Company Information and Legal Declarations [GEM Listing Features and Risk Warnings](index=2&type=section&id=GEM%20Listing%20Features%20and%20Risk%20Warnings) The GEM market provides a listing platform for small and medium-sized companies, but investors should be aware of its high investment risks and market volatility - The GEM market is positioned as a listing platform for small and medium-sized companies, but it carries **higher investment risks** and **market volatility**[2](index=2&type=chunk) [Directors' Responsibility Statement](index=2&type=section&id=Directors'%20Responsibility%20Statement) The company's directors jointly and individually assume full responsibility for this report, confirming its accuracy, completeness, and absence of misleading information in all material aspects - Directors confirm the report content is accurate, complete, and not misleading or deceptive, assuming full responsibility[2](index=2&type=chunk) Interim Financial Results [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's revenue decreased by 29.1% to HKD 30,038 thousand, but the loss for the period significantly narrowed to HKD 158 thousand, with profit attributable to owners of the Company turning positive at HKD 7,476 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 30,038 | 42,251 | -29.1% | | Other income and gains | 606 | 21 | 2785.7% | | Cost of inventories sold | (9,326) | (12,769) | -27.0% | | Staff costs | (10,279) | (16,517) | -37.8% | | Property rental and related expenses | (2,130) | (3,132) | -32.0% | | Advertising and marketing expenses | (32) | (215) | -85.1% | | Other operating expenses | (5,605) | (5,793) | -3.3% | | Depreciation and amortization | (4,767) | (6,795) | -29.9% | | Impairment loss on expected credit losses (net of reversal) | 2,070 | – | N/A | | Impairment loss on property, plant and equipment | (244) | – | N/A | | Finance costs | (489) | (527) | -7.2% | | Loss before tax | (158) | (3,476) | -95.5% | | Loss for the period | (158) | (3,476) | -95.5% | | Profit/(loss) for the period attributable to owners of the Company | 7,476 | (2,732) | 373.0% | | Loss for the period attributable to non-controlling interests | (7,634) | (744) | 926.1% | | Basic earnings/(loss) per share (HK cents) | 1.36 | (0.50) | 372.0% | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets decreased to HKD 16,124 thousand from HKD 25,549 thousand, with net current liabilities and net liabilities indicating ongoing liquidity pressure Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Non-current assets | 11,635 | 16,517 | -29.6% | | Current assets | 4,489 | 9,032 | -50.3% | | **Total assets** | **16,124** | **25,549** | **-36.9%** | | **Liabilities** | | | | | Current liabilities | 47,974 | 53,404 | -10.1% | | Non-current liabilities | 838 | 4,675 | -82.1% | | **Total liabilities** | **48,812** | **58,079** | **-15.9%** | | Net current liabilities | (43,485) | (44,372) | -2.0% | | Net liabilities | (32,688) | (32,530) | 0.5% | | **Equity** | | | | | Equity attributable to owners of the Company | (8,796) | (16,272) | -45.9% | | Non-controlling interests | (23,892) | (16,258) | 47.0% | | **Total equity** | **(32,688)** | **(32,530)** | **0.5%** | [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, equity attributable to owners of the Company improved to HKD (8,796) thousand from HKD (16,272) thousand, driven by a profit of HKD 7,476 thousand, despite an expanded loss for non-controlling interests Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | June 30, 2025 (HKD thousands) | January 1, 2025 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Equity attributable to owners of the Company | (8,796) | (16,272) | 7,476 | | Non-controlling interests | (23,892) | (16,258) | (7,634) | | Total equity | (32,688) | (32,530) | (158) | - Equity attributable to owners of the Company significantly improved due to a **profit of HKD 7,476 thousand** for the period[7](index=7&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash generated from operating activities was HKD 3,301 thousand, but net cash used in financing activities amounted to HKD 6,454 thousand, resulting in a net decrease of HKD 3,222 thousand in cash and cash equivalents, which fell to HKD 750 thousand at period-end Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | Change (HKD thousands) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 3,301 | 5,909 | (2,608) | | Net cash used in investing activities | (69) | (237) | 168 | | Net cash (used in) generated from financing activities | (6,454) | (6,035) | (419) | | Net decrease in cash and cash equivalents | (3,222) | (363) | (2,859) | | Cash and cash equivalents at end of period | 750 | 484 | 266 | - **Cash outflow from financing activities** is the primary reason for the significant decrease in cash and cash equivalents at period-end[8](index=8&type=chunk) Notes to the Financial Statements [General Information and Business Overview](index=9&type=section&id=General%20Information%20and%20Business%20Overview) Luk Hing Entertainment Group Holdings Limited, incorporated in the Cayman Islands in 2015 and listed on GEM in 2016, primarily engages in food and beverage and entertainment businesses, including operating clubs, restaurants, and music-related events - The company primarily engages in food and beverage and entertainment businesses, including operating clubs, restaurants, and music events[9](index=9&type=chunk) - The company is an investment holding company, with functional currencies including RMB and HKD[9](index=9&type=chunk) [Basis of Preparation and Going Concern Assumption](index=10&type=section&id=Basis%20of%20Preparation%20and%20Going%20Concern%20Assumption) The Group's interim financial statements are prepared in accordance with HKFRS and GEM Listing Rules, with consistent accounting policies, but significant net current liabilities and net liabilities raise material uncertainty about going concern, which management addresses through various measures - The Group has **net current liabilities of HKD 43,485 thousand** and **net liabilities of HKD 32,688 thousand**, constituting a material uncertainty regarding its ability to continue as a going concern[11](index=11&type=chunk) - Management plans to improve liquidity through renewing bank facilities, seeking other financing arrangements, and implementing strict cost controls[12](index=12&type=chunk)[13](index=13&type=chunk) [Statement of Compliance](index=10&type=section&id=Statement%20of%20Compliance) The Group's condensed consolidated interim financial information is unaudited but prepared in accordance with HKFRS and applicable GEM Listing Rules disclosure requirements - Interim financial information is unaudited but complies with HKFRS and GEM Listing Rules[10](index=10&type=chunk) [Basis of Measurement and Going Concern Assumption](index=10&type=section&id=Basis%20of%20Measurement%20and%20Going%20Concern%20Assumption) This interim financial report does not include all annual financial statement information and should be read in conjunction with the annual report, with consistent accounting policies and no material impact from new HKFRS, despite significant net current and total liabilities - As of June 30, 2025, the Group has **net current liabilities of approximately HKD 43,485 thousand** and **net liabilities of approximately HKD 32,688 thousand**, indicating a material uncertainty regarding going concern[11](index=11&type=chunk) [Management's Measures](index=11&type=section&id=Management's%20Measures) To ensure going concern, management will negotiate renewal of bank facilities, explore other financing options to increase capital, and implement stricter cost controls to improve working capital and cash flows - Management will negotiate the renewal of bank facilities and believes existing facilities will be renewed[13](index=13&type=chunk) - Management will consider other financing arrangements and fundraising options to increase capital and support company growth[13](index=13&type=chunk) - Management will implement stricter cost control measures to improve working capital and cash flows[13](index=13&type=chunk) [Operating Segment Information](index=12&type=section&id=Operating%20Segment%20Information) The Group operates solely in the food and beverage and entertainment industry with no separate reportable segments, deriving all revenue and holding all non-current assets in Hong Kong, with no single customer contributing 10% or more of total revenue - The Group has no separate reportable segments, with all business operations and non-current assets located in Hong Kong[14](index=14&type=chunk)[16](index=16&type=chunk) [Geographical Information](index=12&type=section&id=Geographical%20Information) All of the Group's revenue from external customers and non-current assets are located in Hong Kong, with no revenue generated or non-current properties held in mainland China Revenue by Geographical Area (For the six months ended June 30) | Region | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Hong Kong | 30,038 | 42,251 | Non-current Assets by Geographical Area (As of June 30) | Region | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Hong Kong | 11,635 | 16,517 | [Major Customer Information](index=13&type=section&id=Major%20Customer%20Information) During the period, no single external customer accounted for 10% or more of the Group's total revenue - No single customer contributed **10% or more of total revenue** this period, indicating a diversified customer base[17](index=17&type=chunk) [Revenue Analysis](index=13&type=section&id=Revenue%20Analysis) The Group's revenue primarily stems from the sale of food, beverages, and other products, as well as event organization, totaling HKD 30,038 thousand for the six months ended June 30, 2025, with food and other product sales contributing HKD 27,295 thousand Revenue Analysis (For the six months ended June 30) | Revenue Source | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Sale of food and other products | 27,295 | 38,038 | | Sale of beverages | 2,743 | 4,213 | | **Total Revenue** | **30,038** | **42,251** | - Sale of food and other products is the primary revenue source, accounting for **90.8% of total revenue**[19](index=19&type=chunk) [Other Income and Gains](index=14&type=section&id=Other%20Income%20and%20Gains) For the six months ended June 30, 2025, other income and gains significantly increased to HKD 606 thousand (from HKD 21 thousand in 2024), primarily due to a reversal of accrued expenses, net exchange gains, and other interest income Other Income and Gains (For the six months ended June 30) | Source | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Net exchange gains | 18 | – | | Other interest income | 115 | – | | Others | 23 | 21 | | Reversal of accrued expenses | 450 | – | | **Total** | **606** | **21** | - **Reversal of accrued expenses** is the main contributor to the significant increase in other income and gains this period[20](index=20&type=chunk) [Taxation](index=14&type=section&id=Taxation) For the six months ended June 30, 2025 and 2024, the Group incurred no income tax expense, primarily because its Hong Kong subsidiaries had no estimated assessable profits - No income tax expense was incurred this period or in the prior period, as Hong Kong subsidiaries had no assessable profits[21](index=21&type=chunk) [Earnings/(Loss) Per Share](index=15&type=section&id=Earnings%2F(Loss)%20Per%20Share) For the six months ended June 30, 2025, basic and diluted earnings per share attributable to owners of the Company were 1.36 HK cents, a significant improvement from a loss of 0.50 HK cents per share in 2024, primarily due to a positive profit for the period Earnings/(Loss) Per Share (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit/(loss) for basic and diluted earnings/(loss) per share (HKD thousands) | 7,476 | (2,732) | | Weighted average number of ordinary shares (thousands) | 548,256 | 548,256 | | Basic earnings/(loss) per share (HK cents) | 1.36 | (0.50) | | Diluted earnings/(loss) per share (HK cents) | 1.36 | (0.50) | - Basic and diluted earnings per share turned from loss to profit, reflecting improved company profitability[22](index=22&type=chunk) [Finance Costs](index=16&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, finance costs decreased to HKD 489 thousand from HKD 527 thousand in 2024, primarily due to reduced bank loan interest, despite an increase in lease liabilities interest Finance Costs (For the six months ended June 30) | Source | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Bank loan interest | 125 | 376 | | Lease liabilities interest | 263 | 144 | | Interest on provision for restoration costs | 31 | – | | Others | 70 | 7 | | **Total** | **489** | **527** | - A significant decrease in **bank loan interest** is the main reason for the reduction in finance costs[23](index=23&type=chunk) [Dividend Policy](index=16&type=section&id=Dividend%20Policy) The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board of Directors does not recommend paying an interim dividend[24](index=24&type=chunk) [Property, Plant and Equipment](index=16&type=section&id=Property,%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group's cost of acquiring property, plant and equipment decreased to HKD 69 thousand from HKD 237 thousand in 2024, with no disposals during the period - The cost of acquiring property, plant and equipment this period was **HKD 69 thousand**, a **70.8% decrease** year-on-year[25](index=25&type=chunk) - No property, plant and equipment items were disposed of during the period[26](index=26&type=chunk) [Right-of-Use Assets and Lease Liabilities](index=17&type=section&id=Right-of-Use%20Assets%20and%20Lease%20Liabilities) As of June 30, 2025, right-of-use assets decreased to HKD 7,771 thousand from HKD 12,263 thousand, primarily due to depreciation, while total lease liabilities were HKD 7,990 thousand, reflecting a reduction in leased restaurant properties Right-of-Use Assets (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | January 1 | 12,263 | 4,087 | | Depreciation provision | (4,492) | (10,513) | | Period-end | 7,771 | 12,263 | Lease Liabilities (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Current | 7,832 | 8,764 | | Non-current | 158 | 4,012 | | **Total** | **7,990** | **12,776** | - The number of restaurant properties leased by the Group decreased from five to four, with lease terms ranging from 1 to 2 years[27](index=27&type=chunk) [Trade and Other Receivables](index=19&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, net trade receivables increased to HKD 950 thousand, while total other receivables and deposits decreased to HKD 6,071 thousand, with the Group maintaining a 60-day credit period and strict control over outstanding receivables Trade and Other Receivables (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Net trade receivables | 950 | 630 | | Net other receivables | 458 | 400 | | Prepayments | 1,268 | 1,789 | | Net deposits | 3,395 | 4,492 | | **Total** | **6,071** | **7,311** | - The Group has a **60-day credit period** for trade receivables and no significant concentration of credit risk[29](index=29&type=chunk)[30](index=30&type=chunk) [Ageing Analysis of Trade Receivables](index=20&type=section&id=Ageing%20Analysis%20of%20Trade%20Receivables) As of June 30, 2025, trade receivables (net of credit loss allowance) were primarily concentrated in the 0-30 day (HKD 611 thousand) and 31-60 day (HKD 253 thousand) ageing brackets Ageing Analysis of Trade Receivables (As of June 30) | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 days | 611 | 626 | | 31 to 60 days | 253 | 4 | | 61 to 90 days | 86 | – | | 91 to 120 days | – | – | | **Total** | **950** | **630** | [Movement in Credit Loss Allowance](index=20&type=section&id=Movement%20in%20Credit%20Loss%20Allowance) As of June 30, 2025, the allowance for credit losses on trade receivables decreased from HKD 3,118 thousand to HKD 323 thousand, mainly due to write-offs and a reduction in expected credit loss provisions Movement in Accumulated Credit Loss Allowance for Trade Receivables (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | January 1 | 3,118 | 883 | | Write-offs | (726) | (668) | | Expected credit loss allowance recognized during the period | (2,069) | 2,903 | | **Period-end** | **323** | **3,118** | - The allowance for credit losses on trade receivables significantly decreased, primarily due to write-offs and adjustments to expected credit loss provisions[32](index=32&type=chunk) [Loans Receivable](index=22&type=section&id=Loans%20Receivable) The Group's total loans receivable of HKD 3,450 thousand are fully provided for expected credit losses, resulting in a net balance of zero, as these loans are overdue by 90 days or more, and recovery is deemed unlikely Loans Receivable (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Total loans receivable | 3,450 | 3,450 | | Less: Allowance for expected credit losses | (3,450) | (3,450) | | **Net loans receivable** | **–** | **–** | - Loans receivable are fully provided for, with the company deeming recovery unlikely and having initiated legal action[35](index=35&type=chunk) [Trade and Other Payables](index=23&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables decreased to HKD 32,371 thousand, primarily comprising other payables, rental payables, and accrued expenses, including defaulted convertible notes and director/shareholder loans Trade and Other Payables (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Trade payables | 3,404 | 4,004 | | Rental payables | 3,240 | 1,813 | | Other payables | 14,198 | 18,758 | | Directors' loans | 850 | 750 | | Shareholders' loans | 1,825 | 1,825 | | Accrued expenses | 8,368 | 6,934 | | Other tax payables | 486 | 839 | | **Total** | **32,371** | **34,823** | - Other payables include approximately **HKD 1,404 thousand** for defaulted convertible promissory notes[39](index=39&type=chunk) - Directors' loans and a portion of shareholders' loans bear interest at an **annual rate of 5.25%**[38](index=38&type=chunk)[39](index=39&type=chunk) [Ageing Analysis of Trade Payables](index=24&type=section&id=Ageing%20Analysis%20of%20Trade%20Payables) As of June 30, 2025, trade payables were mainly concentrated in the 0-30 day (HKD 1,006 thousand) and 91-120 day (HKD 1,255 thousand) ageing brackets Ageing Analysis of Trade Payables (As of June 30) | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 days | 1,006 | 1,401 | | 31 to 60 days | 412 | 691 | | 61 to 90 days | 731 | 528 | | 91 to 120 days | 1,255 | 1,384 | | **Total** | **3,404** | **4,004** | [Share Capital](index=24&type=section&id=Share%20Capital) As of June 30, 2025, the Company's authorized share capital was HKD 100,000 thousand, with issued and fully paid share capital of HKD 54,826 thousand, comprising 548,256 thousand shares, unchanged from December 31, 2024 Share Capital (As of June 30) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Authorized share capital (HKD thousands) | 100,000 | 100,000 | | Issued and fully paid share capital (HKD thousands) | 54,826 | 54,826 | | Issued ordinary shares (thousands) | 548,256 | 548,256 | - The share capital structure remained stable this period, with no new issuances or redemptions[41](index=41&type=chunk) [Capital Commitments](index=25&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group's outstanding contracted capital commitments not yet provided for in the financial statements amounted to HKD 18,207 thousand, primarily representing unpaid capital contributions to a PRC subsidiary, consistent with December 31, 2024 Capital Commitments (As of June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Unpaid capital contribution to a PRC subsidiary | 18,207 | 18,207 | - Capital commitments primarily relate to capital contributions to a PRC subsidiary, with the amount remaining unchanged[42](index=42&type=chunk) [Significant Related Party Transactions](index=25&type=section&id=Significant%20Related%20Party%20Transactions) The Group engaged in several related party transactions, including remuneration paid to key management personnel and rental and loan interest expenses with specific related parties, with key management remuneration decreasing and Mr. Choi Siu Chak's loan interest expense increasing - The Group's related party transactions include key management personnel remuneration, rental expenses, and loan interest expenses[43](index=43&type=chunk)[44](index=44&type=chunk) [Key Management Personnel Remuneration](index=25&type=section&id=Key%20Management%20Personnel%20Remuneration) For the six months ended June 30, 2025, total remuneration paid to the Group's key management personnel was HKD 545 thousand, a 42.8% decrease from HKD 953 thousand in 2024 Key Management Personnel Remuneration (For the six months ended June 30) | Remuneration Type | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Salaries and other short-term employee benefits | 532 | 935 | | Retirement scheme contributions | 13 | 18 | | **Total** | **545** | **953** | - Key management personnel remuneration decreased by **42.8% year-on-year**, reflecting cost control measures[43](index=43&type=chunk) [Other Related Party Transactions](index=26&type=section&id=Other%20Related%20Party%20Transactions) For the six months ended June 30, 2025, the Group incurred no rental expenses to Zone One (CS) Limited (HKD 510 thousand in 2024), but loan interest expenses paid to Executive Director Mr. Choi Siu Chak increased from HKD 7 thousand to HKD 19 thousand Other Related Party Transactions (For the six months ended June 30) | Related Party | Nature of Transaction | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | :--- | | Zone One (CS) Limited | Rental expenses | – | 510 | | Choi Siu Chak | Loan interest expenses | 19 | 7 | - Rental expenses with Zone One (CS) Limited have ceased, but loan interest expenses paid to Executive Director Mr. Choi Siu Chak have increased[44](index=44&type=chunk) Management Discussion and Analysis [Business Review and Outlook](index=27&type=section&id=Business%20Review%20and%20Outlook) In the first half of 2025, the Group closed "SIXA" to focus resources on "HEXA," addressing challenges through promotions and cost control, with a continued focus on "HEXA's" refined operations, menu development, timed promotions, service enhancement, and supply chain optimization for the second half - The Group closed "SIXA" on March 24, 2025, to concentrate resources on "HEXA"[46](index=46&type=chunk) - Cost control measures, including human resource optimization and supplier repricing, are being tightened, alongside ongoing menu development[46](index=46&type=chunk) - The second half will focus on timed promotions, themed menus, strict cost control, and supply chain optimization[46](index=46&type=chunk)[60](index=60&type=chunk) [Business Review](index=27&type=section&id=Business%20Review) In the first half of 2025, the Group closed "SIXA" to focus on "HEXA" as its core restaurant, successfully mitigating declining customer traffic through promotional activities, while managing operational challenges and costs via human resource optimization and supplier repricing - "SIXA" was closed to focus on "HEXA" operations[46](index=46&type=chunk) - Promotional activities were launched to maintain customer traffic, but the operating environment remains challenging[46](index=46&type=chunk) - Cost control was tightened through human resource optimization and supplier repricing[46](index=46&type=chunk) [Outlook](index=31&type=section&id=Outlook) In the second half of 2025, the Group will prioritize refining "HEXA's" menu and pricing, implementing timed promotions and themed meals to boost off-peak utilization, and enhancing service standards, while maintaining strict cost control and exploring new business opportunities - The second half will focus on refining "HEXA's" menu and pricing, and improving off-peak utilization through timed promotions[60](index=60&type=chunk) - Strict cost control will continue through lean staffing, tighter procurement terms, and supply chain optimization[60](index=60&type=chunk) - The company will prudently manage incremental demand, monitor lease economics and financial costs, and identify potential business and investment opportunities[60](index=60&type=chunk) [Financial Review](index=27&type=section&id=Financial%20Review) The Group's revenue for the first half of 2025 decreased by 29.1% to HKD 30.0 million, primarily due to shifting customer consumption patterns towards mainland China, while various expenses significantly declined due to the cessation of "SIXA" operations and strict cost control measures, resulting in a net loss attributable to owners of the Company of HKD 7.5 million - Revenue decreased by **29.1% to HKD 30.0 million** year-on-year, mainly due to shifting customer consumption patterns towards mainland China[47](index=47&type=chunk) - Various operating expenses significantly decreased due to the cessation of "SIXA" operations and strict cost control measures[48](index=48&type=chunk)[49](index=49&type=chunk) - The net loss attributable to owners of the Company was **HKD 7.5 million**, primarily impacted by the cessation of "SIXA" operations and the reversal of expected credit losses[50](index=50&type=chunk) [Revenue](index=27&type=section&id=Revenue) The Group's total revenue decreased by 29.1% from approximately HKD 42.3 million in the first half of 2024 to approximately HKD 30.0 million in the same period of 2025, mainly due to customers shifting their consumption patterns towards mainland China Revenue (For the six months ended June 30) | Indicator | 2025 (HKD millions) | 2024 (HKD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 30.0 | 42.3 | -29.1% | [Expenses](index=28&type=section&id=Expenses) Cost of inventories sold, staff costs, property rental and related expenses, advertising and marketing expenses, other operating expenses, and depreciation and amortization all significantly decreased due to the cessation of "SIXA" operations and strict cost control measures, with staff costs seeing the largest reduction at 95.4% Key Expense Changes (For the six months ended June 30) | Expense Item | 2025 (HKD millions) | 2024 (HKD millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cost of inventories sold | 9.3 | 12.8 | -27.3% | | Staff costs | 10.3 | 16.5 | -37.8% | | Property rental and related expenses | 2.1 | 3.1 | -32.3% | | Advertising and marketing expenses | 0.032 | 0.215 | -85.1% | | Other operating expenses | 5.6 | 5.8 | -3.4% | | Depreciation and amortization | 4.8 | 6.8 | -29.4% | - **Staff costs decreased significantly by 95.4%**, primarily due to the cessation of "SIXA" operations and strict cost control[48](index=48&type=chunk) [Loss Attributable to Owners of the Company](index=28&type=section&id=Loss%20Attributable%20to%20Owners%20of%20the%20Company) In the first half of 2025, the net loss attributable to owners of the Company was approximately HKD 7.5 million, compared to a net loss of approximately HKD 2.7 million in the same period of 2024, mainly due to the cessation of "SIXA" operations and a reversal of expected credit losses Loss Attributable to Owners of the Company (For the six months ended June 30) | Indicator | 2025 (HKD millions) | 2024 (HKD millions) | | :--- | :--- | :--- | | Net loss attributable to owners of the Company | 7.5 | 2.7 | - The increased loss is primarily due to the cessation of "SIXA" operations and the reversal of expected credit losses[50](index=50&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=29&type=section&id=Liquidity,%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2025, the Group's current and quick ratios both declined to 0.1, and the debt-to-equity ratio rose to 302.7%, indicating increased liquidity pressure, with cash and cash equivalents falling to HKD 0.8 million and external borrowings at HKD 7.6 million, prompting the company to implement measures to alleviate liquidity strain Key Financial Ratios (As of June 30) | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Ratio | 0.1 | 0.2 | | Quick Ratio | 0.1 | 0.2 | | Debt-to-equity Ratio | 302.7% | 227.3% | - Current and quick ratios decreased, while the debt-to-equity ratio increased, indicating heightened liquidity pressure[51](index=51&type=chunk) [Key Financial Ratios](index=29&type=section&id=Key%20Financial%20Ratios) As of June 30, 2025, the Group's current ratio was 0.1, quick ratio was 0.1, and debt-to-equity ratio was 302.7%, with the gearing ratio not applicable Key Financial Ratios (As of June 30) | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Ratio | 0.1 | 0.2 | | Quick Ratio | 0.1 | 0.2 | | Debt-to-equity Ratio | 302.7% | 227.3% | | Gearing Ratio | Not applicable | Not applicable | [Cash and External Borrowings](index=29&type=section&id=Cash%20and%20External%20Borrowings) As of June 30, 2025, the Group's cash and cash equivalents significantly decreased to HKD 0.8 million from HKD 4.0 million, while external borrowings slightly declined to HKD 7.6 million from HKD 8.8 million Cash and External Borrowings (As of June 30) | Indicator | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Cash and cash equivalents | 0.8 | 4.0 | | External borrowings | 7.6 | 8.8 | - Cash and cash equivalents significantly decreased, while external borrowings slightly declined[54](index=54&type=chunk) [Pledge of Assets](index=29&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no assets pledged - The Group has no assets pledged[55](index=55&type=chunk) [Foreign Exchange Risk](index=30&type=section&id=Foreign%20Exchange%20Risk) The Group's primary business operations are conducted in HKD and RMB, with overseas financial statements translated into HKD, and due to the relatively stable HKD exchange rate, currency fluctuations are not expected to materially impact operations - Primary business operations are in HKD and RMB, and with a stable HKD exchange rate, foreign exchange risk is not expected to be significant[56](index=56&type=chunk) [Contingent Liabilities and Capital Commitments](index=30&type=section&id=Contingent%20Liabilities%20and%20Capital%20Commitments) Except as disclosed in this interim report, the Group had no other contingent liabilities or capital commitments as of June 30, 2025 - Except as disclosed, the Group has no other contingent liabilities or capital commitments[57](index=57&type=chunk) [Material Investments, Acquisitions and Disposals](index=30&type=section&id=Material%20Investments,%20Acquisitions%20and%20Disposals) Subsequent to the reporting period, the Company's non-wholly owned subsidiary, Hua Run Group Limited, entered into a subscription agreement to issue convertible bonds totaling HKD 3,000,000, which upon full conversion, will reduce the Company's equity interest in the target company to approximately 13.2%, constituting a deemed disposal of interest - Non-wholly owned subsidiary Hua Run Group Limited issued **HKD 3,000,000 convertible bonds**[58](index=58&type=chunk) - Upon full conversion, the Company's equity interest in the target company will decrease to approximately **13.2%**, constituting a deemed disposal[58](index=58&type=chunk) [Employees and Remuneration Policy](index=31&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 49 employees, a significant reduction from 87 in 2024, with remuneration policies based on market terms and individual performance to offer competitive compensation and optimize staff structure Number of Employees (As of June 30) | Indicator | June 30, 2025 | 2024 | | :--- | :--- | :--- | | Number of employees | 49 | 87 | - The number of employees significantly decreased, and the company is actively optimizing its staff structure and offering competitive remuneration packages[59](index=59&type=chunk) Other Information [Directors' and Chief Executive's Interests](index=32&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) As of June 30, 2025, Executive Director Mr. Choi Siu Chak held a 19.95% long position in the Company's ordinary shares through controlled corporations and joint holdings, and also held interests in Welmen Investment Co. Ltd Directors' and Chief Executive's Interests (As of June 30) | Name | Group Member/Associated Corporation | Nature of Interest | Number and Class of Securities | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Mr. Choi Siu Chak | The Company | Interest in controlled corporation, interest held jointly with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Choi Siu Chak | Welmen | Interest in controlled corporation | 3,031.11 ordinary shares (L) | 30.3111% | | Mr. Choi Siu Chak | Welmen | Beneficial owner | 1,262.225 ordinary shares (L) | 12.62225% | - Mr. Choi Siu Chak holds significant interests in the Company and its associated corporations through various means[62](index=62&type=chunk) [Major Shareholders' Interests](index=34&type=section&id=Major%20Shareholders'%20Interests) As of June 30, 2025, Restoran Oversea (CST) Sdn Bhd was the largest shareholder with 29.00% of shares, while Welmen Investment Co. Ltd. and its associates (including Mr. Choi Yat Hon, Mr. Choi Siu Chak, and other parties acting in concert) collectively held 19.95%, and Trendy Pleasure Limited and its associates held 5.47% Major Shareholders' Interests (As of June 30) | Shareholder Name/Designation | Nature of Interest | Number and Class of Securities | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Restoran Oversea (CST) Sdn Bhd | Beneficial owner | 158,988,000 ordinary shares (L) | 29.00% | | Welmen Investment Co. Ltd | Beneficial owner | 109,350,000 ordinary shares (L) | 19.95% | | Yui Tak Investment Limited | Interest in controlled corporation | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Choi Yat Hon | Interest in controlled corporation, interest held jointly with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Au Wai Pong | Interest held jointly with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Au Ka Wai | Interest held jointly with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Yeung Chi Shing | Interest held jointly with another person | 109,350,000 ordinary shares (L) | 19.95% | | Ms. Chan Ting Fai | Spouse's interest | 109,350,000 ordinary shares (L) | 19.95% | | Ms. Lee Wan | Spouse's interest | 109,350,000 ordinary shares (L) | 19.95% | | Trendy Pleasure Limited | Beneficial owner | 30,000,000 ordinary shares (L) | 5.47% | | Saint Lotus Cultural Development Group Co., Limited | Interest in controlled corporation | 30,000,000 ordinary shares (L) | 5.47% | | Mr. Cheung Kin Kwong | Interest in controlled corporation | 30,000,000 ordinary shares (L) | 5.47% | - Multiple directors and affiliated parties collectively hold company shares through acting in concert agreements[64](index=64&type=chunk)[69](index=69&type=chunk) [Dealings in Listed Securities](index=36&type=section&id=Dealings%20in%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During this period, the company and its subsidiaries did not purchase, sell, or redeem any listed securities[68](index=68&type=chunk) [Interests in Competing Business](index=37&type=section&id=Interests%20in%20Competing%20Business) Directors hold interests in various restaurant and bar businesses in Macau and Hong Kong, but the company believes these are distinct and do not constitute direct or indirect competition, while Executive Director Mr. Choi Siu Chak's spouse holds interests in several Hong Kong restaurant businesses - Directors hold interests in restaurant and bar businesses in Macau and Hong Kong, but the company believes these do not constitute competition[70](index=70&type=chunk) - Mr. Choi Siu Chak's spouse holds interests in Lucky Pot Catering Group Company Limited, Sham Tseng Chan Kee Roasted Goose Company Limited, and Yu Tung Company Limited in Hong Kong[70](index=70&type=chunk) [Share Option Scheme](index=38&type=section&id=Share%20Option%20Scheme) The Company adopted a share option scheme on October 18, 2016, to incentivize employees and directors, with a 10-year validity period expiring on November 11, 2026, and as of June 30, 2025, 2,250,810 share options remained unexercised at an exercise price of HKD 0.5921 - The share option scheme was adopted in 2016 to incentivize employees and is valid until **November 11, 2026**[72](index=72&type=chunk) Share Option Movements (As of June 30) | Category | Grant Date | Exercise Period | Exercise Price | Unexercised as of January 1, 2025 | Unexercised as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Employees and consultants | October 2, 2018 | 2018.10.2-2028.10.1 | HKD 0.5921 | 771,180 | 771,180 | | Employees and consultants | October 2, 2018 | 2019.10.2-2028.10.1 | HKD 0.5921 | 771,180 | 771,180 | | Employees and consultants | October 2, 2018 | 2020.10.2-2028.10.1 | HKD 0.5921 | 451,390 | 451,390 | | Employees and consultants | October 2, 2018 | 2021.10.2-2028.10.1 | HKD 0.5921 | 257,060 | 257,060 | | **Total** | | | | **2,250,810** | **2,250,810** | - As of June 30, 2025, **2,250,810 share options** remained unexercised, with an exercise price of **HKD 0.5921**[75](index=75&type=chunk) [Corporate Governance Practices](index=41&type=section&id=Corporate%20Governance%20Practices) The Group is committed to maintaining high corporate governance standards, having adopted and complied with the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules, believing it benefits shareholders and supports sustainable growth - The Group has adopted and complies with the GEM Listing Rules' Corporate Governance Code, committed to maintaining high standards[81](index=81&type=chunk) [Changes in Directors' Information](index=41&type=section&id=Changes%20in%20Directors'%20Information) Except as disclosed in this report, there were no changes in directors' information during the six months ended June 30, 2025, and up to the date of this report - No changes in directors' information occurred during this period[82](index=82&type=chunk) [Directors' Securities Transactions](index=41&type=section&id=Directors'%20Securities%20Transactions) The Company has adopted a code of conduct for directors' securities transactions, and all directors confirmed compliance with the standard code during the six months ended June 30, 2025 - Directors confirm compliance with the company's standard code for securities transactions[83](index=83&type=chunk) [Dividends](index=42&type=section&id=Dividends) The Board of Directors resolved not to declare a dividend for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board of Directors does not declare an interim dividend[84](index=84&type=chunk) [Audit Committee](index=42&type=section&id=Audit%20Committee) The Company has established an Audit Committee, chaired by Independent Non-executive Director Ms. Tse Mei Ling, responsible for providing independent advice on financial reporting, internal controls, and risk management, and has reviewed the financial information in this interim report - The Audit Committee, composed of independent non-executive directors, is responsible for financial reporting, internal controls, and risk management[85](index=85&type=chunk) - The Audit Committee has reviewed the unaudited financial statements in this interim report[85](index=85&type=chunk) [Major Transactions and Compliance Issues](index=42&type=section&id=Major%20Transactions%20and%20Compliance%20Issues) The Group failed to comply with GEM Listing Rules' notification, announcement, and shareholder approval requirements when renewing tenancy agreements for Taikoo Property and Harbour City Property due to an unintentional oversight regarding HKFRS 16, expressing regret and committing to remedial actions to enhance internal controls and compliance, while a non-wholly owned subsidiary's convertible bond issuance also constitutes a major transaction requiring GEM Listing Rules compliance - The company failed to comply with GEM Listing Rules 19.34, 19.38, and 19.40 due to an unintentional oversight in implementing HKFRS 16 regarding tenancy agreements[92](index=92&type=chunk) - Remedial actions will include providing GEM Listing Rules training for board members, senior management, and responsible personnel[93](index=93&type=chunk) - Internal controls and reporting procedures will be strengthened, with annual reviews of existing procedures and consultation with external professionals as needed[93](index=93&type=chunk) - The issuance of convertible bonds by a non-wholly owned subsidiary constitutes a major transaction requiring compliance with GEM Listing Rules for reporting, announcement, and shareholder approval[95](index=95&type=chunk) [Discloseable Transaction on Renewal of Tenancy Agreement](index=42&type=section&id=Discloseable%20Transaction%20on%20Renewal%20of%20Tenancy%20Agreement) The Company's indirect non-wholly owned subsidiary, Hua Run Group Limited, renewed the Taikoo Property tenancy for approximately HKD 3.5 million plus additional turnover rent, constituting a discloseable transaction but exempted from shareholder approval - The renewal of the Taikoo Property tenancy, totaling approximately **HKD 3.5 million**, constitutes a discloseable transaction[86](index=86&type=chunk)[87](index=87&type=chunk) [Major Transaction on Renewal of Tenancy Agreement](index=43&type=section&id=Major%20Transaction%20on%20Renewal%20of%20Tenancy%20Agreement) The tenant renewed the Harbour City Property tenancy for approximately HKD 15.9 million plus additional turnover rent, constituting a major transaction requiring compliance with GEM Listing Rules for reporting, announcement, circular, and shareholder approval, though the EGM has not yet been convened - The renewal of the Harbour City Property tenancy, totaling approximately **HKD 15.9 million**, constitutes a major transaction[89](index=89&type=chunk) - This transaction requires compliance with GEM Listing Rules for reporting, announcement, circular, and shareholder approval, but the EGM has not yet been convened as of the report date[89](index=89&type=chunk)[90](index=90&type=chunk) [Remedial Actions](index=44&type=section&id=Remedial%20Actions) The company regrets its failure to comply with GEM Listing Rules regarding timely shareholder approval and announcement for the aforementioned tenancy agreements, and will implement remedial measures including training, enhanced internal controls, and external professional consultation to prevent recurrence - The company failed to comply with GEM Listing Rules 19.34, 19.38, and 19.40 due to an unintentional oversight in implementing HKFRS 16[92](index=92&type=chunk) - GEM Listing Rules training will be provided for board members, senior management, and responsible personnel[93](index=93&type=chunk) - Internal controls and reporting procedures will be strengthened, with annual reviews of existing procedures and consultation with external professionals as necessary[93](index=93&type=chunk) [Issue of Convertible Bonds by a Non-wholly Owned Subsidiary and Deemed Disposal of Interest Constituting a Major Transaction](index=46&type=section&id=Issue%20of%20Convertible%20Bonds%20by%20a%20Non-wholly%20Owned%20Subsidiary%20and%20Deemed%20Disposal%20of%20Interest%20Constituting%20a%20Major%20Transaction) The Company's non-wholly owned subsidiary, Hua Run Group Limited, issued convertible bonds with a principal amount of HKD 3,000,000 at an annual interest rate of 10%, which upon full conversion, will reduce the Company's equity interest in the target company to approximately 13.2%, constituting a major transaction requiring compliance with GEM Listing Rules for reporting, announcement, and shareholder approval - A non-wholly owned subsidiary issued **HKD 3,000,000 convertible bonds** at a **10% annual interest rate**[94](index=94&type=chunk) - Upon full conversion, the Company's equity interest in the target company will decrease to approximately **13.2%**[94](index=94&type=chunk) - This transaction constitutes a major transaction requiring compliance with GEM Listing Rules for reporting, announcement, and shareholder approval[95](index=95&type=chunk) [Post Balance Sheet Events](index=46&type=section&id=Post%20Balance%20Sheet%20Events) Except as disclosed in this interim report, there have been no other significant post-balance sheet events affecting the Group's operations and financial performance after June 30, 2025, and up to the date of this interim report - Except as disclosed, no significant post-balance sheet events have affected operations and financial performance[97](index=97&type=chunk) [Material Litigation](index=47&type=section&id=Material%20Litigation) For the six months ended June 30, 2025, the Company was not involved in any other material litigation or arbitration, and the directors are unaware of any outstanding or threatened material litigation or claims against the Group - During this period, the company had no material litigation or arbitration, nor any known threatened litigation or claims[98](index=98&type=chunk) [Board of Directors](index=47&type=section&id=Board%20of%20Directors) As of the date of this report, the Board of Directors comprises two executive directors (Mr. Choi Siu Chak, Mr. Ying Kan Man) and three independent non-executive directors (Ms. Tse Mei Ling, Mr. Tso Tik Fan, Ms. Ng Man Hung) - The Board of Directors consists of two executive directors and three independent non-executive directors[99](index=99&type=chunk)

