香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示，概不對因本公佈全部或任何部分內容而產生或 因依賴該等內容而引致的任何損失承擔任何責任。 (Stock Code: 8427) WS-SK TARGET GROUP LIMITED 萬順瑞強集團有限公司 ( 於開曼群島註冊成立之有限公司 ) 香港，2025 年 8 月 31 日 1 有關截至 2025 年 5 月 31 日止年度的 全年業績公佈的補充公佈 茲提述萬順瑞強集團有限公司（「本公司」）日期為 2025年 8月 29日的公佈，內容有關截至 2025 年 5 月 31 日止年度的全年業績公佈（「該公佈」）。除文義另有所指外，本公佈所用詞 彙與該公佈所界定者具相同涵義。 董事會希望提供補充資料，本集團截至 2025年 5月 31日止年度的經審核綜合業績，連同上一 財政年度的經審核比較數字已經本公司審核委員會審閱。 董事會也希望謹此澄清在該公佈第 29 頁標題為「股份發售的所得款項用途」的部分中，發生 無意文書錯誤，載列股份發售所得款項淨額、重新分配的未動用所得款項及直至截至 2025 年 ...

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) [Financial Summary](index=1&type=section&id=Financial%20Summary) The company reported a significant decline in revenue and gross profit for H1 2025, with increased losses and no interim dividend recommendation H1 2025 Key Financial Indicators (YoY) | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 365.99 | 636.16 | -42.47% | | Gross Profit | 17.07 | 44.85 | -61.93% | | Gross Profit Margin | 4.67% | 7.05% | -2.38 percentage points | | Loss Before Income Tax | (177.86) | (98.60) | +80.39% | | Loss Attributable to Equity Holders of the Company | (177.88) | (98.61) | +80.38% | | Basic and Diluted Loss Per Share | (0.75) | (0.44) | +70.45% | - The Board does not recommend an **interim dividend** for the reporting period, consistent with H1 2024[3](index=3&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the six months ended June 30, 2025, detailing the company's financial performance, position, equity changes, and cash flows [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement details the company's revenues, costs, gross profit, operating loss, and net loss for the six months ended June 30, 2025 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 365,993 | 636,157 | | Cost of Sales | (348,919) | (591,305) | | Gross Profit | 17,074 | 44,852 | | Operating Loss | (182,240) | (100,063) | | Loss Before Income Tax | (177,861) | (98,600) | | Loss for the Period | (177,946) | (98,629) | | Loss and Total Comprehensive Loss for the Period Attributable to Equity Holders of the Company | (177,882) | (98,613) | | Basic and Diluted Loss Per Share (RMB) | (0.75) | (0.44) | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement presents the company's assets, equity, and liabilities as of June 30, 2025, reflecting its financial structure and solvency Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **ASSETS** | | | | Total Non-current Assets | 493,870 | 411,668 | | Total Current Assets | 1,092,996 | 1,149,254 | | **TOTAL ASSETS** | **1,586,866** | **1,560,922** | | **EQUITY** | | | | Share Capital | 241,948 | 230,757 | | Reserves | 1,352,677 | 1,181,008 | | Accumulated Losses | (686,687) | (508,741) | | **TOTAL EQUITY** | **907,938** | **903,024** | | **LIABILITIES** | | | | Total Non-current Liabilities | 247,649 | 181,770 | | Total Current Liabilities | 431,279 | 476,128 | | **TOTAL LIABILITIES** | **678,928** | **657,898** | | **TOTAL EQUITY AND LIABILITIES** | **1,586,866** | **1,560,922** | | Net Current Assets | 661,717 | 673,126 | [Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement outlines the changes in the company's equity components, including share capital, reserves, and accumulated losses, for the period ended June 30, 2025 Condensed Consolidated Statement of Changes in Equity (As of June 30, 2025) | Indicator | Share Capital (RMB thousand) | Reserves (RMB thousand) | Accumulated Losses (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | As of January 1, 2025 | 230,757 | 1,181,008 | (508,741) | 903,024 | | Loss for the period | – | – | (177,946) | (177,946) | | Other comprehensive loss | – | (64) | – | (64) | | Placing of new shares | 11,191 | 198,991 | – | 210,182 | | Purchase of shares for share award scheme | – | (27,258) | – | (27,258) | | As of June 30, 2025 | 241,948 | 1,352,677 | (686,687) | 907,938 | [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement presents the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (97,507) | (406,911) | | Net cash generated from/(used in) investing activities | 65,709 | (168,734) | | Net cash generated from financing activities | 230,084 | 65,374 | | Net increase/(decrease) in cash and cash equivalents | 198,286 | (510,271) | | Cash and cash equivalents at end of period | 378,622 | 212,390 | [Notes to the Unaudited Interim Financial Report](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed notes to the interim financial report, covering general information, basis of preparation, accounting policy changes, revenue, expenses, tax, loss per share, inventories, receivables, borrowings, payables, and dividend policy [General Information](index=7&type=section&id=General%20Information) This section provides fundamental details about the company, including its establishment date, registration location, and primary business activities - ZhiXing Automotive Technology (Suzhou) Co., Ltd. was incorporated in Suzhou on December 27, 2016, primarily engaged in the development, manufacturing, and sales of **combined driving assistance solutions and products**[9](index=9&type=chunk) - The company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on **December 20, 2023**[9](index=9&type=chunk) [Basis of Preparation](index=7&type=section&id=Basis%20of%20Preparation) This section outlines the accounting standards and disclosure provisions used in preparing the interim financial report - This interim financial report is prepared in accordance with the disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and **International Accounting Standard 34 'Interim Financial Reporting'**[10](index=10&type=chunk) - This interim financial report is unaudited, but financial information for the year ended December 31, 2024, is extracted from the published annual financial statements with an **unqualified opinion**[11](index=11&type=chunk) [Changes in Accounting Policies](index=8&type=section&id=Changes%20in%20Accounting%20Policies) This section details the application of new accounting standards and interpretations, noting their impact on the interim financial report - The Group has applied amendments to **IAS 21 'The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability'**, which had no significant impact on this interim report due to the absence of relevant foreign currency transactions[12](index=12&type=chunk) - The Group has not applied any new standards or interpretations that are **not yet effective** for the current accounting period[13](index=13&type=chunk) [Revenue and Segment Information](index=8&type=section&id=Revenue%20and%20Segment%20Information) This section provides an overview of the company's revenue streams and confirms its operation as a single business segment primarily in China - The Group primarily engages in the production, R&D, and sales of **combined driving assistance solutions and products** in China, operating as a single business segment[14](index=14&type=chunk) Revenue Analysis by Category (For the six months ended June 30) | Revenue Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Combined driving assistance solutions and products | 327,495 | 613,257 | | Autonomous driving related R&D services | 25,790 | 19,610 | | Sales of PCBA products | 12,708 | 3,290 | | **Total Revenue** | **365,993** | **636,157** | - For the six months ended June 30, 2025, impairment provisions for contract costs recognized significantly increased to approximately **RMB 1,475,000**, up from RMB 77,000 in the same period of 2024[18](index=18&type=chunk) [Other Income](index=10&type=section&id=Other%20Income) This section details the company's other income streams, primarily focusing on government subsidies received during the reporting period Other Income (For the six months ended June 30) | Income Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Government grants | 2,904 | 2,198 | - Government grants are primarily utilized for **R&D expenses** and the construction of advanced industrial bases, with no unfulfilled conditions or contingent matters attached[22](index=22&type=chunk) [Other Losses – Net](index=11&type=section&id=Other%20Losses%20%E2%80%93%20Net) This section presents the net other losses, including fair value changes of financial instruments and exchange losses, for the six months ended June 30, 2025 Other Losses – Net (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net fair value gain on derivative financial instruments | – | 626 | | Net gain/(loss) on disposal of property, plant and equipment and intangible assets | 1 | (1) | | Net fair value gain/(loss) on financial assets at fair value through profit or loss | 1,280 | (5,708) | | Net exchange losses | (3,732) | (6,026) | | Others | 7 | 32 | | **Total** | **(2,444)** | **(11,077)** | [Loss Before Income Tax](index=11&type=section&id=Loss%20Before%20Income%20Tax) This section details the components contributing to the company's loss before income tax, including financial income and costs, and other operating expenses Finance Income and Costs (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest income from bank balances | 6,215 | 3,655 | | Interest on bank and other borrowings | (4,471) | (2,714) | | Interest on lease liabilities | (48) | (80) | | Less: Interest expenses capitalized into construction in progress | 2,683 | 602 | | **Net Finance Income** | **4,379** | **1,463** | Other Items of Expense (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories | 339,370 | 567,442 | | Depreciation: Property, plant and equipment | 7,033 | 5,243 | | Depreciation: Right-of-use assets | 2,530 | 1,784 | | Research and development expenses | 156,526 | 99,587 | | Amortization of intangible assets | 5,055 | 2,942 | - Staff costs and depreciation expenses within R&D expenses amounted to **RMB 117,097,000** (2024: RMB 77,187,000) respectively[26](index=26&type=chunk) [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) This section details the company's income tax expenses and the preferential tax policies it benefits from as a high-tech enterprise Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current income tax expense | 85 | 29 | | Deferred income tax expense | – | – | | **Income Tax Expense** | **85** | **29** | - As a high-tech enterprise, the company enjoys a **preferential corporate income tax rate of 15%**, with its qualification renewed until 2025[28](index=28&type=chunk) - Subsidiaries qualifying as small and micro enterprises benefit from a policy allowing their annual taxable income to be calculated at **25% and taxed at a 20% rate**, extended until December 31, 2027[28](index=28&type=chunk) - Enterprises engaged in R&D activities can deduct **200% of their R&D expenses** for tax purposes (super deduction)[29](index=29&type=chunk) [Loss Per Share](index=13&type=section&id=Loss%20Per%20Share) This section details the calculation of basic and diluted loss per share for the reporting period, considering the weighted average number of ordinary shares outstanding Basic Loss Per Share (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the Company (RMB thousand) | (177,946) | (98,629) | | Weighted average number of ordinary shares in issue (thousand shares) | 236,775 | 226,330 | | Basic loss per share (RMB) | (0.75) | (0.44) | - Diluted loss per share is **identical to basic loss per share**, as there were no potential dilutive ordinary shares outstanding during the period[32](index=32&type=chunk) [Inventories](index=13&type=section&id=Inventories) This section provides a breakdown of the company's inventory composition and the associated impairment provisions as of June 30, 2025 Inventory Composition (As of June 30, 2025) | Inventory Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw materials | 105,131 | 145,526 | | Work in progress | 15,559 | 9,840 | | Finished goods | 162,217 | 146,283 | | Less: Impairment provision | (2,892) | (2,706) | | **Total** | **280,015** | **298,943** | - For the six months ended June 30, 2025, recognized inventory impairment provisions significantly increased to approximately **RMB 4,048,000**, up from RMB 266,000 in the same period of 2024[35](index=35&type=chunk) [Trade and Other Receivables](index=14&type=section&id=Trade%20and%20Other%20Receivables) This section presents the company's trade receivables, including loss provisions and an aging analysis, as of June 30, 2025 Trade and Other Receivables (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 273,987 | 227,360 | | Loss allowance | (6,980) | (5,239) | | **Total** | **267,007** | **222,121** | Aging Analysis of Trade Receivables (As of June 30, 2025) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 216,285 | 206,577 | | 3 to 6 months | 32,138 | 7,132 | | 6 to 12 months | 17,433 | 658 | | Over 12 months | 8,131 | 12,993 | [Borrowings](index=15&type=section&id=Borrowings) This section details the company's borrowing structure, including secured and unsecured bank loans and other loans, as of June 30, 2025 Borrowings Composition (As of June 30, 2025) | Borrowing Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current liabilities: Secured bank borrowings | 240,399 | 170,173 | | Current liabilities: Secured bank borrowings | 15,933 | – | | Current liabilities: Unsecured bank borrowings | 80,000 | 114,500 | | Current liabilities: Other loans | 30,000 | 30,000 | | Current liabilities: Interest payable | 187 | 225 | | **Total Borrowings** | **366,519** | **314,898** | - The Group pledged land use rights with a carrying amount of approximately **RMB 29,957,000** to banks as collateral for long-term bank borrowings of RMB 256,332,000[37](index=37&type=chunk) - The Group's borrowings are subject to interest rate changes and contract repricing or maturity dates, with **RMB 100,000,000** of borrowings maturing within six months[38](index=38&type=chunk) [Trade and Other Payables](index=16&type=section&id=Trade%20and%20Other%20Payables) This section provides a breakdown of the company's trade payables, other payables, and accrued expenses as of June 30, 2025 Trade Payables (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Payables for materials | 136,932 | 114,918 | Other Payables and Accrued Expenses (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Payables for purchase of property, plant and equipment | 62,834 | 82,816 | | Salaries and welfare payables | 15,435 | 36,797 | | Accrued expenses | 30,948 | 39,019 | | Other tax payables | 2,389 | 2,762 | | Others | 34,503 | 25,161 | | **Total** | **146,109** | **186,555** | - Service fees for autonomous driving products collected from customers but not yet paid to suppliers amounted to approximately **RMB 30,559,000**[40](index=40&type=chunk) [Dividends](index=17&type=section&id=Dividends) This section confirms the company's dividend policy and the absence of any interim dividend payments or declarations during the reporting period - For the six months ended June 30, 2025 and 2024, the company **neither paid nor declared any dividends**[41](index=41&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews H1 2025 market conditions, business performance, financial position, liquidity, and capital sources, outlining future strategies despite market competition and revenue decline [Market Review](index=18&type=section&id=Market%20Review) This section reviews the H1 2025 automotive market in China, highlighting growth in production, sales, new energy vehicles, and the increasing penetration of intelligent driving systems - In H1 2025, China's auto production and sales grew by **12.5% and 11.4%** respectively, with new energy vehicle production and sales increasing by **41.4% and 40.3%**, achieving a market share of **44.3%**[43](index=43&type=chunk) - The market share of Chinese brand passenger vehicles reached **68.4%**, an increase of **6.5%** compared to the same period last year[43](index=43&type=chunk) - Chinese government departments introduced multiple policies to promote and regulate the intelligent driving industry, including making **Automatic Emergency Braking (AEB)** a mandatory standard and incorporating combined driving assistance systems and OTA into mandatory regulatory frameworks[44](index=44&type=chunk) - The penetration rate of **combined driving assistance systems** continues to increase, particularly rapidly in vehicle models priced below **RMB 200,000**[45](index=45&type=chunk) - Autonomous driving algorithm models are continuously upgrading, evolving from 'perception-decision' end-to-end large models to 'understanding-reasoning' **VLM/VLA large models**, enhancing generalization capabilities and scene understanding[46](index=46&type=chunk) [Business Review](index=19&type=section&id=Business%20Review) This section reviews the company's business performance, product deliveries, new OEM partnerships, and strategic advancements in autonomous driving and embodied AI - The Group is a Chinese intelligent driving solutions provider, offering **L2 to L2+ combined driving assistance solutions** and developing L3 to L4 autonomous driving solutions[47](index=47&type=chunk) - During the reporting period, the company delivered over **116,000 sets of combined driving assistance solutions and products**, representing a **20.8% year-on-year increase**[47](index=47&type=chunk) Revenue by Major Business Line (For the six months ended June 30) | Business Line | 2025 (RMB million) | 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Combined driving assistance solutions and products | 327.50 | 613.26 | -46.60% | | Intelligent driving related R&D services | 25.79 | 19.61 | +31.51% | | Sales of PCBA products | 12.71 | 3.29 | +286.26% | - Revenue from self-developed **iDC series combined driving assistance domain controllers** increased by **115.66%** year-on-year, and intelligent front-view camera revenue increased by **115.99%**, primarily due to mass production and delivery of new vehicle models[49](index=49&type=chunk) - During the reporting period, the company secured **19 nomination letters** from renowned OEM clients such as Chery Automobile, Geely Automobile, and Dongfeng Motor, with production expected in 2025 and 2026[52](index=52&type=chunk) - The **full-stack self-developed iDC500 combined driving assistance domain controller** officially entered mass production, and a strategic cooperation agreement was signed with Horizon Robotics to advance mass production based on the Journey 6 series[53](index=53&type=chunk) - The company is actively expanding into the **embodied AI** sector, establishing a wholly-owned subsidiary, Aimoxing Robotics (Suzhou) Co., Ltd., and signing an equity restructuring framework agreement with Suzhou Xiaogongjiang Robotics Co., Ltd[54](index=54&type=chunk) - The company is actively pursuing **overseas expansion** by forming a joint venture with Delloyd Technology Berhad in Malaysia to penetrate the Southeast Asian market[55](index=55&type=chunk) [Financial Review](index=22&type=section&id=Financial%20Review) This section provides a detailed financial review, analyzing revenue, cost of sales, gross profit margin, R&D expenses, finance income, and net loss for the reporting period Revenue Breakdown and Proportion (For the six months ended June 30) | Revenue Category | 2025 (RMB thousand) | Proportion (%) | 2024 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Combined driving assistance domain controller solutions | 294,402 | 80.44% | 597,939 | 93.99% | | Intelligent front-view cameras | 33,093 | 9.04% | 15,318 | 2.41% | | Intelligent driving related R&D services | 25,790 | 7.05% | 19,610 | 3.08% | | Sales of PCBA products | 12,708 | 3.47% | 3,290 | 0.52% | | **Total** | **365,993** | **100.00%** | **636,157** | **100.00%** | - Revenue decreased by **42.47%**, primarily due to reduced demand from OEM clients, with a decline in Supervision product sales offset by an increase in **iDC series product sales**[56](index=56&type=chunk) - Cost of sales and services decreased by **40.99%** year-on-year to **RMB 348.92 million**, consistent with the revenue decline[59](index=59&type=chunk) - Gross profit margin decreased from **7.05%** in H1 2024 to **4.67%**, mainly due to strategic price reductions for certain iDC and iFC products to expand market share and maintain customer loyalty[60](index=60&type=chunk) - R&D expenses increased by **57.18%** year-on-year to **RMB 156.53 million**, with the percentage of revenue rising from 15.65% to 42.77%, primarily due to increased investment in self-developed new products and intelligent driving technologies[65](index=65&type=chunk) - Finance income increased by **RMB 2.56 million** year-on-year to **RMB 6.22 million**, mainly due to increased cash from the completion of a placing in February 2025[66](index=66&type=chunk) - Loss for the period increased by **80.42%** year-on-year to **RMB 177.95 million**, and loss attributable to owners of the parent increased by **80.38%** to **RMB 177.88 million**[68](index=68&type=chunk)[69](index=69&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash flow from operating, investing, and financing activities, along with changes in net current assets, inventories, borrowings, and capital expenditure - Net cash outflow from operating activities decreased from **RMB 406.91 million** in H1 2024 to **RMB 97.51 million** in the current reporting period, primarily due to reduced raw material purchases[70](index=70&type=chunk) - Net cash inflow from investing activities was **RMB 65.71 million**, compared to a net outflow of RMB 168.73 million in H1 2024, mainly due to higher redemptions of financial assets at fair value through profit or loss[70](index=70&type=chunk) - Net cash inflow from financing activities significantly increased to **RMB 230.08 million**, up from RMB 65.37 million in H1 2024, primarily due to investment proceeds from a placing completed in February 2025[71](index=71&type=chunk) - Net current assets were **RMB 661.72 million** as of June 30, 2025, slightly lower than RMB 673.13 million as of December 31, 2024[72](index=72&type=chunk) - Inventories decreased by **6.33%** to **RMB 280.02 million**, but average inventory turnover days increased from 92 to 149, mainly due to advance stock-piling for headquarters relocation[73](index=73&type=chunk) - Total borrowings increased by **16.39%** to **RMB 366.52 million**[74](index=74&type=chunk)[77](index=77&type=chunk) - The gearing ratio increased from **29.20%** as of June 30, 2024, to **40.37%** as of June 30, 2025[78](index=78&type=chunk) - Total capital expenditure increased by **51.29%** to **RMB 124.43 million**, primarily for new plant infrastructure and equipment purchases[80](index=80&type=chunk) - Staff costs increased by **31.87%** to **RMB 127.07 million**, mainly due to higher labor costs for R&D and management personnel, with total employees rising to 559[84](index=84&type=chunk) [Significant Investments](index=28&type=section&id=Significant%20Investments) This section confirms the absence of any significant investments during the reporting period, apart from the utilization of proceeds from global offerings and placings - As of June 30, 2025, the Group had **no significant investments** or other future major investment and capital asset plans, apart from utilizing the remaining net proceeds from global offerings and placings[85](index=85&type=chunk) [Significant Acquisitions and Disposals](index=28&type=section&id=Significant%20Acquisitions%20and%20Disposals) This section confirms that the company did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period - During the reporting period, the Group had **no significant acquisitions or disposals** of subsidiaries, associates, or joint ventures[86](index=86&type=chunk) [Future Strategies and Outlook](index=28&type=section&id=Future%20Strategies%20and%20Outlook) This section outlines the company's strategic direction, focusing on product optimization, R&D investment, market expansion, value chain integration, and diversification into embodied AI - 2025 is expected to be the inaugural year for widespread intelligent driving, with a significant increase in penetration, and the company will offer **cost-effective solutions** to meet diverse vehicle demands[87](index=87&type=chunk) - China's auto exports reached new highs, intelligent driving features are increasingly crucial in new energy vehicles, and the **embodied AI industry** is rapidly developing with clear synergistic trends with intelligent driving technology[88](index=88&type=chunk) - The company will continuously optimize existing product lines, expand **in-house manufacturing capabilities**, provide more cost-effective solutions through technological advancements and supply chain optimization, and enhance supply chain and manufacturing digitalization[89](index=89&type=chunk) - Increased R&D investment will deepen **VLA large model deployment**, improve the full-link data closed-loop system, optimize self-developed software middleware, and strengthen cooperation with Horizon Robotics to build integrated cockpit-driving and central vehicle computing platforms[90](index=90&type=chunk) - The company will deepen cooperation with existing clients, expand into more vehicle models, increase the size of its sales and marketing teams, and collaborate with strategic partners to **enlarge its OEM client base**[91](index=91&type=chunk) - Enhancing value chain integration involves collaborating with top international SoC suppliers and Horizon Robotics, deepening partnerships with sensor suppliers, and planning to strengthen **vertical integration capabilities** through investments or M&A[92](index=92&type=chunk) - A firm **overseas expansion strategy** includes supporting Chinese OEM outbound businesses, actively developing international clients, planning a global sales and service network, and leveraging strategic overseas shareholder resources to establish international alliances[93](index=93&type=chunk) - Actively exploring diversified business models involves promoting domain controllers in **unmanned logistics** and increasing investment in embodied AI, exploring cooperation opportunities in main controllers, key components, and algorithms[94](index=94&type=chunk) [Corporate Governance and Other Information](index=31&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the company's corporate governance practices, including code compliance, securities dealing standards, interim dividend policy, use of proceeds from offerings, post-reporting events, and financial statement review [Corporate Governance Code](index=31&type=section&id=Corporate%20Governance%20Code) This section outlines the company's adherence to the Corporate Governance Code, noting an exception regarding the combined roles of Chairman and CEO - The company has complied with all applicable code provisions of the **Corporate Governance Code**, with the exception of code provision C.2.1[95](index=95&type=chunk) - The roles of Chairman and Chief Executive Officer are held by the same individual (Mr. Song Yang), an arrangement the Board believes facilitates **unified leadership and effective executive function**, with the Board's structure ensuring a balance of power[95](index=95&type=chunk) [Standard Code for Securities Transactions](index=31&type=section&id=Standard%20Code%20for%20Securities%20Transactions) This section confirms the company's adoption and compliance with the Standard Code for Securities Transactions by its directors and supervisors - The company has adopted the **Standard Code for Securities Transactions by Directors of Listed Issuers**, and all directors and supervisors confirmed compliance during the reporting period[96](index=96&type=chunk) [Interim Dividend](index=31&type=section&id=Interim%20Dividend) This section reiterates the Board's decision not to recommend an interim dividend for the reporting period, consistent with the prior year - The Board does not recommend an **interim dividend** for the reporting period, consistent with H1 2024[97](index=97&type=chunk) [Use of Proceeds from Global Offering](index=32&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) This section details the allocation and utilization of net proceeds from the global offering, including amounts used for R&D, capital expenditure, and sales network expansion - The net proceeds from the global offering amounted to approximately **RMB 575.83 million**[98](index=98&type=chunk) Use of Proceeds from Global Offering (As of June 30, 2025) | Purpose | Proportion (%) | Net Proceeds (RMB million) | Unutilized as of Jan 1, 2025 (RMB million) | Actual Use during Period (RMB million) | Unutilized as of June 30, 2025 (RMB million) | Expected Time for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Enhance R&D for autonomous driving solutions and products | 45.0% | 259.12 | 43.88 | 43.88 | 0 | Fully utilized | | Capital expenditure for R&D headquarters, production plants, and new production lines | 35.0% | 201.54 | 18.43 | 18.43 | 0 | Fully utilized | | Expand sales and service network | 10.0% | 57.58 | 44.03 | 5.60 | 38.43 | Before end of 2026 | | Working capital and general corporate purposes | 10.0% | 57.58 | 0 | – | – | Fully utilized | | **Total** | **100.0%** | **575.83** | **106.34** | **67.91** | **38.43** | | - As of June 30, 2025, approximately **RMB 38.43 million** of net proceeds from the global offering remained unutilized, expected to be fully utilized before the end of 2026[99](index=99&type=chunk) [Use of Proceeds from 2024 Placing of New H Shares](index=33&type=section&id=Use%20of%20Proceeds%20from%202024%20Placing%20of%20New%20H%20Shares) This section details the allocation and utilization of net proceeds from the 2024 placing of new H shares, including amounts for R&D, capital expenditure, and overseas expansion - The net proceeds from the 2024 placing amounted to approximately **HKD 73.28 million**[100](index=100&type=chunk) Use of Proceeds from 2024 Placing (As of June 30, 2025) | Purpose | Proportion (%) | Net Proceeds (HKD million) | Unutilized as of Jan 1, 2025 (HKD million) | Actual Use during Period (HKD million) | Unutilized as of June 30, 2025 (HKD million) | Expected Time for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Enhance R&D for advanced intelligent driving, cockpit-driving integrated solutions and products | 40.0% | 29.30 | 8.26 | 8.26 | 0 | Fully utilized | | Enhance capital expenditure for R&D and production facilities | 20.0% | 14.66 | 0 | – | – | Fully utilized | | Expand overseas sales and service network | 20.0% | 14.66 | 12.36 | 1.28 | 11.08 | Before end of 2026 | | Working capital and general corporate purposes | 20.0% | 14.66 | 5.31 | 5.31 | 0 | Fully utilized | | **Total** | **100.0%** | **73.28** | **25.93** | **14.85** | **11.08** | | - As of June 30, 2025, approximately **HKD 11.08 million** of net proceeds from the 2024 placing remained unutilized, expected to be fully utilized before the end of 2026[101](index=101&type=chunk) [Use of Proceeds from 2025 Placing of New H Shares](index=34&type=section&id=Placing%20of%20New%20H%20Shares%20under%20General%20Mandate%20during%20the%20Reporting%20Period) This section details the allocation and utilization of net proceeds from the 2025 placing of new H shares, including amounts for R&D, capital expenditure, and working capital - The company completed the placing of **11,190,200 new H shares** in February 2025, with net proceeds amounting to approximately **HKD 228.37 million**[102](index=102&type=chunk) Use of Proceeds from 2025 Placing (As of June 30, 2025) | Purpose | Proportion (%) | Net Proceeds (HKD million) | Actual Use during Period (HKD million) | Unutilized as of June 30, 2025 (HKD million) | Expected Time for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Enhance R&D for advanced intelligent driving, cockpit-driving integrated solutions and products | 60.0% | 137.02 | 76.27 | 60.75 | Before end of 2025 | | Enhance capital expenditure for R&D and production facilities | 10.0% | 22.84 | 5.53 | 17.31 | Before end of 2025 | | Expand overseas sales and service network | 5.0% | 11.42 | 0 | 11.42 | Before end of 2026 | | Working capital and general corporate purposes | 25.0% | 57.09 | 57.09 | 0 | Fully utilized | | **Total** | **100.0%** | **228.37** | **138.89** | **89.48** | | - As of June 30, 2025, approximately **HKD 89.48 million** of net proceeds from the 2025 placing remained unutilized, with most expected to be fully utilized before the end of 2025[104](index=104&type=chunk) [Purchase, Redemption or Sale of Listed Securities](index=35&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20Listed%20Securities) This section reports on the company's transactions involving its own listed securities, specifically noting purchases for a share award scheme - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities, except for the trustee of the first H share award scheme purchasing **2,104,000 H shares** for a total consideration of **HKD 29.52 million**[105](index=105&type=chunk) - As of June 30, 2025, the company **held no treasury shares**[106](index=106&type=chunk) [Review of Financial Statements by Audit Committee](index=35&type=section&id=Review%20of%20Financial%20Statements%20by%20Audit%20Committee) This section confirms the Audit Committee's review of the unaudited interim financial statements and its satisfaction with their preparation and disclosure - The Audit Committee has reviewed the Group's unaudited consolidated financial statements and interim results for the six months ended June 30, 2025, deeming them prepared in accordance with **applicable accounting standards, laws, and regulations**, with appropriate disclosures[107](index=107&type=chunk) [Significant Events After Reporting Period](index=35&type=section&id=Significant%20Events%20After%20Reporting%20Period) This section discloses significant events occurring after the reporting period, including a subsequent placing of new H shares and its intended use of proceeds - In July 2025, the company completed a second placing, allotting and issuing **15,495,000 new H shares** with net proceeds of approximately **HKD 230.7 million**[108](index=108&type=chunk) - Net proceeds from the second 2025 placing will be used to enhance R&D for **advanced intelligent driving and cockpit-driving integrated solutions**, boost capital expenditure for R&D and production facilities, fund R&D, M&A for the company's robotics business, and for working capital and general corporate purposes[108](index=108&type=chunk) - Aside from the aforementioned disclosures, as of the announcement date, there were **no other significant events** materially impacting the Group's operations and financial performance[109](index=109&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=36&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This section informs stakeholders about the availability of the interim results announcement on the Stock Exchange and company websites, with the interim report to follow - This announcement has been published on the **Stock Exchange website and the company's website**, with the interim report to be dispatched to shareholders requesting printed copies and posted on the aforementioned websites in due course[110](index=110&type=chunk)

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 CANbridge Pharmaceuticals Inc. 北海康成製藥有限公司 （於開曼群島註冊成立的有限公司） 截至2025年6月30日止六個月 中期業績公告 北海康成製藥有限公司（「本公司」）董事（「董事」）會（「董事會」）欣然公佈本公司及其附屬公司（「本集 團」、「北海康成」或「我們」）截至2025年6月30日止六個月（「報告期間」）的未經審核簡明綜合業績，連 同截至2024年6月30日止六個月的比較數字如下。 本公告所載若干金額及百分比數字已經約整，或約整至小數點後一位或兩位數。任何表格、圖表或 其他地方所列總數與金額總和之間的任何差異乃因約整所致。 業務摘要 本集團在其藥物產品線及業務運營方面取得重大進展，包括以下里程碑及成就： 與百洋醫藥的戰略合作，於2025年8月，我們開始與青島百洋醫藥股份有限公司（於深圳證券交易所 上市的公司，股票代碼：301015）（「百洋醫藥」）進行戰略合作，據 ...

