[Clarification Announcement](index=1&type=section&id=Clarification%20Announcement) This announcement clarifies dividend-related wording in the interim results announcement to ensure consistency and facilitate investor reference [Purpose and Scope of the Announcement](index=1&type=section&id=Purpose%20and%20Scope%20of%20the%20Announcement) This announcement aims to clarify the wording regarding dividends in the interim results announcement issued on August 28, 2025, by Fufeng Group Limited - This announcement clarifies the wording regarding the basic interim dividend, special interim dividend, and Meihua compensation special dividend after tax in the company's interim results announcement for clarity and consistency purposes[4](index=4&type=chunk) [Dividend Information Clarification](index=1&type=section&id=Dividend%20Information%20Clarification) This section clarifies the specific amounts, per-share distributions, and year-on-year changes for the 2024 fiscal year-end final dividend and 2025 fiscal year H1 interim dividend, noting their accounting treatment [2024 Fiscal Year Final Dividend](index=1&type=section&id=1.%20Page%2025%20of%20the%20Announcement) This section presents the proposed and paid final dividends for FY2024, including per-share amounts and currency conversions | Metric | HKD (Thousands) | RMB (Thousands) | HK Cents per Share | RMB Cents per Share | | :--- | :--- | :--- | :--- | :--- | | Proposed Final Dividend | 476,263 | 439,486 | 19.0 | 17.5 | | Proposed Special Final Dividend | 75,200 | 69,393 | 3.0 | 2.8 | | Final Dividend Paid (June 2025) | 551,561 | 508,352 | - | - | - The difference between the proposed and paid final dividends is due to the exercise of share options and exchange rate fluctuations[5](index=5&type=chunk)[6](index=6&type=chunk) [2025 Fiscal Year H1 Interim Dividend](index=2&type=section&id=2.%20Page%2037%20of%20the%20Announcement) This section outlines the specific amounts and per-share distributions for the 2025 H1 interim dividends, including year-on-year comparisons | Dividend Type | 2025 H1 (HKD Thousands) | 2025 H1 (RMB Thousands) | 2025 H1 (HK Cents per Share) | 2025 H1 (RMB Cents per Share) | 2024 H1 (HKD Thousands) | 2024 H1 (RMB Thousands) | 2024 H1 (HK Cents per Share) | 2024 H1 (RMB Cents per Share) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Basic Interim Dividend | 611,767 | 558,219 | 24.4 | 22.3 | 403,280 | 369,098 | 16.0 | 14.6 | | Special Interim Dividend | 87,753 | 80,072 | 3.5 | 3.2 | 50,410 | 46,137 | 2.0 | 1.8 | | Meihua Compensation Special Dividend | 215,623 | 196,749 | 8.6 | 7.8 | – | – | – | – | | **Total** | **915,143** | **835,040** | **36.5** | **33.3** | **453,690** | **415,235** | **18.0** | **16.4** | - The Board-recommended basic interim dividend, special interim dividend, and Meihua compensation special dividend after tax have not yet been recognized as payable in this interim financial information but will be recognized as an appropriation of retained earnings for the year ending December 31, 2025[8](index=8&type=chunk)[10](index=10&type=chunk) - The **35% basic interim dividend** and **5% special interim dividend** refer to dividends paid from profit attributable to shareholders (excluding Meihua compensation after tax), while the Meihua compensation special dividend refers to Meihua compensation after tax[15](index=15&type=chunk) [Dividend Distribution Arrangements](index=3&type=section&id=Dividend%20Distribution%20Arrangements) This section specifies the ex-dividend date, record date, and share transfer registration suspension period for the 2025 H1 interim dividends - The company will suspend share transfer registration from September 12, 2025, to September 15, 2025 (inclusive)[13](index=13&type=chunk)[14](index=14&type=chunk) - To qualify for the basic interim dividend, special interim dividend, and Meihua compensation special dividend after tax, all share transfer documents, along with the relevant share certificates, must be submitted to the company's Hong Kong share registrar by 4:30 PM on September 11, 2025[13](index=13&type=chunk)[14](index=14&type=chunk) - The Board has resolved to pay the interim basic dividend, special interim dividend, and Meihua compensation special dividend after tax to shareholders on the register as of September 15, 2025, by September 30, 2025[15](index=15&type=chunk)

[Overview](index=2&type=section&id=Overview) The Group's H1 2025 financial performance showed growth in revenue and profit, with a strong gross margin, while no interim dividend was recommended Key Financial Data Overview for H1 2025 | Metric | Amount (RMB '000) | Y-o-Y Growth | Gross Margin | | :--- | :--- | :--- | :--- | | Revenue | 129,323 | approx. 7% | - | | Gross Profit | 76,787 | approx. 12% | 59% (57% in prior period) | | Profit | 42,985 | approx. 12% | - | | Profit Attributable to Equity Holders of the Parent Company | 44,726 | approx. 8% | - | | Basic Earnings Per Share | 6.39 cents | - | - | - The Board does not recommend an interim dividend for the six months ended June 30, 2025[2](index=2&type=chunk) [Interim Results](index=3&type=section&id=Interim%20Results) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's revenue increased by 7% to RMB 129,323 thousand, gross profit by 12% to RMB 76,787 thousand, and profit for the period by 12% to RMB 42,985 thousand, with basic EPS of RMB 6.39 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Metric | 2025 (RMB '000) | 2024 (RMB '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 129,323 | 121,183 | ⬆️ 7% | | Gross Profit | 76,787 | 68,837 | ⬆️ 11.55% | | Profit Before Tax | 54,985 | 47,338 | ⬆️ 16.16% | | Profit for the Period | 42,985 | 38,317 | ⬆️ 12.18% | | Attributable to Equity Holders of the Company | 44,726 | 41,483 | ⬆️ 7.82% | | Basic Earnings Per Share (RMB cents) | 6.39 | 5.93 | ⬆️ 7.76% | [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 were RMB 374,889 thousand, a decrease of approximately 8.5% from year-end 2024; net current assets decreased to RMB 149,709 thousand, and net assets to RMB 178,276 thousand Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | 2025 (RMB '000) | 2024 (RMB '000) | Change | | :--- | :--- | :--- | :--- | | **Total Non-Current Assets** | 30,862 | 31,950 | ⬇️ 3.40% | | **Total Current Assets** | 344,027 | 405,671 | ⬇️ 15.19% | | Trade Receivables | 52,557 | 40,239 | ⬆️ 30.63% | | Cash and Cash Equivalents | 288,638 | 358,735 | ⬇️ 19.54% | | **Total Current Liabilities** | 194,318 | 221,724 | ⬇️ 12.36% | | Contract Liabilities | 161,649 | 138,669 | ⬆️ 16.58% | | **Net Current Assets** | 149,709 | 183,947 | ⬇️ 18.61% | | **Net Assets** | 178,276 | 212,791 | ⬇️ 16.22% | | **Total Equity** | 178,276 | 212,791 | ⬇️ 16.22% | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity attributable to equity holders of the Company was RMB 149,933 thousand, a decrease of approximately 18.3% from year-end 2024, primarily due to a decrease in retained earnings and capital reserve Changes in Equity (As of June 30) | Metric | 2025 (RMB '000) | 2024 (RMB '000) | Change | | :--- | :--- | :--- | :--- | | As at January 1 (Audited) | 212,791 | 185,896 | ⬆️ 14.47% | | Changes during the period | (34,515) | 38,317 | ⬇️ 190.07% | | As at June 30 (Unaudited) | 178,276 | 224,213 | ⬇️ 20.49% | - Total equity attributable to equity holders of the Company was **RMB 149,933 thousand** as of June 30, 2025, compared to **RMB 183,460 thousand** as of December 31, 2024[5](index=5&type=chunk)[6](index=6&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash flow from operating activities significantly decreased to RMB 7,504 thousand from RMB 36,204 thousand in the prior period; net cash used in financing activities was RMB 77,889 thousand, leading to a decrease in cash and cash equivalents to RMB 288,638 thousand at period-end Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Metric | 2025 (RMB '000) | 2024 (RMB '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 7,504 | 36,204 | ⬇️ 79.29% | | Net cash generated from (used in) investing activities | 288 | (4) | ⬆️ 7300% | | Net cash used in financing activities | (77,889) | — | N/A | | Change in cash and cash equivalents | (70,097) | 36,200 | ⬇️ 293.58% | | Cash and cash equivalents at end of period | 288,638 | 335,886 | ⬇️ 14.07% | [Notes to the Condensed Consolidated Interim Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [1. Basis of Presentation and Principal Accounting Policies](index=8&type=section&id=1.%20Basis%20of%20Presentation%20and%20Principal%20Accounting%20Policies) The Group's unaudited results are prepared in accordance with HKFRS, HKAS, and relevant disclosure requirements, using the historical cost convention, except for financial assets measured at fair value; the Group has not early adopted newly issued accounting standards - The Group's unaudited results are prepared in accordance with all requirements of applicable standards and interpretations of Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards, and their interpretations effective at the beginning of the reporting period, as well as applicable disclosure requirements of the Hong Kong Companies Ordinance and Listing Rules[8](index=8&type=chunk) - The Group is currently assessing the impact of new standards and amendments but has not yet determined whether these will have any significant impact on its consolidated financial statements in the period of initial application[9](index=9&type=chunk) [2. Revenue](index=9&type=section&id=2.%20Revenue) As a consulting service provider, the Group's revenue primarily derives from providing decision consulting, data platform, and innovation platform services to clients, with contract pricing net of VAT - The Group is a consulting service provider dedicated to offering (i) decision consulting services; (ii) data platform services; and (iii) innovation platform services to government agencies, industrial parks, and enterprises at various levels[10](index=10&type=chunk) - Revenue refers to the contract revenue sales amount for services provided to customers (net of VAT), excluding sales surcharges[10](index=10&type=chunk) [3. Segment Information](index=9&type=section&id=3.%20Segment%20Information) The Group's operations are divided into three segments: decision consulting, data platform, and innovation platform services; in H1 2025, decision consulting revenue grew significantly by 20%, while data platform and innovation platform revenues decreased by 18% and 15% respectively - The Group's operating segments are independently arranged and managed according to their business nature and services provided, categorized into decision consulting services, data platform services, and innovation platform services[11](index=11&type=chunk) Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (RMB '000) | 2024 Revenue (RMB '000) | Y-o-Y Change | 2025 Segment Results (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Decision Consulting Services | 93,422 | 78,148 | ⬆️ 19.55% | 55,470 | | Data Platform Services | 14,586 | 17,893 | ⬇️ 18.48% | 8,661 | | Innovation Platform Services | 21,315 | 25,142 | ⬇️ 15.22% | 12,656 | | **Total** | **129,323** | **121,183** | **⬆️ 6.72%** | **76,787** | [4. Profit Before Tax](index=11&type=section&id=4.%20Profit%20Before%20Tax) The Group's H1 2025 profit before tax was RMB 54,985 thousand, a 16.16% increase from RMB 47,338 thousand in the prior period; staff costs decreased by approximately 15.27% year-on-year Components of Profit Before Tax (For the six months ended June 30) | Metric | 2025 (RMB '000) | 2024 (RMB '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Staff costs (excluding directors' emoluments) | 49,640 | 58,471 | ⬇️ 15.27% | | Depreciation of property, plant and equipment | 340 | 520 | ⬇️ 34.62% | | Other income | (1,056) | (1,332) | ⬇️ 20.72% | [5. Taxation](index=12&type=section&id=5.%20Taxation) The Group's H1 2025 PRC corporate income tax expense was RMB 12,000 thousand, a 33.02% increase year-on-year; the Company and Industry Brain enjoy a preferential 15% CIT rate as high-tech enterprises, while other members are subject to 25% - PRC corporate income tax expense: **RMB 12,000 thousand** for H1 2025, compared to **RMB 9,021 thousand** for the corresponding period in 2024[15](index=15&type=chunk) - The Company and Beijing CCID Industry Brain Technology Co Ltd are high-tech enterprises located in Beijing High-tech Industrial Development Experimental Zone, enjoying a **15% corporate income tax rate** under PRC income tax law[15](index=15&type=chunk) - Other members of the Group are subject to a PRC corporate income tax rate of **25%**[15](index=15&type=chunk) [6. Earnings Per Share](index=12&type=section&id=6.%20Earnings%20Per%20Share) For the six months ended June 30, 2025, the Company's basic earnings per share increased to RMB 6.39 cents from 5.93 cents in the prior period; no diluted EPS was calculated as there were no dilutive items - Basic earnings per share: **RMB 6.39 cents** for H1 2025, compared to **RMB 5.93 cents** for the corresponding period in 2024[16](index=16&type=chunk) - Earnings per share is calculated based on profit attributable to equity holders of the Company of approximately **RMB 44,726 thousand** for the six months ended June 30, 2025, and the weighted average number of **700,000,000 shares** in issue during the period[16](index=16&type=chunk) - No diluted earnings per share was calculated for the period as there were no dilutive items for the six months ended June 30, 2025[16](index=16&type=chunk) [7. Dividends](index=13&type=section&id=7.%20Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (corresponding period in 2024: no interim dividend paid)[17](index=17&type=chunk) [8. Capital Expenditure](index=13&type=section&id=8.%20Capital%20Expenditure) As of June 30, 2025, the Group's net book value of property, plant and equipment was RMB 9,758 thousand, with additions of RMB 83 thousand, disposals of RMB 335 thousand, and depreciation of RMB 340 thousand during the period; intangible assets' net book value remained unchanged Changes in Capital Expenditure (As of June 30) | Metric | Property, Plant and Equipment (RMB '000) | Intangible Assets (RMB '000) | | :--- | :--- | :--- | | Net book value as at January 1, 2025 | 10,350 | 14,681 | | Additions | 83 | — | | Disposals | (335) | — | | Depreciation/Amortisation expense | (340) | — | | Net book value as at June 30, 2025 | 9,758 | 14,681 | [9. Financial Assets at Fair Value Through Other Comprehensive Income](index=13&type=section&id=9.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) The fair value of CCID Tiandi Equity Fund, held by the Group as a long-term investment, remained unchanged at RMB 1,429 thousand between December 31, 2024, and June 30, 2025 - This long-term investment refers to the CCID Tiandi Equity Fund held by the Company, with a fair value of **RMB 1,429 thousand**[18](index=18&type=chunk) - The Board assessed that there was no significant change in fair value from December 31, 2024, to June 30, 2025[18](index=18&type=chunk) [10. Trade Receivables](index=14&type=section&id=10.%20Trade%20Receivables) As of June 30, 2025, the Group's total trade receivables were RMB 52,557 thousand, a 30.63% increase from year-end 2024, with receivables within 365 days accounting for the largest portion at RMB 48,718 thousand Ageing Analysis of Trade Receivables (As of June 30) | Ageing | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Within 365 days | 48,718 | 35,441 | | Over 365 days | 3,839 | 4,798 | | **Total Trade Receivables** | **52,557** | **40,239** | - The Group's credit period generally ranges from **60 to 365 days** and may be extended on an individual basis[19](index=19&type=chunk) Amounts Due from Related Parties (As of June 30) | Related Party | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Beijing CCID Sci-Tech Innovation Technology Co Ltd | 1,830 | 1,825 | | Beijing CCID Publishing & Media Co Ltd | 350 | 1,271 | | Beijing CCID Technology Engineering Co Ltd | 38 | — | | Beijing CCIDNet Information Technology Co Ltd | 133 | 15 | | **Total** | **2,351** | **3,111** | [11. Contract Liabilities](index=15&type=section&id=11.%20Contract%20Liabilities) As of June 30, 2025, the Group's contract liabilities were RMB 161,649 thousand, a 16.58% increase from year-end 2024, primarily representing advances received from customers for unfulfilled or partially fulfilled service contracts - Total contract liabilities: **RMB 161,649 thousand** as of June 30, 2025, compared to **RMB 138,669 thousand** as of December 31, 2024[21](index=21&type=chunk) - Contract liabilities represent advances received from customers for unfulfilled or partially fulfilled service contracts[21](index=21&type=chunk) Revenue Types and Significant Payment Terms | Revenue Type | Significant Payment Terms | | :--- | :--- | | Decision Consulting Services, Data Platform Services | Milestone payments according to agreed terms upon contract signing (deposit ranging from 20% to 40%), submission of initial draft, revised draft, and final acceptance | | Innovation Platform Services (Innovation Center Operations) | Milestone payments according to agreed terms upon contract signing (deposit ranging from 20% to 30%), at the beginning of each subsequent year after the first year of operation (deposit approx. 10%), and upon service delivery | | Innovation Platform Services (Brand Conferences and Exhibitions) | Milestone payments according to agreed terms upon contract signing (deposit ranging from 70% to 100%), and upon service delivery | [12. Trade Payables](index=15&type=section&id=12.%20Trade%20Payables) As of June 30, 2025, the Group's total trade payables were RMB 8,028 thousand, a significant decrease of 44.18% from year-end 2024, with all payables due within 60 days Ageing Analysis of Trade Payables (As of June 30) | Ageing | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Within 60 days | 8,028 | 14,382 | | **Total Current Trade Payables** | **8,028** | **14,382** | [13. Related Party Disclosures](index=16&type=section&id=13.%20Related%20Party%20Disclosures) The Group engages in various transactions with related parties controlled by the Research Institute, including providing consulting services and paying property management fees, technical service fees, etc.; in H1 2025, revenue from consulting services to related parties was RMB 529 thousand, with related expenses of RMB 3,008 thousand Revenue from Consulting Services Provided to Related Parties (For the six months ended June 30) | Related Party | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Beijing CCID Publishing & Media Co Ltd | 9 | 163 | | Beijing CCID Technology Engineering Co Ltd | 71 | — | | Beijing CCIDNet Information Technology Co Ltd | 449 | 3 | | **Total** | **529** | **166** | Related Party Expenses (For the six months ended June 30) | Expense Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Property management and parking fees paid to Beijing CCID Property Management Co Ltd | 576 | 55 | | Utilities, network, and public service fees paid to China Software Testing Center | 14 | 18 | | Technical service fees paid to Beijing CCID Times Information Industry Co Ltd | 69 | 12 | | Conference fees paid to Beijing CCID Publishing & Media Co Ltd | 1,415 | — | | Service fees paid to the Research Institute | 934 | — | | **Total** | **3,008** | **85** | - All related party transactions disclosed in these unaudited consolidated financial statements constitute 'connected transactions' or 'continuing connected transactions' as defined in Chapter 14A of the Listing Rules and have complied with relevant disclosure requirements[26](index=26&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) [Revenue Analysis](index=18&type=section&id=Revenue%20Analysis) In H1 2025, the Group's total revenue was RMB 129,323 thousand, a 7% year-on-year increase; decision consulting services revenue grew by 20%, while data platform and innovation platform services revenues decreased by 18% and 15% respectively Revenue Analysis by Business Activity (For the six months ended June 30) | Business Activity | 2025 Revenue (RMB '000) | 2024 Revenue (RMB '000) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Decision Consulting Services | 93,422 | 78,148 | ⬆️ 19.55% | | Data Platform Services | 14,586 | 17,893 | ⬇️ 18.48% | | Innovation Platform Services | 21,315 | 25,142 | ⬇️ 15.22% | | **Total** | **129,323** | **121,183** | **⬆️ 6.72%** | [Business Review](index=18&type=section&id=Business%20Review) The Group's H1 2025 revenue and gross profit increased by 7% and 12% respectively; decision consulting services revenue grew by 20% due to business transformation and active project settlement, while data platform and innovation platform services revenues decreased by 18% and 15% respectively - For the six months ended June 30, 2025, the Group's revenue and gross profit were approximately **RMB 129,323 thousand** and **RMB 76,787 thousand** respectively, representing a year-on-year increase of approximately **7% in revenue** and approximately **12% in gross profit**[28](index=28&type=chunk) - Decision consulting services revenue increased by approximately **20%**, primarily due to the company's consulting business transformation and upgrade, and active promotion of project acceptance and settlement[28](index=28&type=chunk) - Data platform services revenue decreased by approximately **18%**, and innovation platform services revenue decreased by approximately **15%**[29](index=29&type=chunk) [Business Outlook](index=19&type=section&id=Business%20Outlook) In 2025, the Group will continue to deepen its Business 3.0 strategy, focusing on government and enterprise clients, leveraging CCID Industry Brain and CCID Digital Tech to enhance technological attributes, including enriching research products, strengthening consulting, building project frameworks, serving local governments and enterprises, and promoting industrial data digitalization and tech service system development - The Group will continue to advance its Business 3.0 strategy, deeply cultivate two major client segments, explore new growth from both government and enterprise ends, and continuously enhance its technological attributes relying on CCID Industry Brain and CCID Digital Tech[30](index=30&type=chunk) - Continuously enrich and innovate Business 3.0, build a business ecosystem connecting government and enterprises, consolidate and enhance research strongholds, strengthen existing consulting businesses, and further promote digital empowerment[30](index=30&type=chunk) - Deeply cultivate local government clients, focusing on urban, county, and park economies; stimulate enterprise client vitality, exploring new products and services centered on IT and advanced manufacturing; strengthen research departments' data accumulation capabilities, promote industrial data digitalization, and accelerate the application of CCID WenDao large models[31](index=31&type=chunk) [Liquidity and Financial Resources](index=20&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, the Group's cash and bank balances were RMB 288,638 thousand, a year-on-year decrease of approximately 14%; cash flow from operating activities is the primary financial source, and management believes working capital is sufficient - As of June 30, 2025, the Group held cash and bank balances of approximately **RMB 288,638 thousand**, a decrease of approximately **14%** compared to the prior period (June 30, 2024: RMB 335,886 thousand)[32](index=32&type=chunk) - Cash flow generated from operating activities is the Group's primary financial source[32](index=32&type=chunk) - Management believes that the Group has sufficient working capital to meet its current needs[32](index=32&type=chunk) [Material Investments](index=21&type=section&id=Material%20Investments) As of June 30, 2025, the Group had no material investments - As of June 30, 2025, the Group had no material investments[33](index=33&type=chunk) [Material Acquisitions and Disposals](index=21&type=section&id=Material%20Acquisitions%20and%20Disposals) On June 9, 2025, the Company entered into an agreement with CCID Group to acquire a 40.625% equity interest in Beijing CCID Digital Tech Co Ltd for RMB 75,070,000, making CCID Digital Tech a wholly-owned subsidiary upon completion; no other material acquisitions or disposals occurred during the period - The Company agreed to acquire, and CCID Group Company agreed to sell, a **40.625% equity interest** in Beijing CCID Digital Tech Co Ltd ('CCID Digital Tech') for a consideration of **RMB 75,070,000**[34](index=34&type=chunk) - Upon completion of the acquisition, the Company's equity interest in CCID Digital Tech will increase from **59.375% to 100%**, and CCID Digital Tech will become a wholly-owned subsidiary of the Company[34](index=34&type=chunk) - Save as disclosed above, as of June 30, 2025, the Group had no other material acquisitions or disposals[35](index=35&type=chunk) [Employees and Remuneration Policy](index=22&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group employed 321 staff, an increase of 36 from the prior period; total staff remuneration for H1 was RMB 49,640 thousand, a year-on-year decrease of approximately 15.1%; the Group implements a performance-oriented remuneration policy, offering comprehensive employee benefits and career development opportunities - As of June 30, 2025, the Group employed a total of **321 staff** (June 30, 2024: 285 staff)[36](index=36&type=chunk) - For the six months ended June 30, 2025, total staff remuneration was approximately **RMB 49,640 thousand** (for the six months ended June 30, 2024: approximately RMB 58,471 thousand)[36](index=36&type=chunk) - The Group implements a performance-oriented appraisal system, determining remuneration based on employee performance, qualifications, and experience, and provides comprehensive benefits, training, and career planning[36](index=36&type=chunk) [Capital Structure](index=22&type=section&id=Capital%20Structure) As of June 30, 2025, the Group's total equity was RMB 178,276 thousand, with 84% attributable to equity holders of the Company Capital Structure Summary (As of June 30, 2025) | Item | Amount (RMB '000) | Percentage | | :--- | :--- | :--- | | Total equity attributable to equity holders of the Company | 149,933 | 84% | | Equity attributable to non-controlling interests | 28,343 | 16% | | **Total** | **178,276** | **100%** | [Contingent Liabilities](index=23&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no contingent liabilities - As of June 30, 2025, the Group had no contingent liabilities (December 31, 2024: nil)[38](index=38&type=chunk) [Pledge of Assets](index=23&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had not pledged any assets - As of June 30, 2025, the Group had not pledged any assets (December 31, 2024: nil)[39](index=39&type=chunk) [Capital and Gearing Ratio](index=23&type=section&id=Capital%20and%20Gearing%20Ratio) As of June 30, 2025, the Group's capital and gearing ratio was approximately 111%, a significant decrease from 222% at year-end 2024 - As of June 30, 2025, the Group's capital and gearing ratio was approximately **111%** (December 31, 2024: approximately 222%)[40](index=40&type=chunk) - The capital and gearing ratio is calculated as total liabilities plus 2024 final dividend less amounts due to related parties, divided by total equity less 2024 final dividend[40](index=40&type=chunk) [Exchange Rate Risk](index=23&type=section&id=Exchange%20Rate%20Risk) The Group adopts a conservative policy in foreign exchange risk management, with most deposits in RMB; USD and HKD deposits may expose the Group to foreign currency exchange rate risk, but the Group considers this risk normal and promptly converts foreign currency deposits to RMB - The Group maintains a conservative policy regarding foreign exchange and interest rate management, with most deposits denominated in RMB[41](index=41&type=chunk) - USD and HKD deposits may expose the Group to foreign currency exchange rate risk when converted to RMB; the Group considers this foreign currency exchange rate risk normal and promptly converts foreign currency deposits to RMB[41](index=41&type=chunk) [Interim Dividend](index=23&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (for the six months ended June 30, 2024: nil)[42](index=42&type=chunk) [Corporate Governance and Shareholder Information](index=24&type=section&id=Corporate%20Governance%20and%20Shareholder%20Information) [Directors', Supervisors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares](index=24&type=section&id=Directors'%2C%20Supervisors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, no director, supervisor, chief executive, or their close associates held any interests or short positions in the shares or underlying shares of the Company or its associated corporations required to be notified to the Company and the Stock Exchange under the SFO - As of June 30, 2025, no director, supervisor, chief executive, or their close associates held any interests or short positions in the shares or underlying shares of the Company or any of its associated corporations required to be notified to the Company and the Stock Exchange under Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance[43](index=43&type=chunk) [Directors' and Supervisors' Rights to Acquire Shares](index=24&type=section&id=Directors'%20and%20Supervisors'%20Rights%20to%20Acquire%20Shares) For the six months ended June 30, 2025, the Company neither granted nor exercised any rights to acquire shares or debentures of the Company to directors, supervisors, their spouses, or minor children - For the six months ended June 30, 2025, the Company neither granted any rights to acquire benefits by way of acquisition of shares or debentures of the Company to directors and supervisors, their respective spouses or children under 18, nor were any such rights exercised[44](index=44&type=chunk) [Share Option Scheme](index=25&type=section&id=Share%20Option%20Scheme) The Company conditionally adopted a share option scheme on November 20, 2002, but as of June 30, 2025, due to unfulfilled conditions regarding H-share subscription and trading restrictions under relevant PRC laws and regulations, the scheme has not yet become effective, and no share options have been granted - The Company conditionally adopted a share option scheme on November 20, 2002[45](index=45&type=chunk) - As of June 30, 2025, the conditions had not been fulfilled, thus the share option scheme had not become effective, and no share options had been granted or agreed to be granted under the scheme[45](index=45&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=25&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2025, the Research Institute and its controlled entities, CCID Group Company and CCID Riyue, collectively held 491,000,000 domestic shares, representing 70.14% of the issued share capital; Lenovo Group Limited, through its subsidiaries, held 20,000,000 H shares, representing 2.89% Substantial Shareholders' Long Positions in Shares (As of June 30, 2025) | Name | Capacity | Number and Class of Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Research Institute | Interest in controlled corporation | 491,000,000 (L) Domestic Shares | 70.14% | | CCID Group Company | Beneficial owner | 392,610,000 (L) Domestic Shares | 56.09% | | Beijing CCID Riyue Investment Co Ltd | Beneficial owner | 98,390,000 (L) Domestic Shares | 14.06% | | Lenovo Manufacturing Limited | Beneficial owner | 20,000,000 (L) H Shares | 2.89% | | Legend Holdings (BVI) Limited | Interest in controlled corporation | 20,000,000 (L) H Shares | 2.89% | | Lenovo Group Limited | Interest in controlled corporation | 20,000,000 (L) H Shares | 2.89% | - The Research Institute, through CCID Group Company and CCID Riyue, beneficially owns **491,000,000 domestic shares** in the Company[47](index=47&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=27&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities (including treasury shares) during the six months ended June 30, 2025[49](index=49&type=chunk) [Competing Interests](index=27&type=section&id=Competing%20Interests) No director or controlling shareholder of the Company, or their respective close associates, has any business interests that compete or may compete with the Group - No director or controlling shareholder of the Company (as defined in the Listing Rules), or their respective close associates, has any business interests that compete or may compete with the business of the Group[50](index=50&type=chunk) [Securities Transactions by Directors and Supervisors](index=27&type=section&id=Securities%20Transactions%20by%20Directors%20and%20Supervisors) The Company has adopted the Model Code for Securities Transactions by Directors and Supervisors in Appendix C3 of the Listing Rules and confirms that all directors and supervisors have complied with the code for the six months ended June 30, 2025 - The Company has adopted the Model Code for Securities Transactions by Directors and Supervisors in Appendix C3 of the Listing Rules and confirms that all directors and supervisors have complied with the code for the six months ended June 30, 2025[51](index=51&type=chunk) [Changes in Directors' and Supervisors' Information under Rule 13.51B(1) of the Listing Rules](index=27&type=section&id=Changes%20in%20Directors'%20and%20Supervisors'%20Information%20under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) There have been no changes in directors' and supervisors' information since the Company's latest published annual report that require disclosure under Rule 13.51B(1) of the Listing Rules - There have been no changes in directors' and supervisors' information since the Company's latest published annual report that require disclosure under Rule 13.51B(1) of the Listing Rules[52](index=52&type=chunk) [Audit Committee](index=28&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2025, and considers their preparation to be in compliance with applicable accounting standards and regulatory requirements - The Audit Committee comprises three independent non-executive directors of the Company, Mr Hu Bin, Mr Zhang Tao, and Mr Fang Hongbin, with Mr Zhang Tao serving as Chairman of the Audit Committee[53](index=53&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2025, and considers their preparation to be in compliance with applicable accounting standards and relevant regulatory and legal requirements[53](index=53&type=chunk) [Events After Reporting Period](index=28&type=section&id=Events%20After%20Reporting%20Period) Save for the acquisition of CCID Digital Tech equity disclosed under material acquisitions and disposals, there were no other material events affecting the Group after the reporting period - Save as disclosed under material acquisitions and disposals, there were no other material events affecting the Group after the reporting period[54](index=54&type=chunk) [Corporate Governance](index=28&type=section&id=Corporate%20Governance) For the six months ended June 30, 2025, the Company has complied with the provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules - For the six months ended June 30, 2025, the Company has complied with the provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[55](index=55&type=chunk) [Future Plans for Material Acquisitions and Disposals](index=28&type=section&id=Future%20Plans%20for%20Material%20Acquisitions%20and%20Disposals) The Group currently has no future plans for material acquisitions and disposals - The Group currently has no future plans for material acquisitions and disposals[56](index=56&type=chunk) [Risk Management and Internal Control](index=28&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board regularly reviews the Group's risk management and internal control systems to ensure their effectiveness and appropriateness, and discusses financial strategies, operations, and risk management - The Board has regularly reviewed the Group's risk management and internal control systems to ensure their effectiveness and appropriateness[57](index=57&type=chunk) - The Board has regularly held meetings to discuss financial strategies, operations, and risk management monitoring[57](index=57&type=chunk) [Sufficiency of Public Float](index=29&type=section&id=Sufficiency%20of%20Public%20Float) As of the latest practicable date prior to the publication of this report, the Company has maintained the sufficient public float as stipulated by the Listing Rules - Based on publicly available information and to the best knowledge of the directors, as of the latest practicable date prior to the publication of this report, the Company has maintained the sufficient public float as stipulated by the Listing Rules[58](index=58&type=chunk) [Acknowledgement](index=29&type=section&id=Acknowledgement) Ms Shen Wen, Chairman of the Board, on behalf of the Board, extends sincere gratitude to the directors, supervisors, management, employees, suppliers, customers, banks, and shareholders - I would like to take this opportunity to express my sincere gratitude to all directors, supervisors, the Group's management and employees for their dedicated work and wholehearted service, as well as to all suppliers, customers, banks, and shareholders for their continuous support[59](index=59&type=chunk) [By Order of the Board](index=29&type=section&id=By%20Order%20of%20the%20Board) This report was signed by Ms Shen Wen, Chairman of the Board, on August 22, 2025; the Board comprises two executive directors and three independent non-executive directors - This report was signed by Ms Shen Wen, Chairman of the Board, in Beijing, People's Republic of China, on August 22, 2025[60](index=60&type=chunk) - As of the date of this report, the Board members include two executive directors, Ms Shen Wen and Mr Fu Changwen; and three independent non-executive directors, Mr Hu Bin, Mr Zhang Tao, and Mr Fang Hongbin[60](index=60&type=chunk)