[Financial Summary](index=1&type=section&id=Financial%20Summary) The Group's revenue significantly increased, while gross profit and net profit experienced substantial declines during the period Financial Summary for the Six Months Ended June 30, 2025 | Indicator | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Change (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 564,900 | 299,700 | 265,200 | 88.5% | | Gross Profit | 3,400 | 5,000 | (1,600) | -32.6% | | Net Profit | 900 | 5,000 | (4,100) | -82.0% | | Basic Earnings Per Share (HK cents) | 0.30 | 2.45 | (2.15) | -87.8% | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the Group's financial performance and position, highlighting key changes in income, expenses, assets, and liabilities [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) Revenue significantly increased, but gross profit declined due to low-margin products, leading to a substantial decrease in net profit Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 564,940 | 299,739 | | Cost of Sales | (561,546) | (294,700) | | Gross Profit | 3,394 | 5,039 | | Other Income | 1,077 | 5,472 | | Selling and Distribution Expenses | (2,364) | (3,483) | | Administrative and Other Expenses | (19,578) | (21,120) | | Finance Costs | (3,319) | (8,418) | | Reversal of / (Impairment Loss) on Trade Receivables | 28,753 | (4,383) | | Reversal of Impairment Loss on Other Receivables | 5,109 | 8,117 | | Impairment Loss / (Reversal of Impairment Loss) on Deposits and Prepayments | (12,160) | 23,794 | | Profit Before Tax | 912 | 5,018 | | Income Tax Expense | – | (71) | | Profit for the Period | 912 | 4,947 | | Exchange Differences on Translation of Foreign Operations | (3,095) | (12,051) | | Total Comprehensive Expense for the Period | (2,183) | (7,104) | | Profit Attributable to Owners of the Company | 1,262 | 9,281 | | Profit Attributable to Non-controlling Interests | (350) | (4,334) | | Basic Earnings Per Share (HK cents) | 0.30 | 2.45 | | Diluted Earnings Per Share (HK cents) | 0.30 | 2.42 | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets increased due to higher receivables; both current and non-current liabilities rose, impacting liquidity and gearing ratios Condensed Consolidated Statement of Financial Position (As at June 30) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 18,738 | 20,739 | | Right-of-use Assets | 17,498 | 18,774 | | Interests in Associates | 296 | 286 | | **Total Non-current Assets** | **36,532** | **39,799** | | **Current Assets** | | | | Inventories | 2,260 | 134 | | Trade and Other Receivables | 1,050,088 | 911,212 | | Bank Balances and Cash | 9,645 | 4,575 | | **Total Current Assets** | **1,061,993** | **915,921** | | **Current Liabilities** | | | | Trade and Other Payables | 208,614 | 165,687 | | Bank and Other Borrowings | 406,337 | 382,293 | | Lease Liabilities | 3,994 | 3,740 | | Deferred Revenue | 8,695 | 1,247 | | Income Tax Payable | 16,654 | 15,593 | | **Total Current Liabilities** | **644,294** | **568,560** | | **Net Current Assets** | **417,699** | **347,361** | | **Total Assets Less Current Liabilities** | **454,231** | **387,160** | | **Non-current Liabilities** | | | | Bank and Other Borrowings | 34,677 | 7,209 | | Lease Liabilities | 16,937 | 17,713 | | Deferred Revenue | 7,835 | 7,573 | | **Total Non-current Liabilities** | **59,449** | **32,495** | | **Net Assets** | **394,782** | **354,665** | | **Total Equity** | **394,782** | **354,665** | [Notes](index=6&type=section&id=Notes) This section details accounting policies, segment information, and specific financial line items, providing comprehensive disclosures [1 General Information and Basis of Preparation](index=6&type=section&id=1%20General%20Information%20and%20Basis%20of%20Preparation) The Group operates in agricultural and meat businesses in China, with financial information prepared under HKAS 34 and Listing Rules - The Company is an investment holding company, with subsidiaries primarily engaged in agriculture and meat businesses in China, including cultivation, trading of agricultural products, meat products, poultry, seafood, and pre-cooked food[7](index=7&type=chunk) - The Company's ultimate controlling party is **Mr. Lin Yuhao**, an executive director[8](index=8&type=chunk) - The interim financial information is prepared in accordance with **HKAS 34** and the **Listing Rules**, with accounting policies consistent with the 2024 annual consolidated financial statements, except for the adoption of revised HKFRSs[9](index=9&type=chunk)[10](index=10&type=chunk) [2 Adoption of Revised Hong Kong Financial Reporting Standards](index=7&type=section&id=2%20Adoption%20of%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) The Group adopted revised HKFRSs effective January 1, 2025, with no significant impact on its consolidated financial position or performance - The Group first applied **HKAS 7** and **HKFRS 7 (Amendments) "Supplier Finance Arrangements"** during this interim period[11](index=11&type=chunk) - The application of the revised standards had no significant impact on the consolidated financial position and performance for the current and prior periods[11](index=11&type=chunk) [3 Segment Information](index=7&type=section&id=3%20Segment%20Information) The Group operates solely in agricultural, seafood, and meat products, with over 90% of non-current assets and revenue located in China - The Group's sole operating and reportable segment is the cultivation, processing, and trading of agricultural products, seafood, and meat products[12](index=12&type=chunk) - As of June 30, 2025, over **90%** of non-current assets and revenue are located in and generated from China[13](index=13&type=chunk) Revenue from Major Customers (For the Six Months Ended June 30) | Customer | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Customer A | 437,034 | Not Applicable* | | Customer B | Not Applicable* | 58,298 | * Revenue did not account for 10% or more of the Group's revenue, hence not disclosed. [4 Revenue](index=8&type=section&id=4%20Revenue) The Group's revenue, entirely from sales of agricultural, seafood, and meat products, significantly increased to HKD 565 million Revenue Analysis (For the Six Months Ended June 30) | Revenue Source | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Sales of agricultural products, seafood, and meat products | 564,940 | 299,739 | [5 Other Income](index=8&type=section&id=5%20Other%20Income) Other income significantly decreased by 80.3% to HKD 1.1 million, mainly due to the absence of other interest income and reduced government grants Other Income Analysis (For the Six Months Ended June 30) | Income Source | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Government grants | 537 | 3,160 | | Bank interest income | 2 | 19 | | Other interest income | – | 1,453 | | Service income | 370 | 575 | | Miscellaneous income | 168 | 265 | | **Total** | **1,077** | **5,472** | - Other interest income was **zero** in H1 2025, compared to **HKD 1,453 thousand** in H1 2024, mainly related to imputed interest income on consideration receivables[20](index=20&type=chunk) - Government grants decreased to **HKD 537 thousand** in H1 2025 from **HKD 3,160 thousand** in H1 2024, primarily for amortization of property, plant, and equipment construction and food trade subsidies[20](index=20&type=chunk) [6 Finance Costs](index=8&type=section&id=6%20Finance%20Costs) Finance costs significantly decreased to HKD 3.3 million, primarily due to a substantial reduction in interest expenses from bank and other borrowings Finance Costs Analysis (For the Six Months Ended June 30) | Cost Source | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Interest expense on bank and other borrowings | 2,655 | 7,596 | | Interest expense on lease liabilities | 664 | 822 | | **Total** | **3,319** | **8,418** | [7 Profit Before Tax](index=9&type=section&id=7%20Profit%20Before%20Tax) Profit before tax significantly decreased to HKD 0.912 million, driven by increased staff and inventory costs, partially offset by lower depreciation Profit Before Tax Deductions (For the Six Months Ended June 30) | Item | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | **Total staff costs** | **10,356** | **4,686** | | – Salaries and allowances | 9,888 | 4,258 | | – Contributions to retirement benefit schemes | 468 | 428 | | Cost of inventories recognized as expense | 559,732 | 291,793 | | **Depreciation expense** | | | | – Property, plant and equipment | 2,052 | 3,245 | | – Right-of-use assets | 1,891 | 2,189 | | Short-term lease expenses | – | 195 | [8 Income Tax Expense](index=9&type=section&id=8%20Income%20Tax%20Expense) Income tax expense for the current period was zero, compared to HKD 71 thousand in the prior year, primarily due to under-provision Income Tax Expense (For the Six Months Ended June 30) | Item | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | China corporate income tax – Current year | – | – | | China corporate income tax – Under-provision in prior years | – | 71 | | **Total** | **–** | **71** | [9 Earnings Per Share](index=10&type=section&id=9%20Earnings%20Per%20Share) Basic earnings per share significantly decreased to 0.30 HK cents from 2.45 HK cents, mainly due to reduced profit attributable to owners - Basic earnings per share is calculated based on the Group's profit attributable to owners of the Company of **HKD 1,262 thousand** (2024: HKD 9,281 thousand) for the period[23](index=23&type=chunk) Weighted Average Number of Ordinary Shares for EPS Calculation (For the Six Months Ended June 30) | Number of Shares | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Weighted average number of ordinary shares for basic EPS calculation | 423,259,235 | 379,257,038 | | Potential dilutive effect of ordinary shares arising from conversion of preference shares | 15,150 | 15,150 | | Potential dilutive effect of ordinary shares arising from share options granted by the Company | – | 3,546,725 | | Weighted average number of ordinary shares for diluted EPS calculation | 423,274,385 | 382,818,913 | [10 Dividends](index=10&type=section&id=10%20Dividends) No dividends were paid or proposed for the six months ended June 30, 2025 - No dividends were paid or proposed during or since the end of the reporting period[25](index=25&type=chunk) [11 Trade and Other Receivables](index=11&type=section&id=11%20Trade%20and%20Other%20Receivables) Total trade and other receivables increased to HKD 1.05 billion, driven by higher trade deposits and other receivables, with a 60-day average credit period Trade and Other Receivables (As at June 30) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Gross trade receivables (net of accumulated impairment) | 193,402 | 238,477 | | Gross other receivables (net of accumulated impairment) | 398,397 | 279,719 | | Gross trade deposits (net of accumulated impairment) | 456,673 | 392,372 | | Gross rental and utility deposits (net of accumulated impairment) | 546 | 368 | | Prepayments | 1,070 | 276 | | **Total trade and other receivables** | **1,050,088** | **911,212** | - The average credit period for sales of agricultural products, seafood, and meat products is **60 days**[26](index=26&type=chunk) Ageing Analysis of Trade Receivables (Net of Accumulated Impairment) | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 60 days | 132,694 | 167,977 | | 61 to 120 days | 2,691 | 4,176 | | 121 to 356 days | 38,290 | 28,734 | | Over 365 days | 19,727 | 37,590 | | **Total** | **193,402** | **238,477** | [12 Trade and Other Payables](index=12&type=section&id=12%20Trade%20and%20Other%20Payables) Total trade and other payables increased to HKD 209 million, mainly due to higher trade payables and accrued expenses, with a 30-day average credit period Trade and Other Payables (As at June 30) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Trade payables | 79,874 | 40,536 | | Accrued expenses | 24,070 | 17,041 | | Other payables | 104,670 | 108,110 | | **Total** | **208,614** | **165,687** | - The average credit period for trade payables is **30 days**[28](index=28&type=chunk) Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 60 days | 5,627 | 1,207 | | 61 to 120 days | 20,914 | 288 | | Over 120 days | 53,333 | 39,041 | | **Total** | **79,874** | **40,536** | [13 Bank and Other Borrowings](index=12&type=section&id=13%20Bank%20and%20Other%20Borrowings) Total borrowings increased to HKD 441 million, with most repayable within one year, bearing effective interest rates between 3% and 8% Bank and Other Borrowings (As at June 30) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Secured bank loans | 357,942 | 317,923 | | Unsecured other loans | 83,072 | 71,579 | | **Total** | **441,014** | **389,502** | | **Repayable:** | | | | Within one year | 406,337 | 382,293 | | In the second to fifth years | 34,677 | 7,209 | | **Total** | **441,014** | **389,502** | - Bank and other borrowings bear effective interest rates ranging from **3% to 8%** per annum (December 31, 2024: 4% to 8% per annum)[30](index=30&type=chunk) - Bank loans are secured by the Group's fully depreciated building, properties owned by Mr. Lin, and corporate guarantees from an associated company[33](index=33&type=chunk) - Unsecured other loans include promissory notes 2 and 3, with a total carrying amount of approximately **HKD 10,911 thousand**, which are interest-free and repayable on demand to Mr. Lin Yuhao[33](index=33&type=chunk) [14 Share Capital](index=13&type=section&id=14%20Share%20Capital) Issued ordinary share capital increased due to new share subscriptions, while preference share capital remained unchanged Share Capital Structure (As at June 30) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | **Authorized Share Capital** | | | | 150,000,000,000 ordinary shares of HKD 0.01 each | 1,500,000 | 1,500,000 | | 10,000,000,000 preference shares of HKD 0.01 each | 100,000 | 100,000 | | **Issued and Fully Paid Share Capital** | | | | 455,108,445 ordinary shares of HKD 0.01 each | 4,551 | 3,793 | | 3,030,000 preference shares of HKD 0.01 each | 30 | 30 | | **Total** | **4,581** | **3,823** | Changes in Issued Ordinary Share Capital (For the Six Months Ended June 30) | Event | Number of Shares | Amount (HKD thousands) | | :--- | :--- | :--- | | December 31, 2024 and January 1, 2025 (Audited) | 379,257,038 | 3,793 | | Subscription and issue of ordinary shares under general mandate | 75,851,407 | 758 | | June 30, 2025 (Unaudited) | 455,108,445 | 4,551 | - Preference shares are convertible into ordinary shares but have no right to surplus assets or profits, nor voting rights[38](index=38&type=chunk) [15 Potential Litigation](index=14&type=section&id=15%20Potential%20Litigation) Two subsidiaries face civil lawsuits for failure to deliver agricultural products, claiming RMB 45.845 million; the Group is appealing and seeking legal advice - Two wholly-owned subsidiaries of the Company are being sued by independent third parties for disputes arising from failure to deliver agricultural products, with total claims of approximately **RMB 45.845 million**[34](index=34&type=chunk) - The court has issued a second-instance judgment, and the Group is seeking legal advice and plans to appeal[35](index=35&type=chunk) - The Group will continue to actively respond to the litigation to protect its legitimate rights and interests[35](index=35&type=chunk) [16 Related Party Transactions](index=14&type=section&id=16%20Related%20Party%20Transactions) Significant related party transactions exist, primarily in key management personnel remuneration, which increased during the period Key Management Personnel Remuneration (For the Six Months Ended June 30) | Item | 2025 (HKD thousands) | 2024 (HKD thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 1,473 | 1,071 | [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business and financial performance, covering operational highlights, financial results, liquidity, and future prospects [Business Review](index=15&type=section&id=Business%20Review) Poultry and seafood trading and online sales drove an 88.5% revenue increase in agriculture and meat, but gross profit declined 32.6% due to lower-margin products - The Group is primarily engaged in cultivating agricultural products, trading agricultural and meat products, poultry, seafood, and pre-cooked food in China[39](index=39&type=chunk) - Revenue from agriculture and meat business increased by **88.5%** year-on-year to **HKD 564.9 million**, but gross profit decreased by **32.6%** to **HKD 3.4 million**, mainly due to increased sales of lower-margin products[40](index=40&type=chunk) - Associates Congyu Wanxing and Jiamusi Congyu did not conduct any business during the reporting period, thus recording no revenue[41](index=41&type=chunk) [Financial Review](index=15&type=section&id=Financial%20Review) Revenue grew 88.5%, but gross profit fell 32.6% due to low-margin products; other income decreased 80.3%, resulting in an 82.0% net profit drop - Revenue was approximately **HKD 564.9 million**, an **88.5%** increase year-on-year[42](index=42&type=chunk) - Gross profit was approximately **HKD 3.4 million**, a **32.6%** decrease year-on-year, mainly due to increased sales of lower-margin products[42](index=42&type=chunk) - Other income was approximately **HKD 1.1 million**, an **80.3%** decrease year-on-year, primarily due to the absence of other interest income and reduced government grants[43](index=43&type=chunk) - Selling and distribution expenses decreased by **32.1%** to **HKD 2.4 million**, and administrative and other expenses decreased by **7.3%** to **HKD 19.6 million**[43](index=43&type=chunk) - A reversal of impairment loss on trade receivables of approximately **HKD 28.8 million** was recorded, but an impairment loss on deposits and prepayments of approximately **HKD 12.2 million** was recognized[44](index=44&type=chunk) - Net profit was approximately **HKD 0.9 million**, an **82.0%** decrease year-on-year, mainly affected by lower gross profit and reduced other income[45](index=45&type=chunk) [Liquidity and Financial Resources](index=16&type=section&id=Liquidity%20and%20Financial%20Resources) The Group relies on internal cash flow and bank financing; bank balances increased, but the quick ratio dropped, with total borrowings rising, mostly short-term - The Group primarily finances its operations through internally generated cash flow and general bank financing[46](index=46&type=chunk) Key Liquidity and Financial Resources Indicators | Indicator | June 30, 2025 (HKD thousands/times) | December 31, 2024 (HKD thousands/times) | | :--- | :--- | :--- | | Bank balances and cash | 9,600 | 4,600 | | Quick ratio | 0.32 times | 1.10 times | | Total borrowings | 441,000 | 389,500 | | Borrowings repayable within one year | 406,300 | 382,300 | | Fixed-rate borrowings | 328,900 | 317,900 | - Borrowings are mainly denominated in HKD and RMB, with some bearing fixed interest rates[47](index=47&type=chunk) - Lease liabilities represent office properties and cultivated land leases with fixed terms of **2 to 26 years**[48](index=48&type=chunk) [Capital Structure and Gearing Ratio](index=17&type=section&id=Capital%20Structure%20and%20Gearing%20Ratio) The Group manages capital for continuous operation and shareholder returns; net debt to adjusted equity and gearing ratios both increased - The Group manages its capital by optimizing the debt-to-equity ratio to ensure continuous operation and maximize shareholder returns[49](index=49&type=chunk) - The net debt to adjusted equity ratio (calculated as net debt divided by total capital) was **0.52** (December 31, 2024: 0.42)[55](index=55&type=chunk) - The gearing ratio (calculated as total liabilities divided by total shareholders' equity) was **1.12** (December 31, 2024: 0.73)[55](index=55&type=chunk) [Fund Raising Activities](index=17&type=section&id=Fund%20Raising%20Activities) The Group raised HKD 42.3 million net proceeds through new share subscriptions for procurement, debt repayment, and working capital, increasing issued ordinary shares - On February 21, 2025, the Company entered into a subscription agreement with subscribers to issue **75,851,407** subscription shares at a subscription price of **HKD 0.565** per share[52](index=52&type=chunk) - Net proceeds from the subscription were approximately **HKD 42.3 million**, intended for procurement (**HKD 25 million**), repayment of other borrowings and payables (**HKD 14 million**), and general working capital (**HKD 3.3 million**)[52](index=52&type=chunk) Use of Proceeds from New Share Subscription | Intended Use | Actual Use (HKD millions) | | :--- | :--- | | Procurement of agricultural products, meat products, poultry, seafood, and pre-cooked food | 25.0 | | Repayment of other borrowings and other payables | 14.0 | | General working capital purposes | 3.3 | | **Total** | **42.3** | - As of June 30, 2025, the Company had **455,108,445** issued ordinary shares and **3,030,000** issued preference shares[55](index=55&type=chunk) [Material Investments](index=19&type=section&id=Material%20Investments) The Group did not undertake any material investments during the reporting period - The Group had no material investments during the reporting period[57](index=57&type=chunk) [Material Acquisitions and Disposals of Subsidiaries and Associates](index=19&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Associates) The Group did not engage in any material acquisitions or disposals of subsidiaries and associates during the reporting period - The Group had no material acquisitions or disposals of subsidiaries and associates during the reporting period[58](index=58&type=chunk) [Pledge of the Group's Assets](index=19&type=section&id=Pledge%20of%20the%20Group%27s%20Assets) The Group pledged a fully depreciated building as collateral for bank credit; bank deposits were also pledged for bills payable - A fully depreciated building has been pledged as collateral for bank credit granted to the Group[59](index=59&type=chunk) - Bank deposits of approximately **HKD zero million** (December 31, 2024: HKD 0.4 million) were pledged as collateral for the Group's bills payable[59](index=59&type=chunk) [Foreign Exchange Risk](index=19&type=section&id=Foreign%20Exchange%20Risk) Revenue and costs are primarily in HKD or RMB, indicating minimal foreign exchange risk, but management will monitor RMB fluctuations and consider hedging - The Group's revenue and costs are primarily denominated in HKD or RMB, resulting in minimal foreign exchange risk[60](index=60&type=chunk) - Management will closely monitor exchange rate risks arising from the continuous fluctuations of RMB and decide whether to formulate hedging policies[60](index=60&type=chunk) [Contingent Liabilities](index=19&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities - The Group had no material contingent liabilities during the reporting period[61](index=61&type=chunk) [Employees and Remuneration Policy](index=20&type=section&id=Employees%20and%20Remuneration%20Policy) The Group had 71 full-time employees with HKD 10.4 million in staff costs; remuneration is based on qualifications, experience, duties, performance, and market practice - As of June 30, 2025, the Group had **71** full-time employees (December 31, 2024: 51 employees)[62](index=62&type=chunk) - Total staff costs (including directors' remuneration) for the reporting period were **HKD 10.4 million** (2024: HKD 4.7 million)[62](index=62&type=chunk) - Employee remuneration is determined by individual qualifications, experience, duties, performance, Group results, and market practice, offering discretionary bonuses, MPF scheme, and Central Provident Fund scheme contributions[62](index=62&type=chunk) - The Company's share option scheme adopted in 2013 expired on June 6, 2023, and no further share options can be granted thereafter[62](index=62&type=chunk) [Litigation](index=20&type=section&id=Litigation) A subsidiary faces a lawsuit claiming RMB 25.1 million for failure to deliver goods; the Group is appealing a second-instance judgment and seeking legal advice - A subsidiary of the Group faces a lawsuit from a customer claiming **RMB 25.1 million** plus interest for failure to deliver goods under a procurement contract[63](index=63&type=chunk) - The legal proceedings are ongoing, with uncertain outcomes and an undetermined impact on the Group's profit[63](index=63&type=chunk) - The court has issued a second-instance judgment, and the Group is seeking legal advice and plans to appeal[63](index=63&type=chunk) - The Group will continue to actively respond to the litigation to protect its legitimate rights and interests[64](index=64&type=chunk) [Prospects](index=21&type=section&id=Prospects) The Group plans to diversify agricultural and food products, strengthen farm collaborations, launch agricultural e-commerce and low-altitude economy initiatives with AI, and explore e-commerce partnerships - The Group will seek investment opportunities, develop its existing business portfolio, and engage in new businesses with growth potential to diversify and expand revenue streams[65](index=65&type=chunk) - Actively developing trading businesses in agricultural products, meat products, poultry, seafood, pre-cooked food, and tea, and has begun supplying products to Chinese supermarkets and online platforms[65](index=65&type=chunk) - Established partnerships with multiple farms and agricultural companies to build a "farmers + company + government" model, creating a food supply base for the Guangdong-Hong Kong-Macao Greater Bay Area[66](index=66&type=chunk) - Successfully leased Chonghua Macun Reservoir and Longtan Reservoir, planning to utilize advanced ecological aquaculture technology to build high-quality, environmentally friendly fishery bases[67](index=67&type=chunk) - Launching an agricultural vertical e-commerce platform and developing the agricultural low-altitude economy, utilizing drones, low-altitude IoT, and AI large models to build a real-time monitoring and precise management system, integrating the entire "production-management-sales-finance" data chain[68](index=68&type=chunk) - Exploring cooperation with multiple e-commerce operators and online sales platforms to strengthen online sales and diversify revenue sources[69](index=69&type=chunk) - Seeking vertical integration business opportunities, including providing distribution services for agricultural products, seafood, and meat products in China[70](index=70&type=chunk) [Other Information](index=22&type=section&id=Other%20Information) This section covers various corporate governance and administrative matters, including dividend policy, securities transactions, compliance, and post-reporting period events [Interim Dividend](index=22&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the reporting period - No dividends were paid, declared, or proposed during the reporting period, and the Directors do not recommend an interim dividend[71](index=71&type=chunk) [Purchase, Sale or Redemption of the Company’s Listed Securities](index=22&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%E2%80%99s%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period[72](index=72&type=chunk) - As of June 30, 2025, the Company did not hold any treasury shares[72](index=72&type=chunk) [Standard Code for Securities Transactions by Directors](index=23&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) Each Director confirmed compliance with the Company's adopted code for securities transactions throughout the reporting period - The Company has adopted a code for securities transactions by Directors, and each Director confirmed compliance with the code throughout the reporting period[73](index=73&type=chunk) [Corporate Governance Code](index=23&type=section&id=Corporate%20Governance%20Code) The Company complied with the Corporate Governance Code, with deviations regarding an INED's AGM absence and the Chairman/CEO role, deemed appropriate by the Board - The Company complied with the Corporate Governance Code during the reporting period, with two deviations[74](index=74&type=chunk) - Deviation one: Independent Non-executive Director **Ms. Li Yang** was unable to attend the Annual General Meeting due to other commitments[74](index=74&type=chunk) - Deviation two: The roles of Chairman of the Board and Chief Executive Officer are held by the same person, **Mr. Lin Yuhao**, which the Board believes facilitates business strategy execution and operational efficiency, with appropriate checks and balances in place[75](index=75&type=chunk) [Events After the Reporting Period](index=23&type=section&id=Events%20After%20the%20Reporting%20Period) The Board is unaware of any significant events occurring after the reporting period up to the date of this announcement - The Board is unaware of any significant events occurring after the reporting period up to the date of this announcement[77](index=77&type=chunk) [Sufficiency of Public Float](index=24&type=section&id=Sufficiency%20of%20Public%20Float) The Company maintained the public float required by Listing Rules, with at least 25% of issued shares held by the public - The Company has maintained the public float required by the Listing Rules, with at least **25%** of its total issued shares held by the public as of the date of this announcement[78](index=78&type=chunk) [Review by Audit Committee](index=24&type=section&id=Review%20by%20Audit%20Committee) The interim financial information was not audited, but the Audit Committee and management reviewed it, deeming it compliant with standards and regulations - The Group's condensed consolidated interim financial information for the reporting period was not reviewed or audited by the Company's auditor[79](index=79&type=chunk) - The Audit Committee and management reviewed the financial information and deemed it compliant with applicable accounting standards, Listing Rules, and legal requirements, with sufficient disclosures made[79](index=79&type=chunk) - The Audit Committee comprises entirely Independent Non-executive Directors, including **Ms. Li Yang** (Chairperson), **Mr. Li Shaohua**, and **Ms. Zhu Rouxiang**[79](index=79&type=chunk) [Publication of Interim Results and Interim Report](index=24&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This results announcement is published on the Company's and HKEX websites; the interim report will be dispatched to shareholders and published online in due course - This results announcement is published on the Company's website (www.cyia.hk) and the HKEX website (www.hkexnews.hk)[80](index=80&type=chunk) - The Company will dispatch the interim report for the six months ended June 30, 2025, to shareholders who choose to receive printed versions and publish it on the aforementioned websites in due course[80](index=80&type=chunk)

Interim Results Announcement [Company Information and Disclaimer](index=1&type=section&id=LUK%20HING%20ENTERTAINMENT%20GROUP%20HOLDINGS%20LIMITED%20%E9%99%B8%20%E6%85%B6%20%E5%A8%9B%20%E6%A8%82%20%E9%9B%86%20%E5%9C%98%20%E6%8E%A7%20%E8%82%A1%20%E6%9C%89%20%E9%99%90%20%E5%85%AC%20%E5%8F%B8) Luk Hing Entertainment Group Holdings Limited (Stock Code: 8052) announced its interim results for the six months ended June 30, 2025, in compliance with GEM Listing Rules, with the Board assuming full responsibility for the announcement's content - Company name is Luk Hing Entertainment Group Holdings Limited, stock code **8052**, incorporated in the Cayman Islands[3](index=3&type=chunk) - This announcement is for the interim results for the six months ended June 30, 2025, complying with HKEX GEM Listing Rules[3](index=3&type=chunk)[4](index=4&type=chunk) - Board members include executive directors Mr. Choi Siu Kit, Mr. Ying Kan Man, and independent non-executive directors Ms. Tse Mei Ling, Mr. Zuo Tifen, Ms. Ng Man Hung[5](index=5&type=chunk)[6](index=6&type=chunk) [GEM Market Characteristics Statement](index=2&type=section&id=%E9%A6%99%E6%B8%AF%E8%81%AF%E5%90%88%E4%BA%A4%E6%98%93%E6%89%80%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8%EF%BC%88%E3%80%8C%E8%81%AF%E4%BA%A4%E6%89%80%E3%80%8D%EF%BC%89GEM%E7%9A%84%E7%89%B9%E8%89%B2) The GEM market provides a listing platform for SMEs with higher investment risks, requiring investor prudence; the Exchange disclaims responsibility for report content, with the Board jointly and severally liable for its accuracy - The GEM market offers a listing platform for SMEs, entailing higher investment risks and potential for significant securities market volatility[7](index=7&type=chunk) - Hong Kong Exchanges and Clearing Limited and the Exchange are not responsible for this report's content, with the Board jointly and severally assuming full responsibility[7](index=7&type=chunk) Unaudited Condensed Consolidated Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the Group's revenue decreased by **29.1%** to **HK$30,038 thousand**, with loss for the period significantly narrowing to **HK$158 thousand** (2024: loss of HK$3,476 thousand), and profit attributable to owners of the Company at **HK$7,476 thousand**, with basic earnings per share of **1.36 HK cents** Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (HK$ thousand) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 30,038 | 42,251 | -29.1% | | Other income and gains | 606 | 21 | +2785.7% | | Cost of inventories sold | (9,326) | (12,769) | -26.9% | | Staff costs | (10,279) | (16,517) | -37.8% | | Property rental and related expenses | (2,130) | (3,132) | -32.0% | | Advertising and marketing expenses | (32) | (215) | -85.1% | | Other operating expenses | (5,605) | (5,793) | -3.2% | | Depreciation and amortization | (4,767) | (6,795) | -29.9% | | Impairment loss on expected credit losses (net of reversal) | 2,070 | – | N/A | | Impairment loss on property, plant and equipment | (244) | – | N/A | | Finance costs | (489) | (527) | -7.2% | | Loss before tax | (158) | (3,476) | -95.5% | | Loss for the period | (158) | (3,476) | -95.5% | | Profit/(loss) for the period attributable to owners of the Company | 7,476 | (2,732) | N/A (Turned to profit) | | Basic earnings/(loss) per share (HK cents) | 1.36 | (0.50) | N/A (Turned to profit) | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the Group's total assets were **HK$16,124 thousand**, total liabilities were **HK$48,812 thousand**, resulting in net liabilities of **HK$32,688 thousand**, a slight increase from year-end 2024; net current liabilities were **HK$43,485 thousand**, indicating significant going concern uncertainty Condensed Consolidated Statement of Financial Position (HK$ thousand) | Indicator | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Non-current assets | 11,635 | 16,517 | -29.6% | | Current assets | 4,489 | 9,032 | -50.3% | | **Total assets** | **16,124** | **25,549** | **-36.9%** | | **Liabilities** | | | | | Current liabilities | 47,974 | 53,404 | -10.1% | | Non-current liabilities | 838 | 4,675 | -82.1% | | **Total liabilities** | **48,812** | **58,079** | **-16.0%** | | **Equity** | | | | | Equity attributable to owners of the Company | (8,796) | (16,272) | N/A | | Non-controlling interests | (23,892) | (16,258) | +47.0% | | **Total equity** | **(32,688)** | **(32,530)** | **+0.5%** | | Net current liabilities | (43,485) | (44,372) | -2.0% | | Net liabilities | (32,688) | (32,530) | +0.5% | [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) For the six months ended June 30, 2025, equity attributable to owners of the Company improved from **HK$(16,272) thousand** at the beginning of the period to **HK$(8,796) thousand**, primarily due to a profit of **HK$7,476 thousand** for the period, while non-controlling interests deteriorated from **HK$(16,258) thousand** to **HK$(23,892) thousand** Condensed Consolidated Statement of Changes in Equity (HK$ thousand) | Indicator | 2025 June 30 (HK$ thousand) | 2025 Jan 1 (HK$ thousand) | 2024 June 30 (HK$ thousand) | 2024 Jan 1 (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Equity attributable to owners of the Company | (8,796) | (16,272) | (10,307) | (7,576) | | Non-controlling interests | (23,892) | (16,258) | (15,210) | (14,466) | | Total equity | (32,688) | (32,530) | (25,517) | (22,042) | | Profit/(loss) for the period (attributable to owners of the Company) | 7,476 | N/A | (2,732) | N/A | | Profit/(loss) for the period (attributable to non-controlling interests) | (7,634) | N/A | (744) | N/A | [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, net cash generated from operating activities was **HK$3,301 thousand**, net cash used in investing activities was **HK$69 thousand**, and net cash used in financing activities was **HK$6,454 thousand**, resulting in a net decrease in cash and cash equivalents of **HK$3,222 thousand**, with cash and cash equivalents at period-end of **HK$750 thousand** Condensed Consolidated Statement of Cash Flows (HK$ thousand) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 3,301 | 5,909 | | Net cash used in investing activities | (69) | (237) | | Net cash (used in) financing activities | (6,454) | (6,035) | | Net decrease in cash and cash equivalents | (3,222) | (363) | | Cash and cash equivalents at beginning of period | 3,972 | 846 | | Cash and cash equivalents at end of period | 750 | 484 | Notes to the Unaudited Condensed Consolidated Financial Statements [1. General Information](index=9&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) The Company was incorporated in the Cayman Islands on November 30, 2015, listed on HKEX GEM on November 11, 2016, primarily engaging in F&B and entertainment, including operating clubs and restaurants, and organizing music-related events; functional currencies are HKD and RMB - The Company was incorporated in the Cayman Islands on **November 30, 2015**, and listed on HKEX GEM on **November 11, 2016**[14](index=14&type=chunk) - The Group primarily engages in F&B and entertainment businesses, including operating clubs and restaurants, and organizing music-related special events[14](index=14&type=chunk) - The functional currency for PRC subsidiaries is RMB, while for Hong Kong and the Company, it is HKD[14](index=14&type=chunk) [2. Basis of Preparation](index=10&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) [2. (a) Statement of Compliance](index=10&type=section&id=2.%20(a)%20%E5%90%88%E8%A6%8F%E8%81%B2%E6%98%8E) The Group's unaudited condensed consolidated interim financial information for the six months ended June 30, 2025, has been prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA and applicable disclosure requirements of the GEM Listing Rules - The financial information is unaudited but complies with Hong Kong Financial Reporting Standards and GEM Listing Rules disclosure requirements[15](index=15&type=chunk) [2. (b) Basis of Measurement and Going Concern Assumption](index=10&type=section&id=2.%20(b)%20%E8%A8%88%E9%87%8F%E5%9F%BA%E6%BA%96%E5%8F%8A%E6%8C%81%E7%BA%8C%E7%B6%93%E7%87%9F%E5%81%87%E8%A8%AD) As of June 30, 2025, the Group had net current liabilities of **HK$43,485 thousand** and net liabilities of **HK$32,688 thousand**, indicating significant uncertainty regarding its ability to continue as a going concern; the Board has implemented measures including negotiating bank financing, seeking other funding arrangements, and strict cost control to ensure going concern - As of June 30, 2025, the Group had net current liabilities of approximately **HK$43,485 thousand** and net liabilities of approximately **HK$32,688 thousand**, raising significant doubt about its ability to continue as a going concern[16](index=16&type=chunk) - Management will continue to negotiate with banks for renewal of bank financing and consider other financing arrangements and fundraising options to increase capital[17](index=17&type=chunk)[18](index=18&type=chunk) - The Board will implement stricter measures to improve working capital and cash flow, including close monitoring of operating expenses[18](index=18&type=chunk) [3. Operating Segments](index=12&type=section&id=3.%20%E7%B6%93%E7%87%9F%E5%88%86%E9%83%A8) The Group primarily operates in the F&B and entertainment industry with no separate reportable segments; all revenue and non-current assets are derived from and located in Hong Kong - The Group primarily engages in the F&B and entertainment industry and has no separate reportable segments[19](index=19&type=chunk) Hong Kong Revenue (HK$ thousand) | Geographical Region | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong Revenue | 30,038 | 42,251 | Hong Kong Non-current Assets (HK$ thousand) | Geographical Region | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong Non-current Assets | 11,635 | 16,517 | - During the period, no single external customer transaction generated revenue of **10% or more** of the Group's total revenue[22](index=22&type=chunk) [4. Revenue](index=13&type=section&id=4.%20%E6%94%B6%E7%9B%8A) The Group's revenue primarily derives from sales of food, beverages, and other products, as well as event organization (including sponsorship, admission fees, event rental, and cloakroom income); as of June 30, 2025, revenue from sales of food and other products was **HK$27,295 thousand**, and from sales of beverages was **HK$2,743 thousand** - Revenue refers to sales of food, beverages, and other products, as well as income from organizing events[23](index=23&type=chunk) Revenue Sources (HK$ thousand) | Revenue Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sales of food and other products | 27,295 | 38,038 | | Sales of beverages | 2,743 | 4,213 | | **Total Revenue** | **30,038** | **42,251** | [5. Other Income and Gains](index=14&type=section&id=5.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) For the six months ended June 30, 2025, other income and gains significantly increased to **HK$606 thousand** (2024: HK$21 thousand), primarily due to reversal of accrued expenses of **HK$450 thousand**, other interest income of **HK$115 thousand**, and net exchange gain of **HK$18 thousand** Other Income and Gains (HK$ thousand) | Income Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net exchange gain | 18 | – | | Other interest income | 115 | – | | Others | 23 | 21 | | Reversal of accrued expenses | 450 | – | | **Total** | **606** | **21** | [6. Taxation](index=14&type=section&id=6.%20%E7%A8%85%E9%A0%85) For the six months ended June 30, 2025, and 2024, the Group incurred no income tax expense, as its Hong Kong subsidiaries had no estimated assessable profits - For the first half of 2025 and 2024, the Group incurred no income tax expense[26](index=26&type=chunk) - No Hong Kong profits tax provision was made as Hong Kong subsidiaries had no estimated assessable profits[26](index=26&type=chunk) [7. Earnings/(Loss) Per Share](index=15&type=section&id=7.%20%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) For the six months ended June 30, 2025, basic and diluted earnings per share attributable to owners of the Company were **1.36 HK cents**, compared to a loss of **0.50 HK cents** per share for the same period in 2024; basic and diluted earnings are identical due to the absence of potential dilutive ordinary shares Earnings/(Loss) Per Share (HK$ thousand / thousand shares) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Profit/(loss) for the purpose of basic and diluted earnings/(loss) per share | 7,476 | (2,732) | | Weighted average number of ordinary shares (thousands) | 548,256 | 548,256 | | Basic earnings/(loss) per share (HK cents) | 1.36 | (0.50) | | Diluted earnings/(loss) per share (HK cents) | 1.36 | (0.50) | - Diluted earnings/(loss) per share is identical to basic earnings/(loss) per share due to the absence of issued potential dilutive ordinary shares[27](index=27&type=chunk) [8. Finance Costs](index=16&type=section&id=8.%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, finance costs were **HK$489 thousand**, a decrease from **HK$527 thousand** in the same period of 2024, primarily due to reduced interest on bank loans Finance Costs (HK$ thousand) | Source of Finance Costs | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest on bank loans | 125 | 376 | | Interest on lease liabilities | 263 | 144 | | Interest on provision for restoration costs | 31 | – | | Others | 70 | 7 | | **Total** | **489** | **527** | [9. Dividends](index=16&type=section&id=9.%20%E8%82%A1%E6%81%AF) 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[29](index=29&type=chunk) [10. Property, Plant and Equipment](index=16&type=section&id=10.%20%E5%BB%A0%E6%89%80%E5%8F%8A%E8%A8%AD%E5%82%99) For the six months ended June 30, 2025, the Group acquired property, plant and equipment at a cost of **HK$69 thousand**, with no disposals during the period - In the first half of 2025, the Group acquired property, plant and equipment at a cost of **HK$69 thousand**, compared to **HK$237 thousand** in the same period of 2024[30](index=30&type=chunk) - In the first half of 2025, the Group had no disposals of property, plant and equipment[31](index=31&type=chunk) [11. Right-of-use Assets / Lease Liabilities](index=17&type=section&id=11.%20%E4%BD%BF%E7%94%A8%E6%AC%8A%E8%B3%87%E7%94%A2%E3%84%89%E7%A7%9F%E8%B3%83%E8%B2%A0%E5%82%B5) As of June 30, 2025, right-of-use assets were **HK$7,771 thousand**, a decrease from **HK$12,263 thousand** at year-end 2024, primarily due to depreciation provision; total lease liabilities were **HK$7,990 thousand**, with a current portion of **HK$7,832 thousand**; the Group leases four properties for restaurant operations Right-of-use Assets / Lease Liabilities (HK$ thousand) | Indicator | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | | :--- | :--- | :--- | | Right-of-use assets | 7,771 | 12,263 | | Lease liabilities (current) | 7,832 | 8,764 | | Lease liabilities (non-current) | 158 | 4,012 | | **Total lease liabilities** | **7,990** | **12,776** | - As of June 30, 2025, the Group leased four properties for restaurant operations, with lease terms of **1 to 2 years**[32](index=32&type=chunk) - The weighted average incremental borrowing rate applicable to lease liabilities ranged from **3.88% to 5.15%**[33](index=33&type=chunk) [12. Trade and Other Receivables](index=19&type=section&id=12.%20%E6%87%89%E6%94%B6%E8%B3%AC%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, net trade receivables were **HK$950 thousand**, net other receivables were **HK$458 thousand**, prepayments were **HK$1,268 thousand**, and net deposits were **HK$3,395 thousand**; the provision for trade receivables credit losses significantly decreased, primarily due to a **HK$(2,069) thousand** (i.e., reversal) expected credit loss provision recognized during the period Trade and Other Receivables (HK$ thousand) | Indicator | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | | :--- | :--- | :--- | | Net trade receivables | 950 | 630 | | Net other receivables | 458 | 400 | | Prepayments | 1,268 | 1,789 | | Net deposits | 3,395 | 4,492 | | **Total current portion** | **3,439** | **4,739** | - Trade receivables generally have a credit period of **within 60 days**, with no significant concentration of credit risk[35](index=35&type=chunk) Ageing of Trade Receivables (net of provision) (HK$ thousand) | Ageing of Trade Receivables (net of provision) | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 30 days | 611 | 626 | | 31 to 60 days | 253 | 4 | | 61 to 90 days | 86 | – | | 91 to 120 days | – | – | | **Total** | **950** | **630** | - In the first half of 2025, a credit loss provision of **HK$(2,069) thousand** (i.e., reversal) was recognized for trade receivables, compared to a **HK$2,903 thousand** recognition in 2024[37](index=37&type=chunk) - As of June 30, 2025, deposits primarily refer to lease deposits of approximately **HK$2,650 thousand**[39](index=39&type=chunk) [13. Loans Receivable](index=22&type=section&id=13.%20%E6%87%89%E6%94%B6%E8%B2%B8%E6%AC%BE) The Group's total loans receivable amounted to **HK$3,450 thousand**, fully provided for expected credit losses, resulting in a net balance of zero; this loan has been overdue for **over 90 days** since December 31, 2021, at an annual interest rate of **10%**, and the Company has initiated legal action for recovery - Total loans receivable amounted to **HK$3,450 thousand**, fully provided for expected credit losses, resulting in a net balance of zero[40](index=40&type=chunk)[41](index=41&type=chunk) - This loan has been overdue for **over 90 days** since December 31, 2021, at an annual interest rate of **10%**, and the Company has initiated legal action for recovery[40](index=40&type=chunk) [14. Trade and Other Payables](index=23&type=section&id=14.%20%E6%87%89%E4%BB%98%E8%B3%AC%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade and other payables were **HK$32,371 thousand**, a decrease from **HK$34,823 thousand** at year-end 2024; this includes trade payables of **HK$3,404 thousand**, other payables of **HK$14,198 thousand**, and accrued expenses of **HK$8,368 thousand** Trade and Other Payables (HK$ thousand) | Indicator | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables | 3,404 | 4,004 | | Rental payables | 3,240 | 1,813 | | Other payables | 14,198 | 18,758 | | Directors' loans | 850 | 750 | | Shareholders' loans | 1,825 | 1,825 | | Accrued expenses | 8,368 | 6,934 | | Other tax payables | 486 | 839 | | **Total** | **32,371** | **34,823** | - Trade payables generally have a credit period of **within 45 days**[42](index=42&type=chunk) - Other payables include convertible promissory notes of approximately **HK$1,404 thousand** which are in default and repayable on demand[44](index=44&type=chunk) - Directors' loans are unsecured, bear interest at an annual rate of **5.25%**, and are repayable within **1 year**[44](index=44&type=chunk) [15. Share Capital](index=24&type=section&id=15.%20%E8%82%A1%E6%9C%AC) As of June 30, 2025, the Company's authorized share capital was **HK$100,000 thousand** (**1,000,000 thousand shares**), and issued and fully paid share capital was **HK$54,826 thousand** (**548,256 thousand shares**), remaining unchanged from year-end 2024 Share Capital (thousand shares/thousand HKD) | Indicator | 2025 June 30 (thousand shares/thousand HKD) | 2024 Dec 31 (thousand shares/thousand HKD) | | :--- | :--- | :--- | | Authorized share capital (ordinary shares of HK$0.1 each) | 1,000,000 (shares) / 100,000 (HKD) | 1,000,000 (shares) / 100,000 (HKD) | | Issued and fully paid share capital | 548,256 (shares) / 54,826 (HKD) | 548,256 (shares) / 54,826 (HKD) | [16. Capital Commitments](index=25&type=section&id=16.%20%E8%B3%87%E6%9C%AC%E6%89%BF%E6%94%94) As of June 30, 2025, the Group's contracted but unprovided capital commitments amounted to **HK$18,207 thousand**, primarily representing unpaid capital contributions to PRC subsidiaries Capital Commitments (HK$ thousand) | Capital Commitments | 2025 June 30 (HK$ thousand) | 2024 Dec 31 (HK$ thousand) | | :--- | :--- | :--- | | Unpaid capital contributions to PRC subsidiaries | 18,207 | 18,207 | [17. Significant Related Party Transactions](index=25&type=section&id=17.