Financial Performance - For the six months ended June 30, 2025, the company reported revenue of HKD 76,846,000, a decrease of 29.5% compared to HKD 108,966,000 for the same period in 2024[7] - The gross profit for the same period was HKD 10,555,000, down 59.6% from HKD 26,105,000 in 2024[7] - The company recorded a net loss of HKD 30,461,000 for the six months ended June 30, 2025, compared to a profit of HKD 2,162,000 in the previous year[7] - The company reported a basic loss per share of HKD 4.32 for the six months ended June 30, 2025, compared to earnings of HKD 0.31 per share in 2024[9] - The company experienced a foreign exchange gain of HKD 8,166,000 for the period, contrasting with a loss of HKD 6,828,000 in the previous year[9] - The company experienced a net loss of HKD 30,461,000 for the six months ended June 30, 2025, compared to a profit of HKD 2,162,000 in the same period of 2024[23] - The group recorded a net loss of approximately HKD 30.5 million for the period, compared to a profit of HKD 2.2 million in the first half of 2024[53] Assets and Liabilities - The total assets as of June 30, 2025, were HKD 187,995,000, a slight decrease from HKD 191,030,000 as of December 31, 2024[10] - The company's cash and cash equivalents decreased to HKD 7,894,000 from HKD 19,689,000 at the end of 2024, indicating a liquidity challenge[10] - The company's intangible assets decreased to HKD 85,643,000 from HKD 99,150,000, reflecting a decline of 13.6%[10] - The total liabilities increased to HKD 158,583,000 as of June 30, 2025, compared to HKD 152,229,000 at the end of 2024[10] - The company's total equity as of June 30, 2025, was HKD 147,608,000, a decrease from HKD 220,938,000 as of January 1, 2024[13] - The company's trade payables increased to HKD 12.529 million as of June 30, 2025, compared to HKD 5.979 million as of December 31, 2024[40] - The company recorded a bank overdraft of approximately HKD 17.918 million as of June 30, 2025, compared to none as of December 31, 2024[44] - The group’s net current assets were approximately HKD 29.4 million as of June 30, 2025, down from approximately HKD 38.8 million as of December 31, 2024[57] - The group’s current ratio was approximately 1.2 as of June 30, 2025, compared to approximately 1.3 as of December 31, 2024[57] Revenue Breakdown - Revenue from key products showed a significant decline, with bonding wires generating HKD 48,551,000 (down 16.7%) and packaging adhesives at HKD 24,870,000 (down 46.8%) compared to the previous year[20] - Revenue from customers in mainland China was HKD 76,145,000, down 26.0% from HKD 102,823,000 in 2024[22] - Bond wire product revenue decreased by 16.7% to approximately HKD 48.6 million, while packaging glue product revenue significantly dropped by 46.9% to approximately HKD 24.9 million[48] Impairment and Expenses - The company recorded an impairment loss of approximately HKD 18,816,000 related to intangible assets for the six months ended June 30, 2025, whereas no impairment loss was reported for the same period in 2024[24] - The financing costs for the six months ended June 30, 2025, totaled HKD 2,955,000, a decrease from HKD 3,026,000 in the same period of 2024[28] - The income tax expense for the six months ended June 30, 2025, was HKD 884,000, compared to HKD 2,675,000 for the same period in 2024[29] - The total employee costs for the six months ended June 30, 2025, were HKD 17,996,000, a slight decrease from HKD 18,407,000 in the same period of 2024[31] - Sales and distribution expenses were approximately HKD 4.2 million, a decrease from approximately HKD 5.6 million in the first half of 2024, primarily due to reduced sales commissions[52] Corporate Governance - The company has established an audit committee composed of three independent non-executive directors to oversee financial reporting and internal control processes[92] - The audit committee has reviewed the unaudited condensed consolidated results for the period and confirmed compliance with applicable accounting standards and GEM listing rules[94] - The company has implemented remedial measures to enhance financial reporting procedures to comply with corporate governance codes[87] - The company has adopted a code of conduct for directors regarding securities trading, ensuring compliance with GEM listing rules throughout the period[90] - The company will continue to improve its corporate governance practices to align with statutory requirements and recent developments[89] Future Outlook and Strategy - The company plans to focus on improving operational efficiency and exploring new market opportunities to enhance future performance[6] - The company aims to focus on innovation in semiconductor packaging materials and accelerate domestic substitution to seize opportunities from the anticipated market recovery[47] - The group aims to enhance R&D investment to address global economic uncertainties and develop advanced, cost-effective products[54] - The group will continue to focus on the "domestic substitution" core strategy and expand its market share in automotive-grade packaging and AI chip materials[55] Shareholder Information - The company’s issued share capital was HKD 7,055,000, divided into 705,500,000 shares with a par value of HKD 0.01 each[81] - BVI Holdings and BVI Chows each hold 50.60% of the company's shares, totaling 357,000,000 shares[79] - Dr. Chow and Professor Chow each indirectly own 40% and 60% of BVI Chows, respectively[77] - Mr. Ma holds 21.61% of the company's shares, totaling 152,490,000 shares[79] - The board did not recommend the payment of an interim dividend for the period[65] Miscellaneous - There were no significant events after the reporting period up to the date of this report[68] - The company has not disclosed any new product developments or market expansion strategies in the report[70] - The company has not granted, exercised, canceled, or expired any stock options under the plan since its adoption, resulting in zero potential shares issued based on stock options during the period[85] - The stock option plan allows for a maximum of 68,000,000 shares to be issued, representing 10% of the total issued shares at the time of the plan's adoption[82] - The stock options must be accepted within 30 days of the grant date, with a nominal acceptance fee of HKD 1[83] - The company has no major shareholders or other individuals with disclosed interests in the company's shares, apart from those mentioned[80] - As of June 30, 2025, there were no significant contingent liabilities or guarantees[66] - As of June 30, 2025, the company had no significant encumbrances on its assets[64]

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) [Company Information](index=1&type=section&id=Company%20Information) This announcement presents the unaudited condensed consolidated interim results of China United Development Holdings Group Limited (incorporated in the Cayman Islands) for the six months ended June 30, 2025, with stock code 264 - Company Name: China United Development Holdings Group Limited[2](index=2&type=chunk) - Place of Incorporation: Cayman Islands[2](index=2&type=chunk) - Stock Code: 264[2](index=2&type=chunk) - Reporting Period: Six months ended June 30, 2025[2](index=2&type=chunk) [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Company's revenue significantly increased by 106.7% to HK$17,878 thousand, with gross profit growing by 113.2% to HK$4,373 thousand, while loss attributable to owners of the Company narrowed to HK$7,598 thousand from HK$9,549 thousand in the prior period, resulting in a basic loss per share of 1.77 HK cents Overview of Profit or Loss and Other Comprehensive Income | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 17,878 | 8,651 | 106.7% | | Cost of sales | (13,505) | (6,600) | 104.6% | | Gross profit | 4,373 | 2,051 | 113.2% | | Other income | 57 | 10 | 470.0% | | Other loss | – | (1,224) | -100.0% | | Selling and distribution costs | (605) | (887) | -31.8% | | Administrative and other operating expenses | (12,108) | (8,001) | 51.3% | | Reversal of impairment loss on trade receivables/(Impairment loss) | 569 | (33) | -1824.2% | | Finance costs | (1,650) | (1,465) | 12.6% | | Loss before tax | (9,364) | (9,549) | -1.9% | | Loss attributable to owners of the Company | (7,598) | (9,549) | -20.4% | | Basic loss per share (HK Cents) | (1.77) | (2.31) | -23.38% | [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Company's total assets increased to HK$22,286 thousand, with total current assets rising to HK$21,722 thousand, primarily due to new share placement proceeds, while net current liabilities and deficiency in assets improved, narrowing from HK$(48,866) thousand and HK$(62,021) thousand respectively as of December 31, 2024, to HK$(41,780) thousand and HK$(54,608) thousand Overview of Financial Position | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 564 | – | N/A | | Total current assets | 21,722 | 10,878 | 99.7% | | Total current liabilities | 63,502 | 59,744 | 6.3% | | Net current liabilities | (41,780) | (48,866) | -14.5% | | Total assets less current liabilities | (41,216) | (48,866) | -15.7% | | Total non-current liabilities | 13,392 | 13,155 | 1.8% | | Net liabilities | (54,608) | (62,021) | -12.0% | | Total deficiency in assets | (54,608) | (62,021) | -12.0% | [Notes to Interim Condensed Consolidated Financial Information](index=6&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Information) [General Information](index=6&type=section&id=General%20Information) The Group primarily engages in leather product manufacturing and distribution, fashion/footwear/leather accessories retail, industrial hemp cultivation, and automotive services, with no significant changes in the nature of its principal activities during the reporting period, and Mr. Zhao Jingfei, an executive director and chairman, is the ultimate controlling shareholder - The Group's principal activities include leather manufacturing, leather retail, industrial hemp cultivation, and automotive services[7](index=7&type=chunk) - There were no significant changes in the nature of the principal activities during the reporting period[7](index=7&type=chunk) - The ultimate controlling shareholder is Mr. Zhao Jingfei, who is also an executive director and the chairman of the Company[8](index=8&type=chunk) [Basis of Preparation](index=6&type=section&id=Basis%20of%20Preparation) The interim financial statements are prepared in accordance with the HKEX Listing Rules and HKAS 34 on a historical cost basis, and despite significant going concern uncertainties, the Board has implemented measures including director and shareholder loan commitments, external financing facilities, and new share placements to ensure sufficient working capital for at least the next 12 months - The interim financial statements are prepared in accordance with the HKEX Listing Rules and HKAS 34, and on a historical cost basis[9](index=9&type=chunk)[10](index=10&type=chunk) - The Company faces significant going concern uncertainties, including a loss of **HK$7,598 thousand** for the period, net current liabilities of **HK$41,780 thousand**, and a deficiency in assets of **HK$54,608 thousand**[11](index=11&type=chunk) - To address going concern risks, the Company has secured an **HK$8,000 thousand** interest-free, unsecured loan commitment from executive director Mr. Qin Bohan, with an additional **HK$30,000 thousand** director's financing facility (undrawn)[11](index=11&type=chunk) - The ultimate controlling shareholder, Mr. Zhao Jingfei, has provided approximately **HK$21,458 thousand** in shareholder loans and committed not to demand repayment, while also offering an additional **HK$20,000 thousand** shareholder financing facility (undrawn)[11](index=11&type=chunk) - The Company has secured an external financing facility of up to **HK$40,000 thousand** from an independent third party (undrawn)[16](index=16&type=chunk) - The Company successfully placed **9,024,000 new shares** in March 2025, raising net proceeds of approximately **HK$15,616 thousand**, and plans an August 2025 placing expected to raise up to **HK$60.9 million**, with **HK$20.9 million** allocated for general working capital[16](index=16&type=chunk)[56](index=56&type=chunk) [Significant Accounting Policies](index=8&type=section&id=Significant%20Accounting%20Policies) The interim financial statements adopt the same accounting policies as the 2024 annual financial statements, with the first-time adoption of HKAS 21 amendments 'Lack of Exchangeability' having no material impact, and several new and revised HKFRSs not yet effective are not expected to significantly affect financial performance or position - The Group has first-time adopted the amendments to HKAS 21 'Lack of Exchangeability', which had no material impact on the interim financial statements[14](index=14&type=chunk)[15](index=15&type=chunk) - Several new and revised HKFRSs (e.g., HKFRS 18, 19, amendments to HKFRS 9 and 7, HKFRS 10, and HKAS 28) are not yet effective and are not expected to have a significant impact on the Group's financial performance and position[17](index=17&type=chunk)[18](index=18&type=chunk) [Estimates](index=9&type=section&id=Estimates) The significant judgments, estimates, and assumptions made by management in preparing the interim financial statements are consistent with those applied in the 2024 annual financial statements, though actual results may differ from these estimates - The significant judgments and key sources of estimation uncertainty made by management in preparing the interim financial statements are consistent with those applied in the 2024 annual financial statements[19](index=19&type=chunk) [Revenue and Segment Information](index=9&type=section&id=Revenue%20and%20Segment%20Information) The Group operates three reportable segments: leather manufacturing, leather retail, and automotive services (commenced in H2 2024); for the six months ended June 30, 2025, leather manufacturing revenue grew significantly by 91.5% to HK$15,999 thousand, accounting for 89.5% of total revenue with a narrowed segment loss, while automotive services generated HK$1,715 thousand in its first reporting period, representing 9.6% of total revenue, and leather retail revenue decreased by 45.0% to HK$164 thousand with an expanded segment loss - The Group has three reportable segments: leather manufacturing business, leather retail business, and automotive services business (commenced in the second half of 2024)[20](index=20&type=chunk)[21](index=21&type=chunk) Reportable Segment Revenue and Loss | Segment | 2025 Revenue (HK$ Thousand) | 2024 Revenue (HK$ Thousand) | Revenue Change (%) | 2025 Segment Loss (HK$ Thousand) | 2024 Segment Loss (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Leather Manufacturing Business | 15,999 | 8,353 | 91.5% | (348) | (4,869) | | Leather Retail Business | 164 | 298 | -45.0% | (890) | (561) | | Automotive Services Business | 1,715 | – | N/A | (3,610) | – | | **Total** | **17,878** | **8,651** | **106.7%** | **(4,848)** | **(5,430)** | Consolidated Total Assets and Liabilities | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Reportable segment assets | 70,863 | 56,343 | | Consolidated total assets | 22,286 | 10,878 | | Reportable segment liabilities | 104,722 | 80,179 | | Consolidated total liabilities | 76,894 | 72,899 | [Other Loss](index=11&type=section&id=Other%20Loss) For the six months ended June 30, 2025, the Group recorded no other losses, compared to approximately HK$1,224 thousand in the prior period, primarily due to impairment of right-of-use assets in the leather manufacturing business Other Loss | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Impairment loss on right-of-use assets | – | 1,224 | - No other losses were recorded in the first half of 2025, whereas the prior period in 2024 primarily saw impairment of right-of-use assets in the leather manufacturing business[59](index=59&type=chunk) [Finance Costs](index=11&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, finance costs increased to HK$1,650 thousand, primarily comprising imputed interest on ultimate controlling shareholder loans (HK$1,445 thousand) and interest on lease liabilities (HK$205 thousand) Finance Costs | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on lease liabilities | 205 | 295 | | Imputed interest on ultimate holding shareholder loans | 1,445 | 1,170 | | **Total** | **1,650** | **1,465** | [Loss Before Tax](index=12&type=section&id=Loss%20Before%20Tax) For the six months ended June 30, 2025, loss before tax was HK$9,364 thousand, a slight narrowing from HK$9,549 thousand in the prior period, with key expenses including cost of inventories recognized as expense of HK$13,505 thousand and employee costs of HK$6,389 thousand, alongside a reversal of impairment loss on trade receivables of HK$569 thousand Components of Loss Before Tax | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Cost of inventories recognized as expense | 13,505 | 6,600 | | Depreciation of property, plant and equipment | 18 | – | | Depreciation of right-of-use assets | – | 111 | | Net foreign exchange (gain)/loss | (49) | 1 | | Employee costs (excluding directors' emoluments) | 6,389 | 5,973 | | (Reversal of impairment loss)/Impairment loss on trade receivables | (569) | 33 | | Short-term lease related expenses | 195 | – | | Provision for onerous short-term lease contracts | 210 | 1,080 | | Interest income | (1) | (1) | [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) The Group generated no assessable profits in Hong Kong and Mainland China, or had deductible losses to offset, resulting in no provision for income tax expense for both periods, and no deferred tax assets were recognized due to uncertainty over future profit sources - The Group generated no assessable profits in Hong Kong and Mainland China, thus no provision for income tax expense was made for both periods[27](index=27&type=chunk)[28](index=28&type=chunk) - No deferred tax assets were recognized due to uncertainty over future profit sources[28](index=28&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 and 2024 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 and 2024[29](index=29&type=chunk)[112](index=112&type=chunk) [Loss Per Share](index=13&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic loss per share narrowed to 1.77 HK cents from 2.31 HK cents in the prior period, and diluted loss per share was consistent with basic loss per share due to the absence of potential dilutive ordinary shares Loss Per Share | Metric | 2025 (HK Cents) | 2024 (HK Cents) | | :--- | :--- | :--- | | Basic loss per share | (1.77) | (2.31) | | Diluted loss per share | (1.77) | (2.31) | - Basic loss per share is calculated based on the loss for the period of **HK$7,598 thousand** and the weighted average of **428,449,481 ordinary shares** in issue[30](index=30&type=chunk) [Property, Plant and Equipment](index=13&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, additions to property, plant and equipment amounted to approximately HK$572 thousand; assets related to the leather retail business were fully impaired with no recoverable amount assessment performed, while property, plant and equipment and right-of-use assets in the leather manufacturing business showed impairment indicators due to losses, with recoverable amounts estimated at zero, requiring no reversal of impairment losses - For the six months ended June 30, 2025, additions to property, plant and equipment amounted to approximately **HK$572 thousand**[31](index=31&type=chunk) - Property, plant and equipment in the leather retail business were fully impaired in prior years, and no recoverable amount assessment was performed for the current period[32](index=32&type=chunk) - Property, plant and equipment and right-of-use assets in the leather manufacturing business showed impairment indicators, with recoverable amounts estimated at zero, and no reversal of impairment losses was required for the current period[33](index=33&type=chunk)[34](index=34&type=chunk) [Leases](index=14&type=section&id=Leases) The Group entered into various lease contracts, including for its corporate headquarters; for the six months ended June 30, 2025, there were no retail right-of-use assets, and manufacturing right-of-use assets were fully impaired, with lease liabilities at period-end totaling HK$2,768 thousand, of which HK$2,732 thousand was current, and a provision for onerous short-term lease contracts of HK$210 thousand was recognized - For the six months ended June 30, 2025, the Group entered into a 3-month lease agreement for its corporate headquarters[35](index=35&type=chunk) - There were no retail right-of-use assets, and manufacturing right-of-use assets were fully impaired, with no reversal of impairment losses required for the current period[36](index=36&type=chunk) Changes in Lease Liabilities | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Beginning of period/year | 4,344 | 6,213 | | Additions | – | 1,681 | | Interest expense | 205 | 588 | | Lease liability payments | (1,870) | (4,006) | | Exchange adjustments | 89 | (132) | | End of period/year balance | 2,768 | 4,344 | | Current portion | 2,732 | 3,957 | | Non-current portion | 36 | 387 | - A provision for onerous short-term lease contracts of **HK$210 thousand** was recognized in the current period, a decrease from **HK$1,080 thousand** in the prior period[38](index=38&type=chunk) [Trade Receivables](index=15&type=section&id=Trade%20Receivables) As of June 30, 2025, the net carrying amount of trade receivables increased significantly to HK$14,232 thousand from HK$5,298 thousand as of December 31, 2024, with impairment loss provision decreasing from HK$2,051 thousand to HK$1,482 thousand, primarily due to a reversal of impairment loss of HK$569 thousand during the period Trade Receivables and Impairment Loss | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Gross trade receivables | 15,714 | 7,349 | | Less: Impairment loss | (1,482) | (2,051) | | **Net carrying amount** | **14,232** | **5,298** | Ageing Analysis of Trade Receivables (Net of Impairment Loss) | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than 30 days | 13,538 | 5,168 | | 121 to 365 days | 694 | 130 | | **Total** | **14,232** | **5,298** | Movement in Provision for Expected Credit Losses on Trade Receivables | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Beginning of period/year | 2,051 | 1,171 | | (Reversal of impairment loss)/Impairment loss | (569) | 880 | | Balance at end of period/year | 1,482 | 2,051 | [Trade Payables](index=17&type=section&id=Trade%20Payables) As of June 30, 2025, total trade payables significantly increased to HK$14,007 thousand from HK$4,766 thousand as of December 31, 2024, primarily concentrated in the less than 30 days and 31 to 60 days ageing categories Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than 30 days | 3,289 | 445 | | 31 to 60 days | 6,081 | 388 | | 61 to 90 days | 1,332 | 3,155 | | 91 to 120 days | 2,497 | 25 | | 121 to 365 days | 300 | 305 | | Over 365 days | 508 | 448 | | **Total** | **14,007** | **4,766** | [Amounts Due to Ultimate Holding Shareholder, Directors and Related Companies](index=17&type=section&id=Amounts%20Due%20to%20Ultimate%20Holding%20Shareholder%2C%20Directors%20and%20Related%20Companies) As of June 30, 2025, amounts due to the ultimate controlling shareholder, Mr. Zhao Jingfei, significantly decreased to HK$2,621 thousand from HK$11,470 thousand as of December 31, 2024, while amounts due to directors Mr. Qin Bohan and Mr. Liang Wai Kit were HK$53 thousand and HK$40 thousand respectively, and total amounts due to related companies were HK$1,971 thousand - Amounts due to the ultimate controlling shareholder, Mr. Zhao Jingfei, were **HK$2,621 thousand** (December 31, 2024: HK$11,470 thousand), which are unsecured, interest-free, and have no fixed repayment terms[43](index=43&type=chunk) - Amounts due to director Mr. Qin Bohan were **HK$53 thousand** (December 31, 2024: HK$307 thousand), and amounts due to director Mr. Liang Wai Kit were **HK$40 thousand** (December 31, 2024: nil), both unsecured, interest-free, and with no fixed repayment terms[43](index=43&type=chunk) - Total amounts due to related companies were **HK$1,971 thousand** (December 31, 2024: HK$1,600 thousand), which are unsecured, interest-free, and have no fixed repayment terms[44](index=44&type=chunk) [Loan from a Director](index=17&type=section&id=Loan%20from%20a%20Director) Executive Director Mr. Qin Bohan granted an HK$8,000 thousand unsecured, interest-free, and repayable-on-demand loan to the Company, committing not to demand repayment until the Company is able to do so - Executive Director Mr. Qin Bohan granted an **HK$8,000 thousand** unsecured, interest-free, and repayable-on-demand loan to the Company[45](index=45&type=chunk) - Mr. Qin Bohan committed not to demand repayment of the loan until the Company is able to repay it[45](index=45&type=chunk) [Loan from Ultimate Holding Shareholder](index=18&type=section&id=Loan%20from%20Ultimate%20Holding%20Shareholder) As of June 30, 2025, the total interest-free loans granted by the ultimate controlling shareholder, Mr. Zhao Jingfei, to the Group slightly increased to HK$17,681 thousand from HK$17,226 thousand as of December 31, 2024, with part of the RMB loans extended for repayment until 2027, and Mr. Zhao committed not to demand repayment of shareholder loans until the Group is able to do so Movement in Loan from Ultimate Holding Shareholder | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Beginning of period/year | 17,226 | 19,517 | | Loan extension agreement entered into: nominal interest reduction from interest-free loan | (1,205) | (4,566) | | Imputed interest expense | 1,445 | 2,503 | | Exchange adjustments | 215 | (228) | | Balance at end of period/year | 17,681 | 17,226 | | Less: Current portion | (4,325) | (4,458) | | Non-current portion | 13,356 | 12,768 | - As of June 30, 2025, the total interest-free loans granted by Mr. Zhao Jingfei to the Group amounted to approximately **HK$21,458 thousand**[46](index=46&type=chunk) - Part of the RMB loans (RMB4,500,000) has been extended for repayment until March to June 2027[47](index=47&type=chunk) - Mr. Zhao Jingfei has confirmed that he will not demand repayment of the shareholder loans until the Group is able to repay them[48](index=48&type=chunk) [Share Capital](index=19&type=section&id=Share%20Capital) As of June 30, 2025, issued and fully paid share capital increased to HK$4,317 thousand from HK$4,227 thousand as of December 31, 2024, primarily due to the placement of 9,024,000 ordinary shares on March 18, 2025, raising net proceeds of approximately HK$15,616 thousand Share Capital Overview | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Authorised share capital | 20,000 | 20,000 | | Issued and fully paid share capital | 4,317 | 4,227 | - On March 18, 2025, the Company issued **9,024,000 ordinary shares** at **HK$1.78 per share**, raising net proceeds of approximately **HK$15,616 thousand**[49](index=49&type=chunk)[104](index=104&type=chunk)[106](index=106&type=chunk) [Commitments](index=19&type=section&id=Commitments) On May 15, 2025, the Group entered into an agreement with an independent third party to establish a subsidiary primarily engaged in e-commerce platform operations, with the Company's capital commitment being HK$255 thousand, and no other significant commitments exist for the Group - The Company committed to invest **HK$255 thousand** to establish a subsidiary primarily engaged in e-commerce platform operations, holding a **51% equity interest**[50](index=50&type=chunk) - Save for the aforementioned capital commitments and operating lease commitments, the Group had no other significant commitments at the end of the reporting period[50](index=50&type=chunk)[110](index=110&type=chunk) [Contingent Liabilities](index=19&type=section&id=Contingent%20Liabilities) The Group had no significant contingent liabilities as of June 30, 2025, and December 31, 2024 - The Group had no significant contingent liabilities at the end of the reporting period[51](index=51&type=chunk)[110](index=110&type=chunk) [Related Party Balances and Transactions](index=19&type=section&id=Related%20Party%20Balances%20and%20Transactions) Key management personnel remuneration for the period significantly increased to HK$1,551 thousand from HK$450 thousand in the prior period, and the Group had no other significant related party transactions beyond those disclosed Key Management Personnel Remuneration | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Short-term benefits | 1,551 | 450 | | Post-employment benefits | – | – | | **Total** | **1,551** | **450** | [Events After the Reporting Period](index=20&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, on August 21, 2025, the Company entered into an agreement to acquire a 20% equity interest in NVTH Limited for HK$100,000 thousand, with HK$40,000 thousand paid in cash and HK$60,000 thousand via new share issuance; NVTH primarily operates a blockchain-based real-world asset tokenization technology platform, and on the same day, the Company also entered into a placing agreement for up to 44,000,000 new shares, expected to raise net proceeds of HK$60.9 million, with HK$40 million allocated for the cash consideration of the NVTH acquisition and the remainder for working capital - On August 21, 2025, the Company entered into an agreement to acquire a **20% equity interest** in NVTH Limited for **HK$100,000 thousand**, with **HK$40,000 thousand** paid in cash and **HK$60,000 thousand** through the issuance of **42,253,000 new shares**[56](index=56&type=chunk) - NVTH Limited primarily provides blockchain-based real-world asset tokenization technology infrastructure platforms, institutional-facing trading and liquidity solutions, and compliance ecosystem services for capital market participants[56](index=56&type=chunk) - On the same day, the Company entered into a placing agreement for up to **44,000,000 new shares**, with expected net proceeds of **HK$60.9 million**[56](index=56&type=chunk) - Of the net proceeds from the placing, **HK$40 million** will be used to pay the cash consideration for the NVTH acquisition, and the remaining **HK$20.9 million** will be used to replenish the Group's general working capital[56](index=56&type=chunk) [Comparative Amounts](index=20&type=section&id=Comparative%20Amounts) Certain comparative amounts have been reclassified to conform with the current period's presentation - Certain comparative amounts have been reclassified to conform with the current period's presentation[55](index=55&type=chunk) [Management Discussion and Analysis](index=21&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Performance Review](index=21&type=section&id=Financial%20Performance%20Review) For the six months ended June 30, 2025, the Group's revenue increased by 106.7% year-on-year to HK$17,878 thousand, gross profit grew by 113.2% to HK$4,373 thousand, and gross profit margin rose from 23.7% to 24.5%; despite significant revenue and gross profit growth, administrative and other operating expenses increased due to new director appointments, higher staff costs in automotive services, and increased professional fees, resulting in a net loss attributable to owners of the Company of HK$7,598 thousand, which was a narrowing from the prior period Key Financial Performance Indicators | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 17,878 | 8,651 | 106.7% | | Gross profit | 4,373 | 2,051 | 113.2% | | Gross profit margin | 24.5% | 23.7% | 0.8 percentage points | | Other income | 57 | 10 | 470.0% | | Selling and distribution costs | 605 | 887 | -31.8% | | Administrative and other operating expenses | 12,108 | 8,001 | 51.3% | | Other loss | – | 1,224 | -100.0% | | Net loss attributable to owners of the Company | 7,598 | 9,549 | -20.4% | | Loss per share (HK Cents) | 1.77 | 2.31 | -23.38% | - The increase in revenue was primarily due to a significant increase in sales volume and sales activities[57](index=57&type=chunk) - The increase in administrative and other operating expenses was mainly due to the appointment of new directors, increased staff costs in the automotive services business, and higher professional fees for corporate activities[58](index=58&type=chunk) [Business Review](index=22&type=section&id=Business%20Review) The Group's business primarily comprises leather manufacturing, leather retail, and automotive services; leather manufacturing revenue grew significantly by 91.5%, driven by Mainland China market expansion and a business model shift, while leather retail revenue declined by 45.0% due to economic uncertainties and high outbound travel by Hong Kong residents, and the new automotive services business recorded HK$1,715 thousand in revenue but remained in a loss-making position - The leather manufacturing business, leather retail business, and automotive services business accounted for **89.5%**, **0.9%**, and **9.6%** of the Group's total revenue, respectively[60](index=60&type=chunk) [Leather Manufacturing Business](index=22&type=section&id=Leather%20Manufacturing%20Business) For the six months ended June 30, 2025, leather manufacturing business revenue increased by 91.5% year-on-year to HK$15,999 thousand, with segment loss significantly narrowing to HK$348 thousand, primarily driven by active expansion into the Mainland China market, a business model shift from 'production-heavy' to 'sales and trade-heavy', and deepening traditional belt business while expanding to small and medium-sized customers - Leather manufacturing business revenue increased by **91.5%** year-on-year to **HK$15,999 thousand**, and segment loss decreased from **HK$4,869 thousand** to **HK$348 thousand**[62](index=62&type=chunk) - Revenue improvement was primarily attributable to: (i) active expansion into the Mainland China market to offset declining demand in European and American markets; (ii) a business model shift towards 'sales and trade-heavy', strengthening outsourcing cooperation and supply chain management; and (iii) deepening traditional belt business and expanding to small and medium-sized customers, startups, and e-commerce partners[62](index=62&type=chunk)[63](index=63&type=chunk) Leather Manufacturing Business Revenue by Geographical Location | Geographical Location | 2025 (HK$ Thousand) | 2025 (%) | 2024 (HK$ Thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | United States | – | – | 807 | 9.6 | | Europe | 2,743 | 17.1 | 3,046 | 36.5 | | Hong Kong, China | 1,371 | 8.6 | 91 | 1.1 | | Mainland China | 11,779 | 73.6 | 408 | 4.9 | | Others | 106 | 0.7 | 4,001 | 47.9 | | **Total** | **15,999** | **100.0** | **8,353** | **100.0** | Leather Manufacturing Business Revenue by Product Category | Product Category | 2025 (HK$ Thousand) | 2025 (%) | 2024 (HK$ Thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Belts | 8,039 | 50.3 | 7,780 | 93.1 | | Leather goods and other accessories | 7,960 | 49.7 | 573 | 6.9 | | **Total** | **15,999** | **100.0** | **8,353** | **100.0** | [Leather Retail Business](index=24&type=section&id=Leather%20Retail%20Business) For the six months ended June 30, 2025, leather retail business revenue decreased by 45.0% year-on-year to HK$164 thousand, with operating loss expanding to HK$890 thousand, primarily due to economic uncertainties in Hong Kong and Mainland China and high outbound travel by Hong Kong residents; the Company plans to improve business through e-commerce platforms and the launch of low-priced and co-branded products - Leather retail business revenue decreased by **45.0%** year-on-year to **HK$164 thousand**, and operating loss expanded to **HK$890 thousand**[66](index=66&type=chunk)[67](index=67&type=chunk) - The decrease in revenue was mainly due to economic uncertainties in Hong Kong and Mainland China and the high number of outbound travelers from Hong Kong[66](index=66&type=chunk) Leather Retail Business Revenue by Geographical Location | Geographical Location | 2025 (HK$ Thousand) | 2025 (%) | 2024 (HK$ Thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 164 | 100.0 | 298 | 100.0 | - The Company believes the revenue decline is a temporary downturn and has formulated strategies to reduce reliance on the US market, optimize factory efficiency, advance e-commerce business, expand customized services, and develop new automotive services business[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [Automotive Services Business](index=26&type=section&id=Automotive%20Services%20Business) The Group expanded into automotive services through a joint venture in December 2024, recording HK$1,715 thousand in revenue for the six months ended June 30, 2025, but still incurring a loss of HK$3,610 thousand; nevertheless, the Company believes this business will provide a stable revenue stream in the future - The automotive services business commenced in December 2024 through a joint venture, recording revenue of **HK$1,715 thousand** and a loss of **HK$3,610 thousand** for the current period[75](index=75&type=chunk) - The Company believes that the development of the automotive services business will provide a stable source of revenue for the Group in the future[75](index=75&type=chunk) [Outlook and Business Strategies and Plans](index=26&type=section&id=Outlook%20and%20Business%20Strategies%20and%20Plans) The Group plans to enhance the performance of its business segments through multiple strategies: the leather manufacturing business will strengthen traditional belt products and launch a customized product line, focusing on the Mainland China market; the leather retail business will expand online sales through an e-commerce joint venture with East Shack Limited, leveraging social media traffic networks, and introduce low-priced and co-branded products; and the automotive services business will continue to expand its hydrogen cleaning system service station network, introduce new environmentally friendly products, and develop mobile applications to achieve Asia-Pacific expansion - The Group will enhance its long-term profitability and financial