[Company Information](index=4&type=section&id=Company%20Information) This section provides key details about the company's governance structure and fundamental corporate information [Board of Directors and Committees](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) This section lists the company's board members, including executive and independent non-executive directors, and the composition of key committees, along with essential contact information - Executive Directors include Mr. Lam Sam Ming (Chairman), Ms. Chan Sau Po, Ms. Yiu Yuen, Ms. Hui Yuk Ling and Mr. Luk Wai[9](index=9&type=chunk) - Independent Non-Executive Directors are Ms. Cheung Yin, Mr. Wong Hei Chiu and Mr. Leung Ka Chun[9](index=9&type=chunk) - The Chairman of the Review Committee is Ms. Cheung Yin, the Chairman of the Remuneration Committee is Mr. Wong Hei Chiu, the Chairman of the Nomination Committee is Mr. Lam Sam Ming, and the Chairman of the Risk Management Committee is Mr. Lam Sam Ming[9](index=9&type=chunk) [Company General Information](index=4&type=section&id=Company%20General%20Information) This section provides fundamental company details such as its registered office, principal place of business, share registrar, principal bankers, legal counsel, auditor, website, and stock code - The company's registered office, Hong Kong head office, and principal place of business are located at 3/F, Yip Cheong Centre, 10 Fung Yip Street, Chai Wan, Hong Kong[9](index=9&type=chunk) - The company's stock code is **8385**[10](index=10&type=chunk) - The company's website is www.prosperous-printing-group.com.hk[10](index=10&type=chunk) [Summary](index=5&type=section&id=Summary) This section presents a high-level overview of the company's key financial performance for the period, highlighting significant changes and board decisions Key Financial Data Overview for the Period | Indicator | Six Months Ended June 30, 2025 (HK$ thousand) | Six Months Ended June 30, 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,200 | 43,500 | -97.2% | | Gross Profit (Loss) | (51) | 3,700 | N/A (Turned from profit to loss) | | Loss for the Period | (26,400) | (29,500) | -10.5% (Loss narrowed) | - The significant decrease in revenue was primarily due to the closure of the Shenzhen factory in May 2024 and the Huizhou factory obtaining its printing license only in May 2025, leading to reduced customer orders[11](index=11&type=chunk) - The Board does not recommend the declaration of an interim dividend for the period (Prior period: nil)[11](index=11&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section provides a detailed breakdown of the company's financial performance, including revenue, costs, and various income and expense items, culminating in the total comprehensive expense for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 1,232 | 43,495 | | Cost of Sales | (1,283) | (39,753) | | Gross (Loss) / Profit | (51) | 3,742 | | Other Income | 127 | 1,354 | | Distribution Costs | (304) | (4,414) | | Administrative Expenses | (14,537) | (27,031) | | Operating Loss | (14,765) | (26,349) | | Finance Costs | (11,630) | (3,039) | | Loss Before Tax | (26,395) | (29,388) | | Income Tax | – | (76) | | Loss for the Period | (26,395) | (29,464) | | Exchange differences on translation of overseas operations | (26,361) | 4,147 | | Total Comprehensive Expense for the Period | (52,756) | (25,317) | | Basic and Diluted Loss Per Share (HK cents) | (28.72) | (35.65) | - Revenue for the period significantly decreased by **97.2%**, leading to a gross profit turning into a gross loss[12](index=12&type=chunk) - Finance costs increased significantly by **282.7%** year-on-year, while administrative expenses decreased by **46.2%** year-on-year[12](index=12&type=chunk) [Condensed Consolidated Statement of Financial Position](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents a snapshot of the company's assets, liabilities, and equity at the end of the reporting period, highlighting changes in financial structure Condensed Consolidated Statement of Financial Position (As at June 30) | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | **Assets** | | | | Property, Plant and Equipment | 37,428 | 92,166 | | Investment Properties | 42,361 | 43,935 | | Trade and Other Receivables | 18,470 | 20,288 | | Cash and Cash Equivalents | 19 | 849 | | **Total Assets** | **100,494** | **158,439** | | **Equity** | | | | Share Capital | 108,490 | 108,490 | | Accumulated Losses | (170,396) | (117,640) | | **Total Equity** | **(61,906)** | **(9,150)** | | **Liabilities** | | | | Trade and Other Payables | 14,532 | 29,822 | | Bank Loans and Overdrafts | 118,921 | 107,580 | | **Total Liabilities** | **162,400** | **167,589** | | **Total Equity and Liabilities** | **100,494** | **158,439** | - Total assets decreased from **HK$158.439 million** at the end of 2024 to **HK$100.494 million**, primarily due to a significant reduction in property, plant and equipment[13](index=13&type=chunk) - Total equity further deteriorated from a negative **HK$9.150 million** to a negative **HK$61.906 million**, indicating an expansion of accumulated losses[13](index=13&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section outlines the movements in the company's equity components over the reporting period, reflecting the impact of profit/loss and other comprehensive income Condensed Consolidated Statement of Changes in Equity (Six Months Ended June 30) | Indicator | June 30, 2025 (HK$ thousand) | June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Share Capital | 108,490 | 106,319 | | Exchange Reserve | (44,131) | (13,648) | | Statutory Surplus Reserve | 5,125 | 5,125 | | Capital Reserve | 3,318 | 3,318 | | Accumulated Losses | (134,708) | (92,170) | | **Total Equity** | **(61,906)** | **8,944** | - As of June 30, 2025, total equity was a negative **HK$61.906 million**, compared to a positive **HK$8.944 million** in the same period of 2024, indicating a significant deterioration in financial position[15](index=15&type=chunk) - The loss for the period of **HK$26.395 million** and other comprehensive expenses of **HK$26.361 million** due to exchange differences on translation of overseas operations were the main reasons for the decrease in equity[15](index=15&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities, providing insight into the company's liquidity management Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (3,086) | (1,874) | | Net Cash From Investing Activities | 1,105 | 385 | | Net Cash From / (Used in) Financing Activities | 453 | (251) | | Net Decrease in Cash and Cash Equivalents | (1,528) | (1,740) | | Cash and Cash Equivalents at End of Period | (12,197) | (10,649) | - Operating activities continued to generate cash outflows, with a net outflow of **HK$3.086 million** for the current period, an increase from the prior year[16](index=16&type=chunk) - Financing activities shifted from a net outflow last year to a net inflow of **HK$453 thousand** in the current period, primarily due to new bank loans of **HK$2 million**[16](index=16&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides supplementary information and explanations for the figures presented in the condensed consolidated financial statements [1. General Information](index=11&type=section&id=1.%20General%20Information) This note introduces the basic information of Prosperous Printing Company Limited, including its incorporation date, listing status, registered office address, and the principal business activities of the company and its subsidiaries - Prosperous Printing Company Limited was incorporated in Hong Kong on December 23, 1992, and listed on GEM of The Stock Exchange of Hong Kong Limited on December 13, 2017[17](index=17&type=chunk) - The company and its subsidiaries (the Group) are principally engaged in the production and trading of books and paper products[19](index=19&type=chunk) [2. Basis of Preparation](index=11&type=section&id=2.%20Basis%20of%20Preparation) This note explains the basis for preparing the interim financial report, which is in accordance with GEM Listing Rules and HKAS 34, and has been reviewed by the company's review committee, also detailing the going concern uncertainties and mitigation measures - The interim financial report is prepared in accordance with the GEM Listing Rules of The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[20](index=20&type=chunk) - The interim results are unaudited but have been reviewed by the company's review committee[21](index=21&type=chunk) [Going Concern Basis](index=12&type=section&id=Going%20Concern%20Basis) This sub-section details the company's going concern uncertainties and the measures taken by the board to address them, which are crucial for the validity of the financial statements' preparation basis - As of June 30, 2025, the Group recorded a loss of approximately **HK$26.395 million**, net current liabilities of approximately **HK$131.672 million**, and bank balances and cash of approximately **HK$19 thousand**, indicating significant going concern uncertainties[22](index=22&type=chunk) - To improve its financial position, the Board has taken several measures, including exploring diversified income sources, implementing cost controls, negotiating renewal of financing with banks, disposing of properties, obtaining financial support from the controlling shareholder, and seeking additional funding[25](index=25&type=chunk) - This interim financial report is prepared on a going concern basis, the validity of which depends on the successful implementation and outcome of the aforementioned measures[23](index=23&type=chunk) [3. Changes in Accounting Policies](index=12&type=section&id=3.%20Changes%20in%20Accounting%20Policies) This note clarifies that certain amendments to Hong Kong Financial Reporting Standards, effective for the current period, did not have a material impact on the Group's financial reporting, and no new standards or interpretations not yet effective were adopted - Certain amendments to Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants became effective for the Group's current accounting period but had no material impact on the Group's results and financial position[24](index=24&type=chunk) - The Group has not early adopted any new standards or interpretations that are not yet effective for the current accounting period[24](index=24&type=chunk) [4. Revenue and Segment Reporting](index=13&type=section&id=4.%20Revenue%20and%20Segment%20Reporting) This note details the Group's revenue composition and segment information, showing a significant decline in revenue due to factory closures and licensing delays, with the company operating as a single segment and disclosing customer revenue by geographical location - The Group's revenue refers to revenue generated from the sale of goods and provision of services[26](index=26&type=chunk) - The chief operating decision maker has determined that the Group has only one operating segment, which is the production of books and paper products[27](index=27&type=chunk) [4(a) Revenue](index=13&type=section&id=4%28a%29%20Revenue) This sub-section provides a breakdown of the Group's revenue by source, highlighting the significant decline in sales of books and paper products and the cessation of subcontracting services Revenue Breakdown (Six Months Ended June 30) | Revenue Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sales of books and paper products | 1,232 | 41,013 | | Provision of subcontracting services | – | 2,482 | | **Total** | **1,232** | **43,495** | - Revenue from sales of books and paper products significantly decreased during the period, and revenue from subcontracting services was zero[26](index=26&type=chunk) - All revenue is recognized at a point in time[26](index=26&type=chunk) [4(b) Segment Reporting](index=14&type=section&id=4%28b%29%20Segment%20Reporting) This sub-section presents the Group's revenue from contracts with customers categorized by geographical location, illustrating the significant contraction in key markets Revenue from Contracts with Customers by Geographical Location (Six Months Ended June 30) | Geographical Location | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 1,051 | 23,782 | | Mainland China | – | 2,482 | | United States | 181 | 16,920 | | United Kingdom | – | 311 | | **Total** | **1,232** | **43,495** | - Hong Kong remained the primary source of revenue during the period, but revenue significantly contracted, while revenue from Mainland China and the United Kingdom was zero[29](index=29&type=chunk) [5. Other Income](index=15&type=section&id=5.%20Other%20Income) This note details the composition of the Group's other income, which significantly decreased due to the absence of one-off income streams recognized in the prior period Other Income (Six Months Ended June 30) | Income Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | – | 39 | | Profit from disposal of scrap materials | – | 431 | | Government grants - PRC government subsidies | – | 176 | | Gain on disposal of property, plant and machinery and equipment | – | 346 | | Net exchange gain / (loss) | 1 | (32) | | Rental income | – | 274 | | Miscellaneous income | 126 | 120 | | **Total** | **127** | **1,354** | - Other income decreased by approximately **90.6%** from approximately **HK$1.4 million** in the prior period to approximately **HK$127 thousand** in the current period[30](index=30&type=chunk) - The decrease was due to one-off income recognized in the prior period related to scrap sales, disposal of property, plant and machinery and equipment, government grants, and rental income[48](index=48&type=chunk) [6. Income Tax](index=15&type=section&id=6.%20Income%20Tax) This note discloses the Group's income tax expense, which was nil for the current period, and outlines the applicable tax rates for its operations in Hong Kong, Mainland China, and the British Virgin Islands Income Tax (Six Months Ended June 30) | Tax Type | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current tax - Hong Kong Profits Tax | – | 76 | | Current tax - PRC Enterprise Income Tax | – | – | | Deferred tax | – | – | | **Total** | **–** | **76** | - Hong Kong Profits Tax adopts a two-tiered system, with the first **HK$2 million** of assessable profits taxed at **8.25%** and the remainder at **16.5%**[31](index=31&type=chunk) - PRC subsidiaries are subject to a tax rate of **25%**, while British Virgin Islands subsidiaries are exempt from tax[31](index=31&type=chunk) [7. Loss Per Share](index=16&type=section&id=7.%20Loss%20Per%20Share) This note calculates and discloses the Group's basic and diluted loss per share, indicating a narrowing of the basic loss per share for the current period with no dilutive potential ordinary shares [7(a) Basic Loss Per Share](index=16&type=section&id=7%28a%29%20Basic%20Loss%20Per%20Share) This sub-section presents the calculation of the basic loss per share, based on the loss attributable to ordinary equity holders and the weighted average number of shares outstanding - Basic loss per share was **28.72 HK cents** (Six months ended June 30, 2024: **35.65 HK cents**)[32](index=32&type=chunk) - The calculation is based on a loss attributable to ordinary equity holders of the Company of approximately **HK$26.395 million** and a weighted average of **104.388 million** ordinary shares outstanding during the interim period[32](index=32&type=chunk) [7(b) Diluted Loss Per Share](index=16&type=section&id=7%28b%29%20Diluted%20Loss%20Per%20Share) This sub-section clarifies that there were no dilutive potential ordinary shares, resulting in the diluted loss per share being identical to the basic loss per share - There were no dilutive potential ordinary shares for the six months ended June 30, 2025 and 2024, thus the diluted loss per share was the same as the basic loss per share[33](index=33&type=chunk) [8. Dividends](index=16&type=section&id=8.%20Dividends) This note states that the Board does not recommend the payment of a dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of a dividend for the six months ended June 30, 2025 (Six months ended June 30, 2024: nil)[34](index=34&type=chunk) [9. Property, Plant and Equipment](index=16&type=section&id=9.%20Property%2C%20Plant%20and%20Equipment) This note discloses the changes in the Group's property, plant and equipment, primarily related to the acquisition and disposal of self-owned assets, including a loss incurred from the disposal of machinery in the current period [9(a) Acquisition and Disposal of Self-Owned Assets](index=16&type=section&id=9%28a%29%20Acquisition%20and%20Disposal%20of%20Self-Owned%20Assets) This sub-section details the specific transactions involving the acquisition and disposal of the Group's self-owned assets, highlighting the financial impact of these activities - During the six months ended June 30, 2025, machinery with a carrying amount of **HK$2.051 million** was disposed of, resulting in a loss on disposal of **HK$946 thousand**[35](index=35&type=chunk) - During the six months ended June 30, 2024, machinery with a carrying amount of nil was disposed of, resulting in a gain on disposal of **HK$346 thousand**[36](index=36&type=chunk) [10. Trade and Other Receivables](index=16&type=section&id=10.%20Trade%20and%20Other%20Receivables) This note provides a detailed breakdown and ageing analysis of the Group's trade and other receivables, showing the composition and maturity profile of these assets Trade and Other Receivables (As at June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables, net of loss allowance | 16,321 | 16,694 | | Other receivables | 2,043 | 3,488 | | Utilities and other deposits | 106 | 106 | | **Total** | **18,470** | **20,288** | Ageing Analysis of Trade Receivables (As at June 30) | Ageing | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 month | 156 | 288 | | 1 to 3 months | 684 | 1,934 | | 3 to 6 months | 1,027 | 851 | | 6 to 12 months | 2,222 | 835 | | Over 1 year | 12,232 | 12,786 | | **Total** | **16,321** | **16,694** | - Trade receivables are generally due within **180 days** from the invoice date[38](index=38&type=chunk) [11. Trade and Other Payables](index=17&type=section&id=11.%20Trade%20and%20Other%20Payables) This note provides a detailed breakdown and ageing analysis of the Group's trade and other payables, indicating a significant decrease in total payables and a concentration of older trade payables Trade and Other Payables (As at June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables | 6,543 | 19,152 | | Other payables and accrued expenses | 7,989 | 10,670 | | **Total** | **14,532** | **29,822** | Ageing Analysis of Trade Payables (As at June 30) | Ageing | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 month | – | 1,764 | | 1 to 3 months | – | 63 | | 3 to 6 months | – | 3,585 | | 6 to 12 months | 5,412 | 6,163 | | Over 1 year | 1,131 | 7,577 | | **Total** | **6,543** | **19,152** | [12. Fair Value Measurement of Financial Instruments](index=18&type=section&id=12.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) This note explains the Group's methodology for fair value measurement of financial instruments, classifying them into a three-level hierarchy based on the observability and significance of valuation inputs [12(i) Financial Assets and Liabilities Measured at Fair Value](index=18&type=section&id=12%28i%29%20Financial%20Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value) This sub-section describes the three-level fair value hierarchy used for classifying financial instruments, based on the nature of the inputs used in their valuation - The fair value hierarchy is divided into three levels: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs without significant unobservable inputs), and Level 3 (significant unobservable inputs)[41](index=41&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's operational and financial performance, strategic outlook, and key financial management aspects for the reporting period [Business Review and Future Prospects](index=19&type=section&id=Business%20Review%20and%20Future%20Prospects) The Group's revenue significantly declined due to factory closures and licensing delays, leading to a shift in business model towards outsourcing, with future plans to leverage project management for overseas orders and explore new printing technologies - The Group's revenue decreased by approximately **97.2%** from approximately **HK$43.5 million** in the prior period to approximately **HK$1.2 million** in the current period[42](index=42&type=chunk) - The Shenzhen factory ceased operations in June 2024, the Hong Kong factory ceased operations, and the business model shifted from self-owned factory production to outsourcing printing and binding to the Huizhou factory or other subcontractors in China[43](index=43&type=chunk) - The Huizhou factory obtained its printing license in May 2025 and can now conduct printing business[43](index=43&type=chunk) - Future plans include streamlining the business model, leveraging competitive advantages to secure overseas orders, outsourcing production to reduce fixed costs, and exploring diversified income sources and more technologically advanced printing business opportunities[44](index=44&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) This section provides a detailed review of the period's financial metrics, including revenue, cost of sales, gross profit (loss), other income, distribution costs, administrative expenses, finance costs, income tax, and loss for the period, analyzing the main reasons for each change [Revenue](index=20&type=section&id=Revenue) This sub-section discusses the significant decrease in revenue, primarily attributed to the closure of the Shenzhen factory and the delayed printing license for the Huizhou factory - Revenue decreased by approximately **97.2%** from approximately **HK$43.5 million** in the prior period to approximately **HK$1.2 million** in the current period[45](index=45&type=chunk) - The decrease was mainly due to the closure of the Shenzhen factory in May 2024 and the Huizhou factory obtaining its printing license only in May 2025, leading to reduced sales orders[45](index=45&type=chunk) [Cost of Sales](index=20&type=section&id=Cost%20of%20Sales) This sub-section analyzes the reduction in cost of sales, directly linked to the significant decline in revenue and sales orders - Cost of sales decreased by approximately **96.8%** from approximately **HK$39.8 million** in the prior period to approximately **HK$1.3 million** in the current period[46](index=46&type=chunk) - The decrease was mainly due to reduced revenue and sales orders[46](index=46&type=chunk) [Gross Profit (Loss) and Gross Profit (Loss) Margin](index=20&type=section&id=Gross%20Profit%20%28Loss%29%20and%20Gross%20Profit%20%28Loss%29%20Margin) This sub-section highlights the shift from a gross profit to a gross loss, primarily driven by the reduction in sales orders - The Group recorded a gross loss of approximately **HK$51 thousand** in the current period, compared to a gross profit of approximately **HK$3.7 million** in the prior period[47](index=47&type=chunk) - The decrease in gross profit was mainly due to reduced sales orders[47](index=47&type=chunk) [Other Income](index=20&type=section&id=Other%20Income) This sub-section explains the substantial decrease in other income, primarily due to the absence of one-off income streams recognized in the previous period - Other income decreased by approximately **90.6%** from approximately **HK$1.4 million** in the prior period to approximately **HK$127 thousand** in the current period[48](index=48&type=chunk) - The decrease was due to one-off income recognized in the prior period related to scrap sales, disposal of property, plant and machinery and equipment, government grants, and rental income[48](index=48&type=chunk) [Distribution Costs](index=20&type=section&id=Distribution%20Costs) This sub-section details the reduction in distribution costs, directly attributable to the decrease in sales orders - The Group recorded distribution expenses of approximately **HK$304 thousand** in the current period, compared to approximately **HK$4.4 million** in the prior period[49](index=49&type=chunk) - The decrease was due to reduced sales orders[49](index=49&type=chunk) [Administrative Expenses](index=20&type=section&id=Administrative%20Expenses) This sub-section analyzes the decrease in administrative expenses, mainly due to reductions in staff costs, benefits, and directors' emoluments - Administrative expenses decreased by approximately **46.2%** from approximately **HK$27.0 million** in the prior