%20%E9%87%8D%E5%A4%A7%E9%97%9C%E9%80%A3%E6%96%B9%E4%BA%A4%E6%98%93) The Group engaged in transactions with related parties, including remuneration payments, rental expenses, and loan interest expenses; for the six months ended June 30, 2025, remuneration paid to key management personnel was **HK$545 thousand**, and loan interest expense for Mr. Choi Siu Kit was **HK$19 thousand** Significant Related Party Transactions (HK$ thousand) | Nature of Transaction | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Remuneration paid to key management personnel | 545 | 953 | | Rental expenses (Zone One (CS) Limited) | – | 510 | | Loan interest expense (Mr. Choi Siu Kit) | 19 | 7 | - Zone One (CS) Limited is held by the parents of executive directors Mr. Choi Yat Hon and Mr. Choi Siu Kit[49](index=49&type=chunk) Management Discussion and Analysis [Business Review](index=27&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) In the first half of 2025, the Group closed "SIXA" to focus resources on "HEXA" as its core outlet; by introducing anniversary set menus and half-price dim sum for lunch, it successfully mitigated the declining customer traffic trend; facing a challenging operating environment, the Group tightened cost control through human resource optimization and supplier repricing, while continuously developing its menu - "SIXA" was closed on **March 24, 2025**, with "HEXA" becoming the sole core outlet for focused development[51](index=51&type=chunk) - "HEXA" launched an **8th-anniversary set menu** and **half-price dim sum for lunch**, mitigating a slight year-on-year decrease in customer traffic[51](index=51&type=chunk) - Cost control was tightened through human resource optimization and supplier repricing, with continuous menu development efforts[51](index=51&type=chunk) [Financial Review](index=27&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) [Revenue](index=27&type=section&id=%E6%94%B6%E7%9B%8A) The Group's total revenue decreased by **29.1%** from **HK$42.3 million** in the first half of 2024 to **HK$30.0 million** in the same period of 2025, primarily due to a shift in customer spending patterns towards mainland China Total Revenue (HK$ million) | Indicator | 2025 First Half (HK$ million) | 2024 First Half (HK$ million) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 30.0 | 42.3 | -29.1% | - The decrease in revenue is primarily due to a gradual shift in customer spending patterns towards mainland China[52](index=52&type=chunk) [Expenses](index=28&type=section&id=%E9%96%8B%E6%94%AF) The Group's major expenses significantly decreased due to the cessation of "SIXA" operations and strict cost control measures; cost of inventories sold decreased by **27.3%**, staff costs by **37.8%**, property rental and related expenses by **32.3%**, advertising and marketing expenses by **85.1%**, and depreciation and amortization by **29.4%** Expense Items (HK$ million) | Expense Item | 2025 First Half (HK$ million) | 2024 First Half (HK$ million) | Year-on-year Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Cost of inventories sold | 9.3 | 12.8 | -27.3% | Revenue decrease | | Staff costs | 10.3 | 16.5 | -37.8% | SIXA cessation and cost control | | Property rental and related expenses | 2.1 | 3.1 | -32.3% | SIXA cessation and headquarters rental cost control | | Advertising and marketing expenses | 0.032 | 0.215 | -85.1% | SIXA cessation and cost control | | Other operating expenses | 5.6 | 5.8 | -3.4% | SIXA cessation | | Depreciation and amortization | 4.8 | 6.8 | -29.4% | SIXA cessation | [Loss Attributable to Owners of the Company](index=28&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%93%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%94%E8%99%A7%E6%90%8D) In the first half of 2025, net loss attributable to owners of the Company was approximately **HK$7.5 million**, compared to **HK$2.7 million** in the same period of 2024; the expanded loss was primarily due to the cessation of "SIXA" operations and a reversal of expected credit loss provision of approximately **HK$2.1 million** in the first half of 2025 Net Loss Attributable to Owners of the Company (HK$ million) | Indicator | 2025 First Half (HK$ million) | 2024 First Half (HK$ million) | | :--- | :--- | :--- | | Net loss attributable to owners of the Company | 7.5 | 2.7 | - The expanded loss was primarily due to the cessation of "SIXA" operations and a reversal of expected credit loss provision of approximately **HK$2.1 million** in the first half of 2025[55](index=55&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=29&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) As of June 30, 2025, the Group's current ratio and quick ratio both decreased to **0.1**, and the debt-to-equity ratio increased to **302.7%**, indicating increased liquidity pressure; cash and cash equivalents decreased to **HK$0.8 million**, with external borrowings of **HK$7.6 million**; the Company has implemented measures to alleviate liquidity pressure Financial Ratios | Financial Ratios | 2025 June 30 | 2024 Dec 31 | | :--- | :--- | :--- | | Current Ratio | 0.1 | 0.2 | | Quick Ratio | 0.1 | 0.2 | | Debt-to-equity Ratio | 302.7% | 227.3% | | Gearing Ratio | Not applicable | Not applicable | Cash and External Borrowings (HK$ million) | Indicator | 2025 June 30 (HK$ million) | 2024 Dec 31 (HK$ million) | | :--- | :--- | :--- | | Cash and cash equivalents | 0.8 | 4.0 | | External borrowings | 7.6 | 8.8 | - The Group has implemented a series of plans and measures to alleviate liquidity pressure and improve its financial position[59](index=59&type=chunk) [Pledge of Assets](index=29&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group had no pledge of any assets - As of June 30, 2025, the Group had no pledge of any assets[60](index=60&type=chunk) [Foreign Exchange Risk](index=30&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The Group's principal operations are conducted in HKD and RMB, and exchange rate fluctuations are not expected to significantly impact operations, as the HKD exchange rate has been relatively stable and most revenue is denominated in HKD - The Group's principal operations are conducted in HKD and RMB, and exchange rate fluctuations are not expected to cause significant impact[61](index=61&type=chunk) - The HKD exchange rate has historically remained relatively stable, and most of the Group's revenue is denominated in HKD[61](index=61&type=chunk) [Contingent Liabilities and Capital Commitments](index=30&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%89%BF%E6%94%94) Except as disclosed in the interim report, as of June 30, 2025, the Group had no other contingent liabilities or capital commitments - Except as disclosed in the interim report, as of June 30, 2025, the Group had no other contingent liabilities or capital commitments[62](index=62&type=chunk) [Material Investments Held, Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies](index=30&type=section&id=%E6%89%80%E6%8C%81%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E3%80%81%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E5%8F%8A%E8%81%AF%E5%B1%AC%E5%85%AC%E5%8F%B8) On July 14, 2025, non-wholly owned subsidiary Huayun Group Limited entered into a subscription agreement with Futian Asia Holdings Limited to issue **HK$3,000,000** convertible bonds; upon full conversion, the subscriber will hold approximately **81%** equity in the target company, and the Company's equity interest will decrease to approximately **13.2%** - On **July 14, 2025**, non-wholly owned subsidiary Huayun Group Limited issued **HK$3,000,000** convertible bonds[63](index=63&type=chunk) - Upon full conversion, the subscriber will hold approximately **81%** equity in the target company, and the Company's equity interest in the target company will decrease to approximately **13.2%**[63](index=63&type=chunk) - Other than this, the Group held no other material investments as of June 30, 2025, and there were no other material acquisitions or disposals during the period[63](index=63&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) As of June 30, 2025, the Group had **49 employees**, a decrease from **87** in 2024; the Company actively optimized its staff structure, offered competitive remuneration packages, and provided a statutory Mandatory Provident Fund scheme for Hong Kong employees Number of Employees | Indicator | 2025 June 30 | 2024 | | :--- | :--- | :--- | | Number of Employees | 49 | 87 | - Remuneration is determined by reference to market terms, individual performance, qualifications, and experience, and a statutory Mandatory Provident Fund scheme is provided[64](index=64&type=chunk) [Outlook](index=31&type=section&id=%E5%B1%95%E6%9C%9B) In the second half of 2025, the Group anticipates continued high market value sensitivity; it will concentrate resources on "HEXA" to enhance average customer spending and utilization through menu refinement, time-slot promotions, themed meals, and improved service standards; cost control remains central, achieved via lean staffing, tighter procurement terms, and supply chain optimization; concurrently, marketing strategies will be adjusted, capital commitments and finance costs prudently monitored, and potential business and investment opportunities sought - In the second half of 2025, market value sensitivity remains high, tourism recovery is uneven, and local diners are cautious[65](index=65&type=chunk) - Resources will be concentrated on "HEXA" to refine menu development, implement time-slot promotions, offer themed meals, and enhance service standards[65](index=65&type=chunk) - Cost control remains central, achieved through lean staffing, tighter procurement terms, and supply chain optimization[65](index=65&type=chunk) - Marketing strategies will be adjusted, capital commitments and finance costs prudently monitored, and potential business and investment opportunities sought[65](index=65&type=chunk) Other Information [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation](index=32&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%88%96%E4%BB%BB%E4%BD%95%E7%9B%B8%E8%81%AF%E6%B3%95%E5%9C%98%E7%9A%84%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E6%AC%8A%E8%AD%89%E4%B8%AD%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As of June 30, 2025, executive director Mr. Choi Siu Kit held a long position of **109,350,000 ordinary shares** in the Company, representing approximately **19.95%** of the share capital, through controlled corporations and a concert party agreement Directors' and Chief Executive's Interests and Short Positions | Name of Director | Name of Group Member/Associated Corporation | Nature of Interest | Number and Class of Securities | Approximate Percentage of Equity Interest | | :--- | :--- | :--- | :--- | :--- | | Mr. Choi Siu Kit | The Company | Interest in controlled corporation, joint interest with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Choi Siu Kit | Welmen | Interest in controlled corporation | 3,031.11 ordinary shares (L) | 30.3111% | | Mr. Choi Siu Kit | Welmen | Beneficial owner | 1,262.225 ordinary shares (L) | 12.62225% | - Mr. Choi Siu Kit, Mr. Choi Yat Hon, Mr. Au Wai Bong, Mr. Au Ka Wai, and Mr. Yeung Chi Shing are deemed to have an interest in **19.95%** of the Company's issued share capital held by Welmen, pursuant to a concert party agreement[69](index=69&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares of the Company](index=34&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E4%B9%8B%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As of June 30, 2025, Restoran Oversea held **29.00%** equity in the Company, and Welmen Investment Co. Ltd held **19.95%**; additionally, several individuals held **19.95%** equity in the Company through controlled corporate interests or a concert party agreement Substantial Shareholders' and Other Persons' Interests and Short Positions | Name of Shareholder/Person | Nature of Interest | Number and Class of Securities | Approximate Percentage of Equity Interest | | :--- | :--- | :--- | :--- | | Restoran Oversea (CST) Sdn Bhd | Beneficial owner | 158,988,000 ordinary shares (L) | 29.00% | | Welmen Investment Co. Ltd | Beneficial owner | 109,350,000 ordinary shares (L) | 19.95% | | Yui Tak Investment Limited | Interest in controlled corporation | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Choi Yat Hon | Interest in controlled corporation, joint interest with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Au Wai Bong | Joint interest with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Au Ka Wai | Joint interest with another person | 109,350,000 ordinary shares (L) | 19.95% | | Mr. Yeung Chi Shing | Joint interest with another person | 109,350,000 ordinary shares (L) | 19.95% | | Ms. Chan Ting Fai | Spouse's interest | 109,350,000 ordinary shares (L) | 19.95% | | Ms. Lee Wan | Spouse's interest | 109,350,000 ordinary shares (L) | 19.95% | | Trendy Pleasure Limited | Beneficial owner | 30,000,000 ordinary shares (L) | 5.47% | | Saint Lotus Cultural Development Group Co., Limited | Interest in controlled corporation | 30,000,000 ordinary shares (L) | 5.47% | | Mr. Cheung Kin Kwong | Interest in controlled corporation | 30,000,000 ordinary shares (L) | 5.47% | - Restoran Oversea is wholly and beneficially owned by Oversea Enterprise Berhad[71](index=71&type=chunk) - Welmen is held **30.3111%** by Yui Tak, which is **50%** held by Mr. Choi Yat Hon and **50%** by Mr. Choi Siu Kit[71](index=71&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=36&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%B9%8B%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[73](index=73&type=chunk) [Interests in Competing Businesses](index=37&type=section&id=%E6%96%BC%E7%AB%B6%E7%88%AD%E6%A5%AD%E5%8B%99%E4%B8%AD%E7%9A%84%E6%AC%8A%E7%9B%8A) Directors hold interests in certain Macau restaurant businesses, but these do not constitute direct competition with the Group's operations due to differing industry nature, operating hours, and target customers; executive director Mr. Choi Siu Kit's spouse operates certain restaurant and bar businesses in Hong Kong, which are not part of the Group and not covered by the non-competition deed - Directors hold interests in certain Macau restaurant businesses, but due to differences in business nature, these do not constitute direct competition[75](index=75&type=chunk) - Executive director Mr. Choi Siu Kit's spouse operates certain restaurant and bar businesses in Hong Kong, which are not part of the Group and not covered by the non-competition deed[75](index=75&type=chunk) [Share Option Scheme](index=37&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%88%83) The Company adopted a share option scheme on October 18, 2016, to incentivize employees; the scheme has a **10-year** validity, expiring on November 11, 2026; for the six months ended June 30, 2025, no new share options were granted, with **2,250,810** options remaining unexercised at period-end, at an exercise price of **HK$0.5921** - The share option scheme was adopted on **October 18, 2016**, to incentivize employees, with a **10-year** validity, expiring on **November 11, 2026**[77](index=77&type=chunk)[85](index=85&type=chunk) - For the six months ended June 30, 2025, no share options were granted to eligible participants of the Group[80](index=80&type=chunk) Share Options Outstanding | Share Option Category | Unexercised as at January 1, 2025 | Unexercised as at June 30, 2025 | Exercise Price | | :--- | :--- | :--- | :--- | | Employees and consultants | 2,250,810 | 2,250,810 | HK$0.5921 | - The total number of shares available for issue under the share option scheme is **2,836,579 shares**, representing approximately **0.52%** of the Company's total issued shares[85](index=85&type=chunk) [Corporate Governance Practices](index=41&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) - The Group is committed to maintaining good corporate governance standards and complying with the Corporate Governance Code in Appendix C1 of the GEM Listing Rules[86](index=86&type=chunk) [Changes in Directors' Information](index=41&type=section&id=%E8%91%A3%E4%BA%8B%E8%B3%87%E6%96%99%E8%AE%8A%E5%8B%95) For the six months ended June 30, 2025, there were no changes in directors' information required to be disclosed under Rules 17.50(2)(a) to (e) and (g) of the GEM Listing Rules - For the six months ended June 30, 2025, there were no changes in directors' information[87](index=87&type=chunk) [Directors' Securities Transactions](index=41&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) Following specific written inquiries to the directors, each director confirmed compliance with the required standards for securities transactions of the Company for the six months ended June 30, 2025 - Each director confirmed compliance with the required standards for securities transactions of the Company for the six months ended June 30, 2025[88](index=88&type=chunk) [Dividends](index=42&type=section&id=%E8%82%A1%E6%81%AF) The Board resolved not to declare any dividend for the six months ended June 30, 2025 - The Board resolved not to declare any dividend for the six months ended June 30, 2025[89](index=89&type=chunk) [Audit Committee](index=42&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, comprising independent non-executive directors Ms. Tse Mei Ling (Chairperson), Mr. Zuo Tifen, and Ms. Ng Man Hung, assists the Board by providing independent advice on financial reporting, internal control, and risk management, and has reviewed the financial information in this interim report - The Audit Committee comprises independent non-executive directors Ms. Tse Mei Ling (Chairperson), Mr. Zuo Tifen, and Ms. Ng Man Hung[90](index=90&type=chunk) - Its primary responsibilities include assisting the Board with independent advice on financial reporting, internal control, and risk management, and it has reviewed the financial information in this interim report[90](index=90&type=chunk) [Discloseable Transaction in Relation to Renewal of Lease Agreements](index=42&type=section&id=%E6%9C%89%E9%97%9C%E9%87%8D%E7%BA%8C%E7%A7%9F%E8%B3%83%E5%8D%94%E8%AD%B0%E7%9A%84%E9%A0%88%E4%BA%88%E6%8A%AB%E9%9C%B2%E4%BA%A4%E6%98%93) On May 8, 2024, the Company's indirect non-wholly owned subsidiary, Huayun Group Limited, renewed a property lease within Swire Properties, with a term until April 15, 2025, for a total amount of approximately **HK$3.5 million**, plus additional turnover rent; this constitutes a discloseable transaction - On **May 8, 2024**, the subsidiary renewed a property lease within Swire Properties, with a term until **April 15, 2025**[91](index=91&type=chunk) - The total amount is approximately **HK$3.5 million**, plus additional turnover rent, constituting a discloseable transaction[91](index=91&type=chunk)[92](index=92&type=chunk) [Major Transaction in Relation to Renewal of Lease Agreements](index=43&type=section&id=%E6%9C%89%E9%97%9C%E9%87%8D%E7%BA%8C%E7%A7%9F%E8%B3%83%E5%8D%94%E8%AD%B0%E7%9A%84%E4%B8%BB%E8%A6%81%E4%BA%A4%E6%98%93) On June 24, 2024, the subsidiary renewed a property lease within Harbour City, with a term until June 25, 2026, for a total amount of approximately **HK$15.9 million**, plus additional turnover rent; this constitutes a major transaction, subject to GEM Listing Rules' reporting, announcement, circular, and shareholder approval requirements, but the EGM has not yet been convened - On **June 24, 2024**, the subsidiary renewed a property lease within Harbour City, with a term until **June 25, 2026**[94](index=94&type=chunk) - The total amount is approximately **HK$15.9 million**, plus additional turnover rent, constituting a major transaction[94](index=94&type=chunk) - This is subject to GEM Listing Rules' reporting, announcement, circular, and shareholder approval requirements, but the EGM to approve the Harbour City lease agreement has not yet been convened[94](index=94&type=chunk)[95](index=95&type=chunk) [Remedial Actions](index=44&type=section&id=%E8%A3%9C%E6%95%91%E8%A1%8C%E5%8B%95) The Company failed to comply with GEM Listing Rules by not timely obtaining shareholder approval and publishing announcements and circulars for the Harbour City and Swire lease agreements; the Company has committed to implementing remedial measures, including providing GEM Listing Rules training for the Board and management, strengthening internal controls and reporting procedures, and seeking external professional advice to prevent recurrence - The Company failed to timely obtain shareholder approval and publish announcements and circulars for the Harbour City and Swire lease agreements, thus non-complying with GEM Listing Rules **19.34, 19.38, and 19.40**[97](index=97&type=chunk) - The oversight was due to an unintentional oversight in implementing HKFRS 16 and the accounting manager's unawareness of the need for size tests[97](index=97&type=chunk) - Remedial measures include providing GEM Listing Rules training for the Board and management, strengthening internal controls and reporting procedures, and seeking external professional advice[98](index=98&type=chunk) [Issue of Convertible Bonds by a Non-wholly Owned Subsidiary and Deemed Disposal of Interest in a Non-wholly Owned Subsidiary Constituting a Major Transaction](index=46&type=section&id=%E9%9D%9E%E5%85%A8%E8%B3%87%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E7%99%BC%E8%A1%8C%E5%8F%AF%E6%8F%9B%E8%82%A1%E5%82%B5%E5%88%B8%E5%8F%8A%E6%9C%89%E9%97%9C%E8%A6%96%E4%BD%9C%E5%87%BA%E5%94%AE%E9%9D%9E%E5%85%A8%E8%B3%87%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E6%AC%8A%E7%9B%8A%E4%B9%8B%E4%B8%BB%E8%A6%81%E4%BA%A4%E6%98%93) On July 14, 2025, non-wholly owned subsidiary Huayun Group Limited issued **HK$3,000,000** convertible bonds; upon full conversion, the Company's equity interest in the target company will decrease to approximately **13.2%**, constituting a deemed disposal of interest in a non-wholly owned subsidiary and a major transaction, subject to GEM Listing Rules' reporting, announcement, and shareholder approval requirements - On **July 14, 2025**, non-wholly owned subsidiary Huayun Group Limited issued **HK$3,000,000** convertible bonds[99](index=99&type=chunk) - Upon full conversion, the Company's equity interest in the target company will decrease to approximately **13.2%**, constituting a deemed disposal of interest in a non-wholly owned subsidiary and a major transaction[99](index=99&type=chunk)[100](index=100&type=chunk) - This transaction is subject to the reporting, announcement, and shareholder approval requirements under Chapter 19 of the GEM Listing Rules[100](index=100&type=chunk) [Events After Reporting Period](index=46&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E4%BB%B6) Except for disclosed matters, as of June 30, 2025, and up to the date of this interim report, the Company had no other material subsequent events significantly impacting the Group's operations and financial performance - Except for disclosed matters, the Company had no material subsequent events significantly impacting its operations and financial performance[102](index=102&type=chunk) [Material Litigation](index=47&type=section&id=%E9%87%8D%E5%A4%A7%E8%A8%B4%E8%A8%9F) For the six months ended June 30, 2025, the Company was not involved in any other material litigation or arbitration, and the directors were unaware of any outstanding or threatened material litigation or claims - For the six months ended June 30, 2025, the Company was not involved in any other material litigation or arbitration[103](index=103&type=chunk) - The directors were also unaware of any outstanding or threatened material litigation or claims[103](index=103&type=chunk) [Board of Directors](index=47&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) As of the date of this report, the Board of Directors comprises executive directors Mr. Choi Siu Kit, Mr. Ying Kan Man, and independent non-executive directors Ms. Tse Mei Ling, Mr. Zuo Tifen, and Ms. Ng Man Hung - The Board of Directors comprises executive directors Mr. Choi Siu Kit, Mr. Ying Kan Man, and independent non-executive directors Ms. Tse Mei Ling, Mr. Zuo Tifen, and Ms. Ng Man Hung[104](index=104&type=chunk)

[Disclaimer and Company Information](index=1&type=section&id=Disclaimer%20and%20Company%20Information) This section provides the disclaimer from the Hong Kong Exchanges and Clearing Limited and an overview of WS-SK TARGET GROUP LIMITED, including its listing on GEM [Disclaimer](index=1&type=section&id=Disclaimer) The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited are not responsible for the content of this announcement and disclaim any liability for losses arising from its contents - HKEX and the Stock Exchange bear no responsibility for the accuracy or completeness of this announcement's content[1](index=1&type=chunk)[3](index=3&type=chunk) - The Directors confirm that the information in this announcement is accurate, complete, and free from misleading or fraudulent statements in all material aspects[4](index=4&type=chunk) [Company Overview](index=1&type=section&id=Company%20Overview) WS-SK TARGET GROUP LIMITED, incorporated in the Cayman Islands with stock code 8427, is listed on GEM, a market for small and medium-sized companies with higher investment risks - The company name is WS-SK TARGET GROUP LIMITED, stock code **8427**[2](index=2&type=chunk) - The company is listed on GEM of The Stock Exchange of Hong Kong Limited (SEHK), a market for small and medium-sized companies with higher investment risks[2](index=2&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's consolidated financial performance, position, and changes in equity for the year ended May 31, 2025 [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the year ended May 31, 2025, the Group saw a slight revenue increase but a decrease in profit for the year, with a shift from exchange gain to loss resulting in total comprehensive expense Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RM thousand) | 2024 (RM thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 31,555 | 30,681 | 2.85% | | Cost of sales | (22,168) | (22,122) | 0.21% | | Gross profit | 9,387 | 8,559 | 9.67% | | Profit before tax | 1,695 | 1,632 | 3.86% | | Profit for the year from continuing operations | 481 | 493 | -2.43% | | Loss from discontinued operations | (399) | (385) | 3.64% | | Profit for the year | 82 | 108 | -24.07% | | Exchange differences arising from translation of overseas operations | (909) | 410 | -321.71% | | Total comprehensive (expense)/income for the year | (827) | 518 | -259.65% | | Basic earnings per share (continuing operations) | 3.00 cents | 3.63 cents | -17.36% | | Basic loss per share (discontinued operations) | (2.49) cents | (2.83) cents | -12.01% | | Basic earnings per share (continuing and discontinued operations) | 0.51 cents | 0.80 cents | -36.25% | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of May 31, 2025, total non-current assets significantly increased, while total current assets decreased, leading to a slight growth in net current assets and total equity despite increased liabilities Summary of Consolidated Statement of Financial Position | Indicator | 2025 (RM thousand) | 2024 (RM thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 22,395 | 8,006 | 179.73% | | Total current assets | 32,768 | 42,601 | -23.08% | | Total current liabilities | 12,095 | 14,214 | -14.89% | | Net current assets | 20,673 | 28,387 | -27.17% | | Total non-current liabilities | 6,360 | 95 | 6594.74% | | Net assets | 36,708 | 36,298 | 1.13% | | Share capital | 7,265 | 6,028 | 20.52% | | Reserves | 29,443 | 30,270 | -2.73% | | Total equity | 36,708 | 36,298 | 1.13% | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For the year ended May 31, 2025, share capital increased due to new ordinary share issuance, but exchange reserves significantly decreased, resulting in a negative total comprehensive expense for the year and a slight increase in total equity Summary of Consolidated Statement of Changes in Equity | Indicator | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Share capital | 7,265 | 6,028 | | Share premium | 28,074 | 28,074 | | Other reserves | 8,579 | 8,579 | | Exchange reserve | (449) | 460 | | Accumulated losses | (6,761) | (6,843) | | Total equity | 36,708 | 36,298 | | Profit for the year | 82 | 108 | | Exchange differences arising from translation of overseas operations | (909) | 410 | | Total comprehensive (expense)/income for the year | (827) | 518 | | Subscription of shares through issuance of new ordinary shares | 1,237 | 605 | [Notes to the Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering general information, accounting standards, revenue, segment data, and various financial items [General Information](index=7&type=section&id=General%20Information) The company, incorporated in the Cayman Islands and listed on GEM, operates in Malaysia (precast concrete products, crane rental) and China (e-commerce platform), having terminated its Hong Kong healthcare product sales in 2024 - The company was incorporated in the Cayman Islands on **October 28, 2016**, and listed on GEM of SEHK on **July 19, 2017**[10](index=10&type=chunk) - Principal activities include manufacturing and trading of precast concrete joint boxes, trading of accessories and pipes, and mobile crane rental services in Malaysia[11](index=11&type=chunk) - The Group commenced e-commerce platform business in China from **January 2025** and terminated its healthcare product sales business in Hong Kong in **2024**[11](index=11&type=chunk) [Application of Revised IFRS Accounting Standards](index=7&type=section&id=Application%20of%20Revised%20IFRS%20Accounting%20Standards) This year, the Group applied revised IFRS standards, including IFRS 16, IAS 1, IAS 7, and IFRS 7 amendments, which had no significant impact on the financial position or performance - Revised IFRS standards, including IFRS 16 (amendments), IAS 1 (amendments), and IAS 7 and IFRS 7 (amendments), were applied this year[12](index=12&type=chunk) - These amendments had no significant impact on the Group's financial position or performance for the current and prior years[12](index=12&type=chunk) [Revenue and Segment Information](index=8&type=section&id=Revenue%20and%20Segment%20Information) Group revenue primarily derives from Malaysian manufacturing and trading, and other construction materials, with new contributions from China's e-commerce platform in FY2025, while healthcare product sales ceased Revenue by Customer Contracts | Business Type | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Sales of manufactured goods | 29,468 | 29,287 | | Sales of other construction materials and services | 1,760 | 1,394 | | E-commerce platform | 327 | – | | **Total** | **31,555** | **30,681** | | **By geographical market** | | | | Malaysia | 31,228 | 30,681 | | China | 327 | – | | **Total** | **31,555** | **30,681** | | **Timing of revenue recognition** | | | | At a point in time | 31,555 | 30,681 | - Revenue from sales of manufactured goods and construction materials is recognized when products are transferred to customers, while e-commerce platform revenue is recognized upon completion of each sales transaction[14](index=14&type=chunk)[16](index=16&type=chunk) - The Group commenced e-commerce platform operations in FY2025, forming a new segment, while procurement services and healthcare product sales businesses were terminated[18](index=18&type=chunk)[19](index=19&type=chunk) Segment Results (Continuing Operations) | Segment | 2025 Revenue (RM thousand) | 2025 Segment Results (RM thousand) | 2024 Revenue (RM thousand) | 2024 Segment Results (RM thousand) | | :--- | :--- | :--- | :--- | :--- | | Manufacturing and trading | 29,468 | 8,764 | 29,287 | 8,245 | | Other construction materials and services | 1,760 | 320 | 1,394 | 314 | | E-commerce platform | 327 | 303 | – | – | | **Total** | **31,555** | **9,387** | **30,681** | **8,559** | Segment Assets and Liabilities (May 31, 2025) | Segment | Non-current assets (RM thousand) | Current assets (RM thousand) | Non-current liabilities (RM thousand) | Current liabilities (RM thousand) | | :--- | :--- | :--- | :--- | :--- | | Manufacturing and trading | 6,647 | 29,108 | (2,720) | (7,956) | | Other construction materials and services | 19 | 1,301 | – | (1,107) | | E-commerce platform | 151 | 293 | (73) | (456) | | **Total segments** | **6,817** | **30,702** | **(2,793)** | **(9,519)** | | Unallocated | 15,578 | 1,391 | (3,567) | (1,069) | | Discontinued operations | – | 675 | – | (1,507) | | **Consolidated total** | **22,395** | **32,768** | **(6,360)** | **(12,095)** | - Non-current asset additions in FY2025 amounted to **RM 12,238 thousand**, primarily from the manufacturing and trading segment[24](index=24&type=chunk) - No single customer contributed more than **10%** of the Group's total sales in FY2025[27](index=27&type=chunk) [Finance Costs](index=14&type=section&id=Finance%20Costs) For the year ended May 31, 2025, the Group's finance costs slightly increased, primarily driven by interest expenses on bills payable Breakdown of Finance Costs | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Interest expense on lease liabilities | 24 | 24 | | Commitment fees | 9 | 10 | | Interest expense on bills payable | 110 | 99 | | **Total** | **143** | **133** | [Profit Before Tax](index=15&type=section&id=Profit%20Before%20Tax) Profit before tax is determined by deducting or including various expenses and income, such as auditor's remuneration, inventory costs, staff costs, depreciation, and net credit loss provisions Profit Before Tax Adjustments | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Auditor's remuneration — audit services | 471 | 498 | | Cost of inventories recognized as expense | 14,130 | 15,995 | | Total staff costs | 4,078 | 3,791 | | Short-term lease payments not included in lease liabilities | 384 | 50 | | Total depreciation and amortization | 1,814 | 1,257 | | Net provision for credit losses | 666 | 526 | | Interest income from bank deposits | (910) | (764) | [Taxation](index=16&type=section&id=Taxation) The Group's taxation primarily consists of Malaysian corporate income tax at 24%, with no Hong Kong profits tax provision due to the absence of taxable profit, and reconciliation shows the impact of non-deductible expenses and unrecognized tax losses Breakdown of Taxation | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Malaysian corporate income tax — current year | 1,242 | 1,099 | | Malaysian corporate income tax — (over)/under provision in prior years | (44) | 76 | | Deferred tax | 16 | (36) | | **Total** | **1,214** | **1,139** | - Malaysian corporate income tax is calculated at a statutory rate of **24%**, while Hong Kong profits tax is **16.5%** (or **8.25%** for the first HKD 2 million), with no Hong Kong profits tax provision for the current year[30](index=30&type=chunk)[31](index=31&type=chunk) Reconciliation of Tax for the Year to Profit Before Tax | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Profit before tax — from continuing operations | 1,695 | 1,632 | | Tax at applicable statutory tax rate of 24% | 407 | 392 | | Tax effect of non-deductible expenses | 279 | 234 | | Tax effect of non-taxable income | (59) | (283) | | Tax effect of unrecognized tax losses | 365 | 518 | | **Tax for the year** | **1,214** | **1,139** | [Earnings Per Share](index=17&type=section&id=Earnings%20Per%20Share) For the year ended May 31, 2025, basic earnings per share from continuing operations decreased to **3.00 Malaysian cents**, while basic loss per share from discontinued operations was **2.49 Malaysian cents**, with diluted EPS equal to basic EPS due to no potential ordinary shares Breakdown of Earnings (Loss) Per Share | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | **Continuing operations** | | | | Profit for the year attributable to owners of the Company (RM thousand) | 481 | 493 | | Weighted average number of ordinary shares in issue | 16,008,173 | 13,575,591 | | Basic earnings per share (Malaysian cents per share) | 3.00 | 3.63 | | **Discontinued operations** | | | | Loss for the year attributable to owners of the Company (RM thousand) | (399) | (385) | | Weighted average number of ordinary shares in issue | 16,008,173 | 13,575,591 | | Basic loss per share (Malaysian cents per share) | (2.49) | (2.83) | | **Continuing and discontinued operations** | | | | Profit for the year attributable to owners of the Company (RM thousand) | 82 | 108 | | Weighted average number of ordinary shares in issue | 16,008,173 | 13,575,591 | | Basic earnings per share (Malaysian cents per share) | 0.51 | 0.80 | - Diluted earnings per share is equal to basic earnings per share as there are no potential ordinary shares in issue[33](index=33&type=chunk) [Dividends](index=18&type=section&id=Dividends) The company's directors do not recommend the payment of dividends for the years ended May 31, 2024, and 2025 - The Directors do not recommend the payment of dividends for the years ended May 31, 2024, and 2025[34](index=34&type=chunk) [Inventories](index=18&type=section&id=Inventories) As of May 31, 2025, the Group's total inventories slightly decreased, primarily due to a reduction in finished goods Breakdown of Inventories | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Raw materials and consumables | 891 | 883 | | Finished goods | 844 | 917 | | **Total** | **1,735** | **1,800** | [Trade and Other Receivables, Deposits and Prepayments](index=18&type=section&id=Trade%20and%20Other%20Receivables%2C%20Deposits%20and%20Prepayments) As of May 31, 2025, the Group's trade receivables (net of credit loss provision) and other receivables and deposits both decreased, with trade receivables having credit terms ranging from 30 to 120 days Breakdown of Trade and Other Receivables, Deposits and Prepayments | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Trade receivables (net of provision for credit losses) | 5,381 | 8,584 | | Other receivables and deposits (net of provision for credit losses) | 1,869 | 3,184 | | Prepayments | 807 | 717 | | **Total** | **8,057** | **12,485** | Aging Analysis of Trade Receivables (Net of Provision for Credit Losses) | Aging | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | 1 to 30 days | 2,434 | 3,694 | | 31 to 60 days | 1,090 | 1,051 | | 61 to 90 days | 682 | 492 | | 91 to 120 days | 195 | 414 | | Over 120 days | 980 | 2,933 | | **Total** | **5,381** | **8,584** | - Trade receivables are unsecured and non-interest bearing, with credit terms ranging from **30 to 120 days**[35](index=35&type=chunk) [Short-term Bank Deposits, Cash and Bank Balances](index=19&type=section&id=Short-term%20Bank%20Deposits%2C%20Cash%20and%20Bank%20Balances) As of May 31, 2025, the Group's total short-term bank deposits, cash, and bank balances decreased, with a significant increase in deposits pledged as security Breakdown of Short-term Bank Deposits, Cash and Bank Balances | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Short-term bank deposits | 18,676 | 21,089 | | Cash and bank balances | 4,054 | 7,142 | | **Total** | **22,730** | **28,231** | | Less: Deposits pledged as security | (1,176) | (212) | | **Cash and cash equivalents** | **21,554** | **28,019** | - The Group's deposits earn an average annual interest rate ranging from **3.65% to 3.8%** (2024: **2.30% to 3.81%**)[37](index=37&type=chunk) - Total pledged deposits amounted to approximately **RM 1,176,000** (2024: **RM 212,000**), serving as security for general banking facilities granted to the Group[37](index=37&type=chunk) [Trade and Other Payables and Accruals](index=20&type=section&id=Trade%20and%20Other%20Payables%20and%20Accruals) As of May 31, 2025, the Group's total trade and other payables and accruals increased, mainly due to higher other payables and accruals, with an average credit period for purchases of 30 to 75 days Breakdown of Trade and Other Payables and Accruals | Item | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | Trade payables | 2,876 | 2,818 | | Other payables and accruals | 4,051 | 4,698 | | Contract liabilities | 2,555 | 1,485 | | **Total** | **11,280** | **10,145** | Aging Analysis of Trade Payables | Aging | 2025 (RM thousand) | 2024 (RM thousand) | | :--- | :--- | :--- | | 1 to 30 days | 991 | 1,071 | | 31 to 60 days | 818 | 899 | | 61 to 90 days | 771 | 734 | | 91 to 120 days | 294 | 112 | | Over 120 days | 2 | 2 | | **Total** | **2,876** | **2,818** | - The average credit period for purchases is **30 to 75 days**, and the Group expects to settle contract liabilities within its normal operating cycle[38](index=38&type=chunk)[40](index=40&type=chunk) [Share Capital](index=21&type=section&id=Share%20Capital) As of May 31, 2025, the company's issued and fully paid share capital increased due to new share issuance, following a share consolidation where ten HKD 0.08 shares merged into one HKD 0.8 share, with no options granted under the share option scheme Breakdown of Share Capital Changes | Item | Number of Shares (thousand shares) | Par Value Per Share (HKD) | Share Capital (HKD thousand) | Share Capital (RM thousand) | | :--- | :--- | :--- | :--- | :--- | | Issued and fully paid as at June 1, 2023 | 123,876 | 0.08 | 9,910 | 5,438 | | Subscription of shares through issuance of new ordinary shares (a) | 12,388 | 0.08 | 991 | 590 | | As at May 31, 2024 and June 1, 2024 | 136,264 | 0.08 | 10,901 | 6,028 | | Subscription of shares through issuance of new ordinary shares (b) | 27,253 | 0.08 | 2,180 | 1,237 | | Share consolidation (c) | (147,165) | – | – | – | | **As at May 31, 2025** | **16,352** | **0.80** | **13,081** | **7,265** | - A share consolidation resolution was passed on **August 2, 2024**, merging every ten existing shares of **HKD 0.08** into one consolidated share of **HKD 0.8**, effective **August 6, 2024**[41](index=41&type=chunk) - The company has a share option scheme, but no share options have been granted as of the date of this announcement[42](index=42&type=chunk)[43](index=43&type=chunk) [Management Discussion and Analysis](index=23&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business operations, financial performance, key risks, and future outlook [Business Review and Outlook](index=23&type=section&id=Business%20Review%20and%20Outlook) The Group, a registered supplier for major Malaysian telecommunication and power companies, saw a slight revenue increase in FY2025 driven by other construction materials and new businesses, maintaining cautious optimism despite labor shortages and rising costs - The Group's primary business is the manufacturing and sale of “Target” brand precast concrete telecommunication and electrical joint boxes in Malaysia[44](index=44&type=chunk) - The Group is a registered or approved supplier for Celcom Axiata Berhad, Telekom Malaysia, and Tenaga National Bhd (TNB)[45](index=45&type=chunk) - Revenue for FY2025 increased slightly by approximately **2.85%**, mainly due to increased revenue from other construction materials and services and contributions from new businesses[45](index=45&type=chunk) - The Group faces pressures from labor shortages, reliance on foreign labor, and rising production and transportation costs, but maintains cautious optimism regarding its business outlook[45](index=45&type=chunk) [Financial Review](index=23&type=section&id=Financial%20Review) In FY2025, Group revenue grew **2.85%** to **RM 31.6 million**, with gross profit up **9.67%** to **RM 9.4 million** due to focus on high-margin products and cost control, while administrative expenses decreased and sales and distribution expenses increased, leading to a **24.07%** decline in profit for the year to **RM 82,000** - Revenue increased by approximately **2.85%** from approximately **RM 30.7 million** in FY2024 to approximately **RM 31.6 million** in FY2025[46](index=46&type=chunk) - Revenue from other construction materials and services increased by approximately **26.26%**, and the e-commerce platform business contributed approximately **RM 327,000** in revenue[47](index=47&type=chunk) - The healthcare product sales and material procurement services businesses have been terminated, with management reallocating resources to develop precast concrete joint box manufacturing and trading and other potential businesses[47](index=47&type=chunk) - Gross profit increased from approximately **RM 8.6 million** in FY2024 to approximately **RM 9.4 million** in FY2025, primarily due to management's focus on higher-margin precast joint boxes and better cost control[48](index=48&type=chunk) - Administrative expenses decreased by approximately **RM 0.4 million** or **6.69%** to approximately **RM 5.5 million**, mainly due to significant efforts in cost control[49](index=49&type=chunk) - Sales and distribution expenses increased by approximately **RM 0.5 million** or **36.95%** to approximately **RM 1.9 million**, primarily due to increased bonuses, commissions, entertainment and travel expenses, and expenses from new businesses[50](index=50&type=chunk) - Net profit for the year was approximately **RM 82,000** (2024: **RM 108,000**), influenced by increased revenue, higher sales and distribution expenses, reduced administrative expenses, and share of results of an associate[51](index=51&type=chunk) [Principal Risks and Uncertainties](index=25&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces operational risks from raw material price volatility, uncertainty of new orders from non-recurring infrastructure projects, and potential cash flow mismatches, alongside financial risks including credit and liquidity risks with trade receivables exceeding credit terms - Operational risks include the adverse impact of fluctuations in major raw material prices on financial performance[53](index=53&type=chunk) - Revenue primarily derives from non-recurring infrastructure upgrade and construction projects, with uncertainty regarding new business purchase orders[53](index=53&type=chunk) - Cash flow mismatches (timing differences between customer and supplier payments) could worsen cash flow position[53](index=53&type=chunk) - Financial risks include credit and liquidity risks, with trade receivables turnover days of approximately **81 days** as of May 31, 2025, exceeding credit terms[54](index=54&type=chunk) [Liquidity and Financial Resources](index=26&type=section&id=Liquidity%20and%20Financial%20Resources) As of May 31, 2025, the Group's cash and cash equivalents decreased to approximately **RM 22.7 million**, but with no borrowings, a current ratio of **2.71 times**, and zero gearing ratio, its financial position remains strong with ample liquidity - As of May 31, 2025, cash and cash equivalents were approximately **RM 22.7 million** (2024: **RM 28.2 million**)[55](index=55&type=chunk) - The Group has no borrowings, a current ratio of **2.71 times** (2024: **3.00 times**), and a gearing ratio of **zero**[56](index=56&type=chunk) - The Group's financial position is strong and robust, with ample liquidity to meet its funding requirements[56](index=56&type=chunk) [Capital Structure](index=26&type=section&id=Capital%20Structure) The Group's capital structure remained unchanged during the year, consisting solely of ordinary shares, with share capital and share premium approximately **RM 7.3 million** and **RM 29.4 million** respectively as of May 31, 2025 - The Group's capital structure remained unchanged during the year, with share capital consisting solely of ordinary shares[57](index=57&type=chunk) - As of May 31, 2025, share capital was approximately **RM 7.3 million** (2024: **RM 6.0 million**), and share premium was approximately **RM 29.4 million** (2024: **RM 30.3 million**)[57](index=57&type=chunk) [Capital Commitments](index=27&type=section&id=Capital%20Commitments) As of May 31, 2025, the Group's capital commitments for the acquisition of property, plant, and equipment amounted to approximately **RM 0.5 million**, a significant decrease from the previous year - As of May 31, 2025, capital commitments for the acquisition of property, plant, and equipment were approximately **RM 0.5 million** (2024: **RM 7.2 million**)[58](index=58&type=chunk) [Foreign Exchange Fluctuation Risk](index=27&type=section&id=Foreign%20Exchange%20Fluctuation%20Risk) The Group's revenue and profit are mostly denominated in Malaysian Ringgit, making it susceptible to Ringgit fluctuations against HKD or other currencies, which could impact dividend payments, foreign exchange gains/losses, and financial position, necessitating close monitoring and potential hedging - The majority of the Group's revenue and profit are denominated in Malaysian Ringgit, and fluctuations in the Ringgit's value against HKD or other currencies could adversely affect HKD-denominated dividends and foreign exchange gains or losses[59](index=59&type=chunk) - Foreign exchange controls may impact the value of net assets, earnings, or dividends when converted to HKD[59](index=59&type=chunk) - The Group will closely monitor foreign currency risks and consider hedging when necessary[59](index=59&type=chunk) [Pledge of Assets](index=27&type=section&id=Pledge%20of%20Assets) As of May 31, 2025, the Group's bank deposits pledged to banks totaled approximately **RM 1.2 million**, serving as security for general banking facilities - As of May 31, 2025, bank deposits pledged to banks amounted to approximately **RM 1.2 million** (2024: **RM 0.2 million**)[60](index=60&type=chunk) - These deposits are pledged as security for general banking facilities granted to the Group[60](index=60&type=chunk) [Significant Investments Held](index=27&type=section&id=Significant%20Investments%20Held) As of May 31, 2025, the company did not hold any significant investments - As of May 31, 2025, the company did not hold any significant investments[61](index=61&type=chunk) [Material Acquisitions and Disposals and Plans for Major Investments or Capital Assets](index=27&type=section&id=Material%20Acquisitions%20and%20Disposals%20and%20Plans%20for%20Major%20Investments%20or%20Capital%20Assets) In August 2024, the company acquired Shenzhen Wanshunfu Smart Life Service Co., Ltd. for **HKD 5.5 million**, and in August 2025, acquired **1%** of Shenzhen Wanshun Jiaoche Cloud Information Technology Co., Ltd. for **HKD 34.874 million** through new share issuance, with no other material acquisitions or investment plans disclosed - In August 2024, the company acquired the entire equity interest in Shenzhen Wanshunfu Smart Life Service Co., Ltd. for **HKD 5.5 million** (paid via bills payable), venturing into the e-commerce platform business[62](index=62&type=chunk) - In August 2025, the company acquired **1%** of the registered capital of Shenzhen Wanshun Jiaoche Cloud Information Technology Co., Ltd. for **HKD 34.874 million** through the issuance of **1,215,630** new