issue during the period used in calculating basic and diluted loss per share | 2,995,413,777 | 2,752,241,000 | | **Basic and diluted loss per share** | **RMB (21.32) cents** | **RMB (8.58) cents** | - Basic and diluted loss per share are the same because the exercise price of share options exceeded the average market price of ordinary shares during the relevant period[136](index=136&type=chunk) [12. Property and Equipment](index=55&type=section&id=12.%20Property%20and%20Equipment) For H1 2025, the Group acquired RMB 76 thousand in assets and disposed of RMB 955 thousand in assets, resulting in a net loss on disposal of RMB 882 thousand - The Group acquired assets with a cost of **RMB 76 thousand** (2024: RMB 1,491 thousand)[137](index=137&type=chunk) - Disposed of assets with a net book value of **RMB 955 thousand**, resulting in a **net loss on disposal of RMB 882 thousand**[137](index=137&type=chunk) [13. Financial Assets at Fair Value Through Profit or Loss](index=56&type=section&id=13.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2025, financial assets at fair value through profit or loss totaled RMB 1,188.471 million, mainly unlisted equity investments and convertible loans, with investments in Guohong Jiaxin Capital and Angel Ventures accounted for similarly Financial Assets at Fair Value Through Profit or Loss (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Listed equity investments | 38,571 | 63,296 | | Unlisted equity investments | 873,052 | 883,656 | | Convertible loans | 276,848 | 291,557 | | **Total** | **1,188,471** | **1,238,509** | - The Group's investments in Guohong Jiaxin Capital and Angel Ventures are accounted for at **fair value through profit or loss**, as there is no control or significant influence[139](index=139&type=chunk) [14. Trade and Bills Receivables](index=57&type=section&id=14.%20Trade%20and%20Bills%20Receivables) As of June 30, 2025, net trade and bills receivables decreased to RMB 530.060 million; the Group typically allows 180-270 day credit terms and has discounted some bills receivables with full recourse Trade and Bills Receivables (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Net trade receivables | 522,409 | 817,531 | | Bills receivables | 7,651 | 28,814 | | **Total** | **530,060** | **846,345** | Ageing Analysis of Trade Receivables (as of June 30) | Ageing | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 6 months | 136,376 | 365,996 | | 6 months to 1 year | 112,908 | 180,511 | | 1 year to 18 months | 69,409 | 136,640 | | 18 months to 2 years | 129,474 | 117,213 | | Over 2 years | 74,242 | 17,171 | | **Total** | **522,409** | **817,531** | - The Group generally allows a **credit period of 180 days**, which can be extended to a maximum of **270 days** for major channels and other counterparties[142](index=142&type=chunk) [15. Prepayments, Other Receivables and Other Assets](index=58&type=section&id=15.%20Prepayments,%20Other%20Receivables%20and%20Other%20Assets) As of June 30, 2025, prepayments, other receivables, and other assets totaled RMB 1,279.040 million, primarily comprising non-current prepaid IP license fees and current prepaid minimum guarantees Prepayments, Other Receivables and Other Assets (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current portion: | | | | Prepayments | 667,138 | 887,365 | | Other receivables | 15,324 | 15,042 | | Current portion: | | | | Prepayments | 447,051 | 479,658 | | Deposits and other receivables | 129,992 | 121,222 | | Contract costs | 19,535 | 37,635 | | **Total** | **1,279,040** | **1,540,922** | - Prepayments primarily include **prepaid minimum guarantees of approximately RMB 419.331 million** and **prepaid IP license fees of approximately RMB 567.638 million**[146](index=146&type=chunk) [16. Trade Payables](index=59&type=section&id=16.%20Trade%20Payables) As of June 30, 2025, total trade payables increased to RMB 233.982 million; these are non-interest bearing and typically settled within 180 days Ageing Analysis of Trade Payables (as of June 30) | Ageing | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 61,428 | 92,507 | | 3 to 6 months | 52,597 | 51,434 | | 6 months to 1 year | 64,179 | 25,450 | | Over 1 year | 55,778 | 49,192 | | **Total** | **233,982** | **218,583** | - Trade payables are **non-interest bearing** and typically settled within **180 days**[147](index=147&type=chunk) [17. Share Capital](index=59&type=section&id=17.%20Share%20Capital) As of June 30, 2025, the Company had 2,995,413,777 issued ordinary shares with RMB 2.089 million share capital; 2024 saw new share allotments via subscriptions and some share cancellations Share Capital (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Issued and fully paid: 2,995,413,777 ordinary shares | 2,089 | 2,089 | - On July 22, 2024, **100,000,000 subscription shares were allotted and issued** for a total consideration of **HKD 168,000,000**[148](index=148&type=chunk) - On October 22, 2024, **105,777,777 subscription shares were allotted and issued** for a total consideration of **HKD 95,200,000**[149](index=149&type=chunk) - On November 1, 2024, **38,000,000 consideration shares were allotted and issued** to acquire intellectual property rights related to "Sword and Fairy"[149](index=149&type=chunk) - On December 19, 2024, **1,036,000 ordinary shares were cancelled**[150](index=150&type=chunk) [18. Share-Based Payments](index=60&type=section&id=18.%20Share-Based%20Payments) The Company's share option scheme incentivizes participants; no share-based payment expenses were recognized in H1 2025 (vs. RMB 28.184 million in H1 2024), with fair value estimated using a binomial model - The Company implements a share option scheme to **incentivize and reward eligible participants** who contribute to the Group's business success[151](index=151&type=chunk) - For the six months ended June 30, 2025, the Group **did not recognize any share-based payment expenses**[153](index=153&type=chunk) - For the six months ended June 30, 2024, the Group recognized **share-based payment expenses of RMB 28.184 million**[153](index=153&type=chunk) Share Option Valuation Model Input Data | Indicator | 2024 Share Options | 2023 Share Options | | :--- | :--- | :--- | | Share option pricing model used | Binomial model | Binomial model | | Exercise price (HKD per share) | HKD 1.50 | HKD 2.50 | | Expected dividend | 0% | 0% | | Expected volatility | 52.14% | 54.87% | | Risk-free interest rate | 3.86% | 3.42% | | Expected life of options (years) | 3 years | 3 years | | Spot price (HKD per share) | HKD 1.22 | HKD 1.96 | | Fair value at grant date (RMB) | RMB 27,411,000 | RMB 26,105,000 | [19. Contingent Liabilities](index=60&type=section&id=19.%20Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had **no significant contingent liabilities**[155](index=155&type=chunk) [20. Commitments](index=61&type=section&id=20.%20Commitments) As of June 30, 2025, the Group's capital commitments amounted to RMB 104.732 million, primarily for the purchase of IP and game licenses Capital Commitments (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Contracted but not provided for: Purchase of IP and game licenses | 104,732 | 134,117 | - Capital commitments are primarily for the **purchase of IP and game licenses**[78](index=78&type=chunk) [21. Related Party Transactions](index=61&type=section&id=21.%20Related%20Party%20Transactions) The Group engaged in related party transactions, including distribution services, production fees, and key management remuneration, with outstanding balances due from Mr. Fan Yingjie and Shanghai Fengguo, and due to Guangzhou Zhonghui as of June 30, 2025 Transactions with Related Parties (for the six months ended June 30) | Type of Transaction | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Production service fees received from Guangzhou Zhonghui Digital Co., Ltd. | 2,043 | — | | Distribution services provided to Shanghai Fengguo Network Technology Co., Ltd. | 1,111 | 5 | | Revenue sharing received from Shenzhen Huohua Huanjing Interactive Entertainment Co., Ltd. | — | 18,953 | Outstanding Balances with Related Parties (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Amount due from Mr. Fan Yingjie | 7,851 | 7,851 | | Amount due from Shanghai Fengguo Network Technology Co., Ltd. | 2,987 | 2,829 | | Amount due to Guangzhou Zhonghui Digital Co., Ltd. | 1,169 | — | Key Management Personnel Remuneration (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Directors' fees | 718 | 658 | | Salaries, allowances and benefits in kind | 3,721 | 4,558 | | Equity-settled share-based payment expenses | — | 17,766 | | Pension scheme contributions | 228 | 251 | | **Total** | **4,667** | **23,233** | [22. Financial Instruments by Category](index=63&type=section&id=22.%20Financial%20Instruments%20by%20Category) The Group's financial assets primarily include those at fair value through profit or loss and at amortized cost, while financial liabilities mainly comprise those at amortized cost, such as trade payables and borrowings Financial Assets (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 1,188,471 | 1,238,509 | | Financial assets measured at amortized cost | 819,563 | 1,095,045 | | **Total** | **2,008,034** | **2,333,554** | Financial Liabilities (as of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Financial liabilities measured at amortized cost | 819,769 | 803,834 | | Other financial liabilities (lease liabilities) | 13,455 | 22,503 | | **Total** | **833,224** | **826,337** | [23. Fair Value of Financial Instruments and Fair Value Hierarchy](index=64&type=section&id=23.%20Fair%20Value%20of%20Financial%20Instruments%20and%20Fair%20Value%20Hierarchy) Financial instrument fair values approximate carrying amounts; unlisted equity investments and convertible loans are valued using discounted cash flow and other models, with Level 3 assets decreasing during the period - The fair values of financial assets or liabilities measured at amortized cost are **similar to their respective carrying amounts**[165](index=165&type=chunk) - The fair values of unlisted equity investments and convertible loans are estimated using **discounted cash flow method, adjusted net asset value method, and other option pricing models**[165](index=165&type=chunk) Fair Value Hierarchy of Assets Measured at Fair Value (as of June 30) | Item | Level 1 (RMB thousands) | Level 2 (RMB thousands) | Level 3 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | **June 30, 2025** | | | | | | - Listed equity investments | 38,571 | — | — | 38,571 | | - Unlisted equity investments | — | 432,752 | 440,300 | 873,052 | | - Convertible loans | — | — | 276,848 | 276,848 | | **Total** | **38,571** | **432,752** | **717,148** | **1,188,471** | | **December 31, 2024** | | | | | | - Listed equity investments | 63,296 | — | — | 63,296 | | - Unlisted equity investments | — | 438,526 | 445,130 | 883,656 | | - Convertible loans | — | — | 291,557 | 291,557 | | **Total** | **63,296** | **438,526** | **736,687** | **1,238,509** | Changes within Level 3 Fair Value Measurements (as of June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Balance at beginning of period | 736,687 | 1,382,552 | | Losses recognized in profit or loss | (55,109) | (560,066) | | Additions | 52,769 | 4,071 | | Disposals | (17,199) | (89,870) | | **Balance at end of period** | **717,148** | **736,687** | [24. Events After the Reporting Period](index=67&type=section&id=24.%20Events%20After%20the%20Reporting%20Period) As of the approval date of the interim condensed consolidated financial statements, there were no significant events after the reporting period - As of the approval date of the interim condensed consolidated financial statements, there were **no significant events after the reporting period**[169](index=169&type=chunk) [25. Approval of Interim Condensed Consolidated Financial Statements](index=67&type=section&id=25.%20Approval%20of%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These interim condensed consolidated financial statements were approved and authorized for issue by the Company's Board of Directors on August 27, 2025 - The interim condensed consolidated financial statements were **approved and authorized for issue by the Company's Board of Directors on August 27, 2025**[170](index=170&type=chunk) Definitions [Terms and Glossary](index=68&type=section&id=Terms%20and%20Glossary) This section provides definitions for key terms and vocabulary used in this interim report to ensure clear understanding of the content