[Financial Summary](index=1&type=section&id=Financial%20Summary) The company's interim financial performance shows significant growth in revenue, profit attributable to owners, and earnings per share, alongside a substantial dividend declaration [Interim Results Overview](index=1&type=section&id=Interim%20Results%20Overview) During the reporting period, the company demonstrated strong financial performance with significant growth in revenue, profit attributable to owners, and a corresponding increase in basic and diluted earnings per share Interim Financial Performance Summary | Metric | H1 2025 (HKD millions) | H1 2024 (HKD millions) | YoY Growth | | :--- | :--- | :--- | :--- | | Revenue | 731 | 536 | 36% | | Gross Profit | 295 | 233 | 26% | | Profit Attributable to Owners of the Company | 339 | 261 | 30% | | Basic and Diluted EPS (HK cents) | 4.77 | 3.65 | 1.12 HK cents | [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) The Board declared an interim dividend of HKD 271 million for H1 2025 and a special dividend of HKD 768 million on March 26, 2025, payable in three installments - An interim dividend of **HKD 271 million** was declared for H1 2025 (H1 2024: HKD 208 million)[4](index=4&type=chunk) - A special dividend of **HKD 768 million** was declared, payable in three installments, with the first installment paid on April 14, 2025, and the second and third installments due on September 26, 2025, and December 29, 2025, respectively[4](index=4&type=chunk) [Condensed Consolidated Interim Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) The company's comprehensive income statement for the interim period shows robust growth in revenue and profit, significantly boosted by foreign exchange gains Condensed Consolidated Interim Statement of Comprehensive Income Summary | Metric (HKD thousands) | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | 731,158 | 535,843 | 36.45% | | Gross Profit | 294,639 | 233,456 | 26.21% | | Operating Profit | 454,850 | 352,566 | 29.02% | | Profit Before Income Tax | 390,646 | 293,299 | 33.19% | | Profit for the Period | 341,520 | 243,949 | 40.00% | | Profit Attributable to Owners of the Company | 339,026 | 260,551 | 30.12% | | Total Comprehensive Income for the Period | 608,964 | 318,959 | 90.92% | | Basic EPS (HK cents) | 4.77 | 3.65 | 30.68% | - Exchange differences on translation of overseas operations turned from a loss of **HKD 119,794 thousand** in H1 2024 to a gain of **HKD 137,941 thousand** in H1 2025, significantly contributing to the substantial increase in total comprehensive income[8](index=8&type=chunk) - Fair value changes of financial assets at fair value through other comprehensive income decreased from **HKD 215,217 thousand** in H1 2024 to **HKD 104,811 thousand** in H1 2025[8](index=8&type=chunk) [Condensed Consolidated Interim Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) The company's financial position shows an increase in total assets and liabilities, with a notable rise in current liabilities primarily due to dividend payables Condensed Consolidated Interim Statement of Financial Position Summary | Metric (HKD thousands) | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total Non-current Assets | 7,801,719 | 7,312,200 | 6.70% | | Total Current Assets | 6,546,065 | 6,516,883 | 0.45% | | Total Assets | 14,347,784 | 13,829,083 | 3.75% | | **Equity** | | | | | Total Equity | 9,263,880 | 9,515,844 | -2.65% | | **Liabilities** | | | | | Total Non-current Liabilities | 3,402,156 | 3,333,305 | 2.06% | | Total Current Liabilities | 1,681,748 | 979,934 | 71.62% | | Total Liabilities | 5,083,904 | 4,313,239 | 17.87% | - Total current liabilities significantly increased by **71.62%**, primarily due to dividends payable rising from zero to **HKD 632,155 thousand** and contract liabilities increasing from **HKD 68,751 thousand** to **HKD 156,228 thousand**[10](index=10&type=chunk) - Time deposits maturing in more than three months increased from **HKD 1,626,752 thousand** to **HKD 3,061,844 thousand**, indicating a shift in the company's cash management strategy[9](index=9&type=chunk) [Notes to the Condensed Consolidated Interim Financial Information](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) This section provides detailed notes on the preparation basis, accounting policies, segment information, and other key financial items for the interim period [1 Basis of Preparation](index=6&type=section&id=1%20Basis%20of%20Preparation) This condensed consolidated interim financial information is prepared in accordance with HKAS 34 "Interim Financial Reporting" and should be read in conjunction with the 2024 annual financial statements - The financial information is prepared in accordance with **HKAS 34 "Interim Financial Reporting"**[12](index=12&type=chunk) - The auditors issued an unqualified opinion on the **2024 annual financial statements**[13](index=13&type=chunk) [2 Accounting Policies and Accounting Estimates and Judgements](index=7&type=section&id=2%20Accounting%20Policies%20and%20Accounting%20Estimates%20and%20Judgements) The Group's accounting policies are consistent with the 2024 annual financial statements, with income tax accrued using the applicable tax rate on the expected total annual profit; management is assessing the impact of newly issued but not yet effective standards - Accounting policies are consistent with the **2024 annual financial statements**, and income tax is accrued using the applicable tax rate on the expected total annual profit[14](index=14&type=chunk)[15](index=15&type=chunk) - Management is evaluating the potential impact of newly issued but not yet applied standards on the Group's operating results and financial position[15](index=15&type=chunk) [3 Revenue and Segment Information](index=8&type=section&id=3%20Revenue%20and%20Segment%20Information) The Group primarily engages in infrastructure asset management, with total revenue of HKD 731 million in H1 2025, significantly contributed by operating service income and investment gains from financial assets at fair value through profit or loss Revenue by Type | Revenue Type (HKD thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Operating Service Income | 475,803 | 370,277 | | Construction Income from Service Concession Arrangements | 9,902 | 11,492 | | Fund Management Service Income | 90,854 | 95,206 | | Excess Returns from Investment Funds | – | 97,491 | | Rental Income | 25,424 | 24,003 | | Investment Gains/(Losses) from Financial Assets at Fair Value Through Profit or Loss | 129,175 | (62,626) | | **Total Revenue** | **731,158** | **535,843** | - Investment gains from financial assets at fair value through profit or loss turned from a loss of **HKD 62,626 thousand** in H1 2024 to a gain of **HKD 129,175 thousand** in H1 2025, serving as a significant driver for revenue growth[17](index=17&type=chunk) - Excess returns from investment funds were **zero** in H1 2025, compared to **HKD 97,491 thousand** in H1 2024[17](index=17&type=chunk) [4 Income Tax Expense](index=9&type=section&id=4%20Income%20Tax%20Expense) The Group's income tax expense primarily comprises Hong Kong profits tax (16.5%) and PRC corporate income tax (mainly 25%), with H1 2025 expense remaining stable year-on-year - Hong Kong profits tax rate is **16.5%**[19](index=19&type=chunk) - PRC mainland subsidiaries' corporate income tax rate is mainly **25%**[20](index=20&type=chunk) - H1 2025 income tax expense was **HKD 49,126 thousand**, largely consistent with **HKD 49,350 thousand** in H1 2024[7](index=7&type=chunk) [5 Earnings Per Share](index=9&type=section&id=5%20Earnings%20Per%20Share) In H1 2025, both basic and diluted earnings per share attributable to owners of the company were 4.77 HK cents, an increase from the prior period, calculated based on the weighted average number of ordinary shares outstanding Earnings Per Share | Metric (HK cents) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Basic EPS | 4.77 | 3.65 | | Diluted EPS | 4.77 | 3.65 | - Profit attributable to owners of the company used for calculating basic and diluted earnings per share was **HKD 339,026 thousand** (H1 2024: **HKD 260,551 thousand**)[25](index=25&type=chunk) - The weighted average number of ordinary shares used for calculating basic and diluted earnings per share was **7,114,104 thousand shares** in H1 2025, slightly lower than **7,132,972 thousand shares** in H1 2024[26](index=26&type=chunk) - Certain unexercised share options were not included in the diluted earnings per share calculation due to their **anti-dilutive effect**[27](index=27&type=chunk) [6 Trade Receivables](index=11&type=section&id=6%20Trade%20Receivables) As of June 30, 2025, net trade receivables increased to HKD 224,372 thousand from year-end 2024, with receivables over 180 days constituting the largest portion Trade Receivables Ageing Analysis | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Within 60 days | 37,778 | 50,391 | | 61 to 90 days | 12,106 | 8,073 | | 91 to 180 days | 23,207 | 29,560 | | Over 180 days | 151,281 | 115,068 | | **Total** | **224,372** | **203,092** | - Trade receivables generally have a credit period of **30 to 180 days**[28](index=28&type=chunk) - Trade receivables over 180 days increased from **HKD 115,068 thousand** at year-end 2024 to **HKD 151,281 thousand** as of June 30, 2025[28](index=28&type=chunk) [7 Trade Payables](index=11&type=section&id=7%20Trade%20Payables) As of June 30, 2025, total trade payables increased to HKD 516,671 thousand from year-end 2024, with payables over 365 days representing the largest portion Trade Payables Ageing Analysis | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Within 90 days | 80,734 | 112,051 | | 91 to 180 days | 65,656 | 48,009 | | 181 to 365 days | 81,833 | 59,030 | | Over 365 days | 288,448 | 233,660 | | **Total** | **516,671** | **452,750** | - Trade payables over 365 days increased from **HKD 233,660 thousand** at year-end 2024 to **HKD 288,448 thousand** as of June 30, 2025[29](index=29&type=chunk) [8 Share Capital](index=12&type=section&id=8%20Share%20Capital) As of June 30, 2025, the company's issued and fully paid ordinary share capital was HKD 12,994,847 thousand, with the number of shares reduced due to share repurchases - As of June 30, 2025, the number of issued and fully paid ordinary shares was **7,284,455 thousand shares**, with share capital of **HKD 12,994,847 thousand**[30](index=30&type=chunk) - In H1 2025, **400,000 shares** were repurchased and cancelled for a total consideration of approximately **HKD 533 thousand**[30](index=30&type=chunk) - For the full year 2024, **83,960,000 shares** were repurchased and cancelled for a total consideration of approximately **HKD 58,736 thousand**[30](index=30&type=chunk) [9 Dividends](index=13&type=section&id=9%20Dividends) The Group recognized final and special dividends during the half-year and declared an interim dividend for H1 2025 Dividends Recognized | Dividend Type (HKD thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Final Dividend | 120,068 | 160,539 | | Special Dividend | 761,621 | – | | **Total Dividends Recognized in Half-Year** | **881,689** | **160,539** | - The Board declared a special dividend of **HKD 768 million** on March 26, 2025, payable in three installments, with two installments recognized as liabilities as of June 30, 2025[32](index=32&type=chunk) - The Board declared an interim dividend of **HKD 271 million** for H1 2025, which has not yet been recognized as a liability[33](index=33&type=chunk) [10 Events After the Reporting Period](index=14&type=section&id=10%20Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the company completed the issuance and listing of USD 180 million 0.75% convertible bonds in July 2025 - On **July 9, 2025**, the company completed the issuance of **USD 180 million 0.75% convertible bonds**, which were listed on the Stock Exchange on **July 10, 2025**[34](index=34&type=chunk) [Interim Dividend Policy and Arrangements](index=15&type=section&id=Interim%20Dividend%20Policy%20and%20Arrangements) This section outlines the company's interim dividend declaration for H1 2025 and the associated arrangements for share transfer registration [Interim Dividend Declaration](index=15&type=section&id=Interim%20Dividend%20Declaration) The Board declared an interim dividend totaling HKD 271 million for the six months ended June 30, 2025, expected to be paid on November 17, 2025 - An interim dividend of **HKD 271 million** (HKD **3.43 cents** per share) was declared, an increase from **HKD 208 million** in H1 2024[35](index=35&type=chunk) - The interim dividend is expected to be paid on **November 17, 2025**[35](index=35&type=chunk) [Closure of Register of Members](index=15&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility for the interim dividend, the company will suspend share transfer registration on September 30, 2025, requiring shareholders to complete transfer procedures before this date - The register of members will be closed on **September 30, 2025**[36](index=36&type=chunk) - To be eligible for the interim dividend, all transfer documents must be lodged with the share registrar by **4:30 p.m. on September 29, 2025**[36](index=36&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the company's business operations, financial performance, risk management strategies, and future outlook [Company Overview](index=16&type=section&id=Company%20Overview) The Group is a leading intelligent infrastructure asset service provider in China, focusing on "asset operation + asset securitization," with businesses spanning parking asset management, industrial space management, REITs, and equity investments, alongside a forward-looking robotics industry layout - The company is positioned as a leading **intelligent infrastructure asset service provider** in China, with a core focus on **"asset operation + asset securitization"**[37](index=37&type=chunk) - Business covers four segments: **parking asset management, industrial space management, REITs investment, and equity investment**[37](index=37&type=chunk) - Adopts an **"asset cycle + digitalization"** operating model to achieve closed-loop management throughout the asset lifecycle[37](index=37&type=chunk) - Proactively lays out the **robotics industry**, investing in several leading enterprises and establishing Beijing Shoucheng Robotics Technology Industrial Co, Ltd[37](index=37&type=chunk) [Overview of Key Financial Indicators](index=17&type=section&id=Overview%20of%20Key%20Financial%20Indicators) In H1 2025, the company achieved growth in revenue, operating profit, and profit attributable to owners, while maintaining healthy asset-liability and debt-to-capital ratios Key Financial Indicators Overview | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue (HKD millions) | 731 | 536 | 36.4% | | Asset Operation Revenue (HKD millions) | 511 | 406 | 25.9% | | Asset Securitization Revenue (HKD millions) | 220 | 130 | 69.2% | | Adjusted EBITDA (HKD millions) | 587 | 482 | 21.8% | | Operating Profit (HKD millions) | 455 | 353 | 28.9% | | Profit Attributable to Owners of the Company (HKD millions) | 339 | 261 | 29.9% | | Basic and Diluted EPS (HK cents) | 4.77 | 3.65 | 30.7% | | **Balance Sheet Metrics** | **June 30, 2025** | **December 31, 2024** | **Change** | | Total Assets (HKD millions) | 14,348 | 13,829 | 3.8% | | Net Assets (HKD millions) | 9,264 | 9,516 | -2.7% | | Asset-Liability Ratio | 35.4% | 31.2% | +4.2% | | Debt-to-Capital Ratio | 12.4% | 15.9% | -3.5% | [Non-HKFRS Measures](index=18&type=section&id=Non-HKFRS%20Measures) The Group utilizes Adjusted EBITDA, asset-liability ratio, and debt-to-capital ratio as non-HKFRS measures to supplement consolidated financial statements, offering a more comprehensive assessment of operating performance and financial position - **Adjusted EBITDA** is used to assess core operating performance, excluding non-cash transactions, income tax, finance costs, and non-controlling interests[40](index=40&type=chunk) - **Asset-liability ratio** (total liabilities/total assets) is used to assess the level of indebtedness[40](index=40&type=chunk) - **Debt-to-capital ratio** (total borrowings and bonds payable/equity and reserves attributable to owners of the company) is used to assess the financing structure[40](index=40&type=chunk) - These non-HKFRS measures aim to provide additional information, enhancing the understanding of the company's performance and prospects[41](index=41&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) In H1 2025, the Group's revenue and gross profit grew significantly, driven by strong performance in asset operation and securitization businesses, with finance costs slightly up, income tax stable, and adjusted EBITDA substantially increasing [Revenue and Cost of Sales](index=19&type=section&id=Revenue%20and%20Cost%20of%20Sales) In H1 2025, the Group's total revenue increased by 36% year-on-year, with asset operation revenue up 26% and asset securitization revenue up 69%, leading to a 26% rise in gross profit - Total revenue was approximately **HKD 731 million**, a year-on-year increase of **36%**[42](index=42&type=chunk) - Asset operation revenue was approximately **HKD 511 million**, a year-on-year increase of **26%**, primarily benefiting from new projects like the Xi'an Xianyang International Airport T5 terminal parking project and improved operational efficiency of existing projects[42](index=42&type=chunk) - Asset securitization revenue was approximately **HKD 220 million**, a year-on-year increase of **69%**[42](index=42&type=chunk) - Overall gross profit was approximately **HKD 295 million**, a year-on-year increase of **26%**[42](index=42&type=chunk) [Finance Costs](index=19&type=section&id=Finance%20Costs) In H1 2025, finance costs were approximately HKD 61 million, an increase of about 5% year-on-year, primarily comprising interest on lease liabilities and borrowings and bonds payable - Finance costs were approximately **HKD 61 million**, a year-on-year increase of about **5%**[43](index=43&type=chunk) - The main components are interest on lease liabilities and interest on borrowings and bonds payable[43](index=43&type=chunk) [Taxation](index=19&type=section&id=Taxation) In H1 2025, income tax expense was approximately HKD 49 million, consistent with the prior period, mainly comprising corporate income tax for PRC subsidiaries - Income tax provision was approximately **HKD 49 million**, consistent with H1 2024[44](index=44&type=chunk) - Primarily corporate income tax for PRC mainland subsidiaries calculated at a **25% tax rate**[44](index=44&type=chunk) [Adjusted EBITDA](index=20&type=section&id=Adjusted%20EBITDA) In H1 2025, Adjusted EBITDA was approximately HKD 587 million, a year-on-year increase of about 22%, reflecting strong cash profit growth from core operations Adjusted EBITDA Reconciliation | Metric (HKD millions) | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Profit Before Income Tax | 391 | 293 | 33.4% | | Non-controlling Interests | (10) | 9 | -211.1% | | Finance Costs | 61 | 58 | 5.2% | | Depreciation of Property, Plant and Equipment | 14 | 11 | 27.3% | | Depreciation of Right-of-Use Assets | 115 | 97 | 18.6% | | Amortization of Other Non-current Assets | 16 | 14 | 14.3% | | **Adjusted EBITDA** | **587** | **482** | **21.8%** | - Adjusted EBITDA increased by **22%** year-on-year, reaching **HKD 587 million**, reflecting growth in cash profit from core operations[45](index=45&type=chunk) - The calculation of Adjusted EBITDA excludes the impact of depreciation, amortization, income tax expense, finance costs, and non-controlling interests[45](index=45&type=chunk) [Business Review](index=21&type=section&id=Business%20Review) The Group achieved significant progress in both asset operation and securitization, enhancing efficiency through a "asset cycle + digitalization" model, accelerating robotics industry layout, and deepening REITs-based full-lifecycle asset management capabilities [Asset Scale and Operational Efficiency Growth and Digitalization Progress](index=21&type=section&id=Asset%20Scale%20and%20Operational%20Efficiency%20Growth%20and%20Digitalization%20Progress) The Group continued to expand its parking resource layout, adding the Xi'an Xianyang International Airport project, accelerating "parking + charging" business development, and enhancing operational efficiency through digitalized operations like AI smart customer service - The Xi'an Xianyang International Airport T5 terminal parking project commenced operations in **February 2025**, offering over **5,200 parking spaces** and completing the national transportation hub project layout[46](index=46&type=chunk) - Accelerated the layout of **"parking + charging" business**, extending parking asset management to comprehensive services[46](index=46&type=chunk) - Launched **AI smart customer service and Q&A functions** built on DeepSeek V3 and Alibaba Tongyi Qianwen models, reducing manual customer service workload by over **50%**[46](index=46&type=chunk) [Asset Securitization and Operational Synergy and Robotics Industry Layout](index=22&type=section&id=Asset%20Securitization%20and%20Operational%20Synergy%20and%20Robotics%20Industry%20Layout) The Group invests in cutting-edge fields like humanoid and medical robots through industrial funds, leveraging its infrastructure management expertise to provide scenario implementation and data support for robotics companies, building an integrated "investment + operation + ecosystem" development path - Invested in core robotics industry chain companies such as **Unitree Robotics and Galaxy Universal** through multiple industrial funds, covering cutting-edge fields like **humanoid robots, medical robots, industrial robots, and low-altitude economy**[47](index=47&type=chunk) - Utilizes managed parking lots and industrial park physical scenarios to provide **real operational data** for robotics companies, accelerating product iteration and commercialization[48](index=48&type=chunk) - Its subsidiary, Beijing Shoucheng Robotics Technology Industrial Co, Ltd, promotes the application and secondary development of robotics products through sales agency, leasing, and consulting services[49](index=49&type=chunk) - Signed agreements with over **50 robotics companies** at the June 2025 Robotics Industry Ecosystem Summit and launched a robotics technology experience store during the World Humanoid Robot Games, covering a **"technology-product-market" closed loop**[49](index=49&type=chunk) [Deepening REITs-Based Full-Lifecycle Asset Management](index=23&type=section&id=Deepening%20REITs-Based%20Full-Lifecycle%20Asset%20Management) The Group, in partnership with China Life, established the Beijing Pingzhun Infrastructure Real Estate Equity Investment Fund, strategically investing in multiple REITs projects and reserving high-quality infrastructure assets for full-lifecycle management through asset securitization and public REITs - Jointly established the Beijing Pingzhun Infrastructure Real Estate Equity Investment Fund with China Life, with a fund size of **RMB 5.237 billion**[50](index=50&type=chunk) - Strategically invested in REITs projects such as **Southern Vanke Data Center, Southern Runze Technology Data Center, CICC-Shounong Industrial Park, and China Everbright Huadian Clean Energy** through proprietary funds and Beijing Pingzhun Fund strategic placements[50](index=50&type=chunk) - The Urban Development Fund reserves high-quality infrastructure assets in the **Beijing-Tianjin-Hebei, East China, Chengdu-Chongqing, and Greater Bay Area** regions, with future exits planned through asset securitization and public REITs[51](index=51&type=chunk) [Principal Risks and Uncertainties](index=24&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces market risks (currency, interest rate, price), credit risk, and liquidity risk, managing them through Board-approved guidelines to mitigate potential adverse impacts [Currency Risk](index=24&type=section&id=Currency%20Risk) The Group's operations are primarily in mainland China and Hong Kong, exposing it to exchange rate fluctuations of HKD, USD, and RMB, which are mitigated by matching foreign currency assets with borrowing bases - Faces **exchange rate fluctuation risks** for HKD, USD, and RMB[53](index=53&type=chunk) - Mitigates exchange rate risk by matching foreign currency assets with foreign currency cash flows as the borrowing base[53](index=53&type=chunk) [Interest Rate Risk](index=24&type=section&id=Interest%20Rate%20Risk) The Group primarily faces cash flow interest rate risk associated with floating-rate bank balances and borrowings - Primarily faces **cash flow interest rate risk** related to floating-rate bank balances and borrowings[54](index=54&type=chunk) [Capital Structure](index=24&type=section&id=Capital%20Structure) The Group's capital structure comprises borrowings, bonds payable, and equity attributable to owners of the company, reviewed semi-annually by the Board to balance it through dividends, new share issues, share repurchases, and debt management - Capital structure includes **borrowings, bonds payable, and equity attributable to owners of the company**[55](index=55&type=chunk) - The Board reviews the capital structure semi-annually, balancing it through dividends, new share issues, share repurchases, and debt management[55](index=55&type=chunk) [Liquidity and Financial Resources](index=25&type=section&id=Liquidity%20and%20Financial%20Resources) The Group is committed to diversifying funding sources, maintaining high-liquidity assets, and preserving healthy asset-liability and debt-to-capital ratios High Liquidity Assets | Metric (HKD millions) | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Bank Balances and Cash | 2,702 | 2,622 | 3.05% | | Wealth Management Products and Fixed-Income Financial Assets | 3,198 | 1,746 | 83.16% | | **Total High Liquidity Assets** | **5,900** | **4,368** | **35.08%** | Asset-Liability Ratio | Metric (HKD millions) | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Liabilities | 5,084 | 4,313 | 17.87% | | Total Assets | 14,348 | 13,829 | 3.75% | | **Asset-Liability Ratio** | **35.4%** | **31.2%** | **+4.2%** | Debt-to-Capital Ratio | Metric (HKD millions) | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Borrowings and Bonds Payable | 1,137 | 1,496 | -23.99% | | Equity and Reserves Attributable to Owners of the Company | 9,174 | 9,421 | -2.62% | | **Debt-to-Capital Ratio** | **12.4%** | **15.9%** | **-3.5%** | - The asset-liability ratio increased by **4.2%**, primarily due to the provision for two installments of special dividends payable during the period[57](index=57&type=chunk) - The debt-to-capital ratio decreased by **3.5%**, mainly because the Group repaid all bank term loans, reducing total borrowings[58](index=58&type=chunk)[59](index=59&type=chunk) - As of June 30, 2025, all bank term loans were repaid, with a 3-year medium-term note balance of approximately **HKD 548 million** and a REITs-like structured asset-backed product balance of approximately **HKD 589 million**[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Significant Investments Held](index=27&type=section&id=Significant%20Investments%20Held) The Group holds significant investments in CICC GLP REIT and Shougang Fushan Resources Group Limited, with CICC GLP REIT realizing fair value change gains in H1 2025 Major Strategic Investments | Strategic Investment Name | Investment Cost (RMB) | Fair Value (RMB) (June 30, 2025) | Fair Value as % of Total Assets | Unrealized Fair Value Change Gain (RMB) (H1 2025) | Dividends Received (RMB) (H1 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | CICC GLP REIT | 583,500,000 | 571,650,000 | 4.37% | 71,400,000 | 7,425,000 | - CICC GLP REIT primarily invests in warehousing and logistics infrastructure projects, with its fund units listed on the Shanghai Stock Exchange[64](index=64&type=chunk) - The Group completed the disposal of a portion of Shougang Resources shares on **February 3, 2025**[64](index=64&type=chunk) [Significant Acquisitions and Disposals](index=28&type=section&id=Significant%20Acquisitions%20and%20Disposals) During the reporting period, the company's wholly-owned subsidiary, Fine Power Group Limited, completed the disposal of approximately 11.92% of Shougang Resources shares to related party Shougang Holding - On **February 3, 2025**, Fine Power Group Limited completed the disposal of **606,927,640 shares** (approximately **11.92%**) of Shougang Resources to Shougang Holding[65](index=65&type=chunk) [Events After the Reporting Period](index=28&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the company completed the issuance and listing of USD 180 million 0.75% convertible bonds in July 2025 - On **July 9, 2025**, the company completed the issuance of **USD 180 million 0.75% convertible bonds**, which were listed on the Stock Exchange on **July 10, 2025**[66](index=66&type=chunk) [Employee Relations](index=28&type=section&id=Employee%20Relations) The Group is committed to providing an equal, diverse, and non-discriminatory work environment, attracting and retaining talent through a competitive compensation and incentive system and comprehensive employee benefits, including equity incentives, social insurance, annual health checks, and recreational activities - As of June 30, 2025, the Group had a total of **442 employees**[67](index=67&type=chunk) - Implements a compensation and incentive system that is **"competitive externally and fair internally,"** including fixed salaries, performance-based variable pay, discretionary bonuses, project bonuses, and equity incentive plans[67](index=67&type=chunk) - Provides medical allowances, hospitalization plans, and pension schemes for Hong Kong employees; arranges social insurance benefits (five insurances and one housing fund) and annual health checks for mainland China employees[67](index=67&type=chunk)[68](index=68&type=chunk) - Enhances team cohesion and sense of belonging through recreational activities and employee assemblies[68](index=68&type=chunk) [Outlook](index=29&type=section&id=Outlook) Looking ahead, the Group will continue to increase investment in core regions, focused industries, and assets, deepen the robotics industry ecosystem, and create long-term shareholder returns through an integrated "investment, production, and service" model - Future plans include increasing investment in **core regions, focused industries, and focused assets**[69](index=69&type=chunk) - Continues to deeply lay out the **robotics industry**, building a complete robotics industry ecosystem through **"investment, production, and service"**[69](index=69&type=chunk) - The goal is to promote the upgrading of China's intelligent manufacturing industry, enhance the digital and intelligent management level of managed assets, and create sustainable value returns for shareholders[69](index=69&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=29&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) In H1 2025, the company repurchased and cancelled 400,000 shares on the Stock Exchange for a total consideration of HKD 532,949.60 Share Repurchases | Month | Number of Shares Repurchased (shares) | Highest Price Paid (HKD) | Lowest Price Paid (HKD) | Total Consideration (HKD) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 400,000 | 1.38 | 1.28 | 532,949.60 | | **Total** | **400,000** | | | **532,949.60** | - All repurchased shares have been cancelled[70](index=70&type=chunk) [Compliance with Corporate Governance Code](index=29&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) For the six months ended June 30, 2025, the company complied with the code provisions of the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules - The company has complied with the code provisions of the **Corporate Governance Code** set out in Appendix C1 of the HKEX Listing Rules[71](index=71&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) This section details changes to the company's registered office address and expresses gratitude to stakeholders [Change of Registered Office Address](index=30&type=section&id=Change%20of%20Registered%20Office%20Address) The company's registered office address will change to Units 3706-08, 37/F, AIA Tower, 183 Electric Road, North Point, Hong Kong, effective September 1, 2025 - The registered office address will change to Units 3706-08, 37/F, AIA Tower, 183 Electric Road, North Point, Hong Kong, effective **September 1, 2025**[72](index=72&type=chunk) [Acknowledgements](index=30&type=section&id=Acknowledgements) The Board expresses gratitude for the trust and support of shareholders and strategic investors, reaffirming the company's core competitive advantages as an intelligent infrastructure asset service provider and deep participant in the robotics industry, committed to creating sustainable shareholder value - The Board thanks shareholders and strategic shareholders (including **Shougang Group Co, Ltd, ORIX Corporation, Chow Tai Fook Enterprises Limited, Beijing State-owned Capital Operation and Management Co, Ltd, and Sunshine Insurance Group Co, Ltd**) for their support[73](index=73&type=chunk) - The company will continue to leverage its core competitive advantages in **asset operation and management, capital synergy and integration, and scenario empowerment and innovation** to promote the upgrading of the intelligent manufacturing industry and create sustainable value for shareholders[73](index=73&type=chunk)