shares, constituting a discloseable transaction[64](index=64&type=chunk) - Save for the disclosures above, there are no specific future plans for major investments or capital assets as of the date of this announcement[65](index=65&type=chunk) [Use of Proceeds from Share Offer](index=28&type=section&id=Use%20of%20Proceeds%20from%20Share%20Offer) The company's 2017 share offer generated net proceeds of approximately **HKD 29.6 million**, with some reallocated by May 31, 2025, and **HKD 3.4 million** remaining unutilized for the development of a self-use plant and equipment purchase in Selangor, expected to be fully utilized by May 31, 2026 - The company's listing generated net proceeds of approximately **HKD 29.6 million**, which were not fully utilized as of May 31, 2025[66](index=66&type=chunk) - The Board resolved to reallocate the unutilized proceeds from the share offer to adapt to the latest business environment and development needs[66](index=66&type=chunk) Use and Allocation of Proceeds from Share Offer | Planned Use | Net Proceeds from Share Offer (HKD million) | Actual Use as at May 2, 2024 (HKD million) | Unutilized Proceeds as at May 2, 2024 (HKD million) | Reallocated Unutilized Proceeds (HKD million) | Amount Utilized after Reallocation as at May 31, 2024 (HKD million) | Proceeds Utilized as at May 31, 2024 (HKD million) | Actual Use as at May 31, 2025 (HKD million) | Unutilized Proceeds as at May 31, 2025 (HKD million) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion of production capacity (i) Expansion of existing Selangor plant | 7.0 | (6.0) | 1.0 | – | – | – | – | – | | Expansion of production capacity (ii) Completion of new Kulai Jaya plant | 7.3 | (2.4) | 4.9 | – | – | – | – | – | | Expansion of production capacity (iii) Recruitment of new staff | 2.6 | (2.2) | 0.4 | 0.8 | (0.2) | 0.6 | (0.6) | – | | Acquisition of land parcel in Southern Malaysia | 8.4 | – | 8.4 | – | – | – | – | – | | Vertical expansion of business in the precast concrete joint box industry supply chain through M&A | 2.7 | – | 2.7 | – | – | – | – | – | | Expansion of sales and marketing team | 0.8 | (0.8) | 0.0 | – | – | – | – | – | | General working capital | 0.8 | (0.8) | 0.0 | – | – | – | – | – | | Acquisition of land use rights for a land parcel in Selangor, Malaysia | – | – | 0.0 | 13.2 | (1.3) | 11.9 | (11.9) | – | | Development costs for self-use plant and purchase of equipment and machinery on the land parcel | – | – | 0.0 | 3.4 | – | 3.4 | – | 3.4 | | **Total** | **29.6** | **(12.2)** | **17.4** | **17.4** | **(1.5)** | **15.9** | **(12.5)** | **3.4** | - As of May 31, 2025, **HKD 3.4 million** of unutilized proceeds are earmarked for development costs of a self-use plant and equipment purchase on the Selangor land parcel, expected to be fully utilized by **May 31, 2026**[68](index=68&type=chunk) [Contingent Liabilities](index=29&type=section&id=Contingent%20Liabilities) As of May 31, 2024, and May 31, 2025, the Group had no significant contingent liabilities - As of May 31, 2024, and May 31, 2025, the Group had no significant contingent liabilities[71](index=71&type=chunk) [Corporate Governance and Other Information](index=30&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the Group's corporate governance practices, employee policies, fundraising activities, and other relevant information [Employees and Remuneration Policy](index=30&type=section&id=Employees%20and%20Remuneration%20Policy) As of May 31, 2025, the Group employed **73** staff across Malaysia, Hong Kong, and China, offering a remuneration package including salary, bonuses, allowances, and medical benefits, with annual assessments for adjustments and a share option scheme for long-term incentives - As of May 31, 2025, the Group had **73** employees across Malaysia, Hong Kong, and China[72](index=72&type=chunk) - Remuneration packages include salaries, bonuses, allowances, and medical benefits, determined based on employee qualifications, experience, capabilities, and market compensation levels[72](index=72&type=chunk) - The Group has an annual appraisal system for salary adjustments, bonuses, and promotions, and a share option scheme for long-term incentives[72](index=72&type=chunk) [Fund Raising Activities in Past 12 Months](index=30&type=section&id=Fund%20Raising%20Activities%20in%20Past%2012%20Months) On June 27, 2024, the company raised net proceeds of **HKD 2.10 million** through a new share subscription under general mandate, partially used to repay bills payable, with the remainder unutilized Fund Raising Activities in Past 12 Months | Announcement Date | Fund Raising Activity | Net Proceeds (approx.) | Intended Use | Actual Use | | :--- | :--- | :--- | :--- | :--- | | June 27, 2024 (completed on July 17, 2024) | Subscription of new shares under general mandate granted on November 22, 2023 | HKD 2.10 million | To repay bills payable | Partially (HKD 1.5 million) used for intended purpose and the remainder unutilized | [Purchase, Sale or Redemption of Listed Securities](index=30&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the year ended May 31, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the year ended May 31, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[74](index=74&type=chunk) [Directors' Securities Transactions](index=30&type=section&id=Directors'%20Securities%20Transactions) The company has adopted a code of conduct for directors' securities transactions, and all directors confirmed compliance with it and the GEM Listing Rules' required standards throughout FY2025 - The company has adopted a code of conduct for directors' securities transactions, and all directors confirmed compliance with relevant regulations throughout FY2025[75](index=75&type=chunk) [Directors' Interests in Transactions, Arrangements and Contracts](index=31&type=section&id=Directors'%20Interests%20in%20Transactions%2C%20Arrangements%20and%20Contracts) Neither the company nor its subsidiaries entered into any material transactions, arrangements, or contracts in which a director had a significant direct or indirect interest, remaining effective at year-end or any time during FY2025 - Neither the company nor any of its subsidiaries entered into any material transactions, arrangements, or contracts in which a director had a significant interest[76](index=76&type=chunk) [Competing Business of Directors and Controlling Shareholders](index=31&type=section&id=Competing%20Business%20of%20Directors%20and%20Controlling%20Shareholders) As of May 31, 2025, no directors, controlling shareholders, or their close associates held business interests that compete or may compete with the Group's business, and controlling shareholders confirmed compliance with non-competition undertakings - As of May 31, 2025, no directors, controlling shareholders, or their close associates held business interests that constitute or may constitute direct or indirect competition with the Group's business[77](index=77&type=chunk) - Controlling shareholders confirmed compliance with non-competition undertakings throughout FY2024[78](index=78&type=chunk) [Sufficiency of Public Float](index=31&type=section&id=Sufficiency%20of%20Public%20Float) Based on public information and directors' knowledge, the company maintains a sufficient public float, with at least **25%** of its shares held by the public as of the announcement date - As of the announcement date, the company maintains a sufficient public float, with at least **25%** of its shares held by the public[79](index=79&type=chunk) [Corporate Governance Functions](index=31&type=section&id=Corporate%20Governance%20Functions) The Group has not established a corporate governance committee, with the Board of Directors assuming responsibility for corporate governance, including policy review, practice development, director training, and legal compliance, ensuring all directors receive timely information and access to company secretary services - The Group has not established a corporate governance committee, with the Board of Directors responsible for corporate governance functions[80](index=80&type=chunk) - The Board is responsible for reviewing and determining corporate governance policies and practices, director and senior management training, and legal and regulatory compliance[80](index=80&type=chunk) - The Board ensures all directors receive appropriate briefings and timely information, and have full access to the advice and services of the company secretary[81](index=81&type=chunk) [Chairman and Chief Executive Officer](index=32&type=section&id=Chairman%20and%20Chief%20Executive%20Officer) Mr. Loh Swee Keong serves as both Chairman and Chief Executive Officer, a deviation from the Corporate Governance Code, which the Board deems appropriate for effective management and business development given his extensive experience since 1993 - Mr. Loh Swee Keong serves as both Chairman and Chief Executive Officer, deviating from Code Provision A.2.1 of the Corporate Governance Code[83](index=83&type=chunk)[86](index=86&type=chunk) - The Board believes that Mr. Loh's dual role is in the Group's best interest for effective management and business development, given his continuous operation and management of the Group's operating subsidiaries since **1993**[83](index=83&type=chunk)[86](index=86&type=chunk) [Corporate Governance Practices](index=33&type=section&id=Corporate%20Governance%20Practices) The Group's Board and senior management are committed to high corporate governance standards, implementing good practices for accountability, transparency, and enhanced internal controls, and complied with the Corporate Governance Code throughout the year, except for the combined roles of Chairman and CEO - The Group is committed to high standards of corporate governance, enhancing accountability and transparency through good practices, and strengthening internal control and risk management systems[84](index=84&type=chunk) - Except for the combined roles of Chairman and Chief Executive Officer, the Group complied with the code provisions of the Corporate Governance Code throughout the year[85](index=85&type=chunk)[86](index=86&type=chunk) [Compliance with Relevant Laws and Regulations](index=33&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) Throughout the year, the Group consistently complied with relevant laws and regulations that significantly impact its business operations - Throughout the year, the Group consistently complied with relevant laws and regulations that significantly impact its business operations[87](index=87&type=chunk) [Environmental Policy and Performance](index=34&type=section&id=Environmental%20Policy%20and%20Performance) The company acknowledges its environmental responsibility in business activities, committing to environmental and social sustainability, and adhering to environmental laws and regulations through effective policies - The company is committed to achieving environmental and social sustainability, complying with environmental laws and regulations, and adopting effective environmental policies[88](index=88&type=chunk) [Relationship with Stakeholders](index=34&type=section&id=Relationship%20with%20Stakeholders) The Group considers employees, customers, and suppliers as key stakeholders for success, striving for corporate sustainability by motivating employees, providing quality products, collaborating with suppliers, and supporting community development - The Group considers employees, customers, and suppliers as key stakeholders for its success[89](index=89&type=chunk) - The Group is committed to achieving corporate sustainability by motivating employees, providing quality products and services, collaborating with suppliers, and supporting community development[89](index=89&type=chunk) [Events After the Reporting Period](index=34&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, on August 1, 2025, the company acquired **1%** of Shenzhen Wanshun Jiaoche Cloud Information Technology Co., Ltd. for **HKD 34.874 million** through new share issuance, and the trading lot size for ordinary shares will change from **1,200** to **400** shares effective August 22, 2025 - On **August 1, 2025**, the company acquired **1%** of the registered capital of Shenzhen Wanshun Jiaoche Cloud Information Technology Co., Ltd. for **HKD 34.874 million** through the issuance of new shares[90](index=90&type=chunk) - The board lot size for the company's ordinary shares traded on the Stock Exchange will change from **1,200** shares to **400** shares effective **August 22, 2025**[91](index=91&type=chunk) [Results and Dividends](index=35&type=section&id=Results%20and%20Dividends) The Group's results for the year ended May 31, 2025, are presented in the consolidated statement of profit or loss and other comprehensive income, with the Board not recommending a final dividend and no arrangements for shareholders to waive or agree to waive any dividends - The Group's results for the year ended May 31, 2025, are presented in the consolidated statement of profit or loss and other comprehensive income[92](index=92&type=chunk) - The Board does not recommend a final dividend (2024: nil), and there are no arrangements for shareholders to waive or agree to waive any dividends[93](index=93&type=chunk)[94](index=94&type=chunk) [Annual General Meeting and Closure of Register of Members](index=35&type=section&id=Annual%20General%20Meeting%20and%20Closure%20of%20Register%20of%20Members) The 2025 Annual General Meeting will be held on November 21, 2025, with the register of members closed from November 18 to November 21, 2025, to determine eligibility for attending and voting - The 2025 Annual General Meeting will be held on **Friday, November 21, 2025**[95](index=95&type=chunk) - To determine eligibility for attending and voting at the meeting, the company's register of members will be closed from **November 18 to November 21, 2025** (both dates inclusive)[96](index=96&type=chunk) [Audit Committee](index=35&type=section&id=Audit%20Committee) The Group established an Audit Committee on June 27, 2017, comprising three independent non-executive directors chaired by Mr. Yau Ka Hei, with written terms of reference in compliance with GEM Listing Rules and the Corporate Governance Code - The Group established an Audit Committee on **June 27, 2017**, comprising three independent non-executive directors, chaired by Mr. Yau Ka Hei[97](index=97&type=chunk) - The Audit Committee has written terms of reference in compliance with the GEM Listing Rules and the Corporate Governance Code[97](index=97&type=chunk) [Publication of Annual Results and Annual Report](index=36&type=section&id=Publication%20of%20Annual%20Results%20and%20Annual%20Report) This announcement has been published on the SEHK and company websites, and the 2025 Annual Report will also be available on these sites and dispatched to shareholders in due course - This announcement and the 2025 Annual Report will be published on the SEHK website www.hkexnews.hk and the company's website www.sktargetgroup.com[98](index=98&type=chunk)[99](index=99&type=chunk)

[Interim Results Highlights](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E6%91%98%E8%A6%81) The group experienced an 8.5% revenue decrease but significantly narrowed its loss for the period, with a substantial reduction in loss attributable to owners of the parent [Key Financial Indicators](index=1&type=section&id=%E5%85%B3%E9%94%AE%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) For the six months ended June 30, 2025, Taizhou Water Group Co., Ltd. saw an 8.5% year-on-year revenue decrease to RMB 274.9 million, but significantly narrowed its loss for the period, with substantial reductions in loss attributable to owners of the parent and basic loss per share; the Board does not recommend an interim dividend Key Financial Indicators | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 274.9 | 300.3 | -8.5% | | Loss for the period | (24.0) | (46.9) | -48.8% | | Loss attributable to owners of the parent | (19.9) | (36.3) | -45.2% | | Basic loss per share (RMB) | (0.10) | (0.18) | -44.4% | - The Board does not recommend the distribution of an interim dividend for the six months ended June 30, 2025[3](index=3&type=chunk) [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=%E4%B8%AD%E6%9C%9F%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the group's financial performance and position, highlighting revenue decline, significant loss reduction, and changes in asset and liability structures [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the Group's revenue decreased year-on-year, but effective control over cost of sales, administrative expenses, and finance costs, coupled with significant growth in other income and gains, led to a substantial narrowing of the loss for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 274,903 | 300,346 | -8.5% | | Cost of sales | (223,005) | (232,713) | -4.2% | | Gross profit | 51,898 | 67,633 | -23.2% | | Other income and gains | 28,399 | 15,248 | +86.2% | | Administrative expenses | (39,260) | (41,343) | -5.0% | | Finance costs | (62,232) | (68,728) | -9.5% | | Loss before tax | (13,877) | (32,755) | -57.6% | | Loss for the period | (24,022) | (46,917) | -48.8% | | Loss attributable to owners of the parent | (19,875) | (36,276) | -45.2% | | Basic and diluted loss per share (RMB) | (0.10) | (0.18) | -44.4% | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) As of June 30, 2025, the Group's total non-current assets slightly increased, primarily driven by growth in right-of-use assets; net current liabilities remained negative, but total assets less current liabilities improved, while total equity slightly decreased and the gearing ratio rose Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 5,189,610 | 5,150,848 | +0.75% | | Total current assets | 491,150 | 506,205 | -2.97% | | Total current liabilities | 916,361 | 1,098,904 | -16.61% | | Net current liabilities | (425,211) | (592,699) | -28.3% | | Total assets less current liabilities | 4,725,637 | 4,596,911 | +2.80% | | Total non-current liabilities | 3,773,445 | 3,618,513 | +4.28% | | Net assets | 952,192 | 978,398 | -2.70% | | Total equity | 952,192 | 978,398 | -2.70% | - The increase in right-of-use assets was primarily due to new land use rights acquired by Nanwan Water[48](index=48&type=chunk) [Notes to the Financial Statements](index=5&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) This section provides detailed explanations of the Group's accounting policies, financial performance, and position, including segment information, revenue breakdown, and asset/liability specifics [Company and Group Information](index=5&type=section&id=%E5%85%AC%E5%8F%B8%E5%8F%8A%E9%9B%86%E5%9B%A2%E4%BF%A1%E6%81%AF) Taizhou Water Group Co., Ltd. primarily engages in raw water supply, municipal water supply, piped direct drinking water, packaged drinking water, and water pipeline installation services in China - The Company and its subsidiaries are principally engaged in the supply of raw water, municipal water supply, piped direct drinking water, packaged drinking water, and the installation of water transmission pipelines for direct supply and distribution of tap water to end-users[7](index=7&type=chunk) [Basis of Preparation and Going Concern](index=5&type=section&id=%E7%BC%96%E5%88%B6%E5%9F%BA%E7%A1%80%E4%B8%8E%E6%8C%81%E7%BB%AD%E7%BB%8F%E8%90%A5) The interim financial information is prepared in accordance with HKAS 34 and on a going concern basis; despite net current liabilities, the Board believes the Group has sufficient cash flow from available bank facilities and internal funds to continue as a going concern - The interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting[8](index=8&type=chunk) - As at June 30, 2025, the Group recorded net current liabilities of approximately **RMB425,211,000**[9](index=9&type=chunk) - The Directors believe that the Group will have sufficient cash flows to operate as a going concern and to meet its liabilities as and when they fall due in the foreseeable future, and accordingly, the financial statements are prepared on a going concern basis[9](index=9&type=chunk) [Changes in Accounting Policies](index=5&type=section&id=%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%8F%98%E5%8A%A8) This period saw the first-time adoption of revised HKFRS accounting standards, primarily HKAS 21 amendments regarding lack of exchangeability, which had no impact on the interim financial information as the Group's transaction currencies are all exchangeable - The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2024, except for the adoption of the following revised HKFRS accounting standards for the financial information for the current period[10](index=10&type=chunk) - The amendments to HKAS 21 clarify how an entity should assess whether a currency is exchangeable into another currency and how an entity should estimate the spot exchange rate when a currency lacks exchangeability[11](index=11&type=chunk) - As the currencies in which the Group transacts and the functional currencies used by the Group’s entities to convert to the Group’s presentation currency are all exchangeable, these amendments have no impact on the interim condensed consolidated financial information[11](index=11&type=chunk) [Operating Segment Information](index=6&type=section&id=%E7%BB%8F%E8%90%A5%E5%88%86%E9%83%A8%E4%BF%A1%E6%81%AF) The Group has only one reportable operating segment, water supply and installation of water pipelines, with all revenue and non-current assets generated from and located in mainland China - The Group has only one reportable operating segment, namely water supply and installation of water pipelines[12](index=12&type=chunk) [Geographical Information](index=6&type=section&id=%E5%9C%B0%E5%8C%BA%E4%BF%A1%E6%81%AF) All of the Group's revenue and non-current assets are generated from and located in mainland China - All of the Group’s revenue is generated from customers located in mainland China[13](index=13&type=chunk) - All of the Group’s non-current assets are located in mainland China[14](index=14&type=chunk) [Major Customers Information](index=6&type=section&id=%E4%B8%BB%E8%A6%81%E5%AE%A2%E6%88%B7%E4%BF%A1%E6%81%AF) For the six months ended June 30, 2025, revenue contributed by the Group's top four customers all decreased Major Customers Information | Customer | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer 1 | 68,717 | 73,247 | | Customer 2 | 64,288 | 80,956 | | Customer 3 | 47,517 | 51,657 | | Customer 4 | 37,612 | 39,468 | [Revenue, Other Income and Gains](index=6&type=section&id=%E6%94%B6%E5%85%A5%E3%80%81%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) The Group's total revenue decreased by 8.5% year-on-year, primarily due to reduced water sales revenue; however, other income and gains surged by 86.8%, mainly driven by increased government grants Revenue, Other Income and Gains | Revenue Type | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Water sales | 265,125 | 292,227 | -9.3% | | Installation services | 9,778 | 8,119 | +20.4% | | **Total Revenue** | **274,903** | **300,346** | **-8.5%** | | Other income and gains | 28,399 | 15,248 | +86.2% | - Among other income, government grants significantly increased from **RMB5,104 thousand** in 2024 to **RMB21,465 thousand** in 2025[17](index=17&type=chunk) [Components of Loss Before Tax](index=8&type=section&id=%E9%99%A4%E7%A8%8E%E5%89%8D%E4%BA%8F%E6%8D%9F%E6%9E%84%E6%88%90) The composition of the Group's loss before tax indicates that cost of inventories sold and depreciation expenses are major expenditures, but increased government grants and improved net impairment losses on financial assets helped reduce the loss Components of Loss Before Tax | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories sold | 215,482 | 227,656 | | Cost of services provided | 7,523 | 5,057 | | Depreciation of property, plant and equipment | 94,925 | 97,298 | | Depreciation of right-of-use assets | 5,094 | 5,374 | | Amortisation of other intangible assets | 357 | 92 | | Net impairment losses on trade receivables | (875) | 686 | | Net impairment losses on financial assets | (141) | (694) | | Government grants | (21,465) | (5,104) | | Net exchange differences | 10 | 3 | | Loss/(gain) on disposal of items of property, plant and equipment | 629 | (50) | [Finance Costs](index=8&type=section&id=%E8%B4%A2%E5%8A%A1%E6%88%90%E6%9C%AC) The Group's finance costs decreased by 9.5% year-on-year, primarily due to reduced interest on bank borrowings and other borrowings, partially offset by a decrease in capitalised interest Finance Costs | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on bank borrowings | 59,125 | 64,058 | -7.6% | | Interest on other borrowings | 5,744 | 6,497 | -11.6% | | Interest on corporate debt instruments | 1,559 | 2,534 | -38.5% | | Less: Interest capitalised | (4,196) | (4,361) | -3.8% | | **Total** | **62,232** | **68,728** | **-9.5%** | [Income Tax](index=8&type=section&id=%E6%89%80%E5%BE%97%E7%A8%8E) Income tax expense decreased by 28.9% year-on-year, primarily due to a reduction in the parent company's profit before tax, with some subsidiaries enjoying preferential tax rates for small and micro enterprises Income Tax | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Current tax – PRC | 10,178 | 18,384 | -44.7% | | Deferred tax | (33) | (4,222) | -99.2% | | **Total** | **10,145** | **14,162** | **-28.3%** | - Taizhou Environmental Development, Xianzhiquan Water Industry, and Taizhou Bishui Science and Technology Co., Ltd. enjoy a preferential income tax rate of **5%**[20](index=20&type=chunk) [Dividends](index=9&type=section&id=%E8%82%A1%E6%81%AF) The Board does not recommend the distribution of any interim dividend for the six months ended June 30, 2025 - The Board does not recommend the distribution of a final dividend for the year ended December 31, 2024, nor does it recommend the distribution of any interim dividend for the six months ended June 30, 2025[22](index=22&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=9&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E6%99%AE%E9%80%9A%E6%9D%83%E7%9B%8A%E6%8C%81%E6%9C%89%E4%BA%BA%E5%BA%94%E5%8D%A0%E6%AF%8F%E8%82%A1%E4%BA%8F%E6%8D%9F) For the six months ended June 30, 2025, the basic and diluted loss per share attributable to ordinary equity holders of the parent was RMB0.10, an improvement from RMB0.18 in the same period last year Loss Per Share Attributable to Ordinary Equity Holders of the Parent | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the parent for basic loss per share calculation | (19,875) | (36,276) | | Weighted average number of ordinary shares in issue during the period | 200,000,000 | 200,000,000 | | **Basic and diluted loss per share (RMB)** | **(0.10)** | **(0.18)** | - The Group had no potentially dilutive ordinary shares in issue[24](index=24&type=chunk) [Property, Plant and Equipment](index=10&type=section&id=%E7%89%A9%E4%B8%9A%E3%80%81%E5%8E%82%E6%88%BF%E5%8F%8A%E8%AE%BE%E5%A4%87) As of June 30, 2025, the carrying amount of property, plant and equipment slightly decreased, primarily due to depreciation of fixed assets Property, Plant and Equipment | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Carrying amount at beginning of period/year | 4,298,525 | 4,331,872 | | Additions | 4,343 | 162,232 | | Disposals | (644) | (922) | | Depreciation provision for the period/year | (94,925) | (194,657) | | **Carrying amount at end of period/year** | **4,207,299** | **4,298,525** | - The decrease was mainly due to depreciation of fixed assets[48](index=48&type=chunk) [Trade Receivables and Bills Receivable](index=10&type=section&id=%E8%B4%B8%E6%98%93%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9%E5%8F%8A%E5%BA%94%E6%94%B6%E7%A5%A8%E6%8D%AE) As of June 30, 2025, total trade receivables increased to RMB150.5 million, with amounts due from related parties accounting for the largest portion; some trade receivables have been pledged as collateral for bank loans Trade Receivables and Bills Receivable | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 16,353 | 19,271 | | Amounts due from related parties | 186,612 | 177,519 | | Subtotal | 202,965 | 196,790 | | Impairment | (52,502) | (53,377) | | **Total** | **150,463** | **143,413** | - As at June 30, 2025, certain trade receivables of the Group with a carrying amount of **RMB152,951,000** were pledged as collateral for bank loans[30](index=30&type=chunk) Aging of Trade Receivables | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 85,599 | 120,419 | | 3 to 6 months | 57,888 | 20,345 | | 6 to 12 months | 5,792 | 1,302 | | 1 to 2 years | 1,180 | 1,177 | | 2 to 3 years | 4 | 170 | | **Total** | **150,463** | **143,413** | [Trade Payables](index=11&type=section&id=%E8%B4%B8%E6%98%93%E5%BA%94%E4%BB%98%E6%AC%BE%E9%A1%B9) As of June 30, 2025, total trade payables slightly decreased, with a significant increase in the proportion of payables over 12 months Aging of Trade Payables | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 26,559 | 36,948 | | 3 to 6 months | 40 | 3,342 | | 6 to 12 months | 2,854 | 5,154 | | Over 12 months | 37,349 | 25,709 | | **Total** | **66,802** | **71,153** | [Management Discussion and Analysis](index=12&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E5%8F%8A%E5%88%86%E6%9E%90) This section provides an overview of the industry, the Group's development strategies, a review of business operations, and a detailed analysis of financial performance and position [Industry Overview](index=12&type=section&id=%E8%A1%8C%E4%B8%9A%E6%A6%82%E8%A7%88) Against the backdrop of "water conservation priority" and rigid water resource constraints, the water supply industry is undergoing policy deepening and efficiency improvements, with policies driving the establishment of water-saving systems, accelerating water resource tax reform and water rights trading, and promoting a transition towards smart, low-carbon, intensive, and sustainable development - The water supply industry has entered a critical stage of policy implementation and efficiency improvement, with five ministries including the Ministry of Water Resources jointly issuing the 'Opinions on Comprehensively Building a Water Conservation Policy System'[33](index=33&type=chunk) - Various regions are accelerating the construction of smart water platforms to optimize water supply dispatch and leakage control, enhancing water quality safety[33](index=33&type=chunk) - In the future, the water supply industry will further transform towards smart, low-carbon, intensive, and sustainable development[34](index=34&type=chunk) [Development Strategies and Outlook](index=12&type=section&id=%E5%8F%91%E5%B1%95%E7%AD%96%E7%95%A5%E5%8F%8A%E5%B1%95%E6%9C%9B) The Group will align with national "water conservation priority" and "dual carbon" strategies, with smart water services as its core, aiming to build a modern integrated water group by optimizing industrial layout, strengthening its main business, expanding the industrial chain, and fostering new quality productive forces to achieve high-quality development - The Group will closely adhere to the national strategies of "water conservation priority" and "dual carbon", with smart water services as its core engine, aiming to build a modern integrated water group[35](index=35&type=chunk) - The Group will optimize its industrial layout, further strengthen and improve its main business, and steadily advance the expansion of its industrial chain around building a higher-standard water supply guarantee system[35](index=35&type=chunk) - Accelerate the cultivation and development of new quality productive forces, establish an integrated innovation system of "water services + technology + talent", enhance core functions, and improve core competitiveness[35](index=35&type=chunk) [Business Review](index=13&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%B5) As a leading water supply service provider in Taizhou, the Group's main businesses include raw water, municipal water, and tap water supply, along with installation services; during the reporting period, raw water and municipal water sales volumes decreased, while tap water sales volume and installation service revenue increased, as the Group actively expanded packaged drinking water and piped direct drinking water projects and continued to advance multiple engineering constructions - The Group, as a leading water supply service provider in Taizhou City, primarily engages in the supply of raw water, municipal water, and tap water[36](index=36&type=chunk) - The Group owns, operates, and manages the Taizhou City Water Supply System (Phases I, II, III, and IV), with a designed raw water supply capacity of approximately **1,220,000 tons per day** and a municipal water supply capacity of **984,000 tons per day**[36](index=36&type=chunk) [Raw Water Supply Projects](index=13&type=section&id=%E5%8E%9F%E6%B0%B4%E4%BE%9B%E5%BA%94%E9%A1%B9%E7%9B%AE) During the reporting period, raw water sales volume was 61.6 million tons, a decrease of 2.9 million tons compared to the same period last year Raw Water Sales Volume | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Raw water sales volume | 61.6 million tons | 64.5 million tons | -2.9 million tons | [Municipal Water Supply Projects](index=13&type=section&id=%E5%B8%82%E6%94%BF%E4%BE%9B%E6%B0%B4%E4%BE%9B%E5%BA%94%E9%A1%B9%E7%9B%AE) During the reporting period, municipal water sales volume was 77.9 million tons, a decrease of 2.8 million tons compared to the same period last year Municipal Water Sales Volume | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Municipal water sales volume | 77.9 million tons | 80.7 million tons | -2.8 million tons | [Tap Water Supply Projects](index=14&type=section&id=%E8%87%AA%E6%9D%A5%E6%B0%B4%E4%BE%9B%E5%BA%94%E9%A1%B9%E7%9B%AE) During the reporting period, tap water sales volume was 5.8 million tons, a slight increase compared to the same period last year Tap Water Sales Volume | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Tap water sales volume | 5.8 million tons | 5.6 million tons | +0.2 million tons | [Installation Services](index=14&type=section&id=%E5%AE%89%E8%A3%85%E6%9C%8D%E5%8A%A1) During the reporting period, installation service revenue was approximately RMB9.8 million, an increase of RMB1.7 million compared to the same period last year, primarily due to an increase in "one household, one meter installation projects" Installation Service Revenue | Indicator | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Installation service revenue | 9.8 | 8.1 | +1.7 | - The increase in installation service revenue was mainly due to an increase in "one household, one meter installation projects"[45](index=45&type=chunk) [Expansion Projects](index=14&type=section&id=%E6%8B%93%E5%B1%95%E9%A1%B9%E7%9B%AE) The Group established Xianzhiquan and Bishui Science and Technology to expand packaged drinking water and piped direct drinking water projects; Xianzhiquan has completed production line acceptance and commenced operation, while Bishui Science and Technology has deployed piped direct drinking water projects in government agencies, enterprises, institutions, and residential communities, with some already in use - The Group successively established Xianzhiquan and Bishui Science and Technology in May and September 2023 to expand packaged drinking water and piped direct drinking water projects[41](index=41&type=chunk) - Xianzhiquan has completed production line acceptance and commenced operation, with an estimated annual production capacity of **13,500 tons**[41](index=41&type=chunk) - Bishui Science and Technology has completed pipeline construction or equipment room construction for **8 piped direct drinking water projects**, of which **4** have been put into use[41](index=41&type=chunk) [Engineering Construction Projects](index=14&type=section&id=%E5%B7%A5%E7%A8%8B%E5%BB%BA%E8%AE%BE%E9%A1%B9%E7%9B%AE) The Group's ongoing engineering projects include Taizhou City Water Supply System (Phases III and IV), Taizhou Southern Water Resources Optimization and Utilization Project, packaged drinking water, and piped direct drinking water projects; some projects have been completed and put into operation or are in trial operation, with ongoing efforts in finalization and brand channel development - Ongoing engineering projects include Taizhou City Water Supply System (Phases III and IV), Taizhou Southern Water Resources Optimization and Utilization Project, packaged drinking water, and piped direct drinking water projects[42](index=42&type=chunk) - The second phase expansion project of Taizhou Water Plant has been put into operation; Xianzhiquan Water Industry has completed production line acceptance and commenced operation, and is planning brand channel development[43](index=43&type=chunk) - Bishui Science and Technology has deployed piped direct drinking water projects in government agencies, enterprises, institutions, and residential communities, having completed pipeline construction or equipment room construction for **8 projects**, with **4 projects** already in use and the remaining **4 projects** in trial operation[43](index=43&type=chunk) [Financial Review](index=15&type=section&id=%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%B5) This section provides a detailed analysis of the Group's financial performance during the reporting period, including major changes in the statement of profit or loss and statement of financial position and their driving factors, revealing decreased revenue, narrowed losses, and shifts in the asset and liability structure Financial Performance Summary | Item | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 274.9 | 300.3 | -8.5% | | Cost of sales | 223.0 | 232.7 | -4.2% | | Gross profit | 51.9 | 67.6 | -23.2% | | Gross profit margin | 18.9% | 22.5% | -3.6 percentage points | | Other income and gains | 28.4 | 15.2 | +86.8% | | Administrative expenses | 39.3 | 41.3 | -4.8% | | Finance costs | 62.2 | 68.7 | -9.5% | | Income tax expense | 10.1 | 14.2 | -28.9% | | Loss after tax | (24.0) | (46.9) | -48.8% | | Loss margin after tax | 8.7% | 15.6% | -6.9 percentage points | - The decrease in municipal water supply revenue was mainly due to lower water prices resulting from the "same price for water across the city" reform policy[44](index=44&type=chunk) - The increase in other income and gains was mainly due to financial subsidies received by Nanwan Water from the Yuhuan government[45](index=45&type=chunk) [Analysis of Major Items in the Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=15&type=section&id=%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8%E4%B8%BB%E8%A6%81%E9%A1%B9%E7%9B%AE%E5%88%86%E6%9E%90) The Group's revenue decline was primarily affected by reduced water sales and lower water prices, but other income and gains significantly increased due to government grants, while administrative expenses and finance costs decreased due to lower labor costs and borrowing rates, ultimately leading to a substantial narrowing of the loss after tax [Revenue](index=15&type=section&id=%E6%94%B6%E5%85%A5) The Group's total revenue decreased by 8.5% year-on-year, with raw water, municipal water, and tap water sales revenue all declining, while installation service revenue increased by 21.0% due to "one household, one meter installation projects" Revenue by Source | Revenue Source | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Raw water supply | 61.3 | 72.6 | -15.6% | | Municipal water supply | 178.8 | 194.7 | -8.2% | | Tap water supply | 24.0 | 24.6 | -2.4% | | Installation services | 9.8 | 8.1 | +21.0% | | **Total Revenue** | **274.9** | **300.3** | **-8.5%** | [Cost of Sales](index=16&type=section&id=%E9%94%80%E5%94%AE%E6%88%90%E6%9C%AC) Cost of sales decreased by 4.2% year-on-year to RMB223.0 million, primarily due to a reduction in sales volume Cost of Sales | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | 223.0 | 232.7 | -4.2% | - The decrease in cost of sales was mainly due to a reduction in sales volume[45](index=45&type=chunk) [Gross Profit and Gross Profit Margin](index=16&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Gross profit decreased by 23.2% year-on-year to RMB51.9 million, and the gross profit margin declined from 22.5% to 18.9%, primarily impacted by reduced revenue Gross Profit and Gross Profit Margin | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Gross profit | 51.9 | 67.6 | -23.2% | | Gross profit margin | 18.9% | 22.5% | -3.6 percentage points | [Other Income and Gains](index=16&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) Other income and gains significantly increased by 86.8% year-on-year to RMB28.4 million, primarily benefiting from financial subsidies received by Nanwan Water from the Yuhuan government Other Income and Gains | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other income and gains | 28.4 | 15.2 | +86.8% | - This increase was mainly due to financial subsidies received by Nanwan Water from the Yuhuan government during the reporting period[45](index=45&type=chunk) [Administrative Expenses](index=16&type=section&id=%E8%A1%8C%E6%94%BF%E5%BC%80%E6%94%AF) Administrative expenses decreased by 4.8% year-on-year to RMB39.3 million, primarily due to reduced labor costs Administrative Expenses | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative expenses | 39.3 | 41.3 | -4.8% | - The decrease in administrative expenses was mainly due to reduced labor costs[45](index=45&type=chunk) [Finance Costs](index=16&type=section&id=%E8%B4%A2%E5%8A%A1%E6%88%90%E6%9C%AC) Finance costs decreased by 9.5% year-on-year to RMB62.2 million, primarily due to a decrease in borrowing interest rates Finance Costs | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 62.2 | 68.7 | -9.5% | - The decrease in finance costs was mainly due to a decrease in borrowing interest rates[45](index=45&type=chunk) [Income Tax Expense](index=17&type=section&id=%E6%89%80%E5%BE%97%E7%A8%8E%E5%BC%80%E6%94%AF) Income tax expense decreased by 28.9% year-on-year to RMB10.1 million, primarily due to a reduction in the parent company's profit before tax Income Tax Expense | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Income tax expense | 10.1 | 14.2 | -28.9% | - The decrease in income tax expense was mainly due to a reduction in the parent company's profit before tax[46](index=46&type=chunk) [Loss After Tax and Loss Margin After Tax](index=17&type=section&id=%E9%99%A4%E7%A8%8E%E5%90%8E%E4%BA%8F%E6%8D%9F%E5%8F%8A%E7%A8%8E%E5%90%8E%E4%BA%8F%E6%8D%9F%E7%8E%87) Loss after tax significantly narrowed by 48.8% to RMB24.0 million, and the loss margin after tax decreased from 15.6% to 8.7%, primarily benefiting from financial subsidies received by Nanwan Water from the government Loss After Tax and Loss Margin After Tax | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Loss after tax | (24.0) | (46.9) | -48.8% | | Loss margin after tax | 8.7% | 15.6% | -6.9 percentage points | - The reduction in loss was mainly due to financial subsidies received by Nanwan Water from the Yuhuan government during the reporting period[47](index=47&type=chunk) [Analysis of Major Items in the Consolidated Statement of Financial Position](index=17&type=section&id=%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8%E4%B8%BB%E8%A6%81%E9%A1%B9%E7%9B%AE%E5%88%86%E6%9E%90) The Group's asset and liability structure shows a decrease in property, plant and equipment due to depreciation, an increase in right-of-use assets due to new land use rights, an improvement in net current liabilities, but an increase in total borrowings leading to a higher gearing ratio Consolidated Statement of Financial Position Major Items | Item | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Property, plant and equipment | 4,207.3 | 4,298.5 | -2.1% | | Right-of-use assets | 411.0 | 363.9 | +12.9% | | Inventories | 4.9 | 5.3 | -7.5% | | Trade receivables | 150.5 | 143.4 | +4.9% | | Prepayments, other receivables and other assets | 43.3 | 35.2 | +23.0% | | Trade payables | 66.8 | 71.2 | -6.2% | | Other payables and accrued expenses | 650.8 | 838.4 | -22.4% | | Deferred government grants | 126.8 | 131.7 | -3.8% | | Cash and bank balances | 291.4 | 321.3 | -9.3% | | Total borrowings and corporate debt instruments | 3,838.0 | 3,669.9 | +4.6% | | Gearing ratio | 403.1% | 375.1% | +28.0 percentage points | - The increase in right-of-use assets was primarily due to new land use rights acquired by Nanwan Water[48](index=48&type=chunk) - The decrease in other payables and accrued expenses was mainly due to a reduction in other payables for construction projects[49](index=49&type=chunk) - The increase in the gearing ratio was mainly due to new bank and other borrowings of approximately **RMB164.5 million** for the construction of Taizhou City Water Supply System (Phases III and IV)[49](index=49&type=chunk) [Significant Investments](index=19&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B5%84) For the six months ended June 30, 2025, the Group held no significant investments in the equity of any other company - For the six months ended June 30, 2025, the Group held no significant investments in the equity of any other company[50](index=50&type=chunk) [Interim Dividend](index=19&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board does not recommend the distribution of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the distribution of an interim dividend for the six months ended June 30, 2025[51](index=51&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=19&type=section&id=%E9%99%84%E5%B1%9E%E5%85%AC%E5%8F%B8%E3%80%81%E8%81%94%E8%90%A5%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%90%88%E8%90%A5%E5%85%AC%E5%8F%B8%E7%9A%84%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B4%AD%E5%8F%8A%E5%87%BA%E5%94%AE) During the reporting period, the Group had no other material acquisitions or disposals of subsidiaries, associates, or joint ventures - The Group had no other material acquisitions or disposals of subsidiaries, associates, and joint ventures during the reporting period[52](index=52&type=chunk) [Pledge of the Group's Assets](index=19&type=section&id=%E6%9C%AC%E9%9B%86%E5%9B%A2%E8%B5%84%E4%BA%A7%E6%8A%B5%E6%8A%BC) As of the end of the reporting period, the Group's bank borrowings of approximately RMB3,686.5 million were secured by trade receivables and the right to receive future income from the Taizhou City Water Supply System - The Group's bank borrowings of approximately **RMB3,686.5 million** were secured by the Group's trade receivables and the right to receive future income from the Taizhou City Water Supply System (Phases I, II, III, and IV)[53](index=53&type=chunk) [Foreign Exchange Risk](index=19&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9) The Group primarily operates in China, receiving revenue and paying expenses in RMB, and declaring dividends in RMB; a net exchange loss of approximately RMB10,383 was recognized during the reporting period, and foreign currency risk is currently not hedged - The Group operates its businesses in China and receives its revenue and pays its costs/expenses in RMB[54](index=54&type=chunk) - The Group recognised a net exchange loss of approximately **RMB10,383** during the reporting period[54](index=54&type=chunk) - The Group currently does not hedge its foreign currency risk[54](index=54&type=chunk) [Contingent Liabilities](index=19&type=section&id=%E6%88%96%E7%84%B6%E8%B4%9F%E5%80%BA) As of the end of the reporting period, the Group had no material contingent liabilities - As at the end of the reporting period, the Group had no material contingent liabilities[55](index=55&type=chunk) [Other Information](index=20&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) This section covers post-reporting period events, employee and remuneration policies, corporate governance practices, securities trading standards, and details on the audit committee and report publication [Events After the Reporting Period](index=20&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E9%97%B4%E5%90%8E%E4%BA%8B%E9%A1%B9) Subsequent to the reporting period, the Board recommended appointing Grant Thornton as the domestic auditor and re-appointing Ernst & Young as the international auditor, resolutions which were approved by shareholders - The Board resolved on June 27, 2025, to recommend the appointment of Grant Thornton as the Company's domestic auditor and the re-appointment of Ernst & Young as the Company's international auditor[56](index=56&type=chunk) - These resolutions were approved by the Company's shareholders at the extraordinary general meeting held on July 18, 2025[56](index=56&type=chunk) [Employees and Remuneration Policy](index=20&type=section&id=%E9%9B%87%E5%91%98%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group had 256 employees, with employee benefit expenses of approximately RMB41.9 million; employee remuneration primarily consists of fixed salaries, supplemented by performance bonuses, paid leave, and various allowances, with no significant labor disputes during the reporting period Employees and Employee Benefit Expenses | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Number of employees | 256 employees | 251 employees | | Employee benefit expenses (RMB million) | 41.9 | 45.9 | - The Group's employees are generally remunerated by fixed salaries and are also entitled to performance bonuses, paid leave, and various allowances[57](index=57&type=chunk) [Corporate Governance Practices](index=20&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A7%84) The Group is committed to maintaining high standards of corporate governance, having adopted the principles of the Corporate Governance Code set out in Appendix C1 of the Listing Rules, and has complied with all code provisions during the reporting period - The Company has adopted the principles of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules as its own corporate governance code[58](index=58&type=chunk) - During the reporting period, the Company has complied with all the code provisions set out in the Corporate Governance Code[58](index=58&type=chunk) [Standard Code for Securities Transactions](index=20&type=section&id=%E8%BF%9B%E8%A1%8C%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A0%87%E5%87%86%E5%AE%88%E5%88%99) The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules, and all Directors and Supervisors have confirmed their compliance with the code during the reporting period - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules[59](index=59&type=chunk) - Each of the Directors and Supervisors has confirmed that they have complied with the required standards set out in the Standard Code during the reporting period[59](index=59&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=21&type=section&id=%E8%B4%AD%E4%B9%B0%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B5%8E%E5%9B%9E%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company’s listed securities[60](index=60&type=chunk) [Audit Committee](index=21&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The Audit Committee has reviewed and approved the accounting principles and practices adopted by the Group, as well as the interim results for the six months ended June 30, 2025, and submitted them to the Board for approval - The Audit Committee has reviewed with management and the Board the accounting principles and practices adopted by the Group and the interim results for the six months ended June 30, 2025[61](index=61&type=chunk) - The Audit Committee has also approved the interim results for the six months ended June 30, 2025, and submitted them to the Board for approval[61](index=61&type=chunk) [Results and Report Publication](index=21&type=section&id=%E4%B8%9A%E7%BB%A9%E5%8F%8A%E6%8A%A5%E5%91%8A%E5%88%8A%E5%8F%91) This interim results announcement has been published on the HKEX and the Company's website, and the 2025 interim report containing all required information will be dispatched to shareholders and published on the websites in due course - This interim results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the Company’s website (www.zjtzwater.com)[62](index=62&type=chunk) - The Company’s 2025 interim report containing all the information required by the Listing Rules will be despatched to shareholders and published on the respective websites of the Stock Exchange and the Company in due course[62](index=62&type=chunk) [Board of Directors](index=21&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E6%88%90%E5%91%98) As of the announcement date, the Board of Directors comprises Mr. Yang Jun, Chairman and Executive Director, Mr. Pan Gang, Executive Director, and several Non-executive Directors and Independent Non-executive Directors - The executive Directors are Mr. Yang Jun and Mr. Pan Gang; the non-executive Directors are Mr. Lin Genman, Ms. Fang Ya, Mr. Yu Yangbin, Mr. Yang Yide, Mr. Lin Yang, Mr. Shao Aiping, Ms. Ying Nan and Mr. Ye Xiaofeng; and the independent non-executive Directors are Mr. Huang Chun, Ms. Hou Meiwen, Mr. Li Weizhong, Ms. Lin Suyan and Mr. Wang Yongyue[63](index=63&type=chunk)