position through product portfolio and revenue source diversification[96](index=96&type=chunk) [Leather Manufacturing Business Strategy](index=26&type=section&id=Leather%20Manufacturing%20Business%20Strategy) The leather manufacturing business will pursue a dual strategy: strengthening its traditional belt product line and launching a customized product line in Q2 2025, focusing on high-end craftsmanship services for handbags, accessories, and automotive interiors, targeting European and Mainland China markets with an online and offline dual-track sales model, with an initial investment of approximately HK$0.7 million - Strengthen traditional belt products by enhancing joint design and supply chain upgrades to increase customer order rates[76](index=76&type=chunk) - Launch a customized product line in Q2 2025, focusing on high-end craftsmanship services for handbags, accessories, and automotive interiors, introducing new materials and e-commerce virtual try-on, with the goal of achieving growth in Mainland China[76](index=76&type=chunk)[77](index=77&type=chunk) - Adopt a combined in-house and outsourced production model, and reduce costs and inventory risks by entering into long-term agreements with suppliers and utilizing a build-to-order model[77](index=77&type=chunk) - The initial investment for the customized product line is approximately **HK$0.7 million**[78](index=78&type=chunk) [Leather Retail Business Strategy](index=27&type=section&id=Leather%20Retail%20Business%20Strategy) The leather retail business plans to expand into UK offline supermarkets and Mainland China retail networks, and enter online retail in 2025; the Company has established an e-commerce joint venture with East Shack Limited, leveraging AI toolchains and social media traffic networks (TikTok, Facebook, Instagram) to promote products, aiming to reduce operating and advertising costs and accelerate global brand awareness, and will also launch low-priced and co-branded products with designers/IP, expected to be available in stores and digital channels from mid-November 2025 - Plans to expand retail network to UK offline supermarkets and Mainland China, and enter online retail in **2025**[79](index=79&type=chunk) - Established an e-commerce joint venture with East Shack Limited, with the Group holding a **51% stake**, leveraging AI toolchains and social media traffic networks (TikTok, Facebook, Instagram) to promote products[80](index=80&type=chunk)[81](index=81&type=chunk) - The e-commerce joint venture is expected to be established in Q3 2025, and will establish logistics channels and implement KOL marketing campaigns[82](index=82&type=chunk) - Plans to launch low-priced products and co-branded products with designers/IP, primarily through e-commerce platforms, expected to be launched from mid-November 2025[83](index=83&type=chunk)[84](index=84&type=chunk) [Automotive Services Business Strategy](index=29&type=section&id=Automotive%20Services%20Business%20Strategy) The automotive services business operates through Flex Fuel Environmental Cleaning Limited and its Shenzhen subsidiary, providing Flex Fuel brand hydrogen injection cleaning system services, with over 60 hydrogen decarbonization and cleaning stations installed at more than 20 locations in Mainland China; the Company plans to acquire an Australian company to enter the Australian market, with revenue streams including providing hydrogen cleaning systems, and selling and leasing cleaning stations; over the next five years, the plan is to expand services across the Asia-Pacific region, continue launching new environmentally friendly products, and refine R&D, with working capital funded by external resources and credit lines applied from banks - The automotive services business operates through the joint venture Flex Fuel Environmental Cleaning Limited and its Shenzhen subsidiary, providing Flex Fuel brand hydrogen injection cleaning system services[85](index=85&type=chunk)[86](index=86&type=chunk) - Over **60 hydrogen decarbonization and cleaning stations** have been installed at more than **20 locations** in Mainland China, and service agreements have been entered into with several large enterprise groups[86](index=86&type=chunk) - Plans to acquire a majority stake in an Australian company to enter the Australian market[87](index=87&type=chunk)[88](index=88&type=chunk) - Revenue will be generated through providing hydrogen injection cleaning systems, and selling and leasing hydrogen decarbonization and cleaning stations[88](index=88&type=chunk) - Working capital will be funded by external resources, with ongoing negotiations with investment funds, institutions, and individual investors, and credit lines applied from banks[89](index=89&type=chunk) - Management includes Mr. Fong Sze Chun and Mr. Jerome Jean Jacques Loubert, who possess extensive experience in the hydrogen energy industry[90](index=90&type=chunk) - Plans to introduce and launch new products such as the Hy Carbon X3 DPF cleaning system, and develop mobile and desktop applications allowing customers to arrange services, make payments, and calculate emission reduction benefits[93](index=93&type=chunk)[94](index=94&type=chunk) - Over the next five years, plans to expand services across the entire Asia-Pacific region through a partnership model with customer repair shops, and continue launching new environmentally friendly products and refining R&D[95](index=95&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=32&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2025, the Group's cash and bank balances increased to HK$1,310 thousand; the current ratio rose from 0.18 times to 0.34 times, and the debt-to-asset ratio decreased from 670.2% to 345.0%, primarily due to funds raised from share placements; although the deficiency in assets narrowed, it still recorded HK$54,608 thousand, with trade receivables turnover days increasing to 145 days while inventory turnover days remained stable Liquidity and Capital Structure Indicators | Metric | June 30, 2025 (HK$ Thousand/Times/%) | December 31, 2024 (HK$ Thousand/Times/%) | Change | | :--- | :--- | :--- | :--- | | Cash and bank balances | 1,310 | 829 | 58.0% | | Total current assets | 21,722 | 10,878 | 99.7% | | Total current liabilities | 63,502 | 59,744 | 6.3% | | Current ratio | 0.34 times | 0.18 times | 0.16 times | | Total assets | 22,286 | 10,878 | 104.9% | | Total liabilities | 76,894 | 72,899 | 5.5% | | Debt-to-asset ratio | 345.0% | 670.2% | -325.2 percentage points | | Deficiency in assets | 54,608 | 62,021 | -12.0% | | Inventories | 3,311 | 2,010 | 64.7% | | Trade receivables | 14,232 | 5,298 | 168.6% | | Inventory turnover days | 45 days | 48 days | -3 days | | Trade receivables turnover days | 145 days | 88 days | +57 days | - The increase in current ratio and decrease in debt-to-asset ratio were primarily due to funds raised through share placements[98](index=98&type=chunk) - The Group has no bank borrowings or bank financing, relying primarily on internal resources, financial assistance from directors and the ultimate controlling shareholder, and external financing facilities[99](index=99&type=chunk)[101](index=101&type=chunk) [Treasury Policy](index=33&type=section&id=Treasury%20Policy) The Group's cash and bank balances are primarily denominated in HKD, USD, and RMB; with HKD pegged to USD, no significant changes in USD to HKD exchange rates are expected, but RMB fluctuations against other currencies may result in foreign exchange gains or losses; the Group currently has no foreign currency hedging policy, but management will continuously monitor foreign exchange risks and consider hedging when necessary - The Group's cash and bank balances are primarily denominated in HKD, USD, and RMB, and transactions are mainly denominated in HKD, USD, and RMB[101](index=101&type=chunk) - The Group currently has no foreign currency hedging policy, but management will continuously monitor foreign exchange risks and consider hedging when necessary[101](index=101&type=chunk) [Pledge of Assets](index=33&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[102](index=102&type=chunk) [Placing of New Shares Under General Mandate](index=33&type=section&id=Placing%20of%20New%20Shares%20Under%20General%20Mandate) On March 18, 2025, the Company completed the placing of 9,024,000 new ordinary shares at HK$1.78 per share, raising net proceeds of approximately HK$15.62 million, which were fully utilized for purchasing materials, equipment, and indirect costs (approximately HK$6 million), general working capital (approximately HK$6 million), and settling outstanding payables (approximately HK$3.62 million) - On March 18, 2025, the Company completed the placing of **9,024,000 new ordinary shares** at **HK$1.78 per share**, raising net proceeds of approximately **HK$15.62 million**[104](index=104&type=chunk)[106](index=106&type=chunk) - The net proceeds were fully utilized for: (i) purchasing materials, equipment, and indirect costs (approximately **HK$6 million**); (ii) general working capital (approximately **HK$6 million**); and (iii) settling outstanding payables (approximately **HK$3.62 million**)[106](index=106&type=chunk)[107](index=107&type=chunk) [Material Investments and Acquisitions of Capital Assets](index=34&type=section&id=Material%20Investments%20and%20Acquisitions%20of%20Capital%20Assets) Save for what is disclosed in Note 12 to the interim financial statements, the Group had no material investments or acquisitions of capital assets for the six months ended June 30, 2025 - For the six months ended June 30, 2025, the Group had no material investments or acquisitions of capital assets (save for what is disclosed in Note 12)[108](index=108&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=34&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) Save for the NVTH acquisition disclosed in Note 23 to the interim financial statements and the establishment of a joint venture discussed in the 'Outlook and Business Strategies and Plans' section, the Group had no specific plans for material acquisitions or disposals of subsidiaries, associates, and joint ventures as of the date of this announcement - Save for the NVTH acquisition and the establishment of a joint venture, the Group had no other material acquisition or disposal plans as of the date of this announcement[109](index=109&type=chunk) [Commitments and Contingent Liabilities](index=34&type=section&id=Commitments%20and%20Contingent%20Liabilities) Save for operating lease commitments disclosed in Note 13 to the interim financial statements, the Group had no significant commitments or contingent liabilities as of June 30, 2025, and December 31, 2024 - Save for operating lease commitments, the Group had no significant commitments or contingent liabilities at the end of the reporting period[110](index=110&type=chunk) [Other Information](index=35&type=section&id=Other%20Information) [Employees and Remuneration Policy](index=35&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group employed 122 staff members; employee remuneration is determined by job nature, performance, and length of service, with discretionary bonuses, pension schemes, medical plans, and other social insurance provided, and the Company offers training to new employees - As of June 30, 2025, the Group employed **122 staff members** (December 31, 2024: 109 staff members)[111](index=111&type=chunk) - Employee remuneration is determined by job nature, performance, and length of service, with discretionary bonuses, pension schemes, medical plans, and other social insurance provided[111](index=111&type=chunk) - The Company provides regular on-the-job training for new employees, covering relevant regulations, safety awareness, and job responsibilities[111](index=111&type=chunk) [Dividends](index=35&type=section&id=Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[112](index=112&type=chunk) [Purchase, Redemption or Sale of Listed Securities](index=35&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during 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 during the reporting period[113](index=113&type=chunk) [Corporate Governance](index=35&type=section&id=Corporate%20Governance) The Company has complied with the Corporate Governance Code in Appendix C1 of the Listing Rules, with certain deviations; the Company has not established an internal audit function but plans to engage an independent third party, and due to the passing of an independent non-executive director and new appointments, the Company temporarily failed to comply with Listing Rules requirements regarding the number of independent non-executive directors and audit committee members, but has since regained compliance after subsequent appointments - The Company has complied with the Corporate Governance Code during the reporting period, except for not establishing an internal audit function, for which it plans to engage an independent third party[114](index=114&type=chunk)[115](index=115&type=chunk) - The Company temporarily failed to comply with Listing Rules 3.10(1) and 3.21 due to the passing of an independent non-executive director and new director appointments, but has since regained compliance after subsequent appointments[116](index=116&type=chunk) [Directors' Securities Transactions](index=36&type=section&id=Directors%27%20Securities%20Transactions) Following specific enquiries, all Directors confirmed compliance with the required standards set out in the Model Code for securities transactions during the six months ended June 30, 2025 - All Directors confirmed compliance with the required standards for securities transactions set out in the Model Code during the reporting period[118](index=118&type=chunk) [Events After the Reporting Period (Other)](index=36&type=section&id=Events%20After%20the%20Reporting%20Period%20%28Other%29) Save for what is disclosed in Note 23 to the interim financial statements, no other significant events affecting the Group occurred after the reporting period and up to the date of this announcement - Save for what is disclosed in Note 23 to the interim financial statements, no other significant events affecting the Group occurred after the reporting period and up to the date of this announcement[119](index=119&type=chunk) [Audit Committee](index=36&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, has reviewed and discussed the Group's interim financial statements and this announcement for the six months ended June 30, 2025, and is satisfied that they were prepared in accordance with applicable accounting standards, though the interim financial statements were not audited or reviewed by external auditors - The Audit Committee, comprising three independent non-executive directors, has reviewed and discussed the interim financial statements and this announcement[120](index=120&type=chunk) - The Audit Committee is satisfied that the interim financial statements were prepared in accordance with applicable accounting standards, but they were not audited or reviewed by external auditors[120](index=120&type=chunk) [Publication of Interim Results and Interim Report](index=37&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This results announcement has been published on the Company's website and the HKEX website; the interim report for the six months ended June 30, 2025, will be dispatched to shareholders in due course and will be available on the aforementioned websites - This results announcement has been published on the Company's website and the HKEX website[121](index=121&type=chunk) - The interim report will be dispatched to shareholders in due course and will be available on the aforementioned websites[121](index=121&type=chunk)

[2025 Interim Results Financial Highlights](index=1&type=section&id=2025%20Interim%20Results%20Financial%20Highlights) The company's revenue and profit significantly declined, basic earnings per share decreased by nearly 30% year-on-year, and the Board did not recommend an interim dividend - During the reporting period, the company's revenue and profit both experienced significant declines, with basic earnings per share decreasing by nearly **30%** year-on-year, and the Board did not recommend an interim dividend[3](index=3&type=chunk) 2025 Interim Financial Highlights (For the six months ended June 30, 2025) | Metric | Amount (RMB Million) | YoY Change (%) | | :--- | :--- | :--- | | Revenue | 90.1 | -15.1% | | Profit attributable to equity holders of the Company | 7.7 | -28.0% | | Basic earnings per share (RMB Cents) | 0.77 | -29.4% | | Interim Dividend | Not recommended for payment | - | [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) The interim condensed consolidated financial statements provide a detailed overview of the company's financial performance and position, including comprehensive income, financial position, and cash flows [Interim Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue decreased by 15.1% year-on-year, and net profit decreased by 28.0%, primarily due to reduced revenue, a shift from net finance income to net finance cost, and increased depreciation and amortization Key Financial Data (For the six months ended June 30) | Metric | 2025 (RMB Thousand) | 2024 (RMB Thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 90,068 | 106,092 | -15.1% | | Other income | 3,934 | 667 | +489.8% | | Other gains – net | 80 | 1,435 | -94.4% | | Employee benefit expenses | (7,685) | (9,725) | -20.9% | | Subcontracting fees | (62,396) | (64,983) | -4.0% | | Cost of materials, supplies and other items | (8,000) | (8,853) | -9.7% | | Depreciation and amortization | (2,464) | (1,009) | +144.2% | | Operating profit | 8,777 | 10,919 | -19.6% | | Finance (costs)/income, net | (502) | 1,231 | -140.8% | | Profit before tax | 8,275 | 12,150 | -31.9% | | Income tax expense | (558) | (1,429) | -61.0% | | Profit for the period attributable to equity holders of the Company | 7,717 | 10,721 | -28.0% | | Basic earnings per share (RMB cents per share) | 0.77 | 1.09 | -29.4% | - Other comprehensive income: Exchange differences arising from translation of foreign operations resulted in a net other comprehensive loss of **RMB 170 thousand** for the period, compared to a net loss of **RMB 2 thousand** in the prior period[5](index=5&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets slightly increased, non-current assets significantly rose due to an increase in financial assets at fair value through profit or loss, while current assets and current liabilities both decreased, maintaining stable growth in net current assets and net assets Key Financial Position Data (As of June 30) | Metric | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 53,978 | 25,693 | +110.1% | | Total current assets | 252,906 | 299,628 | -15.6% | | Total current liabilities | 98,141 | 123,918 | -20.8% | | Net current assets | 154,765 | 175,710 | -12.0% | | Total assets less current liabilities | 208,743 | 201,403 | +3.6% | | Net assets | 207,914 | 200,367 | +3.8% | | Total equity | 207,914 | 200,367 | +3.8% | - Changes in non-current asset composition: Financial assets at fair value through profit or loss increased from zero at the end of 2024 to **RMB 23,986 thousand** as of June 30, 2025[6](index=6&type=chunk) - Changes in current assets: Trade receivables and cash and cash equivalents significantly decreased, while prepayments, deposits, and other receivables increased[6](index=6&type=chunk) - Changes in current liabilities: Contract liabilities, other payables and accrued expenses, and interest-bearing bank borrowings all decreased[7](index=7&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential details on the company's corporate information, accounting policies, estimates, segment information, and specific financial line items, offering context to the interim financial statements [Company Information](index=6&type=section&id=Company%20Information) Wellcell Holdings Limited, incorporated in the Cayman Islands, primarily offers wireless telecom network optimization, infrastructure maintenance, ICT integration, and software services, expanding into fintech, with shares listed on the HKEX since January 12, 2024 - Place and nature of incorporation: Incorporated in the Cayman Islands as an exempted company on September 14, 2021[8](index=8&type=chunk) - Principal activities: Provision of wireless telecommunication network optimization services, telecommunication network infrastructure maintenance and engineering services, ICT integration services, telecommunication network-related software development and related services, and sale of software[8](index=8&type=chunk) - Business expansion: Expanded into fintech business during the current period[8](index=8&type=chunk) - Listing information: Shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since January 12, 2024[9](index=9&type=chunk) [Basis of Preparation and Accounting Policies](index=6&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim financial statements are prepared under HKAS 34 and HKEX Listing Rules, using a historical cost basis, with new and revised HKFRSs adopted for the first time, expected to have no material impact on financial performance or position - Basis of preparation: Prepared in accordance with Appendix D2 to the Listing Rules of the Stock Exchange and Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants[10](index=10&type=chunk) - Measurement basis: Prepared on the historical cost basis, except for financial assets at fair value through profit or loss[10](index=10&type=chunk) - New and revised standards: Amendments to HKAS 21 “Lack of Exchangeability” have been adopted for the first time and are not expected to have a material impact on the interim financial statements[12](index=12&type=chunk)[13](index=13&type=chunk) - Standards effective in the future: HKFRS 18, HKFRS 19, amendments to HKFRS 9 and HKFRS 7, and amendments to HKFRS 10 and HKAS 28 will be effective in the future, with preliminary assessment indicating no material impact[14](index=14&type=chunk)[15](index=15&type=chunk) [Estimates](index=8&type=section&id=Estimates) Management made judgments, estimates, and assumptions in applying accounting policies and reporting amounts for the interim financial statements, with key sources of estimation uncertainty consistent with those applied in the 2024 annual financial statements - Management judgments and estimates: In preparing the interim financial statements, management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of revenue, expenses, assets, and liabilities[16](index=16&type=chunk) - Sources of uncertainty: The key sources of estimation uncertainty are the same as those applied in the 2024 annual financial statements[16](index=16&type=chunk) [Revenue and Segment Information](index=8&type=section&id=Revenue%20and%20Segment%20Information) The Group's primary activities include telecom network services and software. The fintech business is in its early stages with no revenue, thus the Group has only one reportable operating segment: providing telecom network and infrastructure services and products - Principal activities: Provision of wireless telecommunication network optimization services, telecommunication network infrastructure maintenance and engineering services, ICT integration services, telecommunication network-related software development and related services, and sale of software[17](index=17&type=chunk) - Fintech business: In its preliminary development stage during the reporting period, it has not generated any revenue and does not constitute a separate reportable segment[17](index=17&type=chunk) - Reportable operating segment: The Directors have determined that the Group has only one reportable operating segment, which is the provision of telecommunication network and infrastructure services and products[17](index=17&type=chunk) Revenue Recognition Timing and Service Type (For the six months ended June 30) | Revenue Recognition Timing | Service Type | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | :--- | | Over time | Wireless telecommunication network optimization services | 28,636 | 41,136 | | | Telecommunication network infrastructure maintenance and engineering services | 17,170 | 16,842 | | | ICT integration services | 38,359 | 32,240 | | | Telecommunication network-related software development and related services | 3,683 | 11,515 | | At a point in time | Software sales | 2,220 | 4,359 | | **Total Revenue** | | **90,068** | **106,092** | [Profit Before Tax](index=9&type=section&id=Profit%20Before%20Tax) Profit before tax for the six months ended June 30, 2025, significantly decreased to RMB 8,275 thousand from RMB 12,150 thousand in the prior period, influenced by reduced listing expenses, reversal of impairment losses on trade and contract assets, and increased fair value changes of financial assets at fair value through profit or loss Components of Profit Before Tax (For the six months ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Auditor's remuneration – non-audit services | 354 | 350 | | Depreciation and amortization | 2,464 | 1,009 | | Trade and contract assets (reversal of impairment loss)/net impairment loss | (320) | 3,363 | | Impairment loss on other receivables | 281 | – | | Listing expenses | – | 6,257 | | Government grants | 469 | 259 | | VAT refunds | 4 | 379 | | Net fair value change of financial assets at fair value through profit or loss | 3,442 | – | | Exchange gain | 130 | 1,386 | | Finance income (interest on bank deposits) | 94 | 1,679 | | Finance costs (interest on interest-bearing bank borrowings and leases) | (596) | (448) | - Significant reduction in listing expenses: No listing expenses were incurred in the first half of 2025, compared to **RMB 6,257 thousand** in the corresponding period of 2024[19](index=19&type=chunk) - Fair value changes of financial assets: A net fair value gain of **RMB 3,442 thousand** on financial assets at fair value through profit or loss was recorded in the first half of 2025, compared to zero in the prior period[20](index=20&type=chunk) - Net finance income shifted to net finance cost: Net finance cost was **RMB 502 thousand** in the first half of 2025, compared to net finance income of **RMB 1,231 thousand** in the corresponding period of 2024, primarily due to a significant decrease in interest income from bank deposits[22](index=22&type=chunk) [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) Income tax expense for the six months ended June 30, 2025, significantly decreased to RMB 558 thousand from RMB 1,429 thousand in the prior period, mainly due to lower operating profit and the 15% preferential tax rate for high-tech enterprises in China Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Current tax – PRC Enterprise Income Tax | – | 837 | | Current tax – over-provision in prior periods | (285) | – | | Deferred tax | 843 | 592 | | **Income Tax Expense** | **558** | **1,429** | - PRC Enterprise Income Tax preferential treatment: The Group's principal operating subsidiaries in the PRC qualify as High and New Technology Enterprises, enjoying a preferential income tax rate of **15%**[23](index=23&type=chunk) - Hong Kong Profits Tax: The Group had no assessable profits arising in Hong Kong during the reporting period, thus no provision for Hong Kong Profits Tax was made[23](index=23&type=chunk) [Earnings Per Share](index=13&type=section&id=Earnings%20Per%20Share) Basic earnings per share for the six months ended June 30, 2025, was RMB 0.77 cents, a 29.4% decrease from the restated RMB 1.09 cents in the prior period, with calculations retrospectively adjusted for the share split effective March 31, 2025, and the capitalization issue on January 12, 2024 Basic and Diluted Earnings Per Share (For the six months ended June 30) | Metric | 2025 | 2024 (Restated) | | :--- | :--- | :--- | | Profit for the period (RMB Thousand) | 7,717 | 10,721 | | Weighted average number of ordinary shares in issue (Thousand shares) | 1,000,000 | 984,890 | | **Basic and diluted earnings per share (RMB cents per share)** | **0.77** | **1.09** | - No dilutive effect: There were no potential dilutive ordinary shares during the reporting period, hence basic and diluted earnings per share are the same[28](index=28&type=chunk) - Retrospective adjustment: The calculation of earnings per share has been retrospectively adjusted for the share split (one share of HK$0.01 par value split into two shares of HK$0.005 par value) effective March 31, 2025, and the capitalization issue on January 12, 2024[30](index=30&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior period - Interim dividend: The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: Nil)[29](index=29&type=chunk) [Trade Receivables](index=14&type=section&id=Trade%20Receivables) As of June 30, 2025, net trade receivables decreased to RMB 38,441 thousand from RMB 53,539 thousand at December 31, 2024, with a net reversal of impairment loss primarily due to the reduction in total trade receivables - Net trade receivables: As of June 30, 2025, net trade receivables amounted to **RMB 38,441 thousand**, a decrease from **RMB 53,539 thousand** as of December 31, 2024[31](index=31&type=chunk) Aging Analysis (As of June 30) | Aging | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Within 180 days | 18,053 | 33,122 | | 181 to 365 days | 2,950 | 5,166 | | 1 to 2 years | 13,882 | 14,932 | | Over 2 years | 3,556 | 319 | - Changes in impairment loss provision: A reversal of impairment loss of **RMB 125 thousand** was recognized during the period, compared to an impairment loss of **RMB 3,263 thousand** in the prior period[31](index=31&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=15&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2025, financial assets at fair value through profit or loss totaled RMB 23,986 thousand, entirely classified as non-current assets, primarily comprising equity investments in unlisted entities in China and the Cayman Islands, generating approximately RMB 3,442 thousand in fair value gains during the period - Composition: Primarily includes investments in a **0.206%** equity interest in an unlisted PRC entity and an **11%** equity interest in an unlisted Cayman Islands entity[32](index=32&type=chunk) - Classification change: While some were classified as current assets as of December 31, 2024, all were classified as non-current assets totaling **RMB 23,986 thousand** as of June 30, 2025[32](index=32&type=chunk) - Fair value gain: A fair value gain of approximately **RMB 3,442 thousand** was recorded for the six months ended June 30, 2025[32](index=32&type=chunk) [Trade Payables](index=15&type=section&id=Trade%20Payables) As of June 30, 2025, total trade payables increased to RMB 7,414 thousand from RMB 6,022 thousand at December 31, 2024, with the primary increase concentrated in the within 180 days aging category - Total trade payables: As of June 30, 2025, total trade payables amounted to **RMB 7,414 thousand**, an increase from **RMB 6,022 thousand** as of December 31, 2024[33](index=33&type=chunk) Aging Analysis (As of June 30) | Aging | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Within 180 days | 6,225 | 3,331 | | 181 to 365 days | 438 | 1,940 | | Over 1 year | 751 | 751 | [Interest-Bearing Bank Borrowings](index=16&type=section&id=Interest-Bearing%20Bank%20Borrowings) As of June 30, 2025, total interest-bearing bank borrowings decreased to RMB 32,409 thousand from RMB 41,776 thousand at December 31, 2024, comprising both fixed and floating rate portions, secured by receivables from service contracts, with the company adhering to all loan covenants - Total borrowings: As of June 30, 2025, total borrowings amounted to **RMB 32,409 thousand**, a decrease from **RMB 41,776 thousand** as of December 31, 2024[34](index=34&type=chunk) Borrowing Composition and Interest Rates (As of June 30) | Type | Effective Interest Rate | Maturity Date | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | | Bank borrowings – unsecured | 2.4%-2.9% | August and September 2025 | 20,000 | 22,000 | | | Prime Lending Rate-0.5% | March 2026 | 10,000 | 10,000 | | Bank borrowings – secured | 2.6% | December 2025 | 2,409 | 9,776 | - Collateral: Bank borrowings are secured by a floating charge over receivables arising from certain service contracts[36](index=36&type=chunk) - Covenant compliance: The Company regularly monitors compliance with loan covenants, with no breaches at the end of the reporting period[36](index=36&type=chunk) [Share Capital](index=17&type=section&id=Share%20Capital) As of June 30, 2025, the company's authorized share capital was HK$10,000,000, divided into 2,000,000,000 ordinary shares of HK$0.005 each, with 1,000,000,000 shares issued and fully paid, totaling HK$5,000,000 (approximately RMB 4,549 thousand), reflecting a share split effective March 31, 2025, and the capitalization issue on January 12, 2024 - Changes in authorized share capital: Pursuant to a resolution passed at the EGM on March 27, 2025, effective March 31, 2025, each share of HK$0.01 par value was split into two shares of HK$0.005 par value, doubling the number of shares while the total authorized share capital remained unchanged[37](index=37&type=chunk) - Issued and fully paid share capital: As of June 30, 2025, the issued and fully paid share capital comprised **1,000,000,000** ordinary shares of HK$0.005 each, equivalent to approximately **RMB 4,549 thousand**[37](index=37&type=chunk)[38](index=38&type=chunk) - Listing and capitalization issue: On January 12, 2024, the Company issued **125,000,000** ordinary shares through a share offer and undertook a capitalization issue of **374,999,600** ordinary shares[38](index=38&type=chunk) [Capital Commitments](index=19&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no significant capital commitments, consistent with the situation at December 31, 2024 - No significant capital commitments: As of June 30, 2025, the Group had no significant capital commitments[39](index=39&type=chunk) [Related Party Transactions](index=19&type=section&id=Related%20Party%20Transactions) The Group has non-trade balances and lease agreements with related parties, including companies controlled by Director Mr. Jia Zhengyi and his spouse Ms. Zheng Li. As of June 30, 2025, amounts due from a former direct holding company were RMB 1,219 thousand, and amounts due to a shareholder were RMB 32 thousand, with a significant year-on-year increase in key management compensation - Key related parties: Mr. Jia Zhengyi (Director and Shareholder), Ms. Zheng Li (spouse of Mr. Jia), Wellcell Group Limited (former direct holding company), Guangdong Huajun Sports Culture Communication Co., Ltd. (controlled by Mr. Jia and Ms. Zheng Li)[41](index=41&type=chunk) Balances with Related Parties (Non-trade nature) | Item | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Amounts due from a related company (Wellcell Group Limited) | 1,219 | 1,205 | | Amounts due to a shareholder (Mr. Jia) | (32) | (1,032) | - Office lease agreement: The Group entered into a three-year lease agreement with Huajun in March 2024, with approximately **RMB 413 thousand** in rent paid during the period[43](index=43&type=chunk) Key Management Compensation (For the six months ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Salaries and other short-term employee benefits | 1,475 | 730 | | Pension costs – defined contribution plans | 191 | 95 | | **Total** | **1,666** | **825** | [Pledged Assets](index=21&type=section&id=Pledged%20Assets) As of June 30, 2025, the Group pledged approximately RMB 244 thousand in deposits as collateral for customer projects and approximately RMB 1,774 thousand in receivables from service contracts as collateral for interest-bearing bank borrowings - Pledged deposits: Approximately **RMB 244 thousand** as collateral for customer projects (December 31, 2024: approximately **RMB 133 thousand** as collateral for bank payroll)[45](index=45&type=chunk) - Pledged receivables: Approximately **RMB 1,774 thousand** in receivables arising from certain service contracts (included in contract assets) as collateral for interest-bearing bank borrowings[45](index=45&type=chunk) [Contingent Liabilities](index=21&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities, consistent with the situation at December 31, 2024 - No significant contingent liabilities: As of June 30, 2025, the Group had no significant contingent liabilities[46](index=46&type=chunk) [Comparative Figures](index=21&type=section&id=Comparative%20Figures) Comparative figures for earnings per share have been retrospectively adjusted, and certain other comparative figures have been reclassified to conform to the current period's presentation - Retrospective adjustment of earnings per share: Comparative figures for earnings per share have been retrospectively adjusted[47](index=47&type=chunk) - Reclassification of comparative figures: Certain comparative figures have been reclassified to conform to the current period's presentation[47](index=47&type=chunk) [Management Discussion and Analysis](index=22&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business performance, financial results, and future outlook, highlighting shifts in core business segments, the launch of new fintech initiatives, and an analysis of financial position, liquidity, and capital resources [Business Review and Outlook](index=22&type=section&id=Business%20Review%20and%20Outlook) During the reporting period, the Group's core telecom network support services revenue decreased, ICT integration services revenue increased, and software-related business revenue significantly declined. Concurrently, the Group actively expanded its fintech business, launching the "Fopay" crypto payment platform and planning to acquire relevant licenses globally. Management is cautious about the sustainable expansion of core businesses in the short term but is optimistic about the growth potential in fintech [Core Business Segments](index=22&type=section&id=Core%20Business%20Segments) The Group's core businesses include wireless telecom network optimization, infrastructure maintenance, ICT integration, and