period to **HK$14.5 million** in the current period[50](index=50&type=chunk) - The decrease was due to reduced staff costs and benefits, and directors' emoluments[50](index=50&type=chunk) [Finance Costs](index=20&type=section&id=Finance%20Costs) This sub-section highlights the significant increase in finance costs for the current period compared to the prior period - In the current period, the Group recorded finance costs of approximately **HK$11.6 million**, a significant increase from approximately **HK$3.0 million** in the prior period[51](index=51&type=chunk) [Income Tax](index=21&type=section&id=Income%20Tax) This sub-section notes the absence of income tax expense for the current period, contrasting with a small expense in the prior period - Income tax for the current period was zero, compared to approximately **HK$0.1 million** in the prior period[52](index=52&type=chunk) [Loss for the Period](index=21&type=section&id=Loss%20for%20the%20Period) This sub-section summarizes the Group's net loss for the period, indicating a narrowing of the loss despite challenges, primarily due to decreased revenue and increased finance costs - The Group recorded a loss of approximately **HK$26.4 million** in the current period, compared to a loss of **HK$29.5 million** in the prior period, indicating a narrowing of the loss[53](index=53&type=chunk) - The net loss was primarily due to decreased revenue (factory closures, licensing delays) and increased finance costs[53](index=53&type=chunk) [Liquidity and Financial Resources](index=21&type=section&id=Liquidity%20and%20Financial%20Resources) As of the reporting date, the Group had net current liabilities of approximately HK$131.67 million, a current ratio of 0.12, and net debt of approximately HK$62.9 million, with significant bank borrowings due within one year - As of the reporting date, the Group's net current liabilities were approximately **HK$131.67 million** (December 31, 2024: approximately **HK$134.21 million**)[54](index=54&type=chunk) - As of the reporting date, the Group's current ratio was **0.12** (December 31, 2024: **0.14**)[54](index=54&type=chunk) - As of the end of the period, net debt was approximately **HK$62.9 million** (December 31, 2024: approximately **HK$9.2 million**)[54](index=54&type=chunk) - As of the reporting date, bank loans and overdrafts of approximately **HK$118.9 million** were repayable within one year[55](index=55&type=chunk) [Foreign Exchange Management](index=21&type=section&id=Foreign%20Exchange%20Management) The Group's foreign exchange risk primarily arises from receivables, payables, and cash balances denominated in foreign currencies, with no hedging activities undertaken during the period - The Group's foreign exchange risk primarily arises from receivables, payables, and cash balances denominated in foreign currencies (US dollars, Renminbi, British Pounds, and Japanese Yen)[56](index=56&type=chunk) - During the period, the Group did not enter into or trade any financial instruments for hedging purposes[56](index=56&type=chunk) [Pledges of the Group's Assets](index=22&type=section&id=Pledges%20of%20the%20Group%27s%20Assets) As of the reporting date, bank financing was secured by various Group assets, including bank deposits, financial assets, trade receivables, property, plant and equipment, and rental income from Hong Kong properties, with HK$159.4 million of the HK$175.9 million facility utilized - Bank financing is secured by the Group's bank deposits, financial assets at fair value through profit or loss, the Group's trade receivables, the Group's property, plant and equipment, assignment of rental income from the Group's properties in Hong Kong, proceeds from key management personnel insurance policies, and corporate guarantees from the Company and certain subsidiaries[57](index=57&type=chunk) - As of the reporting date, the total amount of these bank facilities was **HK$175.9 million**, with **HK$159.4 million** utilized[57](index=57&type=chunk) - As of June 30, 2025, property and machinery with a carrying amount of **HK$37.4 million** were pledged as collateral for bank financing[57](index=57&type=chunk) [Capital Structure](index=22&type=section&id=Capital%20Structure) The company's shares were listed on GEM on December 13, 2017, and the total number of issued shares remained at 104.388 million since the completion of a placing on September 20, 2024, with no changes in capital structure during the period - The Company's shares were successfully listed on GEM on December 13, 2017[58](index=58&type=chunk) - Since the completion of the placing on September 20, 2024, the total number of issued shares of the Company has been **104.388 million**, with no changes in the capital structure during the period[58](index=58&type=chunk) [Capital Expenditure](index=22&type=section&id=Capital%20Expenditure) Capital expenditure primarily involves the acquisition of property, plant and equipment, with no capital expenditure incurred during the current period, and funding sourced from internal resources, finance leases, and bank borrowings - Capital expenditure primarily includes the acquisition of property, plant and equipment (such as production machinery)[59](index=59&type=chunk) Group's Capital Expenditure (As at June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | – | 92,166 | | Intangible Assets | – | – | | **Total** | **–** | **92,166** | - Capital expenditure for the period was funded through internal resources, finance leases, and bank borrowings[59](index=59&type=chunk) [Contingent Liabilities](index=22&type=section&id=Contingent%20Liabilities) There were no significant contingent liabilities during the current period - There were no significant contingent liabilities[61](index=61&type=chunk) [Commitments](index=23&type=section&id=Commitments) As of the reporting date, there were no unprovided capital commitments for expenditure in the financial statements - As of the reporting date, there were no unprovided capital commitments for expenditure in the financial statements (December 31, 2024: nil)[62](index=62&type=chunk) [Employees and Remuneration Policy](index=23&type=section&id=Employees%20and%20Remuneration%20Policy) As of the reporting date, the Group had 9 employees, with directors' and senior management's remuneration reviewed periodically based on market levels, responsibilities, and company performance - As of the reporting date, the Group had **9** employees (December 31, 2024: **9** employees)[63](index=63&type=chunk) - Directors and senior management receive remuneration in the form of directors' fees, salaries, benefits in kind, and/or discretionary bonuses, with remuneration benefits reviewed and determined periodically[63](index=63&type=chunk) [Material Investments, Material Acquisitions and Disposals, and Future Plans for Material Investments or Capital Assets](index=23&type=section&id=Material%20Investments%2C%20Material%20Acquisitions%20and%20Disposals%2C%20and%20Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) There were no material investments, acquisitions, or disposals during the current period, nor any future plans for material investments or capital assets as of the reporting date - During the period, the Group had no material investments, nor any material acquisitions or disposals[64](index=64&type=chunk) - As of the reporting date, the Group had no future plans regarding any material investments or capital assets[64](index=64&type=chunk) [Events After the Reporting Period](index=23&type=section&id=Events%20After%20the%20Reporting%20Period) To the best of the Board's knowledge, there were no significant disclosable events after the reporting period - To the best of the Board's knowledge, there were no disclosable events after the reporting period[65](index=65&type=chunk) [Dividends](index=23&type=section&id=Dividends) The Board does not recommend the payment of an interim dividend for the current period, consistent with the prior period - The Board does not recommend the payment of an interim dividend for the current period (Prior period: nil)[66](index=66&type=chunk) [Other Information](index=24&type=section&id=Other%20Information) This section covers additional disclosures including share option schemes, share transactions, director changes, interests disclosures, corporate governance practices, and committee reviews [Share Option Scheme](index=24&type=section&id=Share%20Option%20Scheme) The company has adopted a share option scheme, but no options were granted, exercised, cancelled, lapsed, or forfeited during the period, and no outstanding options existed at period-end - No share options were granted, exercised, cancelled, lapsed, or forfeited under the scheme during the period[68](index=68&type=chunk) - There were no outstanding share options as of the reporting date[68](index=68&type=chunk) [Purchase, Sale or Redemption of Shares](index=24&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Shares) Neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares during the current period - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any shares during the period[69](index=69&type=chunk) [Changes in Directors](index=24&type=section&id=Changes%20in%20Directors) Ms. Hui Yuk Ling and Mr. Luk Wai were appointed as executive directors of the company on April 7, 2025, and April 9, 2025, respectively - Ms. Hui Yuk Ling and Mr. Luk Wai were appointed as executive directors of the company on April 7, 2025, and April 9, 2025, respectively[70](index=70&type=chunk) [Disclosure of Interests](index=24&type=section&id=Disclosure%20of%20Interests) This section discloses the interests and short positions of directors and substantial shareholders in the company's shares and associated corporations, including controlled corporate interests and pledged shares [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=24&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20and%20its%20Associated%20Corporations) This sub-section details the interests and short positions held by directors and the chief executive in the company's shares, underlying shares, or debentures Directors' Interests in the Company (As at June 30, 2025) | Director Name | Capacity | Number of Shares | Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Mr. Lam Sam Ming | Controlled Corporation Interest | 48,000,000 (L) | 45.98% | | Ms. Yiu Yuen | Spouse's Interest | 48,000,000 (L) | 45.98% | - Mr. Lam Sam Ming holds **48,000,000** shares through First Tech, which is wholly owned by him[74](index=74&type=chunk) - Ms. Yiu Yuen, as the spouse of Mr. Lam Sam Ming, is deemed to have an interest in the same number of shares[74](index=74&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares Discloseable Under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance](index=26&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20Discloseable%20Under%20Divisions%202%20and%203%20of%20Part%20XV%20of%20the%20Securities%20and%20Futures%20Ordinance) This sub-section outlines the interests and short positions of substantial shareholders in the company's shares, as required by the Securities and Futures Ordinance Substantial Shareholders' Interests in Shares (As at June 30, 2025) | Substantial Shareholder Name | Capacity | Number of Shares | Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | First Tech | Beneficial Owner | 48,000,000 (L) | 45.98% | | Yili | Person with a security interest in shares | 7,200,000 (L) | 6.90% | - First Tech has pledged **6.90%** of its shares in the issued share capital of the Company to a third-party lender[76](index=76&type=chunk) - Yili is wholly owned by Yili International Holdings Limited, which is 50% owned by Mr. Zhao Zhisheng and 50% by Mr. Zhang Dingjian[76](index=76&type=chunk) [Corporate Governance Practices](index=27&type=section&id=Corporate%20Governance%20Practices) The company complied with the Corporate Governance Code's principles and applicable provisions during the period, with the exception of the Chairman and CEO roles being held by the same individual, which the board deems in the company's best interest - The company has complied with the principles and applicable code provisions of the Corporate Governance Code during the period[77](index=77&type=chunk) - Mr. Lam Sam Ming holds both the Chairman and Chief Executive Officer positions, which deviates from Corporate Governance Code Provision C.2.1[78](index=78&type=chunk) - The Board believes that Mr. Lam's continued dual role is in the best interests of the Group, and the experienced and capable Board, including three independent non-executive directors, ensures a sufficient balance of power and authority[78](index=78&type=chunk) [Chairman and Chief Executive Officer](index=27&type=section&id=Chairman%20and%20Chief%20Executive%20Officer) This sub-section specifically addresses the combined roles of Chairman and Chief Executive Officer, noting the individual's extensive industry experience - Mr. Lam Sam Ming serves as both the Chairman and Chief Executive Officer of the company, possessing over **39 years** of experience in the printing industry[78](index=78&type=chunk) [Code of Conduct for Securities Transactions by Directors](index=27&type=section&id=Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The company adopted the GEM Listing Rules as its code of conduct for directors' securities transactions, and all directors confirmed full compliance during the period - The company has adopted Rules **5.48** to **5.67** of the GEM Listing Rules as the code of conduct for directors' securities transactions in shares[80](index=80&type=chunk) - Following specific enquiries with all directors, each of them has confirmed full compliance with the required standards of dealing set out in the code of conduct during the period[80](index=80&type=chunk) [Directors' Interests in Competing Business](index=28&type=section&id=Directors%27%20Interests%20in%20Competing%20Business) No director or their close associates held any direct or indirect interests in businesses competing or potentially competing with the Group's business, other than within the Group itself - Save for members of the Group, no director or their respective close associates had any direct or indirect interest in any business that competes or is likely to compete with the Group's business[81](index=81&type=chunk) [Review Committee](index=28&type=section&id=Review%20Committee) The Review Committee, established on November 15, 2017, has reviewed the Group's unaudited consolidated financial results for the period and found them to be in compliance with applicable accounting standards and GEM Listing Rules, with adequate disclosure - The company established a Review Committee on November 15, 2017[82](index=82&type=chunk) - The Review Committee has reviewed the Group's unaudited consolidated financial results for the period and is of the opinion that they comply with applicable accounting standards and the GEM Listing Rules and have been adequately disclosed[82](index=82&type=chunk)

[Company Profile](index=3&type=section&id=Company%20Profile) Guangdong Yueyun Transportation Co., Ltd. is a comprehensive transportation service provider, strategically focused on expressway travel services. [Company Overview and Strategic Positioning](index=3&type=section&id=Company%20Overview%20and%20Strategic%20Positioning) Guangdong Yueyun Transportation Co., Ltd., established in 1999 and listed in Hong Kong in 2005, is a comprehensive transportation service provider aiming to build a leading integrated platform for expressway travel services and energy-transportation integration. - The company was established in 1999 and listed on the Main Board of the Hong Kong Stock Exchange (stock code: **03399**) in 2005[8](index=8&type=chunk) - The controlling shareholder, Guangdong Provincial Communications Group Co., Ltd., holds approximately **74.12%** of the shares, while H-share shareholders hold approximately **25.88%**[8](index=8&type=chunk) - Strategic positioning: Based on transportation, with expressway travel service industry as the core, deeply operating transportation network resources, to build a leading integrated service platform for expressway travel services and energy-transportation integration in China[9](index=9&type=chunk) - Main businesses include expressway service area operations (energy, retail, investment promotion, advertising), road passenger transport and ancillary services, Taiping Interchange operations, and other businesses[9](index=9&type=chunk)[10](index=10&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) This section provides the company's basic information, core governance team, and external partners. [Basic Information and Governance Structure](index=4&type=section&id=Basic%20Information%20and%20Governance%20Structure) This chapter lists the company's legal name, stock code, registered office, principal place of business in Hong Kong, board members (executive, non-executive, independent non-executive directors), company secretary, authorized representatives, auditor, principal bankers, and legal advisors, showcasing its core governance team and external partners. - The company's legal name is Guangdong Yueyun Transportation Co., Ltd., with stock code **03399**[11](index=11&type=chunk) - Board members include Zhu Fang (Executive Director), Chen Chuxuan (Non-executive Director), Su Wujun (Independent Non-executive Director), etc[11](index=11&type=chunk) - The auditor is BDO China Shu Lun Pan Certified Public Accountants LLP, and the legal advisor is Haiwen & Partners[11](index=11&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) This section summarizes the company's financial performance, balance sheet, and profitability ratios for the period. [Performance Summary](index=5&type=section&id=Performance%20Summary) In the first half of 2025, the company's total operating revenue was RMB 3,770,028 thousand, a 3% year-on-year increase, driven by expressway service area operations, while gross profit decreased by 19%. 2025 H1 Performance Summary (RMB thousand yuan) | Indicator | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 3,770,028 | 3,674,663 | 3% | | Expressway Service Area Operations Revenue | 2,991,062 | 2,621,531 | 14% | | Road Passenger Transport and Ancillary Services Revenue | 723,616 | 980,218 | (26%) | | Taiping Interchange Operations and Other Businesses Revenue | 55,350 | 72,914 | (24%) | | Total Gross Profit | 305,851 | 379,135 | (19%) | | Operating Profit | 175,802 | 189,754 | (7%) | | Net Profit | 134,414 | 135,604 | (1%) | | Net Profit Attributable to Equity Holders of the Parent Company | 142,644 | 138,669 | 3% | | Basic Earnings Per Share (RMB yuan) | 0.18 | 0.17 | 3% | - Expressway service area operations revenue increased by **14%** year-on-year, being the main driver of operating revenue growth[13](index=13&type=chunk) - Total gross profit decreased by **19%**, primarily due to refined oil price adjustments, international oil price fluctuations, impact from new energy vehicles, and increased costs from expanding service area scale[13](index=13&type=chunk) [Balance Sheet and Profitability Ratios](index=6&type=section&id=Balance%20Sheet%20and%20Profitability%20Ratios) As of June 30, 2025, total assets slightly decreased, while total net assets and equity attributable to parent company shareholders increased, with a 10% drop in gross profit margin. 2025 H1 Balance Sheet and Profitability Ratios (RMB thousand yuan) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | 8,440,741 | 8,724,060 | (3%) | | Total Net Assets | 2,669,160 | 2,605,861 | 2% | | Equity Attributable to Equity Holders of the Parent Company | 2,168,198 | 2,086,140 | 4% | | Net Asset Value Per Share Attributable to Equity Holders of the Company (RMB yuan) | 2.71 | 2.61 | 4% | | Gross Profit Margin | 8.11% | 9.03% | (10%) | | Interest Coverage Ratio (times) | 3.21 | 2.79 | 15% | | Asset-Liability Ratio | 68.38% | 70.13% | (2%) | | Current Ratio (times) | 0.92 | 0.98 | (6%) | - Gross profit margin decreased by **10%**, mainly due to lower comprehensive refined oil sales prices and increased costs from expanding service area scale[14](index=14&type=chunk) - Asset-liability ratio decreased by **2%**, indicating an optimized financial structure[14](index=14&type=chunk) [Chairman's Report](index=7&type=section&id=Chairman's%20Report) The Chairman's Report outlines the company's strategic direction, operational focus, and future development plans amidst a complex economic environment. [Macroeconomic and Industry Environment](index=7&type=section&id=Macroeconomic%20and%20Industry%20Environment) In the first half of 2025, the global economy was complex, while China's GDP grew by 5.3%, with Guangdong's transportation sector undergoing reforms and new opportunities. - In the first half of 2025, the global economy was complex and volatile, while China's GDP grew by **5.3%** year-on-year, showing steady and positive economic development[16](index=16&type=chunk) - Guangdong's transportation sector is deepening reforms, with expressways embracing opportunities for new energy integration and diversified service area transformation[16](index=16&type=chunk) - The company is seizing industry development trends, focusing on core businesses, strengthening refined management, and steadily improving operational quality and efficiency[16](index=16&type=chunk) [Key Business Development Focus for H2 2025](index=7&type=section&id=Key%20Business%20Development%20Focus%20for%20H2%202025) The company will focus on core businesses, enhance quality and efficiency, drive innovation, and pursue transformational development in H2 2025, while exiting road passenger transport and exploring strategic emerging industries. - Development orientation for the second half of the year: Focus on core, enhance quality and efficiency, drive innovation, and transform development[17](index=17&type=chunk) - Resources will be concentrated on advantageous industries, and the exit of road passenger transport business will be steadily advanced[17](index=17&type=chunk) - Committed to building the group into a leading integrated platform for expressway travel services in China[17](index=17&type=chunk) [Expressway Service Area Operations - Energy Business](index=8&type=section&id=Expressway%20Service%20Area%20Operations%20-%20Energy%20Business) The energy business plans to expand traditional energy scale by building and reclaiming gas stations, deepen cooperation with central enterprises, and accelerate new energy deployment. - Plan to build **12** new self-operated gas stations and reclaim **10** self-operated gas stations to expand terminal sales scale[19](index=19&type=chunk) - Strengthen in-depth cooperation with central enterprises in oil product supply and sales to ensure supply stability and price advantages[19](index=19&type=chunk) - Establish a new energy subsidiary to comprehensively coordinate the construction of the Dahuai service area integrated "optical-storage-charging" project[21](index=21&type=chunk) - Plan to build photovoltaic power generation systems in **45** pairs of service areas and promote the construction of a digital energy comprehensive management platform[21](index=21&type=chunk) [Expressway Service Area Operations - Retail Business](index=10&type=section&id=Expressway%20Service%20Area%20Operations%20-%20Retail%20Business) The retail business will open new stores, upgrade existing ones, expand online and offline channels, optimize supply chain management, and support rural revitalization. - Plan to open **13** new stores and comprehensively upgrade **16** stores, optimizing store visual image and service standards[22](index=22&type=chunk) - Accelerate the expansion of the online Leyi Mall sales channel, establish a professional e-commerce operation team, and actively expand group purchase and wholesale channels[22](index=22&type=chunk) - Innovate investment promotion strategies, optimize category combinations and brand matrix with "nine-selection-four" product selection standards, and implement a "three-uniform" management model to compress operating costs[24](index=24&type=chunk) - Plan themed promotional activities around core consumption nodes, strengthen the application of the "Lu" IP, and assist in "rural revitalization" by improving agricultural product stations[24](index=24&type=chunk) [Expressway Service Area Operations - Investment Promotion Business](index=12&type=section&id=Expressway%20Service%20Area%20Operations%20-%20Investment%20Promotion%20Business) The investment promotion business will innovate models, build a digital platform, expand self-operated catering, introduce renowned