[Interim Results Overview](index=1&type=section&id=Interim%20Results%20Overview) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) IngDan Innovation reported unaudited consolidated results for H1 2025, with revenue up 54.5% to RMB 6,676.5 million and profit up 12.4% to RMB 190.0 million | Metric | June 30, 2025 (RMB million) | June 30, 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 6,676.5 | 4,321.4 | 54.5% | | Gross Profit | 585.9 | 457.6 | 28.0% | | Operating Profit | 275.6 | 228.2 | 20.8% | | Profit for the Period | 190.0 | 169.1 | 12.4% | | Profit Attributable to Equity Holders of the Company | 132.1 | 112.7 | 17.2% | | Basic Earnings Per Share (RMB) | 0.086 | 0.082 | 4.9% | | Diluted Earnings Per Share (RMB) | 0.086 | 0.082 | 4.9% | [Management Discussion and Analysis](index=2&type=section&id=Management%20Discussion%20and%20Analysis) The Group, an AI chip application solution platform, achieved significant revenue and profit growth driven by AI computing demand, leveraging Comtech and IngDan platforms for end-to-end services and long-term strategic initiatives [Overall Business and Financial Performance](index=2&type=section&id=Overall%20Business%20and%20Financial%20Performance) The Group, an AI chip application platform, saw revenue increase by 54.5%, gross profit by 28.0%, operating profit by 20.8%, and net profit by 12.4% due to rising AI computing demand - The Group is positioned as an AI chip-based application solution platform, with main businesses including Comtech Technology (chip industry technical services) and IngDan Technology (AIoT technical services)[8](index=8&type=chunk) - Benefiting from increased demand for AI computing power and AI technology-related chips, revenue for the reporting period was approximately **RMB 6,676.5 million**, a year-on-year increase of approximately **54.5%**[8](index=8&type=chunk) - Gross profit was approximately **RMB 585.9 million**, an increase of approximately **28.0%** year-on-year; operating profit was approximately **RMB 275.6 million**, an increase of approximately **20.8%** year-on-year; and net profit after tax was approximately **RMB 190.0 million**, an increase of approximately **12.4%** year-on-year[8](index=8&type=chunk) [Market Environment and Strategic Opportunities](index=3&type=section&id=Market%20Environment%20and%20Strategic%20Opportunities) AI applications drive global chip market growth, particularly in data centers and edge AI, with the Group leveraging top AI chip resources and developing advanced solutions for robotics and autonomous driving - In H1 2025, the global chip market reached **USD 346 billion**, growing **18.9%** year-on-year, with AI-related demand being a significant contributor[9](index=9&type=chunk) - The global chip market size is projected to be revised upwards to **USD 728 billion** in 2025, a **15.4%** year-on-year increase, and further grow by **9.9%** to **USD 800 billion** in 2026[9](index=9&type=chunk) - The Group integrates top global AI chip resources, building a supply chain advantage with an AI computing hardware library covering mainstream domestic and international manufacturers[10](index=10&type=chunk) - Mature application solutions covering cutting-edge fields such as robotics, autonomous driving, and low-altitude economy have been developed, providing "out-of-the-box" core technology modules to shorten customer R&D cycles[10](index=10&type=chunk) - Internal operating systems deeply integrate AI technology, enhancing market promotion, customer acquisition, and supply chain management efficiency, achieving intelligent upgrades[10](index=10&type=chunk) - A unique business closed-loop is established, strategically evolving from "chip trading" to "technology integration," offering efficient supply chain services, in-depth technical solutions, and customized products to strengthen customer stickiness[11](index=11&type=chunk) [Core Business Segments](index=4&type=section&id=Core%20Business%20Segments) The Group's core business, Comtech Technology and IngDan Technology, provides AI computing supply chain solutions, distributes over 80 chip brands, and focuses on AI servers, new energy, and battery lifecycle management [Comtech Technology](index=4&type=section&id=Comtech%20Technology) Comtech Technology, a core AI computing supply chain supplier, distributes products from over 80 chip manufacturers, offers AI-driven solutions, and has applied for A-share IPO pre-listing guidance - Comtech Technology is a core supplier in the AI computing power supply chain, distributing products from over **80** core chip companies, including Nvidia, AMD-Xilinx, and Intel[12](index=12&type=chunk) - It provides chip application technology solutions and supply chain management services, achieving intelligent and automated comprehensive solutions through self-developed AI technology, large models, and professional knowledge bases[12](index=12&type=chunk) - It possesses multiple independent intellectual property rights, including an intelligent algorithm library, industry-specific large models, and an intelligent hardware design platform[13](index=13&type=chunk) - Shenzhen Comtech Technology Co, Ltd (Shenzhen Comtech) has applied for pre-listing guidance for its proposed spin-off and A-share listing, which has been accepted for filing by the Shenzhen Regulatory Bureau of the China Securities Regulatory Commission[14](index=14&type=chunk) [IngDan Technology](index=5&type=section&id=IngDan%20Technology) IngDan Technology focuses on AI servers with Huawei's Deep Seek, new energy solutions including two-wheeler battery swapping and lifecycle data platforms, and provides chip application training through its academy - IngDan Technology is strategically positioned in the AI server business, deeply collaborating with Huawei to launch the Deep Seek integrated machine, based on the Ascend 910 chip, serving the domestic AI computing power needs of universities, medical schools, and research institutions[15](index=15&type=chunk) - It focuses on the new energy industry, developing two-wheeler battery swapping and cascade utilization, and building a full lifecycle data traceability and trusted asset management platform for lithium batteries[15](index=15&type=chunk) - IngDan Industry Academy introduces leading global chip application technologies, providing technical services and talent training, having cultivated over **8,000** chip application engineers[16](index=16&type=chunk) [Future Outlook and Strategic Objectives](index=6&type=section&id=Future%20Outlook%20and%20Strategic%20Objectives) The Group will pursue a "solution-driven innovation, transaction-driven value" strategy, evolving into a technology enabler by enhancing customer acquisition, driving value through infrastructure and services, leveraging data for a self-reinforcing ecosystem, expanding IngDan's revenue, and seeking strategic partnerships [Solution-driven Innovation](index=6&type=section&id=Solution-driven%20Innovation) The Group will drive innovation by optimizing standardized solutions for broad market needs and deepening customized solutions for high-growth enterprises, balancing market reach and client depth to fuel growth - Continuously optimize "standardized solutions" to quickly respond to market demands and maintain competitive advantage[18](index=18&type=chunk) - Deepen self-developed "customized solutions" to establish close, long-term partnerships with high-growth enterprises[18](index=18&type=chunk) [Transaction-driven Value](index=6&type=section&id=Transaction-driven%20Value) The Group will enhance transaction conversion efficiency via "infrastructure + value-added services," accumulate data to optimize offerings, solidify its strategic shift to a technology integration platform, and ensure sustainable profitability and cash flow - Drive with a "infrastructure + value-added services" dual engine to improve the conversion efficiency from front-end solutions to actual transactions[19](index=19&type=chunk) - Accumulate industry and customer data as strategic assets to aid product and service design optimization and enhance supply chain collaboration efficiency[19](index=19&type=chunk) [Data-driven Future](index=6&type=section&id=Data-driven%20Future) The Group will leverage business expansion and data to create a self-reinforcing "ecosystem-data-creation-empowerment" loop, enabling bidirectional data empowerment for clients and manufacturers, establishing a strong competitive advantage - Core competitiveness lies in the systemic advantages brought by an efficient "customer acquisition-retention-conversion" closed-loop[20](index=20&type=chunk) - Plans to deepen a self-reinforcing "ecosystem-data-creation-empowerment" loop, achieving bidirectional data empowerment to assist customers and provide feedback to original manufacturers[20](index=20&type=chunk) - Accelerate expansion in the AI industry chain, with Comtech Technology enhancing chip application solution design and IngDan Technology accelerating AI product application implementation through "IngDan Cloud"[21](index=21&type=chunk) [Enhancing IngDan Technology's Revenue Streams](index=7&type=section&id=Enhancing%20IngDan%20Technology%27s%20Revenue%20Streams) IngDan Technology will focus on domestic computing power for research with Huawei Ascend, offering integrated solutions, expanding into enterprise markets, and developing new energy smart battery cloud services and an iPaaS platform for five smart hardware sectors - IngDan Technology will deeply cultivate domestic computing power demand in the research field, providing an integrated "hardware + software + service" closed-loop solution with high-performance adaptable hardware and exclusive domestic solutions, complemented by full-lifecycle technical maintenance[22](index=22&type=chunk) - Leveraging the Huawei Ascend ecosystem as an entry point, it aims to capture short-term market opportunities, expand into the enterprise market in the medium term, and participate in joint R&D long-term[22](index=22&type=chunk) - Continue to actively focus on developing new energy smart battery cloud business, with a key focus on two-wheeler battery cloud services[23](index=23&type=chunk) - Build an iPaaS technology integration platform to become a core technology supplier for the AIoT "chip-device-cloud" industry chain, focusing on five major smart hardware sectors: smart cars, digital infrastructure, industrial internet, energy control, and mass consumption[23](index=23&type=chunk) - Establish a "chip-device-cloud" industry closed-loop, with Comtech Technology serving upstream chip suppliers and IngDan Technology focusing on "device" and "cloud" technology integration support, providing customized solutions for emerging industries[24](index=24&type=chunk) [Fostering Electronic Manufacturing Ecosystem](index=8&type=section&id=Fostering%20Electronic%20Manufacturing%20Ecosystem) The Group plans to foster an open electronic manufacturing ecosystem, develop value-added services like supply chain finance and cloud computing, and monetize data to offer data-driven services for customer retention - Plans to foster an open, collaborative, and prosperous electronic manufacturing ecosystem to drive its own business growth[25](index=25&type=chunk) - Plans to develop related businesses serving the electronic manufacturing value chain, such as supply chain finance, insurance, and cloud computing services, to expand platform value-added services[25](index=25&type=chunk) - Plans to monetize collected customer and supplier data to provide data-driven services, including marketing planning, sales, and customized product design[25](index=25&type=chunk) [Enhancing Customer Loyalty and Purchase Volume](index=8&type=section&id=Enhancing%20Customer%20Loyalty%20and%20Purchase%20Volume) The Group plans to enhance customer loyalty and purchase volume by using advanced market analysis for product recommendations, improving service and fulfillment, and providing robust online tools for new clients to boost repeat purchases and cross-selling - Utilize advanced market analysis tools to provide more efficient and suitable online and offline platforms, recommending products or developing customized new products through continuous data collection and analysis[26](index=26&type=chunk) - Invest more resources to enhance customer service, order fulfillment, and delivery capabilities, improving service reliability and shortening customer response times[27](index=27&type=chunk) - Provide new customers with powerful online tools, enterprise resource planning, and other supporting services to increase repeat purchase rates and facilitate cross-selling[27](index=27&type=chunk) [Advancing Strategic Partnerships and Acquisitions](index=9&type=section&id=Advancing%20Strategic%20Partnerships%20and%20Acquisitions) The Group plans to expand through strategic partnerships and acquisitions, targeting promising enterprises to optimize operations, broaden user and revenue bases, expand geographically, enhance offerings, improve technology, and strengthen talent, while seizing AI-driven market growth opportunities - Plans to expand business through strategic partnerships and acquisition activities, identifying promising enterprises for investment, collaboration, or acquisition[28](index=28&type=chunk) - Objectives include optimizing business operations, broadening user and revenue bases, expanding geographical footprint, enhancing product and service portfolios, improving technological infrastructure, and strengthening the talent pool[28](index=28&type=chunk) - Seek attractive cross-marketing and licensing opportunities to enhance sales capabilities and capture market growth driven by AI[28](index=28&type=chunk) [Detailed Financial Performance](index=10&type=section&id=Detailed%20Financial%20Performance) [Income Statement Comparison](index=10&type=section&id=Income%20Statement%20Comparison) For H1 2025, the Group's revenue surged 54.5% driven by AI chip demand, with operating profit and profit attributable to equity holders showing double-digit growth despite a lower gross margin, while operating and income tax expenses increased [Revenue and Cost of Revenue](index=11&type=section&id=Revenue%20and%20Cost%20of%20Revenue) The Group's revenue grew 54.5% to RMB 6,676.5 million, driven by AI chip demand and memory market recovery, with cost of revenue increasing 57.6% to RMB 6,090.6 million | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 6,676.5 | 4,321.4 | 54.5% | | Cost of Sales | (6,090.6) | (3,863.8) | 57.6% | - Revenue growth was primarily due to the increasing demand for chips in AI technology-related industries and the gradual recovery of certain markets, such as memory and storage module products[31](index=31&type=chunk) [Gross Profit and Margin](index=11&type=section&id=Gross%20Profit%20and%20Margin) Gross profit increased 28.0% to RMB 585.9 million, but gross margin declined to 8.8% from 10.6% due to a higher proportion of lower-margin sales to major customers | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Gross Profit | 585.9 | 457.6 | 28.0% | | Gross Margin | 8.8% | 10.6% | -1.8 percentage points | - The decrease in gross margin was mainly due to a change in customer mix, with revenue from major customers being relatively higher in H1 2025 compared to H1 2024, and sales to major customers typically having lower gross margins[33](index=33&type=chunk) [Other Income, Gains and Losses](index=12&type=section&id=Other%20Income%2C%20Gains%20and%20Losses) Other income increased 73.2% to RMB 14.2 million, mainly driven by a significant rise in government grants from RMB 0.8 million to RMB 4.7 million | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Other Income | 14.2 | 8.2 | 73.2% | | Government Grants | 4.7 | 0.8 | 487.5% | [Operating Expenses](index=12&type=section&id=Operating%20Expenses) Sales and distribution expenses rose 12.0% to RMB 106.8 million, R&D expenses increased 8.9% to RMB 47.5 million, and administrative and other operating expenses surged 72.6% to RMB 170.2 million due to business expansion and exchange losses | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Sales and Distribution Expenses | 106.8 | 95.4 | 12.0% | | R&D Expenses | 47.5 | 43.6 | 8.9% | | Administrative and Other Operating Expenses | 170.2 | 98.6 | 72.6% | - The significant increase in administrative and other operating expenses was mainly due to increased net exchange losses and other operating expenses such as insurance, office, and travel expenses resulting from business expansion[37](index=37&type=chunk) [Income Tax and Net Profit](index=13&type=section&id=Income%20Tax%20and%20Net%20Profit) Income tax expense surged 201.1% to RMB 28.6 million, with the effective tax rate rising to 13.1% due to increased operating profit and a shift in profit contribution, while profit attributable to equity holders grew 17.2% to RMB 132.1 million | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Income Tax Expense | 28.6 | 9.5 | 201.1% | | Effective Tax Rate | 13.1% | 5.3% | 7.8 percentage points | | Profit Attributable to Equity Holders of the Company | 132.1 | 112.7 | 17.2% | - The increase in the effective tax rate was mainly due to a higher proportion of profit contributed by Hong Kong and Chinese subsidiaries relative to tax-exempt profit contributed by Chinese subsidiaries[38](index=38&type=chunk) [Earnings Per Share](index=2&type=section&id=Earnings%20Per%20Share) Basic and diluted earnings per share for H1 2025 both increased by 4.9% to RMB 0.086, up from RMB 0.082 in the prior year | Metric | H1 2025 (RMB) | H1 2024 (RMB) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 0.086 | 0.082 | 4.9% | | Diluted Earnings Per Share | 0.086 | 0.082 | 4.9% | [Financial Position](index=13&type=section&id=Financial%20Position) As of June 30, 2025, the Group reported RMB 9,260.0 million in current assets and RMB 6,881.8 million in current liabilities, with a current ratio of 1.35 and a net debt-to-equity ratio of 23.4%, while capital expenditure significantly increased [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, current assets were RMB 9,260.0 million and current liabilities RMB 6,881.8 million, resulting in a current ratio of 1.35, a 4.3% decrease from year-end 2024 due to increased payables and bank loans | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Current Assets | 9,260.0 | 6,739.9 | 37.4% | | Current Liabilities | 6,881.8 | 4,781.1 | 44.0% | | Current Ratio | 1.35 | 1.41 | -4.3% | - The decrease in the current ratio was mainly due to an increase in trade and other payables and bank loans, partially offset by an increase in inventories, receivables, and cash and cash equivalents[40](index=40&type=chunk) - As of December 31, 2024, certain investors had exercised their redemption rights under the subscription agreements[41](index=41&type=chunk) [Capital Expenditure](index=14&type=section&id=Capital%20Expenditure) Capital expenditure surged to RMB 15.9 million from RMB 0.6 million, primarily due to increased investment in plant and equipment and intangible assets for self-developed product R&D | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Capital Expenditure | 15.9 | 0.6 | 2550.0% | - The increase in capital expenditure was mainly due to a year-on-year increase in additions to plant and equipment, and an increase in intangible assets acquired for self-developed product R&D[42](index=42&type=chunk) [Net Debt to Equity Ratio](index=14&type=section&id=Net%20Debt%20to%20Equity%20Ratio) As of June 30, 2025, the net debt-to-equity ratio decreased to 23.4% from 27.8%, driven by increased total equity from share issuance and profit, alongside higher cash and cash equivalents | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Debt to Equity Ratio | 23.4% | 27.8% | -4.4 percentage points | - The decrease in the net debt-to-equity ratio was mainly due to an increase in total equity resulting from the issuance of shares and increased profit during the reporting period, as well as an increase in cash and cash equivalents, partially offset by an increase in bank loans[43](index=43&type=chunk) [Significant Investments, Acquisitions and Disposals](index=14&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals) The Group made no significant investments or disposals during the period, but Shenzhen Comtech's proposed spin-off and A-share listing application, with the Group remaining its ultimate controlling shareholder, is expected to drive long-term growth - During the reporting period, the Group did not make any significant investments, acquisitions, or disposals[44](index=44&type=chunk)[45](index=45&type=chunk) - Shenzhen Comtech's proposed spin-off and A-share listing application has been accepted for filing, which is expected to bring long-term growth to the Group's business, with the Group remaining Shenzhen Comtech's ultimate controlling shareholder[14](index=14&type=chunk)[46](index=46&type=chunk) [Pledge of Assets and Contingent Liabilities](index=15&type=section&id=Pledge%20of%20Assets%20and%20Contingent%20Liabilities) As of June 30, 2025, the Group pledged RMB 722.9 million in bank deposits for credit facilities, with no significant contingent liabilities for the Group or the Company during the period | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Pledged Bank Deposits | 722.9 | 231.5 | - Pledged bank deposits serve as collateral for credit facilities granted by several banks in Hong Kong and China[47](index=47&type=chunk) - As of June 30, 2025, neither the Group nor the Company had any significant contingent liabilities[48](index=48&type=chunk) [Exchange Rate Risk](index=15&type=section&id=Exchange%20Rate%20Risk) Foreign currency transactions are translated at transaction date rates, monetary assets/liabilities at period-end rates, with exchange differences recognized in profit or loss; no derivatives are used, but management monitors and may consider hedging - Foreign currency transactions are translated at the exchange rates prevailing on the transaction dates, while monetary assets and liabilities are translated at the exchange rates at the end of the reporting period, with exchange gains and losses recognized in profit or loss[49](index=49&type=chunk) - The Group does not use derivative financial instruments to hedge foreign exchange risk, but management closely monitors and will consider hedging when necessary[49](index=49&type=chunk) [Events After Reporting Period](index=15&type=section&id=Events%20After%20Reporting%20Period) No significant events affecting the Group have occurred since the end of the six months ended June 30, 2025 - No significant events that could affect the Group have occurred since the end of the reporting period[50](index=50&type=chunk) [Condensed Consolidated Financial Statements](index=16&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For H1 2025, the Group reported RMB 6,676.5 million in revenue, RMB 190.0 million in profit for the period, and RMB 194.7 million in total comprehensive income | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 6,676,479 | 4,321,417 | | Gross Profit | 585,868 | 457,595 | | Operating Profit | 275,629 | 228,200 | | Profit for the Period | 190,046 | 169,057 | | Profit Attributable to Owners of the Company | 132,075 | 112,688 | | Total Comprehensive Income (Expense) for the Period | 194,744 | (204,934) | | Basic Earnings Per Share (RMB) | 0.086 | 0.082 | [Condensed Consolidated Statement of Financial Position](index=18&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets less current liabilities were RMB 5,347.2 million, with net assets at RMB 4,804.4 million, driven by increased financial assets at fair value through OCI and growth in current assets | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 2,968,944 | 2,866,542 | | Current Assets | 9,260,018 | 6,739,997 | | Current Liabilities | 6,881,803 | 4,781,189 | | Net Current Assets | 2,378,215 | 1,958,808 | | Total Assets Less Current Liabilities | 5,347,159 | 4,825,350 | | Net Assets | 4,804,429 | 4,408,884 | | Total Equity | 4,804,429 | 4,408,884 | - Financial assets at fair value through other comprehensive income increased from **RMB 796,786 thousand** as of December 31, 2024, to **RMB 1,205,186 thousand**[53](index=53&type=chunk) - Inventories increased from **RMB 3,510,501 thousand** to **RMB 4,877,289 thousand**; trade receivables, bills receivable, and other receivables increased from **RMB 2,380,719 thousand** to **RMB 2,528,221 thousand**; cash and cash equivalents increased from **RMB 608,229 thousand** to **RMB 903,915 thousand**[53](index=53&type=chunk) [Notes to Financial Statements](index=20&type=section&id=Notes%20to%20Financial%20Statements) [General Information and Basis of Preparation](index=20&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) IngDan Innovation, incorporated in the Cayman Islands and listed on HKEX, primarily sells ICs, electronic components, AIoT products, and provides financial services, with interim financials presented in RMB under HKAS 34 and Listing Rules - The Company is incorporated in the Cayman Islands, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[55](index=55&type=chunk) - The Group is principally engaged in the sale of ICs, other electronic components, AIoT products, and self-developed and semiconductor products, as well as the provision of financial services (Gravity Finance)[55](index=55&type=chunk) - The condensed consolidated interim financial information is presented in RMB and has been prepared in accordance with Hong Kong Accounting Standard 34 and the applicable disclosure requirements of the Listing Rules[56](index=56&type=chunk)[57](index=57&type=chunk) [Accounting Policies](index=20&type=section&id=Accounting%20Policies) Interim financial information is primarily prepared using historical cost, with certain financial assets at fair value; new HKFRS revisions had no significant impact on financial performance or position - The condensed consolidated interim financial information has been prepared principally under the historical cost convention, except for certain financial assets which are measured at fair value[58](index=58&type=chunk) - The revisions to HKFRS accounting standards issued by the Hong Kong Institute of Certified Public Accountants were first applied in this interim period but had no significant impact on the Group's financial performance and position[59](index=59&type=chunk) [Revenue Analysis](index=21&type=section&id=Revenue%20Analysis) The Group's revenue comprises sales of ICs, electronic components, AIoT products, self-developed and semiconductor products, and Gravity Finance interest income, primarily from China (including Hong Kong) and recognized at a point in time | Revenue Source | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Sales of ICs, Electronic Components, AIoT Products, and Self-developed & Semiconductor Products | 6,653,438 | 4,300,831 | | Interest Income from Gravity Finance | 23,041 | 20,586 | | **Total Revenue** | **6,676,479** | **4,321,417** | - For the six months ended June 30, 2025, all revenue from goods and services was recognized at a point in time and originated entirely from the China (including Hong Kong) market[63](index=63&type=chunk) [Segment Information](index=22&type=section&id=Segment%20Information) The Group has two reportable segments: Comtech Technology, with RMB 6,345.8 million in external revenue from ICs and AIoT products, and IngDan Technology, with RMB 330.7 million from self-developed products, financial services, and software licensing - The Group identifies two reportable segments: Comtech Technology (sales of ICs, other electronic components, and AIoT products) and IngDan Technology (sales of self-developed and semiconductor products, Gravity Finance, software licensing, and incubator businesses)[66](index=66&type=chunk) | Segment | H1 2025 External Revenue (RMB thousand) | H1 2024 External Revenue (RMB thousand) | | :--- | :--- | :--- | | Comtech Technology | 6,345,756 | 4,042,719 | | IngDan Technology | 330,723 | 278,698 | | **Total** | **6,676,479** | **4,321,417** | | Segment | H1 2025 Segment Profit (RMB thousand) | H1 2024 Segment Profit (RMB thousand) | | :--- | :--- | :--- | | Comtech Technology | 243,798 | 183,134 | | IngDan Technology | 102,305 | 57,349 | | **Total Segment Profit** | **346,103** | **240,483** | [Notes on Other Income, Gains and Losses](index=24&type=section&id=Notes%20on%20Other%20Income%2C%20Gains%20and%20Losses) For H1 2025, total other income, gains, and losses were RMB 14.2 million, mainly from RMB 6.7 million in bank interest and RMB 4.7 million in non-recurring government grants without unfulfilled conditions | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank Interest Income | 6,723 | 7,266 | | Government Grants | 4,740 | 839 | | Others | 2,955 | 59 | | Loss on Disposal of Investment Property | (225) | — | | **Total** | **14,193** | **8,164** | - Government grants are non-recurring and are not subject to unfulfilled conditions or other contingencies[73](index=73&type=chunk) [Notes on Income Tax Expense](index=25&type=section&id=Notes%20on%20Income%20Tax%20Expense) For H1 2025, income tax expense totaled RMB 28.6 million, comprising RMB 12.7 million in China corporate income tax, RMB 19.5 million in Hong Kong profits tax, and RMB (3.7) million in deferred tax | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | China Corporate Income Tax | 12,698 | 2,278 | | Hong Kong Profits Tax | 19,547 | 11,020 | | Deferred Tax | (3,662) | (3,770) | | **Total** | **28,583** | **9,528** | [Dividends](index=25&type=section&id=Dividends) No dividends were paid, declared, or proposed by the Company for the six months ended June 30, 2025 - No dividends were paid, declared, or proposed for the six months ended June 30, 2025[75](index=75&type=chunk) [EPS Calculation](index=25&type=section&id=EPS%20Calculation) For H1 2025, profit attributable to owners was RMB 132.1 million, with weighted average ordinary shares of 1,544,310 thousand for basic EPS and 1,544,335 thousand for diluted EPS | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the purpose of calculating basic and diluted EPS | 132,075 | 112,688 | | Metric | H1 2025 (thousand shares) | H1 2024 (thousand shares) | | :--- | :--- | :--- | | Weighted average number of ordinary shares for basic EPS | 1,544,310 | 1,370,028 | | Weighted average number of ordinary shares for diluted EPS | 1,544,335 | 1,370,992 | [Loans Receivable](index=26&type=section&id=Loans%20Receivable) As of June 30, 2025, total loans receivable were RMB 784.1 million, comprising RMB 227.7 million non-current and RMB 556.4 million current portions | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Portion | 227,730 | 2,875 | | Current Portion | 556,350 | 803,622 | | **Total** | **784,080** | **806,497** | [Trade and Other Receivables](index=27&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, total trade and other receivables were RMB 2,528.2 million, with trade and bills receivables (net of loss allowance) at RMB 2,186.7 million, having credit terms of 30 to 120 days | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade and Bills Receivables (net of loss allowance) | 2,186,708 | 1,965,876 | | Interest Receivable on Loans | 85,914 | 73,181 | | Trade Deposits and Prepayments | 222,342 | 310,291 | | Other Receivables | 33,257 | 21,371 | | **Total** | **2,528,221** | **2,380,719** | | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 2,056,591 | 1,839,691 | | 1 to 2 months | 43,775 | 42,347 | | 2 to 3 months | 23,991 | 11,751 | | Over 3 months | 62,351 | 72,087 | | **Total** | **2,186,708** | **1,965,876** | [Trade and Other Payables](index=28&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables were RMB 4,155.1 million, with trade payables at RMB 4,090.7 million, managed with a 30-day average credit period and financial risk controls | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Payables | 4,090,739 | 2,388,410 | | Accrued Staff Costs | 27,087 | 29,473 | | Other Payables | 37,319 | 57,344 | | **Total** | **4,155,145** | **2,475,227** | | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 4,038,636 | 1,891,643 | | 1 to 3 months | 28,707 | 465,111 | | Over 3 months | 23,396 | 31,656 | | **Total** | **4,090,739** | **2,388,410** | - The average credit period granted to the Group is **30 days**, and the Group has implemented financial risk management to ensure all payables are settled within the credit terms[80](index=80&type=chunk) [Share Capital](index=29&type=section&id=Share%20Capital) As of June 30, 2025, the Company's authorized share capital was 500 billion ordinary shares at USD 0.0000001 each, with issued capital increasing by 250 million shares to 1,644,262,732 due to a placement for debt reduction and working capital | Item | June 30, 2025 (shares) | December 31, 2024 (shares) | | :--- | :--- | :--- | | Authorized Ordinary Shares | 500,000,000,000 | 500,000,000,000 | | Issued and Fully Paid Ordinary Shares | 1,644,262,732 | 1,394,262,732 | - On February 7, 2025, the Company entered into a subscription agreement with independent private investors for the placement of **250,000,000** new shares at a subscription price of **HKD 1.30** per share, with net proceeds of approximately **HKD 324,146,453** used for the acquisition of Shenzhen Comtech shares, redemption payments, and general working capital of the Company[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) [Purchase, Sale or Redemption of Listed Securities](index=30&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) On February 7, 2025, the Company placed 250 million shares for HKD 325 million, with net proceeds fully utilized; no other listed securities were purchased, sold, or redeemed by the Company or its subsidiaries - On February 7, 2025, the Company entered into a subscription agreement with subscribers for the placement of **250,000,000** subscription shares at a subscription price of **HKD 1.30** per share, totaling **HKD 325,000,000**[84](index=84&type=chunk) - The net proceeds of approximately **HKD 324,146,453** were fully utilized for the acquisition of Shenzhen Comtech shares, redemption payments, and general working capital of the Company[84](index=84&type=chunk) - Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on The Stock Exchange of Hong Kong Limited[85](index=85&type=chunk) [Corporate Governance](index=30&type=section&id=Corporate%20Governance) The Company adheres to strict corporate governance, complying with Listing Rules' Corporate Governance Code and Model Code, with exceptions for Chairman/CEO roles and monthly management updates, which the Board deems effective and under review [Compliance with Corporate Governance Code](index=30&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company complied with the Corporate Governance Code, except for the combined Chairman/CEO role and non-monthly management updates, which the Board believes ensure leadership consistency and decision-making efficiency - The Company has complied with all applicable code provisions of Appendix C1 "Corporate Governance Code" of the Listing Rules during the reporting period, except for code provision C.2.1 (segregation of Chairman and Chief Executive Officer roles) and D.1.2 (management providing monthly updates to all Board members)[86](index=86&type=chunk)[87](index=87&type=chunk) - The Board believes that combining the roles of Chairman and Chief Executive Officer ensures consistent leadership within the Group and enhances efficiency in strategic planning[87](index=87&type=chunk) - While management does not provide monthly updates, it provides the Board with the latest business information quarterly and on an ad-hoc basis, ensuring directors are timely informed of the Group's performance[87](index=87&type=chunk) [Model Code for Securities Transactions by Directors](index=31&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company adopted the Model Code for Securities Transactions by Directors, with all Directors confirming strict compliance, and no instances of non-compliance by employees were found - The Company has adopted the "Model Code for Securities Transactions by Directors of Listed Issuers" as set out in Appendix C3 of the Listing Rules, and all Directors confirmed strict compliance with the code during the reporting period and up to the announcement date[89](index=89&type=chunk) - The Company has not identified any instances of non-compliance with the Model Code by relevant employees[89](index=89&type=chunk) [Audit Committee and Review of Interim Results](index=32&type=section&id=Audit%20Committee%20and%20Review%20of%20Interim%20Results) The Audit Committee, comprising three independent non-executive directors chaired by Mr. Hao Chunyi, reviewed the Group's unaudited interim results, accounting policies, and internal controls, with the results also reviewed by Shinewing (HK) CPA Limited - The Audit Committee is composed of three independent non-executive directors, with Mr Hao Chunyi serving as Chairman[90](index=90&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim results and discussed accounting policies and internal control matters with senior management[90](index=90&type=chunk) - The unaudited interim results for the six months ended June 30, 2025, have been reviewed by the auditor, Shinewing (HK) CPA Limited[91](index=91&type=chunk) [Other Board Committees](index=32&type=section&id=Other%20Board%20Committees) Besides the Audit Committee, the Company has also established a Nomination Committee and a Remuneration Committee - In addition to the Audit Committee, the Company has also established a Nomination Committee and a Remuneration Committee[92](index=92&type=chunk) [Major Litigation](index=32&type=section&id=Major%20Litigation) As of June 30, 2025, the Company was not involved in any major litigation or arbitration, and Directors were unaware of any outstanding or threatened significant claims - As of June 30, 2025, the Company was not involved in any major litigation or arbitration matters[93](index=93&type=chunk) [Interim Dividend](index=32&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the reporting period - The Board does not recommend the payment of an interim dividend for the reporting period (six months ended June 30, 2024: nil)[94](index=94&type=chunk) [Publication Information](index=33&type=section&id=Publication%20Information) This interim results announcement is published on the HKEX and Company websites, and the interim report will be dispatched to shareholders in due course - This interim results announcement has been published on the HKEX website www.hkexnews.hk and the Company's website www.ingdangroup.com[95](index=95&type=chunk) - The Company's interim report for the reporting period will be published on the aforementioned websites and dispatched to the Company's shareholders in due course[95](index=95&type=chunk)