software-related services. During the period, telecom network support services revenue share decreased to 50.9%, ICT integration services revenue share increased to 42.6%, while software-related business revenue share significantly dropped to 6.5% - Business composition: Primarily derived from wireless telecommunication network optimization services, telecommunication network infrastructure maintenance and engineering services, ICT integration services, telecommunication network-related software development and related services, and sale of software[48](index=48&type=chunk) - Telecommunication network support services: Revenue accounted for approximately **50.9%** (2024: **54.6%**), including wireless telecommunication network optimization and telecommunication network infrastructure maintenance[49](index=49&type=chunk) - ICT integration services: Revenue accounted for approximately **42.6%** (2024: **30.4%**), primarily involving customized computer system design, equipment procurement, system assembly, and subsequent services[50](index=50&type=chunk) - Software-related business: Revenue accounted for approximately **6.5%** (2024: **15.0%**), including software development and sales, and provision of customized software development services[51](index=51&type=chunk) [Fintech Business Expansion](index=23&type=section&id=Fintech%20Business%20Expansion) During the reporting period, the Company developed a new fintech business segment and launched its self-developed one-stop payment platform "Fopay" on July 21, 2025, offering stablecoin custody and virtual/physical VISA prepaid card payment services, with plans to acquire more relevant licenses in the future - New business segment: Expanded into fintech business, covering payment services (including global payment services utilizing blockchain technology)[52](index=52&type=chunk) - Launch of Fopay platform: Launched its self-developed one-stop payment platform “Fopay” on July 21, 2025, offering stablecoin custody and prepaid card payment services[52](index=52&type=chunk)[54](index=54&type=chunk) - Future plans: May consider obtaining licenses for providing custody services, money services, crypto-asset services, and/or other services in Hong Kong or other regions globally[54](index=54&type=chunk) [Market Environment and Future Outlook](index=23&type=section&id=Market%20Environment%20and%20Future%20Outlook) Despite a complex and challenging market, core businesses face decline and increased competition, leading management to be cautious about short-term sustainable expansion. However, the company is optimistic about the growth potential in China's telecom industry and global fintech, particularly in Asia, and has strategically positioned itself in the fintech sector - Core business challenges: Core business experienced a slight decline, with market saturation and intensified competition putting pressure on profit margins, leading management to be cautious about short-term sustainable expansion[53](index=53&type=chunk) - Growth drivers for China's telecom industry: Driven by a large population base, expanding middle class, smartphone penetration, increasing internet penetration, and government digital transformation initiatives[53](index=53&type=chunk) - Fintech market advantages: Rapid global expansion of e-commerce, cross-border trade, and mobile payment applications, with Asian markets like Hong Kong benefiting from their international financial center status, open policies, advanced infrastructure, and digitally savvy user base[53](index=53&type=chunk) - Strategic positioning: In line with global fintech development trends, the Group has strategically positioned itself in the crypto payment sector under its fintech business segment[54](index=54&type=chunk) [Financial Performance Analysis](index=24&type=section&id=Financial%20Performance%20Analysis) During the reporting period, the Group's total revenue decreased by 15.1% year-on-year, primarily due to significant reductions in wireless telecom network optimization services and software-related business revenue, despite growth in ICT integration services revenue. Other income significantly increased due to fair value changes of financial assets, but other gains, net, and net finance income substantially decreased. Both operating profit and net profit saw double-digit declines, mainly impacted by reduced revenue and increased depreciation, amortization, and other operating expenses [Revenue Analysis](index=24&type=section&id=Revenue%20Analysis) Total revenue decreased by 15.1% year-on-year to RMB 90.1 million during the reporting period. Wireless telecom network optimization services and software-related business revenues declined by 30.4% and 62.9% respectively, mainly due to customer budget cuts and fewer projects. Telecommunication network infrastructure maintenance and engineering services revenue slightly increased by 2.4%, and ICT integration services revenue grew by 19.3%, driven by an increase in large-scale projects Revenue Breakdown (For the six months ended June 30) | Service Type | 2025 (RMB Thousand) | 2024 (RMB Thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Wireless telecommunication network optimization services | 28,636 | 41,136 | -30.4% | | Telecommunication network infrastructure maintenance and engineering services | 17,170 | 16,842 | +2.4% | | ICT integration services | 38,359 | 32,240 | +19.3% | | Software-related business | 5,903 | 15,874 | -62.9% | | **Total Revenue** | **90,068** | **106,092** | **-15.1%** | - Reasons for decrease in wireless telecommunication network optimization services: Primarily due to reduced quotations from major customers cutting budgets and the completion of some contracts[58](index=58&type=chunk) - Reasons for increase in ICT integration services: Primarily due to an increase in the number of large-scale projects tendered during the reporting period[60](index=60&type=chunk) - Reasons for decrease in software-related business: Primarily due to a decrease in the number of revenue-generating software development projects undertaken for customers[61](index=61&type=chunk) [Analysis of Other Income and Expenses](index=25&type=section&id=Analysis%20of%20Other%20Income%20and%20Expenses) Other income significantly increased by 457.1% year-on-year to RMB 3.9 million, mainly due to a net fair value increase in financial assets at fair value through profit or loss. However, other gains, net, decreased by 92.9% due to reduced exchange gains. Employee benefit expenses decreased by 20.6%, partly capitalized as intangible asset development costs. Depreciation and amortization increased by 150.0%, primarily due to increases in property, plant and equipment and intangible assets. Impairment loss on trade and contract assets shifted from a loss to a reversal - Significant increase in other income: Increased from **RMB 0.7 million** to **RMB 3.9 million**, a **457.1%** increase, primarily due to a net fair value increase in financial assets at fair value through profit or loss[62](index=62&type=chunk) - Significant decrease in other gains, net: Decreased from **RMB 1.4 million** to **RMB 0.1 million**, a **92.9%** decrease, primarily due to reduced exchange gains[63](index=63&type=chunk) - Decrease in employee benefit expenses: Decreased from **RMB 9.7 million** to **RMB 7.7 million**, a **20.6%** decrease, primarily due to partial capitalization of expenses as intangible asset development costs and higher bonuses in the prior period[64](index=64&type=chunk) - Slight decrease in subcontracting fees: Decreased from **RMB 65.0 million** to **RMB 62.4 million**, a **4.0%** decrease, as stable operation of the core network needs to be maintained[65](index=65&type=chunk) - Significant increase in depreciation and amortization: Increased from **RMB 1.0 million** to **RMB 2.5 million**, a **150.0%** increase, primarily due to increases in property, plant and equipment and intangible assets[67](index=67&type=chunk) - Reversal of impairment loss on trade and contract assets: A reversal of impairment loss of approximately **RMB 320 thousand** was recognized (2024: impairment loss of approximately **RMB 3.4 million**), primarily due to a decrease in total trade and contract assets[68](index=68&type=chunk) - Increase in other operating expenses: Increased from **RMB 3.1 million** to **RMB 4.8 million**, a **54.8%** increase, primarily due to increased professional fees[69](index=69&type=chunk) - No listing expenses incurred: No listing expenses were incurred in the first half of 2025, compared to **RMB 6.257 million** in the corresponding period of 2024[70](index=70&type=chunk) - Net finance (costs)/income turned negative: Net finance cost was approximately **RMB 0.5 million** in the first half of 2025 (2024: net finance income of approximately **RMB 1.2 million**), primarily due to decreased interest income from reduced bank deposits and interest rates[71](index=71&type=chunk) [Operating Profit and Net Profit](index=27&type=section&id=Operating%20Profit%20and%20Net%20Profit) Operating profit decreased by 19.3% year-on-year to RMB 8.8 million, and net profit decreased by 28.0% to RMB 7.7 million, primarily due to reduced revenue, lower interest income from bank deposits, and increased other operating expenses and depreciation and amortization. Income tax expense decreased by 57.1% due to lower operating profit - Decrease in operating profit: Decreased from **RMB 10.9 million** to **RMB 8.8 million**, a **19.3%** decrease, primarily due to reduced revenue and increased other operating expenses, depreciation, and amortization[72](index=72&type=chunk) - Decrease in income tax expense: Decreased from **RMB 1.4 million** to **RMB 0.6 million**, a **57.1%** decrease, primarily due to reduced operating profit[73](index=73&type=chunk) - Decrease in net profit: Decreased from **RMB 10.7 million** to **RMB 7.7 million**, a **28.0%** decrease, primarily due to reduced revenue and interest income from bank deposits, as well as increased other operating expenses, depreciation, and amortization[74](index=74&type=chunk) [Financial Position, Liquidity and Capital Resources](index=28&type=section&id=Financial%20Position%2C%20Liquidity%20and%20Capital%20Resources) As of June 30, 2025, cash and cash equivalents decreased by 34.5% to RMB 68.8 million, primarily used for financial asset investments, bank loan repayments, and operations. Total bank borrowings decreased, and the gearing ratio fell to 15.6%. The current ratio slightly increased to 2.6 times, indicating good liquidity - Cash position: Cash and cash equivalents amounted to approximately **RMB 68.8 million** (December 31, 2024: **RMB 105.0 million**), a decrease of approximately **34.5%**, primarily used for the purchase of financial assets, repayment of bank borrowings, and operations[78](index=78&type=chunk) - Total borrowings: Total bank borrowings amounted to **RMB 32.409 million** (December 31, 2024: **RMB 41.776 million**), comprising both fixed and floating rate borrowings, with unutilized bank facilities of **RMB 5 million**[79](index=79&type=chunk)[80](index=80&type=chunk) - Pledged assets: Approximately **RMB 244 thousand** in pledged deposits as collateral for customer projects, and approximately **RMB 1,774 thousand** in pledged receivables from service contracts as collateral for interest-bearing bank borrowings[81](index=81&type=chunk) - Current ratio: Approximately **2.6 times** (December 31, 2024: **2.4 times**)[82](index=82&type=chunk) - Gearing ratio: Approximately **15.6%** (December 31, 2024: **20.8%**), with the decrease primarily due to reduced interest-bearing bank borrowings[83](index=83&type=chunk) [Share Capital and Board Lot Size](index=29&type=section&id=Share%20Capital%20and%20Board%20Lot%20Size) During the reporting period, the company's share capital underwent a share split, dividing each HK$0.01 par value share into two HK$0.005 par value shares, doubling the total number of issued shares. Concurrently, the HKEX board lot size changed from 4,000 shares to 800 shares - Share split: Effective March 31, 2025, each ordinary share of HK$0.01 par value was split into two ordinary shares of HK$0.005 par value, increasing the total number of issued shares from **500,000,000** to **1,000,000,000**[84](index=84&type=chunk) - Change in board lot size: Effective March 31, 2025, the board lot size was changed from **4,000** shares to **800** shares[85](index=85&type=chunk) [Foreign Exchange Risk and Treasury Policy](index=30&type=section&id=Foreign%20Exchange%20Risk%20and%20Treasury%20Policy) The Group primarily operates in China, with transactions, monetary assets, and liabilities mainly denominated in RMB and HKD. During the reporting period, exchange rate fluctuations did not significantly impact the Group, and no derivative instruments were entered into to hedge foreign exchange risk. The Board will continue to prudently manage cash and maintain a robust liquidity position - Principal currencies: RMB and HKD[87](index=87&type=chunk) - Impact of foreign exchange risk: Fluctuations in exchange rates between different currencies did not have a material adverse impact on the Group during the reporting period[87](index=87&type=chunk) - Hedging strategy: No derivative instruments were entered into to hedge foreign exchange risk[87](index=87&type=chunk) - Treasury policy: Follows a prudent policy in managing cash to maintain a strong and robust liquidity position[87](index=87&type=chunk) [Employees and Remuneration Policy](index=30&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 116 employees. Total wages and salaries (before capitalization) for the reporting period were approximately RMB 8.8 million. The remuneration policy is based on performance, qualifications, experience, and market terms, linked to company profitability and shareholder returns, and reviewed annually by the Remuneration Committee - Number of employees: **116** as of June 30, 2025 (December 31, 2024: **115**)[89](index=89&type=chunk) - Total wages and salaries: Approximately **RMB 8.8 million** (before capitalization) for the six months ended June 30, 2025, a decrease from **RMB 9.7 million** in the corresponding period of 2024[89](index=89&type=chunk) - Remuneration determination: Remuneration packages are determined based on performance, qualifications, capabilities, and comparable market remuneration, including salaries, retirement scheme contributions, and discretionary bonuses, and are linked to shareholder returns[90](index=90&type=chunk) [Material Investments and Plans](index=31&type=section&id=Material%20Investments%20and%20Plans) Except as disclosed in this announcement, as of June 30, 2025, the Group held no material investments, undertook no material acquisitions or disposals of subsidiaries and associates, and had no other material investment or capital asset plans - No material investments: No material investments were held during the reporting period[91](index=91&type=chunk) - No material acquisitions or disposals: No material acquisitions or disposals of subsidiaries and associates occurred during the reporting period and up to the date of this announcement[91](index=91&type=chunk) - No material capital asset plans: As of June 30, 2025, there were no other material investment or capital asset plans[91](index=91&type=chunk) [Use of Proceeds](index=31&type=section&id=Use%20of%20Proceeds) The net proceeds from the company's IPO on January 12, 2024, were approximately RMB 56.0 million, with the intended use and expected implementation timetable unchanged. As of June 30, 2025, RMB 8.6 million had been utilized, mainly for ICT integration and R&D projects, with the remaining RMB 24.3 million unutilized and held in licensed banks in Hong Kong - Net proceeds from IPO: Approximately **RMB 56.0 million**[94](index=94&type=chunk) Use of Proceeds and Application Status (As of June 30) | Use | Allocation in Prospectus (%) | Allocation in Prospectus (RMB Million) | Actual Use as of December 31, 2024 (RMB Million) | Unutilized as of December 31, 2024 (RMB Million) | Utilized during the Reporting Period (RMB Million) | Unutilized as of June 30, 2025 (RMB Million) | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Funding for future ICT integration projects | 20.5% | 11.5 | 8.7 | 2.8 | 2.8 | – | Not applicable | | Undertaking new R&D projects | 34.6% | 19.4 | 5.0 | 14.4 | 3.9 | 10.5 | By end of 2027 | | Strengthening project management team | 19.8% | 11.1 | 0.1 | 11.0 | – | 11.0 | By end of 2026 | | Funding for sales and marketing efforts | 5.4% | 3.0 | 0.2 | 2.8 | – | 2.8 | By end of 2026 | | Repayment of part of bank borrowings | 12.9% | 7.2 | 7.2 | – | – | – | Not applicable | | General working capital | 6.8% | 3.8 | 1.9 | 1.9 | 1.9 | – | Not applicable | | **Total** | **100%** | **56.0** | **23.1** | **32.9** | **8.6** | **24.3** | | - Placement of unutilized funds: Unutilized net proceeds are held as bank balances in licensed banks in Hong Kong[96](index=96&type=chunk) [Events After Reporting Period](index=32&type=section&id=Events%20After%20Reporting%20Period) Except as disclosed in this announcement, the Group had no material events after the reporting period and up to the date of this announcement - No material events after reporting period: No material events occurred after the reporting period and up to the date of this announcement[97](index=97&type=chunk) [Other Information](index=33&type=section&id=Other%20Information) This section covers details on directors' and major shareholders' interests, share disposal by a controlling shareholder, the share option scheme, corporate governance practices, audit committee review, public float compliance, interim dividend policy, and board composition [Directors' and Chief Executive's Interests](index=33&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) As of June 30, 2025, Mr. Qian Fenglei, Mr. Jia Zhengyi, and Mr. Lin Qihao held company shares through controlled corporations, representing 29.9%, 16.6%, and 16.6% of the share capital, respectively Directors' Long Positions in the Company's Shares (As of June 30) | Name of Director | Capacity/Nature | Number of shares held/in which interests are held | Percentage of Equity | | :--- | :--- | :--- | :--- | | Mr. Qian Fenglei | Interest in controlled corporation | 299,000,000 | 29.9% | | Mr. Jia Zhengyi | Interest in controlled corporation | 166,000,000 | 16.6% | | Mr. Lin Qihao | Interest in controlled corporation | 166,000,000 | 16.6% | - Directors' long positions in shares of associated corporations: Mr. Qian Fenglei holds a **58.48%** interest in Hengfeng; Mr. Jia Zhengyi wholly owns Lichao Limited, which holds a **51.50%** interest in Wellcell Group Limited; Mr. Lin Qihao wholly owns Cheer Partners Limited, which holds a **37.5%** interest in Wellcell Group Limited[100](index=100&type=chunk)[101](index=101&type=chunk) [Major Shareholders' Interests](index=35&type=section&id=Major%20Shareholders'%20Interests) As of June 30, 2025, Hengfeng International Holdings Limited held 29.9% of the company's equity, and Wellcell Group Limited held 16.6%. Lichao Limited, Cheer Partners Limited, Mr. Jia Zhengyi, Mr. Lin Qihao, Ms. Zheng Li, and Ms. Zhong Shumin (spouses of Mr. Jia Zhengyi and Mr. Lin Qihao) are all deemed to have interests in the shares held by Wellcell Group Limited Major Shareholders' Long Positions in the Company's Shares (As of June 30) | Name/Designation | Capacity/Nature | Number of Shares | Percentage of Equity | | :--- | :--- | :--- | :--- | | Hengfeng | Beneficial owner | 299,000,000 | 29.9% | | Wellcell Group Limited | Beneficial owner | 166,000,000 | 16.6% | | Lichao Limited | Interest in controlled corporation | 166,000,000 | 16.6% | | Cheer Partners Limited | Interest in controlled corporation | 166,000,000 | 16.6% | | Ms. Zheng Li | Spouse's interest | 166,000,000 | 16.6% | | Ms. Zhong Shumin | Spouse's interest | 166,000,000 | 16.6% | - Related party interests: Hengfeng is **58.48%** owned by Mr. Qian Fenglei. Wellcell Group Limited is **51.5%** owned by Lichao Limited (wholly owned by Mr. Jia Zhengyi) and **37.5%** owned by Cheer Partners Limited (wholly owned by Mr. Lin Qihao). Ms. Zheng Li and Ms. Zhong Shumin are deemed to have interests in the shares held by Mr. Jia Zhengyi and Mr. Lin Qihao, respectively, due to their spousal relationships[102](index=102&type=chunk) [Disposal of Shares by Controlling Shareholder](index=36&type=section&id=Disposal%20of%20Shares%20by%20Controlling%20Shareholder) During the reporting period, Wellcell Group Limited disposed of 299,000,000 shares, representing 29.9% of the company's total issued share capital, to Hengfeng International Holdings Limited. Following the disposal, Hengfeng International Holdings Limited became the beneficial owner of 29.9% of the company's shares, while Wellcell Group Limited's shareholding decreased to 16.6% - Number of shares disposed: Wellcell Group Limited disposed of a total of **299,000,000** shares to Hengfeng International Holdings Limited[104](index=104&type=chunk) - Shareholding percentage after disposal: Hengfeng International Holdings Limited holds a **29.9%** equity interest, and Wellcell Group Limited holds a **16.6%** equity interest[104](index=104&type=chunk) [Share Option Scheme](index=36&type=section&id=Share%20Option%20Scheme) The company conditionally approved a share option scheme on December 15, 2023, effective upon listing on January 12, 2024, to incentivize or reward eligible participants. Since its adoption, no share options have been granted, exercised, cancelled, lapsed, forfeited, or restricted - Scheme effective: The Share Option Scheme became effective upon listing on January 12, 2024, with a validity period of **8.5 years**[105](index=105&type=chunk) - Purpose: To incentivize or reward eligible participants for their contributions to the Group[105](index=105&type=chunk) - Status: No share options have been granted, exercised, cancelled, lapsed, forfeited, or restricted since the adoption of the scheme[105](index=105&type=chunk) [Corporate Governance](index=36&type=section&id=Corporate%20Governance) The company's corporate governance practices are based on the Corporate Governance Code in Appendix C1 of the Listing Rules. From the beginning of the reporting period until May 26, 2025, the roles of Chairman and Chief Executive Officer were combined under Mr. Jia Zhengyi, deviating from Code Provision C.2.1. Since Mr. Qian Fenglei's appointment as Chairman on May 26, 2025, the company has complied with all applicable code provisions. Directors and relevant employees adhere to the Model Code for Securities Transactions - Code compliance: The Company has complied with all applicable code provisions set out in the Corporate Governance Code, except for the deviation where the roles of Chairman and Chief Executive Officer were combined from the beginning of the reporting period until May 26, 2025[106](index=106&type=chunk)[107](index=107&type=chunk) - Separation of Chairman and Chief Executive Officer roles: Since Mr. Qian Fenglei's appointment as Chairman on May 26, 2025, the Company has complied with Code Provision C.2.1[107](index=107&type=chunk) - Model Code for Securities Transactions: All Directors confirm that they have complied with the required standards for dealing in securities as set out in the Model Code throughout the reporting period[108](index=108&type=chunk) [Audit Committee](index=37&type=section&id=Audit%20Committee) The Audit Committee reviewed and discussed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, confirming their compliance with applicable accounting standards, Listing Rules, and adequate disclosure - Committee composition: The Audit Committee comprises three members, with Mr. Wong Chi Man as Chairman[109](index=109&type=chunk) - Scope of review: Reviewed and discussed the Group's unaudited condensed consolidated interim financial statements, accounting principles, and practices for the six months ended June 30, 2025[109](index=109&type=chunk) - Conclusion: Deemed the results to be in compliance with applicable accounting standards, the Listing Rules, and to have made adequate disclosures[109](index=109&type=chunk) [Sufficient Public Float](index=37&type=section&id=Sufficient%20Public%20Float) Based on publicly available information and the Directors' knowledge, the company has maintained the required public float in accordance with the Listing Rules since its listing - Public float: Has maintained the required public float in accordance with the Listing Rules since its listing[110](index=110&type=chunk) [Interim Dividend](index=37&type=section&id=Interim%20Dividend) The Board did not recommend the payment of any dividend for the six months ended June 30, 2025, consistent with the prior period - No dividend payment: The Board did not recommend the payment of any dividend for the six months ended June 30, 2025[111](index=111&type=chunk) [Publication of Interim Results Announcement and Despatch of Interim Report](index=38&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Despatch%20of%20Interim%20Report) This announcement has been published on the HKEX and company websites, and the interim report for the six months ended June 30, 2025, will be available on these websites in due course - Announcement publication: This announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the Company's website (www.wellcell.com.cn)[112](index=112&type=chunk) - Interim report: The interim report for the six months ended June 30, 2025, will be available on the aforementioned websites in due course[112](index=112&type=chunk) [Acknowledgement](index=38&type=section&id=Acknowledgement) The Board extends its sincere gratitude to shareholders, management team, employees, business partners, and customers for their support and contributions to the Group - Acknowledgements: Shareholders, management team, employees, business partners, and customers[113](index=113&type=chunk) [Board of Directors](index=38&type=section&id=Board%20of%20Directors) As of the date of this announcement, the Board of Directors comprises four executive directors, one non-executive director, and three independent non-executive directors - Board composition: Comprises four executive directors (Mr. Qian Fenglei, Mr. Jia Zhengyi, Mr. Cong Bin, and Mr. Li Shihua), one non-executive director (Mr. Lin Qihao), and three independent non-executive directors (Mr. Wong Chi Man, Ms. Dan Xi, and Mr. Chen Weiduan)[114](index=114&type=chunk)

Interim Results Summary [Key Financial Performance](index=1&type=section&id=1.1%20Key%20Financial%20Performance) The company's revenue for the first half of FY2025 significantly declined by 57.9% to RMB 33.1 million, with gross profit decreasing by 69.5% to RMB 4.8 million, while loss attributable to owners decreased by 59.1% to RMB 136.8 million, resulting in a basic loss per share of RMB 0.728 2025 H1 Key Financial Data | Indicator | 2025 H1 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | | Revenue | 33.1 | -57.9% | | Gross Profit | 4.8 | -69.5% | | Loss Attributable to Owners | (136.8) | Loss decreased 59.1% | | Basic Loss Per Share (RMB) | (0.728) | - | | Interim Dividend | Not recommended | - | Unaudited Condensed Consolidated Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=2.1%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) During the reporting period, the company's revenue significantly decreased to RMB 33,142 thousand from RMB 78,696 thousand in the prior period, with a narrowed loss for the period of RMB 147,661 thousand compared to RMB 342,809 thousand, and loss attributable to owners of RMB 136,804 thousand Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (RMB thousand) | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | 33,142 | 78,696 | | Gross Profit | 4,800 | 15,734 | | Loss for the Period | (147,661) | (342,809) | | Loss for the Period Attributable to Owners of the Company | (136,804) | (334,879) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=2.2%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were RMB 2,124,620 thousand, total liabilities were RMB 5,821,500 thousand, resulting in a total deficit of RMB 3,696,874 thousand, with net current liabilities reaching RMB 4,655,592 thousand, indicating severe liquidity challenges Summary of Condensed Consolidated Statement of Financial Position (RMB thousand) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Non-current Assets | 1,134,460 | 1,134,461 | | Current Assets | 990,160 | 1,010,250 | | **Total Assets** | **2,124,620** | **2,144,711** | | Current Liabilities | 5,645,752 | 5,518,233 | | Non-current Liabilities | 175,742 | 175,742 | | **Total Liabilities** | **5,821,494** | **5,693,975** | | Net Current Liabilities | (4,655,592) | (4,507,983) | | Total Deficit | (3,696,874) | (3,549,264) | Notes to the Condensed Consolidated Financial Statements [Company Information](index=6&type=section&id=3.1%20Company%20Information) Xinming China Holdings Limited, incorporated in the Cayman Islands, primarily engages in investment holding, property development, and property leasing, with Mr. Chen Chengshou as the ultimate controlling shareholder - Company registered in: Cayman Islands[10](index=10&type=chunk) - Principal activities: Investment holding, property development, and property leasing[10](index=10&type=chunk) - Ultimate controlling shareholder: Mr Chen Chengshou[10](index=10&type=chunk) [Basis of Preparation and Changes in Accounting Policies](index=6&type=section&id=3.2%20Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) The interim financial statements are prepared in accordance with IAS 34 and the HKEX Listing Rules, presented in RMB, and based on historical cost, except for investment properties and convertible bonds measured at fair value, with no significant impact from the first-time application of IAS 21 amendment "Lack of Exchangeability" [Basis of Preparation](index=6&type=section&id=3.2.1%20Basis%20of%20Preparation) The interim financial statements are prepared in accordance with IAS 34 and the HKEX Listing Rules, presented in RMB, and based on historical cost, except for investment properties and convertible bonds measured at fair value - Basis of preparation: International Accounting Standard 34 “Interim Financial Reporting” and the Listing Rules of the Stock Exchange[11](index=11&type=chunk) - Presentation currency: RMB thousand[11](index=11&type=chunk) - Measurement basis: Historical cost basis, except for investment properties and convertible bonds which are stated at fair value[13](index=13&type=chunk) [Adoption of New/Revised International Financial Reporting Standards](index=8&type=section&id=3.2.2%20Adoption%20of%20New%2FRevised%20International%20Financial%20Reporting%20Standards) The amendment to IAS 21 "Lack of Exchangeability" was first applied in this period, but it had no significant impact on the Group's financial position or performance - Newly adopted standard: Amendments to IAS 21 “Lack of Exchangeability”[18](index=18&type=chunk) - Impact: No significant impact on the Group’s financial position and performance and/or disclosures contained in the interim financial statements for the current and prior periods[18](index=18&type=chunk) [Segment Information](index=8&type=section&id=3.3%20Segment%20Information) The Group has three reportable operating segments: property development, property leasing, and others (investment holding), with property development contributing most revenue in H1 2025, though all segments recorded losses, and all operations are in China with no single customer contributing over 10% of revenue [Operating Segments](index=8&type=section&id=3.3.1%20Operating%20Segments) The Group has three reportable operating segments: property development, property leasing, and others (investment holding), with property development contributing most revenue in H1 2025, though all segments recorded losses - Operating segments: Property development, property leasing, and others (investment holding)[21](index=21&type=chunk) Segment Revenue and Results (RMB thousand) | Segment | 2025 H1 Revenue | 2025 H1 Results (Loss) | | :--- | :--- | :--- | | Property Development | 32,600 | (65,238) | | Property Leasing | 542 | (58,265) | | Others | – | (24,158) | | **Total** | **33,142** | **(147,661)** | [Geographical Information and Major Customers](index=10&type=section&id=3.3.2%20Geographical%20Information%20and%20Major%20Customers) All of the Group's operations and non-current assets are located in China, and no single customer contributed 10% or more of the revenue during the reporting period - Operating region: Operates its businesses solely in the PRC, and almost all of its non-current assets are located in the PRC[24](index=24&type=chunk) - Major customers: No customer contributed 10% or more of the Group’s revenue[25](index=25&type=chunk) [Revenue](index=11&type=section&id=3.4%20Revenue) Total revenue for H1 2025 was RMB 33,142 thousand, primarily from property sales (RMB 32,600 thousand) and rental income (RMB 542 thousand), all originating from China and recognized at a point in time Revenue Disaggregation Information (RMB thousand) | Revenue Source | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Property Sales | 32,600 | 78,255 | | Rental Income | 542 | 441 | | **Total Revenue** | **33,142** | **78,696** | - Geographical market: China[27](index=27&type=chunk) - Timing of revenue recognition: At a point in time[27](index=27&type=chunk) [Other Income and Gains and Losses](index=12&type=section&id=3.5%20Other%20Income%20and%20Gains%20and%20Losses) Total other income and gains and losses for H1 2025 amounted to a net gain of RMB 12,634 thousand, mainly due to a net exchange gain of RMB 10,798 thousand, contrasting with an exchange loss in the prior year Other Income and Gains and Losses (RMB thousand) | Item | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Bank interest income | 4 | 21 | | Government grants | – | 5 | | Other income | 1,832 | 134 | | Net exchange gains/(losses) | 10,798 | (4,658) | | **Total** | **12,634** | **(4,498)** | [Loss Before Income Tax](index=12&type=section&id=3.6%20Loss%20Before%20Income%20Tax) Total finance costs for H1 2025 increased to RMB 47,755 thousand, with staff costs at RMB 3,174 thousand, and other major expenses including cost of properties sold of RMB 28,171 thousand and penalty interest of RMB 106,908 thousand, contrasting with significant impairment of properties under development and completed properties for sale in the prior period [Finance Costs](index=12&type=section&id=3.6.1%20Finance%20Costs) Total finance costs for H1 2025 increased to RMB 47,755 thousand from RMB 35,307 thousand in the prior period, primarily due to interest on interest-bearing bank and other borrowings Finance Costs (RMB thousand) | Item | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Interest on interest-bearing bank and other borrowings | 47,755 | 39,528 | | Less: Interest capitalised | – | (4,221) | | **Total Finance Costs** | **47,755** | **35,307** | [Staff Costs and Other Items](index=13&type=section&id=3.6.2%20Staff%20Costs%20and%20Other%20Items) Staff costs (excluding directors' emoluments) for H1 2025 were RMB 3,174 thousand, with other major expenses including cost of properties sold of RMB 28,171 thousand and penalty interest of RMB 106,908 thousand, contrasting with significant impairment of properties under development and completed properties for sale in the prior period Staff Costs and Other Items (RMB thousand) | Item | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Staff costs (excluding directors’ emoluments) | 3,174 | 3,684 | | Cost of properties sold | 28,171 | 64,848 | | Penalty interest | 106,908 | 197,421 | | Impairment of properties under development | – | 71,321 | | Impairment of completed properties held for sale | – | 18,100 | [Income Tax](index=13&type=section&id=3.7%20Income%20Tax) No income tax provision was made for H1 2025 as relevant entities reported tax losses, while the prior period's income tax expense of RMB 5,416 thousand was mainly from land appreciation tax, with China's corporate income tax rate at 25% and land appreciation tax at a progressive rate of 30% to 60% Income Tax Expense (RMB thousand) | Item | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Current tax | – | 5,902 | | Deferred tax | – | (486) | | **Total Income Tax Expense for the Period** | **–** | **5,416** | - No income tax provision was made for H1 2025 as relevant entities reported tax losses[35](index=35&type=chunk) - PRC corporate income tax statutory rate: **25%**[34](index=34&type=chunk) - Land appreciation tax rate: Progressive rates ranging from **30% to 60%**[35](index=35&type=chunk) [Dividends](index=14&type=section&id=3.8%20Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[37](index=37&type=chunk) [Loss Per Share](index=14&type=section&id=3.9%20Loss%20Per%20Share) Basic loss per share for H1 2025 improved to RMB 0.728 from RMB 1.783 in the prior period, with diluted loss per share being the same as basic loss per share due to the absence of potential ordinary shares Loss Per Share (RMB) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Basic Loss Per Share | (0.728) | (1.783) | | Diluted Loss Per Share | (0.728) | (1.783) | - Weighted average number of ordinary shares in issue: **187,862,000 shares**[38](index=38&type=chunk) [Impairment of Completed Properties Held for Sale](index=14&type=section&id=3.10%20Impairment%20of%20Completed%20Properties%20Held%20for%20Sale) No impairment of completed properties held for sale was recognized in H1 2025, compared to an impairment of RMB 18,100 thousand recognized in the prior period Impairment of Completed Properties Held for Sale (RMB thousand) | Item | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Impairment of completed properties held for sale | – | 18,100 | [Investment Properties](index=15&type=section&id=3.11%20Investment%20Properties) As of June 30, 2025, the fair value of investment properties was RMB 905,930 thousand, unchanged from the end of 2024, with RMB 792,847 thousand of these properties pledged to secure borrowings Fair Value of Investment Properties (RMB thousand) | Date | Amount | | :--- | :--- | | June 