brands, and promote unified cashier systems. - Innovate investment promotion models, build a digital investment promotion information platform, and implement "digital investment promotion," "large-scale investment promotion," and "attracting major investors" strategies[25](index=25&type=chunk) - Accelerate the layout of self-operated catering projects, planning to expand self-operated business scale through gourmet shops, coffee, light meals, etc., in addition to KFC[25](index=25&type=chunk) - Comprehensively promote the unified cashier model, gradually achieving full coverage of unified cashier systems for service area merchants, and enhancing digital management levels[25](index=25&type=chunk) - Intensify efforts to introduce high-quality merchants, tap the commercial potential of service area second floors, and create "five-essence" characteristic service areas and agricultural assistance service areas[27](index=27&type=chunk) [Expressway Service Area Operations - Advertising Business](index=14&type=section&id=Expressway%20Service%20Area%20Operations%20-%20Advertising%20Business) The advertising business will focus on direct operations, deepen cooperation with key industry clients, accelerate digitalization, and explore "offline traffic + online conversion" models. - Focus on direct operations, precisely targeting key industry clients such as tourism, liquor, and regional consumer brands to customize personalized advertising solutions[28](index=28&type=chunk) - Promote the digital transformation of advertising resources, massively install electronic display screens and interactive advertising equipment, and optimize advertising space layout[28](index=28&type=chunk) - Explore the "offline scenario traffic + online value conversion" model to enhance advertising communication effectiveness and conversion rates[28](index=28&type=chunk) - Expand media resources, cultivate digital new media, and accelerate the construction of planned advertising facilities and digital new media cultivation advertising facilities[28](index=28&type=chunk) [Road Passenger Transport and Ancillary Services - Passenger Transport Business Exit and Rescue Service Innovation](index=15&type=section&id=Road%20Passenger%20Transport%20and%20Ancillary%20Services%20-%20Passenger%20Transport%20Business%20Exit%20and%20Rescue%20Service%20Innovation) The company will steadily exit road passenger transport, dispose of assets, and innovate expressway vehicle rescue services by leveraging a digital platform to enhance efficiency. - Steadily advance the exit of passenger transport business, conducting a comprehensive review and analysis of road passenger transport enterprises, and formulating detailed exit plans and timelines[31](index=31&type=chunk) - Increase asset disposal efforts, revitalize existing assets, recover funds, and reduce passenger transport business losses[31](index=31&type=chunk) - Innovate and develop expressway vehicle rescue services, relying on the "Digital Rescue" platform to optimize the intelligent dispatch system, improving rescue speed and on-site punctuality[31](index=31&type=chunk) - Strengthen team building and training, establish a "case review - problem diagnosis - specialized training" mechanism to enhance the professional skills of rescue team members[31](index=31&type=chunk) - Formulate holiday rescue guarantee plans in advance, strengthen coordination with traffic police and road administration departments to ensure smooth and safe roads[32](index=32&type=chunk) [Strategic Emerging Industries Layout](index=16&type=section&id=Strategic%20Emerging%20Industries%20Layout) The company will strategically lay out emerging industries with a diversified and synergistic approach, advancing the "Yueyun Changxing Industrial Park" and exploring "low-altitude economy" opportunities. - Orderly advance the construction of the "Yueyun Changxing Industrial Park" headquarters economic base, creating a comprehensive industrial platform integrating corporate offices and business collaboration functions[33](index=33&type=chunk) - Pay attention to development opportunities in the "low-altitude economy" sector, exploring diversified business scenarios such as low-altitude air rescue and logistics distribution[33](index=33&type=chunk) [Major Investments and Future Capital Asset Plans](index=16&type=section&id=Major%20Investments%20and%20Future%20Capital%20Asset%20Plans) In H2 2025, the Group plans to invest in new energy projects and new gas stations, primarily funded by internal resources and bank loans, to develop integrated energy supply stations. - Key investments in the second half of 2025 include new energy projects (photovoltaic, energy storage, heavy truck supercharging) and new gas stations[34](index=34&type=chunk) - Funding sources primarily include self-owned funds and bank loans[34](index=34&type=chunk) - The investment objective is to tap into new energy business growth poles and build integrated energy supply stations for expressway service areas[34](index=34&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed review of the company's business operations and financial performance for the reporting period. [Business Review](index=17&type=section&id=Business%20Review) In H1 2025, the Group focused on expressway travel services, achieving significant progress in diverse business segments through reform and refined management, while steadily exiting road passenger transport. - In the first half of 2025, the Group focused on its core business of expressway travel services, driving significant progress in various business segments[37](index=37&type=chunk) - The exit of road passenger transport business is progressing steadily as planned, with the Group's overall operations showing a positive trend of stability, progress, and improved quality and efficiency[37](index=37&type=chunk) [Expressway Service Area Operations](index=17&type=section&id=Expressway%20Service%20Area%20Operations) Expressway service area operations expanded, with energy business network growth, refined retail operations, expanded self-operated catering, and direct advertising business development. - As of the end of June 2025, the Group owned operating rights for **230** gas stations, with **220** in operation, of which **110** are self-operated[38](index=38&type=chunk) - Added **338** service areas with charging stations, **1,576** charging piles, **10** battery swap stations, **4** gas filling stations, and **1** photovoltaic deployment point[38](index=38&type=chunk) - The retail business's Leyi convenience stores totaled **526**, implementing "one store, one policy" refined operations, with product categories increasing to **3,673** types[40](index=40&type=chunk) - The investment promotion business has obtained operating rights for **387** service areas, with **365** in operation; Changshawan and Waxi KFC stores have successfully opened[44](index=44&type=chunk) - The advertising business holds advertising operating rights for **79** expressways, with **536** resources, focusing on developing direct operations[47](index=47&type=chunk) [Road Passenger Transport and Ancillary Services](index=22&type=section&id=Road%20Passenger%20Transport%20and%20Ancillary%20Services) Road passenger transport business contracted due to competition, leading to successful equity transfers and exits, while expressway rescue services focused on quality and efficiency. - In the first half of the year, the equity transfer of Zhuhai Gongyun Automobile Passenger Transport Station Co., Ltd. and the exit of controlling stakes in Guangzhou Yueyun Automobile Transport Co., Ltd. and Guangzhou Zengcheng Automobile Passenger Transport Station Co., Ltd. were successfully completed[48](index=48&type=chunk) - Expressway vehicle rescue services covered over **7,500** kilometers, across **84** road sections, with **213** rescue stations and **745** various rescue equipment units[50](index=50&type=chunk) - Intelligent dispatch information system was utilized to achieve intelligent dispatch of rescue resources, improving rescue efficiency[50](index=50&type=chunk) [Taiping Interchange Operations](index=24&type=section&id=Taiping%20Interchange%20Operations) Taiping Interchange operations maintained management and maintenance, but cumulative toll traffic decreased by approximately 25% due to diversion from Shenzhen-Zhongshan Link. - As of the end of June 2025, cumulative toll traffic was approximately **14.62 million** vehicle trips, with an average daily of approximately **81,200** vehicle trips[51](index=51&type=chunk) - Vehicle traffic decreased by approximately **25%** year-on-year, mainly due to diversion from the Shenzhen-Zhongshan Link[51](index=51&type=chunk) - Continued implementation of maintenance and repair plans, regularly inspecting and maintaining bridges, road surfaces, and electromechanical systems to ensure safe operation[51](index=51&type=chunk) [Financial Review](index=25&type=section&id=Financial%20Review) In H1 2025, operating revenue increased by 3%, but gross profit decreased by 19% due to oil price changes and new energy vehicle impact, while net profit attributable to parent company shareholders increased by 3%. - In the first half of 2025, operating revenue was **RMB 3,770,028 thousand**, a **3%** year-on-year increase, primarily due to increased revenue from expressway service area operations[52](index=52&type=chunk) - Gross profit was **RMB 305,851 thousand**, a **19%** year-on-year decrease, mainly due to refined oil price adjustments, international oil price fluctuations, the impact of rising new energy vehicle numbers on fuel sales, and increased costs from expanding service area scale[52](index=52&type=chunk) - Net profit attributable to equity holders of the parent company was **RMB 142,644 thousand**, a **3%** year-on-year increase, primarily due to increased investment income from disposing of subsidiary equity upon exiting the transport business and a corresponding reduction in administrative expenses[52](index=52&type=chunk) [Operating Revenue](index=26&type=section&id=Operating%20Revenue) In H1 2025, total operating revenue increased by 3% to RMB 3,770,028 thousand, with expressway service area operations contributing 79% and driving growth. Operating Revenue by Business Segment (RMB thousand yuan) | Business Segment | For the six months ended June 30, 2025 (RMB thousand yuan) | Percentage | For the six months ended June 30, 2024 (RMB thousand yuan) | Percentage | | :--- | :--- | :--- | :--- | :--- | | Expressway Service Area Operations | 2,991,062 | 79% | 2,621,531 | 71% | | Road Passenger Transport and Ancillary Services | 723,616 | 19% | 980,218 | 27% | | Taiping Interchange Operations and Other Businesses | 55,350 | 2% | 72,914 | 2% | | Total | 3,770,028 | 100% | 3,674,663 | 100% | - Expressway service area operations revenue increased by **14%** year-on-year, with energy business growing **15%** (due to expanded self-operated gas station scale), retail business growing **10%** (due to new stores), investment promotion business growing **17%** (due to rent reductions in the prior year), and advertising business growing **1%**[55](index=55&type=chunk)[59](index=59&type=chunk) - Road passenger transport and ancillary services revenue decreased by **26%** year-on-year, primarily due to the gradual exit from passenger transport business[57](index=57&type=chunk) - Taiping Interchange operations and other businesses revenue decreased by **24%** year-on-year, mainly affected by diversion from the Shenzhen-Zhongshan Link[58](index=58&type=chunk) [Gross Profit](index=28&type=section&id=Gross%20Profit) In H1 2025, total gross profit was RMB 305,851 thousand, a 19% year-on-year decrease, with gross profit margin at 8.11%, impacted by oil prices and increased costs. Gross Profit by Business Segment (RMB thousand yuan) | Business Segment | For the six months ended June 30, 2025 (RMB thousand yuan) | Percentage | For the six months ended June 30, 2024 (RMB thousand yuan) | Percentage | | :--- | :--- | :--- | :--- | :--- | | Expressway Service Area Operations | 280,840 | 92% | 336,662 | 89% | | Road Passenger Transport and Ancillary Services | (20,707) | (7%) | (18,295) | (5%) | | Taiping Interchange Operations and Other Businesses | 45,718 | 15% | 60,768 | 16% | | Total | 305,851 | 100% | 379,135 | 100% | - Expressway service area operations gross profit decreased by **17%** year-on-year, with gross profit margin falling from **13%** to **9%**, mainly due to refined oil price adjustments and increased costs from scale expansion[62](index=62&type=chunk) - Road passenger transport and ancillary services gross loss increased by **13%**, primarily due to increased costs for expressway rescue services from undertaking new routes and expanding standby personnel[64](index=64&type=chunk) - Investment promotion business gross loss changed by **726%**, with gross loss margin increasing from **1%** to **8%**, mainly due to reduced shop occupancy rates from micro-renovations and increased upfront investment costs[67](index=67&type=chunk) - Advertising business gross profit increased by **49%** year-on-year, with gross profit margin rising from **32%** to **47%**, primarily due to reduced costs[67](index=67&type=chunk) [Expenses and Income](index=29&type=section&id=Expenses%20and%20Income) In H1 2025, administrative and R&D expenses decreased by 21%, financial expenses by 6%, and other income by 39%, while investment income significantly increased by 87%. - Total administrative and R&D expenses were **RMB 198,394 thousand**, a **21%** year-on-year decrease, mainly due to the steady exit from transport business and effective cost control[66](index=66&type=chunk) - Financial expenses were **RMB 71,021 thousand**, a **6%** year-on-year decrease, primarily due to effectively reducing the scale of interest-bearing debt[68](index=68&type=chunk) - Other income was **RMB 89,416 thousand**, a **39%** year-on-year decrease, mainly due to reduced government subsidies from exiting the transport business compared to the prior year[69](index=69&type=chunk) - Investment income increased significantly by **87%** to **RMB 94,599 thousand**, primarily due to increased gains from disposing of passenger transport business subsidiaries in the current period[70](index=70&type=chunk) - Credit impairment losses increased by **12%**, asset impairment losses increased by **86%**, and non-operating net expenditure changed by **116%** (from net income to net expenditure)[71](index=71&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [Working Capital and Capital Structure](index=31&type=section&id=Working%20Capital%20and%20Capital%20Structure) The Group maintains prudent financial management, with net debt at RMB (573,933) thousand and an asset-liability ratio of 68.38% as of June 30, 2025. Working Capital and Capital Structure (RMB thousand yuan) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Borrowings (banks and other financial institutions) | 973,597 | 1,183,416 | | Less: Cash and cash equivalents | 1,547,530 | 1,425,057 | | Net Debt | (573,933) | (241,641) | | Total Liabilities | 5,771,581 | 6,118,199 | | Total Shareholders' Equity | 2,669,160 | 2,605,861 | | Total Capital | 2,095,227 | 2,364,220 | | Capital-to-Debt Ratio | (27.39%) | (10.22%) | | Asset-Liability Ratio | 68.38% | 70.13% | - As of June 30, 2025, available credit lines from banks and other financial institutions totaled **RMB 4,813,890 thousand**, ensuring operational loan requirements[75](index=75&type=chunk) [Cash Flow](index=32&type=section&id=Cash%20Flow) In H1 2025, net cash inflow from operating activities decreased by RMB 188,273 thousand, net cash outflow from investing activities increased by RMB 68,929 thousand, and net cash outflow from financing activities increased by RMB 23,265 thousand. Cash Flow Summary (RMB thousand yuan) | Item | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash inflow from operating activities | 434,928 | 623,201 | (188,273) | | Net cash outflow from investing activities | (64,302) | 4,627 | (68,929) | | Net cash outflow from financing activities | (247,241) | (223,976) | (23,265) | - Net cash inflow from operating activities decreased year-on-year, primarily due to increased oil product procurement costs in the service area segment[78](index=78&type=chunk) - Net cash outflow from investing activities increased, primarily due to increased expenditure on the construction of long-term assets to enhance service area business[79](index=79&type=chunk) [Borrowings](index=33&type=section&id=Borrowings) As of June 30, 2025, the Group's total outstanding borrowings decreased to RMB 973,597 thousand, with some subsidiaries having overdue loans, but with limited impact on overall operations. - As of June 30, 2025, the Group's total outstanding borrowings were **RMB 973,597 thousand**, a decrease from **RMB 1,183,416 thousand** as of December 31, 2024[81](index=81&type=chunk) - Borrowing types include unsecured short-term loans (**RMB 180,708 thousand**), secured short-term loans (**RMB 116,860 thousand**), pledged short-term loans (**RMB 21,132 thousand**), unsecured long-term loans (**RMB 294,750 thousand**), pledged long-term loans (**RMB 211,577 thousand**), and finance lease payables (**RMB 148,570 thousand**)[81](index=81&type=chunk) - Some subsidiaries have overdue short-term and long-term loans, but the Board believes the impact on the Group's overall business operations is limited[81](index=81&type=chunk) [Other Information](index=33&type=section&id=Other%20Information) The reporting period saw no significant post-balance sheet events, acquisitions, disposals, or new company formations, with most transactions settled in RMB and limited foreign exchange risk. - No significant post-balance sheet events, major acquisitions, disposals, or establishment of new subsidiaries, associates, or joint ventures, or major investments occurred during the reporting period[82](index=82&type=chunk)[83](index=83&type=chunk) - The Group holds multiple investment properties for operating leases, including Hong Kong Commercial Centre, an office in Kowloon, a ground-floor shop in Mong Kok, driver apartments, Lianzhou Passenger Transport Center Building, and Danxiashan Automobile Passenger Transport Station Complex[84](index=84&type=chunk)[85](index=85&type=chunk) - As of June 30, 2025, fixed assets with a net value of approximately **RMB 146,740 thousand**, land use rights of **RMB 56,695 thousand**, and investment properties of **RMB 164,681 thousand** were pledged as collateral for borrowings[86](index=86&type=chunk) - The majority of the Group's income and expenditure are settled in RMB, resulting in minimal impact from foreign exchange fluctuations, and there are no significant contingent liabilities[87](index=87&type=chunk)[88](index=88&type=chunk) [Other Information](index=34&type=section&id=Other%20Information) This section covers share capital, major shareholders, corporate governance, employee remuneration, dividends, and auditor information. [Share Capital and Major Shareholders](index=35&type=section&id=Share%20Capital%20and%20Major%20Shareholders) As of June 30, 2025, the company had 799,847,800 ordinary shares issued, with public float meeting listing rules and no share changes during the period. - As of June 30, 2025, the company had a total of **799,847,800** ordinary shares issued, with the public float exceeding **25%**, complying with listing rules[89](index=89&type=chunk) - The controlling shareholder, Guangdong Provincial Communications Group Co., Ltd., holds approximately **74.12%** of the shares[90](index=90&type=chunk) Major Shareholder Holdings (As of June 30, 2025) | Shareholder Name | Share Class | Number of Shares Held | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | Communications Group | Domestic Shares | 592,847,800 | 74.12% | | China Petrochemical Corporation | H Shares | 33,570,000 | 4.20% | | China Petroleum & Chemical Corporation | H Shares | 33,570,000 | 4.20% | | Sinopec Sales Co., Ltd. | H Shares | 33,570,000 | 4.20% | | Sinopec (Hong Kong) Limited | H Shares | 33,570,000 | 4.20% | | Pope Asset Management, LLC | H Shares | 21,950,247 | 2.74% | | Shah Capital Management | H Shares | 18,040,000 | 2.26% | - For the six months ended June 30, 2025, the company did not experience any changes, purchases, sales, or redemptions of its listed shares[93](index=93&type=chunk)[94](index=94&type=chunk) [Corporate Governance and Board of Directors](index=37&type=section&id=Corporate%20Governance%20and%20Board%20of%20Directors) The company strives for high corporate governance standards, largely complying with listing rules, though deviations exist regarding independent non-executive director attendance and the Chairman/CEO role. - During the six months ended June 30, 2025, the company complied with all code provisions in Part 2 of Appendix C1 to the Listing Rules, except for code provisions C.1.5 and C.2.1[96](index=96&type=chunk) - Deviation from C.1.5: Non-executive Director Chen Chuxuan did not attend the general meeting due to work reasons, but other directors attended to ensure understanding of shareholders' opinions[96](index=96&type=chunk) - Deviation from C.2.1: Mr. Zhu Fang concurrently serves as Chairman of the Board and General Manager; the Board believes this arrangement facilitates business execution and operational efficiency before a suitable candidate is found[97](index=97&type=chunk) - The Audit and Corporate Governance Committee has reviewed the unaudited interim results for the six months ended June 30, 2025, and recommended their adoption by the Board[101](index=101&type=chunk) - As of June 30, 2025, the Eighth Board of Directors included Zhu Fang, Huang Wenban, Hu Xianhua, Hu Jian (Executive Directors), Chen Chuxuan (Non-executive Director), Su Wujun, Huang Yuan, Shen Jialong, Zhang Xiangfa (Independent Non-executive Directors)[100](index=100&type=chunk) [Employees and Remuneration Policy](index=41&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 9,855 employees with total costs of approximately RMB 652 million, and actively invested in training and development. - As of June 30, 2025, the Group had **9,855** employees (December 31, 2024: **11,476** employees)[103](index=103&type=chunk) - Total employee costs (including directors' remuneration) for the six months ended June 30, 2025, amounted to approximately **RMB 652 million** (2024 corresponding period: approximately **RMB 749 million**)[103](index=103&type=chunk) - Remuneration consists of basic salary, performance-based salary, allowances, and subsidies, determined based on position, experience, education, ability, contribution, and market salary conditions[103](index=103&type=chunk) - In the first half of the year, a total of **181** training courses were conducted, with **18,281** participants, totaling approximately **150,278** training hours[104](index=104&type=chunk) [Dividends and Auditor](index=41&type=section&id=Dividends%20and%20Auditor) The Board did not recommend an interim dividend for the six months ended June 30, 2025, and shareholders approved the appointment of BDO China Shu Lun Pan Certified Public Accountants LLP as auditor. - The Board did not recommend the declaration of an interim dividend for the six months ended June 30, 2025[105](index=105&type=chunk) - Shareholders approved the appointment of BDO China Shu Lun Pan Certified Public Accountants LLP as the company's auditor at the Annual General Meeting held on June 30, 2025[106](index=106&type=chunk) [Unaudited Interim Financial Statements](index=41&type=section&id=Unaudited%20Interim%20Financial%20Statements) This section presents the unaudited interim financial statements, including the review report, balance sheets, income statements, cash flow statements, and statements of changes in equity. [Review Report](index=41&type=section&id=Review%20Report) BDO China Shu Lun Pan Certified Public Accountants LLP reviewed the interim financial statements for the six months ended June 30, 2025, finding no material non-compliance with accounting standards. - The review report was issued by BDO China Shu Lun Pan Certified Public Accountants LLP, reviewing the interim financial statements for the six months ended June 30, 2025[107](index=107&type=chunk) - The review found no matters that caused the auditor to believe the interim financial statements were not prepared in all material respects in accordance with the requirements of Accounting Standard for Business Enterprises No. 32 — Interim Financial Reporting[107](index=107&type=chunk) [Consolidated Balance Sheet](index=43&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, the