[Financial Summary](index=1&type=section&id=Financial%20Summary) Yuzhou Group announced its unaudited consolidated results for the six months ended June 30, 2025, with contract sales down 14.21% to **RMB 3.72851 billion** and revenue down 62.42% to **RMB 2.39652 billion**, while loss attributable to owners of the parent narrowed to **RMB 5.63206 billion** 2025 H1 Key Financial Indicators Comparison | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Contract Sales Amount | 3,728,510 | 4,346,239 | -14.21 | | Revenue | 2,396,521 | 6,377,536 | -62.42 | | Loss Attributable to Owners of the Parent | (5,632,062) | (6,255,983) | 9.97 (Loss narrowed) | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Yuzhou Group's condensed consolidated statement of profit or loss, statement of comprehensive income, and statement of financial position for the six months ended June 30, 2025, detailing the company's financial performance in terms of revenue, profit, assets, liabilities, and equity [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, Yuzhou Group's revenue decreased by 62.42% year-on-year to **RMB 2.39652 billion**, with gross profit significantly reduced to **RMB 22.55 million** Condensed Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,396,521 | 6,377,536 | -62.42 | | Cost of Sales | (2,373,971) | (6,269,505) | -62.13 | | Gross Profit | 22,550 | 108,031 | -79.13 | | Net Fair Value Loss on Investment Properties | (727,389) | (346,271) | 110.07 | | Administrative Expenses | (684,847) | (201,699) | 239.55 | | Write-down of Properties Held for Sale and Properties Under Development to Net Realizable Value | (2,923,061) | (3,300,538) | -11.44 | | Loss Before Tax | (7,578,223) | (7,890,109) | 3.95 (Loss narrowed) | | Loss for the Period | (7,391,533) | (8,012,801) | 7.75 (Loss narrowed) | | Loss Attributable to Owners of the Parent | (5,632,062) | (6,255,983) | 9.97 (Loss narrowed) | | Basic Loss Per Share (RMB cents) | (88.28) | (97.79) | 9.72 (Loss narrowed) | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, Yuzhou Group recorded a total comprehensive loss of **RMB 7.29357 billion**, a narrowing from **RMB 8.31998 billion** in the prior year period Condensed Consolidated Statement of Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the Period | (7,391,533) | (8,012,801) | 7.75 (Loss narrowed) | | Exchange Differences on Translation of Overseas Operations | 97,959 | (307,178) | 131.89 (Turned from loss to gain) | | Total Comprehensive Loss for the Period | (7,293,574) | (8,319,979) | 12.34 (Loss narrowed) | | Total Comprehensive Loss Attributable to Owners of the Parent | (5,534,103) | (6,563,161) | 15.68 (Loss narrowed) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, Yuzhou Group's total non-current and current assets both decreased, with significant reductions in properties under development and prepayments, leading to an expanded capital deficit of **RMB 19.44661 billion** Condensed Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 19,592,612 | 20,891,513 | -6.22 | | Total Current Assets | 54,944,885 | 62,175,342 | -11.63 | | Properties Under Development | 13,526,029 | 18,112,748 | -25.32 | | Prepayments, Other Receivables and Other Assets | 22,452,918 | 24,856,097 | -9.67 | | Total Current Liabilities | 85,698,233 | 85,976,898 | -0.32 | | Net Current Liabilities | (30,753,348) | (23,801,556) | 29.21 (Worsened) | | Net Liabilities | (19,446,614) | (11,735,686) | 65.71 (Worsened) | | Equity Attributable to Owners of the Parent | (18,214,103) | (12,547,450) | 45.16 (Worsened) | | Capital Deficit | (19,446,614) | (11,735,686) | 65.71 (Worsened) | [Notes](index=6&type=section&id=Notes) This section details Yuzhou Group's financial statement preparation basis, accounting policies, revenue and expense components, segment information, and key financial liabilities [Company and Group Information](index=6&type=section&id=Company%20and%20Group%20Information) Yuzhou Group Holdings Company Limited, listed on the HKEX, primarily engages in property development, investment, management, and hotel operations in mainland China and Hong Kong - Company's main businesses include property development, property investment, property management, and hotel operations, primarily in mainland China and Hong Kong[11](index=11&type=chunk) - Mr. Lam Lung On and Ms. Kwok Ying Lan are the controlling shareholders of the Company[12](index=12&type=chunk) [Basis of Presentation and Preparation](index=6&type=section&id=Basis%20of%20Presentation%20and%20Preparation) The Group's condensed consolidated financial statements are prepared on a going concern basis, despite facing significant liquidity challenges and implementing an offshore debt restructuring plan - The Group's condensed consolidated financial statements are prepared on a going concern basis, despite priority note defaults and all priority notes being reclassified as current liabilities[13](index=13&type=chunk) - As of June 30, 2025, the Group's total principal amount of interest-bearing bank and other borrowings, corporate bonds, and priority notes was **RMB 51.971635 billion**, while cash and cash equivalents were only **RMB 1.29684 billion**[13](index=13&type=chunk) - The Group has formulated and implemented various measures to alleviate cash flow pressure, including an offshore debt restructuring plan (effective August 29, 2025), promoting sales to reduce inventory, ensuring property delivery, asset disposal, continuous cash flow monitoring, and cost control[13](index=13&type=chunk)[17](index=17&type=chunk) [Basis of Presentation](index=6&type=section&id=Basis%20of%20Presentation) The Group's condensed consolidated financial statements are prepared on a going concern basis, addressing challenges like priority note defaults and increased net current liabilities through debt restructuring 2025 H1 Key Financial Position | Indicator | Amount (RMB thousand) | | :--- | :--- | | Total Principal Amount of Interest-bearing Bank and Other Borrowings, Corporate Bonds and Priority Notes | 51,971,635 | | Cash and Cash Equivalents | 1,296,840 | | Loss Attributable to Owners of the Parent | (5,632,062) | | Net Current Liabilities | (30,753,348) | | Net Liabilities | (19,446,614) | [Basis of Preparation](index=7&type=section&id=Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with HKAS 34 and HKEX Listing Rules, maintaining consistency with 2024 annual financial statements, except for HKFRS amendments - The condensed consolidated financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix D2 to the HKEX Listing Rules[15](index=15&type=chunk) - Except for changes due to the application of amendments to HKFRSs, accounting policies remain consistent with the 2024 annual financial statements[15](index=15&type=chunk) [Application of Amendments to HKFRSs](index=7&type=section&id=Application%20of%20Amendments%20to%20HKFRSs) The Group first applied HKAS 21 amendment "Lack of Exchangeability" in this interim period, which did not result in significant changes to accounting policies or financial presentation - The Group first applied the amendment to HKAS 21 "Lack of Exchangeability", effective January 1, 2025[16](index=16&type=chunk) - This amendment did not result in significant changes to the Group's accounting policies, financial position, and performance presentation and/or disclosures[16](index=16&type=chunk) [Revenue, Other Income and Gains](index=8&type=section&id=Revenue%2C%20Other%20Income%20and%20Gains) For the six months ended June 30, 2025, Yuzhou Group's total revenue was **RMB 2.39652 billion**, a 62.42% year-on-year decrease, primarily due to a significant drop in property sales Revenue, Other Income and Gains Analysis (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | | | | | Property Sales | 2,174,382 | 6,128,391 | -64.52 | | Investment Property Rental Income | 116,897 | 122,619 | -4.67 | | Property Management Fee Income | 105,234 | 125,423 | -16.09 | | Hotel Operations Income | 8 | 1,103 | -99.27 | | **Total Revenue** | **2,396,521** | **6,377,536** | **-62.42** | | **Other Income and Gains** | | | | | Bank Interest Income | 13,834 | 27,398 | -49.51 | | Others | 5,797 | 4,310 | 34.50 | | **Total Other Income and Gains** | **19,631** | **31,708** | **-38.09** | [Operating Segment Information](index=8&type=section&id=Operating%20Segment%20Information) Yuzhou Group's operating segments include property development, investment, management, hotel operations, and others, with property development being the largest revenue contributor but also incurring significant losses - The Group is divided into five reportable operating segments: property development, property investment, property management, hotel operations, and others[19](index=19&type=chunk)[20](index=20&type=chunk) - Over **90%** of the Group's external customer revenue and segment assets are derived from mainland China, thus no geographical information is presented[23](index=23&type=chunk) Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Segment Revenue (RMB thousand) | 2025 Segment Results (RMB thousand) | 2024 Segment Revenue (RMB thousand) | 2024 Segment Results (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Property Development | 2,179,662 | (5,122,374) | 6,131,727 | (5,849,235) | | Property Investment | 117,351 | (619,394) | 123,250 | (291,290) | | Property Management | 105,287 | 33,945 | 125,440 | 117,917 | | Hotel Operations | 8 | (162) | 1,103 | 954 | | Others | 10 | (9,860) | 326 | 2,331 | | **Total** | **2,402,318** | **(5,717,845)** | **6,381,846** | **(6,019,323)** | [Finance Costs](index=10&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, Yuzhou Group's finance costs were **RMB 1.87421 billion**, a slight decrease from the prior year, mainly due to reduced interest on borrowings Finance Costs Analysis (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on Interest-bearing Bank and Other Borrowings, Corporate Bonds and Priority Notes | 2,062,908 | 2,132,214 | -3.25 | | Less: Capitalized Interest | (188,696) | (234,030) | -19.37 | | **Total Finance Costs** | **1,874,212** | **1,898,184** | **-1.26** | [Loss Before Tax](index=11&type=section&id=Loss%20Before%20Tax) For the six months ended June 30, 2025, Yuzhou Group's loss before tax was **RMB 7.57822 billion**, a narrowing from the prior year, influenced by property costs, service costs, and administrative expenses Loss Before Tax Components (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of Properties Sold | 2,306,839 | 6,185,653 | -62.69 | | Cost of Services Provided | 67,132 | 79,071 | -15.09 | | Depreciation | 25,342 | 25,945 | -2.32 | | Employee Benefit Expenses (Net) | 64,681 | 63,473 | 1.90 | | Direct Operating Expenses Arising from Investment Properties That Generate Rental Income | 7,387 | 6,016 | 22.79 | | Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss | – | 55,792 | -100.00 | | Impairment of Goodwill | – | 65,963 | -100.00 | [Income Tax](index=12&type=section&id=Income%20Tax) For the six months ended June 30, 2025, Yuzhou Group recorded an income tax credit of **RMB 186.69 million**, a shift from an expense in the prior year, primarily due to a decrease in deferred tax liabilities - No provision for Hong Kong profits tax was made due to no assessable profits for the period[29](index=29&type=chunk) Income Tax (Credit)/Expense Analysis (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Current: PRC Enterprise Income Tax | 108,375 | 103,346 | 5,029 | | Current: Over-provision in Prior Years | (80,774) | (78,718) | (2,056) | | Current: PRC Land Appreciation Tax | 18,120 | 11,354 | 6,766 | | Deferred: For the Period | (232,411) | 86,710 | (319,121) | | **Total Tax (Credit)/Expense for the Period** | **(186,690)** | **122,692** | **(309,382)** | [Dividends](index=12&type=section&id=Dividends) The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025, or 2024 - The Board does not recommend the payment of an interim dividend for the first half of 2025 and 2024[31](index=31&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=12&type=section&id=Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) For the six months ended June 30, 2025, Yuzhou Group's basic and diluted loss per share was **RMB 0.8828**, a narrowing from **RMB 0.9779** in the prior year Loss Per Share Calculation Data (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the Period Attributable to Owners of the Parent | (5,632,062) | (6,255,983) | | Distribution in Respect of Senior Perpetual Securities | (135,503) | (133,044) | | Loss Used in Calculating Basic and Diluted Loss Per Share | (5,767,565) | (6,389,027) | | Basic and Diluted Loss Per Share (RMB cents) | (88.28) | (97.79) | Number of Shares (For the six months ended June 30) | Item | 2025 (Shares) | 2024 (Shares) | | :--- | :--- | :--- | | Weighted Average Number Used in Calculating Basic Loss Per Share | 6,533,584,996 | 6,533,584,996 | | Weighted Average Number Used in Calculating Diluted Loss Per Share | 6,533,584,996 | 6,533,584,996 | [Trade Payables](index=13&type=section&id=Trade%20Payables) As of June 30, 2025, Yuzhou Group's total trade payables were **RMB 7.33214 billion**, a decrease from December 31, 2024, with the majority due within one year - Trade payables are non-interest bearing and unsecured[35](index=35&type=chunk) Trade Payables Ageing Analysis (As of June 30) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 4,116,582 | 4,784,145 | | 1 to 2 years | 3,215,562 | 3,175,858 | | **Total** | **7,332,144** | **7,960,003** | [Corporate Bonds](index=14&type=section&id=Corporate%20Bonds) As of June 30, 2025, Yuzhou Group's total corporate bonds amounted to **RMB 2.839 billion**, with a portion classified as current liabilities, and several bonds having extended maturities and adjusted interest rates - The 6.5% corporate bonds issued in 2019 have been approved for maturity extension, with principal to be settled in installments in April 2026, October 2026, and 2027[36](index=36&type=chunk) - The 6.5% corporate bonds II and III issued in 2020 have been approved for maturity extension, with principal to be settled in installments from July 2025 to 2028, and the coupon rate adjusted to **4% per annum**[36](index=36&type=chunk)[37](index=37&type=chunk) Corporate Bonds Balance and Classification (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Corporate Bonds Due in 2024 | 1,075,000 | 1,075,000 | | Corporate Bonds Due in 2025 | 1,764,000 | 1,800,000 | | **Total** | **2,839,000** | **2,875,000** | | Portion Classified as Current Liabilities | (269,750) | (900,000) | | Non-current Liabilities | 2,569,250 | 1,975,000 | [Priority Notes](index=15&type=section&id=Priority%20Notes) As of June 30, 2025, Yuzhou Group's total priority notes were **RMB 38.61815 billion**, all classified as current liabilities due to defaults on interest and principal payments - As of June 30, 2025, the Group had unpaid priority note interest of **USD 227.328 million** (approximately **RMB 1.605742 billion**) and unpaid priority note principal of **USD 886 million** (approximately **RMB 6.258315 billion**)[39](index=39&type=chunk) - The related unpaid interest or overdue principal constituted an event of default under the priority note agreements, resulting in all priority notes being classified as current liabilities[39](index=39&type=chunk) Priority Notes Balance (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Priority Notes | 38,618,153 | 38,789,815 | | Portion Classified as Current Liabilities | (38,618,153) | (38,789,815) | | Non-current Portion | – | – | [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section analyzes Yuzhou Group's H1 2025 market environment, operating performance, and financial position, highlighting significant revenue and gross profit declines amid a challenging real estate market [Market and Business Review](index=17&type=section&id=Market%20and%20Business%20Review) In H1 2025, China's real estate market continued its downward trend, with TOP-100 developers experiencing double-digit contract sales declines despite government support policies - In H1 2025, the real estate market experienced a volatile downturn, with cumulative contract sales of TOP-100 developers decreasing by double digits year-on-year[43](index=43&type=chunk) - Market differentiation intensified, with first-tier and strong second-tier cities showing stronger recovery capabilities, while weaker second-tier and third/fourth-tier cities performed below expectations[43](index=43&type=chunk) 2025 H1 Real Estate Investment Amount | Indicator | Amount (RMB) | YoY Change (%) | | :--- | :--- | :--- | | Real Estate Investment Amount | 4.67 trillion | -11.2 | [Overall Performance](index=17&type=section&id=Overall%20Performance) In H1 2025, Yuzhou Group reported revenue of **RMB 2.39652 billion**, a loss for the period of **RMB 7.39153 billion**, and a capital deficit of **RMB 19.44661 billion**, reflecting severe financial challenges - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[44](index=44&type=chunk) 2025 H1 Overall Financial Performance | Indicator | Amount (RMB) | | :--- | :--- | | Revenue | 2.39652 billion | | Loss for the Period | 7.39153 billion | | Capital Deficit | 19.44661 billion | [Property Sales](index=17&type=section&id=Property%20Sales) In H1 2025, Yuzhou Group's property sales revenue significantly decreased by 64.52% to **RMB 2.17438 billion**, with a total GFA delivered of approximately **278,399 square meters** - The decrease in property sales revenue was primarily due to a reduction in the GFA of properties delivered during the period[45](index=45&type=chunk) - The Central China region, Bohai Rim region, and Yangtze River Delta region were the main contributors to recognized revenue[45](index=45&type=chunk) Property Sales Revenue and Area (2025 H1) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Property Sales Revenue (RMB thousand) | 2,174,382 | 6,128,391 | -64.52 | | Total GFA Delivered (square meters) | 278,399 | 442,612 | -37.11 | | Average Selling Price (RMB/square meter) | 7,810 | 13,846 | -43.60 | [Contract Sales](index=19&type=section&id=Contract%20Sales) In H1 2025, Yuzhou Group's cumulative contract sales amounted to **RMB 3.72851 billion**, with a GFA of **254,589 square meters**, as the Group actively adjusted marketing strategies to counter market downturns - The Yangtze River Delta region contributed **54.16%** of the Group's total contract sales, and the Greater Bay Area contributed **25.31%**[47](index=47&type=chunk) - The Group actively adjusted its marketing strategies, strengthened its "Yuzhou Star Power" anchor matrix, and expanded digital marketing channels through platforms such as WeChat, Weibo, Douyin, and Xiaohongshu[48](index=48&type=chunk) Contract Sales Amount and Area (2025 H1) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Contract Sales Amount (RMB thousand) | 3,728,510 | 4,346,239 | -14.21 | | Contract Sales Area (square meters) | 254,589 | 279,311 | -8.85 | | Average Contract Sales Price (RMB/square meter) | 14,645 | 15,561 | -5.90 | [Property Investment](index=20&type=section&id=Property%20Investment) Yuzhou Group's property investment portfolio includes "Yue" shopping centers and "Yuzhou Plaza" offices, with 39 projects across 9 cities, totaling over **1.53 million square meters** of commercial area - The property investment segment features three product lines: "Yue" shopping centers and "Yuzhou Plaza" office buildings and commercial streets[51](index=51&type=chunk) - There are **32** operational projects and **7** projects in the preparation phase, totaling **39** projects, creating over **1.53 million square meters** of commercial area[51](index=51&type=chunk) - In 2025, the Group launched its Minnan culture dissemination strategy, with "Super New Highlights" as the quarterly theme, hosting diverse cultural events that attracted nearly **10 million** participants[52](index=52&type=chunk) - Through the U-Square service system, the Group has built a comprehensive business platform centered on assurance services, warm services, and functional services, offering six major service systems: "Yuzhou Professional, Yuzhou Secure, Yuzhou Butler, Yuzhou Colorful, Yuzhou Space, Yuzhou Resources"[53](index=53&type=chunk) [Hotel Operations](index=21&type=section&id=Hotel%20Operations) In H1 2025, Yuzhou Group's hotel business revenue was approximately **RMB 0.008 million**, a significant year-on-year decrease, as the Group focuses on optimizing operations and enhancing service quality - The Group's hotels adopt diversified and innovative operational management models, focusing on service quality, customer experience, and reputation enhancement[54](index=54&type=chunk) - Several hotels, including Xiamen Tong'an Jiamelun Hot Spring Hotel and Quanzhou Hui'an Jiamelun Business Hotel, are currently under construction[54](index=54&type=chunk) Hotel Operations Revenue (2025 H1) | Indicator | 2025 H1 (RMB ten thousand) | 2024 H1 (RMB ten thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Hotel Operations Revenue | 0.8 | 110.3 | -99.27 | [Quality and Safety and Product Line Design](index=21&type=section&id=Quality%20and%20Safety%20and%20Product%20Line%20Design) Yuzhou Group adheres to green development principles, with 145 projects exceeding **21 million square meters** meeting green building standards, and continuously innovates its "Temperature Space" residential product series - The Group adheres to low-carbon environmental protection and green development concepts, responding to national "dual carbon" goals by creating green premium projects[55](index=55&type=chunk) - As of June 30, 2025, **145** projects, totaling over **21 million square meters** of property, met green building standards, with approximately **5.55 million square meters** achieving Green Building Two-Star rating or above[55](index=55&type=chunk) - Based on the "Yong", "Lang", and "Jia" three major residential product series, the Group has refined its product system, clarified top-level design, and innovatively iterated the "Temperature Space" series, built around "1 core, 3 spaces, 5 product propositions, and 6 product values"[56](index=56&type=chunk) [Land Bank](index=22&type=section&id=Land%20Bank) As of June 30, 2025, Yuzhou Group's land bank comprised approximately **10.35 million square meters** of saleable GFA across 161 projects in 38 cities, with an average floor cost of **RMB 5,943 per square meter** - The land bank is primarily distributed across six major metropolitan areas: the West Coast Economic Zone, Yangtze River Delta region, Bohai Rim region, Central China region, Greater Bay Area, and Southwest region[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - The Group believes its existing land bank is sufficient for two to three years of future development needs[57](index=57&type=chunk) Land Bank Overview (As of June 30, 2025) | Indicator | Data | | :--- | :--- | | Total Saleable GFA | Approximately 10.35 million square meters | | Number of Projects | 161 | | Cities Covered | 38 | | Average Floor Cost | Approximately RMB 5,943/square meter | [Financial Performance Analysis](index=24&type=section&id=Financial%20Performance%20Analysis) This section analyzes Yuzhou Group's H1 2025 financial performance, detailing significant declines in revenue and gross profit, increased fair value losses on investment properties, and changes in various expenses [Revenue](index=24&type=section&id=Revenue) In H1 2025, Yuzhou Group's total revenue decreased by 62.42% to **RMB 2.39652 billion**, primarily due to reduced property sales Revenue Composition and Change (2025 H1) | Revenue Source | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Property Sales | 2,174,382 | 6,128,391 | -64.52 | | Property Management Fee Income | 105,234 | 125,423 | -16.10 | | Investment Property Rental Income | 116,900 | 122,619 | -4.67 | | Hotel Operations Income | 8 | 1,103 | -99.27 | | **Total Revenue** | **2,396,521** | **6,377,536** | **-62.42** | [Cost of Sales](index=24&type=section&id=Cost%20of%20Sales) In H1 2025, Yuzhou Group's cost of sales decreased by 62.13% to **RMB 2.37397 billion**, mainly attributable to a reduction in the GFA of properties delivered - The decrease in cost of sales was primarily due to a reduction in the GFA of properties delivered during the period[61](index=61&type=chunk) Cost of Sales Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cost of Sales | 2,373,971 | 6,269,505 | -62.13 | [Gross Profit and Gross Profit Margin](index=24&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) In H1 2025, Yuzhou Group's gross profit significantly decreased to **RMB 22.55 million**, with a gross profit margin of **0.94%**, primarily due to fewer properties delivered - The decrease in gross profit was primarily due to a reduction in the GFA of properties delivered during the period[62](index=62&type=chunk) Gross Profit and Gross Profit Margin Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 22,550 | 108,031 | -79.13 | | Gross Profit Margin | 0.94% | 1.70% | -44.71 (Decrease) | [Fair Value Loss on Investment Properties](index=24&type=section&id=Fair%20Value%20Loss%20on%20Investment%20Properties) In H1 2025, Yuzhou Group recorded a fair value loss on investment properties of **RMB 727.39 million**, a 110.07% increase from the prior year, mainly from properties in Xiamen, Hefei, and Shenzhen - The loss was primarily due to fair value losses on investment properties located in Xiamen, Hefei, and Shenzhen[63](index=63&type=chunk) Fair Value Loss on Investment Properties Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Fair Value Loss on Investment Properties | (727,389) | (346,271) | 110.07 (Loss widened) | [Other Income and Gains](index=24&type=section&id=Other%20Income%20and%20Gains) In H1 2025, Yuzhou Group's other income and gains decreased by 38.09% to **RMB 19.63 million**, primarily due to a reduction in bank interest income - The decrease was primarily due to a reduction in bank interest income[64](index=64&type=chunk) Other Income and Gains Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other Income and Gains | 19,631 | 31,708 | -38.09 | [Selling and Distribution Costs](index=24&type=section&id=Selling%20and%20Distribution%20Costs) In H1 2025, Yuzhou Group's selling and distribution costs decreased by 46.17% to **RMB 73.08 million**, mainly due to effective cost control measures and reduced marketing expenses - The decrease was primarily due to effective cost control measures and reduced marketing and promotion expenses[65](index=65&type=chunk) Selling and Distribution Costs Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Selling and Distribution Costs | 73,083 | 135,754 | -46.17 | [Administrative Expenses](index=25&type=section&id=Administrative%20Expenses) In H1 2025, Yuzhou Group's administrative expenses significantly increased by 239.55% to **RMB 684.85 million**, primarily driven by higher exchange losses during the period - The increase was primarily due to increased exchange losses during the period[66](index=66&type=chunk) Administrative Expenses Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 684,847 | 201,699 | 239.55 | [Other Expenses](index=25&type=section&id=Other%20Expenses) In H1 2025, Yuzhou Group's other expenses significantly decreased by 85.72% to **RMB 26.64 million**, mainly due to reduced impairment of goodwill and fair value losses on financial assets - The decrease was primarily due to reduced impairment of goodwill and fair value losses on financial assets at fair value through profit or loss[67](index=67&type=chunk) Other Expenses Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other Expenses | 26,643 | 186,430 | -85.72 | [Finance Costs](index=25&type=section&id=Finance%20Costs) In H1 2025, Yuzhou Group's finance costs decreased by 1.26% to **RMB 1.87421 billion**, primarily due to a reduction in domestic loan amounts - The decrease was primarily due to a reduction in domestic loan amounts[68](index=68&type=chunk) Finance Costs Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 1,874,212 | 1,898,184 | -1.26 | [Share of Profits and Losses of Joint Ventures](index=25&type=section&id=Share%20of%20Profits%20and%20Losses%20of%20Joint%20Ventures) In H1 2025, Yuzhou Group's share of losses from joint ventures was **RMB 285.27 million**, a reversal from a profit in the prior year, with joint ventures reporting a negative gross profit margin - Joint ventures' total revenue was **RMB 282.25 million**, with a gross profit margin of **-5.47%**[69](index=69&type=chunk) Share of Profits and Losses of Joint Ventures Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Share of Profits and Losses of Joint Ventures | (285,266) | 45,070 | (330,336) (Turned from profit to loss) | [Share of Profits and Losses of Associates](index=25&type=section&id=Share%20of%20Profits%20and%20Losses%20of%20Associates) In H1 2025, Yuzhou Group's share of losses from associates expanded to **RMB 254.50 million**, with associates reporting a negative gross profit margin - Associates' total revenue was **RMB 1.34125 billion**, with a gross profit margin of **-12.06%**[70](index=70&type=chunk) Share of Profits and Losses of Associates Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Share of Profits and Losses of Associates | (254,504) | (155,334) | (99,170) (Loss widened) | [Income Tax](index=25&type=section&id=Income%20Tax) In H1 2025, Yuzhou Group recorded an income tax credit of **RMB 186.69 million**, a shift from an expense in the prior year, primarily due to a decrease in deferred tax liabilities - The decrease in income tax expense was primarily due to a reduction in deferred tax liabilities during the period[71](index=71&type=chunk) Income Tax (Credit)/Expense Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Income Tax (Credit)/Expense | (186,690) | 122,692 | (309,382) (Turned from expense to credit) | [Loss for the Period](index=25&type=section&id=Loss%20for%20the%20Period) In H1 2025, Yuzhou Group's loss for the period narrowed to **RMB 7.39153 billion**, primarily due to impairment provisions, fair value losses on investment properties, and reduced revenue - The loss was primarily due to impairment loss provisions, fair value losses on investment properties, and reduced revenue during the period[72](index=72&type=chunk) Loss for the Period Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Loss for the Period | (7,391,533) | (8,012,801) | 7.75 (Loss narrowed) | [Loss Attributable to Non-controlling Interests](index=26&type=section&id=Loss%20Attributable%20to%20Non-controlling%20Interests) In H1 2025, Yuzhou Group's loss attributable to non-controlling interests was **RMB 1.75947 billion**, largely consistent with the prior year, driven by impairment of properties under development and fair value losses - The loss was primarily due to impairment of properties under development, fair value losses on investment properties, and losses from certain non-wholly owned projects[73](index=73&type=chunk) Loss Attributable to Non-controlling Interests Change (2025 H1) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Loss Attributable to Non-controlling Interests | (1,759,471) | (1,756,818) | 0.15 (Loss slightly increased) | [Basic Loss Per Share](index=26&type=section&id=Basic%20Loss%20Per%20Share) For the period ended June 30, 2025, Yuzhou Group's basic loss per share was **RMB 0.88** Basic Loss Per Share (2025 H1) | Indicator | 2025 H1 (RMB) | | :--- | :--- | | Basic Loss Per Share | 0.88 | [Liquidity and Financial Resources](index=26&type=section&id=Liquidity%20and%20Financial%20Resources) Yuzhou Group actively manages its debt, with cash and restricted cash totaling **RMB 2.80824 billion** as of June 30, 2025, and total borrowings of **RMB 51.97164 billion**, indicating severe liquidity pressure [Cash Position](index=26&type=section&id=Cash%20Position) As of June 30, 2025, Yuzhou Group's cash and cash equivalents and restricted cash totaled approximately **RMB 2.80824 billion** Cash and Cash Equivalents and Restricted Cash (As of June 30, 2025) | Indicator | Amount (RMB thousand) | | :--- | :--- | | Cash and Cash Equivalents and Restricted Cash | 2,808,240 | [Borrowings](index=26&type=section&id=Borrowings) As of June 30, 2025, Yuzhou Group's total interest-bearing bank and other borrowings, corporate bonds, and priority notes amounted to **RMB 51.97164 billion**, with a weighted average interest rate of **7.91%** - The decrease in borrowings was due to the repayment of bank and other borrowings during the period[77](index=77&type=chunk) Borrowings Overview (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Interest-bearing Bank and Other Borrowings, Corporate Bonds and Priority Notes Balance | 51,971,640 | 52,620,220 | -1.23 | | Weighted Average Interest Rate | 7.91% | 8.07% | -0.16 percentage points | | Asset-Liability Ratio Excluding Pre-receipts | 127.83% | 115.10% | 12.73 percentage points (Increase) | [Net Gearing Ratio](index=26&type=section&id=Net%20Gearing%20Ratio) As of June 30, 2025, Yuzhou Group's net gearing ratio was **-252.81%**, indicating negative equity and extremely high financial leverage Net Gearing Ratio (As of June 30, 2025) | Indicator | Ratio | | :--- | :--- | | Net Gearing Ratio | -252.81% | [Guarantees](index=27&type=section&id=Guarantees) As of June 30, 2025, Yuzhou Group provided mortgage loan guarantees to banks totaling **RMB 12.81392 billion** and financing guarantees to joint ventures and associates Guarantee Amounts (As of June 30, 2025) | Guaranteed Party | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Mortgage Loans to Property Purchasers | 12,813,920 | 11,450,960 | | Financing for Joint Ventures | 52,920 | 52,920 | | Financing for Associates | 1,170,040 | 888,940 | | Financing for Contractors | 10,020 | 6,760 | | Financing for Independent Third Parties | 4,774,860 | 4,798,420 | [Currency Risk](index=27&type=section&id=Currency%20Risk) As of June 30, 2025, approximately **83.62%** of Yuzhou Group's total borrowings were denominated in HKD and USD, exposing the Group to currency risk - Approximately **83.62%** of borrowings were denominated in HKD and USD, posing exchange rate risk[80](index=80&type=chunk) - The Group regularly monitors exchange rate risk but currently deems no foreign exchange hedging arrangements necessary[81](index=81&type=chunk) Borrowings and Cash Balance by Currency (As of June 30, 2025) | Currency | Borrowings Balance (RMB thousand) | Cash Balance (RMB thousand) | | :--- | :--- | :--- | | HKD | 608,057 | 36,574 | | RMB | 8,510,643 | 2,653,331 | | USD | 42,852,935 | 118,335 | | **Total** | **51,971,635** | **2,808,240** | [Employees and Remuneration Policy](index=28&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, Yuzhou Group had **981** employees, focusing on enhancing organizational effectiveness, fostering team vitality, and integrating cultural assessment into talent selection and retention [Number of Employees and Corporate Culture](index=28&type=section&id=Number%20of%20Employees%20and%20Corporate%20Culture) As of June 30, 2025, Yuzhou Group had **981** employees, guided by core values of "Responsibility, Pragmatism, Synergy, Win-win" and an annual theme of "Acting with Integrity" - The Group's core values are "Responsibility, Pragmatism, Synergy, Win-win", with an annual theme of "Acting with Integrity"[82](index=82&type=chunk) - Cultural assessment is integrated into talent selection and retention to develop responsible and pragmatic talent, and to continuously motivate employees[82](index=82&type=chunk) Number of Employees (As of June 30, 2025) | Indicator | Quantity | | :--- | :--- | | Total Employees | 981 | [Employment and Remuneration Policy](index=28&type=section&id=Employment%20and%20Remuneration%20Policy) Yuzhou Group's employee remuneration is determined by market levels, individual performance, and experience, with bonuses distributed based on performance - Employee remuneration is determined based on market salary levels, individual performance, and work experience[84](index=84&type=chunk) - The Group distributes bonuses based on employee performance[84](index=84&type=chunk) [Events After Reporting Period](index=16&type=section&id=Events%20After%20Reporting%20Period) Post-reporting period, Yuzhou Group completed a rights issue raising approximately **HKD 92.2 million** and implemented an offshore debt restructuring plan, resolving approximately **USD 6.68 billion** in debt to improve capital structure and liquidity - The rights issue has been completed, with **2,690,960,456** rights shares allotted and issued, raising net proceeds of approximately **HKD 92.2 million** for restructuring support agreement fees, creditor fees, and general working capital[42](index=42&type=chunk)[85](index=85&type=chunk) - The offshore debt restructuring plan became effective on August 29, 2025, with approximately **USD 6.68 billion** of debt (together with related accrued interest) fully discharged and released in exchange for cash, new shares, and new notes[42](index=42&type=chunk)[87](index=87&type=chunk) - After the restructuring effective date, a total of **5,645,000,000** new shares (representing approximately **37.9%** of the total issued shares immediately after the allotment of new equity) were issued to scheme creditors[42](index=42&type=chunk) - The terms of the short-term notes have been revised, including capitalization of accrued interest, the right to pay interest in kind, removal of mandatory redemption dates, and reduction of minimum principal amounts, to enhance the Group's financial stability after the restructuring effective date[86](index=86&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) This section covers Yuzhou Group's other key information, including no interim dividend, no significant acquisitions or disposals, financial assistance to affiliates, public float, and corporate governance updates [Interim Dividend](index=30&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 does not recommend the payment of an interim dividend for the six months ended June 30, 2025[89](index=89&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries, Joint Ventures and Associates](index=30&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Joint%20Ventures%20and%20Associates) During the reporting period, the Company did not undertake any significant acquisitions or disposals - During the period, the Company did not undertake any significant acquisitions or disposals[90](index=90&type=chunk) [Financial Assistance to Affiliated Companies](index=31&type=section&id=Financial%20Assistance%20to%20Affiliated%20Companies) As of June 30, 2025, Yuzhou Group provided total financial assistance of **RMB 8.18949 billion** to affiliated companies, including advances and financing guarantees - Advances are unsecured, interest-free, and have no fixed repayment terms[93](index=93&type=chunk) Total Financial Assistance to Affiliated Companies (As of June 30, 2025) | Item | Amount (RMB thousand) | | :--- | :--- | | Advances to Affiliated Companies | 6,966,534 | | Financing Guarantees to Affiliated Companies | 1,222,959 | | **Total** | **8,189,493** | Consolidated Financial Position of Affiliated Companies and the Group's Share of Equity (As of June 30, 2025) | Indicator | Consolidated Financial Position (RMB thousand) | Group's Share of Equity (RMB thousand) | | :--- | :--- | :--- | | Net Assets | 25,022,376 | 8,392,503 | [Sufficient Public Float](index=33&type=section&id=Sufficient%20Public%20Float) As of the announcement date, the Company has 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[94](index=94&type=chunk) [No Material Changes](index=33&type=section&id=No%20Material%20Changes) There have been no material changes in the Company's business since the publication of its most recent annual report for the year ended December 31, 2024 - There have been no material changes in the Company's business since the publication of the 2024 annual report[95](index=95&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=33&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and no treasury shares were held - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[96](index=96&type=chunk) - As of the end of the reporting period, the Company held no treasury shares[96](index=96&type=chunk) [Standard Code for Securities Transactions by Directors](index=33&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code for directors' securities transactions no less stringent than the Listing Rules, and directors confirmed compliance during the period - The Company has adopted a stringent code for directors' securities transactions, and directors have confirmed compliance with its provisions throughout the period[97](index=97&type=chunk) [Corporate Governance](index=33&type=section&id=Corporate%20Governance) Yuzhou Group adheres to the Corporate Governance Code, with the Chairman and CEO roles combined, a deviation from the code, but the Board ensures sufficient balance of power - The Group has consistently adopted, applied, and complied with the Corporate Governance Code in Appendix C1 of the Listing Rules[98](index=98&type=chunk) - The roles of Chairman and Chief Executive Officer are combined and held by Ms. Kwok Ying Lan, which deviates from Code Provision C.2.1[99](index=99&type=chunk) - The Board believes that sufficient balance of power and safeguards are in place and will be regularly reviewed and monitored[99](index=99&type=chunk) [Share Option Scheme](index=34&type=section&id=Share%20Option%20Scheme) No share options were granted by the Company during the six months ended June 30, 2025 - No share options were granted by the Company during the six months ended June 30, 2025[100](index=100&type=chunk) [Share Award Scheme](index=34&type=section&id=Share%20Award%20Scheme) Under the Share Award Scheme, the Board may grant awarded shares to selected employees, with a total of **10,324,504** shares available for award as of June 30, 2025 - The Board may, at its discretion, select employees to participate in the Share Award Scheme and grant awarded shares[101](index=101&type=chunk) - The maximum number of shares that may be awarded to a selected employee shall not exceed **1%** of the Company's issued share capital from time to time[103](index=103&type=chunk) Total Shares Under Share Award Scheme (As of June 30, 2025) | Indicator | Quantity | | :--- | :--- | | Total Shares Available for Award | 10,324,504 shares | | Percentage of Issued Shares | Approximately 0.16% | [Review of Accounts](index=35&type=section&id=Review%20of%20Accounts) The Company's Audit Committee reviewed the Group's accounting policies and the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, with no disagreements with the Board - The Audit Committee has reviewed the Group's accounting policies and interim financial statements[105](index=105&type=chunk) - There were no disagreements between the Board and the Audit Committee[105](index=105&type=chunk) [Publication of Results Announcement and Interim Report](index=35&type=section&id=Publication%20of%20Results%20Announcement%20and%20Interim%20Report) This announcement has been published on the Company's and HKEX websites, and the 2025 interim report will be dispatched to shareholders and published accordingly - This announcement has been published on the Company's website (http://yuzhou-group.com/) and the HKEX website (www.hkexnews.hk)[106](index=106&type=chunk) - The 2025 interim report will be dispatched to shareholders and published on the aforementioned websites at the appropriate time[106](index=106&type=chunk) [Outlook](index=36&type=section&id=Outlook) Yuzhou Group anticipates a bottoming-out and recovery in the H2 2025 real estate market, with continued supportive national policies, and will focus on sales, cash management, asset revitalization, and talent development - The real estate market is expected to bottom out and recover in H2 2025, with national policies continuing to be relaxed to stimulate demand[107](index=107&type=chunk) - The Group will address industry challenges with three core principles: "Strategic Clarity, Innovative Breakthroughs, and Collective Progress"[108](index=108&type=chunk) - The Group will continue to prioritize sales and cash management, promote marketing innovation, strictly manage cash flow, accelerate the revitalization of existing assets, optimize its talent management system, and enhance service quality[108](index=108&type=chunk)