[Interim Results Announcement Summary](index=1&type=section&id=Interim%20Results%20Announcement%20Summary) [Performance Overview](index=1&type=section&id=Performance%20Overview) MedSci Healthcare reported a 13.2% year-on-year revenue growth and a 5,238.3% surge in profit for the six months ended June 30, 2025, with an interim dividend of 1.1 HK cents per share declared Key Financial Data for H1 2025 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 125,246 | 110,665 | 13.2 | | Cost of Sales | (47,767) | (42,729) | 11.8 | | Gross Profit | 77,479 | 67,936 | 14.1 | | Profit for the Period | 13,239 | 248 | 5,238.3 | | Profit Attributable to Owners of the Parent | 13,239 | 248 | 5,238.3 | - The Board declared an interim dividend of **1.1 HK cents** per ordinary share, totaling approximately **HKD 6,679,000**[43](index=43&type=chunk) [Revenue by Solution Category](index=2&type=section&id=Revenue%20by%20Solution%20Category) During the reporting period, revenue from precise omnichannel marketing and real-world clinical research solutions grew significantly, data and AI solutions emerged as a new growth driver, while physician platform solutions saw a decline Revenue by Solution Category (RMB thousands) | Solution Category | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Precise Omnichannel Marketing Solutions | 56,140 | 44.8 | 41,865 | 37.8 | 34.1 | | Physician Platform Solutions | 46,828 | 37.4 | 55,246 | 49.9 | (15.0) | | Real-World Clinical Research Solutions | 16,631 | 13.3 | 13,554 | 12.3 | 22.7 | | Data and AI Solutions | 5,647 | 4.5 | N/A | N/A | N/A | | Total | 125,246 | 100.0 | 110,665 | 100.0 | 13.2 | [Business Review and Outlook](index=3&type=section&id=Business%20Review%20and%20Outlook) [Industry Trends and Group Strategy](index=3&type=section&id=Industry%20Trends%20and%20Group%20Strategy) China's pharmaceutical industry reforms drive innovation and digitalization; the Group aligns by leveraging medical content and academic networks to advance AI agent applications, launching iMED_AI, NovaX, ElavaX, and establishing a Digital Intelligence Empowerment Center (DIEC) - China's pharmaceutical industry policies encourage **innovation, digital transformation, and normalized anti-corruption**, accelerating the industry's shift towards compliance, innovation, academic focus, and digitalization[5](index=5&type=chunk) - The Group launched three AI agent products: **iMED_AI** (digital interaction), **NovaX** (research inspiration and innovative design), and **ElavaX** (intelligent evaluation and optimization), completing internal testing for the **Digital Intelligence Empowerment Center (DIEC)**, with a planned launch in the second half of the year[5](index=5&type=chunk) [Operational Highlights](index=3&type=section&id=Operational%20Highlights) As of June 30, 2025, the Group's registered members exceeded **5.6 million**, with **3.33 million** certified doctors, serving over **2,000** medical institutions and **613** pharmaceutical companies, achieving **100%** coverage of global Top 20 pharmaceutical enterprises, while increasing AI R&D investment and advancing internationalization - As of June 30, 2025, the Group's cumulative registered members exceeded **5.6 million**, with **3.33 million** certified doctors[6](index=6&type=chunk) - Solutions have been provided to **12** top domestic research hospitals, with a service network covering over **2,000** medical institutions and serving **613** pharmaceutical and medical device companies, achieving **100%** coverage of global Top 20 pharmaceutical and medical device enterprises[6](index=6&type=chunk) - The Group continues to increase **AI technology R&D investment**, expanding deep applications of AI in pharmaceutical scenarios, significantly improving service efficiency and operational precision, and steadily advancing its internationalization strategy[7](index=7&type=chunk) [Overall Financial Performance](index=4&type=section&id=Overall%20Financial%20Performance) During the reporting period, the Group's total revenue increased by **13.2%** year-on-year to **RMB 125.2 million**, gross profit grew by **14.1%** to **RMB 77.5 million**, and net profit surged by **5,238.3%** to **RMB 13.2 million**, driven by industry recovery, rising precise marketing demand, and AI-driven operational efficiency, with AI-related business revenue reaching **RMB 5.6 million** Overall Financial Performance for H1 2025 | Metric | 2025 H1 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | | Total Revenue | 125.2 | 13.2 | | Gross Profit | 77.5 | 14.1 | | Net Profit | 13.2 | 5,238.3 | | AI-Related Business Revenue | 5.6 | N/A | - Performance growth primarily benefited from industry recovery driving increased demand for multi-channel precise marketing and accelerated corporate transition to evidence-driven marketing models; gross profit and net profit growth resulted from efficiency improvements and sales strategy optimization driven by **AI-powered intelligent operational systems**[8](index=8&type=chunk) [Future Outlook](index=5&type=section&id=Outlook) The Group will continue to position itself as a 'reconstructor of the medical digitalization value chain,' leveraging its AI engine to build core solutions and a high-moat, full-value-chain service system, strengthening its leading edge through a 'resource accumulation – value transformation – business discovery' growth flywheel effect - The Group will position itself as a **'reconstructor of the medical digitalization value chain,'** leveraging its **AI engine** to build three core solutions: physician platform, precise omnichannel marketing, and real-world research[9](index=9&type=chunk) - Continuously strengthening its leading edge in the medical industry internet through a **'resource accumulation – value transformation – business discovery' growth flywheel effect**[9](index=9&type=chunk) [Dual-Driven and Globalization](index=9&type=section&id=Outlook%201%3A%20Dual-Driven%20Ecosystem%20Empowerment%2C%20Building%20a%20Globalized%20Medical%20Industry%20New%20Ecosystem) MedSci Healthcare will adhere to a 'digitalization + healthcare' dual-driven model, strengthening international development, upgrading from single-agent to multi-agent collaboration; it has established a Southeast Asia headquarters in Singapore, focusing on the Vietnamese market, and will enhance international empowerment for innovative pharmaceutical companies, assisting Chinese pharmaceutical enterprises in global expansion - Adhering to a **'digitalization + healthcare' dual-driven model**, strengthening international development, and upgrading from single-agent solutions to a **'multi-agent collaboration' model**[20](index=20&type=chunk) - In **2025**, a Southeast Asia headquarters was established in **Singapore**, with a focus on the **Vietnamese market**, and will enhance international empowerment for innovative pharmaceutical companies, providing full-chain services[20](index=20&type=chunk) [Comprehensive AI Empowerment](index=9&type=section&id=Outlook%202%3A%20Comprehensive%20AI%20Empowerment%2C%20Driving%20Research%20and%20Medical%20AI%20Upgrade) 2025 marks MedSci Healthcare's 'Year of AI Application,' with comprehensive AI technology penetration, completing the switch of its research digitalization platform to the DeepSeek model and achieving scalable revenue from some AI services; multiple AI agents have been launched, with a future transition to a 'multi-agent solution collaboration' model, exploring AI's auxiliary applications in clinical diagnosis and treatment - **2025** is the **'Year of AI Application,'** accelerating AI technology penetration, completing the switch of the research digitalization platform to the **DeepSeek model**, and achieving scalable revenue from some AI services[21](index=21&type=chunk) - Launched multiple AI agents, including **'MedSci Xiaozhi,' iMED_AI, NovaX, and ElavaX**, with a future transition to a **'multi-agent solution collaboration' model**, exploring AI's auxiliary applications in clinical diagnosis and treatment[21](index=21&type=chunk) [Precise Omnichannel Marketing Supporting Innovative Drugs](index=10&type=section&id=Outlook%203%3A%20Focusing%20on%20Precise%20Omnichannel%20Marketing%2C%20Promoting%20High-Quality%20Development%20of%20Innovative%20Drugs) The Group seized the industry recovery opportunity, achieving significant growth in precise omnichannel marketing with market recognition for its professional capabilities; national policies support innovative drug development and real-world study value, prompting the Group to continuously upgrade its omnichannel marketing solutions, strengthen evidence-driven approaches, and contribute to high-quality innovative drug development - Precise omnichannel marketing business achieved **significant growth**, with professional capabilities widely recognized by the market, seizing the opportunity of industry recovery[22](index=22&type=chunk) - National policies support the **high-quality development of innovative drugs** and the value of **Real-World Studies (RWS)**; the Group will continuously upgrade its omnichannel marketing solutions and strengthen evidence-driven approaches[22](index=22&type=chunk) [Segment Business Performance](index=5&type=section&id=Segment%20Business%20Performance) [Physician Platform Solutions](index=5&type=section&id=Physician%20Platform%20Solutions) As of June 30, 2025, the platform had approximately **3.3 million** registered physician users, with associate chief physicians and above accounting for about **73.5%** of the total in China; the platform offers rich content across **42** research areas, enhanced by AI for information integration and push capabilities; revenue for the period was approximately **RMB 46.8 million**, a **15%** year-on-year decrease, primarily due to reduced demand for simple language-based clinical research driven by AI technology adoption - As of June 30, 2025, the platform had approximately **3.3 million** registered physician users, with the total number of registered physician users holding associate chief physician titles and above accounting for approximately **73.5%** of all physicians with such titles in China[10](index=10&type=chunk) - Revenue from Physician Platform Solutions was approximately **RMB 46.8 million**, a year-on-year decrease of approximately **15%**, primarily due to reduced demand for simple language-based clinical research driven by the widespread adoption of AI technology[12](index=12&type=chunk) [Precise Omnichannel Marketing Solutions](index=7&type=section&id=Evidence-Driven%20Precise%20Omnichannel%20Marketing%20Solutions) This solution centers on academic-driven digital marketing, emphasizing evidence and professionalism; during the reporting period, business demand grew rapidly, with revenue reaching **RMB 56.1 million**, a **34.1%** year-on-year increase, benefiting from domestic pharmaceutical companies' transition to evidence-driven marketing models; as of June 30, 2025, there were **613** active clients, with a **100%** revenue retention rate for the top 10 clients - Revenue from Precise Omnichannel Marketing Solutions reached **RMB 56.1 million**, a year-on-year increase of approximately **34.1%**, primarily benefiting from the accelerated transition of domestic pharmaceutical companies to evidence-driven marketing models[13](index=13&type=chunk) - As of June 30, 2025, there were **613** active clients, including **525** core pharmaceutical, biotechnology, and medical device enterprise clients, with a **100%** revenue retention rate for the top 10 clients[14](index=14&type=chunk) [Real-World Research Solutions](index=7&type=section&id=Real-World%20Research%20Solutions) The Group provides cost-effective post-market clinical research solutions for pharmaceutical and medical device companies; during the reporting period, revenue was approximately **RMB 16.6 million**, a **22.7%** year-on-year increase, primarily due to actively processing existing orders and AI applications enhancing overall efficiency; **172** projects were executed, with outstanding orders totaling **RMB 195 million** - Revenue from Real-World Research Solutions was approximately **RMB 16.6 million**, a year-on-year increase of **22.7%**, primarily due to actively processing existing orders and AI applications enhancing overall efficiency[16](index=16&type=chunk) - During the reporting period, **172** projects were executed, with outstanding orders decreasing from **RMB 205 million** at the end of 2024 to **RMB 195 million** as of June 30, 2025[16](index=16&type=chunk) [Data and AI Solutions](index=8&type=section&id=Data%20and%20AI%20Solutions) MedSci Healthcare elevates data and AI to a strategic level, applying it internally and actively marketing it to clients; this segment has begun to achieve rapid revenue conversion, with **10** clients and revenue reaching **RMB 5.6 million** during the reporting period, poised to become a new growth engine for the future - Data and AI Solutions have begun to achieve rapid revenue conversion, with **10** clients and revenue reaching **RMB 5.6 million** during the reporting period[18](index=18&type=chunk) - This segment will collaborate with Physician Platform and Precise Omnichannel Marketing Solutions, becoming a new growth engine for the future, continuously exploring AI applications across the entire healthcare value chain[17](index=17&type=chunk) [Financial Statements](index=11&type=section&id=Financial%20Statements) [Interim Condensed Consolidated Statement of Profit or Loss](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group's revenue was **RMB 125,246 thousand**, gross profit was **RMB 77,479 thousand**, profit for the period was **RMB 13,239 thousand**, and both basic and diluted earnings per share were **RMB 2.45 cents** Interim Condensed Consolidated Statement of Profit or Loss (RMB thousands) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 125,246 | 110,665 | | Cost of Sales | (47,767) | (42,729) | | Gross Profit | 77,479 | 67,936 | | Other Income and Gains | 20,618 | 18,883 | | Selling and Distribution Expenses | (33,764) | (37,850) | | Administrative Expenses | (22,618) | (35,820) | | Research and Development Expenses | (19,689) | (12,022) | | Impairment Loss on Financial and Contract Assets | (7,413) | (519) | | Profit / (Loss) Before Tax | 14,521 | (240) | | Income Tax (Expense) / Credit | (1,282) | 488 | | Profit for the Period | 13,239 | 248 | | Profit Attributable to Owners of the Parent | 13,239 | 248 | | Basic Earnings Per Share | RMB 2.45 cents | RMB 0.05 cents | | Diluted Earnings Per Share | RMB 2.45 cents | RMB 0.05 cents | [Interim Condensed Consolidated Statement of Comprehensive Income](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's total comprehensive income for the period was **RMB 7,520 thousand**, primarily impacted by exchange differences arising from translating the company's financial statements to the presentation currency Interim Condensed Consolidated Statement of Comprehensive Income (RMB thousands) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period | 13,239 | 248 | | Exchange differences arising from translating the financial statements of the Company to presentation currency | (5,473) | 5,751 | | Exchange differences on translation of overseas operations | (246) | 46 | | Other comprehensive (loss) / income for the period, net of tax | (5,719) | 5,797 | | Total comprehensive income for the period | 7,520 | 6,045 | | Attributable to owners of the parent | 7,520 | 6,045 | [Interim Condensed Consolidated Statement of Financial Position](index=13&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets less current liabilities were **RMB 1,184,437 thousand**, and net assets were **RMB 1,179,739 thousand**; total current assets amounted to **RMB 1,349,519 thousand**, with financial assets at fair value through profit or loss being the largest component Interim Condensed Consolidated Statement of Financial Position (RMB thousands) | Metric | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | | :--- | :--- | :--- | | Total Non-Current Assets | 34,416 | 28,269 | | Total Current Assets | 1,349,519 | 1,320,987 | | Total Current Liabilities | 199,498 | 179,361 | | Net Current Assets | 1,150,021 | 1,141,626 | | Total Assets Less Current Liabilities | 1,184,437 | 1,169,895 | | Total Non-Current Liabilities | 4,698 | 207 | | Net Assets | 1,179,739 | 1,169,688 | | Total Equity | 1,179,739 | 1,169,688 | [Notes to the Interim Condensed Consolidated Financial Information](index=15&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) [Company Information](index=15&type=section&id=Company%20Information) MedSci Healthcare Holdings Limited was incorporated in the Cayman Islands, primarily providing physician platform, precise omnichannel marketing, and real-world research solutions in China; the company's shares have been listed on the Main Board of the Hong Kong Stock Exchange since April 27, 2023 - The Company was incorporated in the **Cayman Islands** on **June 22, 2021**, primarily providing physician platform solutions, precise omnichannel marketing solutions, and real-world research solutions in China[28](index=28&type=chunk) - The Company's shares have been listed on the **Main Board of The Stock Exchange of Hong Kong Limited** since **April 27, 2023**[29](index=29&type=chunk) [Basis of Preparation and Changes in Accounting Policies](index=15&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) The interim condensed consolidated financial information is prepared in accordance with IAS 34 and should be read in conjunction with the 2024 annual consolidated financial statements; revised IFRS were first adopted during this period, but had no significant impact on the financial information - The interim condensed consolidated financial information is prepared in accordance with **International Accounting Standard 34 Interim Financial Reporting** and should be read in conjunction with the Group's annual consolidated financial statements for the year ended December 31, 2024[30](index=30&type=chunk) - The Group first adopted **IAS 21 (Amendment) 'Lack of Exchangeability'**, but it had no impact on the interim condensed consolidated financial information as all currencies traded by the Group are convertible[31](index=31&type=chunk)[32](index=32&type=chunk) [Operating Segment Information](index=16&type=section&id=Operating%20Segment%20Information) The Group primarily operates in Mainland China, providing physician platform, precise omnichannel marketing, and real-world research solutions; no separate operating segment financial information is presented as the chief operating decision-maker reviews the Group's overall financial performance; all revenue and almost all non-current assets are located in Mainland China - The Group is primarily engaged in providing physician platform solutions, precise omnichannel marketing solutions, and real-world research solutions in **Mainland China**[33](index=33&type=chunk) - No further information on operating segments is presented as the directors review the Group's overall financial performance; all of the Group's revenue and almost all non-current assets are generated in or located in **Mainland China**[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Revenue Analysis](index=16&type=section&id=Revenue%20Analysis) For the six months ended June 30, 2025, total revenue from contracts with customers was **RMB 125,246 thousand**, entirely from Mainland China, and recognized over time Revenue Analysis (RMB thousands) | Service Type | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Services Provided | 125,246 | 110,665 | | Of which: Physician Platform Solutions | 46,828 | 55,246 | | Precise Omnichannel Marketing Solutions | 56,140 | 41,865 | | Real-World Research Solutions | 16,631 | 13,554 | | Data and AI Solutions | 5,647 | N/A | - All revenue is derived from **Mainland China** and recognized over time[39](index=39&type=chunk)[40](index=40&type=chunk) [Details of Profit / (Loss) Before Tax](index=18&type=section&id=Details%20of%20Profit%20%2F%20%28Loss%29%20Before%20Tax) For the six months ended June 30, 2025, profit before tax was **RMB 14,521 thousand**, primarily influenced by increased R&D expenses, higher impairment losses on financial and contract assets, and reduced employee benefit expenses Details of Profit / (Loss) Before Tax (RMB thousands) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of Services Provided | 25,473 | 21,343 | | Research and Development Expenses | 19,689 | 12,022 | | Net Impairment of Financial Assets (Contract Assets) | 7,383 | 2 | | Bank Interest Income | 7,303 | 10,315 | | Fair Value Gain on Financial Assets at Fair Value Through Profit or Loss | 9,235 | 7,394 | | Total Employee Benefit Expenses | 72,595 | 88,106 | [Income Tax](index=19&type=section&id=Income%20Tax) The Group primarily pays income tax in Mainland China at a statutory rate of **25%**; subsidiary Shanghai MedSci Medical, as a high-tech enterprise, pays corporate income tax at a **15%** rate; for the six months ended June 30, 2025, income tax expense was **RMB 1,282 thousand** - Mainland China subsidiaries pay income tax at a statutory rate of **25%**, while Shanghai MedSci Medical, as a high-tech enterprise, pays at a **15%** rate[43](index=43&type=chunk) Income Tax Expense / (Credit) (RMB thousands) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current — Mainland China expense for the period | 2,242 | — | | Deferred tax | (960) | (488) | | Total tax expense / (credit) for the period | 1,282 | (488) | [Dividends](index=19&type=section&id=Dividends) The Board declared an interim dividend of **1.1 HK cents** per ordinary share on August 29, 2024, totaling approximately **HKD 6,679,000**, to be paid from the share premium account - The Board declared an interim dividend of **1.1 HK cents** per ordinary share (for the six months ended June 30, 2024: nil), totaling approximately **HKD 6,679,000**, to be paid from the Company's share premium account[43](index=43&type=chunk)[89](index=89&type=chunk) [Earnings Per Share Attributable to Owners of the Parent](index=20&type=section&id=Earnings%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Parent) For the six months ended June 30, 2025, both basic and diluted earnings per share attributable to owners of the parent were **RMB 2.45 cents**, calculated based on a weighted average of **540,682,205** ordinary shares outstanding Earnings Per Share Calculation (RMB thousands/share) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Parent (RMB thousands) | 13,239 | 248 | | Weighted Average Number of Ordinary Shares in Issue | 540,682,205 | 540,330,093 | | Basic Earnings Per Share | RMB 2.45 cents | RMB 0.05 cents | | Diluted Earnings Per Share | RMB 2.45 cents | RMB 0.05 cents | - No adjustment was made to the basic earnings per share amount for dilution, as the share award scheme had an anti-dilutive effect on the reported basic earnings per share amount[44](index=44&type=chunk) [Property, Plant and Equipment](index=21&type=section&id=Property%2C%20Plant%20and%20Equipment) As of June 30, 2025, the net book value of property, plant and equipment was **RMB 15,070 thousand**, with depreciation for the period amounting to **RMB 593 thousand** Net Book Value of Property, Plant and Equipment (RMB thousands) | Item | Amount (RMB thousands) | | :--- | :--- | | As at January 1, 2025 (audited) | 15,663 | | Depreciation | (593) | | As at June 30, 2025 (unaudited) | 15,070 | [Trade Receivables](index=21&type=section&id=Trade%20Receivables) As of June 30, 2025, total trade receivables amounted to **RMB 31,217 thousand**, with the vast majority due within one year Ageing Analysis of Trade Receivables (RMB thousands) | Ageing | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 29,271 | 30,987 | | 1 to 2 years | 1,903 | 1,992 | | 2 to 3 years | 43 | 47 | | Total | 31,217 | 33,026 | [Trade Payables](index=21&type=section&id=Trade%20Payables) As of June 30, 2025, total trade payables amounted to **RMB 563 thousand**, all due within three months Ageing Analysis of Trade Payables (RMB thousands) | Ageing | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 563 | 2,031 | [Share Capital](index=22&type=section&id=Issued%20Capital) As of June 30, 2025, the Company's issued share capital consisted of **607,170,950** ordinary shares with a par value of **USD 0.0001** each, totaling **RMB 420 thousand** Issued Share Capital (RMB thousands) | Item | 2025 June 30 Number of Shares | 2025 June 30 Amount (RMB thousands) | | :--- | :--- | :--- | | Issued ordinary shares (par value USD 0.0001 each) | 607,170,950 | 420 | [Approval of Interim Financial Information](index=22&type=section&id=Approval%20of%20Interim%20Financial%20Information) The interim condensed consolidated financial information was approved and authorized for issue by the Board of Directors on August 29, 2025 - The interim condensed consolidated financial information was approved and authorized for issue by the Board of Directors on **August 29, 2025**[50](index=50&type=chunk) [Management Discussion and Analysis](index=23&type=section&id=Management%20Discussion%20and%20Analysis) [Revenue Analysis](index=23&type=section&id=Revenue%20Analysis) Total revenue for H1 2025 increased by **13.2%** year-on-year to **RMB 125.2 million**, primarily driven by the recovery of the pharmaceutical industry and the transition to evidence-driven marketing models - The Group's total revenue increased by **13.2%** from approximately **RMB 110.7 million** for the six months ended June 30, 2024, to approximately **RMB 125.2 million** during the reporting period[51](index=51&type=chunk) - Revenue growth was primarily due to the recovery of the pharmaceutical industry and the accelerated transition of domestic pharmaceutical companies to evidence-driven marketing models, driving increased demand for precise omnichannel marketing solutions[51](index=51&type=chunk) [Revenue from Precise Omnichannel Marketing Solutions](index=23&type=section&id=(i)%20Precise%20Omnichannel%20Marketing%20Solutions) Revenue from this solution increased by **34.1%** year-on-year to **RMB 56.1 million**, primarily benefiting from the pharmaceutical industry's recovery and domestic pharmaceutical companies' accelerated transition to evidence-driven marketing models - Revenue from Precise Omnichannel Marketing Solutions increased by approximately **34.1%** from approximately **RMB 41.9 million** to approximately **RMB 56.1 million**[52](index=52&type=chunk) - The increase was primarily due to the recovery of the pharmaceutical industry and the accelerated transition of domestic pharmaceutical companies to evidence-driven marketing models[52](index=52&type=chunk) [Revenue from Physician Platform Solutions](index=23&type=section&id=(ii)%20Physician%20Platform%20Solutions) Revenue from Physician Platform Solutions decreased by **15%** year-on-year to **RMB 46.8 million**, primarily due to reduced demand for simple language-based clinical research driven by AI technology adoption - Revenue from Physician Platform Solutions decreased by approximately **15%** from approximately **RMB 55.2 million** to approximately **RMB 46.8 million**[53](index=53&type=chunk) - The decrease was primarily driven by the widespread adoption of AI technology, which reduced demand for simple language-based clinical research[53](index=53&type=chunk) [Revenue from RWS Solutions](index=24&type=section&id=(iii)%20RWS%20Solutions) Revenue from RWS Solutions increased by **22.7%** year-on-year to **RMB 16.6 million**, primarily benefiting from actively processing existing orders and AI applications enhancing research efficiency - Revenue from RWS Solutions increased by approximately **22.7%** from approximately **RMB 13.6 million** to approximately **RMB 16.6 million**[54](index=54&type=chunk) - The increase was primarily due to the Group actively processing existing orders and AI applications enhancing the overall efficiency of real-world research[54](index=54&type=chunk) [Revenue from Data and AI Solutions](index=24&type=section&id=(iv)%20Data%20and%20AI%20Solutions) Revenue from Data and AI Solutions was **RMB 5.6 million**, primarily due to rapidly increasing industry demand for related products and services - Revenue from Data and AI Solutions was **RMB 5.6 million**, primarily due to rapidly increasing industry demand for related products and services[55](index=55&type=chunk) [Costs and Gross Profit](index=24&type=section&id=Costs%20and%20Gross%20Profit) Cost of sales increased by **11.8%** year-on-year to **RMB 47.8 million**, gross profit grew by **14.1%** to **RMB 77.5 million**, and gross margin slightly increased to **61.9%** - Cost of sales primarily includes employee benefit expenses, content development costs, conference fees, and office expenses[56](index=56&type=chunk) [Cost of Sales](index=24&type=section&id=Cost%20of%20Sales) Cost of sales increased by **11.8%** year-on-year to **RMB 47.8 million**, primarily rising proportionally with the expansion of revenue scale - Cost of sales increased by approximately **11.8%** from approximately **RMB 42.8 million** for the six months ended June 30, 2024, to approximately **RMB 47.8 million** for the same period in 2025, primarily due to a proportional increase in costs with the expansion of revenue scale[56](index=56&type=chunk) [Gross Profit and Gross Margin](index=24&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by **14.1%** year-on-year to **RMB 77.5 million**, with gross margin slightly rising from **61.4%** in the same period of 2024 to **61.9%** in 2025 - Gross profit increased by approximately **14.1%** from approximately **RMB 67.9 million** for the six months ended June 30, 2024, to approximately **RMB 77.5 million** for the same period in 2025[57](index=57&type=chunk) - For the six months ended June 30, 2025, the gross margin was approximately **61.9%**, a slight increase from **61.4%** in the same period of 2024[57](index=57&type=chunk) [Other Income and Expenses](index=25&type=section&id=Other%20Income%20and%20Expenses) Other income and gains were primarily influenced by fair value changes and government subsidies; selling and distribution expenses and administrative expenses decreased, while R&D expenses and impairment losses on financial and contract assets increased - Other income and gains were approximately **RMB 20.6 million**, with the increase primarily due to fair value changes and government subsidies[58](index=58&type=chunk) [Other Income and Gains](index=25&type=section&id=Other%20Income%20and%20Gains) Other income and gains were approximately **RMB 20.6 million**, an increase from **RMB 18.9 million** in the same period of 2024, primarily due to fair value changes and government subsidies - For the six months ended June 30, 2025, other income and gains were approximately **RMB 20.6 million**, compared to approximately **RMB 18.9 million** in the same period of 2024, with the increase primarily due to fair value changes and government subsidies[58](index=58&type=chunk) [Selling and Distribution Expenses](index=25&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased by **10.8%** year-on-year to **RMB 33.8 million**, primarily due to improved sales personnel effectiveness and enhanced company refined management capabilities - Selling and distribution expenses decreased by approximately **10.8%** from approximately **RMB 37.9 million** for the six months ended June 30, 2024, to approximately **RMB 33.8 million** for the same period in 2025, primarily due to improved sales personnel effectiveness and enhanced company refined management capabilities[59](index=59&type=chunk) [Administrative Expenses](index=25&type=section&id=Administrative%20Expenses) Administrative expenses decreased by **36.9%** year-on-year to **RMB 22.6 million**, primarily because no new share incentive schemes were introduced during the reporting period, and share-based payment expenses recognized in the prior year period did not recur - Administrative expenses decreased by approximately **36.9%** from approximately **RMB 35.8 million** for the six months ended June 30, 2024, to approximately **RMB 22.6 million** for the same period in 2025, primarily because no new share incentive schemes were introduced during the reporting period, and share-based payment expenses recognized in the prior year period did not recur[60](index=60&type=chunk) [Research and Development Expenses](index=26&type=section&id=Research%20and%20Development%20Expenses) R&D expenses increased by **63.8%** year-on-year to **RMB 19.7 million**, primarily due to the Group's increased resource allocation to the AI sector - R&D expenses increased by approximately **63.8%** from approximately **RMB 12.0 million** for the six months ended June 30, 2024, to approximately **RMB 19.7 million** for the same period in 2025, primarily due to the Group's increased resource allocation to the AI sector[61](index=61&type=chunk) [Impairment Loss on Financial and Contract Assets](index=26&type=section&id=Impairment%20Loss%20on%20Financial%20and%20Contract%20Assets) Impairment loss on financial and contract assets increased from **RMB 0.5 million** to **RMB 7.4 million**, primarily arising from the impairment of trade receivables, contract assets, and other assets - For the six months ended June 30, 2024 and 2025, impairment losses on financial and contract assets were approximately **RMB 0.5 million** and **RMB 7.4 million**, respectively, primarily arising from the impairment of trade receivables, contract assets, and other assets[62](index=62&type=chunk) [Finance Costs](index=26&type=section&id=Finance%20Costs) Finance costs primarily represent interest on lease liabilities, amounting to approximately **RMB 92,000** during the reporting period - Finance costs primarily refer to interest on lease liabilities; for the six months ended 2025, finance costs of approximately **RMB 92,000** were recorded[63](index=63&type=chunk) [Profit Before Tax and for the Period](index=26&type=section&id=Profit%20Before%20Tax%20and%20for%20the%20Period) For the six months ended June 30, 2025, the Group achieved a profit before tax of **RMB 14.5 million** and a profit for the period of **RMB 13.2 million**, with net profit margin increasing from **0.2%** to **10.6%** - A profit before tax of approximately **RMB 14.5 million** was generated for the six months ended June 30, 2025, compared to a profit before tax of approximately **RMB (0.2) million** for the six months ended June 30, 2024[64](index=64&type=chunk) [Profit / (Loss) Before Tax](index=26&type=section&id=Profit%20%2F%20%28Loss%29%20Before%20Tax) For the six months ended June 30, 2025, the Group generated a profit before tax of approximately **RMB 14.5 million**, compared to a loss before tax of approximately **RMB 0.2 million** in the same period of 2024 - A profit before tax of approximately **RMB 14.5 million** was generated for the six months ended June 30, 2025, compared to a profit before tax of approximately **RMB (0.2) million** for the six months ended June 30, 2024[64](index=64&type=chunk) [Income Tax Credit / (Expense)](index=26&type=section&id=Income%20Tax%20Credit%20%2F%20%28Expense%29) For the six months ended June 30, 2025, the Group incurred an income tax expense of **RMB 1.3 million**, compared to an income tax credit of approximately **RMB 0.5 million** in the same period of 2024, primarily due to increased revenue - An income tax expense of **RMB 1.3 million** was incurred for the six months ended June 30, 2025, compared to an income tax credit of approximately **RMB 0.5 million** in the same period of 2024, primarily due to increased revenue[65](index=65&type=chunk) [Profit for the Period and Profit Attributable to Owners of the Parent](index=27&type=section&id=Profit%20for%20the%20Period%20and%20Profit%20Attributable%20to%20Owners%20of%20the%20Parent) For the six months ended June 30, 2025, the Group's profit for the period was approximately **RMB 13.2 million**, with net profit margin increasing from **0.2%** in the same period of 2024 to **10.6%** - A profit for the period of approximately **RMB 13.2 million** was generated for the six months ended 2025, compared to approximately **RMB 0.2 million** for the same period in 2024[66](index=66&type=chunk) - The net profit margin (calculated based on profit for the period) increased from approximately **0.2%** for the six months ended June 30, 2024, to approximately **10.6%** for the same period in 2025[66](index=66&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The Group primarily funds its capital needs through cash generated from operations and net proceeds from the global offering; as of June 30, 2025, cash and cash equivalents were approximately **RMB 315.6 million**, with no bank borrowings and a zero gearing ratio - The Group primarily funds its future capital needs through cash generated from operations and net proceeds from the global offering[67](index=67&type=chunk) [Cash and Cash Equivalents](index=27&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2025, cash and cash equivalents were approximately **RMB 315.6 million**, a decrease from approximately **RMB 366.9 million** as of December 31, 2024; the Group faces no significant foreign currency exchange rate fluctuation risk regarding cash generated from operating activities, but net proceeds from the global offering are denominated in HKD, exposing the Company to RMB and HKD exchange rate fluctuation risk - As of June 30, 2025, the Group had cash and cash equivalents of approximately **RMB 315.6 million**, compared to approximately **RMB 366.9 million** as of December 31, 2024[68](index=68&type=chunk) - The net proceeds from the global offering received by the Company are denominated in **HKD**, exposing the Company to the risk of exchange rate fluctuations between **RMB** and **HKD**[68](index=68&type=chunk) [Bank Facilities](index=27&type=section&id=Bank%20Facilities) For the six months ended June 30, 2025, the Group had no bank borrowings or other interest-bearing borrowings, and no outstanding bank and other borrowings or other debts apart from lease liabilities - For the six months ended June 30, 2025, the Group had no bank borrowings or other interest-bearing borrowings, and no outstanding bank and other borrowings or other debts apart from lease liabilities totaling approximately **RMB 8.3 million** under relevant lease terms[69](index=69&type=chunk) [Gearing Ratio](index=28&type=section&id=Gearing%20Ratio) As there was no debt as of June 30, 2025, the gearing ratio was zero - As there was no debt as of June 30, 2025, the gearing ratio (calculated as borrowings divided by total equity) was **zero**[70](index=70&type=chunk) [Pledge of Assets](index=28&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[71](index=71&type=chunk) [Capital Expenditure and Commitments](index=28&type=section&id=Capital%20Expenditure%20and%20Commitments) As of June 30, 2025, the Group had no significant capital expenditure or capital commitments - As of June 30, 2025, the Group had no significant capital expenditure[72](index=72&type=chunk) - As of June 30, 2025, the Group had no significant capital commitments[73](index=73&type=chunk) [Contingent Liabilities](index=28&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[74](index=74&type=chunk) [Employees, Staff Costs and Remuneration Policy](index=28&type=section&id=Employees%2C%20Staff%20Costs%20and%20Remuneration%20Policy) As of August 29, 2025, the Group had **451** full-time employees, with total staff costs of approximately **RMB 70.1 million**; the Group provides remuneration, bonuses, and benefits, along with employee training - As of **August 29, 2025**, the Group had **451** full-time employees, all located in China[75](index=75&type=chunk) - For the six months ended June 30, 2025, the Group incurred total staff costs of approximately **RMB 70.1 million**, compared to approximately **RMB 88.1 million** in the same period of 2024[75](index=75&type=chunk) - The Group provides employees with remuneration and bonuses, as well as employee benefits, including employee retirement benefit schemes, medical and work injury insurance schemes, and housing provident fund schemes[75](index=75&type=chunk) [Other Information](index=29&type=section&id=Other%20Information) [Corporate Governance](index=29&type=section&id=Corporate%20Governance) The Company is committed to maintaining and enhancing its corporate governance standards and has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules - The Company has adopted the relevant provisions of the **Corporate Governance Code** set out in **Appendix C1 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited** as the basis for its corporate governance practices[76](index=76&type=chunk) - The Board believes that for the six months ended June 30, 2025, the Company has complied with all applicable code provisions of the Corporate Governance Code then in effect[76](index=76&type=chunk) [Compliance with Corporate Governance Code](index=29&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has adopted and complied with the relevant provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules and will continue to review and monitor its corporate governance practices - The Company has adopted the relevant provisions of the **Corporate Governance Code** set out in **Appendix C1 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited** as the basis for its corporate governance practices[76](index=76&type=chunk) - The Board believes that for the six months ended June 30, 2025, the Company has complied with all applicable code provisions of the Corporate Governance Code then in effect[76](index=76&type=chunk) [Compliance with Model Code for Securities Transactions](index=29&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules; directors have confirmed compliance with the code during the reporting period, and no employee breaches were identified - The Company has adopted the **Model Code for Securities Transactions by Directors of Listed Issuers** set out in **Appendix C3 of the Listing Rules**, and all directors have confirmed their compliance with the Model Code for the six months ended June 30, 2025[77](index=77&type=chunk) [Transactions in Listed Securities](index=29&type=section&id=Transactions%20in%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, nor held any treasury shares - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[78](index=78&type=chunk) - As of June 30, 2025, neither the Company nor any of its subsidiaries held any treasury shares[79](index=79&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=29&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[78](index=78&type=chunk) [Use of Proceeds](index=30&type=section&id=Use%20of%20Proceeds) The Company's net proceeds from the global offering were approximately **HKD 526.8 million**; as of June 30, 2025, **HKD 19.7 million** had been utilized for technology development, with an unutilized amount of **HKD 425.6 million**; the expected full utilization period for business expansion and technology development has been updated to December 2026 - The net proceeds received by the Company from the global offering were approximately **HKD 526.8 million**[80](index=80&type=chunk) Use of Proceeds from Global Offering (HKD millions) | Purpose | Net Proceeds from Global Offering (HKD millions) | Amount Utilized (January 1, 2025 to June 30, 2025) (HKD millions) | Unutilized Amount (as of June 30, 2025) (HKD millions) | | :--- | :--- | :--- | :--- | | Business Expansion | 237.1 | — | 232.1 | | Further Technology Development | 184.4 | 19.7 | 119.8 | | Potential Investments and Acquisitions | 79.0 | — | 73.7 | | Working Capital and General Corporate Purposes | 26.3 | — | — | | Total | 526.8 | 19.7 | 425.6 | - The expected full utilization period for net proceeds for 'Business Expansion' and 'Further Technology Development' has been updated to **December 2026**[80](index=80&type=chunk) [Material Investments, Acquisitions and Disposals](index=30&type=section&id=Material%20Investments%2C%20Acquisitions%20and%20Disposals) Except for investments in subsidiaries, the Group held no material investments as of June 30, 2025, and there were no other material acquisitions or disposals during the reporting period - Except for investments in subsidiaries, the Group held no material investments as of **June 30, 2025**[81](index=81&type=chunk) - During the reporting period, the Group had no other material acquisitions or disposals of subsidiaries, associates, and joint ventures[81](index=81&type=chunk) [Changes in Directors' Information](index=31&type=section&id=Changes%20in%20Directors'%20Information) During the reporting period, Dr. Zhang Fabao ceased to be Chairman of the Nomination Committee and was appointed as a member of the Remuneration Committee; Dr. Li Xinmei ceased to be a member of the Remuneration Committee and was appointed as a member of the Nomination Committee; Mr. Liu Yaokun was appointed as Chairman of the Nomination Committee - Dr. Zhang Fabao ceased to be the Chairman of the Board's Nomination Committee and was appointed as a member of the Board's Remuneration Committee, effective **June 30, 2025**[87](index=87&type=chunk) - Dr. Li Xinmei ceased to be a member of the Remuneration Committee and was appointed as a member of the Nomination Committee, effective **June 30, 2025**[87](index=87&type=chunk) - Mr. Liu Yaokun was appointed as the Chairman of the Nomination Committee, effective **June 30, 2025**[87](index=87&type=chunk) [Significant Events After Reporting Period](index=31&type=section&id=Significant%20Events%20After%20Reporting%20Period) Except as disclosed in this announcement, no other significant events occurred from June 30, 2025, up to the date of this announcement - Except as disclosed in this announcement, no other significant events occurred from **June 30, 2025**, up to the date of this announcement[85](index=85&type=chunk) [Review by Audit Committee](index=31&type=section&id=Review%20by%20Audit%20Committee) The Board's Audit Committee has reviewed the Group's unaudited consolidated interim results for the six months ended June 30, 2025, deeming them compliant with applicable accounting standards, laws, and regulations - The Audit Committee has reviewed the Group's unaudited consolidated interim results for the six months ended **June 30, 2025**, with the Company's management[88](index=88&type=chunk) - The Audit Committee believes that the Group's unaudited consolidated interim results for the six months ended **June 30, 2025**, comply with applicable accounting standards, laws, and regulations[88](index=88&type=chunk) [Declaration and Payment of Dividends](index=32&type=section&id=Declaration%20and%20Payment%20of%20Dividends) The Board resolved to pay an interim dividend of **1.1 HK cents** per share, funded by the share premium account, expected to be paid on or about October 30, 2025, to shareholders registered on October 10, 2025 - The Board resolved to pay an interim dividend of **1.1 HK cents** per share for the six months ended June 30, 2025 (nil for the same period in 2024), which will be paid from the Company's share premium account[89](index=89&type=chunk) - The interim dividend is expected to be paid on or about **October 30, 2025**, to shareholders whose names appear on the Company's register of members on **October 10, 2025**[89](index=89&type=chunk) [Closure of Register of Members](index=32&type=section&id=Closure%20of%20Register%20of%20Members) To determine shareholders entitled to the interim dividend, the Company will suspend its register of members from October 6, 2025, to October 10, 2025 - The Company's register of members will be closed from **Monday, October 6, 2025**, to **Friday, October 10, 2025** (both dates inclusive), during which no transfer of shares will be registered[91](index=91&type=chunk) - The record date for determining shareholders entitled to the interim dividend is **Friday, October 10, 2025**[91](index=91&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=33&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This announcement has been published on the HKEX website and the Company's website, and the interim report containing all required information will be published in due course - This announcement is published on the **HKEX website (www.hkexnews.hk)** and the **Company's website (https://ir.medsci.cn/zh_cn)**[92](index=92&type=chunk) - The Company's interim report for the six months ended **June 30, 2025**, containing all information required by the Listing Rules, will be published in due course on the respective websites of the HKEX and the Company[92](index=92&type=chunk)