Group's total consolidated assets were RMB 8,440,741,072.68, a slight decrease from 2024 year-end, with total liabilities at RMB 5,771,581,142.61. Consolidated Balance Sheet Key Items (RMB yuan) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | 2,706,704,677.29 | 2,666,605,098.63 | | Total Non-current Assets | 5,734,036,395.39 | 6,057,454,679.20 | | Total Assets | 8,440,741,072.68 | 8,724,059,777.83 | | **Liabilities and Owners' Equity** | | | | Total Current Liabilities | 2,941,349,352.58 | 2,725,484,608.63 | | Total Non-current Liabilities | 2,830,231,790.03 | 3,392,714,563.93 | | Total Liabilities | 5,771,581,142.61 | 6,118,199,172.56 | | Total Equity Attributable to Equity Holders of the Parent Company | 2,168,197,804.61 | 2,086,139,750.36 | | Non-controlling Interests | 500,962,125.46 | 519,720,854.91 | | Total Owners' Equity | 2,669,159,930.07 | 2,605,860,605.27 | | Total Liabilities and Owners' Equity | 8,440,741,072.68 | 8,724,059,777.83 | - Cash and bank balances increased to **RMB 1,559,864,551.66**, and accounts receivable increased to **RMB 284,903,739.33**[110](index=110&type=chunk) - Long-term borrowings significantly decreased from **RMB 370,147,647.01** to **RMB 53,568,466.85**, but non-current liabilities due within one year significantly increased[112](index=112&type=chunk) [Parent Company Balance Sheet](index=46&type=section&id=Parent%20Company%20Balance%20Sheet) As of June 30, 2025, the parent company's total assets were RMB 3,061,552,497.18, an increase from 2024 year-end, with total liabilities at RMB 1,218,498,244.66. Parent Company Balance Sheet Key Items (RMB yuan) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | 1,262,817,798.05 | 1,106,674,920.72 | | Total Non-current Assets | 1,798,734,699.13 | 1,767,839,283.32 | | Total Assets | 3,061,552,497.18 | 2,874,514,204.04 | | **Liabilities and Owners' Equity** | | | | Total Current Liabilities | 1,061,909,653.47 | 627,152,714.42 | | Total Non-current Liabilities | 156,588,591.19 | 330,505,437.78 | | Total Liabilities | 1,218,498,244.66 | 957,658,152.20 | | Total Owners' Equity | 1,843,054,252.52 | 1,916,856,051.84 | | Total Liabilities and Owners' Equity | 3,061,552,497.18 | 2,874,514,204.04 | - Parent company cash and bank balances significantly increased from **RMB 872,853,135.03** to **RMB 1,005,828,885.16**[117](index=117&type=chunk) - Non-current liabilities due within one year significantly increased from **RMB 18,896,854.90** to **RMB 261,257,571.45**[119](index=119&type=chunk) [Consolidated Income Statement](index=49&type=section&id=Consolidated%20Income%20Statement) For January-June 2025, the Group's consolidated total operating revenue was RMB 3,770,028,082.54, a 3% year-on-year increase, with net profit attributable to parent company shareholders growing by 3%. Consolidated Income Statement Key Items (RMB yuan) | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | Total Operating Revenue | 3,770,028,082.54 | 3,674,662,696.59 | | Total Operating Costs | 3,771,025,108.71 | 3,675,818,805.95 | | Operating Profit | 175,802,407.95 | 189,753,485.07 | | Total Profit | 175,618,960.02 | 190,935,899.71 | | Net Profit | 134,413,582.58 | 135,603,731.44 | | Net Profit Attributable to Equity Holders of the Parent Company | 142,643,705.10 | 138,669,235.05 | | Non-controlling Interests | (8,230,122.52) | (3,065,503.61) | | Basic Earnings Per Share (yuan/share) | 0.18 | 0.17 | | Diluted Earnings Per Share (yuan/share) | 0.18 | 0.17 | - Total operating revenue increased by **3%** year-on-year, while total operating costs increased by **2.59%** year-on-year[124](index=124&type=chunk) - Investment income significantly increased by **87%**, from **RMB 50,596,083.00** to **RMB 94,599,011.02**[124](index=124&type=chunk) [Parent Company Income Statement](index=51&type=section&id=Parent%20Company%20Income%20Statement) For January-June 2025, the parent company's operating revenue decreased by 25% to RMB 59,153,905.91, resulting in a net loss of RMB 1,777,795.99, a reversal from profit in the prior year. Parent Company Income Statement Key Items (RMB yuan) | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | Operating Revenue | 59,153,905.91 | 78,849,509.49 | | Operating Costs | 21,681,190.24 | 15,872,897.50 | | Operating (Loss)/Profit | (1,777,795.99) | 52,009,715.56 | | Total (Loss)/Profit | (1,777,795.99) | 52,009,715.56 | | Net (Loss)/Profit | (1,777,795.99) | 52,009,715.56 | | Total Comprehensive (Loss)/Income | (1,777,795.99) | 52,000,925.41 | - Parent company operating revenue decreased by **25%** year-on-year, while operating costs increased by **36.59%** year-on-year[129](index=129&type=chunk) - Investment income shifted from a profit of **RMB 17,116,924.66** in the prior year to a loss of **RMB (8,179,718.63)** in the current period, which is the main reason for the reversal from profit to loss[129](index=129&type=chunk) [Consolidated Cash Flow Statement](index=53&type=section&id=Consolidated%20Cash%20Flow%20Statement) For January-June 2025, the Group's net cash flow from operating activities decreased by 30%, while investing activities shifted to a net outflow, and financing activities' net outflow increased. Consolidated Cash Flow Statement Key Items (RMB yuan) | Item | January-June 2025 | January-June 2024 | Change Amount | | :--- | :--- | :--- | :--- | | Net cash flow from operating activities | 434,927,661.12 | 623,201,360.80 | (188,273,699.68) | | Net cash flow from investing activities | (64,301,632.80) | 4,627,337.98 | (68,928,970.78) | | Net cash flow from financing activities | (247,241,317.01) | (223,975,754.09) | (23,265,562.92) | | Net increase in cash and cash equivalents | 122,472,678.70 | 404,445,933.09 | (281,973,254.39) | | Cash and cash equivalents at end of period | 1,547,529,633.33 | 1,490,210,918.05 | 57,318,715.28 | - Total cash inflow from operating activities slightly decreased year-on-year, while total cash outflow increased, leading to a reduction in net inflow[134](index=134&type=chunk) - Net cash outflow from investing activities increased, primarily due to a significant increase in cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets[136](index=136&type=chunk) - Cash inflow from financing activities decreased, cash paid for debt repayment decreased, but other cash payments related to financing activities increased, leading to an increased net outflow[138](index=138&type=chunk) [Parent Company Cash Flow Statement](index=57&type=section&id=Parent%20Company%20Cash%20Flow%20Statement) For January-June 2025, the parent company's net cash flow from operating activities shifted to a net outflow of RMB (19,703,036.63), with cash and cash equivalents at period-end of RMB 1,005,828,885.16. Parent Company Cash Flow Statement Key Items (RMB yuan) | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | Net cash flow from operating activities | (19,703,036.63) | 41,631,674.40 | | Net cash flow from investing activities | 36,075,298.24 | 46,288,575.40 | | Net cash flow from financing activities | 116,601,284.13 | 167,357,268.97 | | Net increase in cash and cash equivalents | 132,975,750.13 | 255,277,518.77 | | Cash and cash equivalents at end of period | 1,005,828,885.16 | 897,358,217.22 | - Net cash flow from operating activities shifted from a net inflow in the prior year to a net outflow in the current period, primarily due to decreased cash received from sales of goods and provision of services[143](index=143&type=chunk) - Cash inflow from investing activities decreased, but cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets significantly increased, leading to a reduction in net inflow[145](index=145&type=chunk) [Consolidated Statement of Changes in Equity](index=60&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For January-June 2025, the Group's total consolidated owners' equity increased by RMB 63,299,324.80, with equity attributable to parent company owners increasing by RMB 82,058,054.25. Consolidated Statement of Changes in Equity Summary (RMB yuan) | Item | Balance as of December 31, 2024 | Change for the Current Period | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Share Capital | 799,847,800.00 | – | 799,847,800.00 | | Capital Reserve | 21,781,436.03 | – | 21,781,436.03 | | Other Comprehensive Income | (33,666,160.93) | 11,293,859.91 | (22,372,301.02) | | Special Reserve | 36,096,290.62 | 2,980,091.24 | 39,076,381.86 | | Surplus Reserve | 259,176,302.97 | – | 259,176,302.97 | | Retained Earnings | 1,002,904,081.67 | 67,784,103.10 | 1,070,688,184.77 | | Total Equity Attributable to Equity Holders of the Parent Company | 2,086,139,750.36 | 82,058,054.25 | 2,168,197,804.61 | | Non-controlling Interests | 519,720,854.91 | (18,758,729.45) | 500,962,125.46 | | Total Owners' Equity | 2,605,860,605.27 | 63,299,324.80 | 2,669,159,930.07 | - Total comprehensive income was **RMB 143,051,617.94**, of which **RMB 152,457,379.46** was attributable to owners of the parent company[150](index=150&type=chunk) - Profit distribution in the current period reduced equity attributable to owners of the parent company by **RMB 71,986,302.00**[150](index=150&type=chunk) [Parent Company Statement of Changes in Equity](index=62&type=section&id=Parent%20Company%20Statement%20of%20Changes%20in%20Equity) For January-June 2025, the parent company's total owners' equity decreased by RMB 73,801,799.32, primarily due to a decrease in retained earnings from net loss and profit distribution. Parent Company Statement of Changes in Equity Summary (RMB yuan) | Item | Balance as of December 31, 2024 | Change for the Current Period | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Share Capital | 799,847,800.00 | – | 799,847,800.00 | | Capital Reserve | 117,238,669.53 | – | 117,238,669.53 | | Other Comprehensive Income | 44,401.33 | (44,401.33) | – | | Surplus Reserve | 266,454,296.08 | – | 266,454,296.08 | | Retained Earnings | 733,270,884.90 | (73,757,397.99) | 659,513,486.91 | | Total Owners' Equity | 1,916,856,051.84 | (73,801,799.32) | 1,843,054,252.52 | - Total comprehensive income for the current period was a net loss of **RMB 1,777,795.99**[155](index=155&type=chunk) - Profit distribution in the current period reduced retained earnings by **RMB 71,986,302.00**[155](index=155&type=chunk) [Notes to the Interim Financial Statements](index=63&type=section&id=Notes%20to%20the%20Interim%20Financial%20Statements) This section provides detailed notes on the company's background, accounting policies, taxation, and specific financial statement items. [Company Background](index=64&type=section&id=Company%20Background) This note outlines Guangdong Yueyun Transportation Co., Ltd.'s history, share capital changes, business nature, and ultimate holding company, as a comprehensive transportation service group. - The company's predecessor was Guangdong Yuedi Transportation Co., Ltd., established in 1999, which later underwent restructuring, renaming, and share capital changes to become Guangdong Yueyun Transportation Co., Ltd[160](index=160&type=chunk)[161](index=161&type=chunk) - The company and its subsidiaries form a comprehensive transportation service group within Guangdong Province, primarily engaged in expressway service area operations, road passenger transport, and ancillary travel services[162](index=162&type=chunk) - The company's parent company and ultimate controlling entity is Guangdong Provincial Communications Group Co., Ltd[162](index=162&type=chunk) [Basis of Preparation of Financial Statements](index=65&type=section&id=Basis%20of%20Preparation%20of%20Financial%20Statements) These interim financial statements are prepared in accordance with Accounting Standard for Business Enterprises No. 32 and Hong Kong Listing Rules, on a going concern basis. - These interim financial statements are prepared in accordance with the requirements of Accounting Standard for Business Enterprises No. 32 — Interim Financial Reporting and comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[164](index=164&type=chunk) - These interim financial statements are prepared on a going concern basis[165](index=165&type=chunk) [Significant Accounting Policies and Estimates](index=66&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This chapter details the Group's significant accounting policies and estimates for financial instruments, inventory, long-term equity investments, fixed assets, revenue recognition, government grants, and deferred taxes. - These interim financial statements comply with the requirements of the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance of the People's Republic of China, truly and completely reflecting the Group's financial position, operating results, and cash flows[167](index=167&type=chunk) - Financial instruments are classified based on business model and contractual cash flow characteristics as financial assets and liabilities measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Revenue is recognized when performance obligations in the contract are satisfied, i.e., when the customer obtains control of the related goods or services[282](index=282&type=chunk) - Government grants are classified into asset-related and income-related, recognized when conditions are met, and accounted for as deferred income or current profit or loss, respectively[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Key accounting estimates and judgments include impairment provisions for receivables, impairment of other assets (excluding inventory and financial assets), depreciation and amortization of fixed assets and intangible assets, deferred income tax assets, and post-employment benefit liabilities[311](index=311&type=chunk)[312](index=312&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) [Taxation](index=117&type=section&id=Taxation) This chapter lists the Group's main tax types and rates, including cultural construction fees, corporate income tax, Hong Kong profits tax, VAT, urban maintenance and construction tax, education surcharges, land value-added tax, and property tax, along with tax incentives. Main Tax Types and Rates | Tax Type | Tax Rate | | :--- | :--- | | Cultural Construction Fee | 3% | | Corporate Income Tax | 25%, 20% | | Hong Kong Profits Tax | 16.5% | | Value-Added Tax | 13%, 9%, 6%, 5%, 3% or 1%, Zero-rated, Exempt | | Urban Maintenance and Construction Tax | 7%, 5% | | Education Surcharge and Local Education Surcharge | 3%, 2% | | Land Value-Added Tax | 40%, 60% | | Property Tax | 1.2%, 12% | - Some subsidiaries qualify as small-profit enterprises, paying corporate income tax at a **20%** rate, a policy extended until December 31, 2027[322](index=322&type=chunk)[323](index=323&type=chunk) - Hong Kong local companies enjoy a one-off **100%** profits tax concession for the current year (up to **HKD 1,500** per company)[323](index=323&type=chunk) - VAT small-scale taxpayer exemption policy is extended until December 31, 2027, exempting VAT for monthly sales under **RMB 100,000** and reducing the 3% collection rate to **1%**[326](index=326&type=chunk)[327](index=327&type=chunk) [Notes to Consolidated Financial Statement Items](index=121&type=section&id=Notes%20to%20Consolidated%20Financial%20Statement%20Items) This chapter provides detailed notes on key consolidated financial statement items, offering in-depth understanding of the Group's financial position and operating results. - Total accounts receivable was **RMB 340,173,297.76**, with bad debt provision of **RMB 55,269,558.43**, resulting in a net amount of **RMB 284,903,739.33**, of which **98.96%** was provided based on aging portfolio[328](index=328&type=chunk)[329](index=329&type=chunk) - Carrying amount of long-term equity investments was **RMB 413,934,568.20**, including **RMB 168,762,912.70** in joint ventures and **RMB 245,171,655.50** in associates[335](index=335&type=chunk) - Carrying value of fixed assets was **RMB 1,827,695,854.58**, with buildings and structures accounting for the largest proportion[337](index=337&type=chunk)[341](index=341&type=chunk) - Total short-term borrowings were **RMB 318,699,750.02**, including unsecured borrowings of **RMB 180,708,000.00**, with some subsidiaries having overdue short-term borrowings[348](index=348&type=chunk)[351](index=351&type=chunk) - Total long-term borrowings were **RMB 506,326,918.25**, of which **RMB 452,758,451.40** were long-term borrowings due within one year, with some subsidiaries having overdue long-term borrowings[356](index=356&type=chunk)[359](index=359&type=chunk) - As of June 30, 2025, assets whose ownership or right to use was restricted totaled **RMB 380,450,822.84**, primarily cash and bank balances, investment properties, fixed assets, and intangible assets[379](index=379&type=chunk) [Changes in Consolidation Scope](index=148&type=section&id=Changes%20in%20Consolidation%20Scope) During the reporting period, the Group lost control over Zhuhai Gongyun, Guangzhou Zengcheng Automobile Passenger Transport Station Co., Ltd., and Guangzhou Yueyun Automobile Transport Co., Ltd. through disposal of subsidiaries, and established two new companies. - No business combinations involving entities under common control or not under common control occurred in the current period[386](index=386&type=chunk)[387](index=387&type=chunk) - Control over Zhuhai Gongyun, Guangzhou Zengcheng Automobile Passenger Transport Station Co., Ltd., and Guangzhou Yueyun Automobile Transport Co., Ltd. was lost through disposal of subsidiaries[388](index=388&type=chunk) - Guangdong Leyi Commercial and Trade Co., Ltd. and Guangdong Tongyi Commercial Development Co., Ltd. were newly established this year, both with a **95.56%** shareholding ratio[389](index=389&type=chunk) [Interests in Other Entities](index=149&type=section&id=Interests%20in%20Other%20Entities) This chapter details the Group's interests in numerous subsidiaries, joint ventures, and associates, which are strategically important for its development. - The Group owns numerous subsidiaries, including Guangdong Expressway Media Co., Ltd., Yueyun Transportation (Hong Kong) Co., Ltd., and Guangdong Tongyi Expressway Service Area Co., Ltd[390](index=390&type=chunk)[392](index=392&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk)[397](index=397&type=chunk)[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk)[401](index=401&type=chunk) - Important non-wholly-owned subsidiaries include Yuegang Automobile Transport Joint Venture Co., Ltd. (Hong Kong), Foshan Yueyun Public Transport Co., Ltd., and Heyuan Yueyun Automobile Transport Co., Ltd[403](index=403&type=chunk) - Important joint ventures or associates include Guangdong Sinopec Tongyi Energy Sales Co., Ltd., Yuegongxinhai, and Southern United Property Rights Exchange Co., Ltd., with these investments being strategic to the company's activities[404](index=404&type=chunk) [Related Parties and Related Party Transactions](index=157&type=section&id=Related%20Parties%20and%20Related%20Party%20Transactions) This chapter discloses the Group's related parties and various transactions, including procurement, sales, services, leasing, fund transfers, and key management compensation, along with outstanding balances. - The company's parent company and ultimate controlling party is Guangdong Provincial Communications Group Co., Ltd., with both shareholding and voting rights at **74.12%**[405](index=405&type=chunk) - The Group engages in various transactions with related parties, including material procurement, acceptance of services, provision of transport services, rescue service income, expressway service area income, freight outsourcing income, rental income, and rental expenses[413](index=413&type=chunk)[416](index=416&type=chunk)[417](index=417&type=chunk)[419](index=419&type=chunk)[421](index=421&type=chunk)[424](index=424&type=chunk)[425](index=425&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk)[431](index=431&type=chunk)[433](index=433&type=chunk)[436](index=436&type=chunk)[437](index=437&type=chunk)[439](index=439&type=chunk)[440](index=440&type=chunk)[442](index=442&type=chunk) - As of June 30, 2025, the Group had no related party guarantees[443](index=443&type=chunk) - Related party fund borrowing balance was **RMB 48,400,000.00**, with interest expenses of **RMB 704,970.11**[444](index=444&type=chunk) - Key management personnel remuneration was **RMB 2,528,967.99**[448](index=448&type=chunk) - Receivables from related parties include accounts receivable, prepayments, other receivables, etc.; payables to related parties include accounts payable, advances from customers, contract liabilities, other payables, lease liabilities, and non-current liabilities due within one year[447](index=447&type=chunk)[450](index=450&type=chunk)[452](index=452&type=chunk)[453](index=453&type=chunk)[455](index=455&type=chunk)[456](index=456&type=chunk)[457](index=457&type=chunk)[458](index=458&type=chunk)[460](index=460&type=chunk) [Commitments and Contingencies](index=184&type=section&id=Commitments%20and%20Contingencies) As of the balance sheet date, the Group had no significant commitments or contingencies requiring disclosure. - As of the balance sheet date, the Group had no significant commitments requiring disclosure[461](index=461&type=chunk) - As of the balance sheet date, the Group had no significant contingencies requiring disclosure[462](index=462&type=chunk) [Events After the Balance Sheet Date](index=184&type=section&id=Events%20After%20the%20Balance%20Sheet%20Date) As of the approval date of these interim financial statements, the Group had no significant events after the balance sheet date requiring disclosure. - As of the approval date of these interim financial statements, the Group had no significant events after the balance sheet date requiring disclosure[463](index=463&type=chunk) [Other Significant Matters](index=184&type=section&id=Other%20Significant%20Matters) No prior period accounting error corrections occurred, and the Group's operations are segmented into expressway service area operations, road passenger transport, and Taiping Interchange operations. - No prior period accounting error corrections using the prospective application method occurred during the reporting period[464](index=464&type=chunk) - The Group's operating segments are divided into expressway service area operations, road passenger transport and ancillary services, and Taiping Interchange operations and other businesses, based on internal organizational structure, management requirements, and internal reporting systems[465](index=465&type=chunk) 2025 H1 Segment Performance (RMB yuan) | Item | Expressway Service Area Operations | Road Passenger Transport and Ancillary Services | Taiping Interchange Operations and Other Businesses | Inter-segment Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 2,992,593,473.23 | 727,786,156.29 | 55,349,807.67 | (5,701,354.65) | 3,770,028,082.54 | | Operating Costs | 2,713,675,090.85 | 733,779,983.17 | 20,646,690.24 | (3,924,560.50) | 3,464,177,203.76 | | Operating Profit | 152,246,721.58 | (9,984,588.24) | 34,589,168.44 | (1,048,893.83) | 175,802,407.95 | 2025 H1 Segment Assets and Liabilities (RMB yuan) | Item | Expressway Service Area Operations | Road Passenger Transport and Ancillary Services | Taiping Interchange Operations and Other Businesses | Inter-segment Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 4,564,007,434.66 | 3,324,008,757.66 | 3,061,552,497.18 | (2,508,827,616.82) | 8,440,741,072.68 | | Total Liabilities | 3,430,495,670.97 | 2,096,753,957.36 | 1,218,498,244.66 | (974,166,730.38) | 5,771,581,142.61 | [Notes to Parent Company Financial Statement Items](index=187&type=section&id=Notes%20to%20Parent%20Company%20Financial%20Statement%20Items) This chapter provides detailed notes on the parent company's key financial statement items, including accounts receivable and investment income. - The parent company's net accounts receivable was **RMB 48,508,511.12**, with a bad debt provision of **RMB 5,241,940.18**[471](index=471&type=chunk)[475](index=475&type=chunk) - The parent company's investment income was **RMB (8,179,718.63)**, primarily affected by investment income from the disposal of long-term equity investments[476](index=476&type=chunk)

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 微創醫療科學有限公司* （於開曼群島註冊成立的有限公司） （股份代號：00853） 截至二零二五年六月三十日止六個月的未經審核中期業績公告 財務摘要 | | | 截至六月三十日止六個月 | | | --- | --- | --- | --- | | | 二零二五年 | 二零二四年 | 變動百分比 | | | 千美元 | 千美元 | % | | | （未經審核） | （未經審核） | | | 收入 | 547,532 | 558,702 | 減少2.2% | | | | | （剔除匯率影響） | | 期間利潤╱（虧損） | (36,361) | (106,674) | 減虧65.9% | | 公司權益股東應佔利潤╱（虧損） | (46,602) | (96,830) | 減虧51.9% | | 每股利潤╱（虧損）－ | | | | | 基本（美分） | (2.53) | (5.29) | 減虧52.2% ...