Corporate Information [Board of Directors](index=3&type=section&id=Board%20of%20Directors) The company's Board of Directors, comprising executive directors (including Chairman and CEO Mr. Yan Ruijie) and independent non-executive directors, is responsible for the Group's strategic guidance and oversight - Executive directors include **Mr. Yan Ruijie (Chairman and CEO)**, **Ms. Chen Yun**, **Dr. Li Dayi**, and **Ms. Wang Xiaomei**[5](index=5&type=chunk) - Independent non-executive directors include **Mr. Mo Yiguo**, **Mr. Ding Xingfu**, and **Ms. Zhu Fang**[5](index=5&type=chunk) [Committees](index=3&type=section&id=Committees) The company has an Audit Committee, Remuneration Committee, and Nomination Committee to ensure effective and independent corporate governance, with independent non-executive directors chairing each committee - The Audit Committee is chaired by **Mr. Mo Yiguo**[5](index=5&type=chunk) - The Remuneration Committee is chaired by **Mr. Ding Xingfu**[5](index=5&type=chunk) - The Nomination Committee is chaired by **Ms. Zhu Fang**[5](index=5&type=chunk) [Key Personnel and Advisors](index=3&type=section&id=Key%20Personnel%20and%20Advisors) This section lists the company secretary, authorized representatives, legal advisors, and auditors, roles crucial for compliance and financial transparency - The company secretary is **Mr. Tam Ka Lung**[6](index=6&type=chunk) - The auditor is **BDO Limited**[7](index=7&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) This section provides the company's principal bankers, registered office, Hong Kong principal place of business, stock code, website, and investor relations contact for stakeholders to access basic information - Principal bankers include **Bank of China (Hong Kong) Limited**, **Industrial and Commercial Bank of China Limited**, **Liaoshen Bank Co., Ltd.**, and **Shengjing Bank Co., Ltd.**[8](index=8&type=chunk) - The company's stock code is **377**[9](index=9&type=chunk) Management Discussion and Analysis [Business Review](index=5&type=section&id=Business%20Review) The Group primarily engages in three core businesses: printing, trading and logistics, and property development and investment; total revenue increased by **11.7% year-on-year**, mainly from trading and logistics and printing segments, while property development and investment faced severe challenges - The Group's core businesses are **printing**, **trading and logistics**, and **property development and investment**[11](index=11&type=chunk) - Revenue by Business Segment (For the six months ended June 30, 2025) | Segment | 2025 Revenue (RMB million) | 2025 Revenue Share (%) | 2024 Revenue (RMB million) | 2024 Revenue Share (%) | | :--- | :--- | :--- | :--- | :--- | | Printing | 169.9 | 24.7 | 160.2 | 26.0 | | Trading and Logistics | 494.2 | 71.9 | 422.1 | 68.6 | | Property Development and Investment | 10.2 | 1.5 | 10.7 | 1.7 | | Others | 13.4 | 1.9 | 22.5 | 3.7 | | **Total** | **687.7** | **100.0** | **615.5** | **100.0** | - Revenue growth in the trading and logistics segment was primarily due to **improved market prices for base oil and increased sales volume**[13](index=13&type=chunk) - Revenue growth in the printing segment was mainly due to **recovering orders from beauty and cosmetics clients**[14](index=14&type=chunk) - The property development and investment business faces severe challenges, with a future focus on **disposing of existing projects and discussing debt repayment with creditors to reduce debt and the gearing ratio**[23](index=23&type=chunk)[25](index=25&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) During the reporting period, the Group's total revenue increased by **11.7% to RMB 687.7 million**, but gross profit and gross profit margin decreased; administrative expenses and selling and distribution expenses decreased, while finance costs increased due to accumulated penalty interest; loss attributable to shareholders narrowed, but total shareholders' equity remained in deficit, and liquidity and gearing ratios indicated a tight financial position - Key Financial Indicators Comparison (For the six months ended June 30) | Indicator | 2025 (RMB million) | 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 687.7 | 615.5 | +11.7% | | Gross Profit | 42.7 | 44.2 | -3.4% | | Gross Profit Margin | 6.2% | 7.2% | -1.0 pp | | Selling and Distribution Expenses | 27.9 | 29.2 | -4.5% | | Administrative Expenses | 66.7 | 79.6 | -16.2% | | Finance Costs | 258.5 | 248.2 | +4.1% | | Loss from Fair Value Change of Investment Properties | 81.9 | 100.0 | -18.1% | | Loss Attributable to Company Shareholders | 383.9 | 408.0 | -5.9% | - The decrease in gross profit margin was primarily due to **lower selling prices of property units in the property development and investment segment**[32](index=32&type=chunk)[36](index=36&type=chunk) - The decrease in administrative expenses was mainly due to **reduced staff costs and legal and professional fees**[34](index=34&type=chunk)[38](index=38&type=chunk) - The increase in finance costs was primarily due to **accumulated penalty interest on certain loan agreements**[35](index=35&type=chunk)[39](index=39&type=chunk) - Liquidity and Capital Structure (As at June 30, 2025) | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Total Shareholders' Equity | (7,966.2) (Deficit) | (7,586.3) (Deficit) | | Current Assets | 2,065.4 | 2,035.2 | | Current Liabilities | 12,545.5 | 12,276.6 | | Current Ratio | 0.17 | 0.17 | | Interest-bearing Liabilities | 4,913.5 | 4,916.6 | | Gearing Ratio | 106.1% | 103.7% | | Cash and Cash Equivalents | 49.1 | 36.3 | - Most borrowings are denominated in **RMB**, and approximately **RMB 4,908.5 million** of borrowings are secured by the Group's assets[52](index=52&type=chunk)[57](index=57&type=chunk) - Capital expenditure primarily comprised **additions to investment properties and property, plant and equipment of approximately RMB 1.7 million**[53](index=53&type=chunk)[58](index=58&type=chunk) - Multiple Group assets are pledged as collateral for bank and credit facilities, including **property, plant and equipment, right-of-use assets, and investment properties**[54](index=54&type=chunk)[59](index=59&type=chunk) [Foreign Exchange Risk Management](index=11&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group faces foreign exchange risk from foreign currency-denominated assets and liabilities, which the Board manages through spot foreign currency transactions and forward foreign exchange contracts to maintain net risk at an acceptable level - The Group is exposed to foreign exchange risk from **listed debt instruments, financial instruments held for trading, bank balances and cash, trade and other receivables, trade and other payables, and borrowings**[55](index=55&type=chunk)[60](index=60&type=chunk) - The Board manages foreign exchange risk by **spot buying and selling foreign currencies and entering into ordinary forward foreign exchange contracts**[55](index=55&type=chunk)[60](index=60&type=chunk) [Contingent Liabilities](index=11&type=section&id=Contingent%20Liabilities) Except for borrowing-related matters disclosed in Note 13 to the financial statements, the Group had no other significant contingent liabilities at the end of the reporting period - As at June 30, 2025, the Group had **no significant contingent liabilities other than those disclosed in Note 13**[56](index=56&type=chunk)[61](index=61&type=chunk) [Material Acquisition and Disposal of Subsidiaries](index=12&type=section&id=Material%20Acquisition%20and%20Disposal%20of%20Subsidiarie) During the reporting period, the Group did not undertake any material acquisition or disposal activities of subsidiaries - The Group had **no material acquisitions or disposals of subsidiaries** during the reporting period[62](index=62&type=chunk)[65](index=65&type=chunk) [Outlook](index=12&type=section&id=Outlook) Facing global economic uncertainty and challenges in mainland China's economy, the Group plans to strengthen corporate capabilities, reduce the gearing ratio, accelerate property asset disposals, implement cost-saving measures, and explore new financing options to improve its financial position and liquidity, while concentrating resources on profitable markets and businesses - The global economic outlook is uncertain, and the economic situation in mainland China is full of challenges[63](index=63&type=chunk)[66](index=66&type=chunk) - The Group will **strengthen corporate capabilities**, **reduce the gearing ratio**, and **accelerate the disposal and sale of property assets**[63](index=63&type=chunk)[66](index=66&type=chunk) - **Cost-saving measures** will be adopted, and **alternative fundraising options** will be explored to improve the financial position[63](index=63&type=chunk)[66](index=66&type=chunk) - Resources should be more focused on **profitable markets and businesses with potential**[64](index=64&type=chunk)[66](index=66&type=chunk) Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Profit or Loss Performance](index=13&type=section&id=Profit%20or%20Loss%20Performance) For the six months ended June 30, 2025, the Group's total revenue was **RMB 687.7 million**, an **11.7% increase** year-on-year; despite a slight decrease in gross profit, both loss before tax and loss for the period decreased due to a positive shift in net other gains and losses and a narrower loss from fair value change of investment properties - Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Revenue | 687,746 | 615,514 | | Cost of Sales and Services | (645,046) | (571,343) | | Gross Profit | 42,700 | 44,171 | | Other Gains and (Losses), Net | 7,426 | (50) | | Fair Value Change of Investment Properties | (81,862) | (100,035) | | Selling and Distribution Expenses | (27,888) | (29,243) | | Administrative Expenses | (66,694) | (79,581) | | Finance Costs | (258,461) | (248,247) | | Loss Before Tax | (383,199) | (408,403) | | Loss for the Period | (383,815) | (408,825) | [Other Comprehensive Income and Total Comprehensive Expense](index=14&type=section&id=Other%20Comprehensive%20Income%20and%20Total%20Comprehensive%20Expense) During the reporting period, the Group recorded other comprehensive income, mainly from exchange differences on translating foreign operations, which led to a narrower total comprehensive expense for the period compared to the prior year - Other Comprehensive Income and Total Comprehensive Expense (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the Period | (383,815) | (408,825) | | Exchange Differences on Translating Foreign Operations | 3,876 | (1,113) | | Total Comprehensive Expense for the Period | (379,939) | (409,938) | | Loss Attributable to Company Shareholders | (383,916) | (408,022) | | Total Comprehensive Expense Attributable