[GEM Listing Features and Disclaimer](index=2&type=section&id=GEM%20Listing%20Features%20and%20Disclaimer) This section outlines the GEM market's high-risk nature for small and medium-sized enterprises and the Board's collective responsibility for the accuracy and completeness of the report [GEM Market Positioning and Risks](index=2&type=section&id=GEM%20Market%20Positioning%20and%20Risks) The GEM market provides a listing platform for high-risk SMEs, where investors should be aware of potential volatility and liquidity risks - The GEM market is positioned as a listing platform for high-investment-risk small and medium-sized companies[3](index=3&type=chunk) - Investing in GEM securities may face significant market volatility and does not guarantee high liquidity[3](index=3&type=chunk) [Directors' Responsibility Statement](index=2&type=section&id=Directors%27%20Responsibility%20Statement) The Board of Directors jointly and severally assumes full responsibility for the report's content, confirming its accuracy, completeness, and absence of misleading information - The Board of Directors jointly and severally assumes full responsibility for this report, confirming the information is accurate, complete, and not misleading[3](index=3&type=chunk) [Summary](index=3&type=section&id=Summary) This section provides a concise overview of the Group's financial performance, highlighting key revenue and loss figures for the reporting period [Financial Summary](index=3&type=section&id=Financial%20Summary) For the six months ended June 30, 2025, the Group's revenue from continuing operations significantly grew to HK$53.4 million, with loss attributable to equity holders narrowing to HK$0.3 million, and no interim dividend recommended Financial Performance Summary | Metric | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 53,400 | 24,800 | **115.3% increase** | | Loss attributable to equity holders of the Company | (300) | (1,700) | **82.4% loss narrowed** | - The Board does not recommend an interim dividend for the six months ended June 30, 2025[4](index=4&type=chunk) [Condensed Consolidated Financial Results](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Results) This section presents the Group's condensed consolidated financial results, including statements of profit or loss, financial position, equity changes, and cash flows [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's revenue from continuing operations significantly increased by 115% to HK$53,361 thousand, with gross profit rising to HK$6,971 thousand, and loss for the period narrowing to HK$326 thousand, resulting in a basic loss per share of 2.10 HK Cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 53,361 | 24,816 | **+115.0%** | | Cost of sales | (46,390) | (20,040) | +131.5% | | Gross profit | 6,971 | 4,776 | **+46.0%** | | Other income | 2,113 | 2,977 | -29.0% | | Selling and distribution expenses | (1,490) | (1,336) | +11.5% | | Administrative expenses | (7,843) | (7,874) | -0.4% | | Finance costs | (77) | (239) | -67.8% | | Loss before tax | (326) | (1,696) | **-80.8%** | | Loss for the period | (326) | (1,696) | **-80.8%** | | Loss attributable to equity holders of the Company for the period | (800) | (1,696) | **-52.8%** | | Basic loss per share (HK Cents) | (2.10) | (4.44) | **-52.7%** | - Total other comprehensive expenses for the period significantly narrowed from **(HK$2,075 thousand)** in 2024 to **(HK$20 thousand)** in 2025, primarily due to exchange differences[6](index=6&type=chunk) [Condensed Consolidated Statement of Financial Position](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets less current liabilities were HK$25,223 thousand, with net assets of HK$20,983 thousand, reflecting a significant increase in trade and other receivables and a decrease in inventories within current assets Condensed Consolidated Statement of Financial Position | Metric | As of June 30, 2025 (HK$ Thousand) | As of December 31, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 3,464 | 3,137 | +10.4% | | Current assets | 54,984 | 43,497 | +26.4% | | Current liabilities | 33,225 | 17,902 | +85.6% | | Net current assets | 21,759 | 25,595 | -14.9% | | Net assets | 20,983 | 21,003 | -0.1% | | Total equity attributable to equity holders of the Company | 20,509 | 21,003 | -2.3% | | Trade and other receivables | 34,656 | 18,642 | **+85.9%** | | Inventories | 11,945 | 18,626 | **-35.9%** | | Trade and other payables | 27,962 | 12,612 | **+121.7%** | [Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity attributable to equity holders of the Company slightly decreased from HK$21,003 thousand at the beginning of the period to HK$20,509 thousand, primarily due to the loss for the period, partially offset by an increase in exchange fluctuation reserve Condensed Consolidated Statement of Changes in Equity | Metric | As of January 1, 2025 (HK$ Thousand) | As of June 30, 2025 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Total equity attributable to equity holders of the Company | 21,003 | 20,509 | -2.3% | | Accumulated losses | (76,068) | (76,868) | Loss increased | | Exchange fluctuation reserve | 770 | 1,076 | **Increased by HK$306 thousand** | - Non-controlling interests were **HK$474 thousand** as of June 30, 2025, compared to zero in the same period of 2024, indicating a contribution to the loss for the period[10](index=10&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was HK$1,852 thousand, net cash used in investing activities was HK$986 thousand, and net cash from financing activities was HK$5,077 thousand, leading to cash and cash equivalents of HK$5,353 thousand at period-end Condensed Consolidated Statement of Cash Flows | Metric | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,852) | (6,135) | | Net cash from (used in) investing activities | (986) | 5 | | Net cash from financing activities | 5,077 | 4,827 | | Net increase (decrease) in cash and cash equivalents | 2,239 | (1,303) | | Cash and cash equivalents at end of period | 5,353 | 3,801 | - Net cash used in operating activities significantly decreased year-on-year, indicating an alleviation of operating cash outflow pressure[12](index=12&type=chunk) [Notes to the Unaudited Condensed Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section details the basis of preparation, significant accounting policies, and specific notes to the unaudited condensed consolidated interim financial statements [Basis of Preparation and Significant Accounting Policies](index=10&type=section&id=Basis%20of%20Preparation%20and%20Significant%20Accounting%20Policies) These interim financial statements are presented in HK dollars, prepared in accordance with HKAS 34 and GEM Listing Rules, using the historical cost convention, with no material impact from newly adopted or revised HKFRSs - The financial statements are presented in HK dollars, adhering to Hong Kong Accounting Standard 34 and the GEM Listing Rules[13](index=13&type=chunk) - The initial application of new and revised Hong Kong Financial Reporting Standards has no material impact on the financial position and performance for the current and prior periods[14](index=14&type=chunk) [Revenue](index=11&type=section&id=Revenue) The Group's revenue from continuing operations is entirely derived from the sale of cast metal products, amounting to HK$53,361 thousand for the six months ended June 30, 2025, a significant increase from the prior year Revenue Sources | Revenue Source | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Sale of cast metal products | 53,361 | 24,816 | [Segment Information](index=11&type=section&id=Segment%20Information) The Group operates in a single reportable operating segment, the metal casting segment, which has shown significant growth in revenue and performance, with major customers concentrated in Germany and the top three contributing most of the revenue - The Group has only one reportable operating segment, the metal casting segment[17](index=17&type=chunk) [Reportable Operating Segment](index=11&type=section&id=Reportable%20Operating%20Segment) The metal casting segment achieved revenue of HK$53,361 thousand in the first half of 2025, with segment results turning from a loss to a profit of HK$1,798 thousand, indicating improved operating efficiency Reportable Operating Segment Performance | Metric | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Segment revenue | 53,361 | 24,816 | | Segment results | 1,798 | (286) | [Revenue by Customer Location](index=12&type=section&id=Revenue%20by%20Customer%20Location) Germany is the Group's largest customer market, contributing HK$47,491 thousand in revenue for the first half of 2025, representing the majority of total revenue, with growth also seen in the China and US markets Revenue by Customer Location | Customer Location | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Germany | 47,491 | 22,468 | | China | 4,504 | 1,634 | | United States | 1,366 | 714 | [Non-current Assets by Geographical Location](index=12&type=section&id=Non-current%20Assets%20by%20Geographical%20Location) The Group's non-current assets are primarily located in China and Hong Kong, with non-current assets in China increasing to HK$2,518 thousand as of June 30, 2025 Non-current Assets by Geographical Location | Asset Geographical Location | As of June 30, 2025 (HK$ Thousand) | As of December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Hong Kong | 925 | 883 | | China | 2,518 | 1,830 | [Major Customer Information](index=13&type=section&id=Major%20Customer%20Information) For the six months ended June 30, 2025, Customers A, B, and C were the Group's major customers, contributing HK$12,099 thousand, HK$8,798 thousand, and HK$6,003 thousand in revenue respectively, all showing significant year-on-year growth Major Customer Revenue | Customer | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Customer A | 12,099 | 5,627 | | Customer B | 8,798 | 4,095 | | Customer C | 6,003 | 2,791 | [Income Tax Expense](index=14&type=section&id=Income%20Tax%20Expense) The Group is exempt from income tax in the Cayman Islands and British Virgin Islands, while Hong Kong profits tax uses a two-tiered system and China's corporate income tax rate is 25%; no income tax provision was made for the current or prior period due to the absence of assessable profits in Hong Kong and China subsidiaries - The Cayman Islands and British Virgin Islands are exempt from income tax[24](index=24&type=chunk) - Hong Kong profits tax operates under a two-tiered system, with a tax rate of **8.25%** for the first **HK$2 million** of assessable profits and **16.5%** for the remainder[24](index=24&type=chunk)[25](index=25&type=chunk) - China subsidiaries are subject to a corporate income tax rate of **25%**[26](index=26&type=chunk) - No income tax provision was made for the current or prior period due to the absence of assessable profits in Hong Kong and China subsidiaries[26](index=26&type=chunk) [Loss for the Period and Interim Dividend](index=15&type=section&id=Loss%20for%20the%20Period%20and%20Interim%20Dividend) For the six months ended June 30, 2025, the loss for the period was net of inventory costs of HK$46,390 thousand and depreciation of plant and equipment of HK$278 thousand; the Board does not recommend an interim dividend Deducted Items from Loss for the Period | Deducted Item | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Cost of inventories recognized as expense | 46,390 | 20,040 | | Depreciation of plant and equipment | 278 | 308 | | Depreciation of right-of-use assets | – | 1,158 | - The Board does not recommend an interim dividend for the six months ended June 30, 2025[27](index=27&type=chunk) [Loss Per Share](index=15&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic loss per share was 2.10 HK Cents, a significant narrowing from 4.44 HK Cents in the prior year, with no adjustment for diluted loss per share due to the absence of potential dilutive ordinary shares Loss Per Share | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Weighted average number of ordinary shares in issue (Thousand Shares) | 38,184 | 38,184 | | Loss attributable to equity holders of the Company for the period (HK$ Thousand) | (326) | (1,696) | | Basic loss per share (HK Cents) | (2.10) | (4.44) | - Basic loss per share was not adjusted as there were no potential dilutive ordinary shares in issue[30](index=30&type=chunk) [Trade and Other Receivables, Deposits and Prepayments](index=16&type=section&id=Trade%20and%20Other%20Receivables%2C%20Deposits%20and%20Prepayments) As of June 30, 2025, total trade and other receivables increased to HK$34,656 thousand, with trade receivables (net of loss allowance) at HK$25,343 thousand, and an average credit period of 30 to 90 days Trade and Other Receivables, Deposits and Prepayments | Metric | As of June 30, 2025 (HK$ Thousand) | As of December 31, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Trade receivables | 25,343 | 6,203 | **+308.6%** | | Deposits and other receivables | 9,313 | 12,863 | -27.5% | | Total | 34,656 | 19,066 | **+81.8%** | - The aging analysis of trade receivables shows that amounts overdue for more than 90 days but less than one year constitute the largest portion, at **HK$7,798 thousand**[33](index=33&type=chunk) - The Group grants an average credit period of **30 to 90 days** to trade customers and holds no collateral[32](index=32&type=chunk) [Trade and Other Payables](index=17&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables increased to HK$27,962 thousand, with trade payables at HK$17,631 thousand, and all amounts expected to be settled within one year Trade and Other Payables | Metric | As of June 30, 2025 (HK$ Thousand) | As of December 31, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Trade payables | 17,631 | 4,669 | **+277.6%** | | Accruals and other payables | 10,331 | 7,943 | +30.1% | | Total | 27,962 | 12,612 | **+121.7%** | - The aging analysis of trade payables indicates that amounts due within 30 days represent the largest portion, at **HK$12,837 thousand**[35](index=35&type=chunk) [Share Capital](index=18&type=section&id=Share%20Capital) As of June 30, 2025, the Company's authorized share capital was HK$100,000 thousand, with issued and fully paid share capital of HK$30,547 thousand, comprising 38,184,000 shares at a par value of HK$0.8 per share, consistent with the end of 2024 Share Capital | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Authorized share capital (HK$ Thousand) | 100,000 | 100,000 | | Issued and fully paid share capital (HK$ Thousand) | 30,547 | 30,547 | | Total number of shares in issue (Thousand Shares) | 38,184 | 38,184 | | Par value per share | HK$0.8 | HK$0.8 | [Significant Related Party Transactions and Balances](index=19&type=section&id=Significant%20Related%20Party%20Transactions%20and%20Balances) For the six months ended June 30, 2025, key management personnel remuneration was HK$688 thousand, and the outstanding balance with related party Ms. Hu Lanying decreased to HK$739 thousand from HK$1,482 thousand at the end of 2024, being unsecured, interest-free, and repayable on demand Key Management Personnel Remuneration | Metric | For the six months ended June 30, 2025 (HK$ Thousand) | For the six months ended June 30, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Key management personnel remuneration | 688 | 688 | Related Party Balances | Related Party | As of June 30, 2025 (HK$ Thousand) | As of December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Ms. Hu Lanying (Director) | 739 | 1,482 | - Related party balances are unsecured, interest-free, and repayable on demand[38](index=38&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business operations, financial performance, liquidity, and future outlook for the reporting period [Business Review and Prospects](index=20&type=section&id=Business%20Review%20and%20Prospects) The Group primarily engages in the trading and manufacturing of cast metal components in China, with significant revenue growth in the metal casting business driven by the lifting of overseas lockdowns and product portfolio diversification, despite challenging global economic conditions - The Group primarily engages in the trading and manufacturing of cast metal components in China[39](index=39&type=chunk) - The global economic environment continues to face challenges due to interest rate hikes and inflation[40](index=40&type=chunk) [Metal Casting Business](index=20&type=section&id=Metal%20Casting%20Business) Metal casting products include components for pumps, valves, filters, and food machinery, with Germany as the primary market; the business saw approximately 115% year-on-year revenue growth due to lifted overseas lockdowns and product diversification - Metal casting products primarily include pump components, valve components, filter components, and food machinery components[40](index=40&type=chunk) - Germany is the Group's largest market, with customers also from China and the United States[40](index=40&type=chunk) - Metal casting business revenue increased by approximately **115%** year-on-year, mainly due to rising demand across various industries and strategic product portfolio diversification[40](index=40&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) The Group's revenue from continuing operations increased by 115% year-on-year to HK$53.36 million, gross profit grew by 46% to HK$6.97 million, administrative expenses slightly decreased, and loss for the period significantly narrowed by 82.4% to HK$0.3 million - The financial review covers revenue, gross profit, selling and distribution expenses, administrative expenses, finance costs, and loss for the period[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Revenue](index=20&type=section&id=Revenue) Revenue from continuing operations increased by approximately 115% year-on-year to HK$53.36 million, primarily attributed to a significant improvement in the global economic environment Revenue from Continuing Operations | Metric | For the six months ended June 30, 2025 (HK$ Million) | For the six months ended June 30, 2024 (HK$ Million) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 53.36 | 24.81 | **115%** | [Gross Profit](index=20&type=section&id=Gross%20Profit) Gross profit from continuing operations increased to HK$6.97 million, an increase of HK$2.19 million from the prior year, representing approximately 46% growth Gross Profit from Continuing Operations | Metric | For the six months ended June 30, 2025 (HK$ Million) | For the six months ended June 30, 2024 (HK$ Million) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Gross profit | 6.97 | 4.78 | **46%** | [Selling and Distribution Expenses](index=20&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased to HK$1.49 million, primarily comprising packaging, transportation, customs duties, agency fees, and insurance costs Selling and Distribution Expenses | Metric | For the six months ended June 30, 2025 (HK$ Million) | For the six months ended June 30, 2024 (HK$ Million) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 1.49 | 1.34 | **11.2%** | [Administrative Expenses](index=21&type=section&id=Administrative%20Expenses) Administrative expenses slightly decreased by 0.01% to HK$7.84 million, mainly including directors' and employees' salaries and benefits, exchange losses, and audit and legal professional fees Administrative Expenses | Metric | For the six months ended June 30, 2025 (HK$ Million) | For the six months ended June 30, 2024 (HK$ Million) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Administrative expenses | 7.84 | 7.87 | -0.4% | [Finance Costs](index=21&type=section&id=Finance%20Costs) Finance costs primarily consist of interest on lease liabilities and other borrowings - Finance costs primarily arise from interest on lease liabilities and other borrowings[45](index=45&type=chunk) [Loss for the Period](index=21&type=section&id=Loss%20for%20the%20Period) Loss attributable to equity holders of the Company significantly narrowed to HK$0.3 million, a notable improvement from HK$1.7 million in the prior year Loss Attributable to Equity Holders | Metric | For the six months ended June 30, 2025 (HK$ Million) | For the six months ended June 30, 2024 (HK$ Million) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Loss attributable to equity holders of the Company | 0.3 | 1.7 | **82.4% loss narrowed** | [Interim Dividend](index=21&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2025 - The Board does not recommend an interim dividend for the six months ended June 30, 2025[47](index=47&type=chunk) [Liquidity and Financial Resources](index=21&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's funds primarily originate from business operations and financing activities, with cash and cash equivalents of HK$5.4 million as of June 30, 2025, and no other interest-bearing borrowings apart from a director's loan Cash and Cash Equivalents | Metric | As of June 30, 2025 (HK$ Million) | As of December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Cash and cash equivalents | 5.4 | 6.2 | - The Group's funds primarily originate from business operations and financing activities[48](index=48&type=chunk) - Apart from a director's loan of approximately **HK$0.7 million**, the Group has no other interest-bearing borrowings[48](index=48&type=chunk) [Gearing Ratio](index=21&type=section&id=Gearing%20Ratio) As of June 30, 2025, the Group's gearing ratio was 24.6%, a slight increase from 23.8% at the end of 2024 Gearing Ratio | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Gearing ratio | **24.6%** | 23.8% | [Capital Structure](index=22&type=section&id=Capital%20Structure) The Company's capital consists solely of ordinary shares, with 38,184,000 shares issued at HK$0.8 par value as of June 30, 2025, and no debt securities or other capital instruments - The Company's capital consists solely of ordinary shares[50](index=50&type=chunk) Issued Share Capital | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Total number of shares in issue (Shares) | 38,184,000 | 38,184,000 | | Par value per share | HK$0.8 | HK$0.8 | - The Group had no debt securities or other capital instruments at the end of the period[50](index=50&type=chunk) [Treasury Policy](index=22&type=section&id=Treasury%20Policy) The Group adopts a prudent financial management approach, maintaining a robust liquidity position and solvency through close monitoring of liquidity, ample cash, and committed credit facilities - The Group adopts a prudent financial management approach to maintain a robust liquidity position[51](index=51&type=chunk) - Management manages liquidity risk by monitoring liquidity, maintaining ample cash, and committed credit facilities[51](index=51&type=chunk) [Contingent Liabilities](index=22&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[52](index=52&type=chunk) [Pledge of Assets](index=22&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no pledged assets - As of June 30, 2025, the Group had no pledged assets[53](index=53&type=chunk) [Foreign Currency Risk](index=22&type=section&id=Foreign%20Currency%20Risk) The Group primarily sells products to customers in Germany, China, and the United States, with most revenue denominated in Euros, exposing it to foreign currency risk; while a surcharge mechanism partially hedges exchange rate fluctuations, there is no formal foreign currency hedging policy - The Group primarily sells products to customers in Germany, China, and the United States, with most revenue denominated in Euros, exposing it to foreign currency risk[54](index=54&type=chunk) - The Group partially hedges raw material costs and exchange rate fluctuations through a surcharge mechanism, but currently has no formal foreign currency hedging policy[54](index=54&type=chunk) [Capital Commitments](index=22&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no significant capital commitments - As of June 30, 2025, the Group had no significant capital commitments[55](index=55&type=chunk) [Material Investments Held](index=23&type=section&id=Material%20Investments%20Held) As of June 30, 2025, the Group held no material equity investments in other companies - As of June 30, 2025, the Group held no material equity investments in other companies[56](index=56&type=chunk) [Future Plans for Material Investments and Capital Assets](index=23&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of June 30, 2025, the Group had no future plans for material investments and capital assets - As of June 30, 2025, the Group had no future plans for material investments and capital assets[57](index=57&type=chunk) [Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies](index=23&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Affiliated%20Companies) For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries and affiliated companies - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries and affiliated companies[58](index=58&type=chunk) [Events After the Reporting Period](index=23&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the Company announced a capital reduction, share subdivision, and creation of new shares, subject to approval at an extraordinary general meeting - On August 26, 2025, the Company announced a capital reduction, reducing the par value per share from **HK$0.80** to **HK$0.01**[59](index=59&type=chunk) - Immediately following the capital reduction, the authorized unissued shares will be subdivided, and **3,016,536,000** adjusted shares of **HK$0.01** par value each will be created[59](index=59&type=chunk) - The relevant matters are subject to approval by shareholders at an extraordinary general meeting[59](index=59&type=chunk) [Employees and Remuneration Policy](index=23&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 95 employees, with total staff costs of HK$3.98 million; the Group offers competitive remuneration, reviewed regularly, and directors' and senior management's remuneration is reviewed by the Remuneration Committee Employee Headcount | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Number of employees (including directors) | 95 | 95 | Total Staff Costs | Metric | For the six months ended June 30, 2025 (HK$ Million) | For the six months ended June 30, 2024 (HK$ Million) | | :--- | :--- | :--- | | Total staff costs (including directors' remuneration) | 3.98 | 3.98 | - The Group recruits and promotes employees based on individual performance and development potential, offering competitive remuneration packages that are regularly reviewed[60](index=60&type=chunk) [Other Information](index=24&type=section&id=Other%20Information) This section presents additional information, including directors' and major shareholders' interests, share option schemes, and corporate governance matters [Directors' and Chief Executive's Interests and/or Short Positions in Shares, Underlying Shares, and Debentures of the Company or any Associated Corporation](index=24&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%2For%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures%20of%20the%20Company%20or%20any%20Associated%20Corporation) As of June 30, 2025, Ms. Hu Lanying held 20.99% of the Company's shares, and Mr. Li Qizhi held 5.00% of the shares; no other directors or chief executives held disclosable share interests Directors' and Chief Executive's Interests | Name of Director/Chief Executive | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Hu Lanying | Beneficial owner | 8,014,652 | **20.99%** | | Mr. Li Qizhi | Beneficial owner | 1,909,200 | **5.00%** | [Major Shareholders' Interests and/or Short Positions in Shares and Underlying Shares of the Company](index=25&type=section&id=Major%20Shareholders%27%20Interests%20and%2For%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2025, apart from the directors, Mr. Zhang Xiaowo and Mr. Fang Jinhuo were major shareholders, holding 5.39% and 6.97% of the shares, respectively Major Shareholders' Interests | Name | Nature of Interest | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhang Xiaowo | Personal interest | 2,056,600 | **5.39%** | | Mr. Fang Jinhuo | Personal interest | 2,661,150 | **6.97%** | [Share Option Scheme](index=25&type=section&id=Share%20Option%20Scheme) The Company's share option scheme was adopted on April 10, 2015, and expired on April 9, 2025, with no share options granted during its tenure - The share option scheme was adopted on April 10, 2015, and expired on April 9, 2025[63](index=63&type=chunk) - No share options were granted from the adoption date to the expiry date[64](index=64&type=chunk) [Directors' Rights to Acquire Shares](index=25&type=section&id=Directors%27%20Rights%20to%20Acquire%20Shares) For the six months ended June 30, 2025, no rights to acquire shares or debentures of the Company were granted to or exercised by any director or their associates - For the six months ended June 30, 2025, no rights to acquire shares or debentures of the Company were granted to or exercised by any director or their associates[65](index=65&type=chunk) [Purchase, Sale or Redemption of Securities](index=25&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Securities) 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 securities - 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 securities[66](index=66&type=chunk) [Compliance with the Code of Conduct for Securities Transactions by Directors](index=25&type=section&id=Compliance%20with%20the%20Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code of conduct for directors' securities transactions no less exacting than the GEM Listing Rules, and all directors confirmed compliance during the reporting period - The Company has adopted a code of conduct for directors' securities transactions no less exacting than the GEM Listing Rules[67](index=67&type=chunk) - All directors confirmed compliance with this code of conduct during the reporting period[67](index=67&type=chunk) [Competing Interests](index=26&type=section&id=Competing%20Interests) During the reporting period, to the best of the directors' knowledge, no director or controlling shareholder had any interest in a business that competes or is likely to compete with the Group's business - During the reporting period, to the best of the directors' knowledge, no director or controlling shareholder had any interest in a business that competes or is likely to compete with the Group's business[68](index=68&type=chunk) [Audit Committee](index=26&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors and chaired by Ms. Yuan Huimin, has reviewed this report and provided recommendations - The Audit Committee comprises three independent non-executive directors, with Ms. Yuan Huimin serving as chairperson[69](index=69&type=chunk) - The Audit Committee has reviewed this report and provided recommendations and opinions[69](index=69&type=chunk) [Corporate Governance](index=26&type=section&id=Corporate%20Governance) The Company has adopted the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules and complied with its code provisions during the reporting period - The Company has adopted the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules[70](index=70&type=chunk) - For the six months ended June 30, 2025, the Company complied with the code provisions of the Corporate Governance Code[70](index=70&type=chunk) [Changes in Directors' Information Disclosed Pursuant to GEM Listing Rules 17.50(2) and 17.50A(1)](index=26&type=section&id=Changes%20in%20Directors%27%20Information%20Disclosed%20Pursuant%20to%20GEM%20Listing%20Rules%2017.50%282%29%20and%2017.50A%281%29) During the reporting period, Ms. Hu Lanying was appointed Executive Director and Chairman of Nova Group Holdings Limited, Mr. Yang Yueyong was appointed Executive Director of the Company, Ms. Yuan Huimin ceased to be a member of the Nomination Committee, and Mr. Au Shui Keung was appointed a member of the Nomination Committee - Ms. Hu Lanying was appointed Executive Director and Chairman of Nova Group Holdings Limited, whose shares were delisted on August 7, 2025[71](index=71&type=chunk) - Mr. Yang Yueyong was appointed Executive Director of the Company on April 2, 2025[72](index=72&type=chunk) - Ms. Yuan Huimin ceased to be a member of the Company's Nomination Committee from June 27, 2025, and Mr. Au Shui Keung was appointed as a member of the committee[73](index=73&type=chunk)[74](index=74&type=chunk)

[Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue decreased by 13% year-on-year to RMB 272,278 thousand, with gross profit falling to RMB 13,151 thousand, and loss for the period expanding to RMB 25,987 thousand, resulting in basic and diluted loss per share of RMB (0.049) Condensed Consolidated Statement of Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 272,278 | 313,802 | -13.23% | | Cost of sales | (259,127) | (297,815) | -12.99% | | Gross profit | 13,151 | 15,987 | -17.61% | | Operating loss | (19,485) | (14,572) | 33.71% | | Loss and total comprehensive loss for the period | (25,987) | (18,576) | 39.89% | | Loss per share (basic and diluted) | (0.049) | (0.035) | 40.00% | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were RMB 1,229,695 thousand, a slight decrease from the end of 2024, with total equity at RMB 557,352 thousand and total liabilities increasing to RMB 672,343 thousand, primarily due to higher current liabilities Condensed Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 1,229,695 | 1,249,758 | -1.61% | | Non-current assets | 938,140 | 950,965 | -1.35% | | Current assets | 291,555 | 298,793 | -2.42% | | Total equity | 557,352 | 583,339 | -4.59% | | Total liabilities | 672,343 | 666,419 | 0.89% | | Current liabilities | 584,477 | 604,551 | -3.29% | | Non-current liabilities | 87,866 | 61,868 | 42.02% | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity attributable to owners of the company decreased from RMB 583,446 thousand at the beginning of the year to RMB 557,656 thousand, primarily due to a loss for the period of RMB 25,790 thousand Total Equity Attributable to Owners of the Company Changes (For the six months ended June 30) | Indicator | June 30, 2025 (RMB thousands) | January 1, 2025 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the Company | 557,656 | 583,446 | (25,790) | | Loss for the period | (25,790) | - | - | | Non-controlling interests | (304) | (107) | (197) | [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash generated from operating activities was RMB 15,363 thousand, a positive shift from a net outflow in the prior period, while net cash used in investing activities significantly decreased, and financing activities shifted from net generation to net usage, resulting in a net increase in cash and cash equivalents of RMB 417 thousand Condensed Consolidated Statement of Cash Flows Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Net cash generated from / (used in) operating activities | 15,363 | (26,585) | 41,948 | | Net cash used in investing activities | (1,130) | (42,820) | 41,690 | | Net cash (used in) / generated from financing activities | (13,816) | 40,892 | (54,708) | | Net increase / (decrease) in cash and cash equivalents | 417 | (28,513) | 28,930 | | Cash and cash equivalents at June 30 | 58,581 | 62,029 | (3,448) | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [1 General Information](index=8&type=section&id=1%20General%20Information) Changmao Biochemical Engineering Company Limited primarily engages in the production and sale of organic acid products, with its H shares listed on the Main Board of the Hong Kong Stock Exchange since June 28, 2013, and the condensed consolidated interim financial statements are presented in RMB - The company's principal business is the production and sale of organic acid products[8](index=8&type=chunk) - H shares were transferred to the Main Board of the Hong Kong Stock Exchange on June 28, 2013[8](index=8&type=chunk) [2 Basis of Preparation and Accounting Policies](index=8&type=section&id=2%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and are consistent with the accounting policies of the 2024 annual financial statements, though the Group faces significant going concern uncertainties due to net loss, net current liabilities, and a subsidiary's failure to meet bank loan financial covenants, for which management has developed mitigation plans - For the six months ended June 30, 2025, the Group recorded a **net loss of RMB 25,987,000**[12](index=12&type=chunk) - The Group has **net current liabilities of RMB 292,922,000**, current bank borrowings of RMB 487,961,000, and cash and bank balances of RMB 58,581,000[12](index=12&type=chunk) - A subsidiary failed to meet the asset-liability ratio financial covenants for two project loans totaling RMB 245,020,000, resulting in the reclassification of **RMB 168,860,000** of non-current portions as current liabilities[12](index=12&type=chunk) - Management has formulated several mitigation measures, including negotiating with banks, utilizing unutilized revolving bank facilities, consolidating production lines to reduce costs, and controlling administrative expenses and capital expenditures to support going concern[13](index=13&type=chunk)[14](index=14&type=chunk) [Going Concern Basis](index=8&type=section&id=Going%20Concern%20Basis) The company faces significant going concern uncertainties due to a loss for the period, high net current liabilities, and a subsidiary's failure to meet bank loan financial covenants, but management has proposed several mitigation measures, including bank negotiations, utilizing unutilized credit facilities, cost control, and new production line commissioning, to ensure sufficient working capital for the next 12 months - The Group recorded a **net loss of RMB 25,987,000** and **net current liabilities of RMB 292,922,000**[12](index=12&type=chunk) - A subsidiary's failure to meet the asset-liability ratio requirement for project loans led to **RMB 168,860,000** of non-current loans being reclassified as current liabilities[12](index=12&type=chunk) - Management plans to negotiate with banks, utilize **RMB 112,362,000** in unutilized revolving bank facilities, integrate production lines to reduce costs, control administrative expenses and capital expenditures to alleviate liquidity pressure[14](index=14&type=chunk) [2.1 New and Revised Standards](index=10&type=section&id=2.1%20New%20and%20Revised%20Standards) New Hong Kong Financial Reporting Standards effective from July 1, 2025, are not expected to have a significant impact on the Group's financial statements for the current and future periods - New Hong Kong Financial Reporting Standards have no significant impact on the accounting policies of the Group's condensed consolidated interim financial statements[11](index=11&type=chunk) [3 Estimates](index=11&type=section&id=3%20Estimates) The preparation of interim financial information involves management's judgments, estimates, and assumptions, with key sources of estimation uncertainty being the same as those applied in the 2024 annual consolidated financial statements - Key sources of significant judgments and estimation uncertainties made by management in preparing the interim financial information are the same as those in the 2024 annual financial statements[18](index=18&type=chunk) [4 Financial Risk Management](index=11&type=section&id=4%20Financial%20Risk%20Management) The Group is exposed to foreign currency, credit, liquidity, and interest rate risks, with no significant changes in risk management policies since year-end, and related information should be read in conjunction with the 2024 annual consolidated financial statements - The Group's activities are exposed to foreign currency risk, credit risk, liquidity risk, and cash flow and fair value interest rate risk[19](index=19&type=chunk) - There have been no significant changes in risk management policies since year-end[20](index=20&type=chunk) [5 Revenue and Segment Information](index=12&type=section&id=5%20Revenue%20and%20Segment%20Information) The Group primarily engages in the production and sale of organic acid products, which management considers a single operating segment, with Mainland China contributing the highest proportion of revenue for the six months ended June 30, 2025, despite an overall year-on-year revenue decrease - The Group is principally engaged in the production and sale of organic acid products and is presented as one operating segment[21](index=21&type=chunk) Sales Revenue by Region (For the six months ended June 30) | Region | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Mainland China | 196,143 | 222,042 | -11.66% | | Asia Pacific | 34,287 | 41,472 | -17.32% | | Europe | 30,713 | 34,902 | -11.99% | | Americas | 7,173 | 9,650 | -25.77% | | Other regions | 3,962 | 5,736 | -30.93% | | **Total** | **272,278** | **313,802** | **-13.23%** | [6 Other Income](index=13&type=section&id=6%20Other%20Income) For the six months ended June 30, 2025, total other income was RMB 3,282 thousand, a decrease from RMB 5,507 thousand in the prior period, mainly due to a significant reduction in income from the sale of scrap materials Other Income Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Sale of scrap materials | 4 | 1,704 | (1,700) | | Government grants | 2,472 | 2,965 | (493) | | Others | 806 | 838 | (32) | | **Total** | **3,282** | **5,507** | **(2,225)** | [7 Other Gains, Net](index=13&type=section&id=7%20Other%20Gains%2C%20Net) For the six months ended June 30, 2025, net other gains were RMB 496 thousand, a significant decrease from RMB 1,844 thousand in the prior period, primarily impacted by a reduction in net exchange gains Other Gains, Net Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Fair value gains on financial assets at fair value through profit or loss | 10 | 32 | (22) | | Net exchange gains | 575 | 1,812 | (1,237) | | Others | (89) | – | (89) | | **Total** | **496** | **1,844** | **(1,348)** | [8 Finance Costs, Net](index=13&type=section&id=8%20Finance%20Costs%2C%20Net) For the six months ended June 30, 2025, net finance costs increased to RMB 5,754 thousand, mainly due to a decrease in capitalized interest on bank borrowings, leading to higher actual interest expenses Finance Costs, Net Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Interest on bank borrowings | 9,903 | 10,678 | (775) | | Interest paid / payable on lease liabilities | 22 | 46 | (24) | | Less: Capitalized for qualifying assets | (3,882) | (7,319) | 3,437 | | Interest income from bank deposits | (289) | (535) | 246 | | **Finance costs, net** | **5,754** | **2,870** | **2,884** | [9 Loss Before Income Tax](index=14&type=section&id=9%20Loss%20Before%20Income%20Tax) For the six months ended June 30, 2025, loss before income tax expanded to RMB 25,239 thousand compared to the prior period, with depreciation expenses increasing while amortization of patent rights and right-of-use assets remained stable Loss Before Income Tax Composition (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Loss before income tax | (25,239) | (17,442) | (7,797) | | Amortisation of patent rights | 66 | 66 | 0 | | Amortisation of right-of-use assets | 1,526 | 1,526 | 0 | | Depreciation | 23,153 | 20,508 | 2,645 | [10 Income Tax Expense](index=14&type=section&id=10%20Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense was RMB 748 thousand, a decrease from the prior period, as the company benefits from a 15% preferential tax rate for high-tech enterprises and an additional deduction for R&D expenses - The company qualifies as a high-tech enterprise, enjoying a **preferential corporate income tax rate of 15%**[26](index=26&type=chunk) - The Group can claim a **200% tax deduction** (super deduction) for eligible R&D expenses when determining assessable profits[28](index=28&type=chunk) Income Tax Expense Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Current income tax | 640 | 632 | 8 | | Deferred income tax | 108 | 502 | (394) | | **Income tax expense** | **748** | **1,134** | **(386)** | [11 Loss Per Share](index=15&type=section&id=11%20Loss%20Per%20Share) For the six months ended June 30, 2025, basic and diluted loss per share attributable to owners of the company expanded to RMB (0.049), compared to RMB (0.035) in the prior period, primarily due to an increased loss for the period Loss Per Share Data (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to owners of the Company (RMB thousands) | 25,790 | 18,786 | | Weighted average number of ordinary shares in issue (shares) | 529,700,000 | 529,700,000 | | Loss per share (basic and diluted) (RMB) | (0.049) | (0.035) | [12 Dividends](index=16&type=section&id=12%20Dividends) 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 period - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025[31](index=31&type=chunk) [13 Patent Rights](index=16&type=section&id=13%20Patent%20Rights) As of June 30, 2025, the net book value of patent rights was RMB 440 thousand, a decrease from RMB 506 thousand at the beginning of the year, primarily due to amortization expenses Patent Rights Net Book Value Changes | Item | RMB thousands | | :--- | :--- | | Net book value at January 1, 2025 | 506 | | Amortisation | (66) | | Net book value at June 30, 2025 | 440 | [14 Capital Expenditure](index=16&type=section&id=14%20Capital%20Expenditure) As of June 30, 2025, the net book value of property, plant and equipment was RMB 580,197 thousand, construction in progress increased to RMB 241,614 thousand, and Dalian land use rights were pledged as collateral for bank financing Capital Expenditure Net Book Value (As of June 30) | Item | June 30, 2025 (RMB thousands) | January 1, 2025 (RMB thousands) | | :--- | :--- | :--- | | Property, plant and equipment | 580,197 | 604,275 | | Construction in progress | 241,614 | 230,344 | | Right-of-use assets | 88,833 | 90,359 | | Investment properties | 3,245 | 3,424 | - The land use rights of Changmao Dalian were pledged as collateral for bank financing for the Dalian factory[32](index=32&type=chunk) [15 Trade and Bills Receivables](index=17&type=section&id=15%20Trade%20and%20Bills%20Receivables) As of June 30, 2025, total trade and bills receivables amounted to RMB 68,600 thousand, an increase from the end of 2024, with trade receivables having credit terms ranging from 30 to 210 days, and the zero to three months aging category accounting for the largest proportion Trade and Bills Receivables (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables | 47,898 | 43,010 | | Bills receivables | 20,702 | 19,991 | | **Total** | **68,600** | **63,001** | Trade Receivables Aging Analysis (As of June 30) | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | 0 to 3 months | 43,998 | 40,841 | | 4 to 6 months | 4,691 | 3,216 | | Over 6 months | 341 | 85 | [16 Cash and Bank Balances](index=18&type=section&id=16%20Cash%20and%20Bank%20Balances) As of June 30, 2025, total cash and bank balances were RMB 62,405 thousand, with RMB accounting for the largest proportion, and the conversion and remittance of RMB balances are subject to China's foreign exchange controls Cash and Bank Balances (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 58,581 | 57,963 | | Pledged bank balances | 3,824 | 1,108 | | **Total** | **62,405** | **59,071** | Cash and Bank Balances by Currency (As of June 30) | Currency | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | RMB | 55,230 | 52,968 | | USD | 6,906 | 5,748 | | HKD | 269 | 355 | [17 Share Capital](index=19&type=section&id=17%20Share%20Capital) As of June 30, 2025, the company's issued share capital comprised 529,700,000 shares with a par value of RMB 0.10 each, totaling RMB 52,970 thousand in book value, with the share capital structure remaining unchanged Share Capital Structure (As of June 30) | Item | Number of shares | Book value (RMB thousands) | | :--- | :--- | :--- | | As of June 30, 2025 and December 31, 2024 | 529,700,000 | 52,970 | - The company's share capital includes **2,500,000 domestic shares**, **343,500,000 unlisted foreign shares**, and **183,700,000 H shares**[36](index=36&type=chunk) [18 Reserves](index=19&type=section&id=18%20Reserves) As of June 30, 2025, total reserves amounted to RMB 504,686 thousand, a decrease from RMB 530,476 thousand at the beginning of the year, primarily due to a reduction in retained earnings resulting from the loss for the period Reserves Movement (As of June 30) | Item | June 30, 2025 (RMB thousands) | January 1, 2025 (RMB thousands) | | :--- | :--- | :--- | | Share premium | 102,559 | 102,559 | | Statutory reserve | 87,233 | 87,233 | | Capital reserve | 461 | 461 | | Translation reserve | 7 | 7 | | Special reserve | 2,524 | 1,164 | | Retained earnings | 311,902 | 339,052 | | **Total** | **504,686** | **530,476** | - The **loss for the period of RMB 25,790 thousand** led to a decrease in retained earnings[37](index=37&type=chunk) [19 Bank Borrowings](index=20&type=section&id=19%20Bank%20Borrowings) As of June 30, 2025, total bank borrowings were RMB 524,361 thousand, with current bank borrowings accounting for RMB 487,961 thousand, and secured bank borrowings had a non-current portion of RMB 168,860 thousand reclassified as current liabilities due to a subsidiary's failure to meet asset-liability ratio requirements Bank Borrowings Composition (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Secured bank borrowings | 245,020 | 282,634 | | Unsecured bank borrowings | 279,341 | 241,906 | | **Total** | **524,361** | **524,540** | - Subsidiary Changmao Dalian failed to meet the asset-liability ratio requirement, resulting in **RMB 168,860 thousand** of non-current secured bank borrowings being reclassified as current liabilities[39](index=39&type=chunk) - The effective interest rate for secured bank borrowings is **4.4%**, and for unsecured bank borrowings is **3.1%**[40](index=40&type=chunk) [20 Trade and Bills Payables](index=22&type=section&id=20%20Trade%20and%20Bills%20Payables) As of June 30, 2025, total trade and bills payables amounted to RMB 49,724 thousand, a significant increase from the end of 2024, primarily driven by a notable growth in bills payables Trade and Bills Payables (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 30,604 | 23,158 | | Bills payables | 19,120 | 5,542 | | **Total** | **49,724** | **28,700** | Trade Payables Aging Analysis (As of June 30) | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | 0 to 6 months | 29,468 | 22,565 | | 7 to 12 months | 2 | 163 | | Over 12 months | 1,134 | 430 | [21 Contingent Liabilities](index=22&type=section&id=21%20Contingent%20Liabilities) As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities[42](index=42&type=chunk) [22 Commitments](index=22&type=section&id=22%20Commitments) As of June 30, 2025, the Group's capital commitments for property, plant and equipment amounted to RMB 47,133 thousand, an increase from the end of 2024, primarily for the new Dalian factory and production line upgrades Capital Commitments (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Contracted but not provided for | 47,133 | 34,719 | [Business and Financial Review](index=23&type=section&id=Business%20and%20Financial%20Review) [Business Review and Outlook](index=23&type=section&id=Business%20Review%20and%20Outlook) In the first half of 2025, the Group's sales revenue decreased by 13%, and net loss attributable to shareholders expanded by 37%, primarily due to geopolitical uncertainties, tariff policies, and weak demand for maleic anhydride downstream products; the company actively adjusted its production and sales strategies, focusing on product quality, industrial upgrading, and R&D, while looking to future transformation, technological innovation, enhanced safety and environmental protection, and high-end customer development - Sales revenue decreased by approximately **13%** in the first half, and net loss attributable to owners of the Company expanded by approximately **37%**[45](index=45&type=chunk) - The decline in performance was mainly due to geopolitical conflicts, tariff policy uncertainties, weaker-than-expected demand for maleic anhydride downstream products, and increased interest expenses[45](index=45&type=chunk) - Changzhou factory's production and sales volume increased but gross profit margin decreased, Dalian factory's production and sales were lower than the prior period, and some production lines from Lianyungang have been relocated to Dalian and commenced operation[47](index=47&type=chunk) - The Group will fully support the development of the Dalian factory as its main chemical product production base, extending into new materials, APIs, and novel feed additives[49](index=49&type=chunk) [Interim Results](index=23&type=section&id=Interim%20Results) For the six months ended June 30, 2025, the Group's sales revenue decreased by 13% year-on-year to RMB 272,278 thousand, and net loss attributable to owners of the company expanded by 37% to RMB 25,790 thousand, with performance decline mainly attributed to external market factors and increased interest expenses Interim Results Overview (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Sales revenue | 272,278 | 313,802 | -13.23% | | Net loss attributable to owners of the Company | 25,790 | 18,786 | 37.28% | - The decline in performance was mainly due to geopolitical conflicts, tariff policy uncertainties, weaker-than-expected demand for maleic anhydride downstream products, and increased interest expenses[45](index=45&type=chunk) [Business Review](index=23&type=section&id=Business%20Review) In the first half of 2025, the Group maintained balanced production and sales, with Changzhou factory showing increased production and sales but lower gross profit margin, while Dalian factory's performance was below the prior period, and some Lianyungang production lines have been relocated to Dalian and commenced operation, as the company focuses on product quality, industrial upgrading, and continuous safety and environmental efforts - Changzhou factory's main product production and sales volume increased year-on-year, but the gross profit margin slightly decreased due to unit price impacts[47](index=47&type=chunk) - Some production lines from Lianyungang factory have been relocated to Dalian and commenced operation, positively impacting business operations[47](index=47&type=chunk) - The Group received certifications for Jiangsu Advanced Intelligent Factory and "Jiangsu Quality Product," and continues to enhance safety and environmental protection[47](index=47&type=chunk) [Research and Development](index=24&type=section&id=Research%20and%20Development) In the first half of 2025, the Group's R&D projects progressed steadily, covering new product development and existing product process improvements, with the Pharmaceutical Division having laid out 12 API and pharmaceutical excipient varieties, 7 of which have received "A" status approval results, and one new pharmaceutical excipient is undergoing quality stability assessment - Multiple self-developed and outsourced R&D projects were carried out as planned in the first half, covering new product development and existing product process improvements[48](index=48&type=chunk) - **12 API and pharmaceutical excipient varieties** have been laid out, with **7 varieties** receiving "A" status approval results in the "joint review and approval with formulations"[48](index=48&type=chunk) - A new pharmaceutical excipient is undergoing quality stability assessment and is expected to be submitted to the National Medical Products Administration's Center for Drug Evaluation within the year[48](index=48&type=chunk) [Prospects and Outlook](index=24&type=section&id=Prospects%20and%20Outlook) The Group will adhere to technological innovation, focusing on economic efficiency and customer needs, continuously reducing costs and increasing efficiency, including supporting the Dalian factory as a main production base, accelerating technological innovation, enhancing safety and environmental protection, strengthening risk control, and expanding high-end and international markets - Will fully support the development of the Dalian factory as the Group's main chemical product production base, extending into new materials, APIs, and novel feed additives[49](index=49&type=chunk) - Continuously increase R&D investment, integrate resources and R&D teams, accelerate R&D speed, and cultivate new products that are safe, environmentally friendly, and market-competitive[50](index=50&type=chunk) - Continue to strengthen safety risk control, promote cleaner production, and strive to improve levels in energy and resource consumption, carbon neutrality, and pollutant emissions[51](index=51&type=chunk) - The sales team is dedicated to developing key accounts and end-users, enhancing brand awareness and added value through product quality and service, and focusing on international market expansion[52](index=52&type=chunk) [Review of Financial Statements](index=26&type=section&id=Review%20of%20Financial%20Statements) The Audit Committee, together with the Directors, has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025 - The Audit Committee, together with the Directors, has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025[53](index=53&type=chunk) [Dividends](index=26&type=section&id=Dividends) The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025[54](index=54&type=chunk) [Segment Information](index=26&type=section&id=Segment%20Information) For the six months ended June 30, 2025, the Group's export revenue accounted for approximately 28% of total revenue, and domestic sales accounted for approximately 72%, showing little change compared to the prior period Revenue Geographical Distribution (For the six months ended June 30) | Sales Region | 2025 | 2024 | | :--- | :--- | :--- | | Export | Approx. 28% | Approx. 29% | | Domestic sales | Approx. 72% | Approx. 71% | [Exchange Rate Fluctuation Risk and Hedging](index=26&type=section&id=Exchange%20Rate%20Fluctuation%20Risk%20and%20Hedging) The Group primarily operates in China and is exposed to USD-related foreign currency risk, which management regularly monitors and partially hedges using forward foreign exchange agreements when necessary - The Group primarily operates in China and is exposed to USD-related foreign currency risk[56](index=56&type=chunk) - Management regularly monitors foreign currency risk and used forward foreign exchange agreements to hedge part of the USD risk during the period[56](index=56&type=chunk) [Liquidity and Financial Resources](index=26&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, the Group's total outstanding bank borrowings were RMB 524,361 thousand, with a debt-to-asset ratio of 54.7%, and capital commitments of RMB 47,133 thousand, mainly for the new Dalian factory and production line upgrades, intended to be met through operating cash flow and/or bank financing Liquidity and Financial Resources Overview (As of June 30) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total outstanding bank borrowings | 524,361 | 524,540 | | Debt-to-asset ratio | 54.7% | 53.3% | | Cash and cash equivalents at bank | 58,581 | 57,963 | | Capital commitments | 47,133 | 34,719 | - Capital commitments are mainly for the new Dalian factory and production line upgrades, intended to be met through operating cash flows and/or bank financing[57](index=57&type=chunk) [Employees](index=27&type=section&id=Employees) As of June 30, 2025, the Group had 533 employees, with total staff costs of RMB 40,605 thousand, a decrease from the prior period primarily due to reduced headcount and structural changes, and while an employee incentive scheme is in place, no profit-based bonuses were distributed this period Employees and Staff Costs (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Total number of employees | 533 | 647 | | Total staff costs (RMB thousands) | 40,605 | 42,389 | - The decrease in staff costs was mainly due to a reduction in the number of employees and changes in employee structure[59](index=59&type=chunk) - The company has an employee incentive scheme, but no profit-based bonuses were distributed during the period[59](index=59&type=chunk) [Material Investments](index=27&type=section&id=Material%20Investments) As of June 30, 2025, and December 31, 2024, the Group held no material investments, with major capital expenditures concentrated on the Dalian factory - The Group held no material investments[60](index=60&type=chunk) - Major capital commitments are concentrated on capital expenditure for the Dalian factory[60](index=60&type=chunk) [Changes in Group Structure During the Period](index=28&type=section&id=Changes%20in%20Group%20Structure%20During%20the%20Period) For the six months ended June 30, 2025, the Group did not acquire or dispose of any significant subsidiaries or associated companies - The Group did not acquire or dispose of any significant subsidiaries or associated companies[62](index=62&type=chunk) [Contingent Liabilities](index=28&type=section&id=Contingent%20Liabilities) As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities[63](index=63&type=chunk) [Going Concern](index=28&type=section&id=Going%20Concern) The Group faces significant going concern uncertainties due to a loss for the period, net current liabilities, and failure to meet bank loan financial covenants; although the Board has reviewed cash flow forecasts and formulated mitigation measures, significant uncertainty remains regarding the realization of these plans - The Group recorded a **net loss of RMB 25,987,000** and **net current liabilities of RMB 292,922,000**[64](index=64&type=chunk) - The reclassification of **RMB 168,860,000** of the non-current portion of project loans as current liabilities indicates significant uncertainty[64](index=64&type=chunk) - The Board has reviewed management's cash flow forecasts and believes the Group will have sufficient working capital, but significant uncertainty remains regarding the realization of these plans[65](index=65&type=chunk) [Disclosure of Interests](index=29&type=section&id=Disclosure%20of%20Interests) [Directors', Supervisors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any of its Specified Corporations or any other Associated Corporations](index=29&type=section&id=Directors%27%2C%20Supervisors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20any%20of%20its%20Specified%20Corporations%20or%20any%20other%20Associated%20Corporations) As of June 30, 2025, Mr. Rui Xinsheng and his spouse Ms. Leng Yixin held beneficial interests in the company's domestic shares, unlisted foreign shares, and H shares, making them major shareholders, while other directors and supervisors also held unlisted foreign share interests through associated companies Directors' Interests in Shares (As of June 30, 2025) | Director | Type of interest | Number of domestic shares | Number of unlisted foreign shares | Number of H shares | | :--- | :--- | :--- | :--- | :--- | | Mr. Rui Xinsheng | Beneficial owner, spouse's interest and interest of controlled corporations | 2,500,000 | 135,000,000 | 12,236,000 | | Ms. Leng Yixin | Beneficial owner, spouse's interest and interest of controlled corporations | 2,500,000 | 135,000,000 | 12,236,000 | | Mr. Yu Xiaoping | Spouse's interest and interest of controlled corporations | – | 66,000,000 | 3,774,000 | - Mr. Rui Xinsheng and Ms. Leng Yixin hold significant unlisted foreign shares and domestic shares through Hong Kong Xinsheng and Changzhou Xinsheng[68](index=68&type=chunk) [Persons Who Have Interests or Short Positions Discloseable Under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance and Substantial Shareholders](index=32&type=section&id=Persons%20Who%20Have%20Interests%20or%20Short%20Positions%20Discloseable%20Under%20Divisions%202%20and%203%20of%20Part%20XV%20of%20the%20Securities%20and%20Futures%20Ordinance%20and%20Substantial%20Shareholders) As of June 30, 2025, Hong Kong Xinsheng Venture Investment Co., Ltd., Hong Kong Biochemical High-Tech Investment Co., Ltd., Zaowu Limited, and Hong Kong Kehai Venture Investment Co., Ltd. are major shareholders of the company, holding substantial unlisted foreign shares, and Ms. Lin Mao (spouse of Mr. Yu Xiaoping) also holds H shares and unlisted foreign shares through Zaowu Limited Substantial Shareholders' Interests in Shares (As of June 30, 2025) | Shareholder Name | Type of interest | Number of unlisted foreign shares | Approx. % of unlisted foreign shares | Number of H shares | Approx. % of H shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Hong Kong Xinsheng Venture Investment Co., Ltd. | Beneficial owner | 135,000,000 | 39.30% | – | – | | Hong Kong Biochemical High-Tech Investment Co., Ltd. | Beneficial owner | 67,500,000 | 19.65% | – | – | | Zaowu Limited | Beneficial owner | 66,000,000 | 19.21% | – | – | | Ms. Lin Mao | Spouse's interest, interest of controlled corporations and beneficial owner | 66,000,000 | 19.21% | 3,774,000 | 2.05% | | Hong Kong Kehai Venture Investment Co., Ltd. | Beneficial owner | 62,500,000 | 18.20% | – | – | - Shanghai Science and Technology Venture Capital Co., Ltd. and its associated companies hold significant unlisted foreign shares through Hong Kong Kehai Venture Investment Co., Ltd[72](index=72&type=chunk) [Directors', Supervisors' and Chief Executive's Rights to Acquire Shares or Debentures](index=34&type=section&id=Directors%27%2C%20Supervisors%27%20and%20Chief%20Executive%27s%20Rights%20to%20Acquire%20Shares%20or%20Debentures) During the current year, neither the company, its subsidiaries, nor any other associated corporations entered into any arrangements enabling directors, supervisors, and chief executive or their families to hold interests in the shares or debentures of the company or associated corporations - During the current year, neither the company nor its subsidiaries entered into any arrangements enabling directors, supervisors, and chief executive or their families to hold interests in the shares or debentures of the company or associated corporations[74](index=74&type=chunk) [Other Information](index=35&type=section&id=Other%20Information) [Purchase, Sale or Redemption of the Company's Listed Securities](index=35&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[75](index=75&type=chunk) [Share Capital Structure](index=35&type=section&id=Share%20Capital%20Structure) As of June 30, 2025, the company's total issued shares were 529,700,000, comprising H shares, domestic shares, and unlisted foreign shares; while Chinese law does not explicitly define the rights of unlisted foreign shares, their holders are generally expected to enjoy the same rights as domestic shares and can be converted to H shares under specific conditions Share Capital Structure (As of June 30, 2025) | Share Class | Number of shares | | :--- | :--- | | H shares | 183,700,000 | | Domestic shares | 2,500,000 | | Unlisted foreign shares | 343,500,000 | | **Total** | **529,700,000** | - Holders of unlisted foreign shares are generally considered to have the same rights and obligations as holders of domestic shares and may be converted into overseas listed foreign shares (H shares) upon approval[78](index=78&type=chunk) [Compliance with Code Provisions of the Corporate Governance Code](index=37&type=section&id=Compliance%20with%20Code%20Provisions%20of%20the%20Corporate%20Governance%20Code) The company has complied with the code provisions of the Corporate Governance Code as set out in Part 2 of Appendix C1 to the Listing Rules for the six months ended June 30, 2025 - The company has complied with the code provisions of the Corporate Governance Code as set out in Part 2 of Appendix C1 to the Listing Rules[79](index=79&type=chunk) [Code of Conduct for Securities Transactions by Directors](index=37&type=section&id=Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The company has adopted the Model Code as its code of conduct for directors' securities transactions and was not aware of any non-compliance with the Model Code during the six months ended June 30, 2025 - The company has adopted the Model Code as its code of conduct for directors' securities transactions[80](index=80&type=chunk) - During the six months ended June 30, 2025, no non-compliance with the Model Code was noted[80](index=80&type=chunk) [Glossary](index=38&type=section&id=Glossary) [Glossary](index=38&type=section&id=Glossary) This section provides definitions for key terms used in the report, including financial statements, company entities, security types, and regulatory bodies - The glossary defines key terms used in the report, such as "Condensed Consolidated Financial Statements," "the Group," "H shares," and "Listing Rules"[82](index=82&type=chunk)[83](index=83&type=chunk)