Company Information [Board of Directors and Committees](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) This section lists the executive and independent non-executive directors, compliance officer, authorized representatives, and company secretary, detailing the composition and chairpersons of the Audit, Remuneration, and Nomination Committees, noting changes during the reporting period - Several executive and independent non-executive directors, including Su Binggen, Liu Desheng, Lin Dongsheng, Miao Yingjuan, Ma Jianling, Chen Jie, and Luo Jianhui, retired on **June 30, 2025**[6](index=6&type=chunk) - Ms Chan Li Li was appointed as a member of the Audit Committee and Remuneration Committee, and as a member of the Nomination Committee on **July 7, 2025**[6](index=6&type=chunk)[7](index=7&type=chunk) - Mr Jim Tak Lee serves as the Compliance Officer, Authorized Representative, and Chairman of the Audit and Remuneration Committees[6](index=6&type=chunk) [Company Contact and Registration Information](index=4&type=section&id=Company%20Contact%20and%20Registration%20Information) This section provides key contact and registration details including the company's headquarters, principal place of business, legal advisors, auditors, principal bankers, registered office, company website, share registrar, and Hong Kong share registrar - The company's headquarters and principal place of business are located at Unit 3403, 34th Floor, AIA Tower, 183 Electric Road, North Point, Hong Kong[7](index=7&type=chunk) - The company website is **www.worldsuperhk.com**, and the stock code is **8612**[8](index=8&type=chunk) Chairman's Statement [Business Outlook and Strategic Transformation](index=6&type=section&id=Business%20Outlook%20and%20Strategic%20Transformation) The Group will continue to focus on machinery leasing and construction services as key growth drivers and sustainable revenue sources, transforming into an integrated construction service provider to expand service scope and diversify income - The Group will focus on developing machinery leasing and construction services, expecting them to be primary growth drivers[10](index=10&type=chunk) - The Group is transforming into an integrated construction service provider to offer a wider range of services and diversify revenue streams[10](index=10&type=chunk) Financial Highlights [Interim Key Financial Data](index=7&type=section&id=Interim%20Key%20Financial%20Data) For the six months ended June 30, 2025, the Group's revenue increased by **54%** to **HK$11,498,365**, gross profit also rose by **54%**, while loss for the period slightly narrowed by **1%** to **HK$12,654,882**, or **23%** excluding losses from disposal of machinery and subsidiaries Interim Key Financial Data for the Six Months Ended June 30 | Indicator | 2025 (HK$) | 2024 (HK$) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 11,498,365 | 7,453,571 | 54% | | Gross Profit | 1,089,521 | 710,615 | 54% | | Loss for the Period | (12,654,882) | (12,735,955) | (1)% | | Loss for the Period (excluding gain or loss on disposal of machinery and equipment and loss on disposal of subsidiaries) | (9,830,692) | (12,733,960) | (23)% | Management Discussion and Analysis [Business Review and Prospects](index=8&type=section&id=Business%20Review%20and%20Prospects) The Group's core businesses include machinery leasing, trading, transportation, construction, money lending, and car rental, with significant growth in leasing and car rental, while trading and lending saw declines; future strategy focuses on strengthening integrated business, digitalization, and risk management [Business Review](index=8&type=section&id=Business%20Review) The Group's diversified operations include machinery leasing, trading, transportation, construction, money lending, and car rental, with strong performance in machinery leasing and car rental, growing by **95%** and **650%** respectively, while trading and lending faced reduced demand - The Group's main businesses include leasing services for crawler cranes, piling machines, reverse circulation drilling rigs, and hydraulic trench cutters, as well as trading of related machinery[14](index=14&type=chunk) Revenue Changes by Business Segment | Business Type | H1 2025 Revenue (HK$) | H1 2024 Revenue (HK$) | Change (%) | | :--- | :--- | :--- | :--- | | Machinery Leasing | 4,300,000 | 2,200,000 | 95% | | Trading of Machinery, Tools & Parts | 200,000 | 400,000 | (50)% | | Transportation Services | 60,000 | 0 | N/A | | Foundation Works | 5,400,000 | 4,200,000 | 29% | | Interest Income from Money Lending | 224,000 | 522,000 | (57)% | | Car Rental | 1,500,000 | 200,000 | 650% | - The money lending business obtained a money lender's license in **September 2020**, with annual interest rates ranging from **15% to 18%**, secured by personal guarantees[21](index=21&type=chunk)[22](index=22&type=chunk) - Car rental business revenue accounted for approximately **13%** of total revenue (2024: **3%**), with a fleet utilization rate of **73%**[25](index=25&type=chunk) [Prospects](index=10&type=section&id=Prospects) The Group plans to strengthen its integrated business model, particularly leasing and construction services, by upgrading equipment, streamlining operations, and capitalizing on infrastructure opportunities, while enhancing digitalization, risk management, and service networks for sustainable value creation - The Group will continue to focus on strengthening its integrated business model, which includes machinery leasing, construction services, money lending, and car rental services[26](index=26&type=chunk) - The leasing business is expected to benefit from equipment upgrades and streamlining of branch operations to improve utilization and cost control[26](index=26&type=chunk) - The construction segment will capitalize on opportunities arising from infrastructure recovery in Hong Kong and neighboring regions, actively monitoring the regulatory environment[26](index=26&type=chunk) - The Group will deepen digitalization efforts, strengthen risk management processes, and expand its service alliance network to address industry competition[26](index=26&type=chunk) [Financial Overview](index=11&type=section&id=Financial%20Overview) For the six months ended June 30, 2025, the Group's revenue increased by **53.3%** year-on-year, driven by machinery leasing, with sales and service costs rising proportionally, administrative expenses decreasing due to lower staff costs, and net loss for the period slightly increasing due to loss on disposal of subsidiaries - Revenue increased by approximately **53.3%** from approximately **HK$7.5 million** in the same period of 2024 to approximately **HK$11.5 million** in 2025, primarily due to increased machinery leasing revenue[27](index=27&type=chunk) - Cost of sales and services increased to approximately **HK$10.4 million** (2024: approximately **HK$6.7 million**), consistent with the increase in revenue[28](index=28&type=chunk) - Net other income/(expenses) expanded from a loss of approximately **HK$1.4 million** in the same period of 2024 to a loss of approximately **HK$1.8 million** in 2025, mainly due to loss on disposal of a subsidiary[29](index=29&type=chunk) - Administrative expenses decreased to approximately **HK$8.2 million** (2024: approximately **HK$11.3 million**), primarily due to reduced staff costs and other administrative expenses[30](index=30&type=chunk) - Net loss for the period increased from approximately **HK$12.7 million** in the same period of 2024 to approximately **HK$10.0 million** in 2025[33](index=33&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=12&type=section&id=Liquidity%2C%20Financial%20Resources%2C%20and%20Capital%20Structure) The Group primarily funds its operations through shareholder contributions, bank borrowings, and internal cash flow; as of June 30, 2025, bank balances and cash decreased to approximately **HK$1.9 million**, interest-bearing loans increased to approximately **HK$10.3 million**, and the gearing ratio was approximately **12.6%** - The Group's primary sources of liquidity are shareholder contributions, bank borrowings, internal cash flows, and proceeds from share placements[34](index=34&type=chunk) Liquidity Position | Indicator | June 30, 2025 (HK$) | December 31, 2024 (HK$) | Change | | :--- | :--- | :--- | :--- | | Bank Balances and Cash | 1,900,000 | 3,800,000 | Decrease | | Pledged Bank Deposits | 0 | 0 | No Change | | Interest-bearing Loans | 10,300,000 | 2,800,000 | Increase | | Gearing Ratio | 12.6% | 17.9% | Decrease | - The decrease in bank balances and cash was primarily due to loan repayments and operating cash outflows[34](index=34&type=chunk) [Significant Investments Held](index=12&type=section&id=Significant%20Investments%20Held) As of June 30, 2025, the Group did not hold any significant investments - The Group did not hold any significant investments for the six months ended **June 30, 2025**[36](index=36&type=chunk) [Pledged Assets](index=12&type=section&id=Pledged%20Assets) As of June 30, 2025, approximately **HK$7.7 million** of the Group's machinery and equipment were pledged for finance leases and bank borrowings, a decrease from **HK$12.2 million** on December 31, 2024, with no pledged bank deposits Pledged Asset Status | Asset Type | June 30, 2025 (HK$) | December 31, 2024 (HK$) | | :--- | :--- | :--- | | Machinery and Equipment (Gross Book Value) | 7,700,000 | 12,200,000 | | Pledged Bank Deposits | 0 | 0 | - Machinery and equipment are pledged for finance leases and bank borrowings[37](index=37&type=chunk) [Risk Management](index=12&type=section&id=Risk%20Management) The Group primarily faces operational, credit, and market risks, managed through the Operations Director for operational risks, regular follow-ups and aging analysis for credit risks, and board monitoring for market risks; foreign exchange risk is considered immaterial due to HKD-denominated transactions - The Group primarily faces operational risk, credit risk, and market risk[38](index=38&type=chunk) - Operational risk is supervised by the Operations Director, with a whistle-blowing program in place to prevent fraud and bribery[39](index=39&type=chunk)[40](index=40&type=chunk) - Credit risk is managed through regular follow-up on trade receivables, aging analysis, and assessment of bad debt provisions[41](index=41&type=chunk) - Market risk is monitored by the Board, with policies formulated to mitigate impacts from changes in the macroeconomic environment[42](index=42&type=chunk) - As most operating transactions are denominated in HKD, the Group's foreign exchange risk is considered immaterial, and no derivative instruments were used for hedging during the period[43](index=43&type=chunk) [Capital Commitments](index=13&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no significant capital commitments - The Group had no significant capital commitments as of **June 30, 2025**[44](index=44&type=chunk) [Future Plans for Material Investments and Capital Assets](index=13&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of June 30, 2025, the Group had no other material investment or capital asset acquisition plans - The Group had no other material investment and capital asset acquisition plans as of **June 30, 2025**[45](index=45&type=chunk) [Material Acquisitions and Disposals](index=14&type=section&id=Material%20Acquisitions%20and%20Disposals) For the six months ended June 30, 2024, the Group had no material acquisitions or disposals of subsidiaries and associated companies - For the six months ended **June 30, 2024**, the Group had no material acquisitions or disposals of subsidiaries and associated companies[46](index=46&type=chunk) [Employees and Remuneration Policy](index=14&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group employed **15** full-time and **2** part-time employees, with total staff costs of approximately **HK$6.0 million**, an increase from the prior year, and remuneration is determined by qualifications, responsibilities, contributions, and experience Employee and Remuneration Data | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Number of Full-time Employees | 15 | 13 | | Number of Part-time Employees | 2 | 2 | | Total Staff Costs (HK$) | 6,000,000 | 5,500,000 | - Employee remuneration is determined based on factors such as qualifications, responsibilities, contributions, and experience[47](index=47&type=chunk) [Use of Proceeds](index=14&type=section&id=Use%20of%20Proceeds) On October 4, 2024, the Company entered into a placing agreement with Guochuang Securities Limited to place up to **172,800,000** shares at **HK$0.01764** per share, with the net proceeds fully utilized as general working capital upon completion on November 25, 2024 - The Company entered into a placing agreement with Guochuang Securities Limited on **October 4, 2024**, to place up to **172,800,000** shares[49](index=49&type=chunk) - The placing price was **HK$0.01764** per share, representing a discount of approximately **16%** to the then closing price[49](index=49&type=chunk)[50](index=50&type=chunk) - The placing was completed on **November 25, 2024**, and the net proceeds were fully utilized as general working capital for the Group[50](index=50&type=chunk)[51](index=51&type=chunk) [Contingent Liabilities](index=15&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities as of **June 30, 2025**[52](index=52&type=chunk) [Events After Reporting Period](index=15&type=section&id=Events%20After%20Reporting%20Period) As of the report date, there were no other significant events related to the Group's business or financial performance after June 30, 2025 - No other significant events related to the Group's business or financial performance occurred after **June 30, 2025**, and up to the date of this report[53](index=53&type=chunk) [Litigation](index=15&type=section&id=Litigation) As of June 30, 2025, the Group had no significant pending litigation - The Group had no significant pending litigation as of **June 30, 2025**[54](index=54&type=chunk) [Key Risks and Uncertainties](index=15&type=section&id=Key%20Risks%20and%20Uncertainties) The Group faces key risks including reliance on Hong Kong private sector machinery leasing projects, customer concentration, non-recurring project revenue, dependence on key personnel, challenges in cost estimation, delayed customer payments, and uncontrollable macroeconomic and natural disaster factors - The Group relies on the supply of machinery leasing projects in the Hong Kong private sector, and the non-recurring nature of projects makes it difficult to forecast future business volume and revenue[55](index=55&type=chunk) - Operations are concentrated in Hong Kong, subject to the Hong Kong government's policies, political environment, and economic and legal developments[55](index=55&type=chunk) - Customer concentration means any loss or reduction in projects from major clients could have an adverse impact[56](index=56&type=chunk) - Past revenue and profit margins may not be indicative of future performance, and failure to continuously secure new foundation construction project orders could result in lower-than-expected revenue[56](index=56&type=chunk) - Dependence on Board members and senior management means staff departures could adversely affect business operations[56](index=56&type=chunk) - Inaccurate estimation and control of project costs, along with delayed or defaulted customer payments, could impact financial performance and cash flow[56](index=56&type=chunk) - Uncontrollable factors such as adverse weather, natural disasters, war, and epidemics could affect the Group's performance[57](index=57&type=chunk) [Compliance with Laws and Regulations](index=16&type=section&id=Compliance%20with%20Laws%20and%20Regulations) The Group's operations are primarily in Hong Kong and comply with relevant Hong Kong laws and regulations, with no material breaches during the reporting period or up to the report date - The Group's operations are subject to relevant laws and regulations in Hong Kong[58](index=58&type=chunk) - During the reporting period and up to the date of this report, the Group had no material breaches of relevant existing laws and regulations[58](index=58&type=chunk) [Constitutional Documents](index=16&type=section&id=Constitutional%20Documents) The Company's memorandum and articles of association are published on the Stock Exchange and its website, with no changes during the year ended June 30, 2025, except for the "Second Amended and Restated Articles of Association" announced on May 18, 2023 - The Company has published its memorandum and articles of association on the Stock Exchange and its company website[59](index=59&type=chunk) - For the year ended **June 30, 2025**, there were no changes to the constitutional documents, except for the "Second Amended and Restated Articles of Association" announced on **May 18, 2023**[59](index=59&type=chunk) Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Interim Profit or Loss and Comprehensive Income](index=17&type=section&id=Interim%20Profit%20or%20Loss%20and%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group reported revenue of **HK$11,498,365** and gross profit of **HK$1,089,521**, with a loss before tax of **HK$12,654,882**, largely consistent with the prior year, and total comprehensive expense attributable to owners of the Company was **HK$12,444,262**, resulting in a basic loss per share of **12.21 HK cents** Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Revenue | 11,498,365 | 7,453,571 | | Cost of Sales and Services | (10,408,844) | (6,742,956) | | Gross Profit | 1,089,521 | 710,615 | | Other (Expenses)/Income, Net | (975,744) | 13,066 | | Loss on Disposal of a Subsidiary | (1,790,254) | – | | Administrative Expenses | (8,297,597) | (11,346,914) | | Finance Costs | (692,258) | (150,005) | | Loss Before Tax | (12,654,882) | (12,735,955) | | Loss for the Period | (12,654,882) | (12,735,955) | | Total Comprehensive Expense Attributable to Owners of the Company for the Period | (12,444,262) | (12,781,144) | | Basic and Diluted Loss Per Share (HK cents) | (12.21) | (14.74) | - Exchange differences arising from translation of overseas operations turned from a loss of **HK$45,189** in the same period of 2024 to a gain of **HK$210,620** in 2025[61](index=61&type=chunk) Condensed Consolidated Statement of Financial Position [Interim Financial Position](index=18&type=section&id=Interim%20Financial%20Position) As of June 30, 2025, the Group's total non-current assets were **HK$14,748,750**, total current assets were **HK$17,447,760**, net current liabilities expanded to **HK$13,261,330**, and net assets significantly decreased to **HK$1,358,227**, primarily due to substantial increases in trade and other payables and borrowings Condensed Consolidated Statement of Financial Position (As at June 30, 2025) | Indicator | June 30, 2025 (HK$) | December 31, 2024 (HK$) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Machinery and Equipment | 14,420,636 | 18,041,977 | | Right-of-use Assets | 328,114 | 477,257 | | **Current Assets** | | | | Trade and Other Receivables | 12,470,209 | 3,670,809 | | Bank Balances and Cash | 1,920,809 | 5,758,476 | | **Current Liabilities** | | | | Trade and Other Payables | 19,829,264 | 14,638,213 | | Borrowings | 10,350,000 | 1,500,000 | | Net Current Liabilities | (13,261,330) | (4,439,524) | | Net Assets | 1,358,227 | 13,802,489 | - Trade and other receivables significantly increased from **HK$3,670,809** as of **December 31, 2024**, to **HK$12,470,209** as of **June 30, 2025**[62](index=62&type=chunk) - Borrowings significantly increased from **HK$1,500,000** as of **December 31, 2024**, to **HK$10,350,000** as of **June 30, 2025**[62](index=62&type=chunk) Condensed Consolidated Statement of Changes in Equity [Interim Changes in Equity](index=19&type=section&id=Interim%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity attributable to owners of the Company decreased from **HK$13,802,489** at the beginning of the period to **HK$1,358,227** at the end, primarily due to a total comprehensive expense of **HK$12,444,262** for the period Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Item | June 30, 2025 (HK$) | January 1, 2025 (HK$) | | :--- | :--- | :--- | | Share Capital | 10,368,000 | 10,368,000 | | Reserves | (9,009,773) | 3,434,489 | | Total Equity | 1,358,227 | 13,802,489 | - Total comprehensive expense for the period was **HK$12,444,262**, leading to a significant decrease in total equity[65](index=65&type=chunk) - Exchange reserve turned from a loss of **HK$199,611** at the beginning of the period to a gain of **HK$11,009** at the end of the period[65](index=65&type=chunk) Condensed Consolidated Statement of Cash Flows [Interim Cash Flows](index=21&type=section&id=Interim%20Cash%20Flows) For the six months ended June 30, 2025, the Group reported net cash used in operating activities of **HK$10,929,144**, net cash used in investing activities of **HK$643,566**, and net cash generated from financing activities of **HK$7,744,231**, resulting in cash and cash equivalents decreasing to **HK$1,920,809** at period-end Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (10,929,144) | (6,298,803) | | Net Cash Used in Investing Activities | (643,566) | (1,630,861) | | Net Cash Generated from Financing Activities | 7,744,231 | 230,250 | | Net Decrease in Cash and Cash Equivalents | (3,828,479) | (7,699,414) | | Cash and Cash Equivalents at June 30 | 1,920,809 | 3,333,645 | - Net cash used in operating activities increased compared to the same period last year, while net cash generated from financing activities significantly increased[67](index=67&type=chunk) Notes to the Unaudited Interim Financial Statements [1. General Information](index=22&type=section&id=1.