to Company Shareholders | (380,041) | (409,135) | - Basic and diluted loss per share attributable to company shareholders was **RMB (6.24)**, an improvement from **RMB (6.63)** in the prior year[69](index=69&type=chunk) Condensed Consolidated Statement of Financial Position [Assets](index=15&type=section&id=Assets) As at June 30, 2025, the Group's total non-current assets amounted to **RMB 2,656.1 million**, and total current assets amounted to **RMB 2,065.4 million**; property, plant and equipment and investment properties were the main components of non-current assets, while properties held for sale and trade and other receivables were the main components of current assets - Asset Composition (As at June 30, 2025) | Asset Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 1,028,009 | 1,058,511 | | Investment Properties | 1,282,761 | 1,385,836 | | Right-of-Use Assets | 296,443 | 305,800 | | **Current Assets** | | | | Properties Held for Sale | 672,537 | 672,576 | | Trade and Other Receivables, Deposits and Prepayments | 1,059,502 | 1,031,713 | | Bank Balances and Cash | 49,085 | 36,292 | | Assets Classified as Held for Sale | 106,901 | 106,901 | | **Total Assets** | **4,721,542** | **4,834,511** | [Liabilities and Equity](index=16&type=section&id=Liabilities%20and%20Equity) As at June 30, 2025, the Group's net current liabilities amounted to **RMB 10,480.1 million**, and total liabilities amounted to **RMB 12,687.7 million**; trade and other payables and borrowings were the main components of current liabilities; the Group recorded a net liability of **RMB 7,966.2 million**, with total shareholders' equity in deficit - Liabilities and Equity Composition (As at June 30, 2025) | Liability/Equity Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **Current Liabilities** | | | | Trade and Other Payables and Other Liabilities | 6,857,068 | 6,562,575 | | Borrowings | 4,913,540 | 4,916,585 | | Contract Liabilities | 270,138 | 294,645 | | Corporate Bonds | 98,237 | 97,753 | | **Non-current Liabilities** | | | | Deferred Income | 130,535 | 130,852 | | Deferred Tax Liabilities | 11,724 | 11,973 | | **Net Liabilities** | **(7,966,206)** | **(7,586,267)** | | **Loss Attributable to Company Shareholders** | **(8,087,058)** | **(7,621,857)** | | Non-controlling Interests | 120,852 | 35,590 | - Net current liabilities amounted to **RMB 10,480.1 million**, indicating liquidity pressure[72](index=72&type=chunk) - Total shareholders' equity recorded a deficit of approximately **RMB 7,966.2 million**, further widening from the **RMB 7,586.3 million** deficit at the end of 2024[43](index=43&type=chunk)[49](index=49&type=chunk) Condensed Consolidated Statement of Changes in Equity [Equity Movements](index=18&type=section&id=Equity%20Movements) For the six months ended June 30, 2025, the loss attributable to company shareholders was **RMB 383.9 million**, leading to a further increase in accumulated losses; despite positive changes in exchange reserves, overall shareholders' equity continued to show an expanding deficit - Shareholders' Equity Movements (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Balance at Beginning of Period (Attributable to Company Shareholders) | (7,621,857) | (6,350,809) | | Loss for the Period (Attributable to Company Shareholders) | (383,916) | (408,022) | | Other Comprehensive Income (Expense) | 3,875 | (1,113) | | Deemed Acquisition of Additional Interests from Non-controlling Interests | (85,160) | - | | Balance at End of Period (Attributable to Company Shareholders) | (8,087,058) | (6,759,944) | | Total Loss at End of Period | (7,966,206) | (6,724,171) | - As at June 30, 2025, accumulated losses attributable to company shareholders amounted to **RMB 11,911.4 million**[74](index=74&type=chunk) Condensed Consolidated Statement of Cash Flows [Cash Flow Activities](index=19&type=section&id=Cash%20Flow%20Activities) For the six months ended June 30, 2025, the Group's net cash generated from operating activities significantly decreased, net cash from investing activities turned into an inflow, and net cash used in financing activities significantly decreased, resulting in an increase in cash and cash equivalents at period-end - Cash Flow Statement Key Data (For the six months ended June 30) | Cash Flow Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 6,252 | 109,793 | | Net Cash Generated from (Used in) Investing Activities | 9,952 | (128) | | Net Cash Used in Financing Activities | (3,524) | (117,203) | | Net Increase (Decrease) in Cash and Cash Equivalents | 12,680 | (7,538) | | Cash and Cash Equivalents at End of Period | 49,085 | 57,254 | - Net cash generated from operating activities significantly decreased from **RMB 109.8 million** in the prior year to **RMB 6.3 million**[76](index=76&type=chunk) - Net cash from investing activities turned from an outflow to an inflow compared to the prior year, mainly due to **proceeds from the disposal of right-of-use assets**[76](index=76&type=chunk) - Net cash used in financing activities significantly decreased, primarily due to **reduced repayment of borrowings and interest paid**[78](index=78&type=chunk) Notes to the Condensed Consolidated Financial Statements [Basis of Preparation](index=21&type=section&id=Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with HKAS 34 and presented in RMB; the Group faces significant uncertainties, including net liabilities, borrowing defaults, and insufficient cash resources, which may cast significant doubt on its ability to continue as a going concern; the Board is addressing these challenges through property business restructuring, fundraising, cost reduction, and debt restructuring measures - As at June 30, 2025, the Group recorded a **net loss of RMB 383.8 million** and **net liabilities of approximately RMB 7,966.2 million**[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - Approximately **RMB 4,908.5 million** of borrowing principal was in default, entitling lenders to demand immediate repayment[82](index=82&type=chunk)[85](index=85&type=chunk) - The Group is exploring **property business restructuring**, **fundraising (including new share issuance)**, **implementing cost reduction measures**, and **undertaking offshore debt restructuring** to improve its financial position[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - The offshore debt restructuring plan was **approved by the High Court of Hong Kong on April 3, 2025, and became effective on June 26, 2025**[91](index=91&type=chunk)[95](index=95&type=chunk) [Principal Accounting Policies](index=23&type=section&id=Principal%20Accounting%20Policies) The condensed consolidated financial statements are prepared under the historical cost convention, with certain properties and financial instruments measured at revalued amounts or fair value; newly adopted and revised HKFRS accounting standards had no significant impact on the interim condensed consolidated financial statements for the current period - The financial statements are prepared under the **historical cost convention**, with certain properties and financial instruments measured at revalued amounts or fair value[97](index=97&type=chunk)[102](index=102&type=chunk) - Newly adopted HKFRS accounting standards (such as **amendments to HKAS 21**) had **no significant impact** on the financial statements for the current period[98](index=98&type=chunk)[99](index=99&type=chunk)[103](index=103&type=chunk) [Segment Information](index=23&type=section&id=Segment%20Information) The Group manages its operations based on three main reportable segments: printing, trading and logistics, and property development and investment; during the reporting period, the trading and logistics segment contributed the largest revenue, but the property development and investment segment recorded the largest loss; all assets and liabilities (except at the corporate level) are allocated to operating segments - The Group's principal reportable segments are **printing**, **trading and logistics**, and **property development and investment**[100](index=100&type=chunk)[104](index=104&type=chunk)[112](index=112&type=chunk) - Revenue and Results by Reportable Segment (For the six months ended June 30) | Segment | 2025 Revenue (RMB thousand) | 2025 Segment Results (RMB thousand) | 2024 Revenue (RMB thousand) | 2024 Segment Results (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Printing | 169,926 | (2,966) | 160,164 | (21,287) | | Trading and Logistics | 494,243 | 6,852 | 422,079 | (2,455) | | Property Development and Investment | 10,166 | (89,531) | 10,674 | (104,540) | | All Other Segments | 13,411 | (34,075) | 22,597 | (24,289) | | **Total Reportable Segments** | **674,335** | **(85,645)** | **592,917** | **(128,282)** | | **Group Loss Before Tax** | | **(383,199)** | | **(408,403)** | - Assets and Liabilities by Reportable Segment (As at June 30, 2025) | Segment | 2025 Assets (RMB thousand) | 2025 Liabilities (RMB thousand) | | :--- | :--- | :--- | | Printing | 471,077 | 815,075 | | Trading and Logistics | 747,998 | 352,559 | | Property Development and Investment | 2,614,819 | 9,153,867 | | All Other Segments | 760,574 | 1,814,709 | | Unallocated Assets/Liabilities | 127,074 | 551,538 | | **Total** | **4,721,542** | **12,687,748** | [Other Gains and (Losses), Net](index=27&type=section&id=Other%20Gains%20and%20%28Losses%29%2C%20Net) During the reporting period, the Group recorded net other gains and losses of **RMB 7.4 million**, primarily from gains on disposal of right-of-use assets and exchange gains, contrasting with a net loss in the prior year - Other Gains and (Losses), Net (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Gain on Disposal of Right-of-Use Assets | 6,827 | – | | Net Exchange Gains (Losses) | 502 | 12 | | Fair Value Change of Financial Assets at Fair Value Through Profit or Loss | 97 | (62) | | **Total** | **7,426** | **(50)** | [Income Tax Expenses](index=28&type=section&id=Income%20Tax%20Expenses) During the reporting period, the Group's total income tax expense was **RMB 616 thousand**, mainly comprising China corporate income tax and adjustments for under-provision in prior periods; Hong Kong profits tax is calculated at **16.5%**, and Chinese subsidiaries are subject to a **25%** tax rate - Income Tax Expenses (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Tax: China Corporate Income Tax | 369 | 60 | | Current Tax: Other Jurisdictions | 24 | 31 | | Under-provision in Prior Periods: China Corporate Income Tax | 543 | 635 | | Under-provision in Prior Periods: Other Jurisdictions | 13 | – | | Deferred Tax | (333) | (304) | | **Total Income Tax Expense Recognized in Profit or Loss** | **616** | **422** | - Hong Kong profits tax provision is calculated at **16.5%** of estimated assessable profits[121](index=121&type=chunk)[122](index=122&type=chunk) - Chinese subsidiaries are subject to a China corporate income tax rate of **25%**[123](index=123&type=chunk) [Loss for the Period](index=29&type=section&id=Loss%20for%20the%20Period) The loss for the period is net of various expenses, with finance costs being the largest single expense, primarily from interest on bank and financial institution borrowings; depreciation expenses and cost of inventories also constitute significant expenses - Finance Costs (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on Bank Borrowings and Borrowings from Financial Institutions | 256,112 | 244,507 | | Interest on Lease Liabilities | 53 | 136 | | Effective Interest Expense on Corporate Bonds | 2,296 | 3,604 | | **Total** | **258,461** | **248,247** | - Other Major Expenses (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Depreciation of Right-of-Use Assets | 5,319 | 6,541 | | Depreciation of Property, Plant and Equipment | 26,857 | 34,926 | | Cost of Inventories Recognized as Expense | 543,864 | 475,375 | | Cost of Properties Recognized as Expense | 1,887 | 2,228 | | Interest Income | (44) | (316) | [Loss per Share](index=30&type=section&id=Loss%20per%20Share) For the six months ended June 30, 2025, basic and diluted loss per share attributable to company shareholders was **RMB (6.24)**, an improvement from **RMB (6.63)** in the prior year; diluted loss per share calculation did not assume the exercise of share options as the exercise price was higher than the average market price of shares - Loss per Share (For the six months ended June 30) | Indicator | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic Loss per Share | (6.24) | (6.63) | | Diluted Loss per Share | (6.24) | (6.63) | | Number of Shares Used for Calculating Basic and Diluted Loss per Share | 61,543,075 | 61,543,075 | - The calculation of diluted loss per share did not assume the exercise of share options because the **exercise price of the share options was higher than the average market price of the shares**[130](index=130&type=chunk) [Dividend](index=30&type=section&id=Dividend) The Board of Directors resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (2024: nil)[130](index=130&type=chunk) [Property, Plant and Equipment, Right-of-Use Assets and Investment Properties](index=31&type=section&id=Property%2C%20Plant%20and%20Equipment%2C%20Right-of-Use%20Assets%20and%20Investment%20Properties) During the reporting period, the Group acquired property, plant and equipment and investment properties, and disposed of some plant and equipment and right-of-use assets, with the disposal of right-of-use assets generating a gain; investment properties were revalued using the same valuation method as at the end of the prior year - Asset Acquisition and Disposal (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Acquisition of Property, Plant and Equipment | 1,586 | 2,271 | | Acquisition of Right-of-Use Assets | – | 1,185 | | Acquisition of Investment Properties | 88 | 35 | | Proceeds from Disposal of Plant and Equipment | 501 | – | | Proceeds from Disposal of Right-of-Use Assets | 10,866 | – | | Gain on Disposal of Right-of-Use Assets | 6,827 | – | - Investment properties were revalued as at June 30, 2025, by the Group using the **same valuation method as at December 31, 2024**[133](index=133&type=chunk)[135](index=135&type=chunk) [Properties Held for Sale](index=32&type=section&id=Properties%20Held%20for%20Sale) As at June 30, 2025, the Group's total properties held for sale amounted to **RMB 672.5 million**, primarily comprising completed properties and properties under development for sale, with the amount remaining largely consistent with the prior year-end - Properties Held for Sale Composition (As at June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Completed Properties Held for Sale | 567,573 | 567,676 | | Properties Under Development for Sale | 104,964 | 104,900 | | **Total** | **672,537** | **672,576** | [Trade and Other Receivables, and Prepayments](index=32&type=section&id=Trade%20and%20Other%20Receivables%2C%20and%20Prepayments) As at June 30, 2025, total trade receivables amounted to **RMB 119.7 million**, an increase from the prior year-end; the Group grants credit periods based on customer business relationships and creditworthiness, with most receivables due within **90 days** - Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 – 30 days | 69,238 | 64,654 | | 31 – 90 days | 42,421 | 23,254 | | 91 – 180 days | 1,268 | 9,745 | | Over 180 days | 6,743 | 7,442 | | **Total** | **119,670** | **105,095** | - The ageing analysis of trade receivables shows that **most receivables are due within 30 days**[136](index=136&type=chunk) [Trade and Other Payables, and Other Liabilities](index=33&type=section&id=Trade%20and%20Other%20Payables%2C%20and%20Other%20Liabilities) As at June 30, 2025, total trade payables and construction payables amounted to **RMB 225.5 million**, an increase from the prior year-end; the average credit period ranges from **30 to 180 days** - Ageing Analysis of Trade and Construction Payables (As at June 30, 2025) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 – 30 days | 60,351 | 28,537 | | 31 – 90 days | 18,070 | 13,868 | | 91 – 365 days | 11,851 | 15,519 | | Over 365 days | 135,265 | 134,341 | | **Total** | **225,537** | **192,265** | - The average credit period for purchases and construction costs ranges from **30 to 180 days**[138](index=138&type=chunk) [Borrowings](index=33&type=section&id=Borrowings) As at June 30, 2025, the Group's total interest-bearing bank and other borrowings amounted to approximately **RMB 4,913.5 million**, with most being secured and in default; the report details specific significant defaulted borrowings, including legal proceedings, asset auctions, and accumulated penalty interest, which exert significant pressure on the Group's financial position - Borrowings Composition (As at June 30, 2025) | Borrowing Type | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank Borrowings | 4,856,194 | 4,858,178 | | Other Borrowings | 57,346 | 58,407 | | **Total** | **4,913,540** | **4,916,585** | | Secured | 4,908,540 | 4,911,585 | | Unsecured | 5,000 | 5,000 | | Carrying Amount Payable Within One Year | 4,913,540 | 4,916,585 | - As at June 30, 2025, approximately **RMB 4,908.5 million** of borrowing principal was in default, entitling lenders to demand immediate repayment[140](index=140&type=chunk) - Multiple significant borrowings are in default, involving **China Great Wall Asset Management**, **Zheshang Bank**, **Liaoshen Bank**, **Jiangsu Jiangnan Rural Commercial Bank**, among others, leading to various legal proceedings and asset auctions[141](index=141&type=chunk)[150](index=150&type=chunk)[155](index=155&type=chunk)[158](index=158&type=chunk)[163](index=163&type=chunk)[168](index=168&type=chunk)[172](index=172&type=chunk)[175](index=175&type=chunk)[179](index=179&type=chunk)[182](index=182&type=chunk) - Proceeds from some judicial auctions have been used to repay borrowings, but a **substantial amount of outstanding principal, interest, and penalty interest is still recognized in other payables**[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[176](index=176&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) [Contract Liabilities](index=48&type=section&id=Contract%20Liabilities) As at June 30, 2025, contract liabilities primarily comprised **prepayments for pre-sold properties and prepayments from customers**, totaling **RMB 270.1 million**, which will be recognized as revenue when control of products or services is transferred - Contract Liabilities Composition (As at June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Prepayments for Pre-sold Properties | 166,739 | 163,273 | | Prepayments from Customers | 103,399 | 131,372 | | **Total** | **270,138** | **294,645** | [Corporate Bonds](index=48&type=section&id=Corporate%20Bonds) As at June 30, 2025, all corporate bonds were overdue, totaling **RMB 98.2 million**; these bonds are denominated in HKD, with annual interest rates ranging from **5% to 6.5%** and effective annual interest rates from **7.6% to 10.9%** - Corporate Bonds (As at June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within One Year | 98,237 | 97,753 | | **Total** | **98,237** | **97,753** | - Corporate bonds have annual interest rates ranging from **5% to 6.5%**, with effective annual interest rates from **7.6% to 10.9%**[185](index=185&type=chunk)[186](index=186&type=chunk) - As at June 30, 2025, **all corporate bonds were overdue**[187](index=187&type=chunk) [Share Capital](index=49&type=section&id=Share%20Capital) As at June 30, 2025, the company's authorized share capital was **HKD 400,000 thousand**, and issued and fully paid share capital was **61,543 thousand shares**, equivalent to **RMB 55,983 thousand**, consistent with the prior year-end - Share Capital Information (As at June 30, 2025) | Item | June 30, 2025 (thousand shares) | December 31, 2024 (thousand shares) | | :--- | :--- | :--- | | Number of Authorized Shares | 400,000 | 400,000 | | Number of Issued and Fully Paid Shares | 61,543 | 61,543 | | Issued and Fully Paid Share Capital (RMB thousand) | 55,983 | 55,983 | [Share-Based Transactions](index=49&type=section&id=Share-Based%20Transactions) The company adopted the 2017 Share Option Scheme to incentivize employees and directors; as at June 30, 2025, the number of share options granted but unexercised under the scheme was **zero**, primarily due to the lapse of share options held by Director Mr. Shen Ruolei - The company adopted a **new share option scheme on October 25, 2017**, valid until **October 24, 2027**[190](index=190&type=chunk)[191](index=191&type=chunk) - The exercise price of share options shall be at least the **highest of the closing price on the offer date, the average closing price for the five business days immediately preceding the offer date, and the nominal value of the shares**[247](index=247&type=chunk)[251](index=251&type=chunk) - Share Option Movements (For the six months ended June 30) | Grantee | Unexercised at Beginning of Period (thousand units) | Lapsed During Period (thousand units) | Unexercised at End of Period (thousand units) | | :--- | :--- | :--- | :--- | | Director – Shen Ruolei | 38,735 | (38,735) | – | | **Total** | **38,735** | **(38,735)** | **–** | - As at June 30, 2025, the number of share options granted but unexercised was **zero**[247](index=247&type=chunk) [Capital Commitments](index=51&type=section&id=Capital%20Commitments) As at June 30, 2025, the Group's total capital commitments contracted but not provided for in the condensed consolidated financial statements amounted to **RMB 672.5 million**, primarily for property development projects and acquisition of plant and equipment - Capital Commitments (As at June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Capital Expenditure for Property Development Projects | 465,697 | 467,381 | | Capital Expenditure for Acquisition of Plant and Equipment | 206,817 | 206,817 | | **Total** | **672,514** | **674,198** | [Pledge of Assets](index=51&type=section&id=Pledge%20of%20Assets) As at June 30, 2025, multiple Group assets were pledged to secure bills payable and borrowings, including property, plant and equipment, right-of-use assets, investment properties, and properties held for sale, with the total carrying amount decreasing from the prior year-end - Carrying Amount of Pledged Assets (As at June 30, 2025) | Asset Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | 171,484 | 192,472 | | Right-of-Use Assets | 190,913 | 197,213 | | Investment Properties | 1,153,626 | 1,256,702 | | Properties Held for Sale | 487,963 | 487,963 | | Pledged Bank Deposits | 920 | 930 | | Restricted Bank Balances | 13,571 | 14,205 | [Related Party Transactions](index=52&type=section&id=Related%20Party%20Transactions) During the reporting period, total key management personnel remuneration amounted to **RMB 1.8 million**; the direct controlling company, Huajun Group Company Limited, provided a **RMB 7,000 million** credit facility to the Group, most of which remains unutilized - Key Management Personnel Remuneration (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Short-term Benefits | 1,742 | 1,925 | | Post-employment Benefits | 105 | 89 | | **Total** | **1,847** | **2,014** | - The direct controlling company, **Huajun Group Company Limited**, provided a **RMB 7,000 million** credit facility