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section details the board of directors' composition, registered office, business locations, and key financial institutions [Board of Directors](index=3&type=section&id=Board%20of%20Directors) This section outlines the composition of the Board of Directors, including executive, non-executive, and independent non-executive directors, and lists members and chairpersons of various committees - Mr. Hong Kun was appointed as an executive director on **May 19, 2025**[6](index=6&type=chunk) [Registered Office and Business Locations](index=4&type=section&id=Registered%20Office%20and%20Business%20Locations) This section specifies the company's registered office in the Cayman Islands, its principal place of business in mainland China, and its place of business in Hong Kong, along with share registrar and banking information - The company is registered in the Cayman Islands, with main business operations in Shantou, China, and Hong Kong[9](index=9&type=chunk)[11](index=11&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) This chapter reviews the Group's business and financial performance for the first half of 2025, including revenue growth, gross margin decline, narrowed loss, liquidity, working capital, and borrowings, while outlining future strategies [BUSINESS AND FINANCIAL REVIEW](index=5&type=section&id=BUSINESS%20AND%20FINANCIAL%20REVIEW) The Group's total revenue increased by 36.5% due to strong smart toy car model sales and new market expansion, despite a significant gross margin decline from outsourcing costs, leading to a narrowed net loss - The Group primarily designs, develops, manufactures, and sells smart toy car models, smart interactive toys, and traditional toys[12](index=12&type=chunk)[16](index=16&type=chunk) 2025 H1 Key Financial Indicators Comparison | Indicator | 2025 H1 (RMB'000) | 2024 H1 (RMB'000) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | | | | | Total Revenue | 68,926 | 50,488 | +36.5% | | Smart Car Model Sales | 68,926 | 48,509 | +42.1% | | Smart Interactive Toy Sales | 0 | 0 | 0% | | Traditional Toy Sales | 0 | 0 | 0% | | **Profit** | | | | | Gross Profit | 3,935 | 8,597 | -54.7% | | Gross Margin | 5.7% | 17.0% | -11.3pp | | Selling Expenses | 0 | 7 | -100% | | Administrative Expenses | 6,867 | 12,093 | -43.2% | | Net Impairment Loss on Trade Receivables | 6,674 | 7,396 | -9.8% | | Loss for the Period | 15,038 | 17,584 | -14.5% | - The Group suspended production and sales of traditional toys until market conditions improve[22](index=22&type=chunk)[26](index=26&type=chunk) - The Group produces products under the "kidztech" brand, co-brands with well-known car manufacturers or entertainment characters, and uses OEM/ODM models[23](index=23&type=chunk)[27](index=27&type=chunk) Liquidity and Financial Resources Comparison as of June 30, 2025 | Indicator | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Borrowings | 128,600 | 125,800 | +2.2% | | Total Equity | 275,000 | 285,900 | -3.8% | | Gearing Ratio | 46.8% | 44.0% | +2.8pp | | Current Ratio | 1.4 | 1.4 | 0% | | Quick Ratio | 1.4 | 1.4 | 0% | | Cash and Cash Equivalents | 46,400 | 10,700 | +333.6% | | Trade Receivables | 253,400 | 301,300 | -15.9% | | Prepayments and Other Receivables | 83,800 | 82,600 | +1.5% | | Trade and Other Payables | 126,900 | 140,000 | -9.4% | - Total bank and other borrowings were approximately **RMB128.6 million**, with fixed interest rates between **2.25%** and **18.00%**, and a weighted average effective interest rate of approximately **7.9%**[49](index=49&type=chunk)[51](index=51&type=chunk) [Business Review and Outlook](index=10&type=section&id=Business%20Review%20and%20Outlook) The Group addresses weakening toy demand by expanding into emerging markets, outsourcing production for cost control, and maintaining R&D innovation, with future plans to diversify into high-end and green energy sectors - The Group addresses declining traditional toy orders and weakening consumer demand by expanding into emerging markets, outsourcing production processes, controlling costs, and adopting a low gross margin strategy[54](index=54&type=chunk)[57](index=57&type=chunk) - The company maintains market competitiveness and R&D innovation advantages to achieve a "quality upgrade strategy"[54](index=54&type=chunk)[57](index=57&type=chunk) - In the second half, the company plans to actively expand into high-end, clean energy, and other green-related product and technology industries to enhance internal development potential and establish a diversified product portfolio[54](index=54&type=chunk)[57](index=57&type=chunk) [Significant Investments and Future Plans](index=10&type=section&id=Significant%20Investments%20and%20Future%20Plans) No significant investments, acquisitions, or disposals occurred during the reporting period, but the Group strategically entered the new energy sector through acquisitions of Inner Mongolia Paiwei Technology and Times Logistics Investment - No significant investments, acquisitions, or disposals of subsidiaries during the reporting period[55](index=55&type=chunk)[58](index=58&type=chunk) - The Group has strategically entered the new energy sector as a starting point for diversified development[56](index=56&type=chunk)[59](index=59&type=chunk) - Acquired **60%** equity in Inner Mongolia Paiwei Technology Co., Ltd., which focuses on R&D, production, and sales of energy storage molten salt, core raw materials, and integrated thermal energy storage systems[56](index=56&type=chunk)[59](index=59&type=chunk) - Acquired **51%** equity in Times Logistics Investment Co., Ltd., whose indirect wholly-owned subsidiary, Delingha Ainengsen New Energy Technology, primarily engages in sales, services, and after-sales support in the molten salt materials and thermal storage equipment sectors[60](index=60&type=chunk)[66](index=66&type=chunk) [Capital Structure and Liabilities](index=11&type=section&id=Capital%20Structure%20and%20Liabilities) The Group's capital structure is primarily based on equity attributable to owners, with 624,564,000 ordinary shares issued, and as of June 30, 2025, certain borrowings are secured by property, plant, and equipment - The Group's capital structure is primarily based on equity attributable to owners, with a total of **624,564,000** ordinary shares issued[61](index=61&type=chunk)[67](index=67&type=chunk) - As of June 30, 2025, certain bank and other borrowings are secured by property, plant, and equipment[63](index=63&type=chunk)[68](index=68&type=chunk) Capital Commitments and Contingent Liabilities as of June 30, 2025 | Indicator | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Total Capital Commitments | 13,100 | 13,100 | | Significant Contingent Liabilities | None | None | [Financial Management and Foreign Exchange](index=12&type=section&id=Financial%20Management%20and%20Foreign%20Exchange) The Group adopts prudent financial management policies, primarily funding operations through cash flow and bank borrowings, and regularly reviews its financial position, with no significant foreign exchange risk or hedging policy - The Group adopts prudent funding and treasury management policies, with funding primarily from cash generated from operating activities and bank borrowings[72](index=72&type=chunk)[74](index=74&type=chunk) - Foreign exchange risk primarily arises from USD transactions of Chinese operating subsidiaries and HKD-denominated listing expenses; directors believe there is no significant foreign exchange risk and currently have no foreign currency hedging policy[73](index=73&type=chunk)[75](index=75&type=chunk) [EVENTS AFTER THE REPORTING PERIOD](index=13&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) After the reporting period, the company successfully placed 124,912,800 shares in August 2025, raising approximately HK$16.1 million net, allocated to debt repayment and general working capital - In August 2025, the company successfully placed **124,912,800** shares at an issue price of **HK$0.133** per share[76](index=76&type=chunk)[80](index=80&type=chunk) Use of Proceeds from Placement | Purpose | Amount (HK$ million) | Percentage (%) | | :--- | :--- | :--- | | Debt Repayment | 10.0 | 61.9% | | General Working Capital | 6.1 | 38.1% | | **Total Net Proceeds** | **16.1** | **100%** | [EMPLOYEES, REMUNERATION POLICIES AND PENSION SCHEMES](index=13&type=section&id=EMPLOYEES%2C%20REMUNERATION%20POLICIES%20AND%20PENSION%20SCHEMES) As of June 30, 2025, the Group had 24 full-time employees across Hong Kong, Shantou, and Shenzhen, offering salaries, insurance, and discretionary bonuses, and participates in China's social security and Hong Kong's MPF schemes Full-time Employee Count | Date | Employee Count | Change (%) | | :--- | :--- | :--- | | June 30, 2025 | 24 | -25% | | Dec 31, 2024 | 32 | | - The Group provides salaries, accident insurance, and allowances, with bonuses determined discretionarily based on employee performance and overall Group performance[79](index=79&type=chunk)[82](index=82&type=chunk) - The Group participates in China's housing provident fund and social security schemes, and Hong Kong employees join the Mandatory Provident Fund scheme[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [BUSINESS OUTLOOK](index=14&type=section&id=BUSINESS%20OUTLOOK) The Group plans to prioritize expanding overseas and Chinese markets, diversify its customer base, enhance production efficiency through outsourcing, increase sales resources in domestic and Asian markets, and diversify its product portfolio through continuous development - Continue to prioritize expanding overseas markets (maintaining existing customers, being vigilant about epidemics, expanding customer base) and focusing on the Chinese market[89](index=89&type=chunk) - Strengthen, expand, and diversify the customer base, focusing on Hong Kong and China export-oriented wholesalers and Chinese retailers[89](index=89&type=chunk) - Improve production efficiency and effectively control costs by outsourcing part of the production process[89](index=89&type=chunk) - Allocate more resources to expand sales in domestic and Asian markets[89](index=89&type=chunk) - Diversify the new product portfolio through continuous development[89](index=89&type=chunk) [Condensed Consolidated Interim Statement of Comprehensive Income](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group reported total revenue of RMB68.9 million, gross profit of RMB3.9 million, and a loss for the period of RMB15.0 million, which is a narrower loss compared to the prior year Summary of Condensed Consolidated Interim Statement of Comprehensive Income | Indicator | 2025 H1 (RMB'000) | 2024 H1 (RMB'000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 68,926 | 50,488 | +36.5% | | Cost of Sales | (64,991) | (41,891) | +55.1% | | Gross Profit | 3,935 | 8,597 | -54.7% | | Selling Expenses | – | (7) | -100% | | Administrative Expenses | (6,867) | (12,093) | -43.2% | | Net Impairment Loss on Trade Receivables | (6,674) | (7,396) | -9.8% | | Other Income and Other Gains/(Losses) – Net | 633 | (414) | +252.4% | | Operating Loss | (8,973) | (11,313) | -20.7% | | Finance Costs | (6,065) | (6,271) | -3.3% | | Loss Before Tax | (15,038) | (17,584) | -14.5% | | Income Tax | – | – | 0% | | Loss for the Period | (15,038) | (17,584) | -14.5% | | Exchange Differences on Translation of Overseas Operations | 4,140 | (7,687) | +153.9% | | Total Comprehensive Income for the Period | (10,898) | (25,271) | -56.9% | | Basic and Diluted Loss Per Share (RMB cents) | (2.4) | (2.8) | -14.3% | [Condensed Consolidated Interim Statement of Financial Position](index=17&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets less current liabilities were RMB294.7 million, with net assets of RMB275.0 million, showing a slight decrease in net current assets but a significant increase in cash and cash equivalents Summary of Condensed Consolidated Interim Statement of Financial Position | Indicator | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | Change (%) | | :--- | :--- | :--- | :--- | | **Non-current Assets** | | | | | Property, Plant and Equipment | 152,440 | 159,237 | -4.3% | | Right-of-use Assets | 9,491 | 9,504 | -0.1% | | Prepayments | 9,061 | 9,739 | -7.0% | | **Current Assets** | | | | | Inventories | 18,379 | 19,291 | -4.8% | | Trade Receivables | 253,425 | 301,262 | -15.9% | | Prepayments and Other Receivables | 83,754 | 82,553 | +1.5% | | Cash and Cash Equivalents | 46,422 | 10,705 | +333.6% | | **Current Liabilities** | | | | | Trade and Other Payables | 126,852 | 139,981 | -9.4% | | Bank and Other Borrowings | 128,626 | 125,762 | +2.3% | | Current Income Tax Liabilities | 18,858 | 18,974 | -0.6% | | **Non-current Liabilities** | | | | | Convertible Bonds | 14,979 | 12,908 | +16.0% | | Bonds | 4,783 | 4,870 | -1.8% | | **Total Equity** | 274,978 | 285,876 | -3.8% | [Condensed Consolidated Interim Statement of Changes in Equity](index=18&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity attributable to owners of the company was RMB275.3 million, a decrease from the end of 2024, primarily due to the loss for the period, but with an increase in foreign currency translation reserve Summary of Condensed Consolidated Interim Statement of Changes in Equity | Indicator | June 30, 2025 (RMB'000) | Jan 1, 2024 (RMB'000) | | :--- | :--- | :--- | | Share Capital | 562 | 562 | | Share Premium | 134,121 | 134,121 | | Statutory Reserve | 23,239 | 23,239 | | Capital Reserve | 274,282 | 274,282 | | Foreign Currency Translation Reserve | 14,602 | 6,416 | | Share Option Reserve | 29,403 | 29,403 | | Merger Reserve | (22,103) | (22,103) | | Equity Component of Convertible Bonds | 6,005 | – | | Accumulated Losses | (184,809) | (108,710) | | **Total Equity Attributable to Owners of the Company** | **275,302** | **336,908** | | Non-controlling Interests | (324) | (302) | | **Total Equity** | **274,978** | **336,606** | [Condensed Consolidated Interim Statement of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, the Group generated net cash of RMB34.8 million from operating activities and RMB1.7 million from investing activities, while using RMB0.064 million in financing activities, leading to a significant increase in cash and cash equivalents to RMB46.4 million Summary of Condensed Consolidated Interim Statement of Cash Flows | Indicator | 2025 H1 (RMB'000) | 2024 H1 (RMB'000) | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 34,784 | (4,576) | | Net Cash Generated From Investing Activities | 1,700 | 2 | | Net Cash (Used In)/Generated From Financing Activities | (64) | 2,435 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 36,420 | (2,139) | | Cash and Cash Equivalents at Beginning of Period | 10,705 | 48,899 | | Exchange Differences on Cash and Cash Equivalents | (703) | 507 | | **Cash and Cash Equivalents at End of Period** | **46,422** | **47,267** | [Notes to the Condensed Consolidated Interim Financial Statements](index=20&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes to the condensed consolidated interim financial statements, covering general information, basis of preparation, accounting standards, revenue, segment information, finance costs, income tax, loss for the period, loss per share, dividends, asset changes, receivables, payables, borrowings, share capital, contingent liabilities, and capital commitments [1. General Information](index=20&type=section&id=1.%20General%20Information) Kido Holdings Limited was incorporated in the Cayman Islands on October 25, 2019, and listed on the Main Board of the Hong Kong Stock Exchange on March 18, 2020, primarily engaged in toy manufacturing and sales - The company was incorporated in the Cayman Islands on **October 25, 2019**, and listed on the Main Board of the Hong Kong Stock Exchange on **March 18, 2020**[97](index=97&type=chunk)[101](index=101&type=chunk) - The company is an investment holding company, and its subsidiaries are primarily engaged in the manufacturing and sale of toys[98](index=98&type=chunk)[101](index=101&type=chunk) [2. Basis of Preparation](index=20&type=section&id=2.%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and applicable disclosure requirements of the HKEX Listing Rules, maintaining consistency with 2024 annual financial statements - The financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and the Listing Rules[99](index=99&type=chunk)[102](index=102&type=chunk) - The preparation methods are consistent with the accounting policies and calculation methods used in the 2024 annual financial statements[100](index=100&type=chunk)[102](index=102&type=chunk) [3. Application of New and Revised HKFRS Accounting Standards](index=21&type=section&id=3.%20Application%20of%20New%20and%20Revised%20HKFRS%20Accounting%20Standards) The Group adopted all new and revised HKFRS effective from January 1, 2024, with no significant changes to accounting policies or financial statement presentation, and no expected material impact from unadopted new standards - The Group has adopted all new and revised HKFRS effective from **January 1, 2024**[103](index=103&type=chunk)[105](index=105&type=chunk) - The adoption of new standards did not result in significant changes to accounting policies, financial statement presentation, or reported amounts[103](index=103&type=chunk)[105](index=105&type=chunk) - New standards not yet effective are not expected to have a significant impact on the financial statements[104](index=104&type=chunk)[105](index=105&type=chunk) [4. Revenue and Segment Information](index=22&type=section&id=4.%20Revenue%20and%20Segment%20Information) The Group primarily manufactures and sells car models, treated as one operating segment, with total revenue of RMB68.9 million for H1 2025, mainly from markets outside mainland China, and smart car models as the sole revenue source - The Group primarily manufactures and sells car models, which is considered one operating segment by management[108](index=108&type=chunk)[109](index=109&type=chunk) Revenue by Region and Product | Category | 2025 H1 (RMB'000) | 2024 H1 (RMB'000) | | :--- | :--- | :--- | | **Regional Markets** | | | | Mainland China | 3,201 | – | | Outside Mainland China | 65,725 | 50,488 | | **Total** | **68,926** | **50,488** | | **Main Products** | | | | Smart Car Models | 68,926 | 48,509 | | Raw Materials and Electronic Components | – | 1,979 | | **Total** | **68,926** | **50,488** | - Revenue recognition for all items occurs at a point in time[114](index=114&type=chunk) [5. Finance Costs](index=23&type=section&id=5.%20Finance%20Costs) For the six months ended June 30, 2025, total finance costs amounted to RMB6.065 million, primarily comprising interest expenses on bank and other borrowings and imputed interest on convertible bonds Composition of Finance Costs | Category | 2025 H1 (RMB'000) | 2024 H1 (RMB'000) | | :--- | :--- | :--- | | Interest Expense on Bank and Other Borrowings | 3,908 | 6,173 | | Interest Expense on Lease Liabilities | – | 98 | | Interest Expense on Bonds | 86 | – | | Imputed Interest on Convertible Bonds | 2,071 | – | | **Total** | **6,065** | **6,271** | [6. Income Tax](index=24&type=section&id=6.%20Income%20Tax) For the six months ended June 30, 2025, the Group had no taxable profit, resulting in zero income tax expense - For the six months ended June 30, 2025, the Group had no taxable profit, and income tax expense was zero[118](index=118&type=chunk) [7. Loss for the Period](index=24&type=section&id=7.%20Loss%20for%20the%20Period) The loss for the period primarily consists of cost of sales of inventories, depreciation of property, plant and equipment, right-of-use assets, and staff costs Major Components of Loss for the Period | Category | 2025 H1 (RMB'000) | 2024 H1 (RMB'000) | | :--- | :--- | :--- | | Cost of Sales of Inventories | 64,991 | 41,891 | | Depreciation of Right-of-use Assets | 12 | 1,380 | | Depreciation of Property, Plant and Equipment | 4,439 | 5,072 | | Staff Costs | 1,774 | 2,311 | [8. Loss Per Share](index=25&type=section&id=8.%20Loss%20Per%20Share) As of June 30, 2025, basic loss per share was RMB2.4 cents, an improvement from RMB2.8 cents in the prior year, with unexercised share options having an anti-dilutive effect Loss Per Share | Indicator | 2025 H1 (RMB cents) | 2024 H1 (RMB cents) | | :--- | :--- | :--- | | Basic and Diluted Loss Per Share | (2.4) | (2.8) | - As of June 30, 2025, potential ordinary shares from unexercised share options had an anti-dilutive effect[123](index=123&type=chunk) [9. Dividends](index=25&type=section&id=9.%20Dividends) 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[124](index=124&type=chunk)[129](index=129&type=chunk) [10. Property, Plant and Equipment](index=25&type=section&id=10.%20Property%2C%20Plant%20and%20Equipment) No new property, plant, and equipment were acquired by the Group during the six months ended June 30, 2025 - No new property, plant, and equipment were acquired by the Group during the six months ended June 30, 2025[125](index=125&type=chunk)[130](index=130&type=chunk) [11. Right-of-use Assets](index=25&type=section&id=11.%20Right-of-use%20Assets) No additions to right-of-use assets were recognized during the six months ended June 30, 2025 - No additions to right-of-use assets were recognized during the six months ended June 30, 2025[126](index=126&type=chunk)[131](index=131&type=chunk) [12. Trade Receivables](index=26&type=section&id=12.%20Trade%20Receivables) As of June 30, 2025, net trade receivables were RMB253.4 million, a decrease from the end of 2024, mainly due to improved collection from individual customers, with impairment provisions increasing to RMB60.8 million Trade Receivables and Impairment Provisions | Indicator | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trade Receivables | 314,201 | 356,774 | | Less: Impairment Provisions | (60,776) | (55,512) | | **Net Amount** | **253,425** | **301,262** | Ageing Analysis of Trade Receivables | Ageing | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Less than 30 days | 17,617 | 48,449 | | 31 to 120 days | 33,393 | 138,953 | | 121 days to 1 year | 213,539 | 142,772 | | 1 to 2 years | 49,652 | 24,574 | | Over 2 years | – | 2,026 | [13. Trade and Other Payables](index=27&type=section&id=13.%20Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables were RMB126.9 million, a decrease from the end of 2024, primarily due to timely payments to suppliers Composition of Trade and Other Payables | Category | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trade Payables | 38,809 | 54,395 | | Accrued Other Expenses | 57,336 | 56,422 | | Accrued Staff Salaries | 2,352 | 2,627 | | VAT and Other Taxes Payable | 21,706 | 20,858 | | Amounts Due to Shareholders | 6,649 | 5,679 | | **Total** | **126,852** | **139,981** | Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Less than 30 days | 834 | 2,928 | | 31 to 120 days | 9,319 | 13,359 | | 121 days to 1 year | 5,266 | 425 | | 1 to 2 years | 8,973 | 37,683 | | Over 2 years | 14,417 | – | [14. Bank and Other Borrowings](index=28&type=section&id=14.%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, total bank and other borrowings were RMB128.6 million, all repayable within one year, with some secured by property, plant, and equipment, right-of-use assets, company shares, and personal guarantees Bank and Other Borrowings | Category | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Bank Loans (Secured) | 74,988 | 72,101 | | Other Borrowings | 53,638 | 53,661 | | **Total** | **128,626** | **125,762** | - All borrowings are repayable within one year[137](index=137&type=chunk) - Borrowings are secured by property, plant, and equipment, right-of-use assets, company shares held by certain company shareholders, and personal guarantees provided by Mr. Yu Huang, Ms. Chen Cheng, and minority shareholders[137](index=137&type=chunk) [15. Share Capital](index=29&type=section&id=15.%20Share%20Capital) As of June 30, 2025, the company's authorized share capital was 5,000,000,000 shares, each with a par value of HK$0.001; a total of 624,564,000 ordinary shares were issued Share Capital Information | Indicator | June 30, 2025 | | :--- | :--- | | Authorized Ordinary Shares | 5,000,000,000 | | Issued Ordinary Shares | 624,564,000 | | Par Value Per Share | HK$0.001 | [16. Contingent Liabilities](index=29&type=section&id=16.%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[140](index=140&type=chunk) [17. Capital Commitment](index=29&type=section&id=17.%20Capital%20Commitment) As of June 30, 2025, the Group's total capital commitments amounted to approximately RMB10.4 million, primarily for contracted but unprovided property, plant, and equipment Capital Commitments | Category | June 30, 2025 (RMB'000) | Dec 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment – Contracted but Not Provided For | 10,437 | 13,088 | [18. Approval of Financial Statements](index=29&type=section&id=18.%20Approval%20of%20Financial%20Statements) The financial statements were approved and authorized for issue by the Board of Directors on August 29, 2025 - The financial statements were approved and authorized for issue by the Board of Directors on **August 29, 2025**[141](index=141&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) This chapter discloses directors' and substantial shareholders' interests, share schemes (including the terminated 2020 Share Option Scheme and adopted 2025 Share Scheme), share transactions, interim dividend policy, corporate governance practices, changes in director information, and continuing disclosure requirements [Directors' and Chief Executive's Interests and Short Positions in the Shares, Underlying Shares or Debentures](index=30&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20the%20Shares%2C%20Underlying%20Shares%20or%20Debentures) As of June 30, 2025, Executive Director Mr. Yu Huang held a 31.19% equity interest in the company through his controlled corporation, Top Synergy Y&C Limited, with all directors complying with the Model Code for Securities Transactions by Directors of Listed Issuers Directors' and Chief Executive's Share Interests | Director Name | Capacity/Nature of Interest | Number of Shares Held/Interested | Long/Short Position | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Mr. Yu Huang | Interest in Controlled Corporation | 194,784,667 | Long Position | 31.19% | - Mr. Yu Huang holds company shares through Top Synergy Y&C Limited, which is approximately **94.79%** owned by Mr. Yu Huang and approximately **5.21%** by his spouse, Ms. Chen Cheng[146](index=146&type=chunk) - All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period[207](index=207&type=chunk)[210](index=210&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares, Underlying Shares and Debentures](index=32&type=section&id=Substantial%20Shareholders'%20and%20Other%20Persons'%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As of June 30, 2025, substantial shareholders included Ms. Chen Cheng (spouse of Mr. Yu Huang, deemed to own 31.19% interest), Top Synergy Y&C Limited (beneficially owning 31.19%), and Gold-Face Finance Limited and Upbest Group Limited (holding a 19.10% share charge interest due to loan guarantees) Substantial Shareholders' and Other Persons' Share Interests | Name/Entity | Capacity/Nature of Interest | Number of Shares Held/Interested | Long/Short Position | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Ms. Chen Cheng | Spouse's Interest | 194,784,667 | Long Position | 31.19% | | Top Synergy Y&C Limited | Beneficial Owner | 194,784,667 | Long Position | 31.19% | | Gold-Face Finance Limited | Corporation with Share Charge Interest | 119,300,000 | Long Position | 19.10% | | Upbest Group Limited | Interest in Controlled Corporation | 119,300,000 | Long Position | 19.10% | [Share Scheme](index=34&type=section&id=Share%20Scheme) The Group established the 2020 Share Option Scheme (terminated on June 30, 2025) and adopted the 2025 Share Scheme (adopted on June 30, 2025) to incentivize employees and enhance company value [2020 Share Option Scheme](index=34&type=section&id=2020%20Share%20Option%20Scheme) The 2020 Share Option Scheme, adopted on February 13, 2020, to reward contributors, had 52,000,000 unexercised options as of June 30, 2025, representing approximately 8.33% of issued shares, with an exercise price of HK$1.17 and a 10-year exercise period, and was terminated on June 30, 2025 - The 2020 Share Option Scheme was adopted on **February 13, 2020**, to incentivize or reward participants who have contributed to the Group[155](index=155&type=chunk)[157](index=157&type=chunk) - The exercise price of share options shall not be lower than the highest of the closing price of the shares, the average closing price for five days, and the par value[160](index=160&type=chunk)[163](index=163&type=chunk) Changes in 2020 Share Option Scheme | Participant Category | Exercise Price (HK$) | Unexercised as of Jan 1, 2025 | Unexercised as of June 30, 2025 | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Employees | 1.17 | 52,000,000 | 52,000,000 | 8.33% | - Share options were granted on **June 21, 2022**, with a **10-year** exercise period (**June 21, 2022**, to **June 20, 2032**), and vested immediately upon acceptance by the grantee[167](index=167&type=chunk) - The 2020 Share Option Scheme was terminated on **June 30, 2025**[175](index=175&type=chunk) [2025 Share Scheme](index=37&type=section&id=2025%20Share%20Scheme) The 2025 Share Scheme, adopted on June 30, 2025, aims to attract, incentivize, and retain eligible participants by offering opportunities to become shareholders, with awards in the form of share options or share awards, and a total of 62,456,400 new shares available for grant - The 2025 Share Scheme was adopted on **June 30, 2025**, to attract, incentivize, retain, and reward eligible participants, enhancing company value[168](index=168&type=chunk)[171](index=171&type=chunk) - Awards can be in the form of share options or share awards, payable in shares or their equivalent[169](index=169&type=chunk)[171](index=171&type=chunk) - Eligible participants are employees, directors (excluding independent non-executive directors), or senior officers of the Group[170](index=170&type=chunk)[172](index=172&type=chunk) Number of Shares Available for Grant under 2025 Share Scheme | Indicator | Quantity | Percentage of Issued Share Capital | | :--- | :--- | :--- | | Total New Shares Available for Grant | 62,456,400 | 10.00% | - The scheme's authorized limit is **10%** of the total issued shares, subject to subsequent updates[180](index=180&type=chunk) - The exercise period for share options does not exceed **10** years, and the vesting period is generally not less than **12** months (except in special circumstances)[185](index=185&type=chunk)[186](index=186&type=chunk) - The exercise price of share options shall not be less than the higher of the closing price on the grant date and the average closing price for the preceding five days[195](index=195&type=chunk) - The remaining term of the scheme is approximately **9** years and **10** months[191](index=191&type=chunk)[194](index=194&type=chunk) [Purchase, Sale or Redemption of Shares](index=41&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Shares) For the six months ended June 30, 2025, neither the company nor any Group member purchased, sold, or redeemed any shares, and the company held no treasury shares - For the six months ended June 30, 2025, neither the company nor any member of the Group purchased, sold, or redeemed any shares[198](index=198&type=chunk)[202](index=202&type=chunk) - As of June 30, 2025, the company held no treasury shares[198](index=198&type=chunk)[202](index=202&type=chunk) [Interim Dividend](index=41&type=section&id=Interim%20Dividend) The Board of Directors has resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board of Directors has resolved not to declare an interim dividend for the six months ended June 30, 2025[199](index=199&type=chunk)[203](index=203&type=chunk) [Corporate Governance](index=41&type=section&id=Corporate%20Governance) The Group maintains high corporate governance standards, adhering to Appendix C1 of the Listing Rules, though the Chairman and CEO roles are combined, a deviation the Board believes facilitates efficient decision-making without compromising accountability - The Group complies with the Corporate Governance Code in Appendix C1 of the Listing Rules, but the roles of Chairman and Chief Executive Officer are held by the same person (Mr. Yu Huang), deviating from Code Provision C.2.1[204](index=204&type=chunk)[206](index=206&type=chunk)[209](index=209&type=chunk) - The Board believes the current structure facilitates prompt and effective implementation of business decisions, with no impairment to the balance of power and accountability, and will review this arrangement regularly[206](index=206&type=chunk)[209](index=209&type=chunk) [Code of Conduct for Securities Transactions by Directors](index=42&type=section&id=Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, with all directors confirming compliance during the reporting period and no non-compliance found among senior management - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers[207](index=207&type=chunk)[210](index=210&type=chunk) - All directors confirmed compliance with the Model Code during the reporting period, and the company found no non-compliance by senior management[207](index=207&type=chunk)[210](index=210&type=chunk) [Changes in Director's Information](index=42&type=section&id=Changes%20in%20Director's%20Information) Mr. Hong Kun was appointed as an executive director on May 19, 2025 - Mr. Hong Kun was appointed as an executive director on **May 19, 2025**[208](index=208&type=chunk)[211](index=211&type=chunk) [Continuing disclosure requirement under rule 13.21 of the Listing Rules](index=43&type=section&id=Continuing%20disclosure%20requirement%20under%20rule%2013.21%20of%20the%20Listing%20Rules) The company entered a HK$30,000,000 loan agreement with a Hong Kong licensed money lender, with HK$10,000,000 outstanding, secured by equity of controlling shareholder Mr. Yu Huang, shares pledged by Top Synergy Y&C Limited, and personal guarantees - The company entered into a loan agreement for **HK$30,000,000** with a Hong Kong licensed money lender[212](index=212&type=chunk)[215](index=215&type=chunk) Loan Repayment Status | Indicator | Amount (HK$) | | :--- | :--- | | Loan Principal | 30,000,000 | | Amount Repaid | 20,000,000 | | Amount Outstanding | 10,000,000 | - The loan is secured by equity of the company's controlling shareholder, Mr. Yu Huang, **119,300,000** shares pledged by Top Synergy Y&C Limited, and personal guarantees[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk) [Competing Interests](index=44&type=section&id=Competing%20Interests) Directors are unaware of any business or interest of directors, controlling shareholders, or their close associates that competes or may compete with the Group's business, nor any conflicts of interest during the reporting period - Directors are unaware of any business or interest of directors, controlling shareholders, or their close associates that competes or may compete with the Group's business, nor any conflicts of interest during the reporting period[221](index=221&type=chunk)[223](index=223&type=chunk) [Audit Committee](index=45&type=section&id=Audit%20Committee) The Audit Committee, established in accordance with Listing Rules and Corporate Governance Code, reviewed interim results, accounting principles, and discussed audit, risk management, internal control, and financial statement matters, though these interim financial results were not audited or reviewed by the company's auditor - The Audit Committee has been established in accordance with the Listing Rules and the Corporate Governance Code[224](index=224&type=chunk)[226](index=226&type=chunk) - The Audit Committee has reviewed the interim results, accounting principles and practices, and discussed audit, risk management, internal control, and financial statement matters[224](index=224&type=chunk)[226](index=226&type=chunk) - The condensed consolidated interim financial results for the six months ended June 30, 2025, have not been audited or reviewed by the company's auditor[225](index=225&type=chunk)[226](index=226&type=chunk)

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) This announcement is a supplementary disclosure to Sunway International Holdings Limited's 2024 annual report, providing additional information on fundraising activities and share option schemes as per Listing Rules - This announcement is a supplementary disclosure to the annual report of Sunway International Holdings Limited (Stock Code: 58) for the year ended December 31, 2024[2](index=2&type=chunk) [Supplementary Information Disclosure](index=1&type=section&id=Supplementary%20Information%20Disclosure) This section details the estimated utilization of remaining fundraising proceeds and specific aspects of the share option scheme, including authorized quantities and expiry [Fundraising Activity Update](index=1&type=section&id=Fundraising%20Activity%20Update) As of December 31, 2024, the company's net remaining share subscription proceeds of HKD 8.39 million are projected for full utilization by December 31, 2025 Net Remaining Proceeds from Share Subscription | Metric | Amount (HKD) | Estimated Utilization Date | | :--- | :--- | :--- | | Net Remaining Proceeds (as of Dec 31, 2024) | 8,390,000 | Before Dec 31, 2025 | [Share Option Scheme Details](index=1&type=section&id=Share%20Option%20Scheme%20Details) The share option scheme maintains 10,714,166 grantable options, with the same number of shares available for issue, representing 4.97% of total shares, and is set to expire on June 16, 2026 Share Option Scheme Authorization and Issuance | Metric | Quantity/Proportion | Remarks | | :--- | :--- | :--- | | Number of Options Authorized for Grant (as of Jan 1, 2024) | 10,714,166 options | | | Number of Options Authorized for Grant (as of Dec 31, 2024) | 10,714,166 options | | | Total Shares Available for Issue (as of Annual Report Date) | 10,714,166 shares | Approximately **4.97%** of total issued shares | - No sub-limit for service providers is set under the share option scheme[5](index=5&type=chunk) - The existing share option scheme will expire on **June 16, 2026**[5](index=5&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) Beyond the specific supplementary details, the 2024 annual report's content remains unchanged, and the announcement includes updated board composition information - Except as disclosed in this announcement, the remaining content of the annual report remains unchanged[6](index=6&type=chunk) - The Board of Directors comprises one executive director (Mr. Lo Chun Choi), one non-executive director (Mr. Yu Shui Sang), and three independent non-executive directors (Mr. Choi Pun Lap, Mr. Wong Yue Kwan, and Ms. Tsang Ngo Yin)[7](index=7&type=chunk)