%20General%20Information) The Company was incorporated as an exempted company in the Cayman Islands on February 26, 2016, with its registered office in the Cayman Islands and principal place of business in Hong Kong - The Company was incorporated in the Cayman Islands on **February 26, 2016**[68](index=68&type=chunk) - The principal place of business is Unit 3403, 34th Floor, AIA Tower, 183 Electric Road, North Point, Hong Kong[68](index=68&type=chunk) [2. Basis of Preparation and Accounting Policies](index=22&type=section&id=2.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The unaudited interim condensed consolidated financial statements are prepared in accordance with HKAS 34, using the historical cost convention and presented in HKD, with consolidation based on the Group's control over an investee, enabling it to affect and be exposed to variable returns - The financial statements are prepared in accordance with HKAS 34 Interim Financial Reporting, using the historical cost convention and presented in **HKD**[69](index=69&type=chunk) - The basis of consolidation is when the Group has control over a subsidiary, meaning it can affect variable returns through its power[70](index=70&type=chunk) - The unaudited interim condensed consolidated results have been reviewed by the Company's Audit Committee but have not been audited by the auditors[72](index=72&type=chunk) [Basis of Consolidation](index=22&type=section&id=Basis%20of%20Consolidation) The Group assesses control by considering contractual arrangements, other contractual rights, and voting and potential voting rights with other holders of voting rights in the investee; upon loss of control, related assets, liabilities, and non-controlling interests are derecognized, and any retained investment is recognized at fair value - The assessment of control considers contractual arrangements with other voting interest holders of the investee, other contractual rights, and the Group's voting and potential voting rights[70](index=70&type=chunk)[71](index=71&type=chunk) - Upon losing control of a subsidiary, related assets, liabilities, and non-controlling interests are derecognized, and any retained investment is recognized at fair value[72](index=72&type=chunk) [3. Changes in Accounting Policies](index=23&type=section&id=3.%20Changes%20in%20Accounting%20Policies) This year, the Group adopted new and revised HKFRSs issued by the HKICPA, including HKAS 21 (Amendments) and HKFRS 1 "Lack of Exchangeability," which are not expected to have any significant impact on the Group's financial statements - This year, the Group first adopted HKAS 21 (Amendments) and HKFRS 1 "Lack of Exchangeability"[73](index=73&type=chunk) - The amendments specify how an entity should assess currency exchangeability and estimate spot exchange rates, requiring disclosure of related impacts[73](index=73&type=chunk) - The amendments are not expected to have any significant impact on the Group's financial statements[73](index=73&type=chunk) [4. Revenue and Segment Reporting](index=24&type=section&id=4.%20Revenue%20and%20Segment%20Reporting) The Group's revenue is derived from machinery leasing, goods sales, and service provision; for the six months ended June 30, 2025, total revenue was **HK$11,498,365**, with construction services and machinery leasing as major contributors, significant growth in car rental revenue, and primary revenue sources being Hong Kong and Japan - The Group's revenue represents the net amounts received or receivable from leasing machinery, selling goods, and providing services in the ordinary course of business[74](index=74&type=chunk) - The Group organizes its operating segments by business activities, which are regularly reviewed by the executive directors to allocate resources and assess performance[74](index=74&type=chunk) [(a) Revenue Classification](index=24&type=section&id=(a)%20Revenue%20Classification) For the six months ended June 30, 2025, the Group's total revenue was **HK$11,498,365**, with construction services contributing **HK$5,415,020**, machinery leasing **HK$4,313,481**, and car rental **HK$1,539,042**, primarily from Hong Kong (**HK$9,959,323**) and Japan (**HK$1,539,042**) Revenue Classification from Contracts with Customers by Major Product or Service and Geographical Location | Revenue Source | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Overall Sales | – | 383,902 | | Construction Services Revenue | 5,415,020 | 4,186,148 | | Transportation and Other Services Revenue | 6,900 | – | | Car Rental Revenue | 1,539,042 | 193,102 | | Machinery Leasing Revenue | 4,313,481 | 2,168,419 | | Loan Interest Income | 223,922 | 522,000 | | **Total Revenue** | **11,498,365** | **7,453,571** | | **By Customer Geographical Location** | | | | Hong Kong | 9,959,323 | 7,260,469 | | Japan | 1,539,042 | 193,102 | [(b) Segment Information](index=25&type=section&id=(b)%20Segment%20Information) For the six months ended June 30, 2025, the Group's segment revenue primarily came from construction services, machinery leasing, and car rental; segment results showed losses across most major business segments except money lending, leading to a loss before tax of **HK$12,654,882**, and segment assets and liabilities are not regularly reported to the chief operating decision-maker Segment Revenue and Results for the Six Months Ended June 30, 2025 | Segment | Revenue (HK$) | Results (HK$) | | :--- | :--- | :--- | | Machinery Leasing | 4,313,481 | (956,076) | | Transportation and Other Services | 6,900 | (2,182) | | Construction Services | 5,415,020 | (1,279,642) | | Money Lending Business | 223,922 | 223,927 | | Car Rental Revenue | 1,539,042 | (66,892) | | **Total** | **11,498,365** | **(2,080,865)** | | Loss Before Tax | | (12,654,882) | Segment Revenue and Results for the Six Months Ended June 30, 2024 | Segment | Revenue (HK$) | Results (HK$) | | :--- | :--- | :--- | | Machinery Leasing | 2,168,419 | (4,198,982) | | Trading of Machinery, Tools & Parts | 383,902 | 42,218 | | Construction Services | 4,186,148 | (2,124,936) | | Money Lending Business | 522,000 | (984,479) | | Car Rental Revenue | 193,102 | (80,188) | | **Total** | **7,453,571** | **(7,346,367)** | | Loss Before Tax | | (12,735,955) | - Unallocated expenses include administrative staff salaries, selling and distribution expenses, finance costs, and other expenses[78](index=78&type=chunk) - Segment assets and liabilities are not presented as they are not regularly reported to the chief operating decision-maker[79](index=79&type=chunk) [5. Loss Before Tax](index=27&type=section&id=5.%20Loss%20Before%20Tax) Loss before tax was primarily affected by losses on disposal of machinery and equipment, increased provision for expected credit losses, and higher finance costs, with depreciation, repairs, and rent within administrative expenses also contributing to the loss [(a) Other (Income)/Expenses, Net](index=27&type=section&id=(a)%20Other%20(Income)%2FExpenses%2C%20Net) For the six months ended June 30, 2025, net other (income)/expenses amounted to **HK$975,744**, primarily comprising a loss on disposal of machinery and equipment of **HK$1,033,936**, compared to a gain of **HK$13,066** in the prior year Other (Income)/Expenses, Net | Item | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Interest Income | (669) | (10,971) | | Loss/(Gain) on Disposal of Machinery and Equipment | 1,033,936 | (2,095) | | Others | (57,523) | – | | **Total** | **975,744** | **(13,066)** | [(b) Finance Costs](index=27&type=section&id=(b)%20Finance%20Costs) For the six months ended June 30, 2025, finance costs significantly increased to **HK$692,258**, mainly due to interest on other borrowings of **HK$670,351**, whereas the prior year's costs were primarily from bank borrowings and finance leases Finance Costs | Item | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Interest on Bank Borrowings | – | 73,222 | | Interest on Other Borrowings | 670,351 | – | | Interest on Finance Leases | – | 53,859 | | Interest on Lease Liabilities | 21,907 | 22,924 | | **Total** | **692,258** | **150,005** | [(c) Other Items](index=28&type=section&id=(c)%20Other%20Items) For the six months ended June 30, 2025, depreciation of machinery and equipment (owned assets) increased to **HK$1,596,391**, depreciation of right-of-use assets was **HK$179,651**, and the provision for expected credit losses on trade receivables significantly increased to **HK$1,482,790** Other Items | Item | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Cost of Overall Sales | – | 341,864 | | Depreciation of Machinery and Equipment – Owned Assets | 1,596,391 | 1,147,459 | | Depreciation of Right-of-use Assets | 179,651 | 242,637 | | Repair and Maintenance Expenses | 55,181 | 235,820 | | Short-term Operating Lease Rentals for Leased Properties | 756,303 | 785,871 | | Provision for Expected Credit Losses on Trade Receivables | 1,482,790 | 85,408 | [6. Income Tax in the Statement of Profit or Loss and Other Comprehensive Income](index=28&type=section&id=6.%20Income%20Tax%20in%20the%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group recorded an income tax credit of approximately **HK$0**, with Hong Kong profits tax at **16.5%** (or **8.25%** for the first **HK$2 million** for some subsidiaries) and Japan corporate income tax at **34.1%**, and no taxes payable in other jurisdictions - The Group recorded an income tax credit of approximately **HK$0** for the six months ended **June 30, 2025**[83](index=83&type=chunk) - Hong Kong profits tax is provided at **16.5%**, with some subsidiaries taxed at **8.25%** for the first **HK$2 million**[84](index=84&type=chunk) - Japan corporate income tax is provided at an effective tax rate of **34.1%**[85](index=85&type=chunk) - The Group is not subject to taxation in other jurisdictions[86](index=86&type=chunk) [7. Dividends](index=29&type=section&id=7.%20Dividends) For the six months ended June 30, 2025 and 2024, the Group neither paid nor declared any dividends, and no dividends have been proposed since the end of the reporting period - The Group neither paid nor declared any dividends for the six months ended **June 30, 2025**, and **2024**[87](index=87&type=chunk) [8. Basic and Diluted Loss Per Share](index=29&type=section&id=8.%20Basic%20and%20Diluted%20Loss%20Per%20Share) For the six months ended June 30, 2025, the basic loss per share attributable to owners of the Company was **12.21 HK cents**, a narrowing from **14.74 HK cents** in the prior year, with no diluted loss per share as there were no potential dilutive ordinary shares issued during the period Basic Loss Per Share | Indicator | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Loss for the Period Attributable to Owners of the Company Used for Basic Earnings Per Share Calculation | (12,654,882) | (12,735,955) | | Weighted Average Number of Ordinary Shares in Issue (for basic loss per share calculation) | 103,680,000 | 86,400,000 | | Basic Loss Per Share (HK cents) | (12.21) | (14.74) | - The weighted average number of ordinary shares in issue for the six months ended **June 30, 2024**, has been restated to reflect the effect of the share consolidation effective on **November 26, 2024**[88](index=88&type=chunk) - There was no diluted loss per share as there were no potential dilutive ordinary shares in issue during the period[89](index=89&type=chunk) [9. Capital Expenditure](index=30&type=section&id=9.%20Capital%20Expenditure) For the six months ended June 30, 2025, the Group did not acquire any machinery and equipment or enter into any lease agreements requiring recognition as right-of-use assets - For the six months ended **June 30, 2025**, the Group acquired machinery and equipment at a total cost of approximately **HK$0** (same period in 2024: approximately **HK$1.6 million**)[90](index=90&type=chunk) - For the six months ended **June 30, 2025**, and **2024**, the Group did not enter into any lease agreements requiring recognition as right-of-use assets[91](index=91&type=chunk) [10. Trade and Other Receivables](index=30&type=section&id=10.%20Trade%20and%20Other%20Receivables) As of June 30, 2025, the Group's total trade and other receivables were **HK$12,470,209**, a significant increase from December 31, 2024, with net trade receivables rising to **HK$9,520,404** and a notable increase in the provision for expected credit losses Trade and Other Receivables | Item | June 30, 2025 (HK$) | December 31, 2024 (HK$) | | :--- | :--- | :--- | | Trade Receivables | 25,292,819 | 9,906,422 | | Less: Provision for Expected Credit Losses on Trade Receivables | (15,772,415) | (7,411,631) | | **Net Trade Receivables** | **9,520,404** | **2,494,791** | | Interest Receivable | 385,737 | 241,817 | | Prepayments | 1,001,108 | 504,423 | | Other Receivables | 1,127,571 | – | | **Total** | **12,470,209** | **3,670,809** | Aging Analysis of Trade Receivables (Net of Provision for Expected Credit Losses) | Aging | June 30, 2025 (HK$) | December 31, 2024 (HK$) | | :--- | :--- | :--- | | Within 30 days | 1,716,496 | 174,641 | | 31 to 60 days | 3,126,696 | 1,139,398 | | 61 to 90 days | 3,363,428 | – | | 91 to 120 days | 912,139 | – | | 121 to 365 days | 401,645 | 1,180,752 | | **Total** | **9,520,404** | **2,494,791** | - The provision for expected credit losses on trade receivables increased from **HK$7,411,631** as of **December 31, 2024**, to **HK$15,772,415** as of **June 30, 2025**[92](index=92&type=chunk) [11. Trade and Other Payables](index=31&type=section&id=11.%20Trade%20and%20Other%20Payables) As of June 30, 2025, the Group's total trade and other payables were **HK$19,829,264**, a significant increase from December 31, 2024, with trade payables rising from **HK$2,978,174** to **HK$8,984,952**, and a larger proportion of amounts overdue by more than 60 days Trade and Other Payables | Item | June 30, 2025 (HK$) | December 31, 2024 (HK$) | | :--- | :--- | :--- | | Trade Payables | 8,984,952 | 2,978,174 | | Contract Liabilities | 15,484 | 15,484 | | Accruals and Other Payables | 9,619,828 | 10,064,816 | | Amounts Due to Directors of the Company | 1,199,000 | 1,569,739 | | Deposits and Provisional Sums Received | 10,000 | 10,000 | | **Total** | **19,829,264** | **14,638,213** | Aging Analysis of Trade Payables | Aging | June 30, 2025 (HK$) | December 31, 2024 (HK$) | | :--- | :--- | :--- | | Within 30 days | 530,689 | 22,258 | | 30 to 60 days | 2,199,004 | 139,258 | | 61 to 90 days | 3,781,582 | 194,985 | | Over 90 days | 2,473,677 | 2,621,673 | | **Total** | **8,984,952** | **2,978,174** | [12. Share Capital](index=32&type=section&id=12.%20Share%20Capital) As of June 30, 2025, the Company's authorized share capital was **HK$80,000,000**, divided into **800,000,000** ordinary shares of **HK$0.1** each, with issued and fully paid share capital of **HK$10,368,000**, comprising **103,680,000** ordinary shares, consistent with the beginning of the period Share Capital Structure | Item | Number of Shares | Share Capital (HK$) | | :--- | :--- | :--- | | Authorized Ordinary Shares of HK$0.1 each (at beginning and end of period) | 800,000,000 | 80,000,000 | | Issued and Fully Paid Ordinary Shares of HK$0.1 each (at beginning and end of period) | 103,680,000 | 10,368,000 | Other Information [Interim Dividend](index=33&type=section&id=Interim%20Dividend) 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**[95](index=95&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=33&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, redeemed, or sold any of the Company's shares - For the six months ended **June 30, 2025**, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's shares[96](index=96&type=chunk) [Code of Conduct for Securities Transactions by Directors](index=33&type=section&id=Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code of conduct for directors' securities transactions no less exacting than required by the GEM Listing Rules, and all directors confirmed compliance for the period - The Company has adopted a code of conduct for directors' securities transactions no less exacting than that required by the GEM Listing Rules[97](index=97&type=chunk) - All directors confirmed compliance with the code of conduct for the six months ended **June 30, 2025**[97](index=97&type=chunk) [Directors' and Chief Executive's Interests and/or Short Positions in Shares, Underlying Shares, and Debentures of the Company or any Associated Corporation](index=33&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%2For%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures%20of%20the%20Company%20or%20any%20Associated%20Corporation) As of June 30, 2025, Mr Su Binggen held **27,625,000** shares, representing approximately **3.20%** of the Company's equity through his controlled corporation; no other directors or chief executives had disclosable interests or short positions in the Company's or its associated corporations' shares Directors' Long Positions in Shares | Name of Director | Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of the Company's Equity | | :--- | :--- | :--- | :--- | | Mr Su Binggen | Interest in a controlled corporation and spouse's interest | 27,625,000 | 3.20% | - Mr Su Binggen is deemed to be interested in all shares held by Pro-Han Holdings Limited, whose entire issued share capital is owned by Mr Su[98](index=98&type=chunk) - Save as disclosed above, no other directors or chief executives had disclosable interests or short positions in the shares of the Company or its associated corporations[99](index=99&type=chunk) [Substantial Shareholders' Interests and/or Short Positions in Shares and Underlying Shares](index=34&type=section&id=Substantial%20Shareholders'%20Interests%20and%2For%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, Ms Zhao Manchi held **52,630,000** shares, representing approximately **6.09%** of the Company's equity, making her a substantial shareholder; the directors were unaware of any other persons with disclosable interests or short positions Substantial Shareholders' Long Positions in Shares | Name of Shareholder | Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of the Company's Equity | | :--- | :--- | :--- | :--- | | Ms Zhao Manchi | Beneficial interest | 52,630,000 | 6.09% | - Save as disclosed in this report, the directors were not aware of any other persons having interests or short positions in the shares or underlying shares that were required to be disclosed to the Company and the Stock Exchange[101](index=101&type=chunk) [Share Option Scheme](index=34&type=section&id=Share%20Option%20Scheme) The Company adopted a share option scheme on June 21, 2019, with a **10-year** validity, and as of the report date, no share options had been granted, agreed to be granted, exercised, cancelled, or lapsed under the scheme - The Company's share option scheme was adopted on **June 21, 2019**, with a validity period of **10 years**[102](index=102&type=chunk) - As of the date of this report, no share options had been granted, exercised, cancelled, or lapsed under the scheme[102](index=102&type=chunk) [Directors' Rights to Acquire Shares and Debentures](index=35&type=section&id=Directors'%20Rights%20to%20Acquire%20Shares%20and%20Debentures) At no time during the six months ended June 30, 2025, did the Company, its holding company, or any of its subsidiaries or fellow subsidiaries enter into any arrangements enabling directors and the chief executive to acquire benefits by purchasing shares or debentures of the Company or any other body corporate - Neither the Company, its holding company, nor any of its subsidiaries or fellow subsidiaries entered into any arrangements enabling directors and the chief executive to acquire benefits by purchasing shares or debentures of the Company or any other body corporate[103](index=103&type=chunk) [Directors' Interests in Material Transactions, Arrangements or Contracts](index=35&type=section&id=Directors'%20Interests%20in%20Material%20Transactions%2C%20Arrangements%20or%20Contracts) Neither the Company, its holding company, nor any of its subsidiaries or fellow subsidiaries entered into any material transactions, arrangements, or contracts in force during the six months ended June 30, 2025, in which a director or an entity connected with such director had a direct or indirect material interest - Neither the Company, its holding company, nor any of its subsidiaries or fellow subsidiaries entered into any material transactions, arrangements, or contracts in which a director or an entity connected with such director