to the Group, of which approximately **RMB 6,776.5 million** remains unutilized[202](index=202&type=chunk)[204](index=204&type=chunk) [Contingent Liabilities (Note 21)](index=52&type=section&id=Contingent%20Liabilities_Note21) Except for borrowing-related matters disclosed in Note 13, as at June 30, 2025, the Group was involved in multiple legal proceedings in China with construction contractors, customers, and suppliers, but the Board believes these lawsuits will not have a significant financial impact on the Group - Except for those disclosed in Note 13, the Group is involved in **several unresolved legal proceedings initiated by construction contractors, customers, and suppliers in China**[203](index=203&type=chunk)[205](index=205&type=chunk) - The Directors believe that **all other legal proceedings will not have a significant financial impact on the Group**, as the claims are not material or are unlikely to result in a significant financial impact[203](index=203&type=chunk)[205](index=205&type=chunk) Other Information [Results and Appropriations](index=53&type=section&id=Results%20and%20Appropriations) The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2025[207](index=207&type=chunk)[210](index=210&type=chunk) [Compliance with Corporate Governance Code](index=53&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company has complied with the Corporate Governance Code, but the roles of Chairman and Chief Executive Officer are combined in Mr. Yan Ruijie, constituting a deviation from Code Provision C.2.1; the Board believes this arrangement benefits Group management and business development, with sufficient safeguards to ensure a balance of power - The company has complied with the Corporate Governance Code, except for **Code Provision C.2.1 (separation of Chairman and Chief Executive Officer roles)**[208](index=208&type=chunk)[211](index=211&type=chunk) - **Mr. Yan Ruijie** has served as both Chairman and Chief Executive Officer since **June 28, 2023**, an arrangement the Board believes benefits Group management and business development[209](index=209&type=chunk)[211](index=211&type=chunk) - The Board comprises **seven directors, including three independent non-executive directors**, providing independent perspectives and ensuring a balance of power[209](index=209&type=chunk)[211](index=211&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors](index=54&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) All Directors have confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers for the six months ended June 30, 2025 - All Directors have confirmed compliance with the Model Code for the six months ended June 30, 2025[214](index=214&type=chunk)[218](index=218&type=chunk) [Change of Directors' and Senior Management's Information](index=54&type=section&id=Change%20of%20Directors%27%20and%20Senior%20Management%27s%20Information) To enhance corporate governance and meet gender diversity requirements, Ms. Chen Yun was appointed as a member of the Nomination Committee, and Mr. Yan Ruijie ceased to be a member; Mr. Shen Ruolei retired as an independent non-executive director, while Dr. Li Dayi and Ms. Wang Xiaomei were elected as executive directors, and Ms. Zhu Fang was elected as an independent non-executive director and appointed as Chairman of the Nomination Committee - **Ms. Chen Yun** was appointed as a member of the Nomination Committee, and **Mr. Yan Ruijie** ceased to be a member, effective **March 31, 2025**[215](index=215&type=chunk)[219](index=219&type=chunk) - **Mr. Shen Ruolei** retired as an independent non-executive director on **June 27, 2025**[216](index=216&type=chunk)[219](index=219&type=chunk) - **Dr. Li Dayi** and **Ms. Wang Xiaomei** were elected as executive directors, and **Ms. Zhu Fang** was elected as an independent non-executive director and appointed as Chairman of the Nomination Committee[220](index=220&type=chunk)[224](index=224&type=chunk) [Purchase, Sale or Redemption of Listed Shares of the Company](index=55&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Shares%20of%20the%20Company) 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 shares, and the company held no treasury shares - Neither the company nor its subsidiaries purchased, sold, or redeemed any listed shares during the reporting period[222](index=222&type=chunk)[225](index=225&type=chunk) - As at June 30, 2025, the company held **no treasury shares**[222](index=222&type=chunk)[225](index=225&type=chunk) [Interests and/or Short Positions of the Directors and Chief Executive of the Company in the Shares, Underlying Shares and Debentures of the Company or Any Associated Corporation](index=55&type=section&id=Interests%20and%2For%20Short%20Positions%20of%20the%20Directors%20and%20Chief%20Executive%20of%20the%20Company%20in%20the%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20Any%20Associated%20Corporation) As at June 30, 2025, except for Ms. Chen Yun holding **880 shares**, no other directors or chief executives had any disclosable interests or short positions in the shares, underlying shares, and debentures of the company or any associated corporation - Directors' Interests in Shares (As at June 30, 2025) | Director | Nature of Interest | Number of Shares (L) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Chen Yun | Beneficial Owner | 880 | 0.01% | - Except as disclosed above, no other directors or chief executives had any disclosable interests or short positions in the shares, underlying shares, or debentures of the company or any associated corporation[228](index=228&type=chunk)[230](index=230&type=chunk) [Interests and/or Short Positions Discloseable Under the SFO and the Substantial Shareholders](index=57&type=section&id=Interests%20and%2For%20Short%20Positions%20Discloseable%20Under%20the%20SFO%20and%20the%20Substantial%20Shareholders) As at June 30, 2025, substantial shareholders included Huajun Group Company Limited (beneficially owned by Mr. Meng Guangbao) and his spouse Ms. Bao Le, as well as Oak Group Company Limited (indirectly beneficially owned by Mr. Dong Yuanxi); Oak Group became a core connected person due to an increase in shareholding, but the company's public float percentage has not fallen below **15%** - Substantial Shareholders' Interests (As at June 30, 2025) | Shareholder | Nature of Interest | Number of Shares (L) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Huajun Group Company Limited | Beneficial Owner | 44,450,619 | 72.22% | | Mr. Meng Guangbao | Beneficial Owner and Interest in Controlled Corporation | 868,520 + 44,450,619 | 1.41% + 72.22% | | Ms. Bao Le | Interest Held by Spouse | 45,319,139 | 73.63% | | Oak Group Company Limited | Beneficial Owner | 6,582,326 | 10.69% | | Mr. Dong Yuanxi | Interest in Controlled Corporation | 6,582,326 | 10.69% | - **Oak Group Company Limited** became a core connected person due to its shareholding increasing to approximately **10.69%**[233](index=233&type=chunk)[239](index=239&type=chunk) - The company's public float percentage has **never fallen below 15%** since **April 26, 2021**[233](index=233&type=chunk)[239](index=239&type=chunk) [Directors' Interests in Significant Contracts](index=58&type=section&id=Directors%27%20Interests%20in%20Significant%20Contracts) Except as stated in Note 20 to the condensed consolidated financial statements, no significant contracts in which a director had a material interest were entered into by the company, its holding company, or any of its subsidiaries or fellow subsidiaries during the reporting period - Except as stated in Note 20 to the condensed consolidated financial statements, **no significant contracts in which a director had a material interest** were entered into during the reporting period[236](index=236&type=chunk)[238](index=238&type=chunk) [Share Option Scheme](index=59&type=section&id=Share%20Option%20Scheme_OtherInfo) The company adopted a new share option scheme in 2017 to incentivize and retain talent; share options can be exercised within a period not exceeding **10 years**, with the exercise price determined by the Board; as at June 30, 2025, the number of share options granted but unexercised was **zero** - The company adopted the **2017 Share Option Scheme on October 25, 2017**, valid until **October 24, 2027**[241](index=241&type=chunk) - Share options can be exercised within a period not exceeding **10 years**, and the exercise price shall be at least the **highest of the closing price on the offer date, the average closing price for the five business days immediately preceding the offer date, and the nominal value of the shares**[242](index=242&type=chunk)[251](index=251&type=chunk) - As at June 30, 2025, the number of share options granted but unexercised was **zero**[247](index=247&type=chunk) [Arrangement for Directors to Acquire Shares or Debentures](index=61&type=section&id=Arrangement%20for%20Directors%20to%20Acquire%20Shares%20or%20Debentures) Except for the disclosed share option scheme, neither the company nor any of its subsidiaries participated in any arrangements during the reporting period that would enable directors to acquire benefits through subscribing for shares or debentures - Except for the share option scheme, **no other arrangements** were in place during the reporting period that would enable directors to acquire benefits through subscribing for shares or debentures[253](index=253&type=chunk)[257](index=257&type=chunk) [Events After the Reporting Period](index=61&type=section&id=Events%20After%20the%20Reporting%20Period) No significant events occurred after the reporting period for the Group - The Group had **no significant events** after the reporting period[254](index=254&type=chunk)[258](index=258&type=chunk) [Staff](index=61&type=section&id=Staff) As at June 30, 2025, the Group had **1,347 employees**, a slight decrease from the prior year-end; the Group provides various employee benefits and training programs - Employee Count | Date | Employee Count | | :--- | :--- | | June 30, 2025 | 1,347 | | December 31, 2024 | 1,367 | - The Group provides **employee insurance, retirement schemes, discretionary bonuses**, and offers **internal and external training**[255](index=255&type=chunk)[259](index=259&type=chunk) [Audit Committee](index=61&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive directors, has reviewed the Group's accounting principles, internal controls, and financial reporting matters, and believes the unaudited condensed consolidated financial statements comply with applicable accounting standards, Listing Rules, and legal requirements - The Audit Committee is composed of **three independent non-executive directors**[256](index=256&type=chunk)[260](index=260&type=chunk) - The Committee has reviewed the Group's **accounting principles, internal controls, and financial reporting matters**[256](index=256&type=chunk)[260](index=260&type=chunk) - The Committee believes the unaudited condensed consolidated financial statements comply with **applicable accounting standards, Listing Rules, and all legal requirements**[256](index=256&type=chunk)[260](index=260&type=chunk)

2025 年中期報告 Bank of Qingdao Co., Ltd. 青島銀行股份有限公司 （於中華人民共和國註冊成立的股份有限公司） （H 股股份代號：3866） 2025 年中期報告 第一節 重要提示 1. 本行董事會、監事會及董事、監事、高級管理人員保證本中期報告內容的真實、準確、完整，不 存在虛假記載、誤導性陳述或重大遺漏，並承擔個別和連帶的法律責任。 2. 本行第九屆董事會第十七次會議於2025年8月28日召開，審議通過了《關於青島銀行股份有限公司 2025年半年度報告及摘要、業績公告的議案》，應出席董事14名，實際出席董事14名（其中，委 託出席的董事1名。因工作原因，譚麗霞女士委託周雲傑先生出席會議並代為行使表決權）。 3. 本行董事長景在倫先生、行長吳顯明先生、主管財務工作的副行長陳霜女士、計劃財務部總經理 李振國先生聲明：保證本中期報告中財務報告的真實、準確、完整。 4. 本公司按照中國企業會計準則和國際財務報告會計準則編製的2025年上半年財務報告已經安永華 明會計師事務所（特殊普通合夥）和安永會計師事務所分別根據中國和國際審閱準則審閱。 5. 在有條件的情況下，本行董事會可以根據本行 ...