30, 2025 | 905,930 | | December 31, 2024 | 905,930 | - Pledged investment properties value: **RMB 792,847 thousand** to secure the Group’s interest-bearing bank and other borrowings[40](index=40&type=chunk) [Trade Receivables](index=15&type=section&id=3.12%20Trade%20Receivables) As of June 30, 2025, net trade receivables were RMB 3,684 thousand, primarily due within one year, showing a slight increase compared to the end of 2024 Trade Receivables (RMB thousand) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Trade receivables | 11,957 | 11,474 | | Less: Impairment allowance | (8,273) | (8,273) | | **Net Amount** | **3,684** | **3,201** | - Trade receivables aging: All due within one year[43](index=43&type=chunk)[45](index=45&type=chunk) [Trade Payables](index=16&type=section&id=3.13%20Trade%20Payables) As of June 30, 2025, total trade payables were RMB 448,826 thousand, with the vast majority (RMB 448,826 thousand) aged over one year, indicating long-term outstanding payables Trade Payables Aging Analysis (RMB thousand) | Aging | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Within 1 year | – | 16,842 | | Over 1 year | 448,826 | 442,724 | | **Total** | **448,826** | **459,566** | [Interest-Bearing Bank and Other Borrowings](index=16&type=section&id=3.14%20Interest-Bearing%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, total interest-bearing bank and other borrowings amounted to RMB 1,212,604 thousand, all repayable on demand or within one year and overdue, constituting events of default, and are jointly guaranteed by subsidiary equity, investment properties, and related parties including the controlling shareholder Interest-Bearing Bank and Other Borrowings (RMB thousand) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Repayable on demand or within one year | 1,212,604 | 1,212,708 | - As of June 30, 2025, approximately **RMB 1,212,604 thousand** of borrowings were overdue, constituting events of default[50](index=50&type=chunk) - Penalties incurred due to default and cross-default borrowings amounted to approximately **RMB 1,099,594 thousand**[50](index=50&type=chunk) - Borrowings are jointly guaranteed by equity interests in subsidiaries, investment properties, controlling shareholder Mr Chen Chengshou, non-executive director Ms Gao Qiaojin, and related party Xinming Group Co Ltd[50](index=50&type=chunk)[51](index=51&type=chunk) [Convertible Bonds](index=17&type=section&id=3.15%20Convertible%20Bonds) As of June 30, 2025, the outstanding principal of convertible bonds was RMB 274,135 thousand, which matured on May 31, 2020, and is currently overdue - Convertible bonds were issued on June 1, 2018, with a total principal amount of **HKD 300,000,000** (approximately RMB 252,604,000)[52](index=52&type=chunk) - The bonds matured on May 31, 2020, and as of June 30, 2025, the outstanding principal amount remains unsettled[52](index=52&type=chunk) Carrying Amount of Convertible Bonds (RMB thousand) | Date | Amount | | :--- | :--- | | January 1, 2025 (audited) | 282,125 | | Exchange differences | (7,990) | | **June 30, 2025 (unaudited)** | **274,135** | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=18&type=section&id=3.16%20Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) Convertible bonds are recognized as financial liabilities at fair value through profit or loss, with a fair value of RMB 274,135 thousand, classified as Level 3 in the fair value hierarchy, and valued using the discounted cash flow method Fair Value of Convertible Bonds (RMB thousand) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Carrying amount | 274,135 | 282,125 | | Fair value | 274,135 | 282,125 | - Convertible bonds fair value hierarchy: **Level 3**[57](index=57&type=chunk) - Valuation technique: Discounted cash flow method[58](index=58&type=chunk) Management Discussion and Analysis [Business and Financial Review](index=20&type=section&id=4.1%20Business%20and%20Financial%20Review) Total revenue for H1 2025 decreased by 57.9% to RMB 33.1 million due to fewer property sales deliveries, while loss attributable to owners decreased by 59.2% to RMB 136.8 million, mainly benefiting from reduced impairment of properties under development and loan default penalties, though the company's financial position continued to deteriorate with an expanded total deficit Business and Financial Review Key Data (RMB million) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 33.1 | 78.7 | -57.9% | | Delivered Property Sales | 32.6 | - | -58.4% | | Loss Attributable to Owners of the Company | (136.8) | (334.9) | Loss decreased 59.2% | | **Financial Position (as of period end)** | | | | | Total Assets | 2,124.6 | 2,144.7 (2024-12-31) | -0.9% | | Total Liabilities | 5,821.5 | 5,694.0 (2024-12-31) | +2.2% | | Total Deficit | (3,696.9) | (3,549.3) (2024-12-31) | Deficit expanded 4.1% | - Loss reduction primarily due to decreased impairment of properties under development and loan default penalties compared to the prior period[61](index=61&type=chunk) [Sales Performance](index=21&type=section&id=4.2%20Sales%20Performance) Total turnover for H1 2025 was RMB 33.1 million, a 57.9% year-on-year decrease, with property sales revenue at RMB 32.6 million, down 58.3% primarily because sales of Phase IV of the Shandong project have not yet been recognized, while rental income increased by 22.9% to RMB 0.5 million [Property Sales](index=21&type=section&id=4.2.1%20Property%20Sales) Property sales revenue for H1 2025 was RMB 32.6 million, a 58.3% year-on-year decrease, mainly due to sales of Phase IV of the Shandong project not yet being recognized as revenue, with delivered gross floor area decreasing to 16,727 square meters Property Sales Revenue (RMB million) | Item | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Property sales revenue | 32.6 | 78.3 | -58.3% | | Sales GFA (sqm) | 8,937.9 | - | Decreased 78.2% | | Delivered GFA (sqm) | 16,727 | 34,870 | -52.0% | - Property sales revenue decrease mainly due to sales of Phase IV of the Shandong project not yet recognized as revenue in this period[63](index=63&type=chunk)[65](index=65&type=chunk) [Property Leasing](index=21&type=section&id=4.2.2%20Property%20Leasing) Rental income for H1 2025 was RMB 0.5 million, a 22.9% year-on-year increase, with actual leased area of approximately 10,073.31 square meters, representing 16.2% of leasable properties Rental Income (RMB million) | Item | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Rental income | 0.5 | 0.4 | +22.9% | - Actual leased area of approximately **10,073.31 square meters**, representing approximately **16.2%** of the Group's total investment properties held for rental purposes and commercial properties sold and leased back from third-party buyers[66](index=66&type=chunk) [Profitability Analysis](index=22&type=section&id=4.3%20Profitability%20Analysis) Gross profit for H1 2025 significantly decreased by 69.4%, with gross margin falling to 14.5%, while other income and gains and losses turned into a net gain primarily due to exchange gains; sales and administrative expenses slightly decreased, but finance costs significantly increased, leading to a 56.2% year-on-year reduction in operating loss and a 59.1% reduction in loss attributable to owners, mainly due to decreased other expenses, particularly impairment and penalty interest [Gross Profit](index=22&type=section&id=4.3.1%20Gross%20Profit) Gross profit for H1 2025 was RMB 4.8 million, a 69.4% year-on-year decrease, with gross margin falling from 20.0% to 14.5% Gross Profit and Gross Margin (RMB million) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 4.8 | 15.7 | -69.4% | | Gross Margin | 14.5% | 20.0% | -5.5 percentage points | [Other Income and Gains and Losses](index=22&type=section&id=4.3.2%20Other%20Income%20and%20Gains%20and%20Losses) H1 2025 recorded a net gain of RMB 12.6 million in other income and gains and losses, primarily from exchange gains, a significant contrast to the exchange loss in the prior period Other Income and Gains and Losses (RMB million) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Other income and gains and losses | Gain 12.6 | Loss 4.5 | | Primary source | Exchange gains | Exchange losses | [Selling and Administrative Expenses](index=22&type=section&id=4.3.3%20Selling%20and%20Administrative%20Expenses) Total selling and administrative expenses for H1 2025 were RMB 9.5 million, a 4.9% year-on-year decrease, with selling and distribution expenses increasing due to more commercial project promotion activities, while administrative expenses decreased due to effective management Selling and Administrative Expenses (RMB million) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Selling and administrative expenses | 9.5 | 10.0 | -4.9% | | Selling and distribution expenses | Increased 1.7 | - | | | Administrative expenses | Decreased 2.2 | - | | [Other Expenses](index=22&type=section&id=4.3.4%20Other%20Expenses) Other expenses for H1 2025 were RMB 107.8 million, a significant 63.3% year-on-year decrease, mainly due to reduced loan default penalties and no impairment of properties under development and completed properties for sale in this period Other Expenses (RMB million) | Item | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total other expenses | 107.8 | 294.2 | -63.3% | | Loan default penalties | 106.9 | 197.4 | -45.8% | | Impairment of properties under development | – | 71.3 | -100% | | Impairment of completed properties held for sale | – | 18.1 | -100% | [Operating Loss](index=23&type=section&id=4.3.5%20Operating%20Loss) Operating loss for H1 2025 was RMB 147.7 million, a 56.2% year-on-year decrease, primarily benefiting from a significant reduction in other expenses Operating Loss (RMB million) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Loss | (147.7) | (337.4) | Loss decreased 56.2% | - Operating loss decreased mainly due to a reduction in other expenses during the period[72](index=72&type=chunk) [Fair Value Changes of Investment Properties](index=23&type=section&id=4.3.6%20Fair%20Value%20Changes%20of%20Investment%20Properties) There was no change in the fair value of investment properties in H1 2025, compared to a loss of RMB 9.2 million recorded in the prior period Fair Value Changes of Investment Properties (RMB million) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Fair value changes | – | Loss 9.2 | [Finance Costs](index=23&type=section&id=4.3.7%20Finance%20Costs) Finance costs for H1 2025 were RMB 47.8 million, a 35.3% year-on-year increase Finance Costs (RMB million) | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 47.8 | 35.3 | +35.3% | [Income Tax Expense](index=23&type=section&id=4.3.8%20Income%20Tax%20Expense) There was no income tax expense in H1 2025, compared to RMB 5.4 million in the prior period, primarily from land appreciation tax Income Tax Expense (RMB million) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Income Tax Expense | – | 5.4 | | Primary source | – | Land appreciation tax | [Loss Attributable to Owners of the Company](index=23&type=section&id=4.3.9%20Loss%20Attributable%20to%20Owners%20of%20the%20Company) Loss attributable to owners of the company for H1 2025 was RMB 136.8 million, a 59.1% year-on-year decrease, with basic loss per share falling to RMB 0.728 Loss Attributable to Owners of the Company and Loss Per Share | Indicator | 2025 H1 | 2024 H1 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (RMB million) | (136.8) | (334.9) | Loss decreased 59.1% | | Basic Loss Per Share (RMB) | (0.728) | (1.783) | Loss decreased 59.1% | [Business Development](index=24&type=section&id=4.4%20Business%20Development) In H1 2025, Xingmeng International Commercial City (Tengzhou, Shandong Province) contributed all property sales revenue of RMB 32.6 million, and as of June 30, 2025, the Group had 5 property development projects with a total GFA of approximately 375,300 square meters, including 274,300 square meters completed, 22,000 square meters under development, and 79,000 square meters for future development [Overview of Property Sales Projects](index=24&type=section&id=4.4.1%20Overview%20of%20Property%20Sales%20Projects) In H1 2025, Xingmeng International Commercial City (Tengzhou, Shandong Province) contributed all property sales revenue of RMB 32.6 million, with a sales GFA of 3,647.38 square meters and an average selling price of RMB 8,938 per square meter Property Sales Project Overview (2025 H1) | Property Project | Location | Type | Sales GFA (sqm) | Revenue (RMB million) | Average Selling Price (RMB/sqm) | | :--- | :--- | :--- | :--- | :--- | :--- | | Xingmeng International Commercial City | Tengzhou, Shandong Province | Commercial | 3,647.38 | 32.6 | 8,938 | [Land Bank](index=24&type=section&id=4.4.2%20Land%20Bank) As of June 30, 2025, the Group had 5 property development projects with a total GFA of approximately 375,300 square meters, including 274,300 square meters completed, 22,000 square meters under development, and 79,000 square meters for future development - Number of property development projects: **5**[78](index=78&type=chunk) Land Bank Overview (As of June 30, 2025) | Status | Gross Floor Area (sqm) | | :--- | :--- | | Total GFA | 375,300 | | Completed | 274,300 | | Under Development | 22,000 | | For Future Development | 79,000 | [Liquidity and Capital Structure](index=24&type=section&id=4.5%20Liquidity%20and%20Capital%20Structure) As of June 30, 2025, the Group's cash and cash equivalents decreased, while trade payables and other liabilities increased due to provisions for penalties, further expanding net current liabilities; the current ratio remained at 0.18:1, and the gearing ratio, though improved, remained negative, indicating tight liquidity and insolvency, with total interest-bearing bank and other borrowings of RMB 1,212.6 million, all repayable on demand or within one year and overdue [Cash and Cash Equivalents](index=24&type=section&id=4.5.1%20Cash%20and%20Cash%20Equivalents) As of June 30, 2025, cash and bank balances (including restricted cash) totaled approximately RMB 1.5 million, a decrease from the end of 2024 Cash and Cash Equivalents (RMB million) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Cash and bank balances | 1.5 | 2.1 | [Trade Receivables and Other Assets](index=24&type=section&id=4.5.2%20Trade%20Receivables%20and%20Other%20Assets) As of June 30, 2025, the sum of trade receivables, prepayments, other receivables, and other assets was RMB 48.1 million, a slight decrease from the end of 2024 Trade Receivables and Other Assets (RMB million) | Indicator | As of June 30, 2025 | As of December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total | 48.1 | 48.7 | -1.2% | [Trade Payables and Other Liabilities](index=24&type=section&id=4.5.3%20Trade%20Payables%20and%20Other%20Liabilities) As of June 30, 2025, the sum of trade payables, contract liabilities, other payables, and accrued expenses was RMB 3,254.0 million, a 4.3% increase from the end of 2024, mainly due to provisions for related interest penalties and loan default amounts Trade Payables and Other Liabilities (RMB million) | Indicator | As of June 30, 2025 | As of December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total | 3,254.0 | 3,118.4 | +4.3% | - The increase was due to provisions for related interest penalties and fines received for loan defaults[81](index=81&type=chunk) [Total Assets and Liabilities](index=25&type=section&id=4.5.4%20Total%20Assets%20and%20Liabilities) As of June 30, 2025, total assets were RMB 2,124.6 million, a slight decrease; total liabilities were RMB 5,645.8 million, an increase; and net current liabilities further expanded to RMB 4,655.6 million Total Assets and Liabilities (RMB million) | Indicator | As of June 30, 2025 | As of December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 2,124.6 | 2,144.7 | -0.9% | | Total Current Assets | 990.2 | 1,010.3 | -2.0% | | Total Non-current Assets | 1,134.5 | 1,134.5 | No significant change | | Total Liabilities | 5,645.8 | 5,694.0 | +2.3% | | Total Current Liabilities | 5,645.8 | 5,518.2 | +2.3% | | Total Non-current Liabilities | 175.7 | 175.7 | No significant change | | Net Current Liabilities | (4,655.6) | (4,508.0) | +3.3% | [Current Ratio](index=25&type=section&id=4.5.5%20Current%20Ratio) As of June 30, 2025, the current ratio was 0.18:1, unchanged from the end of 2024, indicating continued tight liquidity Current Ratio | Date | Current Ratio | | :--- | :--- | | June 30, 2025 | 0.18:1 | | December 31, 2024 | 0.18:1 | [Gearing Ratio](index=25&type=section&id=4.5.6%20Gearing%20Ratio) As of June 30, 2025, the gearing ratio was (67.1)%, an improvement from (72.7)% at the end of 2024, but still negative, indicating the company is insolvent Gearing Ratio | Date | Gearing Ratio | | :--- | :--- | | June 30, 2025 | (67.1)% | | December 31, 2024 | (72.7)% | [Convertible Bonds](index=25&type=section&id=4.5.7%20Convertible%20Bonds) The Group issued HKD 300 million convertible bonds in 2018 with an annual interest rate of 6.5% plus a 1% handling fee, which matured on June 1, 2020, and as of the reporting period end, the principal and interest remain unsettled, with the bonds transferred to a new buyer on January 15, 2025 - Convertible bonds were issued on June 1, 2018, for **HKD 300 million** with an annual interest rate of **6.5%** (plus a **1%** handling fee), maturing on June 1, 2020[86](index=86&type=chunk) - As of the announcement date, the principal amount of approximately **RMB 274.1 million** (equivalent to HKD 300 million) and interest remain unsettled[87](index=87&type=chunk) - The convertible bonds were transferred to Motivational Mathematics Limited on January 15, 2025[87](index=87&type=chunk) [Capital Structure](index=26&type=section&id=4.5.8%20Capital%20Structure) The Group primarily funds its operations through shareholders' equity, bank credit, and internal resources, mainly denominated in RMB - Funding sources: Shareholders’ equity, bank credit, and internal resources[88](index=88&type=chunk) - Primary currency: RMB[88](index=88&type=chunk) [Borrowings](index=26&type=section&id=4.5.9%20Borrowings) As of June 30, 2025, total interest-bearing bank and other borrowings amounted to RMB 1,212.6 million, largely unchanged from the end of 2024, all repayable on demand or within one year Interest-Bearing Bank and Other Borrowings (RMB million) | Indicator | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total | 1,212.6 | 1,212.7 | Slight decrease of 0.1 | | Repayable on demand or within one year | 1,212.6 | 1,212.7 | Slight decrease of 0.1 | [Material Events and Going Concern](index=26&type=section&id=4.6%20Material%20Events%20and%20Going%20Concern) The company completed amendments to its articles of association, capital reorganization, and a rights issue, raising net proceeds of approximately HKD 78.9 million primarily for debt repayment and general working capital; however, significant overdue borrowings and substantial net current liabilities create material uncertainty about its ability to continue as a going concern, prompting management to implement measures such as negotiating extensions, seeking additional financing, accelerating property sales, actively disposing of projects, and expediting inventory clearance to improve liquidity and financial position [Amendments to Articles of Association](index=26&type=section&id=4.6.1%20Amendments%20to%20Articles%20of%20Association) The resolution to amend the articles of association was considered and approved at the company's AGM on April 14, 2025, and became effective on the same day - Resolution to amend the articles of association was approved by shareholders and became effective on April 14, 2025[90](index=90&type=chunk) [Capital Reorganization and Rights Issue](index=27&type=section&id=4.6.2%20Capital%20Reorganization%20and%20Rights%20Issue) The capital reorganization and rights issue proposal were approved at the EGM on March 13, 2025; the capital reorganization became effective on May 23, 2025, and the rights issue was completed on July 29, 2025, raising net proceeds of approximately HKD 78.9 million, primarily for repaying convertible bonds, bank borrowings, and general working capital - Capital reorganization became effective on May 23, 2025, and the rights issue was completed on July 29, 2025[91](index=91&type=chunk) - Net proceeds from the rights issue amounted to approximately **HKD 78.9 million**[93](index=93&type=chunk) - Use of rights issue proceeds: Approximately **92%** for settling convertible bonds, repaying interest-bearing bank loans and other borrowings; approximately **8%** for the Group’s general working capital[93](index=93&type=chunk) [Disclaimer of Opinion on 2024 Annual Report and Going Concern Measures](index=27&type=section&id=4.6.3%20Disclaimer%20of%20Opinion%20on%202024%20Annual%20Report%20and%20Going%20Concern%20Measures) Given the substantial overdue borrowings (RMB 1,212.6 million) and convertible bonds, along with significant net current liabilities, there is material uncertainty regarding the company's ability to continue as a going concern; management has implemented measures including negotiating extensions with financial institutions, seeking additional financing (rights issue completed), accelerating pre-sales and sales of properties (e.g., Shandong project), actively disposing of property development projects or commercial properties (e.g., Shanghai project), and expediting property inventory clearance to improve liquidity and financial position - The Group has substantial overdue borrowings (approximately **RMB 1,212.6 million**), constituting events of default, which creates material uncertainty about its ability to continue as a going concern[14](index=14&type=chunk)[92](index=92&type=chunk) - Management has taken measures: negotiating extensions/repayment arrangements with financial institutions; seeking additional financing opportunities (rights issue completed); accelerating pre-sales and sales of properties under development and completed properties (e.g., Shandong project); actively disposing of property development projects or commercial properties (e.g., Shanghai project); and expediting property inventory clearance[15](index=15&type=chunk)[93](index=93&type=chunk) - The Directors are satisfied that the interim financial statements have been prepared on a going concern basis[16](index=16&type=chunk)[94](index=94&type=chunk) [Other Disclosures](index=29&type=section&id=4.7%20Other%20Disclosures) The Group held no other significant investments, had no future plans for major investments or capital assets, and no significant acquisitions or disposals of subsidiaries or joint ventures during the period; as of June 30, 2025, guarantees for certain buyers' mortgage loans amounted to approximately RMB 27.9 million, with some borrowings secured by properties under development, completed properties, investment properties, and subsidiary equity, and jointly guaranteed by the controlling shareholder and related parties; the Group primarily operates in RMB, has no foreign exchange hedging policy, and reduced its employee count to 40 as a cost-efficiency measure, with no purchases, sales, or redemptions of listed securities, nor any new significant litigation or arbitration matters during the period [Significant Investments Held](index=29&type=section&id=4.7.1%20Significant%20Investments%20Held) Apart from investments in subsidiaries, the Group held no other significant investments in equity interests of any other companies during the period - Apart from investments in subsidiaries, the Group did not hold any significant investments in equity interests of any other companies during the period[95](index=95&type=chunk) [Future Plans for Major Investments and Capital Assets](index=29&type=section&id=4.7.2%20Future%20Plans%20for%20Major%20Investments%20and%20Capital%20Assets) The Group currently has no other major investment and capital asset plans - The Group has no other major investment and capital asset plans[96](index=96&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries and Joint Ventures](index=29&type=section&id=4.7.3%20Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Joint%20Ventures) The Group had no significant acquisitions or disposals of subsidiaries or joint ventures during the period - The Group had no significant acquisitions and disposals of subsidiaries and joint ventures during the period[97](index=97&type=chunk) [Guarantees for Mortgage Financing](index=29&type=section&id=4.7.4%20Guarantees%20for%20Mortgage%20Financing) As of June 30, 2025, the Group provided guarantees for mortgage loans of certain buyers amounting to approximately RMB 27.9 million Guarantees for Mortgage Financing (RMB million) | Date | Amount | | :--- | :--- | | June 30, 2025 | 27.9 | | December 31, 2024 | 28.0 | [Pledge of Assets](index=29&type=section&id=4.7.5%20Pledge%20of%20Assets) The Group had pledged or restricted bank deposits of approximately RMB 0.2 million, with some borrowings secured by properties under development, completed properties for sale, investment properties, and equity in certain subsidiaries, and jointly guaranteed by the controlling shareholder and related parties Pledged or Restricted Bank Deposits (RMB million) | Date | Amount | | :--- | :--- | | June 30, 2025 | 0.2 | | December 31, 2024 | 1.4 | - Certain other borrowings are secured by properties under development, completed properties held for sale, investment properties, and equity interests in certain subsidiaries of the Group[99](index=99&type=chunk) - Borrowings are jointly guaranteed by executive director Mr Chen Chengshou, his spouse and children, Xinming Group Co Ltd (an associate of the Group), and other non-controlling shareholders of certain subsidiaries of the Group[99](index=99&type=chunk) [Capital Expenditure](index=30&type=section&id=4.7.6%20Capital%20Expenditure) Capital expenditure for the acquisition of property, plant, and equipment was zero in H1 2025, and capital commitments for properties under development activities were approximately RMB 24.5 million as of June 30, 2025 Capital Expenditure and Commitments (RMB million) | Item | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Capital expenditure for acquisition of property, plant and equipment | 0 | 0 | | Capital commitments for properties under development activities (as of period end) | 24.5 | 24.5 (2024-12-31) | [Exchange Rate Fluctuation Risk](index=30&type=section&id=4.7.7%20Exchange%20Rate%20Fluctuation%20Risk) The Group primarily operates in RMB, with some bank deposits denominated in HKD, but has no foreign exchange hedging policy and will closely monitor exchange rate risks - The Group primarily conducts its business in RMB, with certain bank deposits denominated in HKD[102](index=102&type=chunk) - The Group has not entered into any foreign exchange hedging policy but will closely monitor foreign exchange risk[102](index=102&type=chunk) [Employees](index=30&type=section&id=4.7.8%20Employees) As of June 30, 2025, the Group had 40 employees, a decrease from the prior period, primarily due to cost-efficiency measures, and is committed to talent upgrading and improving its remuneration system Number of Employees | Date | Number of Employees | | :--- | :--- | | June 30, 2025 | 40 | | June 30, 2024 | 42 | - The decrease in employee numbers was mainly due to cost-efficiency measures[103](index=103&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=30&type=section&id=4.7.9%20Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's securities during the period and up to the date of this announcement - Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s securities[104](index=104&type=chunk) [Material Litigation](index=30&type=section&id=4.7.10%20Material%20Litigation) There were no new significant litigation or arbitration matters during the period - The Company had no new material litigation and arbitration matters[105](index=105&type=chunk) Corporate Governance and Review [Corporate Governance Practices](index=31&type=section&id=5.1%20Corporate%20Governance%20Practices) The company complies with the Corporate Governance Code, but the roles of Chairman and Chief Executive Officer are combined in Mr. Chen Chengshou, deviating from code provision C.2.1, though the Board believes this arrangement benefits the Group's business - The Company complies with the code provisions set out in the Corporate Governance Code in Appendix C1 to the Listing Rules[107](index=107&type=chunk) - Deviation from code provision C.2.1: The roles of chairman and chief executive officer should be separate and not performed by the same individual; Mr Chen Chengshou holds both positions[107](index=107&type=chunk) - The Board believes that Mr Chen Chengshou’s dual role as Chairman and Chief Executive Officer is beneficial to the Group’s business prospects and management[107](index=107&type=chunk) [Standard Code for Securities Transactions](index=31&type=section&id=5.2%20Standard%20Code%20for%20Securities%20Transactions) All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the period - All Directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules during the period[108](index=108&type=chunk) [Review of Interim Results](index=31&type=section&id=5.3%20Review%20of%20Interim%20Results) The Audit Committee has reviewed the company's interim results announcement and financial report - The Company’s Audit Committee has reviewed the unaudited condensed consolidated interim results announcement and financial report for the period[109](index=109&type=chunk) [Events After Reporting Period](index=31&type=section&id=Events%20After%20Reporting%20Period) Subsequent to the reporting period, the company completed a rights issue, raising net proceeds of approximately HKD 78.9 million, primarily for repaying convertible bonds, bank borrowings, and general working capital, with no other significant events occurring thereafter - The rights issue was approved at the EGM on March 13, 2025, with rights shares commencing trading on July 31, 2025[110](index=110&type=chunk) - Net proceeds from the rights issue amounted to approximately **HKD 78.9 million**[111](index=111&type=chunk) - Use of rights issue proceeds: Approximately **92%** for repaying convertible bonds, interest-bearing bank loans, and other borrowings; approximately **8%** for the Group’s general working capital[111](index=111&type=chunk) - No other significant events occurred after the reporting period, except as disclosed above[112](index=112&type=chunk) [Publication of Interim Results and Interim Report](index=32&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) The interim results announcement has been published on the company's and HKEX websites, and the interim report will be dispatched to shareholders and posted on the websites in due course - The interim results announcement has been published on the Company’s website (www.xinm.com.cn) and the HKEX website (www.hkexnews.hk)[113](index=113&type=chunk) - The 2025 interim report will be dispatched to shareholders and posted on the Company’s website and the HKEX website in due course[113](index=113&type=chunk)

[Company Information](index=2&type=section&id=Company%20Information) This section provides key contact and professional service information for the company, including board composition, auditors, legal counsel, and share registrar [Board and Committee Composition](index=2&type=section&id=Board%20and%20Committee%20Composition) This section lists the members of the company's Board of Directors, including executive and independent non-executive directors, as well as the members and chairpersons of the Audit, Nomination, Remuneration, and Compliance Committees - The Board of Directors includes Mr. Zhao Liang, Chairman and Chief Executive Officer, Mr. Li Weihai, Executive Director, and four independent non-executive directors: Mr. Shen Shifu, Mr. Liu Ze Zheng, Ms. Zhao Jingran, and Mr. He Kaidong[4](index=4&type=chunk)[6](index=6&type=chunk) - The Chairman of the Audit Committee is Mr. He Kaidong, the Chairman of the Nomination Committee is Mr. Zhao Liang, the Chairman of the Remuneration Committee is Mr. Liu Ze Zheng, and the Chairman of the Compliance Committee is Mr. Liu Ze Zheng[6](index=6&type=chunk) [Company Contact and Professional Service Information](index=3&type=section&id=Company%20Contact%20and%20Professional%20Service%20Information) This section provides key contact and service information for the company, including its principal place of business, registered office, company secretary, authorized representatives, independent auditor, legal counsel, share registrar, and principal bankers - The company's headquarters and principal place of business in China are located at Building 1, Graphite Development Zone, Yan Jun Farm, Luobei County, Hegang City, Heilongjiang Province, China[6](index=6&type=chunk) - The independent auditor is PricewaterhouseCoopers, and the legal counsel is Tian Yuan Law Firm[6](index=6&type=chunk)[7](index=7&type=chunk) - The company's stock code is **2237**[2](index=2&type=chunk)[7](index=7&type=chunk) [Definitions](index=3&type=section&id=Definitions) This section defines key terms and abbreviations used in the interim report to ensure clear and consistent understanding, covering time periods, mine names, company entities, offering-related terms, and major shareholders [Key Terminology Definitions](index=4&type=section&id=Key%20Terminology%20Definitions) This section provides definitions for key terms and abbreviations used throughout the interim report, ensuring clarity and consistency in understanding the content - "First half of 2024" refers to the six months ended June 30, 2024, and "first half of 2025" refers to the six months ended June 30, 2025[10](index=10&type=chunk) - "Beishan Mine" refers to the graphite mine located approximately 28 kilometers northwest of Luobei County, Heilongjiang Province, for which the Group obtained mining rights in 2019[10](index=10&type=chunk) - "The Group" or "we" refers to China Graphite Group Limited and its subsidiaries[10](index=10&type=chunk) - "Mr. Zhao" refers to Mr. Zhao Liang, the Chairman of the Board, Executive Director, Chief Executive Officer, and controlling shareholder of the Company[13](index=13&type=chunk) [Chairman's Report on 2025 Interim Results](index=8&type=section&id=Chairman's%20Report%20on%202025%20Interim%20Results) The Chairman's report highlights the company's performance in the first half of 2025, addressing industry opportunities and challenges, operational adjustments, and future development strategies [Industry Overview and Challenges](index=8&type=section&id=Industry%20Overview%20and%20Challenges) The Chairman's report indicates that the rapid development of new energy vehicles and new materials industries presents opportunities for the graphite industry, but also intensifies downstream market competition, leading to challenges such as low-price competition and inefficient resource utilization in the natural graphite sector - The rapid development of China's new energy vehicle and new materials industries brings significant opportunities for the graphite industry, but also intensifies fierce competition in the downstream market[18](index=18&type=chunk) - The natural graphite industry faces challenges such as low-price competition and inefficient resource utilization, with cost pressures being passed on to upstream material suppliers[18](index=18&type=chunk) [Interim Performance Review](index=8&type=section&id=Interim%20Performance%20Review) The Group achieved total revenue of **RMB 39.8 million** in the first half of 2025, a **9.3% year-on-year increase**, with gross profit significantly growing by **106.9% to RMB 6.0 million**, and gross margin improving by **7.0 percentage points to 15.0%**, while net loss decreased compared to the same period last year Interim Performance in First Half of 2025 | Indicator | First Half of 2025 (RMB million) | First Half of 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 39.8 | 36.4 | +9.3% | | Gross Profit | 6.0 | 2.9 | +106.9% | | Gross Margin | 15.0% | 8.0% | +7.0 percentage points | | Net Loss | (11.9) | (16.2) | -26.5% (Loss reduction) | | Revenue from Spherical Graphite and By-products | 4.8 | 10.2 | -52.9% | | Revenue from Flake Graphite Concentrate | 30.3 | 25.1 | +20.7% | | Revenue from Unprocessed Marble | 4.6 | - | - | [Production and Operations](index=8&type=section&id=Production%20and%20Operations) In the first half of 2025, following the traditional shutdown period in Luobei County, the Group rationally adjusted its operational strategy in response to capacity expansion and intensified homogeneous competition, focusing on product quality improvement and cost reduction. Sales volume of spherical graphite decreased by 23.6%, while sales volume of flake graphite concentrate increased by 22.8%, as the Group strategically reallocated resources to the flake graphite concentrate business - The first quarter of the first half of 2025 was the traditional shutdown period for graphite enterprises in Luobei County, with significant capacity expansion in some key domestic graphite producing areas, intensifying homogeneous competition[20](index=20&type=chunk) - After resuming production, the Group rationally adjusted its operational strategy, actively improving product quality and maximizing cost reduction, leading to slight improvements in sales and effective cost control[20](index=20&type=chunk) Sales Volume of Major Products in First Half of 2025 | Product | Sales Volume in First Half of 2025 (tons) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Spherical Graphite | 705 | -23.6% | | Flake Graphite Concentrate | 12,409 | +22.8% | - Given the weak demand and price competition in the downstream anode material market, the Group has strategically reallocated resources to the flake graphite concentrate business[21](index=21&type=chunk) [Prudent Development and Future Outlook](index=9&type=section&id=Prudent%20Development%20and%20Future%20Outlook) The Group is leveraging the rich, high-grade graphite resources of the Beishan Mine to reduce costs and ensure profitability through its own ore supply. It is currently