had a material interest[104](index=104&type=chunk) [Competing Interests](index=35&type=section&id=Competing%20Interests) For the six months ended June 30, 2025, the directors were unaware of any business or interest of any director, controlling shareholder, management shareholder, or their respective associates that competed or might compete with the Group's business, nor any other conflicts of interest - The directors were unaware of any business or interest of any director, controlling shareholder, management shareholder, or their respective associates that competed or might compete with the Group's business[105](index=105&type=chunk) [Changes in Directors' Information](index=35&type=section&id=Changes%20in%20Directors'%20Information) For the six months ended June 30, 2025, up to the date of this report, there were no changes in directors' information required to be disclosed under Rule 17.50A(1) of the GEM Listing Rules - For the six months ended **June 30, 2025**, up to the date of this report, there were no changes in directors' information required to be disclosed under Rule 17.50A(1) of the GEM Listing Rules[106](index=106&type=chunk) [Corporate Governance Practices](index=36&type=section&id=Corporate%20Governance%20Practices) The Company is committed to high corporate governance standards but has some non-compliance with the Corporate Governance Code, including the unseparated roles of Chairman and Chief Executive, absence of a dividend policy, insufficient independent non-executive directors and Audit Committee members, and management's failure to provide monthly updates to the Board - The Company has not separated the roles of Chairman and Chief Executive, with Mr Su holding both positions, an arrangement the Board believes provides strong and consistent leadership[109](index=109&type=chunk) - The Company has not adopted a dividend policy, and dividend payments will be determined by the Board based on various factors[109](index=109&type=chunk) - The number of independent non-executive directors and Audit Committee members is below the minimum required by Rule 5.05A of the GEM Listing Rules, and the Company needs to appoint sufficient members within three months[110](index=110&type=chunk) - Management has not provided monthly updates to the Board, which does not comply with Code Provision D.1.2 of the Corporate Governance Code[111](index=111&type=chunk) [Non-compliance with Code Provision D.1.2 of the Corporate Governance Code as set out in Appendix C1 to the Corporate Governance Code](index=36&type=section&id=Non-compliance%20with%20Code%20Provision%20D.1.2%20of%20the%20Corporate%20Governance%20Code%20as%20set%20out%20in%20Appendix%20C1%20to%20the%20Corporate%20Governance%20Code) The Group's failure to provide monthly updates to the Board with a balanced and understandable assessment of company performance, condition, and prospects does not comply with Code Provision D.1.2 of the Corporate Governance Code, though the Board acknowledges the importance of such updates and will continue to review practices - The Group has not provided monthly updates to the Board, which does not comply with Code Provision D.1.2 of the Corporate Governance Code[111](index=111&type=chunk) - The Board acknowledges the importance of monthly updates for the Board as a whole and for individual directors to discharge their duties[112](index=112&type=chunk) [Audit Committee](index=37&type=section&id=Audit%20Committee) The Company's Audit Committee, comprising three independent non-executive directors with Mr Jim Tak Lee as Chairman, reviews and monitors external auditor independence, financial statement integrity, financial reporting, financial controls, risk management, and internal control systems, having reviewed the interim results and found them compliant with applicable accounting standards and GEM Listing Rules - The Audit Committee comprises three independent non-executive directors: Mr Jim Tak Lee (Chairman), Ms Du Min, and Ms Chan Li Li[114](index=114&type=chunk) - The Committee's primary responsibilities include reviewing and monitoring the independence of external auditors, overseeing the integrity of financial statements, and reviewing financial reporting, financial controls, risk management, and internal control systems[114](index=114&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim results for the six months ended **June 30, 2025**, and considers them to be in compliance with applicable accounting standards and the GEM Listing Rules[114](index=114&type=chunk) - The Company has complied with Rule 5.28 of the GEM Listing Rules, which requires at least one Audit Committee member to possess appropriate professional qualifications, accounting, or related financial management expertise[114](index=114&type=chunk)

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=%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) The company achieved revenue of HKD 65,056 thousand, a significant increase from HKD 38,368 thousand in the prior period, successfully turning a net loss of HKD 25,467 thousand into a net profit of HKD 124 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 65,056 | 38,368 | 26,688 | 69.56% | | Cost of services | (56,790) | (52,067) | (4,723) | 9.07% | | Gross profit/(loss) | 8,266 | (13,699) | 21,965 | 160.34% | | Other income | 19 | 93 | (74) | -79.57% | | Administrative expenses | (8,069) | (3,767) | (4,302) | 114.22% | | Finance costs | (182) | (255) | 73 | -28.63% | | Profit/(loss) before tax | 124 | (25,467) | 25,591 | 100.49% | | Profit/(loss) for the period | 124 | (25,467) | 25,591 | 100.49% | | Basic earnings/(loss) per share (HK cents) | 0.04 | (8.16) | 8.20 | 100.49% | [Condensed Consolidated Statement of Financial Position](index=2&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the company's total assets increased to HKD 55,226 thousand, with significant improvement in net current assets and total equity, reflecting a robust enhancement in financial position Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Non-current assets | 13,818 | 5,792 | 8,026 | 138.57% | | Current assets | 42,658 | 36,468 | 6,190 | 16.97% | | **Total assets** | **55,226** | **42,260** | **12,966** | **30.68%** | | **Liabilities** | | | | | | Current liabilities | 32,326 | 32,430 | (104) | -0.32% | | **Net current assets** | **10,332** | **4,038** | **6,294** | **155.87%** | | **Total equity** | **24,150** | **9,830** | **14,320** | **145.68%** | [Notes to the Condensed Consolidated Financial Statements](index=3&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [1. General Information and Basis of Preparation](index=3&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99%E5%8F%8A%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) China Netcom Group Company Limited, incorporated in the Cayman Islands and listed on the Main Board of the Stock Exchange, primarily engages in construction services, construction IT services, and beauty and health services, with financial statements presented in HKD under HKAS 34 - The Company was incorporated in the Cayman Islands on January 30, 2019, and listed on the Main Board of the Stock Exchange on August 16, 2019[5](index=5&type=chunk) - The Group primarily engages in construction services, construction IT services, and beauty and health services[6](index=6&type=chunk) - The condensed consolidated financial statements are presented in HKD and prepared in accordance with HKAS 34 Interim Financial Reporting issued by the HKICPA and the applicable disclosure requirements of Appendix D2 to the Listing Rules of the Stock Exchange[7](index=7&type=chunk) [2. Application of New and Revised Hong Kong Financial Reporting Standards](index=4&type=section&id=2.%20%E6%87%89%E7%94%A8%E6%96%B0%E8%A8%82%E5%8F%8A%E7%B6%93%E4%BF%AE%E8%A8%82%E9%A6%99%E6%B8%AF%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87) The application of the revised HKFRS accounting standards (Amendments to HKFRS 21: Lack of Exchangeability) during this period had no material impact on the Group's financial position and performance - The application of the revised HKFRS accounting standards (Amendments to HKFRS 21: Lack of Exchangeability) during this period had no material impact on the Group's financial position and performance[9](index=9&type=chunk) [3A. Revenue from Contracts with Customers](index=4&type=section&id=3A.%20%E5%AE%A2%E6%88%B6%E5%90%88%E7%B4%84%E6%94%B6%E7%9B%8A) The Group's revenue from contracts with customers for the six months ended June 30, 2025, totaling HKD 65,056 thousand, was entirely derived from construction services, showing significant growth, with public sector projects contributing the majority Classification of Revenue from Contracts with Customers (For the six months ended June 30) | Service Type | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Construction services | 65,056 | 38,368 | 26,688 | 69.56% | | Construction IT services | – | – | – | – | | Beauty and health services | – | – | – | – | | **Total** | **65,056** | **38,368** | **26,688** | **69.56%** | | Customer Type | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Private sector projects – Construction services | 7,321 | 5,353 | 1,968 | 36.76% | | Public sector projects – Construction services | 57,735 | 33,015 | 24,720 | 74.88% | | **Total** | **65,056** | **38,368** | **26,688** | **69.56%** | - The Group's revenue from wet trade and related ancillary works is recognized over time, with contract periods ranging from 1 to 17 months[12](index=12&type=chunk) [3B. Segment Information](index=5&type=section&id=3B.%20%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group's reportable segments include construction services, construction IT services, and the newly added beauty and health services, with construction services being the sole revenue source for the period, contributing a positive segment result of HKD 1,974 thousand, a turnaround from a loss in the prior year - The Group's reportable segments are construction services, construction IT services, and the newly added beauty and health services for the current period[13](index=13&type=chunk)[14](index=14&type=chunk) Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (HKD '000) | 2025 Results (HKD '000) | 2024 Revenue (HKD '000) | 2024 Results (HKD '000) | | :--- | :--- | :--- | :--- | :--- | | Beauty and health services | – | – | – | – | | Construction services | 65,056 | 1,974 | 38,368 | (24,078) | | Construction IT services | – | – | – | – | | **Consolidated** | **65,056** | **124 (Profit before tax)** | **38,368** | **(25,467) (Loss before tax)** | - The Group's revenue and non-current assets are primarily derived from a single geographical region, Hong Kong, thus no geographical segment information is presented[20](index=20&type=chunk) [4. Other Income](index=7&type=section&id=4.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income for the period was HKD 19 thousand, a decrease of approximately 80% from HKD 93 thousand in the prior period, mainly due to reduced bank interest income and the absence of government grants Other Income (For the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest income | 19 | 13 | 6 | 46.15% | | Government grants | – | 80 | (80) | -100.00% | | **Total** | **19** | **93** | **(74)** | **-79.57%** | - Government grants primarily originated from the Construction Industry Council's scheme to subsidize employers for apprentice training, compensating for expenses incurred[22](index=22&type=chunk) [5. Finance Costs](index=8&type=section&id=5.%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) Finance costs for the period were HKD 182 thousand, a decrease of approximately 28.6% from HKD 255 thousand in the prior period, primarily due to reduced interest on bank borrowings Finance Costs (For the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest on bank borrowings | 99 | 255 | (156) | -61.18% | | Interest on lease liabilities | 83 | – | 83 | N/A | | **Total** | **182** | **255** | **(73)** | **-28.63%** | [6. Profit/(Loss) Before Tax](index=8&type=section&id=6.%20%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9%EF%BC%8F%EF%BC%88%E虧%E6%90%8D%EF%BC%89) Profit before tax for the period was HKD 124 thousand, a significant turnaround from a loss of HKD 25,467 thousand in the prior period, primarily driven by improved gross profit, partially offset by increased administrative expenses Components of Profit/(Loss) Before Tax (For the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 1,493 | 933 | 560 | 60.02% | | Rental expenses for short-term leases of warehouses, office premises and machinery | 493 | 119 | 374 | 314.29% | | Total staff costs | 2,476 | 2,535 | (59) | -2.33% | [7. Income Tax Expense](index=8&type=section&id=7.%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) No provision for Hong Kong profits tax was made as the Group did not generate any assessable profits in Hong Kong during the current and prior periods - No provision for Hong Kong profits tax was made as the Group did not generate any assessable profits in Hong Kong during the current and prior periods[24](index=24&type=chunk) [8. Dividends](index=9&type=section&id=8.%20%E8%82%A1%E6%81%AF) The Board of Directors resolved not to declare any dividends for the review period, consistent with the prior period - The Board of Directors resolved not to declare any dividends for the review period[25](index=25&type=chunk) [9. Earnings/(Loss) Per Share](index=9&type=section&id=9.%20%E6%AF%8F%E8%82%A1%E6%BA%A2%E5%88%A9%EF%BC%8F%EF%BC%88%E虧%E6%90%8D%EF%BC%89) Basic earnings per share for the period was HKD 0.04 cents, a significant improvement from a basic loss per share of HKD 8.16 cents in the prior period, with no diluted loss per share presented due to the absence of potential dilutive shares Calculation of Earnings/(Loss) Per Share (For the six months ended June 30) | Indicator | 2025 (HKD '000/shares '000) | 2024 (HKD '000/shares '000) | | :--- | :--- | :--- | | Profit/(loss) for the period | 124 | (25,467) | | Weighted average number of ordinary shares | 314,413 | 312,000 | | **Basic earnings/(loss) per share (HK cents)** | **0.04** | **(8.16)** | - No diluted loss per share is presented due to the absence of potential dilutive ordinary shares[28](index=28&type=chunk) [10. Impairment Losses under Expected Credit Loss ("ECL") Model (net of reversal)](index=9&type=section&id=10.%20%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E虧%E6%90%8D%EF%BC%88%E3%80%8C%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E虧%E6%90%8D%E3%80%8D%EF%BC%89%E6%A8%A1%E5%BC%8F%E4%B8%8B%E7%9A%84%E6%B8%9B%E5%80%BC%E虧%E6%90%8D%EF%BC%88%E6%89%A3%E9%99%A4%E6%92%A5%E5%9B%9E%EF%BC%89) Impairment loss reversal of approximately HKD 3 thousand was recorded for the period, a significant reduction from an impairment loss of HKD 7,839 thousand in the prior period, primarily due to the reversal of impairment losses on trade receivables offsetting impairment losses on contract assets Recognized Impairment Losses (net of reversal) (For the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Contract assets | 1,247 | 7,839 | (6,592) | -84.09% | | Trade receivables | (1,250) | – | (1,250) | N/A | | **Total** | **(3)** | **7,839** | **(7,842)** | **-100.04%** | - Impairment losses primarily comprised an impairment loss of approximately **HKD 1,100 thousand** for a Sha Tau Kok construction project and a reversal of impairment loss of approximately **HKD 1,300 thousand** for trade receivables from a Tai Wai construction project[56](index=56&type=chunk) [11. Changes in Property, Plant and Equipment](index=10&type=section&id=11.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99%E4%B9%8B%E8%AE%8A%E5%8B%95) The Group recognized right-of-use assets of approximately HKD 9,432 thousand during the period, primarily for a three-year office lease in Hong Kong, with no such recognition in the prior period - The Group recognized right-of-use assets of approximately **HKD 9,432 thousand** during the period, primarily for a three-year office lease in Hong Kong[30](index=30&type=chunk) [12. Financial Assets at Fair Value Through Profit or Loss](index=10&type=section&id=12.%20%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E5%85%A5%E6%90%8D%E7%9B%8A%E4%B9%8B%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2) The Group's financial assets at fair value through profit or loss primarily consist of life insurance policies for key management personnel, totaling HKD 2,882 thousand as of June 30, 2025, a slight increase from HKD 2,795 thousand as of December 31, 2024 Financial Assets at Fair Value Through Profit or Loss | Item | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Life insurance policies for key management personnel | 2,882 | 2,795 | 87 | 3.11% | - The life insurance policy covers the death and permanent disability of an executive director, with Ma Yau Engineering Company Limited as the beneficiary and policyholder[31](index=31&type=chunk) [13. Trade Receivables](index=10&type=section&id=13.%20%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, trade receivables (net of impairment loss provision) significantly decreased to HKD 3,036 thousand from HKD 21,776 thousand as of December 31, 2024, primarily due to the collection of receivables and reduced impairment provisions Trade Receivables (As of June 30, 2025) | Item | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade receivables | 3,150 | 23,140 | (19,990) | -86.39% | | Less: Provision for impairment losses | (114) | (1,364) | 1,250 | -91.64% | | **Total** | **3,036** | **21,776** | **(18,740)** | **-86.06%** | Ageing Analysis of Trade Receivables (As of June 30, 2025) | Ageing | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Within 30 days | 3,036 | 4,111 | | 31 to 60 days | – | 9,339 | | 61 to 90 days | – | 8,326 | | **Total** | **3,036** | **21,776** | [14. Other Receivables, Deposits and Prepayments](index=11&type=section&id=14.%20%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85%E3%80%81%E6%8C%89%E9%87%91%E5%8F%8A%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, total other receivables, deposits, and prepayments amounted to HKD 5,517 thousand, compared to zero as of December 31, 2024, primarily comprising new other receivables and deposits of HKD 1,505 thousand and prepayments of HKD 4,012 thousand Other Receivables, Deposits and Prepayments (As of June 30, 2025) | Item | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Other receivables and deposits | 1,505 | – | | Prepayments | 4,012 | – | | **Total** | **5,517** | **–** | [15. Contract Assets](index=11&type=section&id=15.%20%E5%90%88%E7%B4%84%E8%B3%87%E7%94%A2) As of June 30, 2025, net contract assets significantly increased to HKD 10,975 thousand from HKD 4,153 thousand as of December 31, 2024, mainly due to an increase in unbilled revenue and retention receivables Contract Assets (As of June 30, 2025) | Item | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Contract assets | 33,979 | 25,910 | 8,069 | 31.14% | | Less: Provision for impairment losses | (23,004) | (21,757) | (1,247) | 5.73% | | **Net** | **10,975** | **4,153** | **6,822** | **164.26%** | - Contract assets represent the Group's right to consideration from customers for construction services provided, including unbilled revenue and retention receivables[34](index=34&type=chunk) Analysis of Construction Services Contract Assets (Current) | Item | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Unbilled revenue | 9,881 | 3,161 | 6,720 | 212.59% | | Retention receivables | 1,094 | 992 | 102 | 10.28% | | **Total** | **10,975** | **4,153** | **6,822** | **164.26%** | [16. Trade and Other Payables](index=13&type=section&id=16.%20%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade and other payables decreased by approximately 34% to HKD 17,880 thousand from HKD 27,124 thousand as of December 31, 2024, primarily due to a reduction in trade payables Trade and Other Payables (As of June 30, 2025) | Item | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade payables | 15,744 | 25,406 | (9,662) | -38.03% | | Wages and MPF payables | 392 | 416 | (24) | -5.77% | | Accrued expenses | 1,744 | 1,302 | 442 | 33.95% | | **Total** | **17,880** | **27,124** | **(9,244)** | **-34.08%** | Ageing Analysis of Trade Payables (As of June 30, 2025) | Ageing | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Within 30 days | 5,344 | 6,562 | | 31 to 60 days | 10,400 | 9,962 | | 61 to 90 days | – | 8,882 | | **Total** | **15,744** | **25,406** | [17. Bank Borrowings](index=13&type=section&id=17.%20%E9%8A%80%E8%A1%8C%E5%80%9F%E6%AC%BE) The Group did not draw new bank borrowings during the period and repaid approximately HKD 375 thousand, with existing bank borrowings bearing interest at HKD Prime minus 2.5% and HIBOR plus 1.85%, and bank overdrafts at HIBOR plus 2% as of June 30, 2025 - The Group did not draw new bank borrowings during the period and repaid approximately **HKD 375 thousand** in bank borrowings[38](index=38&type=chunk) - Bank borrowings bear interest at HKD Prime minus 2.5% and HIBOR plus 1.85%, while bank overdrafts bear interest at HIBOR plus 2%[38](index=38&type=chunk) - Bank borrowings are repayable in installments by May 2028[38](index=38&type=chunk) [18. Share Capital](index=14&type=section&id=18.