[Financial Summary and Announcement](index=1&type=section&id=FinancialSummaryAndAnnouncement) This section presents the company's unaudited interim condensed consolidated results for the six months ended June 30, 2025, highlighting key financial performance and the official announcement [Financial Summary](index=1&type=section&id=FinancialSummary) This section outlines the company's key financial performance for the six months ended June 30, 2025, showing year-on-year revenue growth, a significant decline in gross profit, a substantial increase in loss for the period, and higher basic and diluted loss per share | Metric | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (Restated, RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 0.80 | 0.20 | ⬆️ 300% | | Gross Profit | 0.02 | 0.09 | ⬇️ 77.78% | | Gross Profit Margin | 2.86% | 47.21% | ⬇️ 44.35% | | Loss for the Period | (16.87) | (8.52) | ⬆️ 98.00% | | Net Loss Margin | (2,008.45%) | (4,321.83%) | ⬆️ 2313.38% (Loss narrowed) | | Basic and Diluted Loss Per Share | (0.07) | (0.04) | ⬆️ 75% | [Announcement Statement](index=1&type=section&id=AnnouncementStatement) This announcement presents the unaudited interim condensed consolidated results of Guangdong Adway Construction (Group) Company Limited and its subsidiaries for the six months ended June 30, 2025, which have been reviewed by the audit committee - This announcement presents the unaudited interim condensed consolidated results of the company and its subsidiaries for the six months ended June 30, 2025, which have been reviewed by the audit committee[2](index=2&type=chunk) [Interim Consolidated Financial Statements](index=2&type=section&id=InterimConsolidatedFinancialStatements) This section provides the unaudited interim consolidated financial statements, including the statement of profit or loss and other comprehensive income, and the statement of financial position [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=ConsolidatedStatementOfProfitOrLoss) During the reporting period, the company experienced revenue growth but a significant decline in gross profit, leading to a substantial expansion of operating loss and an increase in loss for the period from RMB 8.514 million in the same period of 2024 to RMB 16.871 million in 2025 | Metric (RMB thousand) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 (Restated) | Change | | :--- | :--- | :--- | :--- | | Revenue | 840 | 197 | ⬆️ 326.4% | | Cost of Sales | (816) | (104) | ⬆️ 684.6% | | Gross Profit | 24 | 93 | ⬇️ 74.2% | | Selling and Marketing Expenses | (379) | (390) | ⬇️ 2.8% | | Administrative Expenses | (3,629) | (5,418) | ⬇️ 33.0% | | Net Impairment Loss on Financial and Contract Assets | — | 11,696 | ⬇️ 100% | | Other (Expenses) / Income — Net | (1,690) | 2,027 | ⬇️ 183.4% | | Operating Loss | (5,675) | 8,008 | ⬇️ 170.9% (Turned from profit to loss) | | Finance Costs — Net | (11,196) | (13,922) | ⬇️ 19.6% | | Loss Before Income Tax | (16,871) | (5,914) | ⬆️ 185.3% | | Income Tax Expense | — | (2,600) | ⬇️ 100% | | Loss for the Period | (16,871) | (8,514) | ⬆️ 98.2% | [Consolidated Statement of Financial Position](index=3&type=section&id=ConsolidatedStatementOfFinancialPosition) As of June 30, 2025, the company's total assets slightly decreased, non-current assets remained stable, and current assets declined; total equity was negative and further expanded, total liabilities slightly increased, and both net current liabilities and net assets deteriorated | Metric (RMB thousand) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Non-current Assets | 39,623 | 40,661 | ⬇️ 2.55% | | Current Assets | 14,680 | 17,063 | ⬇️ 13.97% | | Total Assets | 54,303 | 57,724 | ⬇️ 5.93% | | **Equity** | | | | | Total Equity | (720,551) | (703,680) | ⬇️ 2.39% (Negative value expanded) | | **Liabilities** | | | | | Non-current Liabilities | 1,230 | 1,265 | ⬇️ 2.77% | | Current Liabilities | 773,624 | 760,139 | ⬆️ 1.77% | | Total Liabilities | 774,854 | 761,404 | ⬆️ 1.77% | | Net Current Liabilities | (758,944) | (743,076) | ⬇️ 2.14% (Negative value expanded) | | Net Assets | (720,551) | (703,680) | ⬇️ 2.39% (Negative value expanded) | [Notes to Financial Information](index=5&type=section&id=NotesToFinancialInformation) This section provides detailed notes to the interim consolidated financial statements, covering general information, significant accounting policies, and specific financial item breakdowns [General Information](index=5&type=section&id=GeneralInformation) Guangdong Adway Construction (Group) Company Limited is incorporated in China with H shares listed on the Hong Kong Stock Exchange, primarily engaged in interior and exterior architectural decoration and design services in China, controlled by Mr. Ye Yujing and Ms. Ye Xiujin - The company is primarily engaged in providing interior and exterior architectural decoration and design services in China[7](index=7&type=chunk) - Mr. Ye Yujing and Ms. Ye Xiujin have been the controlling shareholders of the Group since its establishment[7](index=7&type=chunk) [Summary of Significant Accounting Policies](index=5&type=section&id=SummaryOfSignificantAccountingPolicies) This section outlines the significant accounting policies adopted in the preparation of the consolidated financial statements, including the basis of preparation, going concern assumption, and new and revised standards adopted and not yet adopted [Basis of Preparation](index=5&type=section&id=BasisOfPreparation) The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA, the Hong Kong Companies Ordinance, and the disclosure requirements of the Listing Rules, and are prepared under the historical cost convention - The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, the Hong Kong Companies Ordinance, and the Listing Rules[10](index=10&type=chunk) - The consolidated financial statements are prepared under the historical cost convention[11](index=11&type=chunk) [Going Concern Assumption](index=6&type=section&id=GoingConcernAssumption) Despite significant uncertainties including substantial net loss, net current liabilities, and net liabilities, as well as overdue borrowings and cash shortages, the Board believes that preparing financial statements on a going concern basis is appropriate through measures such as debt restructuring, seeking new financing, and controlling expenses - As of June 30, 2025, the Group reported a net loss of approximately **RMB 16.871 million**, net current liabilities of approximately **RMB 758.944 million**, net liabilities of approximately **RMB 720.551 million**, and cash and cash equivalents of only **RMB 0.106 million**, indicating significant going concern uncertainties[12](index=12&type=chunk) - The Board plans to mitigate liquidity pressure by negotiating debt restructuring with creditors, seeking new financing channels, and controlling administrative expenses, deeming the preparation of consolidated financial statements on a going concern basis appropriate[12](index=12&type=chunk)[14](index=14&type=chunk) [New and Revised Standards Adopted](index=6&type=section&id=NewAndRevisedStandardsAdopted) The Group first adopted HKFRS 21 (Revised) "Lack of Exchangeability" from January 1, 2025, but its application did not have a significant impact on the financial position and performance for the current and prior years - The Group first adopted HKFRS 21 (Revised) "Lack of Exchangeability" from **January 1, 2025**[13](index=13&type=chunk) - The application of the new revised standard did not have a significant impact on the Group's financial position and performance for the current and prior years[13](index=13&type=chunk) [New Standards Not Yet Adopted](index=7&type=section&id=NewStandardsNotYetAdopted) The report lists several new standards, amendments to standards, and interpretations that have been published but are not yet mandatorily effective, including those related to financial instrument classification and measurement, contracts dependent on natural power, annual improvements, and financial statement presentation, which are not expected to have a significant impact on the Group's financial performance and position - Several new standards and amendments not yet mandatorily effective are listed, including HKFRS 9, HKFRS 7, HKFRS 18, with most effective dates on or after **January 1, 2026**[18](index=18&type=chunk) - The Group's preliminary assessment anticipates no significant impact on financial performance and position when these new standards and amendments become effective[15](index=15&type=chunk) [Correction to 2024 Interim Results Announcement](index=7&type=section&id=CorrectionTo2024InterimResults) Management corrected revenue and cost of sales data in the interim results announcement for the six months ended June 30, 2024, due to an inadvertent error, but this correction will not affect the financial performance and position for the six months ended June 30, 2025 - Management corrected the revenue and cost of sales data in the interim results announcement for the six months ended June 30, 2024[16](index=16&type=chunk) | Metric (RMB thousand) | 2024 (Previously Presented) | 2024 (Restated) | | :--- | :--- | :--- | | Revenue | 5,534 | 197 | | Cost of Sales | 5,445 | 104 | - This correction will not affect the financial performance and position for the six months ended June 30, 2025[17](index=17&type=chunk) [Segment Information](index=8&type=section&id=SegmentInformation) The Group primarily engages in architectural decoration and design services in China, which management considers a single operating segment for resource allocation and performance assessment, with all revenue and non-current assets located in China - The Group is primarily engaged in providing interior and exterior architectural decoration and design services in China, which is considered a single operating segment by management[19](index=19&type=chunk) - For the six months ended June 30, 2025, all of the Group's revenue was generated in China, and all non-current assets are also located in China[19](index=19&type=chunk)[20](index=20&type=chunk) [Revenue](index=8&type=section&id=RevenueNote) For the six months ended June 30, 2025, the Group's revenue primarily derived from construction contracts, totaling RMB 798 thousand, a significant increase from RMB 197 thousand in the same period of 2024 | Revenue Source (RMB thousand) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 (Restated) | Change | | :--- | :--- | :--- | :--- | | Revenue from construction contracts | 798 | 197 | ⬆️ 305.08% | | Sales, design and other income | — | — | — | | Total | 798 | 197 | ⬆️ 305.08% | [Income Tax Expense](index=8&type=section&id=IncomeTaxExpense) For the six months ended June 30, 2025, the Group incurred no income tax expense, compared to RMB 2,600 thousand in China corporate income tax for the same period in 2024 | Income Tax Expense (RMB thousand) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 (Restated) | Change | | :--- | :--- | :--- | :--- | | Current income tax — China corporate income tax | — | 2,600 | ⬇️ 100% | | Deferred income tax | — | — | — | | Total | — | 2,600 | ⬇️ 100% | [Loss Per Share](index=9&type=section&id=LossPerShare) For the six months ended June 30, 2025, the loss attributable to owners of the company was RMB 16,871 thousand, resulting in a basic and diluted loss per share of RMB 0.07, an increase from RMB 0.04 in the same period of 2024 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 (Restated) | Change | | :--- | :--- | :--- | :--- | | Loss attributable to owners of the company (RMB thousand) | (16,871) | (8,514) | ⬆️ 98.16% | | Weighted average number of ordinary shares in issue (thousand shares) | 240,931 | 240,931 | — | | Basic loss per share (RMB) | (0.07) | (0.04) | ⬆️ 75% | - For the six months ended June 30, 2024 and 2025, the company had no outstanding potential dilutive ordinary shares, thus diluted earnings per share were the same as basic