applying for mining rights below 150 meters above sea level and actively advancing the construction of new beneficiation and processing plants to secure long-term capacity, while maintaining an optimistic yet cautious approach to future industry development - The Beishan Mine has abundant and high-grade graphite resources; using ore from its own mine can achieve upstream and downstream synergy, reducing costs and ensuring profitability[22](index=22&type=chunk) - The Beishan Mine's mining permit covers elevations from 150 to 274 meters above sea level, with graphite ore reserves of approximately **7.0 million tons**; the Group is currently applying for mining rights for resources below 150 meters above sea level[22](index=22&type=chunk) - The Group is actively advancing the construction of new beneficiation and processing plants at Beishan, funded by proceeds from its initial public offering, to secure long-term capacity[22](index=22&type=chunk) - Despite the anode material and graphite industries entering an adjustment period, the Group remains optimistic about the industry's future and will prudently adjust its development pace according to market changes[22](index=22&type=chunk) [Continuous Enhancement of Scientific Research Capabilities](index=10&type=section&id=Continuous%20Enhancement%20of%20Scientific%20Research%20Capabilities) The Group has been deeply rooted in the natural graphite industry for over two decades, adhering to the philosophy of "innovation-driven development." It has collaborated with renowned domestic universities to research and develop advanced technologies such as flotation column technology, graphene processing from micronized graphite, and fluorine-free purification. In the future, it will continue to deepen innovation, establish strategic partnerships, focus on key areas, enhance industrial technology levels, and forge high-value-added products - The Group has been deeply rooted in the natural graphite industry for over two decades, adhering to the philosophy of "accumulating before innovating, and innovating with accumulation," continuously deepening innovation leadership[23](index=23&type=chunk) - It has successively collaborated with several renowned domestic universities and research institutes, undertaking and completing multiple major scientific research projects, accumulating strong product research and development capabilities[23](index=23&type=chunk) - It has innovatively developed advanced processes such as flotation column technology for short-process graphite beneficiation, graphene processing from micronized graphite, and fluorine-free purification[23](index=23&type=chunk) - In the future, it will deeply implement the "innovation-driven development" strategy, establish strategic partnerships with upstream and downstream enterprises, focus on key areas, accelerate the transformation of scientific and technological achievements, enhance industrial technology levels, and forge high-value-added products[23](index=23&type=chunk) [Corporate Governance](index=10&type=section&id=Corporate%20Governance) The Group adheres to principles of openness, transparency, and efficiency in corporate governance, strictly complying with listing rules to ensure a high standard of governance. Through a diversified board structure, the professional experience of independent non-executive directors, compliant operations, and a robust risk management system, it ensures healthy corporate operations - The Group consistently adheres to principles of openness, transparency, and efficiency in corporate governance, strictly complying with listing rules to ensure a high standard of corporate governance[24](index=24&type=chunk) - It adheres to a diversified board member structure policy and director nomination policy, fully leveraging the experience and expertise of independent non-executive directors to improve the corporate governance structure and decision-making mechanisms[24](index=24&type=chunk) - It insists on compliant operations, enhances compliance management capabilities, strengthens a company-wide compliance culture, and improves the risk management system, reinforcing supervision in key areas to ensure healthy corporate operations[24](index=24&type=chunk) [Social Responsibility and Corporate Honors](index=11&type=section&id=Social%20Responsibility%20and%20Corporate%20Honors) As the first listed enterprise in Hegang City, Heilongjiang Province, the Group prioritizes employee well-being, creating a safe and healthy work environment and promoting a diverse and equitable culture. It also integrates environmental protection into daily management, striving for harmonious coexistence between humans and nature, and has been awarded the title of "Green Factory in the Non-Metallic Mineral Industry" - The Group believes employees are the foundation of the enterprise, striving to create a safe and healthy working environment, committed to protecting employee rights, and advocating a diverse and equitable work culture[26](index=26&type=chunk) - The Group highly values the impact of its business operations on the environment and nature, integrating environmental protection concepts into internal daily management and work to achieve a vision of harmonious coexistence between humans and nature[26](index=26&type=chunk) - The Group was awarded the honorary title of "Green Factory in the Non-Metallic Mineral Industry" by the China Non-Metallic Minerals Industry Association[26](index=26&type=chunk) [Full Year and Future Outlook](index=11&type=section&id=Full%20Year%20and%20Future%20Outlook) In the first half of 2025, China's new energy vehicle production and sales both achieved double-digit growth, continuously unleashing industrial vitality. Looking ahead to the second half, under "two new" policies and new product supply, automotive consumption is expected to continue growing. Although the natural graphite industry is in an adjustment period, the Group remains optimistic about its medium-to-long-term market prospects, will adjust its development pace according to market changes, and build a mutually beneficial industrial ecosystem - In the first half of 2025, China's automobile production and sales both exceeded **15 million units** for the first time, with new energy vehicle production and sales increasing by approximately **41.4%** and **40.3%**, respectively[27](index=27&type=chunk) - Looking ahead to the second half, the "two new" policies will continue to be implemented in an orderly manner, coupled with a continuous enrichment of new product supply from enterprises, which will help drive sustained growth in automotive consumption[27](index=27&type=chunk) - The natural graphite industry is currently in a phased adjustment period, but from a medium-to-long-term perspective, the Group is optimistic about its market prospects, driven by the deepening implementation of national "dual carbon" policies and the emphasis on strategic non-metallic mineral resources[27](index=27&type=chunk) - The Group will adjust its development pace according to market changes, establish cooperative relationships with upstream and downstream enterprises, and build a standardized, orderly, and mutually beneficial new graphite industry ecosystem[27](index=27&type=chunk) [Acknowledgements](index=12&type=section&id=Acknowledgements) The Chairman, on behalf of the Board, extends sincere gratitude to shareholders, customers, and all sectors of society, and expresses deep appreciation for the hard work and dedication of all Group employees - The Chairman, on behalf of the Board, extends sincere gratitude to shareholders and customers for their continued trust, and to all sectors of society for their invaluable support[29](index=29&type=chunk) - The Chairman expresses deep appreciation for the hard work and dedication of all Group employees[29](index=29&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the group's operational and financial performance, including exploration, mining, costs, revenue, expenses, liquidity, and risk management [Exploration, Development and Mining Production Activities](index=13&type=section&id=Exploration,%20Development%20and%20Mining%20Production%20Activities) In the first half of 2025, the Group did not conduct exploration drilling or development contracts at the Beishan Mine, focusing primarily on mining activities and waste rock removal to obtain unprocessed graphite ore. Total material extracted during the period was approximately **1,806,000 tons**, of which unprocessed graphite ore was approximately **221,000 tons**, a significant year-on-year increase. Some mining production activities were subcontracted to third parties, leading to increased related expenses - In the first half of 2025, the Group did not conduct any exploration drilling or enter into any contracts or commitments related to development activities at the Beishan Mine[31](index=31&type=chunk) - The Group focused on mining activities and removing waste rock at the Beishan Mine to obtain unprocessed graphite ore[31](index=31&type=chunk) Mined Material Volume at Beishan Mine | Material Type | First Half of 2025 (tons) | First Half of 2024 (tons) | | :--- | :--- | :--- | | Total Material | 1,806,000 | 1,385,000 | | Unprocessed Marble and Waste Rock | 1,585,000 | 1,256,000 | | Unprocessed Graphite Ore | 221,000 | 129,000 | - The Group subcontracted certain mining production activities to independent third parties, totaling approximately **RMB 11.0 million** (first half of 2024: RMB 8.4 million), primarily due to increased mining activities during the period[32](index=32&type=chunk) [Mining Costs](index=14&type=section&id=Mining%20Costs) Mining costs increased to approximately **RMB 14.0 million** in the first half of 2025, up from RMB 10.5 million in the same period last year, mainly due to the increased total volume of extracted materials, leading to higher blasting services, machinery rental, and fuel costs Mining Cost Breakdown | Item | First Half of 2025 (RMB thousand) | First Half of 2024 (RMB thousand) | | :--- | :--- | :--- | | Total | 13,999 | 10,450 | | Capitalized Portion | 4,622 | 6,973 | | Portion included in cost of mined graphite ore | 4,882 | 2,435 | | Portion included in cost of mined marble | 4,495 | 1,042 | - Mining costs increased from approximately **RMB 10.5 million** in the first half of 2024 to approximately **RMB 14.0 million** in the first half of 2025[33](index=33&type=chunk) - The increase in costs was mainly due to the increased total volume of materials mined in the first half of 2025, leading to an increase of approximately **RMB 0.7 million** in blasting service expenses, **RMB 1.0 million** in machinery rental expenses, and **RMB 1.0 million** in fuel costs for mining equipment, respectively[33](index=33&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) The Group's total revenue increased by **9.3%** year-on-year in the first half of 2025, with gross profit significantly growing by **106.9%**, and gross margin improving to **15.0%**. Despite a decline in spherical graphite sales, this was partially offset by increased sales of flake graphite concentrate and unprocessed marble. Through cost control, net loss significantly narrowed [Revenue](index=14&type=section&id=Revenue) Revenue by Business Segment | Business Segment | First Half of 2025 (RMB thousand) | Proportion (%) | First Half of 2024 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | 4,836 | 12.2 | 10,233 | 28.1 | | Sales of Flake Graphite Concentrate | 30,323 | 76.2 | 25,107 | 68.9 | | Sales of Unprocessed Marble | 4,636 | 11.6 | 1,097 | 3.0 | | Total | 39,795 | 100.0 | 36,437 | 100.0 | [Revenue from Sales of Spherical Graphite and By-products](index=15&type=section&id=Revenue%20from%20Sales%20of%20Spherical%20Graphite%20and%20By-products) - Revenue from sales of spherical graphite and by-products decreased from approximately **RMB 10.2 million** in the first half of 2024 to approximately **RMB 4.8 million** in the first half of 2025, with its proportion of total revenue falling from **28.1% to 12.2%**[34](index=34&type=chunk)[38](index=38&type=chunk) Spherical Graphite and By-products Sales Data | Product | Period | Revenue (RMB thousand) | Sales Volume (tons) | Average Selling Price (RMB/ton) | | :--- | :--- | :--- | :--- | :--- | | Spherical Graphite (SG-9) | 2025 H1 | 3,328 | 418 | 7,962 | | Spherical Graphite (SG-17) | 2025 H1 | 1,272 | 287 | 4,432 | | Spherical Graphite (SG-10) | 2024 H1 | 4,867 | 423 | 11,506 | | Spherical Graphite (SG-9) | 2024 H1 | 4,204 | 500 | 8,408 | | Micronized Graphite Powder | 2025 H1 | 236 | 206 | 1,146 | | Micronized Graphite Powder | 2024 H1 | 1,162 | 986 | 1,178 | [Revenue from Sales of Flake Graphite Concentrate](index=16&type=section&id=Revenue%20from%20Sales%20of%20Flake%20Graphite%20Concentrate) - Revenue from sales of flake graphite concentrate increased from approximately **RMB 25.1 million** in the first half of 2024 to approximately **RMB 30.3 million** in the first half of 2025, with its proportion of total revenue increasing from **68.9% to 76.2%**[34](index=34&type=chunk)[38](index=38&type=chunk) Flake Graphite Concentrate Sales Data | Product Type | Period | Revenue (RMB thousand) | Sales Volume (tons) | Average Selling Price (RMB/ton) | | :--- | :--- | :--- | :--- | :--- | | 193 | 2025 H1 | 2,451 | 1,029 | 2,382 | | 194 | 2025 H1 | 18,376 | 7,415 | 2,478 | | 195 | 2025 H1 | 7,310 | 2,770 | 2,639 | | Other | 2025 H1 | 2,186 | 1,195 | 1,829 | | Total | 2025 H1 | 30,323 | 12,409 | 2,444 | | Total | 2024 H1 | 25,107 | 10,109 | 2,484 | [Revenue from Sales of Unprocessed Marble](index=17&type=section&id=Revenue%20from%20Sales%20of%20Unprocessed%20Marble) - Revenue from sales of unprocessed marble in the first half of 2025 was approximately **RMB 4.6 million**, a significant increase from **RMB 1.1 million** in the first half of 2024[40](index=40&type=chunk) - The increase in sales was mainly due to increased demand for construction projects from certain customers in nearby areas and the sales team's efforts to develop new customers[40](index=40&type=chunk) [Cost of Sales](index=17&type=section&id=Cost%20of%20Sales) - Cost of sales increased to approximately **RMB 33.8 million** in the first half of 2025, an increase of approximately **0.9%** from approximately **RMB 33.5 million** in the first half of 2024, consistent with the increase in revenue[41](index=41&type=chunk) - Despite the increase in cost of sales, improved production efficiency resulted in savings of approximately **RMB 1.7 million** in utilities, partially offset by an increase of approximately **RMB 0.9 million** in maintenance costs for production machinery and workplaces[41](index=41&type=chunk) - The remaining increase in production costs was mainly due to increased mining expenses, such as rental costs for mining equipment and their fuel costs, which rose with increased mining activities in the first half of 2025[41](index=41&type=chunk) [Gross Profit and Gross Margin](index=18&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross Profit and Gross Margin by Business Segment | Business Segment | Gross Profit in First Half of 2025 (RMB thousand) | Gross Margin in First Half of 2025 (%) | Gross Profit in First Half of 2024 (RMB thousand) | Gross Margin in First Half of 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | (352) | (7.3) | (2,172) | (21.2) | | Sales of Flake Graphite Concentrate | 6,196 | 20.4 | 5,040 | 20.1 | | Sales of Unprocessed Marble | 141 | 3.0 | 55 | 5.0 | | Total | 5,985 | 15.0 | 2,923 | 8.0 | - The Group's gross profit increased from approximately **RMB 2.9 million** in the first half of 2024 to approximately **RMB 6.0 million** in the first half of 2025, with gross margin increasing from **8.0% to 15.0%**[42](index=42&type=chunk) - The general increase in gross margin was mainly attributable to management's adjustment of production strategies and implementation of cost control measures, such as efficient utilization of utilities, streamlined human resource allocation, and enhanced equipment maintenance[43](index=43&type=chunk) [Other Income and Other Gains](index=19&type=section&id=Other%20Income%20and%20Other%20Gains) - Other income and gains decreased from **RMB 1.3 million** in the same period of 2024 to approximately **RMB 0.5 million** in the first half of 2025[44](index=44&type=chunk) - This decrease was primarily due to a reduction in government grants from approximately **RMB 1.6 million** in the first half of 2024 to approximately **RMB 0.5 million** in the first half of 2025[44](index=44&type=chunk) [Selling and Distribution Expenses](index=19&type=section&id=Selling%20and%20Distribution%20Expenses) - In the first half of 2025, selling and distribution expenses increased to approximately **RMB 3.3 million**, an increase of approximately **32.0%** from approximately **RMB 2.5 million** in the first half of 2024[45](index=45&type=chunk) - The increase in expenses was mainly due to an increase of approximately **RMB 0.9 million** in transportation costs, resulting from product deliveries to major customers located far from operational sites[45](index=45&type=chunk) [General and Administrative Expenses](index=19&type=section&id=General%20and%20Administrative%20Expenses) - In the first half of 2025, general and administrative expenses decreased to approximately **RMB 12.0 million**, a decrease of approximately **8.4%** from approximately **RMB 13.1 million** in the first half of 2024[46](index=46&type=chunk) - This decrease was mainly due to the Group's cost control measures, including a reduction in salaries of approximately **RMB 0.5 million**, a reduction in utilities for administrative offices of approximately **RMB 0.2 million**, and a reduction in office expenses of approximately **RMB 0.3 million**[46](index=46&type=chunk) [Research and Development Expenses](index=19&type=section&id=Research%20and%20Development%20Expenses) - Research and development expenses in the first half of 2025 remained at approximately **RMB 3.2 million**, consistent with the first half of 2024[47](index=47&type=chunk) - Research and development activities primarily focused on projects aimed at continuously improving production efficiency and adjusting product specifications to meet customer needs and requirements[47](index=47&type=chunk) [Net Finance Costs](index=19&type=section&id=Net%20Finance%20Costs) - Net finance costs decreased from approximately **RMB 2.6 million** in the first half of 2024 to approximately **RMB 1.1 million** in the first half of 2025[50](index=50&type=chunk) - This decrease was mainly due to reduced use of discounted bill financing in the first half of 2025, leading to a decrease in interest expenses of approximately **RMB 0.5 million**, and the absence of approximately **RMB 1.1 million** in land acquisition interest expenses incurred in the first half of 2024[50](index=50&type=chunk) [Income Tax Credit](index=20&type=section&id=Income%20Tax%20Credit) - In the first half of 2025, the Group recognized an income tax credit of approximately **RMB 11 thousand**[51](index=51&type=chunk) - This was primarily due to operating losses at the subsidiary level resulting in no taxable income during the period, and also included a reversal of over-provision for income tax expenses from the previous year[51](index=51&type=chunk) - The Group's principal operating subsidiaries, Yixiang New Energy and Yixiang Graphite, as high-tech enterprises, are eligible for tax incentives granted by the Chinese government, with an applicable tax rate of **15%**[51](index=51&type=chunk) [Loss for the First Half of 2025](index=20&type=section&id=Loss%20for%20the%20First%20Half%20of%202025) - Loss after tax for the first half of 2025 was approximately **RMB 11.9 million**, a decrease of approximately **RMB 4.3 million** compared to approximately **RMB 16.2 million** in the first half of 2024[52](index=52&type=chunk) - The reduction in loss was mainly attributable to improved production efficiency, an increase in gross margin from **8.0% to 15.0%**, and a reduction in administrative expenses due to streamlined employee structure and reduced office expenses[52](index=52&type=chunk) [Liquidity, Capital Resources and Capital Structure](index=21&type=section&id=Liquidity,%20Capital%20Resources%20and%20Capital%20Structure) The Group maintains a sound financial position with sufficient working capital. As of June 30, 2025, the capital structure was approximately **RMB 424.4 million**, net current assets were approximately **RMB 72.1 million**, cash and cash equivalents increased to approximately **RMB 61.4 million**, and interest-bearing borrowings decreased to approximately **RMB 76.8 million**. The gearing ratio significantly improved to **3.5%** - The Group's financial position remains sound, and working capital is expected to be sufficient to fund its future business operations[53](index=53&type=chunk) Key Data on Liquidity, Capital Resources and Capital Structure | Indicator | As of June 30, 2025 (RMB million) | As of December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Capital Structure (Equity and Reserves) | 424.4 | 436.3 | | Net Current Assets | 72.1 | 90.1 | | Cash and Cash Equivalents | 61.4 | 32.5 | | Interest-bearing Borrowings | 76.8 | 80.0 | | Unutilized Bank Facilities | 103.2 | 110.0 | | Current Ratio (times) | 1.7 | 1.7 | | Gearing Ratio | 3.5% | 9.8% | - The gearing ratio improved from approximately **9.8%** as of December 31, 2024, to approximately **3.5%** as of June 30, 2025, mainly due to an increase in cash and cash equivalents and accelerated collection of customer payments[57](index=57&type=chunk) [Treasury Policy](index=22&type=section&id=Treasury%20Policy) The Board will continue to follow a prudent policy in managing the Group's cash balances and maintain strong and robust liquidity to meet working capital requirements and business expansion needs - The Directors will continue to follow a prudent policy in managing the Group's cash balances[58](index=58&type=chunk) - Maintain strong and robust liquidity to meet working capital requirements and business expansion needs[58](index=58&type=chunk) [Pledge of the Group's Assets](index=22&type=section&id=Pledge%20of%20the%20Group's%20Assets) As of June 30, 2025, the Group's bank facilities were secured by guarantees provided by the controlling shareholder, property, plant and equipment, land use rights, and mining rights. Compared to December 31, 2024, trade receivables are no longer used as collateral - The Group's bank facilities are secured by guarantees provided by the controlling shareholder, property, plant and equipment, land use rights, and mining rights[59](index=59&type=chunk)[180](index=180&type=chunk) - As of June 30, 2025, no trade receivables were pledged as collateral for bank facilities, compared to approximately **RMB 12.755 million** as of December 31, 2024[180](index=180&type=chunk) [Contingent Liabilities](index=22&type=section&id=Contingent%20Liabilities) The Directors confirm that the Group had no contingent liabilities as of June 30, 2025, and December 31, 2024, and is not currently involved in any litigation that could have a material adverse effect on its business, operating results, or financial condition - As of June 30, 2025, and December 31, 2024, the Directors confirmed that the Group had no contingent liabilities[60](index=60&type=chunk)[191](index=191&type=chunk) - The Group is not currently involved in any litigation that could have a material adverse effect on its business, operating results, or financial condition[60](index=60&type=chunk) [Financial Risks](index=22&type=section&id=Financial%20Risks) The Group faces interest rate risk, credit risk, and liquidity risk, which are managed through prudent policies and monitoring measures. Interest rate risk is not severe as most assets and liabilities are interest-free or fixed-rate; credit risk is managed through strict credit policies; and liquidity risk is controlled by maintaining sufficient cash and monitoring borrowings. Foreign exchange risk is not significant [Interest Rate Risk](index=23&type=section&id=Interest%20Rate%20Risk) - Most of the Group's assets and liabilities are interest-free or bear interest at fixed rates, making fair value interest rate risk not severe[63](index=63&type=chunk) - The Group does not face significant cash flow interest rate risk and currently has no hedging policy for interest rate risk[63](index=63&type=chunk)[64](index=64&type=chunk) [Credit Risk](index=23&type=section&id=Credit%20Risk) - The Group's maximum credit risk of financial loss due to counterparty failure to fulfill obligations arises from the carrying amounts of the relevant recognized financial assets stated in the interim condensed consolidated statement of financial position[65](index=65&type=chunk) - To minimize credit risk, the Group generally grants credit periods of no more than three months to customers and implements clear credit policies, tightening risk profiles and adopting prudent policies to manage credit risk for trade receivables[65](index=65&type=chunk) [Liquidity Risk](index=23&type=section&id=Liquidity%20Risk) - The Group monitors and maintains levels of cash and cash equivalents that management deems sufficient to fund operations and mitigate the impact of cash flow fluctuations[66](index=66&type=chunk) - Management monitors the utilization of bank borrowings to ensure compliance with loan covenants. As of June 30, 2025, the Directors believe the Group has no significant liquidity risk[66](index=66&type=chunk) [Foreign Exchange Risk](index=24&type=section&id=Foreign%20Exchange%20Risk) - The Group's assets and liabilities are primarily denominated in RMB, with most denominated in the functional currency of transaction-related businesses[67](index=67&type=chunk) - In the first half of 2025, the Group had certain HKD-denominated deposits in banks, but this foreign exchange risk is not significant to the Group, and therefore, there is currently no foreign currency hedging policy[67](index=67&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=24&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) In the first half of 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - In the first half of 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[68](index=68&type=chunk) [Employees and Remuneration Policy](index=24&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had a total of **159 employees**, a decrease from **189** as of December 31, 2024, primarily due to intensified industry competition and cost control policies. The Group recruits employees based on experience, educational background, and vacancy requirements, paying fixed salaries and allowances, and does not negotiate employment terms through labor unions - As of June 30, 2025, the Group had a total of **159 employees** (December 31, 2024: 189), of whom **117** were full-time employees[69](index=69&type=chunk) - The decrease in total employees was mainly due to intensified competition in the graphite industry and the implementation of cost control policies to streamline the employee structure in the first half of 2025[69](index=69&type=chunk) - The Group recruits employees based on various factors such as industry experience in the graphite mining sector, educational background, and vacancy requirements, and pays fixed salaries and other allowances according to positions and responsibilities[69](index=69&type=chunk) - Employees have never negotiated their employment terms through any labor union or collective bargaining agreement[69](index=69&type=chunk) [Relationships with Suppliers, Customers and Other Stakeholders](index=24&type=section&id=Relationships%20with%20Suppliers,%20Customers%20and%20Other%20Stakeholders) The Group recognizes the importance of maintaining good relationships with suppliers, customers, communities, and governments, and had no significant or material disputes with these stakeholders in the first half of 2025 - The Group recognizes the importance of maintaining good relationships with suppliers, customers, communities, and governments for achieving its objectives and long-term goals[70](index=70&type=chunk) - In the first half of 2025, the Group had no significant or material disputes with suppliers, customers, and/or stakeholders[70](index=70&type=chunk) [Commitments](index=25&type=section&id=Commitments) As of June 30, 2025, and December 31, 2024, the Group had no significant capital commitments - As of June 30, 2025, and December 31, 2024, the Group had no significant capital commitments[72](index=72&type=chunk)[190](index=190&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the first half of 2025, consistent with the first half of 2024 - The Board does not recommend the payment of an interim dividend for the first half of 2025 (first half of 2024: nil)[73](index=73&type=chunk)[145](index=145&type=chunk) [Significant Events After the First Half of 2025](index=25&type=section&id=Significant%20Events%20After%20the%20First%20Half%20of%202025) Except as disclosed elsewhere in this report, no significant post-balance sheet events occurred for the Company or the Group after June 30, 2025, and up to the date of this report - Except as disclosed elsewhere in this report, no significant post-balance sheet events occurred for the Company or the Group after June 30, 2025, and up to the date of this report[74](index=74&type=chunk)[192](index=192&type=chunk) [Major Investments Held, Major Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures, and Future Plans for Major Investments or Capital Assets](index=25&type=section&id=Major%20Investments%20Held,%20Major%20Acquisitions%20and%20Disposals%20of%20Subsidiaries,%20Associates%20and%20Joint%20Ventures,%20and%20Future%20Plans%20for%20Major%20Investments%20or%20Capital%20Assets) In the first half of 2025, the Group held no other major investments, nor were there any major acquisitions or disposals of subsidiaries, associates, and joint ventures, and the Board had not approved any other major investments or plans to increase capital assets - In the first half of 2025, no other major investments were held, nor were there any major acquisitions or disposals of subsidiaries, associates, and joint ventures[75](index=75&type=chunk) - As of the date of this report, the Board had not approved any other major investments or plans to increase capital assets[75](index=75&type=chunk) [Share Option Scheme](index=25&type=section&id=Share%20Option%20Scheme) The Company conditionally adopted a share option scheme on June 21, 2022, with a ten-year validity period. In the first half of 2025, no share options were granted, lapsed, exercised, or cancelled, and there were no outstanding share options. The scheme authorizes the grant of up to **160,000,000** share options, representing approximately **10%** of the issued shares - The share option scheme was conditionally adopted on June 21, 2022, with a ten-year validity period, expiring on June 20, 2032[76](index=76&type=chunk) - In the first half of 2025, no share options were granted, lapsed, exercised, or cancelled under the share option scheme, and there were no outstanding share options[76](index=76&type=chunk) - The number of share options authorized for grant under the scheme is **160,000,000**, representing approximately **10%** of the Company's issued shares as of the date of this report[76](index=76&type=chunk) [Directors' Interests in Contracts](index=26&type=section&id=Directors'%20Interests%20in%20Contracts) As of June 30, 2025, none of the Company's Directors had any direct or indirect material interest in any contract entered into by the Company, its holding company, its subsidiaries, or any of its fellow subsidiaries during the first half of 2025 that was significant to the Group's business - As of June 30, 2025, none of the Company's Directors had any direct or indirect material interest in any contract entered into by the Company, its holding company, its subsidiaries, or any of its fellow subsidiaries during the first half of 2025 that was significant to the Group's business[78](index=78&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=26&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) As of June 30, 2025, Mr. Zhao Liang, Chairman and Chief Executive Officer, beneficially owned a **75.0%** long position in the Company's issued shares through his wholly-owned Sandy Mining Limited. Other than this, no other Directors or Chief Executive had any disclosable interests or short positions in shares, underlying shares, and debentures Directors' and Chief Executive's Interests in Shares | Name of Director/Chief Executive of the Company | Position | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | :--- | | Mr. Zhao | Chairman, Executive Director and Chief Executive Officer | Interest in controlled corporation | 1,200,000,000 (Long Position) | 75.0% | - Mr. Zhao beneficially owns **75.0%** of the issued shares through his wholly-owned Sandy Mining Limited[79](index=79&type=chunk) - Save as disclosed above, no Director or Chief Executive of the Company had any disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or any of its associated corporations[80](index=80&type=chunk) [Directors' Rights to Acquire Shares or Debentures](index=27&type=section&id=Directors'%20Rights%20to%20Acquire%20Shares%20or%20Debentures) During the first half of 2025, neither the Company nor any of its subsidiaries had any arrangements enabling Directors to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate, nor did any Director or their spouse or children under 18 years of age have any right to subscribe for equity or debt securities of the Company or any other body corporate - During the first half of 2025, neither the Company nor any of its subsidiaries had any arrangements enabling Directors to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate[81](index=81&type=chunk) - No Director or their spouse or children under 18 years of age had any right to subscribe for equity or debt securities of the Company or any other body corporate, nor had any such rights been exercised[81](index=81&type=chunk) [Substantial Shareholders and Other Persons' Interests and Short Positions in Shares and Underlying Shares](index=27&type=section&id=Substantial%20Shareholders%20and%20Other%20Persons'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, other than the Directors and Chief Executive of the Company, Sandy Mining Limited was the only substantial shareholder holding **5%** or more interest in the Company's shares, beneficially owning **75.0%** of the issued shares Substantial Shareholders' Interests in Shares | Name of Substantial Shareholder/Other Person of the Company | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | | Sandy Mining | Beneficial Owner | 1,200,000,000 (Long Position) | 75.0% | - Save as disclosed above, no other person (other than the Directors and Chief Executive of the Company) was known to have a disclosable interest of **5%** or more in the shares and underlying shares[85](index=85&type=chunk) [Compliance with Relevant Laws and Regulations](index=28&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) To the best of the Board's and management's knowledge, the Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations, with no serious breaches or non-compliance with applicable laws and regulations in the first half of 2025 - The Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations[86](index=86&type=chunk) - In the first half of 2025, the Group had no serious breaches or non-compliance with applicable laws and regulations[86](index=86&type=chunk) [Compliance with Corporate Governance Code](index=28&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has complied with all applicable code provisions of the Corporate Governance Code in the first half of 2025, except for the non-segregation of the roles of Chairman and Chief Executive Officer (both held by Mr. Zhao Liang). The Board believes this arrangement benefits the Group's management, and the Board, comprising experienced senior management and independent directors, provides effective checks and balances - The Company has complied with all applicable code provisions of the Corporate Governance Code in the first half of 2025, save for code provision C.2.1 of Part 2 of the Corporate Governance Code (the roles of Chairman and Chief Executive Officer are not segregated)[87](index=87&type=chunk) - Mr. Zhao Liang holds both the roles of Chairman and Chief Executive Officer of the Company, and the Board believes this arrangement benefits the Group's management due to his extensive experience in the graphite mining industry[87](index=87&type=chunk) - The Board currently comprises two executive directors and four independent non-executive directors, whose composition provides a robust level of independence, effectively balancing Mr. Zhao's power and authority[88](index=88&type=chunk) [Compliance with Model Code](index=29&type=section&id=Compliance%20with%20Model%20Code) All Directors have confirmed that they have complied with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules throughout the first half of 2025 - All Directors have confirmed that they have complied with the required standards of dealing and conduct set out in the Model Code for securities transactions by Directors throughout the first half of 2025[89](index=89&type=chunk) [Board Committees](index=29&type=section&id=Board%20Committees) The Group has established an Audit Committee, Remuneration Committee, Nomination Committee, and Compliance Committee under the Board of Directors, with each committee operating under terms of reference adopted by the Board to enhance corporate governance [Audit Committee](index=29&type=section&id=Audit%20Committee) - The Audit Committee comprises four members, with Mr. He Kaidong (Independent Non-executive Director) as Chairman[91](index=91&type=chunk) - Its primary responsibilities include making recommendations to the Board on the appointment, re-appointment, and removal of external auditors; reviewing financial statements; overseeing internal control and risk management systems; and providing advice and recommendations on