Report Overview [Characteristics of the GEM Market and Disclaimer](index=2&type=section&id=GEM%E5%B8%82%E5%A0%B4%E7%89%B9%E8%89%B2%E4%B8%8E%E5%85%8D%E8%B4%A3%E5%A3%B0%E6%98%8E) This report is published on the GEM of The Stock Exchange of Hong Kong Limited, a market for small and mid-sized companies that carries higher investment risks - The GEM market serves as a listing platform for small and mid-sized companies, but investments carry **higher risks**, with securities potentially facing significant market volatility and liquidity uncertainties[4](index=4&type=chunk) - The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this report, for which the directors of the Company collectively and individually accept full responsibility, confirming its accuracy and completeness[4](index=4&type=chunk) [Summary](index=3&type=section&id=%E6%91%98%E8%A6%81) The Group's financial performance for the six months ended June 30, 2025, shows a 28% decline in revenue from continuing operations and a consolidated loss attributable to owners of approximately HK$3.872 million Key Financial Summary for the Six Months Ended June 30, 2025 | Indicator | June 30, 2025 (HK$'000) | June 30, 2024 (HK$'000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 13,023 | 17,971 | -28% | | Consolidated loss attributable to owners of the Company (continuing and discontinued) | 3,872 | 3,402 | +13.8% | | Basic and diluted loss per share (continuing and discontinued) | 0.08 HK cents | 0.07 HK cents | +0.01 HK cents | - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025[6](index=6&type=chunk) Financial Statements [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E5%85%A5%E8%A1%A8) For the six months ended June 30, 2025, the Group's revenue from continuing operations was HK$13,023 thousand, a 28% decrease year-on-year, while the loss for the period narrowed to HK$3,970 thousand Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 13,023 | 17,971 | -28% | | Gross Profit | 1,357 | 1,544 | -12.1% | | Loss before tax | (4,109) | (3,080) | +33.4% (Loss widened) | | Loss for the period | (3,970) | (4,090) | -2.9% (Loss narrowed) | | Loss from continuing operations attributable to owners of the Company | (3,940) | (2,879) | +36.8% (Loss widened) | | Profit/(loss) from discontinued operations attributable to owners of the Company | 68 | (523) | Turnaround to profit | [Consolidated Statement of Financial Position](index=6&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the Group's total assets increased to HK$16,823 thousand, but net current assets decreased to HK$6,127 thousand, and total liabilities increased significantly by 94% Key Data from Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 118 | 251 | -53% | | Current assets | 16,705 | 15,433 | +8.2% | | Current liabilities | 10,578 | 5,453 | +94% | | Net current assets | 6,127 | 9,980 | -38.6% | | Net assets | 6,245 | 10,226 | -38.9% | | Equity attributable to owners of the Company | 6,894 | 10,775 | -36% | - Trade and other receivables **surged from HK$2,107 thousand to HK$9,729 thousand**, while cash and bank balances decreased from HK$13,281 thousand to HK$6,537 thousand[10](index=10&type=chunk) [Consolidated Statement of Changes in Equity](index=8&type=section&id=%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) For the six months ended June 30, 2025, total equity attributable to owners of the Company decreased from HK$10,775 thousand to HK$6,894 thousand, mainly due to the loss for the period Key Data from Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | January 1, 2025 (HK$'000) | June 30, 2025 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Equity attributable to owners of the Company | 10,775 | 6,894 | -3,881 | | Loss for the period | - | (3,872) | - | | Other comprehensive expense for the period | - | (9) | - | [Consolidated Statement of Cash Flows](index=9&type=section&id=%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, the Group experienced a net cash outflow from operating activities of HK$6,762 thousand, a significant reversal from the net inflow in the prior period Key Data from Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Net cash (used in)/from operating activities | (6,762) | 170 | Shift from inflow to outflow | | Net cash used in investing activities | (8) | (704) | Outflow significantly reduced | | Net cash used in financing activities | — | (219) | Outflow significantly reduced | | Net decrease in cash and cash equivalents | (6,770) | (753) | Decrease significantly widened | | Cash and cash equivalents at end of period | 6,537 | 17,225 | Substantial decrease | Notes to the Interim Financial Information [Basis of Preparation and Impact of New Hong Kong Financial Reporting Standards](index=10&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96%E5%8F%8A%E6%96%B0%E8%A8%82%E9%A6%99%E6%B8%AF%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87%E4%B9%8B%E5%BD%B1%E9%9F%BF) The unaudited consolidated financial statements for the six months ended June 30, 2025, were prepared in accordance with HKAS 34 and the GEM Listing Rules, with no material impact from new HKFRSs - The interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and the GEM Listing Rules, using the historical cost basis[17](index=17&type=chunk) - The adoption of new and revised Hong Kong Financial Reporting Standards during the period did not have a material impact on the Group's accounting policies and reported amounts[17](index=17&type=chunk) [Revenue](index=11&type=section&id=%E6%94%B6%E7%9B%8A) For the six months ended June 30, 2025, the Group's revenue from continuing operations was HK$13,023 thousand, driven by the automotive products and smart retail services businesses Revenue from Continuing Operations (For the six months ended June 30) | Business Type | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Provision of automotive products and culture business | 8,001 | — | | Provision of smart retail services | 5,022 | 17,971 | | **Total** | **13,023** | **17,971** | [Segment Information](index=11&type=section&id=%E5%88%86%E9%A1%9E%E8%B3%87%E6%96%99) The Group's operating segments include continuing operations (smart retail, automotive products) and discontinued operations (AWS cloud services), with the automotive business contributing HK$8,001 thousand in revenue - The Group's operating segments include continuing operations (smart retail business, automotive products and culture business) and discontinued operations (AWS cloud services business)[21](index=21&type=chunk) Revenue and Profit/(Loss) by Business Segment (For the six months ended June 30) | Business Segment | 2025 Revenue (HK$'000) | 2025 Profit/(Loss) (HK$'000) | 2024 Revenue (HK$'000) | 2024 Profit/(Loss) (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Smart retail business (Continuing) | 5,022 | (239) | 17,971 | (385) | | Automotive products and culture business (Continuing) | 8,001 | (768) | — | — | | AWS cloud services business (Discontinued) | 134 | 134 | 4,570 | (1,026) | Assets and Liabilities by Business Segment (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Smart retail business segment assets | 6,028 | 1,854 | | Automotive products and culture business segment assets | 3,346 | 304 | | Consolidated assets | 16,823 | 15,684 | | Smart retail business segment liabilities | 5,343 | 1,230 | | Automotive products and culture business segment liabilities | 4,706 | 302 | | Consolidated liabilities | 10,578 | 5,458 | [Finance Costs](index=14&type=section&id=%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC) The Group incurred no finance costs for the six months ended June 30, 2025, compared to HK$15 thousand in the prior period Finance Costs (For the six months ended June 30) | Finance Costs | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Interest on lease liabilities | — | 15 | [Income Tax Credit](index=14&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E6%8A%B5%E5%85%8D) For the six months ended June 30, 2025, the Group recorded an income tax credit of HK$5 thousand, primarily from deferred tax Income Tax Credit (For the six months ended June 30) | Tax Type | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Current tax | (1) | — | | Deferred tax | 6 | 16 | | **Total income tax credit** | **5** | **16** | - The corporate income tax rate for subsidiaries in China is 25%[26](index=26&type=chunk) [Loss for the Period from Continuing Operations](index=15&type=section&id=%E4%BE%86%E8%87%AA%E6%8C%81%E7%BA%8C%E7%B6%93%E7%87%9F%E6%A5%AD%E5%8B%99%E7%9A%84%E6%9C%9F%E9%96%93%E8%99%A7%E6%90%8D) The loss from continuing operations was influenced by increased net exchange losses, a significant reduction in loss allowance for receivables, and lower directors' remuneration Key Items Affecting Loss from Continuing Operations (For the six months ended June 30) | Item | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Bank interest income | (120) | (173) | Decreased | | Net exchange loss | 524 | 219 | Loss widened | | Loss allowance on trade and other receivables | 612 | 4,846 | Substantially decreased | | Directors' remuneration | 416 | 739 | Decreased | | Employee benefit expenses (excluding directors' remuneration) | 1,509 | 1,753 | Decreased | [Discontinued Operations](index=16&type=section&id=%E5%B7%B2%E7%B5%82%E6%AD%A2%E7%B6%93%E7%87%9F%E6%A5%AD%E5%8B%99) The Group's discontinued AWS cloud services business, sold in the previous year, recorded a profit before tax of HK$134 thousand, a turnaround from a loss in the prior period - The Group disposed of its AWS cloud services business during the year ended December 31, 2024[29](index=29&type=chunk) Performance of Discontinued Operations (For the six months ended June 30) | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 134 | 4,570 | Substantially decreased | | Profit/(loss) before tax | 134 | (1,026) | Turnaround to profit | | Total comprehensive income/(expense) for the period from discontinued operations | 134 | (1,026) | Turnaround to profit | [Loss Per Share](index=17&type=section&id=%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) For the six months ended June 30, 2025, the basic and diluted loss per share attributable to owners of the Company was 0.08 HK cents, with the loss from continuing operations widening year-on-year Loss Per Share (For the six months ended June 30) | Indicator | 2025 (HK cents per share) | 2024 (HK cents per share) | Change | | :--- | :--- | :--- | :--- | | Loss per share from continuing operations | (0.08) | (0.06) | Loss widened | | Loss per share from continuing and discontinued operations | (0.08) | (0.07) | Loss widened | - The weighted average number of ordinary shares was 4,686,048 thousand, and with no dilutive potential shares outstanding, basic and diluted loss per share are identical[31](index=31&type=chunk) [Property, Plant and Equipment](index=18&type=section&id=%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99) As of June 30, 2025, the net book value of the Group's property, plant and equipment was reduced to zero due to disposals Net Book Value of Property, Plant and Equipment (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Net book value at end of period/year | — | 3 | Reduced to zero | - The net book value of property, plant and equipment decreased to zero, primarily due to disposals[32](index=32&type=chunk) [Intangible Assets](index=18&type=section&id=%E7%84%A1%E5%BD%A2%E8%B3%87%E7%94%A2) As of June 30, 2025, the Group's intangible assets had a net book value of HK$118 thousand, mainly comprising network platform development costs Net Book Value of Intangible Assets (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Net book value at end of period/year | 118 | — | - Intangible assets primarily represent development costs for a network platform, with additions of HK$128 thousand and amortization of HK$10 thousand during the period[32](index=32&type=chunk) [Trade and Other Receivables](index=19&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, the Group's total trade and other receivables increased substantially to HK$9,729 thousand from HK$2,107 thousand at year-end 2024 Trade and Other Receivables (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Trade receivables, net of loss allowance | 5,145 | 17 | Substantial increase | | Deposits, other receivables and prepayments | 4,584 | 2,090 | Substantial increase | | **Total trade and other receivables** | **9,729** | **2,107** | **+361.7%** | - Trade receivables are due within 60 days from the date of invoice[33](index=33&type=chunk) [Trade and Other Payables](index=20&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, the Group's total trade and other payables increased significantly to HK$10,549 thousand, driven by rises in both trade payables and other payables Trade and Other Payables (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Total trade payables | 4,175 | 204 | Substantial increase | | Accrued salaries and other tangible benefits | 336 | 1,590 | Significant decrease | | Other payables and accruals | 6,038 | 2,292 | Substantial increase | | **Total trade and other payables** | **10,549** | **4,086** | **+158.2%** | [Related Party Transactions](index=21&type=section&id=%E9%97%9C%E9%80%A3%E6%96%B9%E4%BA%A4%E6%98%93) For the six months ended June 30, 2025, key management personnel compensation was HK$416 thousand, and the Group earned revenue of HK$409 thousand from an intermediate holding company Related Party Transactions (For the six months ended June 30) | Transaction Type | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Key management personnel compensation | 416 | 739 | Decreased | | Revenue from provision of smart retail services to an intermediate holding company | 409 | — | New | [Interim Dividend](index=21&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025[37](index=37&type=chunk) Management Discussion and Analysis [Business Review](index=22&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's business comprises smart retail and the newly developed automotive products and culture segments, with the latter showing promising market potential in its first reporting period - The Group's business development will continue to be driven by the smart retail business, with core activities including system development, operation, and sales of software and hardware[51](index=51&type=chunk) [Smart Retail Business](index=22&type=section&id=%E6%99%BA%E6%85%A7%E9%9B%B6%E5%94%AE%E6%A5%AD%E5%8B%99) The smart retail business provides digital transformation solutions and cloud services, but its total revenue declined significantly year-on-year due to lower cloud service income and business adjustments - The smart retail business provides new retail digital transformation solutions, an integrated software service platform, and cloud services for chain retail enterprises and merchants[38](index=38&type=chunk) Smart Retail Business Revenue (For the six months ended June 30) | Business Type | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Continuing operations | 5,022 | 17,971 | -72.1% | | Discontinued operations (AWS cloud services) | 134 | 4,570 | -97.1% | | **Total Revenue** | **5,156** | **22,541** | **-77.1%** | [Automotive Products and Culture Business](index=22&type=section&id=%E8%BB%8A%E5%93%81%E6%96%87%E5%8C%96%E6%A5%AD%E5%8B%99) The automotive products and culture business, engaged in the sale of auto-related accessories, recorded its first revenue of HK$8,001 thousand for the six months ended June 30, 2025 - The automotive products and culture business engages in the trading of various auto-related accessories and peripheral products, offering customized designs through collaboration with car manufacturers[39](index=39&type=chunk) Automotive Products and Culture Business Revenue (For the six months ended June 30) | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Revenue | 8,001 | Zero | [Financial Review and Policies](index=23&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7%E5%92%8C%E8%B2%A1%E5%8B%99%E6%94%BF%E7%AD%96) For the six months ended June 30, 2025, the Group's revenue from continuing operations decreased by 28%, and the consolidated loss attributable to owners increased by 14% Financial Performance Overview (For the six months ended June 30) | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 13,023 | 17,971 | -28% | | Loss from continuing operations attributable to owners of the Company | (3,940) | (2,879) | Loss widened | | Profit/(loss) from discontinued operations attributable to owners of the Company | 68 | (523) | Turnaround to profit | | Consolidated loss attributable to owners of the Company (continuing and discontinued) | (3,872) | (3,402) | Loss increased by 14% | - The increase in overall loss was primarily attributable to the decline in revenue from the cloud services business and the Company's business adjustments[40](index=40&type=chunk) - The Group adopts a centralized financial policy aimed at reducing overall interest expenses[41](index=41&type=chunk) [Liquidity and Gearing Ratio](index=24&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) As of June 30, 2025, the Group's total assets and liabilities increased, while cash balances decreased significantly, resulting in a lower current ratio of approximately 1.5 and a gearing ratio of zero Liquidity and Gearing Ratio (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Total assets | 16,823 | 15,684 | +7.3% | | Total liabilities | 10,578 | 5,453 | +94% | | Cash and bank balances | 6,537 | 13,281 | -50.8% | | Current ratio | 1.5 | 2 | Decreased | | Gearing ratio | Zero | Zero | Unchanged | - The Group had **no bank borrowings or loans**, resulting in a gearing ratio of zero[42](index=42&type=chunk) [Capital Structure](index=24&type=section&id=%E8%B3%87%E6%9C%AC%E7%B5%90%E6%A7%8B) As of June 30, 2025, the Group's capital structure primarily consisted of equity attributable to owners of the Company amounting to HK$6,894 thousand, with no change in the total number of issued shares Capital Structure (As of June 30) | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | Change | | :--- | :--- | :--- | :--- | | Equity attributable to owners of the Company | 6,894 | 10,775 | -36% | | Total number of issued shares | 4,686,048,381 shares | 4,686,048,381 shares | No change | [Pledge of Group's Assets](index=24&type=section&id=%E6%9C%AC%E9%9B%86%E5%9C%98%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group had no pledged assets, consistent with the position at the end of the previous year - As of June 30, 2025, the Group had **no pledged assets**[44](index=44&type=chunk) [Significant Investments, Acquisitions or Disposals of Subsidiaries, Associates or Joint Ventures](index=24&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E3%80%81%E9%87%8D%E5%A4%A7%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E3%80%81%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E6%88%96%E5%90%88%E7%87%9F%E5%85%AC%E5%8F%B8%E6%94%B6%E8%B3%BC%E6%88%96%E5%87%BA%E5%94%AE) During the six months ended June 30, 2025, the Group held no other significant investments and made no material acquisitions or disposals of subsidiaries, associates, or joint ventures - During the six months ended June 30, 2025, the Group did not hold other significant investments, nor did it conduct any material acquisitions or disposals of subsidiaries, associates, and joint ventures[45](index=45&type=chunk) [Capital Investments and Future Plans for Material Investments or Capital Assets](index=25&type=section&id=%E8%B3%87%E6%9C%AC%E6%8A%95%E8%B3%87%E5%8F%8A%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E6%88%96%E8%B3%BC%E5%85%A5%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E4%B9%8B%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The Group made no payments for the purchase of property, plant and equipment during the period and has no specific plans for material investments or capital asset acquisitions - During the six months ended June 30, 2025, the Group did not incur any expenses for the purchase of property, plant and equipment[46](index=46&type=chunk) - As of June 30, 2025, the Group had no specific plans for material investments or the purchase of capital assets[46](index=46&type=chunk) [Foreign Exchange Fluctuation Risk](index=25&type=section&id=%E5%8C%AF%E7%8E%87%E6%B3%A2%E5%8B%95%E9%A2%A8%E9%9A%AA) The Group's sales and purchases are mainly denominated in HKD and RMB, exposing it to RMB exchange rate fluctuations, which are monitored but not hedged during the period - The Group's sales and purchases are primarily denominated in Hong Kong dollars and Renminbi[47](index=47&type=chunk) - The RMB exchange rate is subject to Chinese government controls and economic and political factors, and its fluctuations may affect the Group's performance[47](index=47&type=chunk) - The Group monitors foreign exchange risk but did not enter into any hedging transactions during the six months ended June 30, 2025[48](index=48&type=chunk) [Contingent Liabilities](index=25&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had **no significant contingent liabilities**[49](index=49&type=chunk) [Employees and Remuneration Policy](index=26&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group had 8 employees, and total staff costs decreased to approximately HK$2.2 million, with a competitive remuneration policy based on performance Employee and Remuneration Information (As of June 30) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of employees | 8 | 12 | Decreased by 4 | | Total staff costs (including directors' remuneration) | Approx. HK$2.2 million | Approx. HK$2.7 million (June 30, 2024) | Decreased | - The Group offers competitive salaries and benefits to its employees, with remuneration reviewed periodically based on job performance[50](index=50&type=chunk) [Outlook](index=26&type=section&id=%E5%B1%95%E6%9C%9B) The Group's future development will be driven by the smart retail business, capitalizing on generative AI, consumption stimulus policies, and supply-side structural reforms - The Group's future business development will continue to be driven by the smart retail business, with core activities including system development, operation, and sales of software and hardware[51](index=51&type=chunk) - The popularization of generative AI technology, consumption stimulus policies, and the Chinese government's promotion of supply-side structural reforms are expected to boost future demand for smart retail services[51](index=51&type=chunk) - The Group will closely monitor its operational performance in mainland China, adjust business strategies, and explore opportunities in new quality productive forces and internet-based new retail[51](index=51&type=chunk) Shareholder and Corporate Governance Information [Interests and Short Positions of Directors and Chief Executive in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations](index=27&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%88%96%E5%85%B6%E4%BB%BB%E4%BD%95%E7%9B%B8%E8%81%AF%E6%B3%95%E5%9C%98%E7%9A%84%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E5%88%B8%E4%B8%AD%E6%93%81%E6%9C%89%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As of June 30, 2025, Mr. Sun Haitao and Ms. Wu Shan held long positions in the shares of the associated corporation Vala Inc., with no other disclosable interests held by directors Directors' Long Positions in Shares of Associated Corporation VALA (As of June 30, 2025) | Director's Name | Capacity and Nature of Interest | Number of Shares | Approximate Percentage of VALA's Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Sun Haitao | Discretionary trust, founder, other, beneficial owner | 308,082,736 | 18.90% | | Ms. Wu Shan | Beneficial owner | 1,689,770 | 0.10% | - Save as disclosed above, no other director or chief executive had any disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or its associated corporations[53](index=53&type=chunk) [Interests and Short Positions of Substantial Shareholders and Other Persons in the Shares, Underlying Shares and Debentures of the Company](index=29&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E5%88%B8%E4%B8%AD%E6%93%81%E6%9C%89%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As of June 30, 2025, VALA and Qichen High-tech, along with their respective controlled corporations, were deemed to have a 29.00% long position in the Company's shares Long Positions of Substantial Shareholders and Other Persons in the Company's Shares (As of June 30, 2025) | Name | Capacity and Nature of Interest | Number of Shares Held Directly or Indirectly | Approximate Percentage of Issued Shares | | :--- | :--- | :--- | :--- | | VALA | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | 51 Credit Card (China) Inc. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Hangzhou Zhenniu Information Technology Co., Ltd. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Hangzhou Jiahao Technology Co., Ltd. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Shanghai Wuniu Network Technology Co., Ltd. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | 51RENPIN.COM INC. | Beneficial owner | 1,358,954,030 (L) | 29.00% | | Mr. Zuo Lei | Beneficial owner | 511,025,000 (L) | 10.91% | | Zheng Minggao | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Ningbo Qichen Investment Holding Co., Ltd. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Beijing Tongsen Capital Holding Co., Ltd. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Shandong Qichen Zhongke Investment Holding Co., Ltd. | Interest in a controlled corporation | 1,358,954,030 (L) | 29.00% | | Qichen High-tech Management Consulting Ltd. | Beneficial owner | 1,358,954,030 (L) | 29.00% | - As the Share Sale and Purchase Agreement had not been completed by June 30, 2025, both 51RENPIN.COM INC., Qichen High-tech, and their respective holding companies were deemed to have an interest in the shares under the agreement[57](index=57&type=chunk) [Compliance with the Corporate Governance Code](index=31&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The Company complied with the Corporate Governance Code during the period, except for the deviation where the roles of Chairman and Chief Executive Officer were both held by Mr. Sun - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1, Part 2 of the GEM Listing Rules[59](index=59&type=chunk) - Chairman Mr. Sun Haitao also serves as the Chief Executive Officer, which deviates from code provision C.2.1 (roles of chairman and chief executive should be separate)[59](index=59&type=chunk) - The Board believes this arrangement enhances decision-making and execution efficiency and is searching for a suitable candidate to comply with the code[59](index=59&type=chunk) [Directors' Securities Transactions](index=32&type=section&id=%E8%91%A3%E4%BA%8B%E4%B9%8B%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93) The Company has adopted a code for directors' securities transactions, and no violations were noted during the six months ended June 30, 2025 - The Company has adopted a code of conduct for securities transactions by directors on terms no less exacting than the required standard of dealings[60](index=60&type=chunk) - No incidents of non-compliance by any director with the required standard of dealings and the code were noted during the six months ended June 30, 2025[60](index=60&type=chunk) [Audit Committee](index=32&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee has reviewed the Group's unaudited interim results and report for the period and found them to be compliant with applicable standards and rules, with no disagreements - The Audit Committee has reviewed the Group's unaudited consolidated results and interim report for the six months ended June 30, 2025[61](index=61&type=chunk) - The Audit Committee concluded that the financial statements comply with applicable accounting standards, GEM Listing Rules, and other statutory requirements, with full disclosure and no disagreements on accounting treatments[61](index=61&type=chunk) [Changes in Information of Directors and Chief Executive](index=32&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E4%B9%8B%E4%BF%A1%E6%81%AF%E8%AE%8A%E6%9B%B4) As of the report date, the annual director's fee for Executive Director Ms. Wu Shan was changed to HK$512,000, effective January 1, 2025 - The annual director's fee of Executive Director Ms. Wu Shan has been changed to HK$512,000, effective from January 1, 2025[62](index=62&type=chunk) - Save for the above, there were no other changes in the information of the Directors and chief executive required to be disclosed pursuant to Rule 17.50A(1) of the GEM Listing Rules as of the date of this report[62](index=62&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=32&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period, and no treasury shares were held - During the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[63](index=63&type=chunk) - As of June 30, 2025, the Company did not hold any treasury shares[63](index=63&type=chunk) [Change of Single Largest Shareholder](index=33&type=section&id=%E8%AE%8A%E6%9B%B4%E5%96%AE%E4%B8%80%E6%9C%80%E5%A4%A7%E8%82%A1%E6%9D%B1) Following the completion of share sale agreements, Qichen High-tech has become the Company's single largest shareholder, holding approximately 29.00% of the total issued shares - 51RENPIN.COM INC. entered into a placing agreement and a share sale and purchase agreement with Qichen High-tech and Shandong Qichen to sell a total of approximately 39.16% of the shares[64](index=64&type=chunk) - The placing agreement and the share sale and purchase agreement were completed on June 9, 2025, and July 15, 2025, respectively[65](index=65&type=chunk) - **Qichen High-tech has become the single largest shareholder** of the Company, holding approximately 29.00% of the total issued share capital[65](index=65&type=chunk) [Events After the Reporting Period](index=33&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) No significant events occurred after the end of the reporting period and up to the date of this report - No significant events occurred after the end of the reporting period and up to the date of this report[66](index=66&type=chunk) [By Order of the Board](index=33&type=section&id=%E6%89%BF%E8%91%A3%E4%BA%8B%E6%9C%83%E5%91%BD) This report was signed on August 26, 2025, by Mr. Sun Haitao, Chairman and Executive Director of the Board - This report was signed on August 26, 2025, by Mr. Sun Haitao, Chairman and Executive Director[67](index=67&type=chunk)[68](index=68&type=chunk) - As of the report date, the Executive Directors are Mr. Sun Haitao and Ms. Wu Shan; the Independent Non-executive Directors are Mr. Fan Lei, Ms. Liu Jia, and Mr. Yu Tat Chi[68](index=68&type=chunk)

Company Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section lists the company's board members (including executive, non-executive, and independent non-executive directors), their roles in the audit, remuneration, and nomination committees, and key corporate governance information such as the company secretary and auditor - The Board of Directors includes Chairman Mr. Dai Kam Chun, CEO Mr. Dai Kam Man, COO Ms. Cheung So Wan as executive directors, along with non-executive directors and three independent non-executive directors[4](index=4&type=chunk) - The Audit Committee is chaired by Mr. Ng Tak Lung, the Remuneration Committee by Mr. Ding Kee Lung, and the Nomination Committee by Mr. Ho Chi Hang[4](index=4&type=chunk) - The company's auditor is Ernst & Young, and its stock code is **02307**[4](index=4&type=chunk)[5](index=5&type=chunk) Management Discussion and Analysis [Market Review](index=4&type=section&id=Market%20Review) In H1 2025, the global textile and apparel industry faced significant uncertainties due to economic challenges, trade disruptions, and US tariff policies, leading to cautious consumer behavior and intensified competition - In H1 2025, the global textile and apparel industry faced significant uncertainties due to global economic challenges, trade disruptions, and US tariff policies[7](index=7&type=chunk) - US real GDP grew by approximately **1.25%** on average, a slowdown from the past two years, with Trump administration tariffs exacerbating trade tensions[7](index=7&type=chunk) - China's consumer confidence index, while showing signs of stabilization, remained near historical lows, reflecting cautious consumer behavior due to market uncertainties[8](index=8&type=chunk) [Business Review](index=5&type=section&id=Business%20Review) Despite intense market competition, the Group's textile and apparel business performed stably in H1 2025, with revenue up 1.8%, gross profit up 5.9%, and profit attributable to equity holders up 68.0%, strengthening its 'China + Vietnam + Cambodia' production network and acquiring KHV dye factory - The Group's textile and apparel business maintained stable performance in H1 2025, with minimal direct impact from US tariffs[9](index=9&type=chunk) Key Financial Performance H1 2025 | Metric | H1 2025 (HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | | Overall Revenue | 1,843,000,000 | +1.8% | | Gross Profit | 209,500,000 | +5.9% | | Profit Attributable to Ordinary Equity Holders | 6,400,000 | +68.0% | | Basic Earnings Per Share | 0.7 HK cents | - | - The Group successfully acquired Korea Textile & Dyeing Support Services Joint Stock Company (now Kam Hing (Vietnam) Textile Printing and Dyeing Company Limited, or KHV) for a total cash consideration of approximately **HKD 83.913 million**, significantly enhancing its textile production capacity in Vietnam[10](index=10&type=chunk)[11](index=11&type=chunk) - Investments in expanding garment production capacity in Cambodia have yielded results, improving order fulfillment efficiency and product innovation capabilities[11](index=11&type=chunk) [Prospects](index=6&type=section&id=Prospects) Despite a fragile global economic outlook, the Group will optimize operations and financial performance, leveraging its 'China + Vietnam + Cambodia' production network and increasing local sourcing to manage geopolitical risks and gain market share - The IMF projects global economic growth of **3.0%** in 2025 and **3.1%** in 2026, both below historical averages, indicating continued pressure on supply chains and the business environment[12](index=12&type=chunk) - The Group will continue to optimize its operations and financial performance, leveraging its 'China + Vietnam + Cambodia' production network to more effectively manage geopolitical and market risks[13](index=13&type=chunk) - The Group plans to enhance supply chain management by increasing local sourcing, aiming to maintain cost advantages and competitiveness while committing to sustainable development[13](index=13&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) This section reviews the Group's H1 2025 financial performance, including revenue, gross profit, expenses, net profit, liquidity, capital expenditure, and significant acquisitions, noting increased revenue and net profit, successful acquisition of a Vietnam dye factory, and higher bank borrowings [Revenue](index=7&type=section&id=Revenue) The Group's total sales revenue for H1 2025 was approximately HKD 1,843 million, a 1.8% year-on-year increase, primarily driven by stable demand for fabric and garment products Revenue Overview | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,842,985 | 1,810,902 | +1.8% | [Gross Profit and Gross Margin](index=7&type=section&id=Gross%20Profit%20and%20Gross%20Margin) The Group's gross profit for H1 2025 was approximately HKD 209.5 million, a 5.9% year-on-year increase, with gross margin rising to 11.4% due to a higher proportion of profitable orders Gross Profit and Gross Margin Overview | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 209,520 | 197,873 | +5.9% | | Gross Margin | 11.4% | 10.9% | +0.5pp | [Other Income and Gains, Net](index=8&type=section&id=Other%20Income%20and%20Gains%2C%20Net) The Group's other income and gains, net, for H1 2025 was approximately HKD 35.9 million, primarily from sewage treatment services, freight services, government grants, and bank interest, with a significant increase in government grants Other Income and Gains, Net | Item | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Other income and gains, net | 35,900 | 33,300 | | Sewage treatment service income | 14,800 | 12,100 | | Government grants | 4,200 | 100 | | Bank interest income | 2,000 | 4,300 | [Selling and Distribution Expenses](index=8&type=section&id=Selling%20and%20Distribution%20Expenses) The Group's selling and distribution expenses increased to approximately HKD 65 million in H1 2025, mainly due to a significant rise in freight charges Selling and Distribution Expenses | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 65,039 | 52,551 | +23.8% | [Administrative Expenses](index=8&type=section&id=Administrative%20Expenses) The Group's administrative expenses decreased to approximately