earnings per share[24](index=24&type=chunk) [Dividends](index=9&type=section&id=Dividends) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (2024: nil)[25](index=25&type=chunk) [Trade Receivables](index=9&type=section&id=TradeReceivables) As of June 30, 2025, net trade receivables amounted to RMB 3,442 thousand, consistent with December 31, 2024, primarily comprising amounts after impairment provisions, with most receivables aged over three years | Metric (RMB thousand) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade receivables | 40,806 | 40,806 | — | | Less: Impairment provision for trade receivables | (37,364) | (37,364) | — | | Trade receivables — Net | 3,442 | 3,442 | — | - As of June 30, 2025, total trade receivables amounted to **RMB 40,806 thousand**, with the largest portion being amounts aged over three years[27](index=27&type=chunk) [Trade and Other Payables](index=10&type=section&id=TradeAndOtherPayables) As of June 30, 2025, total trade and other payables increased to RMB 462,190 thousand, up from December 31, 2024, primarily due to increases in trade payables and other payables, with most trade payables aged over three years | Metric (RMB thousand) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade payables | 296,883 | 296,504 | ⬆️ 0.13% | | Other taxes payable | 15,065 | 15,205 | ⬇️ 0.92% | | Accrued payroll | 5,838 | 4,583 | ⬆️ 27.38% | | Other payables | 144,404 | 132,413 | ⬆️ 9.05% | | Total | 462,190 | 448,705 | ⬆️ 3.00% | - As of June 30, 2025, total trade payables amounted to **RMB 296,883 thousand**, of which **RMB 261,583 thousand** were aged over three years[27](index=27&type=chunk) [Borrowings](index=11&type=section&id=Borrowings) As of June 30, 2025, the Group's total borrowings were RMB 224,805 thousand, consistent with December 31, 2024, with all borrowings repayable within one year, denominated in RMB, and weighted average annual interest rates remaining stable | Borrowing Type (RMB thousand) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Bank borrowings | 133,657 | 133,657 | — | | Other borrowings | 91,148 | 91,148 | — | | Total | 224,805 | 224,805 | — | - All borrowings are repayable within one year and denominated in RMB[28](index=28&type=chunk) - The weighted average annual interest rate for bank borrowings was **6.49%**, and for other borrowings was **7.03%**, both consistent with 2024[28](index=28&type=chunk) [Management Discussion and Analysis](index=12&type=section&id=ManagementDiscussionAndAnalysis) This section provides management's perspective on the Group's market environment, business operations, financial performance, liquidity, and future outlook for the reporting period [Market Review](index=12&type=section&id=MarketReview) In the first half of 2025, China's real estate sector remained sluggish, and economic growth slowed due to the US-China trade war and Western suppression, severely impacting the architectural decoration industry; despite challenges, market demand and opportunities for high-quality development persist with warming government policies - China's real estate sector has continuously faced challenges since the second half of **2021**, with ongoing debt crises leading to a sluggish industry trend[29](index=29&type=chunk) - China's economic growth slowed due to the US-China trade war and Western suppression, severely impacting the architectural decoration industry to which the Group belongs[29](index=29&type=chunk) - Despite contraction, the architectural decoration industry still presents market demand and opportunities for high-quality development transformation as government policies towards the real estate sector become more favorable[29](index=29&type=chunk) [Business Review](index=12&type=section&id=BusinessReview) The Group possesses over 27 years of experience and a strong brand reputation, offering diverse architectural decoration services; however, business operations were significantly curtailed in the first half of 2025 due to ongoing impacts from bank debt defaults, broken capital chains, and increased litigation - The Group provides professional services such as architectural decoration, mechanical and electrical installation, curtain wall engineering, and fire safety engineering for public and private clients, with projects covering various building types[30](index=30&type=chunk) - Despite over **27 years** of operating history and top-tier industry qualifications, business operations were significantly curtailed in the first half of 2025 due to bank debt defaults, broken capital chains, lack of solvency, and increased litigation[30](index=30&type=chunk) [Financial Review](index=13&type=section&id=FinancialReview) This section provides a detailed review of the Group's revenue, gross profit margin, and loss for the period, noting that while revenue increased, gross profit significantly declined, ultimately leading to an expanded loss [Revenue and Gross Profit Margin](index=13&type=section&id=RevenueAndGrossProfitMargin) For the six months ended June 30, 2025, the Group's revenue increased to approximately RMB 0.80 million, primarily due to increased contract value, but gross profit significantly decreased from approximately RMB 0.09 million to approximately RMB 0.02 million - Revenue increased from approximately **RMB 0.20 million** in the same period of 2024 to approximately **RMB 0.80 million** in 2025, primarily due to increased contract value[31](index=31&type=chunk) - Gross profit decreased from approximately **RMB 0.09 million** in the same period of 2024 to approximately **RMB 0.02 million** in 2025[31](index=31&type=chunk) [Loss for the Period](index=13&type=section&id=LossForThePeriod) For the six months ended June 30, 2025, the Group recorded a loss of approximately RMB 16.87 million, primarily because revenue was insufficient to cover administrative expenses and finance costs - The Group incurred a loss of approximately **RMB 16.87 million** for the six months ended June 30, 2025[32](index=32&type=chunk) - The primary reason for the loss was that revenue could not cover administrative expenses and finance costs[32](index=32&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=LiquidityAndCapitalResources) This section details the Group's liquidity, showing decreased monetary funds, stable trade receivables but increased payables, high borrowings, deteriorating debt-to-asset ratio, and issues such as pledged assets and frozen bank deposits [Monetary Funds](index=13&type=section&id=MonetaryFunds) As of June 30, 2025, the Group's monetary funds (including cash and cash equivalents and restricted cash) decreased to approximately RMB 5.44 million, primarily due to repayment of personal borrowings, payment of daily expenses, inability to obtain new financing, and frozen company accounts | Metric (RMB million) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Monetary funds | 5.44 | 7.03 | ⬇️ 22.62% | - The decrease in monetary funds was primarily due to the repayment of some personal borrowings, payment of daily expenses, inability to obtain new external financing, and frozen company accounts[33](index=33&type=chunk) [Trade Receivables and Contract Assets](index=13&type=section&id=TradeReceivablesAndContractAssets) As of June 30, 2025, trade receivables remained at approximately RMB 3.44 million, consistent with December 31, 2024, primarily consisting of unrecovered amounts from prior years that are still under collection - Trade receivables as of June 30, 2025, amounted to approximately **RMB 3.44 million**, consistent with December 31, 2024, both representing unrecovered amounts from prior years[34](index=34&type=chunk) [Trade and Other Payables Liquidity](index=13&type=section&id=TradeAndOtherPayablesLiquidity) As of June 30, 2025, trade and other payables increased to approximately RMB 462.19 million, up from December 31, 2024, primarily due to the Group's tight liquidity and delayed payments to some suppliers | Metric (RMB million) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade and other payables | 462.19 | 448.71 | ⬆️ 3.00% | - The increase was primarily due to the Group's tight liquidity, resulting in delayed payments to some suppliers[35](index=35&type=chunk) [Borrowings Liquidity](index=14&type=section&id=BorrowingsLiquidity) As of June 30, 2025, the Group's total borrowings were approximately RMB 224.81 million, consistent with December 31, 2024, comprising interest-bearing bank borrowings and other interest-bearing borrowings | Metric (RMB million) | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total borrowings | 224.81 | 224.81 | — | [Pledge of Assets](index=14&type=section&id=PledgeOfAssets) As of June 30, 2025, the Group's short-term borrowings were secured by fixed assets totaling approximately RMB 40.66 million and guaranteed by certain related parties, with the value of pledged assets consistent with the end of 2024 - The Group's short-term borrowings are secured by fixed assets totaling approximately **RMB 40.66 million** and guaranteed by related parties[37](index=37&type=chunk) [Debt-to-Asset Ratio](index=14&type=section&id=DebtToAssetRatio) As of June 30, 2025, the Group's debt-to-asset ratio deteriorated to 1426.91%, an increase from 1319.04% as of December 31, 2024, primarily due to the loss incurred during the period | Metric | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Debt-to-asset ratio | 1426.91% | 1319.04% | ⬆️ 107.87% | - The increase in the debt-to-asset ratio was primarily due to the Group's loss for the current period[38](index=38&type=chunk) [Capital Expenditure](index=14&type=section&id=CapitalExpenditure) For the six months ended June 30, 2025, the Group incurred no capital expenditure, consistent with the same period in 2024 - For the six months ended June 30, 2025, the Group incurred no capital expenditure (2024: nil)[39](index=39&type=chunk) [Capital Commitments](index=14&type=section&id=CapitalCommitments) As of June 30, 2025, the Group had no capital commitments or overseas debt commitments - As of June 30, 2025, the Group had no capital commitments (2024: nil)[40](index=40&type=chunk) - Since its establishment, the company has not conducted business overseas and has no overseas debt commitments[40](index=40&type=chunk) [Contingent Liabilities](index=14&type=section&id=ContingentLiabilities) As of June 30, 2025, the Group's bank deposits totaling approximately RMB 8.95 million have been frozen by Chinese courts due to tight liquidity, overdue bank borrowings, and multiple lawsuits - As of June 30, 2025, the Group's bank deposits totaling approximately **RMB 8.95 million** have been frozen by Chinese courts due to tight liquidity, overdue bank borrowings, and involvement in multiple lawsuits[41](index=41&type=chunk) [RMB Exchange Rate Fluctuations and Foreign Exchange Risk](index=15&type=section&id=RMBExchangeRateFluctuationsAndForeignExchangeRisk) Most of the Group's business and all bank borrowings are denominated in RMB, resulting in insignificant exposure to foreign exchange fluctuations; the Board expects exchange rate fluctuations will not materially impact business or financial performance, and there is currently no hedging policy - Most of the Group's business and all bank borrowings are denominated in RMB, resulting in insignificant exposure to foreign exchange fluctuations[42](index=42&type=chunk) - The Board expects RMB exchange rate fluctuations will not have a significant impact on the Group's business operations or financial performance[42](index=42&type=chunk) - The Group currently has no hedging policy in place for foreign exchange risk[42](index=42&type=chunk) [Significant Investments, Acquisitions and Disposals](index=15&type=section&id=SignificantInvestmentsAcquisitionsAndDisposals) For the six months ended June 30, 2025, the Group did not undertake any significant investments, acquisitions, or disposals of subsidiaries, associates, or assets - For the six months ended