corporate governance matters[91](index=91&type=chunk) [Remuneration Committee](index=29&type=section&id=Remuneration%20Committee) - The Remuneration Committee comprises four members, including three independent non-executive directors and one executive director, with Mr. Liu Ze Zheng as Chairman[92](index=92&type=chunk) - Its primary responsibilities include making recommendations to the Board on the remuneration policy and structure for Directors and senior management, as well as employee benefit arrangements[92](index=92&type=chunk) [Nomination Committee](index=30&type=section&id=Nomination%20Committee) - The Nomination Committee comprises four members, including three independent non-executive directors and one executive director, with Mr. Zhao Liang as Chairman[94](index=94&type=chunk) - Its primary responsibilities include making recommendations to review the structure, size, and composition of the Board; and reviewing and making recommendations to the Board on the appointment of Directors and Board succession planning[94](index=94&type=chunk) [Compliance Committee](index=30&type=section&id=Compliance%20Committee) - The Compliance Committee comprises three members, including two independent non-executive directors and one executive director, with Mr. Liu Ze Zheng as Chairman[95](index=95&type=chunk) - Its primary responsibilities include ensuring compliance with regulatory matters and that regulatory compliance procedures and systems are adequate and effective[95](index=95&type=chunk) [Review of Interim Results](index=30&type=section&id=Review%20of%20Interim%20Results) The Company's Audit Committee has reviewed the Group's interim results for the first half of 2025 and this interim report with management, confirming their compliance with applicable accounting standards and Listing Rules, and that adequate disclosures have been made - The Company's Audit Committee has reviewed the accounting policies adopted by the Group and discussed audit, risk management, internal control systems, and financial reporting matters with management[96](index=96&type=chunk) - The Audit Committee is of the opinion that the Group's unaudited interim condensed consolidated financial statements for the first half of 2025 comply with applicable accounting standards and Listing Rules and have made adequate disclosures[96](index=96&type=chunk) [Interim Condensed Consolidated Statement of Comprehensive Income](index=31&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This statement presents the group's financial performance for the six months ended June 30, 2025, showing revenue, costs, and net loss [Financial Performance for the First Half of 2025](index=31&type=section&id=Financial%20Performance%20for%20the%20First%20Half%20of%202025) The Group's consolidated statement of comprehensive income for the six months ended June 30, 2025, shows an increase in total revenue, a significant improvement in gross profit, a substantial narrowing of net loss, and an improvement in basic and diluted loss per share Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 39,795 | 36,437 | | Cost of Sales | (33,810) | (33,514) | | Gross Profit | 5,985 | 2,923 | | Other Income and Other Gains | 545 | 1,318 | | Selling and Distribution Expenses | (3,253) | (2,531) | | General and Administrative Expenses | (12,019) | (13,093) | | Research and Development Expenses | (3,191) | (3,239) | | Net Finance Costs | (1,135) | (2,586) | | Loss and Total Comprehensive Loss for the Period | (11,890) | (16,218) | | Basic and Diluted Loss Per Share | (0.74) cents | (1.01) cents | [Interim Condensed Consolidated Statement of Financial Position](index=32&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the group's assets, liabilities, and equity as of June 30, 2025, highlighting changes in key financial positions [Financial Position as of June 30, 2025](index=32&type=section&id=Financial%20Position%20as%20of%20June%2030,%202025) As of June 30, 2025, the Group's total assets were **RMB 540.27 million**, total liabilities were **RMB 115.85 million**, and total equity was **RMB 424.42 million**. Cash and cash equivalents significantly increased, while trade receivables and bills receivable substantially decreased Summary of Interim Condensed Consolidated Statement of Financial Position | Indicator | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Assets | 540,269 | 562,392 | | Non-current Assets | 357,377 | 351,442 | | Current Assets | 182,892 | 210,950 | | Total Equity | 424,418 | 436,308 | | Total Liabilities | 115,851 | 126,084 | | Non-current Liabilities | 5,061 | 5,261 | | Current Liabilities | 110,790 | 120,823 | | Cash and Cash Equivalents | 61,371 | 32,484 | | Trade and Bills Receivables | 77,455 | 147,823 | [Interim Condensed Consolidated Statement of Changes in Equity](index=34&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details the changes in the group's equity for the six months ended June 30, 2025, including net loss and transfers to reserves [Changes in Equity for the First Half of 2025](index=34&type=section&id=Changes%20in%20Equity%20for%20the%20First%20Half%20of%202025) The Group's statement of changes in equity for the six months ended June 30, 2025, shows that opening equity was **RMB 436.31 million**, and due to a loss of **RMB 11.89 million** for the period and transfers to other reserves, closing equity decreased to **RMB 424.42 million** Summary of Interim Condensed Consolidated Statement of Changes in Equity | Item | Share Capital (RMB thousand) | Share Premium (RMB thousand) | Statutory Reserve (RMB thousand) | Other Reserves (RMB thousand) | Retained Earnings (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of January 1, 2025 | 1,375 | 303,829 | 15,193 | (143,128) | 259,039 | 436,308 | | Loss for the period | – | – | – | – | (11,890) | (11,890) | | Transfer to other reserves | – | – | – | (536) | 536 | – | | Balance as of June 30, 2025 | 1,375 | 303,829 | 15,193 | (143,664) | 247,685 | 424,418 | [Interim Condensed Consolidated Statement of Cash Flows](index=35&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 [Cash Flows for the First Half of 2025](index=35&type=section&id=Cash%20Flows%20for%20the%20First%20Half%20of%202025) The Group's statement of cash flows for the six months ended June 30, 2025, shows net cash generated from operating activities of **RMB 54.35 million**, net cash used in investing activities of **RMB 20.89 million**, net cash used in financing activities of **RMB 4.57 million**, with cash and cash equivalents increasing to **RMB 61.37 million** at period-end Summary of Interim Condensed Consolidated Statement of Cash Flows | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 54,353 | 62,640 | | Net cash used in investing activities | (20,885) | (138,136) | | Net cash (used in)/generated from financing activities | (4,568) | 58,327 | | Net increase/(decrease) in cash and cash equivalents | 28,900 | (17,169) | | Cash and cash equivalents at end of period | 61,371 | 94,933 | [Notes to the Interim Condensed Consolidated Financial Information](index=36&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed explanatory notes to the interim condensed consolidated financial information, covering accounting policies, estimates, and financial risk management [General Information](index=36&type=section&id=General%20Information) China Graphite Group Limited was incorporated in the Cayman Islands as an investment holding company, primarily engaged in the manufacturing and sale of graphite products. The Company's shares were listed on the Main Board of the Hong Kong Stock Exchange on July 18, 2022, with Mr. Zhao Liang as the ultimate controlling party - China Graphite Group Limited was incorporated in the Cayman Islands on August 3, 2020, as an investment holding company[107](index=107&type=chunk) - The Company and its subsidiaries are principally engaged in the manufacturing and sale of graphite products, with Mr. Zhao Liang as the ultimate controlling party[107](index=107&type=chunk) - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 18, 2022[108](index=108&type=chunk) [Basis of Presentation](index=36&type=section&id=Basis%20of%20Presentation) The interim condensed consolidated financial information for the six months ended June 30, 2025, has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and should be read in conjunction with the annual report for the year ended December 31, 2024 - This interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[110](index=110&type=chunk) - This interim condensed consolidated financial information does not include all the information and disclosures normally included in an annual financial report and should be read in conjunction with the annual report for the year ended December 31, 2024[110](index=110&type=chunk) [Accounting Policies](index=36&type=section&id=Accounting%20Policies) The accounting policies applied by the Group are consistent with those of the prior financial year, and the adoption of new and revised standards has no significant financial impact on the interim condensed consolidated financial information. Management expects that new and revised standards not yet effective will also not have any significant impact on the Group's financial position and operating results - The accounting policies applied are consistent with those used in the prior financial year and the corresponding interim reporting period, except for estimated income tax and the adoption of new and revised standards[111](index=111&type=chunk) - The adoption of new and revised standards such as HKAS 21 and HKFRS 1 (Amendments) has no significant financial impact on the interim condensed consolidated financial information[112](index=112&type=chunk) - Management has performed a preliminary assessment and expects that the adoption of new and revised standards and interpretations not yet effective will not have any significant impact on the Group's financial position and operating results[113](index=113&type=chunk) [Significant Accounting Estimates and Judgements](index=38&type=section&id=Significant%20Accounting%20Estimates%20and%20Judgements) The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses. The key sources of significant judgments and estimation uncertainties are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2024 - The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses[115](index=115&type=chunk) - The key sources of significant judgments and estimation uncertainties made by management in applying the Group's accounting policies in preparing this interim condensed consolidated financial information are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2024[115](index=115&type=chunk) [Financial Risk Management](index=38&type=section&id=Financial%20Risk%20Management) The Group faces various financial risks, including foreign exchange, cash flow and fair value interest rate, credit, and liquidity risks, which are minimized through prudent risk management plans. Risk management policies have not changed since December 31, 2024, and capital risk management aims to safeguard the ability to continue as a going concern and maximize shareholder returns, with a significant improvement in the gearing ratio [Financial Risk Factors](index=38&type=section&id=Financial%20Risk%20Factors) - The Group's activities expose it to various financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk[116](index=116&type=chunk) - The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance[116](index=116&type=chunk) - Risk management policies have not changed since December 31, 2024[117](index=117&type=chunk) [Fair Value Estimation](index=38&type=section&id=Fair%20Value%20Estimation) - The carrying amounts of trade and bills receivables, deposits, other receivables, and cash and cash equivalents, as well as trade payables, accrued expenses and other payables, and borrowings, net of impairment provisions, are assumed to approximate their fair values[118](index=118&type=chunk) - The fair values of financial assets and liabilities for disclosure purposes are estimated by discounting the future contractual cash flows at the current market interest rates available for similar financial instruments to the Company[118](index=118&type=chunk) [Capital Risk Management](index=39&type=section&id=Capital%20Risk%20Management) - The Group manages its capital to safeguard its ability to continue as a going concern, to provide returns for owners, and thereby to obtain sufficient financial resources from owners[119](index=119&type=chunk) - Capital risk management policies have not changed since December 31, 2024[119](index=119&type=chunk) Debt-to-Capital Ratio | Indicator | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Debt | 15,453 | 47,516 | | Total Equity | 424,418 | 436,308 | | Total Capital | 439,871 | 483,824 | | Debt-to-Capital Ratio | 3.5% | 9.8% | [Revenue and Segment Information](index=40&type=section&id=Revenue%20and%20Segment%20Information) The Group operates in two segments: sales of flake graphite concentrate and sales of spherical graphite and its by-products and unprocessed marble. All revenue from external customers is derived from customers in China, with one customer contributing over **10%** of total revenue in the first half of 2025. As of June 30, 2025, contract liabilities related to customer contracts amounted to **RMB 10,443,000** - The Group operates in two segments: sales of flake graphite concentrate and sales of spherical graphite and its by-products and unprocessed marble[123](index=123&type=chunk) - All of the Group's revenue from external customers is derived from customers located in China[132](index=132&type=chunk) - For the six months ended June 30, 2025, revenue from **1 customer** (Customer A) individually accounted for over **10%** of the Group's revenue, amounting to **RMB 5,643 thousand**[132](index=132&type=chunk) - As of June 30, 2025, the Group recognized customer advances of **RMB 10,443,000** for the sale of graphite products as contract liabilities[133](index=133&type=chunk) [Other Income and Other Gains](index=46&type=section&id=Other%20Income%20and%20Other%20Gains) The Group's other income and other gains for the first half of 2025 amounted to **RMB 545 thousand**, a decrease from **RMB 1,318 thousand** in the first half of 2024, primarily due to reduced government subsidies Breakdown of Other Income and Other Gains | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Government subsidies | 521 | 1,598 | | Loss on disposal of property, plant and equipment | – | (23) | | Others | 24 | (257) | | Total | 545 | 1,318 | - Government subsidies mainly relate to the Group's research and development activities[135](index=135&type=chunk) - As of June 30, 2025, government subsidies of **RMB 1,551,000** related to equipment purchases were recognized as deferred income under non-current liabilities[135](index=135&type=chunk) [Expenses by Nature](index=47&type=section&id=Expenses%20by%20Nature) The Group's total expenses by nature for the first half of 2025 were approximately **RMB 52.27 million**, largely consistent with the same period last year. Raw materials for production, transportation fees, and repair and maintenance expenses increased, while utilities and resource taxes and other miscellaneous taxes decreased Summary of Expenses by Nature | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw materials used – production | 12,015 | 8,322 | | Changes in inventories of finished goods and work-in-progress | (5,603) | (8,171) | | Transportation expenses | 2,158 | 1,249 | | Depreciation of property, plant and equipment | 11,654 | 11,191 | | Employee benefit expenses | 7,603 | 8,204 | | Utilities expenses | 7,639 | 9,591 | | Repair and maintenance expenses | 2,954 | 1,829

[Company Information and Financial Summary](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF%E4%B8%8E%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) [Company Profile and Report Statement](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E6%A6%82%E6%B3%81%E4%B8%8E%E6%8A%A5%E5%91%8A%E5%A3%B0%E6%98%8E) The company discloses its unaudited interim results for the six months ended June 30, 2025, with comparative data from the same period in 2024 - Century Ginwa Group Holdings Limited (Stock Code: 1620) released its interim results announcement for the six months ended June 30, 2025[2](index=2&type=chunk)[3](index=3&type=chunk) - The announcement contains unaudited figures and provides comparative numbers for the six months ended June 30, 2024[3](index=3&type=chunk) [Financial Summary](index=1&type=section&id=%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) The company's revenue and gross profit declined, but the loss for the period narrowed significantly by 55.6% to HK$12.8 million Financial Summary for the Six Months Ended June 30 | Indicator | 2025 (HK$ million) | 2024 (HK$ million) | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Revenue | 47.7 | 50.1 | (4.8%) | | Gross Profit | 15.3 | 18.1 | (15.5%) | | Loss for the period | (12.8) | (28.8) | (55.6%) | | Basic and diluted loss per share (HK cents) | (1.1) | (2.4) | (54.2%) | [Consolidated Financial Statements](index=2&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Consolidated Statement of Comprehensive Income](index=2&type=section&id=%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) The loss for the period narrowed significantly to HK$12.80 million, driven by a large reduction in credit loss provisions and an income tax credit Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 47,680 | 50,053 | | Cost of sales | (32,421) | (31,911) | | Gross profit | 15,259 | 18,142 | | Other income | 6 | 7 | | Other net (losses)/gains | (3,562) | 1,846 | | Provision for expected credit losses on financial assets | (2,693) | (20,167) | | Selling expenses | (866) | (1,355) | | Administrative expenses | (22,481) | (18,154) | | Operating loss | (14,337) | (19,681) | | Net finance costs | (55) | (107) | | Loss before income tax | (14,392) | (19,788) | | Income tax credit/(expense) | 1,593 | (9,038) | | Loss for the period attributable to owners of the Company | (12,799) | (28,826) | | Foreign currency translation differences | 3,000 | (2,311) | | Total comprehensive income/(expense) for the period | (9,799) | (31,137) | | Basic and diluted loss per share (HK cents) | (1.07) | (2.40) | - **Loss for the period narrowed by 55.6%** to HK$12.8 million, mainly due to a significant reduction in the provision for expected credit losses on financial assets and an income tax credit[5](index=5&type=chunk) [Consolidated Statement of Financial Position](index=3&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) Total assets increased to HK$174.33 million as of June 30, 2025, but a sharp rise in current liabilities resulted in a capital deficiency Key Data from Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | **Assets** | | | | Total non-current assets | 19,079 | 15,634 | | Total current assets | 155,253 | 95,193 | | **Total assets** | **174,332** | **110,827** | | **Equity** | | | | Total equity | (9,241) | 558 | | **Liabilities** | | | | Total non-current liabilities | 1,405 | 1,856 | | Total current liabilities | 182,168 | 108,413 | | **Total liabilities** | **183,573** | **110,269** | | **Total equity and liabilities** | **174,332** | **110,827** | - **Total assets increased** from HK$110.83 million on December 31, 2024, to HK$174.33 million on June 30, 2025[6](index=6&type=chunk) - Equity attributable to owners of the Company shifted from a positive value to a **capital deficiency**, changing from HK$558 thousand on December 31, 2024, to (HK$9,241) thousand on June 30, 2025[7](index=7&type=chunk) [Notes to the Financial Statements](index=5&type=section&id=%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [1. General Information](index=5&type=section&id=1%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) The company operates in air ticketing, travel business process management, and tourism products, with primary markets in Canada, the US, and China - The company was incorporated in Ontario, Canada on August 18, 2017, and continued as an exempted limited liability company in the Cayman Islands since October 20, 2017[8](index=8&type=chunk) - The Group is engaged in air ticketing distribution, travel business process management, and providing travel products and services in Canada, the United States, and China[8](index=8&type=chunk) [2. Basis of Preparation and Going Concern Assumption](index=6&type=section&id=2%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E7%A4%8E%E5%8F%8A%E6%8C%81%E7%BA%8C%E7%B6%93%E7%87%9F%E5%81%87%E8%A8%AD) Despite net current liabilities and a capital deficiency, the Board considers the going concern assumption appropriate based on expected revenue growth - The interim financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" and the Listing Rules of The Stock Exchange of Hong Kong Limited[9](index=9&type=chunk) - For the six months ended June 30, 2025, the Group incurred a loss of approximately **HK$12.8 million**, had **net current liabilities of HK$26.9 million**, and a **capital deficiency of HK$9.2 million**, casting significant doubt on its ability to continue as a going concern[9](index=9&type=chunk) - The Board believes the Group will have sufficient liquidity to continue as a going concern, based on expected revenue growth from the Greater Bay Area and **undrawn banking facilities of approximately HK$8.9 million**[10](index=10&type=chunk)[11](index=11&type=chunk) [3. Changes in Accounting Policies and Disclosures](index=7&type=section&id=3%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E5%8B%95%E5%8F%8A%E6%8A%AB%E9%9C%B2) The adoption of revised IFRSs had no material impact on the Group's financial performance, and key judgments remain consistent with the prior year - The Group has applied revised IFRSs issued by the IASB for the first time, including amendments to IAS 21 and IFRS 1 "Lack of Exchangeability"[13](index=13&type=chunk) - The application of these amendments **did not have a material impact** on the Group's results and financial position for the current or prior periods[13](index=13&type=chunk) - The key sources of estimation uncertainty and critical judgments made by management in preparing the interim financial statements were the same as those in the 2024 annual report[15](index=15&type=chunk) [4. Revenue and Segment Information](index=8&type=section&id=4%20%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group operates three reportable segments, with travel products and services contributing the largest share of the HK$47.68 million total revenue - The Group has identified three reportable operating segments: air ticketing distribution, travel business process management, and travel products and services[16](index=16&type=chunk) Revenue from External Customers by Segment | Segment | June 30, 2025 (HK$ thousand) | June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Air ticketing distribution | 2,215 | 6,174 | | Travel business process management | 10,803 | 11,150 | | Travel products and services | 34,662 | 32,729 | | **Total** | **47,680** | **50,053** | Revenue by Geographical Location | Geographical Location | June 30, 2025 (HK$ thousand) | June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Canada | 12,938 | 17,240 | | United States | 80 | 161 | | Mainland China | 34,662 | 32,652 | | **Total** | **47,680** | **50,053** | [5. Other Income and Net (Loss)/Gain](index=12&type=section&id=5%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%B7%A8%EF%BC%88%E8%99%A7%E6%90%8D%EF%BC%89/%E6%94%B6%E7%9B%8A) Other net (loss)/gain shifted from a gain to a loss in the period, primarily due to foreign exchange losses Other Income and Net (Loss)/Gain | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sundry income | 6 | 7 | | **Total other income** | **6** | **7** | | Foreign exchange (loss)/gain | (3,575) | 1,813 | | Loss on disposal of property and equipment | (4) | — | | Fair value change of financial assets at FVTPL | 17 | 33 | | **Total other net (loss)/gain** | **(3,562)** | **1,846** | - Foreign exchange (loss)/gain shifted from a **gain of HK$1.813 million** in the prior period to a **loss of HK$3.575 million** in 2025[24](index=24&type=chunk) [6. Expenses by Nature](index=13&type=section&id=6%20%E6%8C%89%E6%80%A7%E8%B3%AA%E5%8A%83%E5%88%86%E7%9A%84%E9%96%8B%E6%94%AF) Total expenses increased to HK$55.77 million, driven by a significant rise in service fees, while employee benefit expenses slightly decreased Expenses by Nature | Expense Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Cost of tour packages and air tickets | 26,340 | 26,400 | | Employee benefit expenses | 14,726 | 15,328 | | Office, communication and utilities expenses | 1,065 | 1,342 | | Depreciation of right-of-use assets | 764 | 962 | | Short-term lease expenses | 100 | 193 | | Credit card charges | 8 | 9 | | Auditor's remuneration (audit services) | 788 | 788 | | Auditor's remuneration (non-audit services) | 472 | 483 | | Depreciation of property, plant and equipment | 105 | 174 | | Legal and professional fees | 1,030 | 963 | | Service fees | 8,266 | 3,258 | | Others | 2,104 | 1,520 | | **Total cost of sales, selling and administrative expenses** | **55,768** | **51,420** | - **Service fees increased significantly** from HK$3.26 million in the prior period to HK$8.27 million in 2025[25](index=25&type=chunk) - Employee benefit expenses, including directors' remuneration, **decreased slightly** from HK$15.33 million to HK$14.73 million[25](index=25&type=chunk) [7. Net Finance Costs](index=14&type=section&id=7%20%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC%E6%B7%A8%E9%A1%8D) Net finance costs decreased to HK$55 thousand from HK$107 thousand in the prior year, mainly due to lower interest expenses on lease liabilities Net Finance Costs | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | 10 | 3 | | Interest expense on lease liabilities | (32) | (64) | | Imputed interest expense on government loans | (33) | (46) | | **Net finance costs** | **(55)** | **(107)** | - **Net finance costs decreased** from HK$107 thousand in the prior period to HK$55 thousand in 2025[26](index=26&type=chunk) [8. Income Tax Expense](index=14&type=section&id=8%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) The Group recorded an income tax credit of HK$1.593 million, a reversal from the HK$9.038 million expense in the prior year, mainly from deferred tax - Corporate income tax rates are approximately 26.5% in Canada, 21% (federal) and 14.95% (state/city) in the US, and 25% in China[27](index=27&type=chunk) Income Tax Credit/(Expense) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current income tax (US state) | — | (1) | | Current income tax (China enterprise) | (330) | (282) | | Deferred income tax | 1,923 | (8,755) | | **Income tax credit/(expense)** | **1,593** | **(9,038)** | - The deferred income tax in 2025 primarily relates to deductible temporary differences arising from unused tax losses and provisions for expected credit losses on financial assets[28](index=28&type=chunk) [9. Dividends](index=15&type=section&id=9%20%E8%82%A1%E6%81%AF) The Board does not recommend the payment of any dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of any dividend for the six months ended June 30, 2025 (2024: Nil)[29](index=29&type=chunk) [10. Loss Per Share](index=16&type=section&id=10%20%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) Basic and diluted loss per share decreased significantly to 1.07 HK cents from 2.40 HK cents in the prior period, reflecting the narrowed loss Basic and Diluted Loss Per Share | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Loss attributable to owners of the Company (HK$ thousand) | (12,799) | (28,826) | | Weighted average number of ordinary shares in issue (thousand shares) | 1,200,000 | 1,200,000 | | **Basic and diluted loss per share (HK cents)** | **(1.07)** | **(2.40)** | - **Basic and diluted loss per share decreased by 55.4%** from 2.40 HK cents in the prior period to 1.07 HK cents in 2025[31](index=31&type=chunk) - The Group had no potentially dilutive ordinary shares for the six months ended June 30, 2025 and 2024[31](index=31&type=chunk) [11. Trade Receivables](index=16&type=section&id=11%20%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) Total trade receivables decreased to HK$32.33 million, primarily due to the significant settlement of receivables aged over 180 days Trade Receivables | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Incentive commission receivables (less provision) | 517 | 1,017 | | Other trade receivables (less provision) | 31,812 | 42,838 | | **Total trade receivables** | **32,329** | **43,855** | Ageing Analysis of Trade Receivables | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 60 days | 12,395 | 11,496 | | 61 to 180 days | 19,423 | 15,835 | | Over 180 days | 511 | 16,524 | | **Total** | **32,329** | **43,855** | - Trade receivables aged over 180 days **decreased significantly** from HK$16.52 million on December 31, 2024, to HK$0.51 million on June 30, 2025[33](index=33&type=chunk) [12. Share Capital](index=17&type=section&id=12%20%E8%82%A1%E6%9C%AC) The company's authorized and issued share capital remained unchanged from the end of 2024 - The authorized share capital is 90,000,000 thousand ordinary shares of HK$0.0001 each, with a nominal value of HK$9,000 thousand[33](index=33&type=chunk) - The issued and fully paid share capital is 1,200,000 thousand ordinary shares with a nominal value of HK$120 thousand, which has not changed since January 1, 2024[34](index=34&type=chunk) [13. Trade Payables](index=18&type=section&id=13%20%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) Total trade payables increased to HK$32.04 million, with a notable rise in payables aged 0 to 30 days Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 30 days | 10,005 | 3,053 | | 31 to 60 days | — | 3,164 | | 61 to 90 days | 4,726 | 1,658 | | Over 90 days | 17,312 | 21,257 | | **Total** | **32,043** | **29,132** | - Trade payables aged 0 to 30 days **increased** from HK$3.05 million on December 31, 2024, to HK$10.01 million on June 30, 2025[35](index=35&type=chunk) [14. Bank Facilities](index=18&type=section&id=14%20%E9%8A%80%E8%A1%8C%E4%BF%A1%E8%B2%B8) The Group had bank facilities of approximately HK$14.38 million, of which HK$5.49 million was utilized and guaranteed by a Canadian Crown corporation - The Group was granted bank facilities of approximately **HK$14.38 million** (December 31, 2024: HK$13.49 million)[36](index=36&type=chunk) - Approximately **HK$5.49 million** of these facilities were utilized and guaranteed by a Canadian Crown corporation[36](index=36&type=chunk) - The Group complied with all bank covenants as of June 30, 2025, and December 31, 2024[37](index=37&type=chunk) [15. Subsequent Events](index=18&type=section&id=15%20%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) After the reporting period, the Group completed the disposal of its Canadian subsidiaries for a cash consideration of approximately HK$17.1 million - On August 29, 2025, the Group entered into a sale and purchase agreement with an independent third party to dispose of its entire interest in its Canadian indirect wholly-owned subsidiary, BVTEHC Inc, and its subsidiary, Tour East Holidays (Canada) Inc[38](index=38&type=chunk) - The disposal was completed on the same day for a cash consideration of approximately **CAD 3 million (approximately HK$17.1 million)**[38](index=38&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Review](index=19&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's revenue and gross profit declined due to the deteriorating performance of the air ticketing business, prompting the sale of its Canadian operations - The Group's total revenue **decreased by 4.8%** to approximately HK$47.7 million compared to the same period in 2024[39](index=39&type=chunk) - Gross profit **decreased by 15.5%** to approximately HK$15.3 million, with the gross profit margin falling by 4.2 percentage points to 32.0%[39](index=39&type=chunk) - The decline in revenue and gross profit was mainly due to the continued deterioration of the air ticketing distribution segment, affected by Sino-US geopolitical tensions and increased competition[39](index=39&type=chunk)[40](index=40&type=chunk) [Overall Business Performance](index=19&type=section&id=%E6%95%B4%E9%AB%94%E6%A5%AD%E5%8B%99%E8%A1%A8%E7%8F%BE) The Group's total revenue and gross profit both declined during the reporting period, primarily dragged down by the air ticketing distribution segment - The Group's total revenue **decreased by 4.8%** year-on-year to HK$47.7 million[39](index=39&type=chunk) - Gross profit **decreased by 15.5%** year-on-year to HK$15.3 million, and the overall gross profit margin fell by 4.2 percentage points to 32.0%[39](index=39&type=chunk) [Disposal of Canadian Business](index=19&type=section&id=%E5%8A%A0%E6%8B%BF%E5%A4%A7%E6%A5%AD%E5%8B%99%E5%87%BA%E5%94%AE) The Group disposed of its entire interest in the Canadian Group on August 29, 2025, to optimize its business structure amid a deteriorating market - On August 29, 2025, the Group disposed of its entire interest in the Canadian Group for a consideration of **CAD 3.0 million (approximately HK$17.1 million)**[40](index=40&type=chunk)[41](index=41&type=chunk) - Following the disposal, the Group has ceased its air ticketing distribution, business process management, and travel products and services businesses in Canada[41](index=41&type=chunk) [Travel Products and Services Segment](index=20&type=section&id=%E6%97%85%E9%81%8A%E7%94%A2%E5%93%81%E5%8F%8A%E6%9C%8D%E5%8B%99%E5%88%86%E9%83%A8) This segment's revenue grew by 6.1% to HK$34.7 million, driven by increased cultural tourism transactions in the Greater Bay Area of China - Revenue from the travel products and services segment **increased by 6.1%** or HK$2.0 million year-on-year to HK$34.7 million[42](index=42&type=chunk) - The growth was mainly due to an increase in transaction volume from the company's self-operated cultural tourism in the Greater Bay Area of China[42](index=42&type=chunk) - This business has shown steady growth since its launch in 2023 and is now the Group's largest business segment[42](index=42&type=chunk) [Travel Business Process Management Segment](index=20&type=section&id=%E6%97%85%E9%81%8A%E6%A5%AD%E5%8B%99%E6%B5%81%E7%A8%8B%E7%AE%A1%E7%90%86%E5%88%86%E9%83%A8) This segment's revenue remained relatively stable at approximately HK$10.8 million, but its scale is expected to shrink significantly after the Canadian disposal - Revenue from the travel business process management segment remained relatively stable at approximately **HK$10.8 million** in 2025, compared to HK$11.2 million in 2024[43](index=43&type=chunk) - The gross profit margin also remained stable at approximately **72.0%** in 2025, compared to 72.5% in 2024[43](index=43&type=chunk) - As this business was mainly operated in Canada, its scale is expected to be substantially reduced following the disposal[44](index=44&type=chunk) [Air Ticketing Distribution Segment](index=21&type=section&id=%E6%A9%9F%E7%A5%A8%E5%88%86%E9%8A%B7%E5%88%86%E9%83%A8) This segment's revenue plummeted by 64.5% to HK$2.2 million due to weak air traffic between China and North America and intense competition - Revenue from the air ticketing distribution segment **decreased by 64.5%** or HK$4.0 million year-on-year to HK$2.2 million[45](index=45&type=chunk) - The decrease was mainly due to continued weakness in air traffic between China and North America amid geopolitical tensions and intensified competition[45](index=45&type=chunk) - Following the disposal, the Group is no longer an IATA-accredited travel agent and has ceased its air ticketing distribution business in Canada[45](index=45&type=chunk) [Dividend Policy](index=22&type=section&id=%E8%82%A1%E6%81%AF%E6%94%BF%E7%AD%96) The Board does not recommend an interim dividend in order to preserve cash for working capital and future development - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: Nil)[46](index=46&type=chunk) - This decision aims to retain more cash to meet the Group's working capital needs and fund future development[46](index=46&type=chunk) [Future Prospects](index=22&type=section&id=%E6%9C%AA%E4%BE%86%E5%89%8D%E6%99%AF) The Group will focus on the high-potential Greater Bay Area tourism business and explore new opportunities after optimizing its structure by selling its Canadian operations - The disposal of the Canadian business helps optimize the Group's structure, allowing it to focus resources on more promising areas like the Greater Bay Area tourism business[47](index=47&type=chunk) - The Group will continue to strengthen its presence in the Greater Bay Area's tourism industry and explore suitable opportunities in travel consulting and other potential service sectors[47](index=47&type=chunk) [Financial Review](index=23&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's loss for the period narrowed significantly despite lower revenue and gross profit, mainly due to a substantial reduction in credit loss provisions - The Group's loss before income tax **decreased by 27.3%** to approximately HK$14.4 million from HK$19.8 million in the prior period[61](index=61&type=chunk) - The reduced loss was mainly due to a **HK$17.5 million decrease** in the provision for expected credit losses on financial assets, which offset a HK$2.8 million decline in gross profit and a HK$4.3 million increase in administrative expenses[61](index=61&type=chunk)[62](index=62&type=chunk) [Revenue Analysis](index=23&type=section&id=%E6%94%B6%E7%9B%8A%E5%88%86%E6%9E%90) Total revenue decreased by 4.8%, driven by a 64.5% drop in the air ticketing segment, while the travel products and services segment grew by 6.1% Revenue Composition by Business Segment | Segment | 2025 (HK$ thousand) | 2025 (%) | 2024 (HK$ thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Air ticketing distribution | 2,215 | 4.6 | 6,174 | 12.3 | | Travel business process management | 10,803 | 22.7 | 11,150 | 22.3 | | Travel products and services | 34,662 | 