HKD 135.1 million in H1 2025, reflecting effective cost control measures and organizational optimization amid global economic uncertainties Administrative Expenses | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Administrative expenses | 135,100 | 138,600 | -2.5% | [Other Operating Expenses, Net](index=9&type=section&id=Other%20Operating%20Expenses%2C%20Net) The Group's other operating expenses, net, for H1 2025 was approximately HKD 13.6 million, primarily due to increased sewage treatment operating expenses and losses from disposal of property, plant, and equipment Other Operating Expenses, Net | Item | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Other operating expenses, net | 13,600 | 8,700 | | Sewage treatment operating expenses | 14,700 | 11,000 | | Loss on disposal of property, plant and equipment | 1,900 | 300 | | Exchange gains | (3,000) | (2,600) | [Finance Costs](index=9&type=section&id=Finance%20Costs) The Group's finance costs for H1 2025 were approximately HKD 22.4 million, a 31.0% year-on-year decrease, mainly due to lower prevailing bank interest rates in Hong Kong Finance Costs | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 22,400 | 31,800 | -31.0% | | Interest on bank loans | 15,800 | 21,400 | -26.1% | | Interest on trade loans and discounted bills | 4,400 | 8,900 | -50.6% | [Net Profit](index=9&type=section&id=Net%20Profit) Net profit attributable to ordinary equity holders of the Company was approximately HKD 6.4 million, a 68.0% year-on-year increase, primarily due to improved gross margin and reduced administrative and finance costs Net Profit Attributable to Ordinary Equity Holders | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Net profit attributable to ordinary equity holders | 6,400 | 3,800 | +68.0% | [Contingent Liabilities](index=9&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities (December 31, 2024: nil)[22](index=22&type=chunk) [Liquidity and Financial Resources](index=10&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's net current assets were approximately HKD 762.8 million, with a current ratio of 1.5 times; total bank borrowings increased to HKD 989.8 million, resulting in a net debt-to-equity ratio of 39.0% Liquidity and Financial Resources Overview | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net current assets | 762,800 | 683,600 | +11.6% | | Cash and cash equivalents | 637,200 | 672,800 | -5.3% | | Current ratio | 1.5 times | 1.5 times | 0% | | Total bank borrowings | 989,800 | 886,900 | +11.6% | | Net debt-to-equity ratio | 39.0% | 37.3% | +1.7pp | [Financing](index=10&type=section&id=Financing) As of June 30, 2025, the Group's long-term loans, primarily bank term loans, significantly increased to approximately HKD 298.8 million compared to the end of 2024 Financing Overview | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Long-term loans | 298,800 | 189,800 | +57.4% | [Interim Dividend](index=10&type=section&id=Interim%20Dividend) The Board of Directors resolved not to recommend the payment of any interim dividend for the period - The Board of Directors resolved not to recommend the payment of any interim dividend for the period (six months ended June 30, 2024: nil)[25](index=25&type=chunk) [Foreign Exchange and Interest Rate Risks](index=11&type=section&id=Foreign%20Exchange%20and%20Interest%20Rate%20Risks) Approximately 84.2% of the Group's sales are denominated in USD, exposing it primarily to RMB-related foreign exchange risk, while borrowings are mainly at floating rates, with management monitoring and hedging as needed - Approximately **84.2%** of the Group's sales are denominated in USD, primarily exposing it to RMB-related foreign exchange risk[26](index=26&type=chunk) - The Group's borrowings are primarily subject to floating interest rates, and management monitors interest rate movements, utilizing necessary hedging instruments prudently and professionally[26](index=26&type=chunk) [Pledge of the Group's Assets](index=11&type=section&id=Pledge%20of%20the%20Group%27s%20Assets) As of June 30, 2025, the Group had no pledged land and buildings; approximately HKD 35.4 million in deposits were pledged for HKD 87.4 million in bills payable, and restricted bank deposits decreased to zero - As of June 30, 2025, the Group had no pledged land and buildings[27](index=27&type=chunk) Pledged Assets Overview | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Deposits pledged for bills payable | 35,400 | 36,000 | | Bills payable | 87,400 | 110,500 | | Restricted bank deposits | 0 | 1,300 | [Capital Expenditure](index=11&type=section&id=Capital%20Expenditure) The Group's capital expenditure for H1 2025 was approximately HKD 52.8 million, with 97.8% for plant and machinery; total capital commitments were approximately HKD 213.2 million, mainly for property, plant, equipment, and new production facilities Capital Expenditure Overview | Metric | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Capital expenditure | 52,800 | 46,300 | +14.0% | | Percentage for purchase of plant and machinery | 97.8% | 74.4% | +23.4pp | Capital Commitments | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Property, plant and equipment and right-of-use assets | 37,000 | 13,000 | | Construction of new production facilities | 176,200 | 176,200 | | **Total** | **213,200** | **189,200** | [Material Investments](index=12&type=section&id=Material%20Investments) As of June 30, 2025, the Group held no material investments representing 5% or more of its total assets - As of June 30, 2025, the Group held no material investments representing **5%** or more of its total assets[29](index=29&type=chunk) [Material Acquisitions and Disposals](index=12&type=section&id=Material%20Acquisitions%20and%20Disposals) In April 2025, the Group completed the acquisition of KHV's entire equity for approximately HKD 83.913 million to enhance Vietnam textile production capacity, with no other material acquisitions or disposals during the period - The Group completed the acquisition of the entire equity of Korea Textile & Dyeing Support Services Joint Stock Company (KHV) in April 2025, for a total cash consideration of approximately **HKD 83.913 million**[30](index=30&type=chunk) - This acquisition aims to significantly enhance the Group's textile production capacity in Vietnam[30](index=30&type=chunk) - Other than the aforementioned acquisition, the Group did not undertake any other material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period[30](index=30&type=chunk) [Events After Reporting Period](index=12&type=section&id=Events%20After%20Reporting%20Period) No significant events occurred after the reporting period that would materially affect the Group's operations and financial performance - No significant events occurred after the reporting period that would materially affect the Group's operations and financial performance[31](index=31&type=chunk) [Treasury Policy](index=12&type=section&id=Treasury%20Policy) The Group adopts a prudent treasury policy, emphasizing risk control and transaction management to mitigate the impact of interest rate and exchange rate fluctuations and minimize financial risks - The Group adopts a prudent treasury policy in cash and financial management, placing high importance on risk control and transactions related to its principal businesses[32](index=32&type=chunk) - The treasury policy aims to mitigate the impact of interest rate and exchange rate fluctuations on the Group's overall financial position and minimize its financial risks[32](index=32&type=chunk) [Equity Fundraising Activities](index=13&type=section&id=Equity%20Fundraising%20Activities) The Company did not engage in any equity fundraising activities or dispose of treasury shares during the period - The Company did not engage in any equity fundraising activities or dispose of treasury shares during the period[33](index=33&type=chunk) [Staff Policy](index=13&type=section&id=Staff%20Policy) As of June 30, 2025, the Group had 7,270 employees globally, with remuneration based on market terms and qualifications, reviewed annually based on performance, and comprehensive retirement and medical benefits provided Employee Headcount Overview | Region | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | China | 3,575 | 3,638 | | Cambodia | 3,348 | 3,356 | | Hong Kong, Macau, Singapore and others | 297 | 187 | | **Total** | **7,270** | **7,181** | - Remuneration packages are generally determined by reference to market terms and individual qualifications, with discretionary bonuses based on employee performance and Group results[34](index=34&type=chunk) - The Group has established defined contribution retirement benefit schemes and purchased medical insurance for all Hong Kong employees, and participates in various defined contribution and insurance schemes to comply with local regulations[34](index=34&type=chunk) Other Information [Changes in Directors' Information Disclosed Under Listing Rule 13.51B(1)](index=14&type=section&id=Changes%20in%20Directors%27%20Information%20Disclosed%20Under%20Listing%20Rule%2013.51B%281%29) This section discloses the resignation of Mr. Ho Chi Hang, an independent non-executive director, as Vice Chairman of the China Committee of the Hong Kong General Chamber of Commerce, and Mr. Ng Tak Lung's cessation as an independent non-executive director of Henan Jinma Energy Company Limited - Independent Non-executive Director Mr. Ho Chi Hang resigned as Vice Chairman of the China Committee of the Hong Kong General Chamber of Commerce, effective July 11, 2025[35](index=35&type=chunk) - Independent Non-executive Director Mr. Ng Tak Lung ceased to be an independent non-executive director of Henan Jinma Energy Company Limited (Stock Code: **6885**) effective June 16, 2025[35](index=35&type=chunk) [Directors' Interests and Short Positions in Shares and Underlying Shares](index=14&type=section&id=Directors%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, several directors held long positions in the Company's ordinary shares and underlying shares, primarily through controlled corporations and spouse interests, with Mr. Dai Kam Chun and his spouse Ms. Cheung So Wan collectively holding approximately 38.69% of shares Directors' Long Positions in Ordinary Shares and Underlying Shares of the Company (as of June 30, 2025) | Name of Director | Beneficial Owner (No. of Shares) | Spouse's Interest (No. of Shares) | Interest in Controlled Corporation (No. of Shares) | Total Interest (No. of Shares) | Approximate Percentage of the Company's Issued Share Capital (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Dai Kam Chun | 3,000,000 | 1,000,000 | 332,600,000 | 336,600,000 | 38.69 | | Mr. Dai Kam Man | 2,000,000 | 1,000,000 | 96,000,000 | 99,000,000 | 11.38 | | Ms. Cheung So Wan | 1,000,000 | 335,600,000 | – | 336,600,000 | 38.69 | | Ms. Wong Siu Yuk | 1,000,000 | 98,000,000 | – | 99,000,000 | 11.38 | | Mr. Li Xiangmin | 200,000 | – | – | 200,000 | 0.02 | - Mr. Dai Kam Chun's interests include shares held by Exceed Standard Limited, which he beneficially owns, and shares held by his spouse, Ms. Cheung So Wan[38](index=38&type=chunk) - Mr. Dai Kam Man's interests include shares held by Power Strategy Limited, which he beneficially owns, and shares held by his spouse, Ms. Wong Siu Yuk[38](index=38&type=chunk) [Share Option Scheme](index=16&type=section&id=Share%20Option%20Scheme) The Company's 2014 share option scheme expired on June 8, 2024, with no options granted since its adoption and no outstanding options as of June 30, 2025 - The Company's share option scheme adopted on June 9, 2014, expired on June 8, 2024[40](index=40&type=chunk) - Since the adoption date of the scheme, no share options have been granted by the Company under the scheme, and there were no outstanding share options as of June 30, 2025[40](index=40&type=chunk) [Persons with Disclosable Interests or Short Positions Under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance](index=17&type=section&id=Persons%20with%20Disclosable%20Interests%20or%20Short%20Positions%20Under%20Divisions%202%20and%203%20of%20Part%20XV%20of%20the%20Securities%20and%20Futures%20Ordinance) As of June 30, 2025, beyond the directors, Exceed Standard and Power Strategy held disclosable long positions in the Company's shares, accounting for 38.23% and 11.04% of the issued share capital, respectively Major Shareholders' Long Positions in Ordinary Shares and Underlying Shares of the Company (as of June 30, 2025) | Name | Capacity and Nature of Interest | Number of Ordinary Shares Held | Percentage (%) | | :--- | :--- | :--- | :--- | | Exceed Standard | Beneficial Owner | 332,600,000 | 38.23 | | Power Strategy | Beneficial Owner | 96,000,000 | 11.04 | - Exceed Standard is associated with Chairman Mr. Dai Kam Chun, and Power Strategy is associated with Executive Director Mr. Dai Kam Man[43](index=43&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=17&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20the%20Company%27s%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the period, and no treasury shares were held as of June 30, 2025 - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the period[44](index=44&type=chunk) - As of June 30, 2025, the Company held no treasury shares[44](index=44&type=chunk) [Corporate Governance](index=18&type=section&id=Corporate%20Governance) The Company is committed to maintaining good corporate governance practices, applying relevant principles and complying with the Corporate Governance Code in Appendix C1 Part 2 of the Listing Rules throughout the period - The Company is committed to maintaining good corporate governance practices, believing they are crucial for effective management, a sound corporate culture, successful business development, and enhancing shareholder value[45](index=45&type=chunk) - The Company has consistently applied the relevant principles and complied with the applicable code provisions set out in the Corporate Governance Code in Appendix C1 Part 2 of the Listing Rules throughout the period[45](index=45&type=chunk) [Audit Committee](index=18&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, reviews and oversees the Group's financial reporting, risk management, and internal controls, and has reviewed the unaudited interim financial statements for the period - The Audit Committee, composed of all three independent non-executive directors, is primarily responsible for reviewing and overseeing the Group's financial reporting, risk management, and internal controls[46](index=46&type=chunk) - The Audit Committee has discussed the accounting policies adopted by the Group with management and reviewed the Group's unaudited interim financial statements for the period prior to recommending them for Board approval[46](index=46&type=chunk) [Standard Code for Securities Transactions by Directors ("Model Code")](index=18&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors%20%28%22Model%20Code%22%29) The Company adopted the Model Code in Appendix C3 of the Listing Rules as the code of conduct for directors' securities transactions, and all directors confirmed compliance during the period - The Company has adopted the Model Code set out in Appendix C3 of the Listing Rules as the code of conduct for directors' securities transactions[47](index=47&type=chunk) - Following specific enquiries with all directors, each director confirmed compliance with the standards set out in the Model Code during the period[47](index=47&type=chunk) [Approval of Unaudited Interim Financial Statements](index=18&type=section&id=Approval%20of%20Unaudited%20Interim%20Financial%20Statements) The unaudited interim financial statements were approved and authorized for issue by the Board of Directors on August 19, 2025 - The unaudited interim financial statements were approved and authorized for issue by the Board of Directors on August 19, 2025[48](index=48&type=chunk) Condensed Consolidated Statement of Profit or Loss [Summary of Condensed Consolidated Statement of Profit or Loss](index=19&type=section&id=Summary%20of%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group reported revenue of HKD 1,842,985 thousand and gross profit of HKD 209,520 thousand for H1 2025, with profit before tax of HKD 9,026 thousand and profit for the period of HKD 6,310 thousand, resulting in basic and diluted earnings per share of 0.7 HK cents Summary of Condensed Consolidated Statement of Profit or Loss | Metric | Six months ended June 30, 2025 (HKD thousands) | Six months ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 1,842,985 | 1,810,902 | | Cost of sales | (1,633,465) | (1,613,029) | | Gross profit | 209,520 | 197,873 | | Other income and gains, net | 35,823 | 33,274 | | Selling and distribution expenses | (65,039) | (52,551) | | Administrative expenses | (135,128) | (138,618) | | Finance costs | (22,374) | (31,766) | | Profit before tax | 9,026 | 4,204 | | Income tax expense | (2,716) | (234) | | Profit for the period | 6,310 | 3,970 | | Profit attributable to ordinary equity holders of the Company | 6,411 | 3,815 | | Basic earnings per share | 0.7 HK cents | 0.4 HK cents | | Diluted earnings per share | 0.7 HK cents | 0.4 HK cents | Condensed Consolidated Statement of Comprehensive Income [Summary of Condensed Consolidated Statement of Comprehensive Income](index=20&type=section&id=Summary%20of%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The Group's profit for H1 2025 was HKD 6,310 thousand, with no other comprehensive income, resulting in a total comprehensive income for the period of HKD 6,310 thousand, of which HKD 6,411 thousand was attributable to ordinary equity holders of the Company Summary of Condensed Consolidated Statement of Comprehensive Income | Metric | Six months ended June 30, 2025 (HKD thousands) | Six months ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Profit for the period | 6,310 | 3,970 | | Other comprehensive income | – | – | | Total comprehensive income for the period | 6,310 | 3,970 | | Attributable to ordinary equity holders of the Company | 6,411 | 3,815 | | Non-controlling interests | (101) | 155 | Condensed Consolidated Statement of Financial Position [Summary of Condensed Consolidated Statement of Financial Position](index=21&type=section&id=Summary%20of%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total non-current assets were HKD 1,302,049 thousand and total current assets were HKD 2,180,635 thousand, with net assets increasing slightly to HKD 1,722,127 thousand compared to the end of 2024 Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 856,042 | 875,715 | | Right-of-use assets | 190,521 | 162,277 | | Goodwill | 32,621 | 405 | | Total non-current assets | 1,302,049 | 1,266,432 | | **Current assets** | | | | Inventories | 840,921 | 826,683 | | Trade and bills receivables | 526,094 | 518,455 | | Cash and cash equivalents | 637,150 | 672,814 | | Total current assets | 2,180,635 | 2,169,299 | | **Current liabilities** | | | | Trade and bills payables | 562,680 | 607,894 | | Interest-bearing bank borrowings | 691,018 | 697,123 | | Total current liabilities | 1,417,846 | 1,485,664 | | **Non-current liabilities** | | | | Interest-bearing bank borrowings | 298,754 | 189,812 | | Total non-current liabilities | 342,711 | 228,161 | | **Net assets** | **1,722,127** | **1,721,906** | Condensed Consolidated Statement of Changes in Equity [Summary of Condensed Consolidated Statement of Changes in Equity](index=23&type=section&id=Summary%20of%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity attributable to ordinary equity holders of the Company was HKD 1,721,010 thousand, a slight increase from January 1, 2025, primarily due to profit for the period, net of dividends declared for the previous year Summary of Condensed Consolidated Statement of Changes in Equity | Metric | June 30, 2025 (HKD thousands) | January 1, 2024 (HKD thousands) | | :--- | :--- | :--- | | Issued share capital | 86,992 | 86,992 | | Reserves | 1,634,018 | 1,633,696 | | Total equity attributable to ordinary equity holders of the Company | 1,721,010 | 1,720,688 | | Non-controlling interests | 1,117 | 1,218 | | **Total equity** | **1,722,127** | **1,721,906** | | Profit for the period | 6,411 | 3,815 | | Dividends declared for the previous year | (6,089) | – | Condensed Consolidated Statement of Cash Flows [Summary of Condensed Consolidated Statement of Cash Flows](index=24&type=section&id=Summary%20of%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) The Group's H1 2025 net cash flow from operating activities was HKD 5,135 thousand, net cash used in investing activities was HKD 132,796 thousand (mainly due to subsidiary acquisition), and net cash from financing activities was HKD 91,997 thousand, with cash and cash equivalents at period-end of HKD 637,150 thousand Summary of Condensed Consolidated Statement of Cash Flows | Metric | Six months ended June 30, 2025 (HKD thousands) | Six months ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Net cash flows from/(used in) operating activities | 5,135 | (107,490) | | Purchase of property, plant and equipment | (52,779) | (46,319) | | Acquisition of a subsidiary | (80,850) | – | | Net cash flows used in investing activities | (132,796) | (46,766) | | Proceeds from bank loans | 1,063,414 | 948,131 | | Repayment of bank loans | (961,984) | (1,287,851) | | Net cash flows from/(used in) financing activities | 91,997 | (342,877) | | Net decrease in cash and cash equivalents | (35,664) | (497,133) | | Cash and cash equivalents at end of period | 637,150 | 418,955 | Notes to the Condensed Consolidated Financial Statements [1.1 Basis of Presentation](index=25&type=section&id=1.1%20Basis%20of%20Presentation) This section states that the interim condensed consolidated financial statements for the six months ended June 30, 2025, are prepared in accordance with HKAS 34 and Appendix D2 of the Listing Rules, and have been reviewed by the Audit Committee - The interim condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of Appendix D2 of the Listing Rules[55](index=55&type=chunk) - These condensed consolidated financial statements are unaudited but have been reviewed by the Company's Audit Committee[55](index=55&type=chunk) [1.2 Changes in Accounting Policies and Disclosures](index=25&type=section&id=1.2%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The accounting policies adopted for the interim condensed consolidated financial information are consistent with the prior year, with the initial adoption of the revised HKFRS accounting standard 'Lack of Exchangeability' having no material impact on the Group's financial performance or position - The accounting policies adopted in preparing the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2024[56](index=56&type=chunk) - The initial adoption of the revised HKFRS accounting standard 'Lack of Exchangeability' during the period had no material impact on the Group's financial performance and position[57](index=57&type=chunk) [2. Operating Segment Information](index=26&type=section&id=2.%20Operating%20Segment%20Information) The Group operates three reportable segments: fabric, garment, and 'others,' with management allocating resources and assessing performance based on segment results; the fabric segment contributes most revenue and profit, while the garment segment recorded a loss, with regional revenue mainly from Korea and non-current assets primarily in Mainland China and Vietnam - The Group's business units are segmented by products and services into three reportable operating segments: fabric, garment, and 'others' (including sewage treatment services and air/ocean freight services)[58](index=58&type=chunk)[59](index=59&type=chunk) Operating Segment Revenue and Profit (Six months ended June 30, 2025) | Segment | Revenue (HKD thousands) | Profit/(Loss) (HKD thousands) | | :--- | :--- | :--- | | Fabric | 1,432,714 | 29,828 | | Garment | 410,271 | (283) | | Others | – | (574) | | **Total** | **1,842,985** | **28,971** | Revenue from External Customers (by Customer Location) | Region | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Korea | 815,989 | 795,036 | | Mainland China | 262,248 | 281,639 | | Singapore | 164,003 | 137,956 | | Hong Kong | 132,745 | 141,684 | | Taiwan | 90,856 | 80,562 | | United States | 76,654 | 67,125 | | Vietnam | 49,114 | 62,666 | | Others | 251,376 | 244,234 | | **Total** | **1,842,985** | **1,810,902** | Non-current Assets (by Asset Location) | Region | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Mainland China | 775,139 | 907,950 | | Cambodia | 140,819 | 146,083 | | Hong Kong | 118,570 | 74,171 | | Vietnam | 104,776 | 4,859 | | Singapore | 1,824 | 2,191 | | Others | – | 317 | | **Total** | **1,141,128** | **1,135,571** | - Customer A contributed over **10%** of the Group's total revenue, primarily from sales of knitted fabric and dyed yarn[63](index=63&type=chunk) [3. Revenue, Other Income and Gains](index=30&type=section&id=3.%20Revenue%2C%20Other%20Income%20and%20Gains) The Group's revenue primarily stems from the production and sale of knitted fabric, dyed yarn, and garment products, along with related processing services, while other income and gains, net, totaled HKD 35,823 thousand, with a notable increase in government grants - Revenue refers to the net invoiced value of goods sold (less returns and provisions for trade discounts) and services rendered by the Group[64](index=64&type=chunk) Revenue Analysis (by Type of Goods or Services) | Type of goods or services | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Production and sales of knitted fabric and dyed yarn | 1,432,714 | 1,477,142 | | Production and sales of garment products and provision of related processing services | 410,271 | 333,760 | | **Total revenue** | **1,842,985** | **1,810,902** | Other Income and Gains Analysis | Item | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Bank interest income | 2,034 | 4,348 | | Government grants | 4,212 | 48 | | Sewage treatment service income | 14,831 | 12,061 | | Freight service income | 3,622 | 3,778 | | Others | 11,222 | 13,033 | | **Total other income** | **35,921** | **33,268** | | Fair value losses/(gains) | (98) | 6 | | **Other income and gains, net** | **35,823** | **33,274** | [4. Profit Before Tax](index=34&type=section&id=4.%20Profit%20Before%20Tax) This section details the major expenses and gains deducted from or credited to the Group's profit before tax, including cost of sales, R&D costs, depreciation, employee benefits, loss on disposal of property, impairment reversal for trade receivables, and exchange differences Items Deducted From/(Credited To) Profit Before Tax | Item | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Cost of inventories sold and services rendered | 1,633,465 | 1,613,029 | | Research and development costs | 20,595 | 26,011 | | Depreciation of property, plant and equipment | 91,273 | 111,029 | | Depreciation of right-of-use assets | 7,118 | 2,278 | | Employee benefit expenses (including directors' emoluments) | 286,840 | 278,319 | | Loss on disposal of property, plant and equipment | 1,908 | 298 | | Reversal of impairment losses on trade receivables, net | (224) | (4,727) | | Exchange differences, net | (3,043) | (2,620) | [5. Income Tax](index=35&type=section&id=5.%20Income%20Tax) The Group's total income tax expense for H1 2025 was HKD 2,716 thousand, a significant increase from the prior year, with tax calculated based on prevailing rates in each operating jurisdiction, including Hong Kong's two-tiered profits tax, preferential rates for high-tech enterprises in Mainland China, Macau's exemption, and Vietnam's corporate income tax Income Tax Expense Analysis | Item | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Current tax – Hong Kong | (165) | 288 | | Current tax – Other jurisdictions | 794 | (91) | | Deferred tax expense | 2,087 | 37 | | **Total tax expense for the period** | **2,716** | **234** | - Hong Kong profits tax rate is **16.5%**, with the first **HKD 2 million** of assessable profits for qualifying entities taxed at **8.25%**[71](index=71&type=chunk) - Mainland China corporate income tax rate is **25%**, with certain subsidiaries enjoying a preferential tax rate of **15%** under high-tech enterprise status[72](index=72&type=chunk) - Vietnamese subsidiaries are subject to corporate income tax at a rate of **20%** (H1 2024: nil)[72](index=72&type=chunk) [6. Dividends](index=36&type=section&id=6.%20Dividends) The Board of Directors resolved not to declare any interim dividend for the period - The Board of Directors resolved not to declare any interim dividend for the period (six months ended June 30, 2024: nil)[73](index=73&type=chunk) [7. Earnings Per Share Attributable to Ordinary Equity Holders of the Company](index=36&type=section&id=7.%20Earnings%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Company) Basic and diluted earnings per share attributable to ordinary equity holders of the Company for H1 2025 were both 0.7 HK cents, an increase from 0.4 HK cents in the prior year, calculated based on profit for the period of HKD 6,411 thousand and 869,919,000 ordinary shares outstanding Earnings Per Share | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Basic earnings per share | 0.7 HK cents | 0.4 HK cents | | Diluted earnings per share | 0.7 HK cents | 0.4 HK cents | - Earnings per share are calculated based on the profit for the period attributable to ordinary equity holders of the Company of **HKD 6,411 thousand** and **869,919,000** ordinary shares outstanding during the period[74](index=74&type=chunk) - The Group had no potentially dilutive ordinary shares outstanding for the periods ended June 30, 2025, and June 30, 2024[74](index=74&type=chunk) [8. Property, Plant and Equipment](index=36&type=section&id=8.%20Property%2C%20Plant%20and%20Equipment) As of June 30, 2025, the net book value of property, plant, and equipment was HKD 856,042 thousand, with additions and subsidiary acquisitions increasing assets, while depreciation and disposals caused reductions; the Group is applying for property ownership certificates for certain self-occupied properties in China Movement in Net Book Value of Property, Plant and Equipment | Item | HKD thousands | | :--- | :--- | | At January 1, 2025 (audited) | 875,715 | | Additions | 52,779 | | Acquisition of a subsidiary | 21,084 | | Depreciation | (91,273) | | Disposals | (2,263) | | **At June 30, 2025 (unaudited)** | **856,042** | - The Group is applying for property ownership certificates for certain self-occupied properties in Nansha and Enping, China, with net book values of approximately **HKD 700,000** and **HKD 18,000,000**, respectively[76](index=76&type=chunk) - The directors confirm that, as the Group has legally obtained land use rights certificates for the aforementioned self-built properties, they believe there are no legal or other impediments to obtaining the property ownership certificates[76](index=76&type=chunk) [9. Trade and Bills Receivables](index=37&type=section&id=9.%20Trade%20and%20Bills%20Receivables) As of June 30, 2025, the Group's total trade and bills receivables were HKD 526,094 thousand; the Group generally offers interest-free credit terms of up to three months and closely monitors outstanding receivables to minimize credit risk - The Group generally grants interest-free credit terms of up to three months to its customers, extendable to six months for long-term customers with sound financial standing[77](index=77&type=chunk) - The Group closely monitors outstanding receivables and has a credit control department to minimize credit risk[77](index=77&type=chunk) Ageing Analysis of Trade and Bills Receivables (net of loss allowance) | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Within 1 month | 355,925 | 361,744 | | 1 to 2 months | 117,894 | 94,236 | | 2 to 3 months | 32,379 | 37,422 | | Over 3 months | 19,896 | 25,053 | | **Total** | **526,094** | **518,455** | [10. Trade and Bills Payables](index=38&type=section&id=10.%20Trade%20and%20Bills%20Payables) As of June 30, 2025, the Group's total trade and bills payables were HKD 562,680 thousand, generally interest-free and due within one to five months Ageing Analysis of Trade and Bills Payables | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Within 3 months | 501,084 | 513,855 | | 3 to 6 months | 56,708 | 88,900 | | Over 6 months | 4,888 | 5,139 | | **Total** | **562,680** | **607,894** | - Trade and bills payables are interest-free and generally settled within credit terms of one to five months[79](index=79&type=chunk) [11. Business Combination](index=39&type=section&id=11.%20Business%20Combination) In April 2025, the Group acquired KHV for a total cash consideration of HKD 83,892 thousand, including share purchase and debt repayment, resulting in provisional goodwill of HKD 32,216 thousand and contributing HKD 3,276 thousand in revenue but a loss of HKD 1,789 thousand to the Group since acquisition - The Group completed the acquisition of the entire equity of Korea Textile & Dyeing Support Services Joint Stock Company (KHV) in April 2025[80](index=80&type=chunk) Cash Consideration for KHV Acquisition | Item | Amount (HKD thousands) | | :--- | :--- | | Share purchase price | 33,913 | | Repayment of debts due to vendor | 49,979 | | **Total cash consideration** | **83,892** | Fair Value of Identifiable Assets and Liabilities of Acquiree at Acquisition Date (Provisional) | Item | HKD thousands | | :--- | :--- | | Property, plant and equipment | 21,084 | | Right-of-use assets | 28,220 | | Inventories | 558 | | Trade receivables | 1,874 | | Cash and cash equivalents | 3,042 | | Trade payables | (662) | | Deferred tax liabilities | (2,160) | | **Total identifiable net assets at fair value** | **51,676** | | **Provisional goodwill arising on acquisition** | **32,216** | - Since the acquisition, the acquiree contributed **HKD 3,276 thousand** in revenue and resulted in a loss of **HKD 1,789 thousand** to the consolidated profit for the six months ended June 30, 2025[86](index=86&type=chunk) [12. Commitments](index=42&type=section&id=12.%20Commitments) As of June 30, 2025, the Group's total capital commitments were HKD 221,392 thousand, primarily for machinery purchases, construction in progress, and new production facilities, with outstanding irrevocable letter of credit commitments of HKD 139,396 thousand Capital Commitments (contracted but not provided for) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Purchase of machinery | 15,074 | 4,173 | | Construction in progress | 21,952 | 8,854 | | Construction of new production facilities | 176,207 | 176,207 | | Construction of properties under development | 8,159 | 8,159 | | **Total** | **221,392** | **197,393** | - As of the end of the reporting period, the Group had outstanding commitments for irrevocable letters of credit totaling **HKD 139,396 thousand**[87](index=87&type=chunk) [13. Related Party Transactions](index=43&type=section&id=13.%20Related%20Party%20Transactions) The Group has outstanding balances with related parties, including receivables from and payables to associates; directors have provided indemnity for certain unlicensed factory buildings, and key management personnel compensation totaled HKD 10,732 thousand - Mr. Dai Kam Chun and Mr. Dai Kam Man, directors of the Company, together with their respective spouses, have jointly and severally provided an indemnity to the Group for certain unlicensed six-storey factory buildings[88](index=88&type=chunk) Outstanding Balances with Related Parties | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Amounts due from associates | 28,641 | 31,847 | | Amounts due to associates | 283 | 11,949 | Key Management Personnel Compensation | Item | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 10,531 | 10,588 | | Post-employment benefits | 201 | 210 | | **Total** | **10,732** | **10,798** | [14. Transfer of Financial Assets](index=44&type=section&id=14.%20Transfer%20of%20Financial%20Assets) The Group endorsed certain bank bills receivable to suppliers; for un-derecognized endorsed bills, the Group retained most risks and rewards, while for fully derecognized bills, most risks and rewards were transferred, with directors deeming the risk of claims extremely low - The Group endorsed certain bank bills receivable in China to various suppliers to settle trade payables or make advance payments[89](index=89&type=chunk) - For endorsed bills not fully derecognized (carrying amount of approximately **HKD 1,741 thousand** as of June 30, 2025), the Group retained substantially all risks and rewards, thus continuing to recognize their full carrying amount[89](index=89&type=chunk) - For bank bills receivable fully derecognized (total value of approximately **HKD 30,019 thousand** as of June 30, 2025), the Group transferred substantially all risks and rewards, and the directors consider the risk of claims to be extremely low given the creditworthiness of the accepting banks[90](index=90&type=chunk) - For the periods ended June 30, 2025, and June 30, 2024, the Group did not recognize any gain or loss on the date of transfer of the derecognized bills[91](index=91&type=chunk)