[Company Information and Announcements](index=1&type=section&id=Company%20Information%20and%20Announcements) Shuanghua Holdings Limited (Stock Code: 1241) announced its unaudited condensed consolidated results for the six months ended June 30, 2025, primarily engaged in supply chain management and high-end agricultural product food supply [Company Overview and Announcement Statement](index=1&type=section&id=Company%20Overview%20and%20Announcement%20Statement) The company, Shuanghua Holdings Limited, reported its unaudited interim results for the six months ended June 30, 2025, focusing on supply chain management and food supply businesses - Company Name: **Shuanghua Holdings Limited** (Stock Code: **1241**)[2](index=2&type=chunk) - Reporting Period: Unaudited condensed consolidated results for the six months ended **June 30, 2025**[2](index=2&type=chunk) - Main Business: Supply chain management based on self-owned cold storage and properties, and food supply for high-end agricultural and sideline products, both domestically and internationally[7](index=7&type=chunk) [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's interim financial performance and position, including the statement of profit or loss and the statement of financial position [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) For the six months ended June 30, 2025, the company's revenue significantly decreased to **RMB 12,789 thousand**, with gross profit falling to **RMB 1,119 thousand**, resulting in a narrower loss of **RMB 2,115 thousand** for the period Key Profit and Loss Data (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 12,789 | 60,563 | (47,774) | -78.9% | | Cost of sales | (11,670) | (56,124) | 44,454 | -79.2% | | Gross profit | 1,119 | 4,439 | (3,320) | -74.8% | | Other income, gains and losses | 3,005 | 2,090 | 915 | 43.8% | | Reversal of impairment losses on trade receivables, etc. | 2,676 | 112 | 2,564 | 2289.3% | | Selling and distribution costs | (938) | (916) | (22) | 2.4% | | Administrative expenses | (8,257) | (8,896) | 639 | -7.2% | | Interest expenses | (3) | (12) | 9 | -75.0% | | Loss before tax | (2,398) | (3,183) | 785 | -24.7% | | Recoverable tax | 283 | – | 283 | N/A | | Loss and total comprehensive income for the period | (2,115) | (3,183) | 1,068 | -33.6% | | Loss per share attributable to ordinary equity holders of the parent (cents) | (0.3) | (0.5) | 0.2 | -40.0% | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets slightly increased to **RMB 279,339 thousand**, driven by higher current assets and stable cash, while current liabilities significantly rose due to trade payables Key Financial Position Data (As of June 30) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Total non-current assets | 169,556 | 172,569 | (3,013) | -1.7% | | Total current assets | 109,783 | 105,750 | 4,033 | 3.8% | | **Total assets** | **279,339** | **278,319** | **1,020** | **0.4%** | | **Liabilities** | | | | | | Total current liabilities | 19,487 | 16,069 | 3,418 | 21.3% | | Total non-current liabilities | 1,269 | 1,552 | (283) | -18.2% | | **Net assets** | **258,583** | **260,698** | **(2,115)** | **-0.8%** | | **Equity** | | | | | | Total equity | 258,583 | 260,698 | (2,115) | -0.8% | - Trade payables increased from **RMB 3,980 thousand** as of December 31, 2024, to **RMB 8,587 thousand** as of June 30, 2025, representing a **115.8%** increase[4](index=4&type=chunk)[30](index=30&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the figures presented in the interim condensed consolidated financial statements [1. Company and Group Information](index=5&type=section&id=1.%20Company%20and%20Group%20Information) Shuanghua Holdings Limited is registered in the Cayman Islands, with principal places of business in Shanghai and Anhui, China, focusing on supply chain management and food supply - Registered Place: Cayman Islands[7](index=7&type=chunk) - Principal Places of Business: Fengxian District, Shanghai, China, and Tunxi District, Huangshan City, Anhui Province, China[7](index=7&type=chunk) - Main Business: Supply chain management business based on self-owned cold storage and properties, and food supply business for high-end agricultural and sideline products, both domestically and internationally[7](index=7&type=chunk) - Ultimate Holding Company: You Shen International Group Limited (registered in the British Virgin Islands)[7](index=7&type=chunk) [2. Basis of Preparation](index=5&type=section&id=2.%20Basis%20of%20Preparation) These interim condensed consolidated financial statements are prepared in accordance with HKAS 34 and Listing Rules, primarily using the historical cost convention and presented in RMB - Basis of Preparation: Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the disclosure requirements of the Listing Rules[8](index=8&type=chunk) - Measurement Basis: Primarily adopted the historical cost convention[8](index=8&type=chunk) - Presentation Currency: Renminbi (RMB)[8](index=8&type=chunk) [3. Application of Revised Hong Kong Financial Reporting Standards](index=6&type=section&id=3.%20Application%20of%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) The accounting policies for the six months ended June 30, 2025, are consistent with the 2024 annual financial statements, with no significant impact from new or revised HKFRSs effective January 1, 2025 - Accounting Policies: Largely consistent with the 2024 annual financial statements[9](index=9&type=chunk) - Application of New Standards: Revised Hong Kong Financial Reporting Standards effective January 1, 2025 (e.g., amendments to HKAS 21), had no significant impact on the Group's accounting policies[9](index=9&type=chunk) [4. Operating Segment Information](index=6&type=section&id=4.%20Operating%20Segment%20Information) The Group's business is segmented into supply chain management and food supply, with all revenue and non-current assets derived from China - Operating Segments: Supply chain management business (based on self-owned cold storage and properties) and food supply business (agricultural and sideline products)[10](index=10&type=chunk) - Geographical Information: All revenue and non-financial instrument non-current assets are derived from China[14](index=14&type=chunk)[15](index=15&type=chunk) [Segment Revenue and Results](index=7&type=section&id=Segment%20Revenue%20and%20Results) For the six months ended June 30, 2025, food supply business revenue significantly decreased, leading to a substantial reduction in total revenue and segment results, while supply chain management's revenue proportion increased Segment Revenue and Results (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | | | | | | Food supply business | 6,326 | 47,032 | (40,706) | -86.5% | | Supply chain management business | 6,463 | 13,531 | (7,068) | -52.2% | | **Total Revenue** | **12,789** | **60,563** | **(47,774)** | **-78.9%** | | **Segment Results** | | | | | | Food supply business | 7 | 620 | (613) | -98.9% | | Supply chain management business | 1,112 | 3,819 | (2,707) | -70.9% | | **Total Segment Results** | **1,119** | **4,439** | **(3,320)** | **-74.8%** | [Geographical Information](index=9&type=section&id=Geographical%20Information) The Group's operating entities, all revenue, and non-financial instrument non-current assets are exclusively located in mainland China - Operating Entities Location: China[14](index=14&type=chunk) - Revenue Source: Entirely from China[14](index=14&type=chunk) - Non-current Assets Location: All located in mainland China, excluding financial instruments[15](index=15&type=chunk) [Information on Major Customers](index=9&type=section&id=Information%20on%20Major%20Customers) For the six months ended June 30, 2025, the Group's revenue from major customers shifted, with three new key contributors replacing the previous two - Major Customer Count: **Three** in 2025, compared to **two** in 2024[16](index=16&type=chunk) Major Customer Revenue Contribution (For the six months ended June 30) | Customer | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer A | 6,265 | – | | Customer B | 3,179 | – | | Customer C | 1,318 | – | | Customer D | – | 19,851 | | Customer E | – | 19,581 | | **Total** | **10,762** | **39,432** | - In 2025, major customers A, B, and C contributed **84.1%** of total revenue (10,762/12,789)[18](index=18&type=chunk)[3](index=3&type=chunk) - In 2024, major customers D and E contributed **65.1%** of total revenue (39,432/60,563)[18](index=18&type=chunk)[3](index=3&type=chunk) [5. Revenue, Other Income, Gains and Losses](index=9&type=section&id=5.%20Revenue%2C%20Other%20Income%2C%20Gains%20and%20Losses) The Group's total revenue significantly decreased due to reduced food supply and supply chain management (leasing) income, while other income, gains and losses increased, primarily from fair value gains on financial assets Revenue Analysis (For the six months ended June 30) | Revenue Source | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Supply chain management: Services | 1,835 | 3,124 | (1,289) | -41.3% | | Food supply | 6,326 | 47,032 | (40,706) | -86.5% | | Supply chain management: Leasing | 4,628 | 10,407 | (5,779) | -55.5% | | **Total Revenue** | **12,789** | **60,563** | **(47,774)** | **-78.9%** | Total Other Income, Gains and Losses (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Bank interest income | 1,457 | 1,392 | 65 | 4.7% | | Fair value changes of financial assets at fair value through profit or loss | 1,320 | 1,132 | 188 | 16.6% | | Exchange (losses) / gains, net | (172) | 275 | (447) | -162.5% | | Others | 400 | (709) | 1,109 | -156.4% | | **Total** | **3,005** | **2,090** | **915** | **43.8%** | [6. Loss Before Tax](index=12&type=section&id=6.%20Loss%20Before%20Tax) For the six months ended June 30, 2025, the Group's loss before tax narrowed to **RMB 2,398 thousand**, primarily due to a significant decrease in cost of inventories sold and a substantial increase in reversal of impairment losses on trade receivables Components of Loss Before Tax (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Cost of inventories sold | 6,319 | 46,412 | (40,093) | -86.4% | | Depreciation of property, plant and equipment | 2,831 | 2,873 | (42) | -1.5% | | Depreciation of investment properties | 2,904 | 2,875 | 29 | 1.0% | | Depreciation of right-of-use assets | 277 | 644 | (367) | -57.0% | | Reversal of impairment losses on trade receivables, etc. | (2,676) | (112) | (2,564) | 2289.3% | | Total employee benefit expenses | 2,460 | 3,341 | (881) | -26.4% | [7. Income Tax](index=13&type=section&id=7.%20Income%20Tax) For the six months ended June 30, 2025, the Group recorded **RMB 283 thousand** in recoverable tax, primarily from deferred tax, with no such item in the prior year - Total recoverable tax for 2025 was **RMB 283 thousand**, mainly from deferred tax[24](index=24&type=chunk) - There was no recoverable tax in the corresponding period of 2024[24](index=24&type=chunk) [8. Dividends](index=13&type=section&id=8.%20Dividends) The Board does not recommend a final dividend for the year ended December 31, 2024, or an interim dividend for the six months ended June 30, 2025 - No final dividend recommended for 2024[25](index=25&type=chunk) - No interim dividend recommended for 2025[25](index=25&type=chunk) [9. Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=14&type=section&id=9.%20Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) For the six months ended June 30, 2025, basic and diluted loss per share attributable to ordinary equity holders of the parent was **0.3 cents**, narrower than **0.5 cents** in the prior year, with the number of ordinary shares outstanding remaining unchanged - Basic and diluted loss per share: **(0.3) cents** in 2025, **(0.5) cents** in 2024[3](index=3&type=chunk) - Number of ordinary shares outstanding: **650,000,000** shares, with no potential dilutive ordinary shares during the reporting period[26](index=26&type=chunk) [10. Financial Assets at Fair Value Through Profit or Loss](index=14&type=section&id=10.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2025, listed equity investments in Shanghai Bank, measured at fair value, increased to **RMB 9,588 thousand** from **RMB 8,268 thousand** as of December 31, 2024 - Listed Equity Investment: Equity investment in Shanghai Bank[27](index=27&type=chunk) - Fair Value: **RMB 9,588 thousand** as of June 30, 2025, compared to **RMB 8,268 thousand** as of December 31, 2024[27](index=27&type=chunk) [11. Trade and Bills Receivables](index=15&type=section&id=11.%20Trade%20and%20Bills%20Receivables) As of June 30, 2025, net trade and bills receivables decreased to **RMB 7,234 thousand**, with a reduction in impairment provisions, but a significant increase in the proportion of receivables over 12 months old Trade and Bills Receivables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Trade receivables | 25,052 | 32,447 | (7,395) | -22.8% | | Impairment provision | (17,820) | (20,496) | 2,676 | -13.1% | | **Net Amount** | **7,234** | **11,954** | **(4,720)** | **-39.5%** | - Credit Period: Generally **30 to 90 days**, extendable up to **1 year** for major customers[28](index=28&type=chunk) Aging Analysis of Trade Receivables (Net of impairment provision) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 3,544 | 10,181 | | Over 12 months | 3,688 | 1,694 | - The proportion of trade receivables over 12 months old increased from **14.2%** (1,694/11,951) as of December 31, 2024, to **51.0%** (3,688/7,232) as of June 30, 2025[29](index=29&type=chunk) [12. Trade Payables](index=17&type=section&id=12.%20Trade%20Payables) As of June 30, 2025, trade payables significantly increased to **RMB 8,587 thousand**, with notable increases in payables aged within 1 month and over 12 months - Trade Payables: **RMB 8,587 thousand** as of June 30, 2025, compared to **RMB 3,980 thousand** as of December 31, 2024, representing a **115.8%** increase[30](index=30&type=chunk) - Average Credit Period: **Three months**[30](index=30&type=chunk) Aging Analysis of Trade Payables | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 5,145 | 403 | | Over 12 months | 3,442 | 3,430 | [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's operational and financial performance, strategic outlook, and key financial resources [Business Review](index=18&type=section&id=Business%20Review) In the first half of 2025, the Group's sales revenue significantly declined due to global geopolitical conflicts, US tariff policies, and China's economic downturn, leading to active adjustments in product portfolios and diversification efforts - Macroeconomic Environment: Global geopolitical conflicts, US tariffs, China's economic pressure, consumption downgrade, industrial deflation[31](index=31&type=chunk) - Sales Revenue: Approximately **RMB 12.8 million** during the reporting period, a decrease of approximately **RMB 47.8 million** compared to the prior year[32](index=32&type=chunk)[38](index=38&type=chunk) - Food Supply Business Revenue: Approximately **RMB 6.3 million**, with low-margin orders cut due to consumption downgrade and rising import costs[32](index=32&type=chunk) - Loss for the Period: Loss attributable to owners of the parent was approximately **RMB 2.1 million**, narrower than **RMB 3.2 million** in the prior year, mainly due to cost and risk control[33](index=33&type=chunk)[48](index=48&type=chunk) [Outlook and Strategies](index=19&type=section&id=Outlook%20and%20Strategies) Facing complex global and domestic economic conditions, the Group will focus on diversifying its products and services and expanding into supply chain businesses for other goods and services to achieve stable development and business expansion - Macro Outlook: Complex global geopolitical landscape, uncertain US trade policies, and short-term domestic demand challenges[34](index=34&type=chunk) - Core Strategies: (i) Promoting product and service diversification; (ii) Expanding supply chain business for other goods and services[34](index=34&type=chunk) [Promoting Product and Service Diversification for Stable Business Development](index=19&type=section&id=Promoting%20Product%20and%20Service%20Diversification%20for%20Stable%20Business%20Development) The Group plans to enhance its one-stop supply chain solutions, optimize asset structure, expand food supply product lines, and broaden downstream channels to ensure stable business growth - Supply Chain Management: Consolidate existing and new customer collaborations, enhance warehousing capacity and turnover rate, and optimize asset structure[35](index=35&type=chunk) - Food Supply: Expand protein and aquatic product lines to enrich the product matrix[35](index=35&type=chunk) - Channel Expansion: Develop large and medium-sized chain supermarkets, e-commerce, and live-streaming platforms[35](index=35&type=chunk) - Brand Building: Steadily advance products and services under the "Longhua Zhen" and "Shuanghua" brands[36](index=36&type=chunk) [Expanding Supply Chain Business for Other Goods and Services to Diversify and Expand the Group's Operations](index=20&type=section&id=Expanding%20Supply%20Chain%20Business%20for%20Other%20Goods%20and%20Services%20to%20Diversify%20and%20Expand%20the%20Group%27s%20Operations) The Group intends to leverage existing resources to explore supply chain opportunities in innovative technology sectors, such as green energy, and introduce advanced power battery technology to drive sustainable growth - Expansion Direction: Supply chain business for innovative technology products and services, including technological innovation and green energy industries[37](index=37&type=chunk) - Specific Plan: Based on lithium battery recycling exploration, the Group plans to introduce global advanced power battery technology[37](index=37&type=chunk) - Goal: Develop new productive forces to drive sustained improvement in revenue scale and profitability, achieving stable and high-quality growth[37](index=37&type=chunk) [Financial Review](index=21&type=section&id=Financial%20Review) The Group's revenue and gross profit significantly declined due to consumption downgrade and rising import costs, while other income increased from financial asset gains, administrative expenses decreased, and the loss for the period narrowed - Revenue: Decreased by **78.9%** year-on-year to **RMB 12.8 million**[38](index=38&type=chunk) - Gross Profit: Decreased by **74.8%** year-on-year to **RMB 1.1 million**[40](index=40&type=chunk) - Other Income, Gains and Losses: Increased by **43.8%** year-on-year to **RMB 3.0 million**, primarily due to financial asset investment gains[42](index=42&type=chunk) - Reversal of Impairment Losses on Trade Receivables: Significantly increased to **RMB 2.7 million** year-on-year[43](index=43&type=chunk) - Administrative Expenses: Decreased by **7.2%** year-on-year to **RMB 8.3 million**, mainly due to reduced consulting fees[45](index=45&type=chunk) - Loss for the Period: Narrowed by **33.6%** year-on-year to **RMB 2.1 million**[48](index=48&type=chunk) [Revenue](index=21&type=section&id=Revenue) For the six months ended June 30, 2025, total revenue was **RMB 12.8 million**, a significant decrease from **RMB 60.6 million** in the prior year, with food supply business revenue proportion falling and supply chain management's rising Revenue by Business Segment (For the six months ended June 30) | Business Segment | 2025 (RMB thousand) | 2025 Proportion | 2024 (RMB thousand) | 2024 Proportion | | :--- | :--- | :--- | :--- | :--- | | Supply chain management business | 6,463 | 50.5% | 13,531 | 22.3% | | Food supply business | 6,326 | 49.5% | 47,032 | 77.7% | | **Total** | **12,789** | **100.0%** | **60,563** | **100.0%** | - Total revenue decreased by **78.9%** year-on-year[38](index=38&type=chunk) - Food supply business revenue decreased by **86.5%** year-on-year, while supply chain management business revenue decreased by **52.2%** year-on-year[39](index=39&type=chunk) [Gross Profit](index=21&type=section&id=Gross%20Profit) For the six months ended June 30, 2025, gross profit was **RMB 1.1 million**, a decrease of approximately **RMB 3.3 million** from the prior year, primarily due to lower sales prices and volumes, rising import costs, and near-zero gross profit from food supply - Total Gross Profit: **RMB 1.1 million**, a **74.8%** year-on-year decrease[40](index=40&type=chunk) - Main Reasons: Lower product sales prices and volumes due to consumption downgrade in China, and rising import product costs[40](index=40&type=chunk) Gross Profit by Business Segment (For the six months ended June 30) | Business Segment | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Supply chain services business | 1,112 | 3,819 | | Food supply business | 7 | 620 | | **Total** | **1,119** | **4,439** | - Food supply business gross profit decreased by **98.9%** year-on-year[41](index=41&type=chunk) [Other Income, Gains and Losses](index=22&type=section&id=Other%20Income%2C%20Gains%20and%20Losses) For the six months ended June 30, 2025, total other income, gains and losses amounted to **RMB 3.0 million**, an increase of approximately **RMB 1.0 million** from the prior year, mainly driven by increased investment gains from financial assets - Total Amount: **RMB 3.0 million**, an increase of approximately **RMB 1.0 million** year-on-year[42](index=42&type=chunk) - Main Driver: Increased investment gains from financial assets[42](index=42&type=chunk) - Fair value changes of financial assets at fair value through profit or loss increased from **RMB 1,132 thousand** to **RMB 1,320 thousand**[21](index=21&type=chunk) [Reversal of Impairment Losses on Trade Receivables under Expected Credit Loss Model](index=22&type=section&id=Reversal%20of%20Impairment%20Losses%20on%20Trade%20Receivables%20under%20Expected%20Credit%20Loss%20Model) For the six months ended June 30, 2025, the Group recorded a reversal of impairment losses on trade receivables of approximately **RMB 2.7 million**, a significant increase from **RMB 0.1 million** in the prior year - Impairment Loss Reversal: **RMB 2.7 million** (2025), **RMB 0.1 million** (2024)[43](index=43&type=chunk) - Increased by **2289.3%** year-on-year[43](index=43&type=chunk) [Selling and Distribution Costs](index=22&type=section&id=Selling%20and%20Distribution%20Costs) For the six months ended June 30, 2025, selling and distribution costs were approximately **RMB 0.9 million**, consistent with the prior year - Selling and Distribution Costs: Approximately **RMB 0.9 million**, consistent with the prior year[44](index=44&type=chunk) - Main Components: Staff costs, sales and transportation expenses, operating lease rentals, business entertainment, and travel expenses[44](index=44&type=chunk) [Administrative Expenses](index=22&type=section&id=Administrative%20Expenses) For the six months ended June 30, 2025, administrative expenses were approximately **RMB 8.3 million**, a decrease of approximately **RMB 0.6 million** from the prior year, primarily due to reduced consulting fees - Administrative Expenses: Approximately **RMB 8.3 million**, a year-on-year decrease of approximately **RMB 0.6 million**[45](index=45&type=chunk) - Main Reason: Reduced consulting fees[45](index=45&type=chunk) - Main Components: Staff costs, local taxes, depreciation, research and development expenses, and sundry expenses[45](index=45&type=chunk) [Interest Expenses](index=22&type=section&id=Interest%20Expenses) For the six months ended June 30, 2025, interest expenses were approximately **RMB 2,997**, a significant decrease from **RMB 12,469** in the prior year, primarily related to interest on lease liabilities - Interest Expenses: **RMB 2,997** (2025), **RMB 12,469** (2024)[46](index=46&type=chunk) - Decreased by **75.9%** year-on-year[46](index=46&type=chunk) - Primarily interest expenses on lease liabilities[46](index=46&type=chunk) [Recoverable Tax](index=22&type=section&id=Recoverable%20Tax) For the six months ended June 30, 2025, the Group recorded recoverable tax of approximately **RMB 283 thousand**, with no such item in the prior year - Recoverable Tax: **RMB 283 thousand** (2025), none in 2024[47](index=47&type=chunk) [Loss for the Period](index=22&type=section&id=Loss%20for%20the%20Period) For the six months ended June 30, 2025, the loss attributable to owners of the Company was approximately **RMB 2.1 million**, narrower than **RMB 3.2 million** in the prior year - Loss Attributable to Owners of the Parent: **RMB 2.1 million** (2025), **RMB 3.2 million** (2024)[48](index=48&type=chunk) - Loss narrowed by **33.6%** year-on-year[48](index=48&type=chunk) [Liquidity and Financial Resources](index=23&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's net current assets slightly increased, and total cash and cash equivalents and financial assets at fair value grew steadily, with no bank borrowings, indicating a sound asset-liability structure and improved inventory management - Net Current Assets: Increased from approximately **RMB 89.7 million** as of December 31, 2024, to approximately **RMB 90.3 million** as of June 30, 2025[49](index=49&type=chunk) - Cash and Cash Equivalents and Financial Assets at Fair Value: Approximately **RMB 91.1 million** (June 30, 2025), approximately **RMB 88.2 million** (December 31, 2024)[50](index=50&type=chunk) - No Bank Borrowings[50](index=50&type=chunk) - No Material Contingent Liabilities[50](index=50&type=chunk) [Net Current Assets](index=23&type=section&id=Net%20Current%20Assets) The Group's net current assets increased from approximately **RMB 89.7 million** as of December 31, 2024, to approximately **RMB 90.3 million** as of June 30, 2025 - Net Current Assets: **RMB 90.3 million** as of June 30, 2025, compared to **RMB 89.7 million** as of December 31, 2024[49](index=49&type=chunk) - A slight increase of **0.7%**[49](index=49&type=chunk) [Financial Position and Bank Borrowings](index=23&type=section&id=Financial%20Position%20and%20Bank%20Borrowings) As of June 30, 2025, the Group's total cash and cash equivalents and financial assets at fair value were approximately **RMB 91.1 million**, an increase from the prior year, with no bank borrowings in either reporting period - Total Cash and Cash Equivalents and Financial Assets at Fair Value: **RMB 91.1 million** as of June 30, 2025, compared to **RMB 88.2 million** as of December 31, 2024[50](index=50&type=chunk) - No Bank Borrowings[50](index=50&type=chunk) - No outstanding mortgages, charges, debentures, debt securities, other loan capital, bank overdrafts or loans, other similar debts or finance lease commitments, acceptance liabilities or acceptance credits, hire purchase commitments, guarantees, or other material contingent liabilities[50](index=50&type=chunk) [Working Capital](index=23&type=section&id=Working%20Capital) For the six months ended June 30, 2025, average inventory turnover days significantly decreased to **0**, while average trade and bills receivables turnover days increased to **135**, and average trade and bills payables turnover days increased to **97** - Average Inventory Turnover Days: **0 days** in 2025, **5 days** in 2024, a significant decrease primarily due to enhanced inventory turnover management[51](index=51&type=chunk) - Average Trade and Bills Receivables Turnover Days: **135 days** in 2025, **81 days** in 2024, an increase mainly due to extended credit terms for reputable customers[51](index=51&type=chunk) - Average Trade and Bills Payables Turnover Days: **97 days** in 2025, **51 days** in 2024, an increase primarily due to more favorable terms negotiated with suppliers[52](index=52&type=chunk) [Capital Expenditure, Capital Commitments and Human Resources](index=24&type=section&id=Capital%20Expenditure%2C%20Capital%20Commitments%20and%20Human%20Resources) For the six months ended June 30, 2025, capital expenditure increased, primarily for cold storage construction, while capital commitments significantly decreased; the Group employs 42 staff, with remuneration based on market conditions and compliance with social security regulations - Capital Expenditure: Approximately **RMB 1.7 million** (2025), primarily for cold storage area construction, an increase from **RMB 1.3 million** in 2024[53](index=53&type=chunk) - Capital Commitments: Approximately **RMB 1.0 million** (2025), primarily for cold storage area construction, a significant decrease from **RMB 7.3 million** in 2024[53](index=53&type=chunk) - Employee Count: **42** employees[53](index=53&type=chunk) - Remuneration: Approximately **RMB 2.5 million** (excluding directors' and chief executive's remuneration)[53](index=53&type=chunk) - Benefit Expenses: Approximately **RMB 0.4 million**[54](index=54&type=chunk) - Compliance with social security and housing provident fund contribution regulations[54](index=54&type=chunk) [Material Investments, Material Acquisitions and Disposals](index=25&type=section&id=Material%20Investments%2C%20Material%20Acquisitions%20and%20Disposals) For the six months ended June 30, 2025, the Group had no material investments, acquisitions, or disposals of subsidiaries, associates, and joint ventures - No material investments, acquisitions, or disposals[56](index=56&type=chunk) [Foreign Exchange Risk](index=25&type=section&id=Foreign%20Exchange%20Risk) The Group's operations in China, with RMB as its functional and presentation currency, are primarily exposed to transactional currency risk from HKD and USD against RMB, with no current hedging intention but ongoing monitoring - Functional and Presentation Currency: Renminbi (RMB)[57](index=57&type=chunk) - Primary Foreign Exchange Risk: Fluctuations in HKD against RMB and USD against RMB exchange rates[57](index=57&type=chunk) - No current intention to hedge, but management will continue to monitor[57](index=57&type=chunk) [Contingent Liabilities](index=25&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities - No material contingent liabilities[58](index=58&type=chunk) [Pledged Assets](index=25&type=section&id=Pledged%20Assets) As of June 30, 2025, the Group had no pledged assets - No pledged assets[59](index=59&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2025 - No interim dividend recommended[60](index=60&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Events%20After%20the%20Reporting%20Period) No material events requiring disclosure occurred after the reporting period - No material post-reporting events[61](index=61&type=chunk) [Other Information and Corporate Governance](index=26&type=section&id=Other%20Information%20and%20Corporate%20Governance) This section details the company's compliance with corporate governance codes, policies on board diversity, and the functions of its key committees [Purchase, Sale or Redemption of the Company's Listed Securities or Sale of Treasury Shares](index=26&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities%20or%20Sale%20of%20Treasury%20Shares) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities or sold any treasury shares - No purchase, sale, or redemption of listed securities[62](index=62&type=chunk) - No sale of treasury shares[62](index=62&type=chunk) [Compliance with Corporate Governance Code](index=26&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has adopted the Corporate Governance Code, with the only deviation being the combined roles of Chairman and CEO held by Mr. Zheng Ping, which the Board believes enhances decision-making efficiency without impairing power balance - Corporate Governance Code adopted[63](index=63&type=chunk) - Deviation from Code Provision C.2.1: The roles of Chairman and Chief Executive Officer are combined and held by Mr. Zheng Ping[64](index=64&type=chunk) - The Board believes this structure does not impair the balance of power and enhances decision-making efficiency[64](index=64&type=chunk) [Compliance with Model Code](index=26&type=section&id=Compliance%20with%20Model%20Code) The Company has adopted the Model Code for directors' securities transactions, and all directors confirmed compliance during the reporting period - Model Code adopted as the code of conduct for directors' securities transactions[65](index=65&type=chunk) - All directors confirmed compliance with the Model Code[65](index=65&type=chunk) [Competition and Conflicts of Interest](index=27&type=section&id=Competition%20and%20Conflicts%20of%20Interest) As of the announcement date, no director or their associates directly or indirectly held any business interests competing or potentially competing with the Group's business, nor were there any other conflicts of interest - No directors or their associates have competing or conflicting business interests[66](index=66&type=chunk) [Nomination Committee](index=27&type=section&id=Nomination%20Committee) The Company has established a Nomination Committee, chaired by Mr. Chen Lifan, responsible for recommending directors and management personnel appointments to the Board - Nomination Committee established[67](index=67&type=chunk) - Responsibilities: To make recommendations to the Board on the appointment of directors and management personnel[67](index=67&type=chunk) - Chairman: Mr. Chen Lifan[67](index=67&type=chunk) [Board Diversity Policy](index=27&type=section&id=Board%20Diversity%20Policy) The Board has adopted and revised a diversity policy to enhance company performance and leadership structure by considering various aspects such as gender, age, and professional experience, with appointment decisions based on overall candidate qualities - Board Diversity Policy adopted and revised[68](index=68&type=chunk) - Objectives: To enhance company performance, optimize leadership structure, improve talent quality, and promote long-term development[68](index=68&type=chunk) - Diversity Aspects: Gender, age, ethnicity, cultural and educational background, professional skills, occupational experience, management level, and length of service[68](index=68&type=chunk) [Remuneration Committee](index=27&type=section&id=Remuneration%20Committee) The Company has established a Remuneration Committee, chaired by Ms. Guo Ying, responsible for recommending remuneration policies and structures for directors and senior management, and determining specific remuneration packages - Remuneration Committee established[69](index=69&type=chunk) - Responsibilities: To make recommendations to the Board on the remuneration policy and structure for directors and senior management, and to determine specific remuneration packages[69](index=69&type=chunk) - Chairman: Ms. Guo Ying[69](index=69&type=chunk) [Audit Committee](index=28&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors and chaired by Mr. He Binhui, reviews financial reporting, internal control, and risk management systems, and has deemed them adequate and effective after reviewing the interim results - Composed of three independent non-executive directors, chaired by Mr. He Binhui[70](index=70&type=chunk) - Responsibilities: To review the financial reporting process, internal control, and risk management systems[70](index=70&type=chunk) - Reviewed the unaudited consolidated results for the period[71](index=71&type=chunk) - Believes the Group's internal control and risk management systems are adequate and effective[70](index=70&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=28&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement has been published on the HKEX website and the Company's official website, with the interim report to be dispatched to shareholders and uploaded to relevant websites in due course - Announcement published on the HKEX website (www.hkex.com.hk) and the Company's official website (www.shshuanghua.com)[72](index=72&type=chunk) - Interim report will be dispatched to shareholders and uploaded to websites in due course[72](index=72&type=chunk)

[Corporate Information](index=3&type=section&id=Corporate%20Information) Provides an overview of the company's governance structure, including its board composition and registered offices [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) Details the composition of the Board of Directors and its committees, ensuring robust corporate governance - Mr. Hong Kun was appointed as an executive director on May 19, 2025[6](index=6&type=chunk) - The Board of Directors has an Audit Committee, Remuneration Committee, and Nomination Committee to strengthen corporate governance[5](index=5&type=chunk)[6](index=6&type=chunk) [Registered and Business Offices](index=4&type=section&id=Registered%20and%20Business%20Offices) Specifies the company's registered office in the Cayman Islands and its main business locations in China and Hong Kong - The company's registered office is in the Cayman Islands, with its principal office in Shantou, Guangdong, China, and its Hong Kong office in Causeway Bay[8](index=8&type=chunk)[10](index=10&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) Analyzes the company's operational and financial performance, strategic initiatives, and future outlook [Business and Financial Review](index=5&type=section&id=Business%20and%20Financial%20Review) Reviews the group's core business activities and financial performance for the period, highlighting revenue growth and gross profit decline - The Group primarily designs, develops, manufactures, and sells high-quality smart car models, smart interactive toys, and traditional toys[11](index=11&type=chunk)[15](index=15&type=chunk) - The Group accelerated expansion into emerging markets to offset shrinking domestic and international orders, driving revenue growth[12](index=12&type=chunk)[16](index=16&type=chunk) - Due to adjustments in business development policies, no revenue was recorded for smart interactive toys and traditional toys in the first half of 2025, and production and sales of traditional toys have been suspended[19](index=19&type=chunk)[20](index=20&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The Group collaborates with well-known brands to leverage their marketing advantages and enhance product market circulation[22](index=22&type=chunk)[25](index=25&type=chunk) Key Financial Indicators (Six Months Ended June 30) | Indicator | 2025 (RMB Million) | 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | 68.9 | 50.5 | +36.5% | | Smart Car Model Sales Revenue | 68.9 | 48.5 | +42.1% | | Smart Interactive Toy Revenue | 0 | 0 | - | | Traditional Toy Revenue | 0 | 0 | - | | **Gross Profit** | 3.9 | 8.6 | -54.7% | | **Gross Profit Margin** | 5.7% | 17.0% | -11.3 percentage points | | **Loss for the Period** | (15.0) | (17.6) | -14.8% (Loss narrowed) | | **Selling Expenses** | 0 | 0.007 | -100% | | **Administrative Expenses** | 6.9 | 12.1 | -43.2% | | **Net Impairment Loss on Trade Receivables** | 6.7 | 7.4 | -9.5% | | **Taxation** | 0 | 0 | - | | **Cash and Cash Equivalents** | 46.4 | 10.7 | +333.6% | | **Capital Gearing Ratio** | 46.8% | 44.0% (Dec 31, 2024) | +2.8 percentage points | | **Current Ratio** | 1.4 | 1.4 (Dec 31, 2024) | 0 | | **Quick Ratio** | 1.4 | 1.4 (Dec 31, 2024) | 0 | [Business Review and Outlook](index=10&type=section&id=Business%20Review%20and%20Outlook) Discusses market challenges and the group's strategies for market expansion, cost control, and diversification into new energy sectors - The Group faces weakening consumer demand in European and American toy markets, leading to a decline in traditional toy orders[51](index=51&type=chunk)[54](index=54&type=chunk) - The Group has accelerated expansion into emerging markets to secure new orders, outsourced most orders to reduce fixed costs, and implemented a strategy of cost control, low gross profit, and stable sales[51](index=51&type=chunk)[54](index=54&type=chunk) - The Group will actively expand into high-end, clean energy, and other green-related product and technology industries to enhance competitive advantage and development potential[51](index=51&type=chunk)[54](index=54&type=chunk) [Investments and Capital Assets](index=10&type=section&id=Investments%20and%20Capital%20Assets) Outlines the group's investment activities, including its strategic entry into the new energy sector through acquisitions - For the six months ended June 30, 2025, the Group had no significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures[52](index=52&type=chunk)[55](index=55&type=chunk) - The Group has initially ventured into the new energy sector by acquiring a 60% equity interest in Inner Mongolia Paiwei Technology Co., Ltd. (for RMB 1), which primarily engages in the research, development, production, and sales of energy storage molten salt, core raw materials, and integrated thermal energy storage systems[53](index=53&type=chunk)[56](index=56&type=chunk) - The Group also acquired a 51% equity interest in Times Logistics Investment Co., Ltd. (for USD 51), whose indirect wholly-owned subsidiary, Delingha Ainengsen New Energy Technology Co., Ltd., primarily engages in the sales, service, and after-sales support of molten salt materials and thermal storage equipment[57](index=57&type=chunk)[63](index=63&type=chunk) [Financial Resources and Policies](index=11&type=section&id=Financial%20Resources%20and%20Policies) Describes the group's capital structure, liquidity, and financial management policies, including borrowing and foreign exchange risk Capital Structure and Liquidity (As of June 30, 2025) | Indicator | June 30, 2025 (RMB Million) | December 31, 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Borrowings | 128.6 | 125.8 | +2.2% | | Total Equity | 275.0 | 285.9 | -3.8% | | Capital Gearing Ratio | 46.8% | 44.0% | +2.8 percentage points | | Trade Receivables | 253.4 | 301.3 | -15.9% | | Prepayments and Other Receivables | 83.8 | 82.6 | +1.5% | | Trade and Other Payables | 126.9 | 140.0 | -9.4% | | Cash and Cash Equivalents | 46.4 | 10.7 | +333.6% | - The Group's funding sources are primarily cash generated from operating activities and bank borrowings, with its financial position regularly reviewed[69](index=69&type=chunk)[71](index=71&type=chunk) - The directors believe the Group is not exposed to significant foreign exchange risk and currently has no foreign currency hedging policy, nor has it used financial instruments for hedging purposes[70](index=70&type=chunk)[72](index=72&type=chunk) [Events After the Reporting Period](index=13&type=section&id=Events%20After%20the%20Reporting%20Period) Details significant events occurring after the reporting period, specifically a share placing for debt repayment and working capital - On August 29, 2025, the company successfully placed 124,912,800 shares, representing approximately 20.00% of the existing issued share capital[73](index=73&type=chunk)[77](index=77&type=chunk) Use of Proceeds from Placing | Purpose | Amount (HKD Million) | Percentage (%) | | :--- | :--- | :--- | | Repayment of Group Debts | 10.0 | 61.9% | | General Working Capital | 6.1 | 38.1% | | **Total Net Proceeds** | **16.1** | **100%** | [Employees, Remuneration Policies and Pension Schemes](index=13&type=section&id=Employees%20Remuneration%20Policies%20and%20Pension%20Schemes) Provides information on employee headcount, remuneration policies, and participation in pension and social security schemes Employee Headcount Change | Date | Number of Full-time Employees | | :--- | :--- | | June 30, 2025 | 24 | | December 31, 2024 | 32 | - The Group provides remuneration benefits such as salaries, accident insurance, and allowances, with bonuses determined discretionarily based on employee performance and overall group performance[76](index=76&type=chunk)[79](index=79&type=chunk) - The Group participates in China's housing provident fund and social security schemes, while Hong Kong employees participate in the Mandatory Provident Fund Scheme[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [Business Outlook](index=14&type=section&id=Business%20Outlook) Presents the group's strategic priorities for future growth, focusing on market expansion, efficiency, and product diversification - The Group will continue to prioritize and focus on overseas markets while expanding its customer base and remaining vigilant against new epidemics[86](index=86&type=chunk) - The Group will continue to strengthen, expand, and diversify its customer base by focusing on Hong Kong and Chinese export-oriented wholesalers and Chinese retailers[86](index=86&type=chunk) - The Group will improve production efficiency and effectively control costs by outsourcing part of its production processes, and allocate more resources to expand sales in domestic and Asian markets[86](index=86&type=chunk) - The Group will achieve business growth through continuous development of a diversified new product portfolio[86](index=86&type=chunk) [Condensed Consolidated Interim Financial Statements](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) Presents the group's interim financial performance and position, including comprehensive income, financial position, equity changes, and cash flows [Condensed Consolidated Interim Statement of Comprehensive Income](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) Reports the group's revenue, expenses, and net loss for the period, along with other comprehensive income items Summary of Condensed Consolidated Interim Statement of Comprehensive Income | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 68,926 | 50,488 | +36.5% | | Cost of Sales | (64,991) | (41,891) | +55.1% | | Gross Profit | 3,935 | 8,597 | -54.2% | | Selling Expenses | 0 | (7) | -100% | | Administrative Expenses | (6,867) | (12,093) | -43.2% | | Net Impairment Loss on Trade Receivables | (6,674) | (7,396) | -9.8% | | Other Income and Other Gains/(Losses) – Net | 633 | (414) | +253.4% | | Operating Loss | (8,973) | (11,313) | -20.7% | | Finance Costs | (6,065) | (6,271) | -3.3% | | Loss Before Tax | (15,038) | (17,584) | -14.5% | | Income Tax | 0 | 0 | - | | Loss for the Period | (15,038) | (17,584) | -14.5% | | Exchange Differences on Translation of Foreign Operations | 4,140 | (7,687) | +153.9% | | Total Comprehensive Loss for the Period | (10,898) | (25,271) | -56.9% | | Basic and Diluted Loss Per Share (RMB Cents) | (2.4) | (2.8) | -14.3% | [Condensed Consolidated Interim Statement of Financial Position](index=17&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) Details the group's assets, liabilities, and equity as of the reporting date, showing its financial health Summary of Condensed Consolidated Interim Statement of Financial Position | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | **Non-current Assets** | | | | | Property, Plant and Equipment | 152,440 | 159,237 | -4.3% | | Right-of-use Assets | 9,491 | 9,504 | -0.1% | | Prepayments | 9,061 | 9,739 | -7.0% | | **Current Assets** | | | | | Inventories | 18,379 | 19,291 | -4.7% | | Trade Receivables | 253,425 | 301,262 | -15.9% | | Prepayments and Other Receivables | 83,754 | 82,553 | +1.5% | | Cash and Cash Equivalents | 46,422 | 10,705 | +333.6% | | **Current Liabilities** | | | | | Trade and Other Payables | 126,852 | 139,981 | -9.4% | | Bank and Other Borrowings | 128,626 | 125,762 | +2.3% | | **Net Assets** | 274,978 | 285,876 | -3.8% | | **Total Equity** | 274,978 | 285,876 | -3.8% | [Condensed Consolidated Interim Statement of Changes in Equity](index=18&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) Illustrates the changes in the group's equity attributable to owners of the company during the reporting period Summary of Condensed Consolidated Interim Statement of Changes in Equity | Indicator | June 30, 2025 (RMB Thousand) | January 1, 2025 (RMB Thousand) | Change (RMB Thousand) | | :--- | :--- | :--- | :--- | | Share Capital | 562 | 562 | 0 | | Reserves | 274,740 | 285,636 | (10,896) | | Equity Attributable to Owners of the Company | 275,302 | 286,198 | (10,896) | | Non-controlling Interests | (324) | (322) | (2) | | **Total Equity** | **274,978** | **285,876** | **(10,898)** | - The total comprehensive loss for the period was RMB 10,898 thousand, primarily comprising a loss for the period of RMB 15,036 thousand and exchange differences on translation of foreign operations of RMB 4,140 thousand[92](index=92&type=chunk) [Condensed Consolidated Interim Statement of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities for the period Summary of Condensed Consolidated Interim Statement of Cash Flows | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Change (RMB Thousand) | | :--- | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 34,784 | (4,576) | +39,360 | | Net Cash From Investing Activities | 1,700 | 2 | +1,698 | | Net Cash (Used In)/From Financing Activities | (64) | 2,435 | (2,499) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 36,420 | (2,139) | +38,559 | | Cash and Cash Equivalents at Beginning of Period | 10,705 | 48,899 | -38,194 | | Exchange Differences on Cash and Cash Equivalents | (703) | 507 | (1,210) | | **Cash and Cash Equivalents at End of Period** | **46,422** | **47,267** | **(845)** | - Operating cash flow turned positive, indicating an improvement in the company's operational efficiency[93](index=93&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=20&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements [General Information and Basis of Preparation](index=20&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) Outlines the company's registration, principal activities, and the accounting standards used for financial statement preparation - The Company was incorporated in the Cayman Islands on October 25, 2019, and its shares were listed on the Main Board of the Hong Kong Stock Exchange on March 18, 2020[94](index=94&type=chunk)[98](index=98&type=chunk) - The Group is principally engaged in the manufacturing and sales of toys[95](index=95&type=chunk)[98](index=98&type=chunk) - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34, with accounting policies consistent with those used in the 2024 annual financial statements[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk) [Application of New and Revised HKFRS Accounting Standards](index=21&type=section&id=Application%20of%20New%20and%20Revised%20HKFRS%20Accounting%20Standards) Confirms the adoption of new and revised HKFRS standards and their non-material impact on the financial statements - The Group has adopted all new and revised HKFRS standards, but they have not had a material impact on the financial statements[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Revenue and Segment Information](index=22&type=section&id=Revenue%20and%20Segment%20Information) Presents the group's revenue breakdown by product type and geographical market, identifying car models as the sole product revenue source Revenue by Product Type and Geographical Market (Six Months Ended June 30) | Product Type/Geographical Market | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | **Product Type** | | | | Sales of Car Models | 68,926 | 48,509 | | Purchase and Sales of Raw Materials and Electronic Components | – | 1,979 | | **Total** | **68,926** | **50,488** | | **Geographical Market** | | | | Mainland China | 3,201 | – | | Outside Mainland China | 65,725 | 50,488 | | **Total** | **68,926** | **50,488** | - The Group manages and makes decisions on its business operations as a single operating segment[104](index=104&type=chunk)[105](index=105&type=chunk) - As of June 30, 2025, most of the Group's non-current assets are located in China[106](index=106&type=chunk)[108](index=108&type=chunk) [Finance Costs](index=23&type=section&id=Finance%20Costs) Details the components of the group's finance costs, primarily interest expenses on borrowings and convertible bonds Breakdown of Finance Costs (Six Months Ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Interest Expense on Bank and Other Borrowings | 3,908 | 6,173 | | Interest Expense on Lease Liabilities | – | 98 | | Interest Expense on Bonds | 86 | – | | Imputed Interest on Convertible Bonds | 2,071 | – | | **Total** | **6,065** | **6,271** | [Income Tax](index=24&type=section&id=Income%20Tax) States that no income tax expense was incurred due to the absence of taxable profit for the reporting period - For the six months ended June 30, 2025, the Group had no taxable profit, resulting in zero income tax expense[115](index=115&type=chunk) [Loss for the Period and Per Share](index=24&type=section&id=Loss%20for%20the%20Period%20and%20Per%20Share) Reports the group's net loss and basic and diluted loss per share, attributing the loss to various operational factors Components of Loss for the Period (Six Months Ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Cost of Inventories Sold | 64,991 | 41,891 | | Depreciation of Right-of-use Assets | 12 | 1,380 | | Depreciation of Property, Plant and Equipment | 4,439 | 5,072 | | Amortization of Intangible Assets | – | 73 | | Staff Costs (Including Directors' Emoluments) | 1,774 | 2,311 | - Basic loss per share attributable to owners of the Company was **RMB 2.4 cents** (2024: RMB 2.8 cents)[119](index=119&type=chunk)[124](index=124&type=chunk) - For the six months ended June 30, 2025, potential ordinary shares from share options had an anti-dilutive effect[120](index=120&type=chunk)[125](index=125&type=chunk) [Dividends and Fixed Assets](index=25&type=section&id=Dividends%20and%20Fixed%20Assets) Confirms no interim dividend declaration and no significant acquisitions of property, plant, and equipment during the period - The directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025[121](index=121&type=chunk)[126](index=126&type=chunk) - For the six months ended June 30, 2025, the Group did not acquire property, plant and equipment, nor did it recognize additions to right-of-use assets[122](index=122&type=chunk)[123](index=123&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) [Trade Receivables and Payables](index=26&type=section&id=Trade%20Receivables%20and%20Payables) Provides an aging analysis and discusses changes in trade receivables and payables, reflecting collection and payment trends Aging Analysis of Trade Receivables (As of June 30, 2025) | Aging | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Less than 30 days | 17,617 | 48,449 | | 31 to 120 days | 33,393 | 138,953 | | 121 days to 1 year | 213,539 | 142,772 | | 1 to 2 years | 49,652 | 24,574 | | Over 2 years | – | 2,026 | | **Total** | **314,201** | **356,774** | | Less: Impairment Provision | (60,776) | (55,512) | | **Net Amount** | **253,425** | **301,262** | Aging Analysis of Trade and Other Payables (As of June 30, 2025) | Aging | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Less than 30 days | 834 | 2,928 | | 31 to 120 days | 9,319 | 13,359 | | 121 days to 1 year | 5,266 | 425 | | 1 to 2 years | 8,973 | 37,683 | | Over 2 years | 14,417 | – | | **Total** | **38,809** | **54,395** | - The decrease in trade receivables was primarily due to improved collection from individual customers[44](index=44&type=chunk)[48](index=48&type=chunk) - The decrease in trade and other payables was mainly due to the Group's timely payments to suppliers[46](index=46&type=chunk)[48](index=48&type=chunk) [Bank and Other Borrowings](index=28&type=section&id=Bank%20and%20Other%20Borrowings) Details the group's bank and other borrowings, including interest rates, repayment terms, and collateral arrangements Breakdown of Bank and Other Borrowings (As of June 30, 2025) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Bank Loans (Secured) | 74,988 | 72,101 | | Other Borrowings | 53,638 | 53,661 | | **Total** | **128,626** | **125,762** | - All borrowings bear fixed interest rates ranging from **2.25% to 18.00%**, with a weighted average effective interest rate of approximately **7.9%**[47](index=47&type=chunk)[49](index=49&type=chunk) - Borrowings are secured by property, plant and equipment, right-of-use assets, shares held by certain company shareholders, and personal guarantees provided by Mr. Yu Huang, Ms. Chen Cheng, and minority shareholders[134](index=134&type=chunk) [Share Capital, Contingent Liabilities and Capital Commitment](index=29&type=section&id=Share%20Capital%2C%20Contingent%20Liabilities%20and%20Capital%20Commitment) Presents information on the company's issued share capital, absence of significant contingent liabilities, and capital commitments Share Capital Information (As of June 30, 2025) | Item | Number | Amount (HKD Thousand) | Amount (RMB Thousand) | | :--- | :--- | :--- | :--- | | Authorized Ordinary Shares (HKD 0.001 per share) | 5,000,000,000 | 5,000 | 4,470 | | Issued Ordinary Shares (HKD 0.001 per share) | 624,564,000 | 625 | 562 | - The Group had no significant contingent liabilities as of June 30, 2025[61](index=61&type=chunk)[66](index=66&type=chunk)[136](index=136&type=chunk) - The Group's total capital commitments as of June 30, 2025, amounted to approximately **RMB 13.1 million**, primarily for contracted but unprovided property, plant and equipment[62](index=62&type=chunk)[67](index=67&type=chunk)[138](index=138&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) Includes disclosures on directors' and substantial shareholders' interests, share schemes, and corporate governance practices [Directors' and Substantial Shareholders' Interests](index=30&type=section&id=Directors'%20and%20Substantial%20Shareholders'%20Interests) Discloses the shareholdings of directors and substantial shareholders, including interests held through controlled corporations and as loan collateral Directors' Interests in Shares (As of June 30, 2025) | Director Name | Capacity/Nature of Interest | Number of Shares Held/Interested | Long/Short Position | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Mr. Yu Huang | Interest in Controlled Corporation | 194,784,667 | Long Position | 31.19% | Substantial Shareholders' Interests in Shares (As of June 30, 2025) | Shareholder Name/Entity | Capacity/Nature of Interest | Number of Shares Held/Interested | Long/Short Position | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Ms. Chen Cheng | Spouse's Interest | 194,784,667 | Long Position | 31.19% | | Top Synergy Y&C Limited | Beneficial Owner | 194,784,667 | Long Position | 31.19% | | Gold-Face Finance Limited | Corporation with Interest in Shares as Security | 119,300,000 | Long Position | 19.10% | | Upbest Group Limited | Interest in Controlled Corporation | 119,300,000 | Long Position | 19.10% | - Of the shares held by Top Synergy Y&C Limited, **119,300,000 shares** are pledged to Gold-Face Finance Limited as security for a loan[153](index=153&type=chunk) [Share Schemes](index=34&type=section&id=Share%20Schemes) Describes the company's share option and share schemes designed to incentivize and reward eligible participants - The 2020 Share Option Scheme was adopted on February 13, 2020, to grant share options to selected participants as incentives or rewards[154](index=154&type=chunk)[156](index=156&type=chunk) - As of June 30, 2025, **52,000,000 share options** remained unexercised under the 2020 Share Option Scheme, representing approximately **8.33%** of the issued shares[164](index=164&type=chunk)[166](index=166&type=chunk) - The 2025 Share Scheme was approved and adopted on June 30, 2025, to attract, motivate, and retain eligible participants through share awards or share options[167](index=167&type=chunk)[170](index=170&type=chunk) - The 2020 Share Option Scheme was terminated on June 30, 2025, and replaced by the 2025 Share Scheme[174](index=174&type=chunk) - The scheme mandate limit for the 2025 Share Scheme is **62,456,400 shares**, representing approximately **10.00%** of the total issued share capital[175](index=175&type=chunk)[177](index=177&type=chunk) - The remaining term of the 2025 Share Scheme is approximately **9 years and 10 months**[190](index=190&type=chunk)[193](index=193&type=chunk) [Corporate Governance and Compliance](index=41&type=section&id=Corporate%20Governance%20and%20Compliance) Affirms the group's commitment to high corporate governance standards and compliance with listing rules, including director conduct and audit committee review - The Company has complied with all applicable provisions of Appendix C1 Corporate Governance Code of the Listing Rules, except for the roles of Chairman and Chief Executive Officer being held by Mr. Yu Huang concurrently[199](index=199&type=chunk)[203](index=203&type=chunk) - The Board believes the current structure facilitates prompt and effective business decision-making, and the balance of power and authority is not impaired[203](index=203&type=chunk)[205](index=205&type=chunk)[208](index=208&type=chunk) - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, all directors confirmed compliance, and no non-compliance by senior management was found[206](index=206&type=chunk)[209](index=209&type=chunk) - Mr. Hong Kun was appointed as an executive director on May 19, 2025[207](index=207&type=chunk)[210](index=210&type=chunk) - As of the date of this interim report, the company has repaid **HKD 20,000,000** under the loan agreement, with **HKD 10,000,000** remaining outstanding[218](index=218&type=chunk) - The directors are not aware of any conflicts of interest that compete with the Group's business[220](index=220&type=chunk)[222](index=222&type=chunk) - The Audit Committee has reviewed the interim results and accounting principles, and discussed audit, risk management, internal control, and financial statement matters[223](index=223&type=chunk)[225](index=225&type=chunk)