72.7 | 32,729 | 65.4 | | **Total** | **47,680** | **100.0** | **50,053** | **100.0** | - Revenue from the air ticketing distribution segment **decreased by 64.5%** to HK$2.2 million, mainly due to geopolitical tensions and increased competition[50](index=50&type=chunk) - Revenue from the travel products and services segment **increased by 6.1%** to HK$34.7 million, primarily due to higher transaction volume from self-operated cultural tourism in the Greater Bay Area[52](index=52&type=chunk) [Gross Profit and Gross Profit Margin Analysis](index=25&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87%E5%88%86%E6%9E%90) Overall gross profit fell by 15.5% and the margin dropped to 32.0%, mainly because the air ticketing business recorded a gross loss Gross Profit and Gross Profit Margin by Business Segment | Segment | 2025 Gross Profit (HK$ thousand) | 2025 Gross Profit Margin (%) | 2024 Gross Profit (HK$ thousand) | 2024 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Air ticketing distribution | (131) | (5.9) | 3,726 | 60.3 | | Travel business process management | 7,782 | 72.0 | 8,087 | 72.5 | | Travel products and services | 7,608 | 21.9 | 6,329 | 19.3 | | **Total** | **15,259** | **32.0** | **18,142** | **36.2** | - The air ticketing business shifted from a **gross profit of HK$3.7 million** in the prior period to a **gross loss of HK$0.1 million** in 2025, with the margin dropping from 60.3% to -5.9%[55](index=55&type=chunk) - The travel products and services segment's gross profit **increased by 20.6%** to HK$7.6 million, with the margin improving by 2.6 percentage points to 21.9%[57](index=57&type=chunk) [Selling Expenses](index=27&type=section&id=%E9%8A%B7%E5%94%AE%E9%96%8B%E6%94%AF) Selling expenses decreased to HK$0.9 million, mainly due to reduced rental-related expenses from remote working arrangements in Canada - Selling expenses **decreased** from approximately HK$1.4 million in the prior period to approximately HK$0.9 million in 2025[58](index=58&type=chunk) - The decrease was mainly attributable to reduced rental-related expenses due to the adaptation of remote working arrangements in Canada[58](index=58&type=chunk) [Administrative Expenses](index=27&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) Administrative expenses increased to HK$22.5 million, primarily due to a one-off early termination fee paid to a service provider - Administrative expenses **increased** from approximately HK$18.2 million in the prior period to approximately HK$22.5 million in 2025[59](index=59&type=chunk) - The increase was mainly due to a **one-off early termination fee** paid to a service provider[59](index=59&type=chunk) [Provision for Expected Credit Losses on Financial Assets](index=27&type=section&id=%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E8%99%A7%E6%90%8D%E6%92%A5%E5%82%99) The provision for expected credit losses on financial assets decreased sharply by 86.6% to HK$2.7 million due to improved receivable aging - The provision for expected credit losses on financial assets **decreased by 86.6%** from approximately HK$20.2 million in the prior period to approximately HK$2.7 million in 2025[60](index=60&type=chunk) - The decrease was mainly attributable to the improved aging of receivable balances and the settlement of certain long-outstanding receivables[60](index=60&type=chunk) [Loss for the Period](index=27&type=section&id=%E6%9C%9F%E5%85%A7%E8%99%A7%E6%90%8D) The Group's loss before income tax decreased by 27.3% to HK$14.4 million, as the reduction in credit loss provisions offset lower gross profit - The Group's loss before income tax **decreased by 27.3%** from approximately HK$19.8 million in the prior period to approximately HK$14.4 million in 2025[61](index=61&type=chunk) - The reduced loss was mainly offset by a **significant decrease of HK$17.5 million** in the provision for expected credit losses, despite a HK$2.8 million decrease in gross profit and a HK$4.3 million increase in administrative expenses[61](index=61&type=chunk)[62](index=62&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=28&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) The Group's cash position improved, but net current liabilities increased and the gearing ratio turned negative, though financial resources remain sufficient - Net cash generated from operating activities was approximately **HK$27.0 million**, compared to approximately HK$5.5 million in the prior period[63](index=63&type=chunk) - As of June 30, 2025, the Group's cash and cash equivalents were approximately **HK$38.9 million**, an increase of about 28.0% from December 31, 2024[63](index=63&type=chunk) - The Group's net current liabilities were approximately **HK$26.9 million** as of June 30, 2025, an increase from HK$13.2 million on December 31, 2024[65](index=65&type=chunk) [Cash Flow and Cash Equivalents](index=28&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E5%8F%8A%E7%8F%BE%E9%87%91%E7%AD%89%E5%83%B9%E7%89%A9) Net cash from operations grew significantly, and cash and cash equivalents at the end of the period increased by 28.0% Cash Flow Overview | Cash Flow Type | June 30, 2025 (HK$ million) | June 30, 2024 (HK$ million) | | :--- | :--- | :--- | | Net cash from operating activities | 27.0 | 5.5 | | Net cash used in investing activities | (21.8) | (0.017) | | Net cash from financing activities | 1.3 | 3.6 | | **Cash and cash equivalents at end of period** | **38.9** | **30.4** | - As of June 30, 2025, the Group's cash and cash equivalents were approximately **HK$38.9 million**, an increase of about 28.0% from HK$30.4 million on December 31, 2024[63](index=63&type=chunk) [Gearing Ratio](index=29&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E7%8E%87) The Group's gearing ratio shifted from a positive to a negative percentage, but financial resources are expected to be sufficient for ongoing needs - The Group's gearing ratio changed from a **positive percentage** as of December 31, 2024, to a **negative percentage** as of June 30, 2025[64](index=64&type=chunk) - The Group is expected to have sufficient financial resources to meet its ongoing operational and development needs[64](index=64&type=chunk) [Net Current Liabilities](index=29&type=section&id=%E6%B5%81%E5%8B%95%E8%B2%A0%E5%82%B5%E6%B7%A8%E5%80%BC) The Group's net current liabilities increased to HK$26.9 million, mainly due to additional credit loss provisions and customer advances - As of June 30, 2025, the Group's net current liabilities were approximately **HK$26.9 million**, compared to approximately HK$13.2 million as of December 31, 2024[65](index=65&type=chunk) - The increase was mainly due to the recognition of additional expected credit loss provisions on financial assets and an increase in advances received from a travel business process management customer[65](index=65&type=chunk) [Borrowings](index=29&type=section&id=%E5%80%9F%E6%AC%BE) The Group had interest-free borrowings of approximately HK$2.1 million from the Canadian government, with HK$0.8 million due within one year - The Group had interest-free borrowings from the Canadian government of approximately **HK$2.1 million** (December 31, 2024: HK$2.3 million)[66](index=66&type=chunk) - Approximately HK$0.8 million is repayable within one year, HK$0.8 million between one and two years, and HK$0.5 million between two and five years[66](index=66&type=chunk) [Treasury Policy](index=29&type=section&id=%E5%BA%AB%E5%8B%99%E6%94%BF%E7%AD%96) The Group maintains a prudent financial management approach, ensuring liquidity and minimizing credit risk through continuous monitoring - The Group adopts a prudent financial management approach to its treasury policies, maintaining a sound liquidity position[67](index=67&type=chunk) - It strives to reduce credit risk and ensure funding needs are met through continuous credit evaluation of customers and monitoring of its liquidity position[67](index=67&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=30&type=section&id=%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E5%85%A5%E6%90%8D%E7%9B%8A%E7%9A%84%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2) The Group holds approximately HK$1.3 million in Canadian government bonds classified as non-current financial assets - As of June 30, 2025, financial assets at fair value through profit or loss amounted to approximately **HK$1.3 million**, representing government bonds issued by the Government of Canada[68](index=68&type=chunk) - The bonds carry an annual interest rate of approximately 2.8%, mature on March 8, 2027, and are classified as non-current financial assets[68](index=68&type=chunk) [Amount Due to Immediate Holding Company](index=30&type=section&id=%E6%87%89%E4%BB%98%E7%9B%B4%E6%8E%A5%E6%8E%A7%E8%82%A1%E5%85%AC%E5%8F%B8%E6%AC%BE%E9%A0%85) The amount due to the immediate holding company was approximately HK$19.5 million, which is non-trade, interest-free, and unsecured - As of June 30, 2025, the amount due to the immediate holding company was approximately **HK$19.5 million** (December 31, 2024: HK$17.0 million)[69](index=69&type=chunk) - The amount is non-trade in nature, interest-free, unsecured, repayable on demand on normal commercial terms or better, and constitutes fully exempt financial assistance under Rule 14A.90 of the Listing Rules[69](index=69&type=chunk) [Events After the Reporting Period](index=30&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E4%BB%B6) The Group completed the disposal of its Canadian business and appointed Mr. Liu Jiefeng as the new Chief Executive Officer on August 29, 2025 - On August 29, 2025, the Group completed the disposal of its Canadian business[70](index=70&type=chunk) - Effective August 29, 2025, Mr. Liu Jiefeng was re-designated as an executive Director and appointed as the Chief Executive Officer of the Company, succeeding Dr. Gao Songyan[70](index=70&type=chunk) - Other than disclosed in this announcement, there were no material events affecting the Group's operations and financial performance after the reporting period[71](index=71&type=chunk) [Foreign Exchange Risk](index=31&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The Group is exposed to foreign currency risk and recorded a net foreign exchange loss of approximately HK$3.6 million without using hedging instruments - The Group's foreign currency risk primarily arises from asset and liability balances denominated in currencies other than the functional currencies of the relevant group companies[72](index=72&type=chunk) - A **net foreign exchange loss of approximately HK$3.6 million** was recorded for the six months ended June 30, 2025, compared to a net gain of approximately HK$1.8 million in the prior period[72](index=72&type=chunk) - The Group did not engage in any derivative transactions or use any financial instruments for hedging against foreign currency risk[72](index=72&type=chunk) [Employees and Remuneration Policy](index=31&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) The Group had 80 employees with total staff costs of approximately HK$14.7 million and maintains a share option scheme to incentivize staff - As of June 30, 2025, the Group had a total of **80 employees** (December 31, 2024: 82)[73](index=73&type=chunk) - Total staff costs incurred for the six months ended June 30, 2025, were approximately **HK$14.7 million** (2024: HK$15.3 million)[73](index=73&type=chunk) - The Company adopted a share option scheme on May 7, 2018, to attract and retain experienced and capable individuals and to reward them for their contributions[73](index=73&type=chunk) [Material Acquisitions and Disposals and Major Investments](index=32&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE%E4%BB%A5%E5%8F%8A%E4%B8%BB%E8%A6%81%E6%8A%95%E8%B3%87) The Group had no material acquisitions, disposals, or major investments during the reporting period, but completed the sale of its Canadian business subsequently - During the six months ended June 30, 2025, the Group had **no material acquisitions and disposals** of subsidiaries, associates, or joint ventures, or major investments[74](index=74&type=chunk) - As of June 30, 2025, the Group had no significant investments[74](index=74&type=chunk) - Subsequent to the reporting period, the Group completed the disposal of its Canadian business on August 29, 2025[74](index=74&type=chunk) [Pledge of Assets](index=32&type=section&id=%E8%B3%87%E7%94%A2%E8%B3%AA%E6%8A%BC) Approximately HK$1.3 million in Canadian government bonds were pledged as security to obtain an operating license in Quebec - As of June 30, 2025, the Group held government bonds issued by the Government of Canada of approximately **HK$1.3 million**[75](index=75&type=chunk) - The bonds were held by the Consumer Protection Office of Quebec as a security pledge to obtain an operating license as required by the Travel Agents Act (Quebec)[75](index=75&type=chunk) [Contingent Liabilities](index=32&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 or guarantees - As of June 30, 2025, the Group did not have any significant contingent liabilities or guarantees[76](index=76&type=chunk) [Future Plans for Material Investments and Capital Assets](index=32&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The Group had no plans for material investments or capital assets as of June 30, 2025 - The Group had no plans for material investments and capital assets as of June 30, 2025[77](index=77&type=chunk) [Use of Proceeds from Listing](index=33&type=section&id=%E4%B8%8A%E5%B8%82%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The company will re-evaluate the use of the remaining HK$14.3 million in listing proceeds following the disposal of its Canadian business - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on June 28, 2018, raising net proceeds of approximately **HK$49.7 million**[78](index=78&type=chunk) Analysis of Use of Net Proceeds from Listing | Use of Net Proceeds | Net Proceeds from Share Offer (HK$ million) | Amount Utilised as of June 30, 2025 (HK$ million) | Unutilised Amount as of June 30, 2025 (HK$ million) | Expected Year of Full Utilisation | | :--- | :--- | :--- | :--- | :--- | | Repayment of bank borrowings | 21.5 | 21.5 | — | — | | Expansion of air ticketing distribution business | 13.4 | 1.0 | 12.4 | 2026 | | Enhancement of IT infrastructure | 6.7 | 4.8 | 1.9 | 2026 | | Expansion of travel business process management business | 6.9 | 6.9 | — | — | | Advertising and promotion | 1.2 | 1.2 | — | — | | **Total** | **49.7** | **35.4** | **14.3** | | - In light of the disposal of the Canadian business and to align with the Group's development strategy, the Company will re-evaluate the timeline and/or use of the net proceeds from the share offer[80](index=80&type=chunk) [Share Option Scheme](index=34&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company adopted a share option scheme in 2018, but no options have been granted, exercised, lapsed, or cancelled to date - The Company adopted a share option scheme on May 7, 2018, to incentivize eligible participants and to attract and retain experienced and capable individuals[81](index=81&type=chunk) - Since the adoption of the share option scheme and up to the date of this announcement, **no share options have been granted**, exercised, lapsed, or cancelled under the scheme[81](index=81&type=chunk) [Interim Dividend](index=34&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board resolved not to declare any interim dividend for the six months ended June 30, 2025 and 2024 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2025 and 2024[82](index=82&type=chunk) [Corporate Governance](index=34&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) [Corporate Governance Practices](index=34&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The company complied with the Corporate Governance Code, resolving a prior deviation where the roles of Chairman and CEO were held by the same person - The Company has complied with the Corporate Governance Code as set out in Appendix C1 to the Listing Rules for the six months ended June 30, 2025[83](index=83&type=chunk) - A previous deviation where the roles of Chairman and Chief Executive Officer were held by the same person was resolved on August 29, 2025, with the appointment of Mr. Liu Jiefeng as CEO, while Dr. Gao Songyan continues as Chairman[84](index=84&type=chunk) [Model Code for Securities Transactions by Directors](index=35&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The company has adopted the Model Code for securities transactions by directors, and all directors have confirmed their compliance - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules[85](index=85&type=chunk) - All Directors have confirmed that they have complied with the Model Code and its code of conduct during the six months ended June 30, 2025, and up to the date of this announcement[85](index=85&type=chunk) - The Company has also adopted the Model Code as a guideline for relevant employees who may possess unpublished inside information, with no incidents of non-compliance found[86](index=86&type=chunk) [Audit Committee](index=36&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, comprising three independent non-executive Directors, provides independent advice on financial reporting and internal controls - The Company established an Audit Committee on May 7, 2018, with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 of the Corporate Governance Code[87](index=87&type=chunk) - The primary duties of the Audit Committee are to assist the Board in providing an independent view of the effectiveness of the Group's financial reporting process, internal control, and risk management systems, and to oversee the audit process[87](index=87&type=chunk) - The Audit Committee currently consists of three independent non-executive Directors, namely Ms. Kwan Ka Yee (Chairman), Mr. Tan Wenta and Ms. Sun Yan Wing[87](index=87&type=chunk) [Review of Accounts](index=36&type=section&id=%E8%B3%AC%E7%9B%AE%E5%AF%A9%E9%96%B1) The Group's unaudited interim results have been reviewed by the Audit Committee and the external auditor in accordance with relevant standards - The Group's unaudited interim results and financial report for the six months ended June 30, 2025, have been reviewed by the Audit Committee[88](index=88&type=chunk) - The Audit Committee is of the opinion that the interim results and financial report have been prepared in accordance with applicable accounting standards, rules, and regulations, and that appropriate disclosures have been duly made[88](index=88&type=chunk) - The external auditor has also reviewed the interim financial information in accordance with International Standard on Review Engagements 2410[88](index=88&type=chunk) [Other Information](index=37&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) [Purchase, Sale, or Redemption of the Company's Listed Securities](index=37&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period - During the six months ended June 30, 2025, and up to the date of this announcement, neither the Company nor any of its subsidiaries had purchased, sold, or redeemed any of the Company's listed securities[89](index=89&type=chunk) [Publication of Interim Results and Interim Report](index=37&type=section&id=%E5%88%8A%E7%99%BC%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) The interim results announcement is available on the HKEX and company websites, and the interim report will be dispatched to shareholders in due course - The interim results announcement is published on the HKEX website (http://www.hkexnews.hk) and the Company's website (http://www.cighl.com)[90](index=90&type=chunk) - The interim report for the period, containing all information required by Appendix D2 of the Listing Rules, will be dispatched to shareholders and made available on the above websites in due course[90](index=90&type=chunk) [Board of Directors](index=37&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E6%88%90%E5%93%A1) As of the announcement date, the Board consists of three executive Directors and three independent non-executive Directors - As of the date of this announcement, the executive Directors are Mr. Liu Xuebin, Dr. Gao Songyan, and Mr. Liu Jiefeng[92](index=92&type=chunk) - The independent non-executive Directors are Mr. Tan Wenta, Ms. Sun Yan Wing, and Ms. Kwan Ka Yee[92](index=92&type=chunk)

Huishang International Holdings Limited Interim Results Announcement for the Six Months Ended June 30, 2025 [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) During the reporting period, the company's revenue significantly decreased by 76.7% to RMB 7.386 million, but gross profit turned from loss to a profit of RMB 346 thousand, with the loss for the period narrowing to RMB 6.573 million and basic loss per share at RMB 0.72 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | For the Six Months Ended June 30, 2025 (RMB thousands) | For the Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 7,386 | 31,817 | | Cost of Sales | (7,040) | (33,650) | | Gross Profit / (Loss) | 346 | (1,833) | | Other Income | 1,803 | 3,506 | | Loss Before Tax | (6,573) | (8,599) | | Loss for the Period | (6,573) | (8,599) | | Loss Per Share Attributable to Owners of the Company (RMB cents) | (0.72) | (0.97) | - Revenue decreased by **76.7% year-on-year**, primarily due to intensified market competition[4](index=4&type=chunk)[49](index=49&type=chunk) - Gross profit turned from a loss in the prior period to a profit, reflecting initial effects of cost control and operational adjustments[4](index=4&type=chunk)[49](index=49&type=chunk) [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets and total liabilities both decreased, with net current assets maintained at RMB 337.9 million and bank balances and cash reduced to RMB 316.0 million Condensed Consolidated Statement of Financial Position Key Data | Indicator | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current Assets | 47,939 | 50,070 | | Current Assets | 411,289 | 417,636 | | Current Liabilities | 73,403 | 73,751 | | Net Current Assets | 337,886 | 343,885 | | Net Assets | 385,587 | 393,704 | | Total Equity | 385,587 | 393,704 | - Bank balances and cash decreased to **RMB 316.0 million**, from RMB 397.8 million at the end of 2024[6](index=6&type=chunk)[51](index=51&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=5&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section details the basis of preparation, accounting policies, segment information, revenue composition, taxation, loss per share, share capital changes, and specifics of various assets and liabilities, providing context for understanding the financial data [Basis of Preparation](index=5&type=section&id=Basis%20of%20Preparation) - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and the disclosure requirements of Appendix 16 to the Listing Rules of the Stock Exchange of Hong Kong[8](index=8&type=chunk) - HKAS 21 (Revised) "Lack of Exchangeability" was first applied in the current period, with no significant impact on the Group's financial position or performance for the current and prior periods[11](index=11&type=chunk) [Segment Information](index=6&type=section&id=Segment%20Information) - The Group primarily operates in two reportable segments: slaughtering and pork product trading, and pipe system products[13](index=13&type=chunk)[14](index=14&type=chunk) [Segment Revenue and Results](index=7&type=section&id=Segment%20Revenue%20and%20Results) Segment Revenue and Results | Segment | For the Six Months Ended June 30, 2025 (RMB thousands) | For the Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Slaughtering and Pork Product Trading Revenue | 7,386 | 31,817 | | Slaughtering and Pork Product Trading Results | (4,026) | (4,545) | | Pipe System Products Revenue | - | - | | Pipe System Products Results | - | (1) | - Revenue from the slaughtering and pork product trading segment significantly decreased, but the segment loss narrowed[15](index=15&type=chunk)[16](index=16&type=chunk) [Segment Assets and Liabilities](index=9&type=section&id=Segment%20Assets%20and%20Liabilities) Segment Assets and Liabilities | Segment | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Slaughtering and Pork Product Trading Assets | 453,161 | 460,568 | | Slaughtering and Pork Product Trading Liabilities | (38,328) | (41,703) | | Pipe System Products Assets | 203 | 173 | | Pipe System Products Liabilities | (13,669) | (11,671) | [Geographical Information](index=11&type=section&id=Geographical%20Information) - All of the Group's revenue is derived from the Mainland China market[21](index=21&type=chunk) [Information About Major Customers](index=11&type=section&id=Information%20About%20Major%20Customers) - For the six months ended June 30, 2025, only one customer (Customer A) accounted for more than **10%** of the Group's total revenue, compared to seven customers in the prior period[22](index=22&type=chunk)[23](index=23&type=chunk) [Revenue and Other Income](index=12&type=section&id=Revenue%20and%20Other%20Income) Revenue and Other Income Details | Item | For the Six Months Ended June 30, 2025 (RMB thousands) | For the Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue from Customer Contracts (Pork Product Sales) | 7,386 | 31,817 | | Total Other Income | 1,803 | 3,506 | | Of which: Total Interest Income | 208 | 746 | | Of which: Dividend Income from Equity Investments | 105 | 1,261 | - Other income decreased year-on-year, primarily due to a decline in interest income and dividend income from equity investments[24](index=24&type=chunk) [Finance Costs](index=12&type=section&id=Finance%20Costs) Finance Costs | Item | For the Six Months Ended June 30, 2025 (RMB thousands) | For the Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest on Lease Liabilities | 5 | - | [Taxation](index=13&type=section&id=Taxation) - The Group incurred no income tax expenses in Hong Kong, China, or Japan[28](index=28&type=chunk)[32](index=32&type=chunk) - Hunan Huishang, a Chinese subsidiary, is exempt from enterprise income tax due to its engagement in primary processing of agricultural products, in accordance with tax preferential policies[30](index=30&type=chunk) [Loss for the Period](index=14&type=section&id=Loss%20for%20the%20Period) Loss for the Period Deductions | Item | For the Six Months Ended June 30, 2025 (RMB thousands) | For the Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Directors' Remuneration | 137 | 180 | | Total Staff Costs | 397 | 662 | | Depreciation of Property, Plant and Equipment | 2,011 | 2,776 | | Depreciation of Right-of-use Assets | 120 | 122 | | Cost of Inventories Recognized as Expense | 7,040 | 33,031 | [Loss Per Share Attributable to Owners of the Company](index=15&type=section&id=Loss%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Company) Loss Per Share and Number of Shares | Indicator | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (RMB thousands) | 6,667 | 8,551 | | Weighted Average Number of Ordinary Shares in Issue (shares) | 922,838,000 | 884,069,000 | | Basic and Diluted Loss Per Share (RMB cents) | (0.72) | (0.97) | [Dividends](index=15&type=section&id=Dividends) - No interim dividends were paid or declared by the Company for the six months ended June 30, 2025[36](index=36&type=chunk) [Movements in Property, Plant and Equipment and Right-of-use Assets](index=15&type=section&id=Movements%20in%20Property%2C%20Plant%20and%20Equipment%20and%20Right-of-use%20Assets) - No new property, plant and equipment or right-of-use assets were recognized during this interim period[37](index=37&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=15&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) Financial Assets at Fair Value Through Profit or Loss | Item | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Held-for-trading investments: Equity securities listed in Hong Kong | 4,617 | 5,379 | [Trade Receivables](index=16&type=section&id=Trade%20Receivables) Trade Receivables Ageing Analysis (Net of Provisions) | Ageing | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 30 days | 2,217 | 12,532 | | 31 to 60 days | 224 | 304 | | 61 to 90 days | 7,750 | 180 | | Total | 10,191 | 13,016 | - Net trade receivables decreased, and the proportion of receivables aged **61-90 days** significantly increased[40](index=40&type=chunk) [Loans Receivable, Prepayments, Deposits and Other Receivables](index=17&type=section&id=Loans%20Receivable%2C%20Prepayments%2C%20Deposits%20and%20Other%20Receivables) Loans Receivable, Prepayments, Deposits and Other Receivables | Item | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Loans Receivable (net) | 2,624 | 2,699 | | Other Receivables (net) | 7,711 | 7,176 | | Deposits (net) | 9,974 | 8,521 | | Other Prepayments (net) | 80,155 | 1,299 | | Less: Provision for Expected Credit Losses | (19,965) | (18,222) | | Total (net) | 80,499 | 1,473 | - Other prepayments significantly increased to **RMB 80.155 million**, primarily due to prepayments for biological assets[42](index=42&type=chunk) [Trade Payables](index=18&type=section&id=Trade%20Payables) Trade Payables Ageing Analysis | Ageing | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 30 days | 734 | 5,051 | | Over 60 days | 9,144 | 7,332 | | Total | 9,878 | 12,383 | - Total trade payables decreased, but the proportion of payables over **60 days** significantly increased[43](index=43&type=chunk) [Share Capital](index=18&type=section&id=Share%20Capital) Share Capital Movements | Item | Number of Shares | Amount (RMB thousands) | | :--- | :--- | :--- | | Issued and fully paid as of January 1, 2024 | 880,838,000 | 7,308 | | Subscription of new shares | 42,000,000 | 390 | | Issued and fully paid as of June 30, 2025 | 922,838,000 | 7,698 | - The Company completed a subscription of new shares on June 17, 2024, issuing **42,000,000 shares** at **HKD 0.053 per share**[45](index=45&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business performance, particularly the intensified market competition in pork trading and the suspension of pipe system products business, noting a significant revenue decrease but a positive gross margin and narrowed net loss, with stable financial position and no major capital commitments, maintaining an optimistic outlook for the future of the hog industry [Business Review](index=20&type=section&id=Business%20Review) - The Group primarily engages in slaughtering and trading of livestock and pork products, and previously in sales of pipe system products and related technical consulting services[46](index=46&type=chunk) [Slaughtering and Pork Product Trading Business](index=20&type=section&id=Slaughtering%20and%20Pork%20Product%20Trading%20Business) - The Group maintains its position as one of the pork suppliers in Changde City, Hunan Province, China, with core business including production and sales of pork products[47](index=47&type=chunk) - Due to intensified local market competition, the Group's revenue continued to decline, but gross margin recorded positive growth through effective cost control and strict quality control[47](index=47&type=chunk) [Pipe System Products](index=20&type=section&id=Pipe%20System%20Products) - The pipe system products business was suspended due to a significant increase in import costs from Germany, affected by the depreciation of the Japanese Yen and US tariffs[48](index=48&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) - For the period ended June 30, 2025, the Group's revenue was approximately **RMB 7.4 million**, a decrease of approximately **76.7%** compared to the same period last year[49](index=49&type=chunk) - The Company achieved a gross profit of approximately **RMB 346,000** in the interim period of 2025, reversing the gross loss recorded in previous periods[49](index=49&type=chunk) - Administrative expenses decreased by approximately **RMB 2.6 million**, a reduction of approximately **35.1%**, to approximately **RMB 4.8 million**, leading to a narrowed net loss for the period[50](index=50&type=chunk) [Liquidity, Financial Resources and Funding and Treasury Policies](index=21&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Funding%20and%20Treasury%20Policies) - As of June 30, 2025, the Group's bank balances and cash were approximately **RMB 316.0 million**, with net current assets of approximately **RMB 337.9 million**[51](index=51&type=chunk) - The Group adopts a conservative treasury policy, holding most bank deposits in Hong Kong Dollars or local operating subsidiary currencies to minimize exchange rate risk[51](index=51&type=chunk) [Gearing Ratio](index=21&type=section&id=Gearing%20Ratio) - The Group's gearing ratio was **zero** as of June 30, 2025[52](index=52&type=chunk) [Foreign Exchange Risk](index=21&type=section&id=Foreign%20Exchange%20Risk) - The Group's assets, liabilities, and operating cash flows are primarily denominated in Hong Kong Dollars, Renminbi, and Japanese Yen, with no related foreign exchange hedging currently in place[53](index=53&type=chunk) [Capital Commitments and Contingent Liabilities](index=22&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) - For the six months ended June 30, 2025, the directors were not aware of any significant capital commitments or contingent liabilities[54](index=54&type=chunk) [Material Acquisitions and Disposals](index=22&type=section&id=Material%20Acquisitions%20and%20Disposals) - During the review period, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[55](index=55&type=chunk) [Material Investments](index=22&type=section&id=Material%20Investments) - No other material investments were made during the review period[56](index=56&type=chunk) [Events After the Reporting Period](index=22&type=section&id=Events%20After%20the%20Reporting%20Period) - As of the date of this announcement, no significant events after the reporting period have occurred for the Company or the Group[57](index=57&type=chunk) [Interim Dividends](index=22&type=section&id=Interim%20Dividends) - The Board of Directors has resolved not to declare any interim dividends for the six months ended June 30, 2025[58](index=58&type=chunk) [Employees and Remuneration Policy](index=22&type=section&id=Employees%20and%20Remuneration%20Policy) - As of June 30, 2025, the Group employed **30 staff**, with remuneration determined based on performance and experience, and benefits including social insurance, medical insurance, and retirement scheme contributions[59](index=59&type=chunk) [Capital Structure](index=23&type=section&id=Capital%20Structure) - As of June 30, 2025, the Company had **922,838,000 ordinary shares** in issue, with a par value of **HKD 0.01 per share**[60](index=60&type=chunk) - There were no changes in the Company's capital structure for the six months ended June 30, 2025, and up to the date of this announcement[60](index=60&type=chunk) [Competing Interests of Directors and Controlling Shareholders](index=23&type=section&id=Competing%20Interests%20of%20Directors%20and%20Controlling%20Shareholders) - No director, controlling shareholder, or substantial shareholder of the Company, or any of their respective close associates, is considered to have an interest in any business that competes or is likely to compete, directly or indirectly, with the Group's business[61](index=61&type=chunk) [Directors' Interests in Contracts](index=23&type=section&id=Directors'%20Interests%20in%20Contracts) - Save for service contracts and letters of appointment with each director, neither the Company nor any of its subsidiaries entered into any material contract in which a director had a direct or indirect material interest that was subsisting at the end of the reporting period or at any time during the period[62](index=62&type=chunk) [Outlook and Future Prospects](index=23&type=section&id=Outlook%20and%20Future%20Prospects) - Despite recent stabilization in pork prices, market uncertainties persist, and the Group will continue to closely monitor market dynamics, policy changes, and environmental factors[63](index=63&type=chunk) - The trial operation of the joint venture slaughterhouse is progressing smoothly and has gradually commenced operations, expected to enhance production efficiency, expand the pork product line, and optimize cost structure[63](index=63&type=chunk) - The Group's management team is committed to implementing a strategic focus on the hog industry and remains optimistic about the Group's long-term development prospects[63](index=63&type=chunk) [Corporate Governance and Other Information](index=24&type=section&id=Corporate%20Governance%20and%20Other%20Information) The Group complies with the Model Code for Securities Transactions by Directors and the Code on Corporate Governance Practices; the Audit Committee has reviewed the interim financial statements, and this announcement and the interim report will be published on the HKEX and company websites [Compliance with the Model Code for Securities Transactions by Directors](index=24&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) - The Company has adopted the Model Code as set out in Appendix C3 of the Listing Rules and confirms that all directors have complied with it[64](index=64&type=chunk) [Code on Corporate Governance Practices](index=24&type=section&id=Code%20on%20Corporate%20Governance%20Practices) - The Company has adopted the Code on Corporate Governance Practices as set out in Appendix C1 of the Listing Rules and has complied with all code provisions for the six months ended June 30, 2025[65](index=65&type=chunk)[66](index=66&type=chunk) [Audit Committee and Review of Financial Statements](index=24&type=section&id=Audit%20Committee%20and%20Review%20of%20Financial%20Statements) - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025, with management[67](index=67&type=chunk) - The Audit Committee comprises three independent non-executive directors, with Mr. Luo Mingsheng serving as its chairman[67](index=67&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=25&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) - This interim results announcement and interim report will be published on the HKEX website www.hkexnews.hk and the Company's website www.hsihl.com[68](index=68&type=chunk)