June 30, 2025, the Group did not undertake any significant investments, acquisitions, or disposals of subsidiaries, associates, or assets[43](index=43&type=chunk) [Employees and Remuneration Policy](index=15&type=section&id=EmployeesAndRemunerationPolicy) As of June 30, 2025, the Group's employee count decreased to 24, with a corresponding reduction in employee costs; the company provides remuneration, benefits, and vocational training to employees and contributes to social security funds as required | Metric | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of employees | 24 | 39 | ⬇️ 38.46% | | Metric (RMB million) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Employee costs | 2.27 | 3.02 | ⬇️ 24.83% | - The company provides employees with salaries, allowances, bonuses, pension contributions, and other in-kind benefits, determines salaries based on individual qualifications, positions, and experience, implements vocational training, and contributes to mandatory social security funds[44](index=44&type=chunk) [Future Development Prospects and Strategies](index=16&type=section&id=FutureDevelopmentProspectsAndStrategies) This section outlines the Group's overall strategy, focusing on market development, operational efficiency, talent acquisition, and exploring new business opportunities for future growth [Overall Strategy](index=16&type=section&id=OverallStrategy) The Group aims to become a leading international green decoration integrated service provider, planning to resolve debt and liquidity risks through debt restructuring and introducing new investors to achieve revitalization - The Group is committed to becoming a leading international green decoration integrated service provider[45](index=45&type=chunk) - Plans include leveraging debt restructuring and introducing new investors to resolve debt and liquidity risks, aiming for revitalization[45](index=45&type=chunk) [Focus on Niche Markets and Regional Development](index=16&type=section&id=FocusOnNicheMarketsAndRegionalDevelopment) The Group will actively respond to national policies, expand business, adopt a prudent order strategy, screen high-quality clients, and leverage technology; it will focus on developing business in the medical and hotel niche sectors, concentrating on the "Guangdong-Hong Kong-Macao Greater Bay Area" to consolidate its advantages - Actively respond to national policies, expand business, adopt a prudent order strategy, and intensify efforts to screen high-quality clients[46](index=46&type=chunk) - Focus on supporting and developing business in the medical and hotel niche sectors, concentrating on the development of the "Guangdong-Hong Kong-Macao Greater Bay Area" to consolidate and highlight advantages in these segments[46](index=46&type=chunk) [Optimize Engineering Management and Efficiency](index=16&type=section&id=OptimizeEngineeringManagementAndEfficiency) The Group will continuously optimize engineering management processes, enhance efficiency through process reengineering and innovation, and adapt business models to industry management changes, strengthening risk control and liquidity management - Continuously optimize engineering management processes, enhancing efficiency through process reengineering and innovation[47](index=47&type=chunk) - Optimize business models, strengthening risk control and liquidity management[47](index=47&type=chunk) [Strengthen Talent Pool](index=16&type=section&id=StrengthenTalentPool) The Group plans to strengthen corporate culture, optimize existing staff, and recruit outstanding management and project manager talent to build a "market-oriented, professionally skilled, career-driven, and management-integrated" team - Strengthen corporate culture, optimize existing staff, and recruit outstanding management and project manager talent within the industry[48](index=48&type=chunk) - Build a "market-oriented, professionally skilled, career-driven, and management-integrated" team[48](index=48&type=chunk) [Explore New Business Opportunities](index=16&type=section&id=ExploreNewBusinessOpportunities) While focusing on core business development, the company will explore new business opportunities with new investors, expanding into new energy and technological innovation sectors, transforming from a traditional architectural decoration service enterprise to a technology-innovative development - While concentrating on developing core business advantages, explore new business opportunities and ventures with new investors[49](index=49&type=chunk) - Expand into new energy and technological innovation sectors, transforming from a traditional architectural decoration service enterprise to a technology-innovative development[49](index=49&type=chunk) [Other Information](index=17&type=section&id=OtherInformation) This section covers various additional disclosures, including securities transactions, corporate governance, interim dividends, audit committee review, post-reporting period events, and trading suspension [Purchase, Sale or Redemption of Listed Securities](index=17&type=section&id=PurchaseSaleOrRedemptionOfListedSecurities) During the reporting period, neither the company nor any of 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 any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[50](index=50&type=chunk) - As of June 30, 2025, the company held no treasury shares[50](index=50&type=chunk) [Compliance with Corporate Governance Code](index=17&type=section&id=ComplianceWithCorporateGovernanceCode) The company's Board of Directors comprises four executive directors, one non-executive director, and four independent non-executive directors, and has adopted the Corporate Governance Code set out in Appendix C1 of the Listing Rules, fully complying with all applicable code provisions during the reporting period - The Board of Directors comprises four executive directors, one non-executive director, and four independent non-executive directors[51](index=51&type=chunk) - The company has adopted and fully complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules during the reporting period[51](index=51&type=chunk) [Standard Code for Securities Transactions](index=17&type=section&id=StandardCodeForSecuritiesTransactions) The company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as the code of conduct for directors and supervisors in securities transactions, confirming that all directors and supervisors complied with the relevant provisions during the reporting period, with no non-compliance incidents found among relevant employees - The company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as the code of conduct for directors and supervisors in securities transactions[53](index=53&type=chunk) - Following inquiry, all directors and supervisors confirmed compliance with the relevant provisions of the Standard Code during the reporting period, with no non-compliance incidents found among relevant employees[53](index=53&type=chunk) [Interim Dividend](index=17&type=section&id=InterimDividend) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[54](index=54&type=chunk) [Audit Committee Review](index=18&type=section&id=AuditCommitteeReview) The Audit Committee has reviewed the accounting principles and practices adopted by the Group with management and discussed risk management, internal control, and financial reporting matters, including the review of interim results for the six months ended June 30, 2024 - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed risk management, internal control, and financial reporting matters[55](index=55&type=chunk) - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2024[55](index=55&type=chunk) [Events After Reporting Period](index=18&type=section&id=EventsAfterReportingPeriod) This section discloses significant events occurring from the end of the reporting period to the announcement date, including the failure to repay approximately RMB 217.83 million in matured loans due to breaches of loan agreements, and the company's bankruptcy reorganization application being rejected but with plans to reapply [Breach of Loan Agreements](index=18&type=section&id=BreachOfLoanAgreements) From the end of the reporting period to the announcement date, approximately RMB 217.83 million of the Group's loans matured and could not be repaid, breaching loan agreement terms without waiver, and lenders have demanded immediate repayment - From the end of the reporting period to the announcement date, loans totaling approximately **RMB 217.83 million** from **8 banks**, **1 company**, and **3 individuals** matured, which the Group failed to repay or renew[56](index=56&type=chunk) - The Group has breached loan agreement terms, has not obtained waivers, and lenders have demanded immediate repayment[56](index=56&type=chunk) [Matters Regarding Bankruptcy Reorganization](index=18&type=section&id=MattersRegardingBankruptcyReorganization) The company's application for bankruptcy reorganization submitted to the Shenzhen Intermediate People's Court has been rejected, but the company will adjust and improve its reorganization plan based on the court's opinion and reapply for bankruptcy reorganization - The company's application for bankruptcy reorganization submitted to the Shenzhen Intermediate People's Court has been rejected[57](index=57&type=chunk) - The company will adjust and improve its reorganization plan based on the court's opinion and reapply for bankruptcy reorganization[57](index=57&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=19&type=section&id=PublicationOfInterimResultsAndReport) This interim results announcement has been published on the Stock Exchange and the company's website, and the interim report containing all information required by the Listing Rules will be dispatched to shareholders and published on the websites in due course - This interim results announcement has been published on the Stock Exchange website (www.hkexnews.hk) and the company's website (www.aidewei.cn)[58](index=58&type=chunk) - The interim report containing all information required by the Listing Rules will be dispatched to shareholders and published on the aforementioned websites in due course[58](index=58&type=chunk) [Continued Suspension of Trading](index=19&type=section&id=ContinuedSuspensionOfTrading) The company's shares have been suspended from trading since July 16, 2025, under Listing Rule 6.01(3), and will remain suspended until further notice, advising shareholders and potential investors to exercise caution - The company's shares have been suspended from trading since **July 16, 2025**, under Listing Rule 6.01(3)[59](index=59&type=chunk) - Trading in the shares will remain suspended until further notice, advising shareholders and potential investors to exercise caution[59](index=59&type=chunk) [Board of Directors Members](index=19&type=section&id=BoardOfDirectorsMembers) The announcement lists the Board of Directors members as of the announcement date (September 3, 2025), including executive directors, non-executive directors, and independent non-executive directors - As of **September 3, 2025**, the Board of Directors includes Mr. Ye Yujing, Ms. Ye Xiujin, Mr. Ye Guofeng, and Mr. Ye Jiajun (Executive Directors); Mr. Zhuang Liangbin (Non-executive Director); and Mr. Cai Huiming, Mr. Sun Changqing, Mr. Lin Zhiyang, and Mr. Zhou Wanxiong (Independent Non-executive Directors)[61](index=61&type=chunk)

2025 中期 報告 Yum China Holdings, Inc. 百勝中國控股有限公司 紐交所代號 : YUMC 港交所代號 : 9987 Yum China Holdings, Inc. 百勝中國控股有限公司 2025 中期報告 目錄 本中期報告包括1933年證券法（經修訂）第27A條及 1934年證券交易法（經修訂）（「交易法」）第21E條所定 義之「前瞻性陳述」。我們擬將所有前瞻性陳述予以 涵蓋於1995年美國私人證券訴訟改革法案的安全港 條文範圍內。 可基於並非嚴謹陳述歷史或當前事實的特點識別前 瞻性陳述。該等陳述通常包括「可能」、「將」、「估 計」、「擬」、「尋 求」、「預 期」、「期 望」、「預 測」、 「預 計」、「相 信」、「信 心」、「規 劃」、「計 劃」、 「可」、「目 標」、「旨 在」、「承 諾」、「預 料」、「相 當 可 能」、「應」、「預 想」、「展 望」、「模 型」、「繼 續」、「持續」等詞彙或其他類似表述。前瞻性陳述乃 基於我們目前對未來的業績或事件的預期、估計、 假設或預測作出。我們向股東回饋資本的計劃乃基 於目前的預期，可能會因市場情況、資本需求或其 他因素而改變。前瞻 ...