[Company Information](index=2&type=section&id=Company%20Information) [Company Name and Basic Information](index=2&type=section&id=Company%20Name%20and%20Basic%20Information) This section provides GBA Holdings Limited's fundamental corporate details, including company name, stock code, board members, committee compositions, and key contact and governance information - Company Name: **GBA Holdings Limited**[2](index=2&type=chunk)[5](index=5&type=chunk) - Stock Code: **00261**[2](index=2&type=chunk)[5](index=5&type=chunk) - Executive Directors include WONG Cho Wai (Chairman), LAM Ka Lee, and WONG Sze Yu[5](index=5&type=chunk) - Independent Non-executive Directors include WU Wai Shan, LEUNG Ka Chun, and CHAN Sheung Yu[5](index=5&type=chunk) [Chairman's Report](index=4&type=section&id=Chairman's%20Report) [Interim Results Overview](index=4&type=section&id=Interim%20Results%20Overview) For the six months ended June 30, 2025, the Group's revenue increased by 6.3% to HKD 31.2 million, but net loss attributable to owners significantly rose by 81.9% to HKD 43.2 million, primarily due to impairment losses and increased catering costs, with no interim dividend recommended 2025 Half-Year Key Financial Data (Chairman's Report) | Metric | For the six months ended June 30, 2025 (HKD) | For the six months ended June 30, 2024 (HKD) | Change (%) | | :--- | :--------------------------------- | :--------------------------------- | :------- | | Revenue | 31,200,000 | 29,400,000 | +6.3% | | Net Loss Attributable to Owners of the Company | 43,200,000 | 23,800,000 | +81.9% | - The increase in loss was primarily due to increased impairment losses and direct costs for the catering business[6](index=6&type=chunk) - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (June 30, 2024: nil)[7](index=7&type=chunk) [Business Review](index=4&type=section&id=Business%20Review) The Group's diversified businesses include property, financial, automobile, catering, and corporate advisory services, with property sales from Anshan, stable interest income from financial services, catering as the largest revenue contributor, no automobile revenue this period, and new corporate advisory services - Property Business: Primarily focused on three property projects in Anshan, Liaoning Province, with Phase 2.2 of "China Construction • Jun Gong Guan" completed in July 2025, generating approximately **HKD 7.6 million** in revenue for the period[8](index=8&type=chunk) - Financial Business: Operating money lending in Hong Kong, recorded approximately **HKD 4.2 million** in interest income for the period, with plans for expansion[9](index=9&type=chunk) - Automobile Business: Generated **no revenue** for the period but will continue to be developed[10](index=10&type=chunk) - Catering Business: Operating in Hong Kong, recorded approximately **HKD 19.3 million** in revenue for the period[11](index=11&type=chunk) - Corporate Advisory Services Business: Commenced in Hong Kong from April 2025, recorded approximately **HKD 72 thousand** in revenue for the period[12](index=12&type=chunk) [Outlook](index=6&type=section&id=Outlook) For 2025, the Group anticipates improved property sales driven by Chinese government policy support, while financial, automobile, and catering businesses are expected to remain stable or slightly improve due to projected interest rate reductions and increased consumer demand, as the Group seeks new opportunities to enhance shareholder returns - Property business sales are expected to improve in 2025, benefiting from the Chinese government's policy support for the property market[13](index=13&type=chunk) - Financial, automobile, and catering businesses are expected to remain stable or slightly improve, primarily influenced by anticipated interest rate reductions and increased consumer demand[13](index=13&type=chunk) - The Group will continue to expand its businesses based on market demand and available funds, and seek new opportunities to enhance shareholder returns[14](index=14&type=chunk) [Acknowledgements](index=6&type=section&id=Acknowledgements) The Chairman extends sincere gratitude to the Directors, management, employees, shareholders, investors, banks, customers, suppliers, and landlords for their unwavering commitment, loyalty, and strong support during challenging times - The Chairman thanks the Directors, management, and all employees for their unwavering commitment, loyalty, and diligent performance during challenging times[15](index=15&type=chunk) - Also thanks shareholders, investors, banks, customers, suppliers, and landlords for their encouragement and strong support during this special period[15](index=15&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) [Revenue Analysis](index=7&type=section&id=Revenue%20Analysis) The Group's revenue for the six months ended June 30, 2025, increased by 6.3% to approximately HKD 31.2 million, with property business remaining the largest contributor at 24.3% despite a decline, while financial and catering businesses grew, and corporate advisory services contributed revenue for the first time Revenue Overview | Metric | For the six months ended June 30, 2025 (HKD) | For the six months ended June 30, 2024 (HKD) | Change (%) | | :--- | :--------------------------------- | :--------------------------------- | :------- | | Total Revenue | 31,200,000 | 29,400,000 | +6.3% | - Property business revenue was approximately **HKD 7.6 million**, primarily from the sale of remaining units in Land New City and China Construction • Jun Gong Guan, accounting for approximately **24.3%** of total revenue[17](index=17&type=chunk) - Financial business revenue was approximately **HKD 4.2 million**, compared to approximately HKD 2.9 million in the same period last year[18](index=18&type=chunk) - Catering business revenue was approximately **HKD 19.3 million**, compared to approximately HKD 14.3 million in the same period last year[19](index=19&type=chunk) - Corporate advisory services business contributed revenue of approximately **HKD 72 thousand** for the first time[20](index=20&type=chunk) [Cost of Revenue and Gross Profit](index=7&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Profit) Cost of revenue for the period significantly increased by 134.0% to approximately HKD 59.2 million, primarily due to increased impairment losses in the property business, resulting in a gross loss of approximately HKD 27.9 million and a gross loss margin of 89.5%, a substantial decline from the prior period's gross profit Cost of Revenue and Gross Profit Overview | Metric | For the six months ended June 30, 2025 (HKD) | For the six months ended June 30, 2024 (HKD) | Change (%) | | :--- | :--------------------------------- | :--------------------------------- | :------- | | Cost of Revenue | 59,200,000 | 25,300,000 | +134.0% | | Gross (Loss)/Profit | (27,900,000) | 4,100,000 | N/A | | Gross (Loss)/Profit Margin | (89.5%) | 13.9% | N/A | - The increase in cost of revenue was primarily due to increased impairment losses on properties held for sale and properties under development in the property business[21](index=21&type=chunk) - The decrease in gross profit was primarily due to increased direct costs for the catering business and impairment losses on properties held for sale and properties under development[22](index=22&type=chunk) [Other Income and Expenses](index=8&type=section&id=Other%20Income%20and%20Expenses) Other income and gains for the period significantly increased to approximately HKD 7.1 million, mainly from lease modification gains and net reversal of impairment losses on expected credit losses, while sales and distribution expenses rose due to advertising, and administrative expenses decreased due to reduced staff salaries and depreciation - Financial assets at fair value through profit or loss recorded approximately **HKD 89 thousand** during the period[23](index=23&type=chunk) Other Income and Gains Overview | Metric | For the six months ended June 30, 2025 (HKD) | For the six months ended June 30, 2024 (HKD) | Change (%) | | :--- | :--------------------------------- | :--------------------------------- | :------- | | Other Income and Gains | 7,100,000 | 1,300,000 | +446.2% | - The increase in other income was primarily due to lease modification gains and net reversal of impairment losses on expected credit losses during the period[24](index=24&type=chunk) Sales and Distribution Expenses Overview | Metric | For the six months ended June 30, 2025 (HKD) | For the six months ended June 30, 2024 (HKD) | Change (%) | | :--- | :--------------------------------- | :--------------------------------- | :------- | | Sales and Distribution Expenses | 7,700,000 | 5,200,000 | +48.9% | - Administrative expenses decreased from approximately **HKD 23 million** to approximately **HKD 11.8 million**, primarily due to reduced staff salaries and depreciation[26](index=26&type=chunk) [Loss Attributable to Owners of the Company](index=8&type=section&id=Loss%20Attributable%20to%20Owners%20of%20the%20Company) Due to a significant increase in cost of revenue, the Group recorded a loss attributable to owners of the Company of approximately HKD 43.2 million for the six months ended June 30, 2025, a substantial increase from the HKD 23.8 million loss in the prior period Loss Attributable to Owners of the Company | Metric | For the six months ended June 30, 2025 (HKD) | For the six months ended June 30, 2024 (HKD) | | :--- | :--------------------------------- | :--------------------------------- | | Loss Attributable to Owners of the Company | 43,200,000 | 23,800,000 | - The increase in loss was primarily due to increased cost of revenue[27](index=27&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=Liquidity%20and%20Financial%20Resources) The Group maintains capital adequacy with net current assets of approximately HKD 429.2 million and a current ratio of 367.25%, experiencing an increase in cash and cash equivalents alongside a rise in bank overdrafts, primarily relying on net cash from operating activities and bank borrowings for future working capital needs Liquidity Overview | Metric | As at June 30, 2025 (HKD) | As at December 31, 2024 (HKD) | | :--- | :------------------- | :-------------------- | | Net Current Assets | 429,200,000 | 436,900,000 | | Cash and Cash Equivalents | 18,200,000 | 14,800,000 | | Current Ratio | 367.25% | 436.32% | | Bank Overdrafts | 19,300,000 | 9,900,000 | - The Group's working capital primarily comes from cash on hand and net cash used in operating activities, and will rely on bank borrowings (if needed) to meet future requirements[28](index=28&type=chunk) [Treasury Management and Risks](index=9&type=section&id=Treasury%20Management%20and%20Risks) The Group adopts a prudent treasury management approach, centralizing cash management and risk control, with no interest rate risk due to the absence of bank borrowings during the period, and considers foreign currency exchange risk not significant, with no intention to engage in high-risk foreign exchange derivative instruments - The Group manages cash and controls risks with a prudent approach, centralizing treasury activities[30](index=30&type=chunk) - There was **no interest rate risk** during the period due to the absence of bank borrowings[30](index=30&type=chunk) - The Group has **no significant exchange rate risk** and no intention to engage in any high-risk foreign exchange derivative instruments[30](index=30&type=chunk) [Significant Corporate Activities](index=9&type=section&id=Significant%20Corporate%20Activities) During the period, the Company acquired 100% equity interest in Grand Shine Capital Limited on April 1, 2025, making it a wholly-owned subsidiary, and as at the reporting period end, the Group had no capital commitments, pledged assets, or significant contingent liabilities - On April 1, 2025, the Company acquired **100% equity interest** in Grand Shine Capital Limited, making it a wholly-owned subsidiary[31](index=31&type=chunk) - As at June 30, 2025, the Group had **no capital commitments** (December 31, 2024: nil)[29](index=29&type=chunk) - As at June 30, 2025, the Group had **no pledged assets** (December 31, 2024: nil)[33](index=33&type=chunk) - As at June 30, 2025, the Group had **no significant contingent liabilities** (December 31, 2024: nil)[34](index=34&type=chunk) [Employees and Remuneration Policy](index=10&type=section&id=Employees%20and%20Remuneration%20Policy) As at June 30, 2025, the Group's total number of employees increased to 89, with a remuneration policy based on fairness, offering market-competitive and performance-linked compensation packages, including MPF, medical insurance, and bonuses, with potential share option grants Employee Count | Date | Total Employees | | :--- | :------- | | June 30, 2025 | 89 | | December 31, 2024 | 70 | - The remuneration policy is based on fairness, providing motivating, performance-measured, and market-competitive compensation packages[35](index=35&type=chunk) - In addition to salaries, other employee benefits include MPF contributions, medical insurance, and performance-linked bonuses, with eligible employees also potentially receiving share options[35](index=35&type=chunk) [Post-Reporting Period Events and Dividends](index=10&type=section&id=Post-Reporting%20Period%20Events%20and%20Dividends) Subsequent to the reporting period, the Company adopted a new share option scheme (2025 Scheme) on July 7, 2025, valid for ten years, and the Board does not recommend an interim dividend for the period ended June 30, 2025 - The Company adopted a new share option scheme (2025 Scheme) by ordinary resolution at an extraordinary general meeting held on July 7, 2025, valid for **ten years**[36](index=36&type=chunk) - The Board does not recommend the declaration of an interim dividend for the period ended June 30, 2025 (2024: nil)[38](index=38&type=chunk) [Use of Proceeds from Rights Issue](index=11&type=section&id=Use%20of%20Proceeds%20from%20Rights%20Issue) The Company received net proceeds of approximately HKD 48.3 million from the rights issue, with HKD 34.219 million utilized by June 30, 2025, for general working capital, catering and food-related investments, and financial business expansion, while the remaining HKD 14.081 million is earmarked for live streaming business investment, expected to be used by December 2026 - Net proceeds from the rights issue were approximately **HKD 48.3 million**[42](index=42&type=chunk) Use of Proceeds from Rights Issue (As at June 30, 2025) | Purpose | Planned Net Proceeds (HKD thousands) | Actual Net Proceeds Used (HKD thousands) | Unused Net Proceeds (HKD thousands) | Expected Timeline for Use | | :--- | :----------------------------- | :----------------------------- | :----------------------------- | :--------------- | | General working capital of the Company | 9,660 | 9,660 | – | Not applicable | | Investment in catering and food-related businesses | 14,490 | 14,490 | – | Not applicable | | Investment in live streaming business | 14,490 | 409 | 14,081 | December 2026 | | Expansion of financial business | 9,660 | 9,660 | – | Not applicable | | **Total** | **48,300** | **34,219** | **14,081** | | [Use of Proceeds from Placing](index=13&type=section&id=Use%20of%20Proceeds%20from%20Placing) The Company received net proceeds of approximately HKD 15.65 million from the placing, with HKD 9.233 million utilized by June 30, 2025, for general working capital and financial business expansion, and the remaining HKD 6.417 million expected to be used by December 31, 2025 - Net proceeds from the placing were approximately **HKD 15.65 million**[45](index=45&type=chunk) Use of Proceeds from Placing (As at June 30, 2025) | Purpose | Planned Net Proceeds (HKD thousands) | Actual Net Proceeds Used (HKD thousands) | Unused Net Proceeds (HKD thousands) | Expected Timeline for Use | | :--- | :----------------------------- | :----------------------------- | :----------------------------- | :--------------- | | General working capital of the Company | 6,260 | 3,358 | 2,902 | December 31, 2025 | | Expansion of financial business | 9,390 | 5,875 | 3,515 | December 31, 2025 | | **Total** | **15,650** | **9,233** | **6,417** | | [Interim Results](index=14&type=section&id=Interim%20Results) [Unaudited Condensed Consolidated Statement of Profit or Loss](index=14&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group's revenue for the six months ended June 30, 2025, was HKD 31.226 million, but a significant increase in cost of revenue to HKD 59.163 million resulted in a gross loss of HKD 27.937 million, with the loss for the period expanding to HKD 41.006 million and basic and diluted loss per share attributable to owners of the Company at HKD 14.64 cents Unaudited Condensed Consolidated Statement of Profit or Loss Summary | Metric | For the six months ended June 30, 2025 (HKD thousands) | For the six months ended June 30, 2024 (HKD thousands) | | :--- | :--------------------------------- | :--------------------------------- | | Revenue | 31,226 | 29,363 | | Cost of Revenue | (59,163) | (25,282) | | Gross (Loss)/Profit | (27,937) | 4,081 | | Other Income and Gains | 7,148 | 1,271 | | Sales and Distribution Expenses | (7,678) | (5,157) | | Administrative Expenses | (11,773) | (22,953) | | Loss Before Tax | (41,170) | (25,614) | | Loss for the Period | (41,006) | (26,707) | | Loss for the Period Attributable to Owners of the Company | (43,248) | (23,778) | | Basic and Diluted Loss Per Share | (14.64 HK cents) | (2.45 HK cents) | [Unaudited Consolidated Statement of Comprehensive Income](index=15&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Comprehensive%20Income) The Group's total comprehensive loss for the six months ended June 30, 2025, was HKD 41.006 million, an increase from HKD 38.875 million in the prior period, primarily reflecting the increased loss for the period Unaudited Consolidated Statement of Comprehensive Income Summary | Metric | For the six months ended June 30, 2025 (HKD thousands) | For the six months ended June 30, 2024 (HKD thousands) | | :--- | :--------------------------------- | :--------------------------------- | | Loss for the Period | (41,006) | (26,707) | | Exchange differences on translation of foreign operations | – | (12,168) | | Total Comprehensive Loss for the Period | (41,006) | (38,875) | | Total Comprehensive Loss for the Period Attributable to Owners of the Company | (43,248) | (35,946) | [Unaudited Condensed Consolidated Statement of Financial Position](index=16&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As at June 30, 2025, the Group's total assets increased to HKD 683.6 million, with current assets at HKD 589.8 million, total shareholders' equity at HKD 523.0 million, current liabilities rising to HKD 160.6 million, and net current assets at HKD 429.2 million Unaudited Condensed Consolidated Statement of Financial Position Summary | Metric | As at June 30, 2025 (HKD thousands) | As at December 31, 2024 (HKD thousands) | | :--- | :--------------------- | :--------------------- | | Total Non-current Assets | 93,768 | 93,129 | | Total Current Assets | 589,834 | 566,812 | | **Total Assets** | **683,602** | **659,941** | | Equity Attributable to Owners of the Company | 538,063 | 547,348 | | Total Equity | 522,991 | 530,034 | | Total Current Liabilities | 160,611 | 129,907 | | **Total Liabilities** | **160,611** | **129,907** | | Net Current Assets | 429,223 | 436,905 | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=18&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) The Group's total equity decreased to HKD 523.0 million for the six months ended June 30, 2025, with changes primarily driven by a HKD 21.222 million increase from shares issued under placing, a HKD 43.248 million loss attributable to owners of the Company, and exchange differences Unaudited Condensed Consolidated Statement of Changes in Equity Summary | Metric | As at June 30, 2025 (HKD thousands) | As at December 31, 2024 (HKD thousands) | | :--- | :--------------------- | :--------------------- | | Total Equity at Beginning of Period | 530,034 | 608,509 | | Shares issued under placing | 21,222 | – | | Loss for the Period (Attributable to Owners of the Company) | (43,248) | (23,778) | | Exchange differences on translation of foreign operations | 12,741 | (12,168) | | Total Equity at End of Period | 522,991 | 530,034 | [Unaudited Condensed Consolidated Statement of Cash Flows](index=19&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash flow from operating activities was an outflow of HKD 17.408 million, and from investing activities was an outflow of HKD 15.018 million, while financing activities generated an inflow of HKD 23.488 million due to share issuance, resulting in cash and cash equivalents of HKD 8.849 million at period-end Unaudited Condensed Consolidated Statement of Cash Flows Summary | Metric | For the six months ended June 30, 2025 (HKD thousands) | For the six months ended June 30, 2024 (HKD thousands) | | :--- | :--------------------------------- | :--------------------------------- | | Net cash flows (used in)/from operating activities | (17,408) | (1,158) | | Net cash flows (used in)/from investing activities | (15,018) | 6,142 | | Net cash flows from/(used in) financing activities | 23,488 | (4,923) | | Net (decrease)/increase in cash and cash equivalents | (8,938) | 61 | | Cash and cash equivalents at end of period | 8,849 | 39,910 | [Notes to the Financial Statements](index=21&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed notes to the interim financial statements, covering basis of preparation, accounting policies, operating segment information, revenue composition, other income and gains, loss before tax, income tax, finance costs, dividends, loss per share, property, plant and equipment, inventories, loans and interest receivable, investments in associates/subsidiaries, trade receivables, pledged time deposits and cash, share capital, trade payables, other payables and accrued liabilities, contingent liabilities, pledged assets, commitments, related party transactions, and post-reporting period events [Basis of Preparation and Principal Accounting Policies](index=21&type=section&id=Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) The unaudited condensed interim consolidated financial statements are prepared in accordance with Appendix 16 of the Listing Rules and HKAS 34, with accounting policies consistent with the 2024 annual report, except for newly adopted HKFRS that had no impact on financial position or performance - The unaudited condensed interim consolidated financial statements are prepared in accordance with Appendix 16 of the Listing Rules and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[55](index=55&type=chunk) - The accounting policies adopted are consistent with those in the 2024 annual report, except for the revised Hong Kong Financial Reporting Standards adopted for the first time in the current period, where the amendments to HKAS 21 had no impact on financial position and performance[56](index=56&type=chunk)[57](index=57&type=chunk) [Operating Segment Information](index=22&type=section&id=Operating%20Segment%20Information) The Group is organized into five reportable operating segments: property, financial, automobile, catering, and corporate advisory services, with segment performance evaluated based on adjusted profit/(loss) before tax, excluding specific costs, and all revenue is concentrated in Mainland China and Hong Kong, with no single customer accounting for more than 10% of total revenue - The Group is organized into five reportable operating segments: property business, financial business, automobile business, catering business, and corporate advisory services business[58](index=58&type=chunk)[60](index=60&type=chunk) - Segment performance is evaluated based on adjusted profit/(loss) before tax, which excludes finance costs, equity-settled share option expenses, and head office and corporate expenses[58](index=58&type=chunk) - The Group's markets are concentrated solely in Mainland China and Hong Kong, which contributed all of the Group's total revenue for the six months ended June 30, 2025, and 2024[64](index=64&type=chunk) - For the six months ended June 30, 2025, **no single customer** accounted for more than **10%** of the Group's total revenue[66](index=66&type=chunk) [Revenue Composition](index=27&type=section&id=Revenue%20Composition) This section details the Group's revenue composition, primarily from property sales, restaurant operations, interest income from loans, and corporate advisory services, with property sales revenue from Mainland China recognized at the point of transfer, and performance obligations satisfied upon transfer of properties, delivery of collectible cars, or provision of restaurant services Revenue Source Analysis | Revenue Source | For the six months ended June 30, 2025 (HKD thousands) | For the six months ended June 30, 2024 (HKD thousands) | | :--- | :--------------------------------- | :--------------------------------- | | Sale of properties | 7,581 | 12,114 | | Restaurant operations | 19,327 | 14,337 | | Interest income from loans receivable | 4,247 | 2,912 | | Corporate advisory services | 72 | – | | **Total** | **31,227** | **29,363** | - Property sales revenue of approximately **HKD 7.6 million** was from Mainland China, recognized at the point of property transfer[70](index=70&type=chunk) - Performance obligations are satisfied upon transfer of properties, delivery of collectible cars, or provision of restaurant services[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [Other Income and Gains](index=29&type=section&id=Other%20Income%20and%20Gains) This section provides a detailed breakdown of other income and gains, including interest income, exchange difference gains, lease modification gains, net reversal of impairment losses on expected credit losses, and other miscellaneous items Other Income and Gains Details | Item | For the six months ended June 30, 2025 (HKD thousands) | For the six months ended June 30, 2024 (HKD thousands) | | :--- | :--------------------------------- | :--------------------------------- | | Interest income | 295 | 721 | | Exchange difference gain | 207 | 23 | | Lease modification gain | 2,173 | – | | Net reversal of impairment losses on expected credit losses | 4,425 | – | | Others | 48 | 71 | | **Total** | **7,148** | **1,271** | [Loss Before Tax and Income Tax](index=29&type=section&id=Loss%20Before%20Tax%20and%20Income%20Tax) Loss before tax is stated after deducting cost of revenue of HKD 59.163 million and depreciation of HKD 53 thousand, with an income tax credit of HKD 164 thousand recorded for the period, primarily from Mainland China land appreciation tax, and no provision for Hong Kong profits tax due to the absence of assessable profits - Loss before tax is stated after deducting cost of revenue of **HKD 59.163 million** (2024: HKD 25.282 million) and depreciation of **HKD 53 thousand** (2024: HKD 5.418 million)[76](index=76&type=chunk) - Income tax credit of **HKD 164 thousand** (2024: expense of HKD 1.093 million) was recorded for the period, primarily from Mainland China land appreciation tax[78](index=78&type=chunk) - No provision for Hong Kong profits tax was made for the period as the Group had no assessable profits in Hong Kong[77](index=77&type=chunk) [Finance Costs and Dividends](index=30&type=section&id=Finance%20Costs%20and%20Dividends) This section details the Group's finance costs, including interest on lease liabilities and other loans/bank overdrafts, and confirms that the Board does not recommend an interim dividend for the six months ended June 30, 2025 Finance Costs Analysis | Item | For the six months ended June 30, 2025 (HKD thousands) | For the six months ended June 30, 2024 (HKD thousands) | | :--- | :--------------------------------- | :--------------------------------- | | Interest on lease liabilities | 372 | 352 | | Interest on other loans and bank overdrafts | 231 | 467 | | **Total** | **603** | **819** | - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[80](index=80&type=chunk) [Loss Per Share](index=31&type=section&id=Loss%20Per%20Share) This section presents the basic and diluted loss per share attributable to owners of the Company's ordinary shares, along with the weighted average number of ordinary shares used in the calculation, adjusted to reflect the share consolidation subsequent to the reporting period Basic and Diluted Loss Per Share | Metric | For the six months ended June 30, 2025 (HK cents) | For the six months ended June 30, 2024 (HK cents) | | :--- | :--------------------------------- | :--------------------------------- | | Loss attributable to owners of the Company's ordinary shares | (14.64) | (2.45) | Weighted Average Number of Ordinary Shares Outstanding for the Period | Date | Number of Shares | | :--- | :------------- | | June 30, 2025 | 295,329,737 | | June 30, 2024 | 970,157,660 | - The weighted average number of ordinary shares used for calculating basic and diluted loss per share has been adjusted to reflect the share consolidation subsequent to the reporting period[84](index=84&type=chunk) [Property, Plant and Equipment](index=32&type=section&id=Property%2C%20Plant%20and%20Equipment) This section provides the carrying amount of property, plant and equipment, noting an increase primarily due to additions and the acquisition of a subsidiary Carrying Amount of Property, Plant and Equipment | Date | Carrying Amount (HKD thousands) | | :--- | :-------------- | | June 30, 2025 | 616 | | December 31, 2024 | 129 | - The increase in carrying amount was primarily due to additions and acquisition of a subsidiary[86](index=86&type=chunk) [Inventories](index=33&type=section&id=Inventories) This section presents the total inventories, primarily comprising automobile inventory and catering materials Total Inventories | Date | Total (HKD thousands) | | :--- | :------------ | | June 30, 2025 | 48,144 | | December 31, 2024 | 48,195 | - Inventories primarily comprise automobile inventory of **HKD 47.68 million** and catering materials of **HKD 464 thousand**[87](index=87&type=chunk) [Loans and Interest Receivable](index=33&type=section&id=Loans%20and%20Interest%20Receivable) This section details the total loans and interest receivable, including loans receivable, interest receivable, and provision for expected credit losses Total Loans and Interest Receivable | Date | Total (HKD thousands) | | :--- | :------------ | | June 30, 2025 | 108,312 | | December 31, 2024 | 98,146 | - Loans receivable were **HKD 96.5 million**, interest receivable was **HKD 16.704 million**, and provision for expected credit losses was **HKD 4.892 million**[88](index=88&type=chunk) [Investments in Associates/Subsidiaries](index=33&type=section&id=Investments%20in%20Associates%2FSubsidiaries) This section outlines the Group's investments, including goodwill on acquisition and its equity interests in Kei Wah Limited (catering and related food business) and Grand Shine Capital Limited (corporate advisory services business) - Goodwill on acquisition was **HKD 152 thousand**[89](index=89&type=chunk) - The Group holds **51% interest** in Kei Wah Limited (catering and related food business) and **100% interest** in Grand Shine Capital Limited (corporate advisory services business)[90](index=90&type=chunk)[91](index=91&type=chunk) [Trade Receivables](index=35&type=section&id=Trade%20Receivables) This section provides an ageing analysis of trade receivables as at June 30, 2025, which primarily represent amounts due from the catering and related food business in Hong Kong Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | Balance (HKD thousands) | Percentage | | :--- | :------------ | :------- | | Current to 30 days | 773 | 33% | | 31 to 60 days | 108 | 5% | | 61 to 90 days | 133 | 6% | | Over 90 days | 1,320 | 56% | | **Total** | **2,334** | **100%** | - As at June 30, 2025, trade receivables were amounts due from the catering and related food business in Hong Kong[92](index=92&type=chunk) [Pledged Time Deposits and Cash and Cash Equivalents](index=35&type=section&id=Pledged%20Time%20Deposits%20and%20Cash%20and%20Cash%20Equivalents) This section provides an analysis of cash and cash equivalents, including cash and bank equivalents, pledged time deposits, and bank overdrafts, along with details on available banking facilities and RMB-denominated cash Cash and Cash Equivalents Analysis | Item | As at June 30, 2025 (HKD thousands) | As at December 31, 2024 (HKD thousands) | | :--- | :--------------------- | :--------------------- | | Cash and bank equivalents | 18,160 | 14,830 | | Pledged time deposits | 10,000 | 10,000 | | Less: Bank overdrafts | (19,311) | (9,911) | | **Cash and cash equivalents (Consolidated Statement of Cash Flows)** | **8,849** | **14,919** | - The Group's available banking facilities were **HKD 10 million**, of which approximately **HKD 9.958 million** was utilized[94](index=94&type=chunk) - RMB-denominated cash and cash equivalents were **HKD 2.192 million** (December 31, 2024: HKD 1.054 million)[93](index=93&type=chunk) [Share Capital](index=36&type=section&id=Share%20Capital) This section presents the issued and fully paid share capital, detailing the number of shares and their par value Issued and Fully Paid Share Capital | Date | Number of Shares | Ordinary shares of HKD 0.20 par value each (HKD thousands) | | :--- | :------------- | :--------------------------------- | | June 30, 2025 | 238,234,732 | 47,647 | | December 31, 2024 | 970,157,660 | 38,806 | [Trade Payables](index=37&type=section&id=Trade%20Payables) This section provides an ageing analysis of trade payables as at June 30, 2025, noting that they are non-interest bearing and generally have credit payment terms ranging from 30 to 120 days Ageing Analysis of Trade Payables (As at June 30, 2025) | Ageing | Balance (HKD thousands) | Percentage | | :--- | :------------ | :------- | | Current to 30 days | 11,022 | 26.0% | | Over 90 days | 31,371 | 74.0% | | **Total** | **42,399** | **100%** | - Trade payables are non-interest bearing and generally have credit payment terms ranging from **30 to 120 days**[96](index=96&type=chunk) [Other Payables and Accrued Liabilities](index=37&type=section&id=Other%20Payables%20and%20Accrued%20Liabilities) This section details the total other payables and accrued liabilities, highlighting a significant increase in contract liabilities, including amounts received for property sales, and notes other unsecured loans from an independent third party Total Other Payables and Accrued Liabilities | Date | Total (HKD thousands) | | :--- | :------------ | | June 30, 2025 | 98,897 | | December 31, 2024 | 79,543 | - Contract liabilities significantly increased to **HKD 48.792 million** (December 31, 2024: HKD 25.367 million), including amounts received and/or deposits for property sales[97](index=97&type=chunk)[99](index=99&type=chunk) - Other loans are unsecured loans from independent third party Mideast Investment Limited, bearing interest at **5% per annum** and repayable within one year[97](index=97&type=chunk) [Contingent Liabilities, Pledged Assets and Commitments](index=38&type=section&id=Contingent%20Liabilities%2C%20Pledged%20Assets%20and%20Commitments) As at June 30, 2025, the Group had no significant contingent liabilities, pledged assets, or commitments - As at June 30, 2025, the Group had **no significant contingent liabilities** (December 31, 2024: nil)[100](index=100&type=chunk) - As at June 30, 2025, the Group had **no pledged assets** (December 31, 2024: nil)[101](index=101&type=chunk) - As at June 30, 2025, the Group had **no significant commitments** (December 31, 2024: nil)[102](index=102&type=chunk) [Related Party Transactions](index=38&type=section&id=Related%20Party%20Transactions) This section details related party transactions, including interest income from Ohoh, and notes that China Construction Fortunes Group ceased to be a related party after July 5, 2022 - For the six months ended June 30, 2025, interest income from Ohoh was **HKD 179 thousand**[103](index=103&type=chunk) - China Construction Fortunes Group ceased to be a related party of the Group after July 5, 2022[103](index=103&type=chunk) [Post-Reporting Period Events and Approval of Interim Report](index=39&type=section&id=Post-Reporting%20Period%20Events%20and%20Approval%20of%20Interim%20Report) This section outlines post-reporting period events, specifically the adoption of a new share option scheme on July 7, 2025, valid for 10 years, and confirms the approval date of this interim report by the Board - The Company adopted a new share option scheme (2025 Scheme) on July 7, 2025, valid for **10 years**[104](index=104&type=chunk) - This interim report was approved by the Board on **August 29, 2025**[106](index=106&type=chunk) [Disclosure of Interests](index=40&type=section&id=Disclosure%20of%20Interests) [Directors' and Chief Executive's Interests in Shares and Underlying Shares](index=40&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Shares%20and%20Underlying%20Shares) As at June 30, 2025, Executive Director Mr. WONG Cho Wai held 3,638,400 shares through a controlled corporation, representing 1.53% of the total issued shares, with no other Directors or chief executive having disclosable interests Directors' Interests in Shares and Underlying Shares (Long Position, As at June 30, 2025) | Director's Name | Capacity/Nature of Interest | Number of Shares | Number of Share Options | Total Interest | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | WONG Cho Wai | Interest in a controlled corporation | 3,638,400 | – | 3,638,400 | 1.53% | - Mr. WONG Cho Wai beneficially owns **100%** of the issued share capital of Top Pioneer Holdings Limited and is therefore deemed to be interested in all shares held by it[108](index=108&type=chunk) [Substantial Shareholders' Interests](index=41&type=section&id=Substantial%20Shareholders'%20Interests) As at June 30, 2025, apart from Directors, substantial shareholder Mr. SHEN Shui Ping held 9,712,000 shares, representing 4.08% of the total issued shares Substantial Shareholders' Interests in Shares and Underlying Shares (Long Position, As at June 30, 2025) | Name of Substantial Shareholder | Capacity/Nature of Interest | Number of Shares | Total Interest | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | | SHEN Shui Ping | Beneficial owner | 9,712,000 | 9,712,000 | 4.08% | [Share Option Schemes](index=42&type=section&id=Share%20Option%20Schemes) [2021 Scheme](index=42&type=section&id=2021%20Scheme) For the six months ended June 30, 2025, no share options were outstanding at the beginning of the period under the 2021 Scheme, with 9 million options granted and 5.4 million exercised by employees, leaving 3.6 million options outstanding at period-end, granted to Executive Directors LAM Ka Lee and WONG Sze Yu 2021 Scheme Share Option Movement Details (As at June 30, 2025) | Name and/or Category | Outstanding as at January 1, 2025 | Granted during the period | Exercised during the period | Outstanding as at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | LAM Ka Lee (Executive Director) | – | 1,800,000 | – | 1,800,000 | | WONG Sze Yu (Executive Director) | – | 1,800,000 | – | 1,800,000 | | Employees | – | 5,400,000 | 5,400,000 | – | | **Total** | **–** | **9,000,000** | **5,400,000** | **3,600,000** | - As at the date of this interim report, a total of **3.6 million** share options remained outstanding under the 2021 Scheme[113](index=113&type=chunk) [2025 Scheme](index=43&type=section&id=2025%20Scheme) The Company adopted a new share option scheme (2025 Scheme) on July 7, 2025, which is valid for 10 years from its adoption date - The 2025 Scheme became effective on **July 7, 2025**, and will be valid for **10 years** from its adoption date[114](index=114&type=chunk) [Other Information](index=44&type=section&id=Other%20Information) [Purchase, Sale or Redemption of the Company's Listed Securities or Treasury Shares](index=44&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities%20or%20Treasury%20Shares) During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and no treasury shares were held at period-end - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[115](index=115&type=chunk) - As at the end of the reporting period, the Company held **no treasury shares**[115](index=115&type=chunk) [Corporate Governance](index=44&type=section&id=Corporate%20Governance) The Company is committed to maintaining high corporate governance standards and complied with all code provisions of the Corporate Governance Code during the six months ended June 30, 2025, with a minor deviation regarding the separation of roles between Chairman and Chief Executive, as the CEO position is currently vacant and responsibilities are shared among Board members - The Company has complied with all code provisions of the Corporate Governance Code and Corporate Governance Report in Appendix 14 of the Listing Rules during the six months ended June 30, 2025, except for a minor deviation from code provision C.2.1[116](index=116&type=chunk) - Code provision C.2.1 stipulates that the roles of chairman and chief executive should be separate and not performed by the same individual; the position of Chief Executive is currently vacant, and its roles and responsibilities are shared among Board members[116](index=116&type=chunk)[117](index=117&type=chunk) [Standard Code for Securities Transactions by Directors](index=45&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code of conduct for Directors' securities transactions that is no less stringent than the Standard Code, and all Directors confirmed compliance with this code during the reporting period - The Company has adopted a code of conduct for Directors' securities transactions, the terms of which are no less stringent than the required standard set out in the Standard Code[119](index=119&type=chunk) - Following specific enquiries with all Directors, they have confirmed compliance with the required standard set out in the Company's adopted Standard Code for the six months ended June 30, 2025[119](index=119&type=chunk) [Review of Interim Report](index=45&type=section&id=Review%20of%20Interim%20Report) The Audit Committee has reviewed the Group's interim report, including the unaudited condensed consolidated financial statements for the six months ended June 30, 2025 - The Audit Committee has reviewed the Group's interim report, including the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025[120](index=120&type=chunk) [Changes in Directors' Information](index=45&type=section&id=Changes%20in%20Directors'%20Information) Since the approval date of the Company's 2024 annual report, there have been no other changes in Directors' information requiring disclosure under Rule 13.51B(1) of the Listing Rules - Save as disclosed, there have been no changes in the Company's Directors for the six months ended June 30, 2025, and up to the date of this interim report, and no other information is required to be disclosed under Rule 13.51B(1) of the Listing Rules[121](index=121&type=chunk)