%20%E8%82%A1%E6%9C%AC) As of June 30, 2025, the Company's issued share capital increased to HKD 37,440 thousand, primarily due to the placement of 62,400,000 new ordinary shares, raising net proceeds of approximately HKD 14.1 million Details of Share Capital Movement (As of June 30, 2025) | Item | Number of Shares ('000) | Amount (HKD '000) | | :--- | :--- | :--- | | As at December 31, 2024 | 312,000,000 | 31,200 | | Shares issued under placing | 62,400,000 | 6,240 | | **As at June 30, 2025** | **374,400,000** | **37,440** | - On June 24, 2025, the Company allotted and issued **62,400,000** ordinary shares by way of placing at a placing price of **HKD 0.241** per share, raising gross proceeds of **HKD 15,038 thousand**[39](index=39&type=chunk) [19. Significant Related Party Transactions](index=14&type=section&id=19.%20%E9%87%8D%E5%A4%A7%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) Total key management personnel compensation for the period was HKD 915 thousand, a significant increase from HKD 399 thousand in the prior period, primarily due to growth in short-term benefits Key Management Personnel Compensation (For the six months ended June 30) | Item | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Short-term benefits | 906 | 390 | 516 | 132.31% | | Post-employment benefits | 9 | 9 | 0 | 0.00% | | **Total** | **915** | **399** | **516** | **129.32%** | [20. Fair Value Measurement of Financial Instruments](index=15&type=section&id=20.%20%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E4%B9%8B%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E9%87%8F) The Group's financial assets at fair value through profit or loss, primarily life insurance policies for key management personnel, are classified under Level 2 fair value measurements, with their fair value determined by reference to the cash value provided by the insurance company, and no transfers between levels occurred during the period Fair Value Hierarchy of Financial Assets at Fair Value Through Profit or Loss | Item | Level 1 (HKD '000) | Level 2 (HKD '000) | Level 3 (HKD '000) | Total (HKD '000) | | :--- | :--- | :--- | :--- | :--- | | June 30, 2025 - Life insurance policies for key management personnel | – | 2,882 | – | 2,882 | | December 31, 2024 - Life insurance policies for key management personnel | – | 2,795 | – | 2,795 | - The fair value of life insurance policies for key management personnel is determined by reference to the cash value provided by the insurance company[43](index=43&type=chunk) - No transfers between Level 1 and Level 2, or into or out of Level 3, occurred during the period[42](index=42&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) [Business Review and Outlook](index=16&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E5%8F%8A%E5%89%8D%E6%99%AF) The Group continues to focus on wet trade engineering while actively expanding into new businesses, including construction IT services and beauty and health services, to achieve business diversification and consolidate revenue streams, striving to enhance market competitiveness and seek new opportunities despite challenges in the construction industry [Provision of Wet Trade and Related Ancillary Works](index=16&type=section&id=%E6%8F%90%E4%BE%9B%E6%B3%A5%E6%B0%B4%E5%8F%8A%E5%85%B6%E7%9B%B8%E9%97%9C%E7%9A%84%E9%85%8D%E5%A5%97%E5%B7%A5%E7%A8%8B) The Group, through Ma Yau Engineering Company Limited, provides wet trade engineering services and faces challenges in the Hong Kong construction industry, including financial constraints and increased competition, but remains committed to monitoring the market and expanding its client base - The Group provides wet trade engineering services through Ma Yau Engineering Company Limited, which is registered with the Construction Industry Council[45](index=45&type=chunk) Overview of Wet Trade Engineering Projects (As of June 30, 2025) | Project Status | Contract Amount (HKD million) | | :--- | :--- | | Ongoing projects (commenced but not completed, and awarded but not commenced) | 139.6 | | Projects currently bidding or awaiting tender results | 131.9 | - The Hong Kong construction industry faces challenges such as financial tightness, slower new project tendering, pressure on tender prices and profit margins due to mainland construction companies' participation, and increased credit risk[46](index=46&type=chunk) - The Group will continue to monitor the market, provide high-quality engineering, expand its client base and market share to enhance competitiveness[47](index=47&type=chunk) [Provision of Construction IT Services](index=17&type=section&id=%E6%8F%90%E4%BE%9B%E5%BB%BA%E7%AF%89%E8%B3%87%E8%A8%8A%E7%A7%91%E6%8A%80%E6%9C%8D%E5%8B%99) The Group has established an online platform to provide users with specifications for wet trade engineering service projects and assist clients in reviewing contractors' monthly payment requests - The Group has established an online platform to provide users with specifications for wet trade engineering service projects and assist clients in reviewing contractors' monthly payment requests[48](index=48&type=chunk) [Provision of Beauty and Health Services (New Business)](index=17&type=section&id=%E6%8F%90%E4%BE%9B%E7%BE%8E%E5%AE%B9%E5%8F%8A%E5%81%A5%E5%BA%B7%E6%9C%8D%E5%8B%99) The Group launched new beauty and health services during the review period to diversify its business and revenue streams, focusing on cosmetics, skincare, nutritional health products, and health management through joint ventures and physical stores in major Chinese cities, collaborating with global manufacturers - The Group commenced new beauty and health services during the review period to achieve business and revenue stream diversification[49](index=49&type=chunk) - The new business will focus on cosmetics, beauty and skincare products, nutritional health foods, lifestyle beauty, medical aesthetics, and health management, primarily through establishing joint ventures and physical stores with local partners in first-tier and second-tier cities in China[50](index=50&type=chunk) - The Group has opened physical stores in central cities in mainland China, including Shenzhen, Beijing, Shanghai, Wuhan, Fuzhou, Chongqing, and Shenyang, Xi'an[51](index=51&type=chunk) - The Group has established deep cooperation with globally renowned cosmetics manufacturers such as Cosmax (China) Cosmetics Co., Ltd. and Xianle Health Technology (Anhui) Co., Ltd[52](index=52&type=chunk) - The Group is actively expanding into the medical aesthetics and health consumption sectors and exploring market opportunities outside Hong Kong[52](index=52&type=chunk) [Financial Review](index=18&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The period saw significant improvement in financial performance, with substantial revenue growth, a turnaround from gross loss to profit, and net profit achieved, primarily driven by successful large-scale project tenders and improved cost control, though administrative expenses increased due to professional fees and staff costs [Revenue](index=18&type=section&id=%E6%94%B6%E7%9B%8A) Revenue for the period increased significantly, primarily due to the larger scale of successfully tendered projects Revenue Change | Indicator | 2025 (HKD million) | 2024 (HKD million) | Change (HKD million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 65.1 | 38.4 | 26.7 | 69.6% | - The increase in revenue was primarily due to the relatively larger scale of successfully tendered projects[53](index=53&type=chunk) [Gross Profit/(Loss) and Gross Profit/(Loss) Margin](index=18&type=section&id=%E6%AF%9B%E5%88%A9%EF%BC%8F%EF%BC%88%E6%AF%9B%E6%90%8D%EF%BC%89%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87%EF%BC%8F%EF%BC%88%E6%AF%9B%E6%90%8D%E7%8E%87%EF%BC%89) Gross profit for the period improved significantly, turning a loss into a profit, primarily due to better cost control Gross Profit/(Loss) and Gross Profit/(Loss) Margin Change | Indicator | 2025 (HKD million) | 2024 (HKD million) | Change (HKD million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross profit/(loss) | 8.3 | (13.7) | 22.0 | 160.6% | | Gross profit/(loss) margin | 12.7% | (35.7%) | 48.4% | N/A | - The improvement in gross profit was primarily due to improved cost control[54](index=54&type=chunk) [Other Income](index=18&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income decreased for the period, mainly due to reduced bank interest income resulting from lower average bank balances Other Income Change | Indicator | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other income | 19 | 93 | (74) | -79.6% | - The decrease was primarily due to reduced bank interest income resulting from lower average bank balances[55](index=55&type=chunk) [Impairment Losses under Expected Credit Loss ("ECL") Model (net of reversal)](index=19&type=section&id=%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E虧%E6%90%8D%EF%BC%88%E3%80%8C%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E虧%E6%90%8D%E3%80%8D%EF%BC%89%E6%A8%A1%E5%BC%8F%E4%B8%8B%E7%9A%84%E6%B8%9B%E5%80%BC%E虧%E6%90%8D%EF%BC%88%E6%89%A3%E9%99%A4%E6%92%A5%E5%9B%9E%EF%BC%89) Impairment loss reversal was recorded for the period, primarily influenced by an impairment loss on a construction project and a reversal of impairment loss on trade receivables from another project Expected Credit Loss Impairment Loss Change | Indicator | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | ECL reversal | (3) | 7,800 | (7,803) | -100.04% | - Impairment losses primarily comprised an impairment loss of approximately **HKD 1,100 thousand** for a Sha Tau Kok construction project and a reversal of impairment loss of approximately **HKD 1,300 thousand** for trade receivables from a Tai Wai construction project[56](index=56&type=chunk) [Administrative Expenses](index=19&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) Administrative expenses increased for the period, mainly due to higher professional fees related to a cash offer and increased staff costs Administrative Expenses Change | Indicator | 2025 (HKD million) | 2024 (HKD million) | Change (HKD million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative expenses | 8.1 | 3.8 | 4.3 | 113.2% | - The increase was primarily due to higher professional fees related to a cash offer and increased staff costs[57](index=57&type=chunk) [Finance Costs](index=19&type=section&id=%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) Finance costs decreased for the period, primarily due to reduced interest on bank borrowings resulting from lower interest rates Finance Costs Change | Indicator | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finance costs | 182 | 255 | (73) | -28.6% | - The decrease was primarily due to reduced interest on bank borrowings resulting from lower interest rates[58](index=58&type=chunk) [Net Profit/(Loss)](index=19&type=section&id=%E6%B7%A8%E6%BA%A2%E5%88%A9%EF%BC%8F%EF%BC%88%E虧%E6%90%8D%EF%BC%89) Net profit for the period significantly improved, turning a loss into a profit Net Profit/(Loss) Change | Indicator | 2025 (HKD '000) | 2024 (HKD '000) | Change (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net profit/(loss) | 124 | (25,500) | 25,624 | 100.49% | [Interim Dividend](index=19&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board of Directors does not recommend the payment of an interim dividend for the review period - The Board of Directors does not recommend the payment of an interim dividend for the review period[60](index=60&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=19&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) The Company completed a placing of 62,400,000 new shares during the period, significantly strengthening its capital structure, with total bank balances and cash increasing and total borrowings slightly decreasing as of June 30, 2025, indicating improved liquidity - The Company completed the placing of **62,400,000** new shares at a placing price of **HKD 0.241** per share on June 24, 2025[61](index=61&type=chunk) Liquidity and Borrowings Overview | Indicator | June 30, 2025 (HKD million) | December 31, 2024 (HKD million) | Change (HKD million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Issued share capital | 37.44 | 31.20 | 6.24 | 20.0% | | Total bank balances and cash | 23.1 | 10.5 | 12.6 | 120.0% | | Total borrowings (including bank borrowings) | 4.9 | 5.3 | (0.4) | -7.5% | - All bank balances and borrowings are denominated in HKD, with interest charged at fixed and floating rates, and the Group has not implemented any interest rate hedging policy[62](index=62&type=chunk) [Fundraising and Use of Proceeds](index=20&type=section&id=%E7%B1%8C%E6%8E%AA%E8%B3%87%E9%87%91%E5%8F%8A%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The Company raised net proceeds of approximately HKD 14.1 million from a new share placement, with 57.4% earmarked for new beauty salon businesses, 21.3% for new office renovation, and the remaining 21.3% for working capital, all of which remained unutilized as of June 30, 2025, and are planned for use in the second half of 2025 - Net proceeds from the placing amounted to approximately **HKD 14.1 million**[63](index=63&type=chunk) Intended Use of Net Proceeds | Use | Amount (HKD million) | Proportion of Net Proceeds | | :--- | :--- | :--- | | New business (establishing approximately 8 physical beauty salons in first-tier cities in China) | 8.1 | 57.4% | | Renovation of new office | 3.0 | 21.3% | | Working capital | 3.0 | 21.3% | - As of June 30, 2025, the net proceeds remained unutilized and are planned to be used for their intended purposes in the second half of 2025[63](index=63&type=chunk) [Treasury Policy](index=20&type=section&id=%E5%BA%AB%E5%8B%99%E6%94%BF%E7%AD%96) The Group adopts a prudent financial management approach, with the Board of Directors closely monitoring liquidity to ensure the liquidity structure of assets, liabilities, and other commitments meets funding requirements - The Group adopts a prudent financial management approach, with the Board of Directors closely monitoring liquidity to ensure funding requirements are met[64](index=64&type=chunk) [Pledged Assets](index=21&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group had pledged approximately HKD 2.9 million of financial assets at fair value through profit or loss to secure bank facilities - As of June 30, 2025, the Group had pledged approximately **HKD 2.9 million** of financial assets at fair value through profit or loss to secure bank facilities[65](index=65&type=chunk) [Foreign Exchange Risk](index=21&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The Group primarily operates in Hong Kong, with most transactions and assets denominated in HKD, and foreign currency transactions are not significant; no derivative instruments were involved, nor was foreign exchange risk hedged during the period - The Group primarily operates in Hong Kong, with most transactions and assets denominated in HKD, and foreign currency transactions are not significant[66](index=66&type=chunk) - No derivative instruments were involved, nor was foreign exchange risk hedged during the period[66](index=66&type=chunk) [Gearing Ratio](index=21&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%80%B5%E6%AF%94%E7%8E%87) As of June 30, 2025, the gearing ratio was approximately 20.4%, a significant decrease from 54.0% as of December 31, 2024, with the higher ratio in 2024 primarily due to a reduction in total equity from accumulated losses Gearing Ratio Change | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gearing ratio | 20.4% | 54.0% | -33.6% | - The decrease in gearing ratio was primarily due to a reduction in total equity as of June 30, 2024, resulting from increased accumulated losses[67](index=67&type=chunk) [Material Investments Held, Material Acquisitions or Disposals of Subsidiaries, Associates and Joint Ventures](index=21&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%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E3%80%81%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%90%88%E7%87%9F%E5%85%AC%E5%8F%B8%E7%9A%84%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E6%88%96%E5%87%BA%E5%94%AE) The Group held no material investments and made no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period - The Group held no material investments and made no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period[68](index=68&type=chunk) [Future Plans for Material Investments or Capital Assets](index=21&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E6%88%96%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E4%B9%8B%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) As of the date of this announcement, the Group has no other plans for material investments or capital assets - As of the date of this announcement, the Group has no other plans for material investments or capital assets[69](index=69&type=chunk) [Employees](index=22&type=section&id=%E5%83%B1%E5%93%A1) As of June 30, 2025, the Group's employee count increased to 38, with total staff costs of approximately HKD 2.5 million, and the Group regularly reviews its remuneration policy, offering competitive benefits and training, adjusting compensation and discretionary bonuses based on individual performance and market conditions Employee Count and Costs | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of employees | 38 | 13 | 25 | | Total staff costs (HKD million) | 2.5 | 2.5 | 0 | - The Group regularly reviews its remuneration policy, offering competitive salary benefits and job training, and adjusts compensation and discretionary bonuses based on individual performance and market conditions[70](index=70&type=chunk) [Capital Commitments and Contingent Liabilities](index=22&type=section&id=%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94%E5%8F%8A%E6%88%96%E7%84%B6%E8%B2%A0%E5%80%B5) As of June 30, 2025, the Group had no material capital commitments or contingent liabilities - As of June 30, 2025, the Group had no material capital commitments or contingent liabilities[71](index=71&type=chunk) [Other Information](index=22&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) [Compliance with Corporate Governance Code](index=22&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The Company has adopted and complied with the principles and provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules - The Company has adopted and complied with the principles and provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[72](index=72&type=chunk) [Compliance with the Standard Code for Securities Transactions](index=22&type=section&id=%E9%81%B5%E5%AE%88%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The Company has adopted the Standard Code as the code of conduct for directors' securities transactions, and all directors confirmed compliance with its provisions during the review period after specific inquiry - The Company has adopted the Standard Code as the code of conduct for directors' securities transactions, and all directors confirmed compliance with its provisions[73](index=73&type=chunk) [Purchase, Sale and Redemption of the Company's Listed Securities](index=22&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E5%8F%8A%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[74](index=74&type=chunk) [Audit Committee](index=23&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Company's Audit Committee, established on July 22, 2019, comprises three members with Ms. Ding Xin as Chairperson, and its primary responsibilities include recommending external auditors, reviewing financial information, and monitoring financial reporting and internal control systems - The Audit Committee was established on July 22, 2019, comprising Ms. Ding Xin, Mr. Zhu Qi, and Ms. Zhang Lingke, with Ms. Ding Xin as Chairperson[75](index=75&type=chunk) - Its primary responsibilities include recommending the appointment and removal of external auditors, reviewing financial information, and monitoring the financial reporting system and internal control procedures[75](index=75&type=chunk) [Review of Interim Financial Results](index=23&type=section&id=%E5%AF%A9%E9%96%B1%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E6%A5%AD%E7%B8%BE) The Group's interim financial results, though unaudited, have been reviewed and approved by the Audit Committee, which deemed them prepared in compliance with applicable accounting standards, requirements, and Listing Rules, with adequate disclosures - The Group's interim financial results, though unaudited, have been reviewed and approved by the Audit Committee[76](index=76&type=chunk) - The Audit Committee deemed the results prepared in compliance with applicable accounting standards, requirements, and Listing Rules, with adequate disclosures[76](index=76&type=chunk) [Information on Board Members](index=23&type=section&id=%E8%91%A3%E4%BA%8B%E5%B1%80%E6%88%90%E5%93%A1%E8%B3%87%E6%96%99) As of the date of this announcement, the Board of Directors includes executive directors Mr. Zhou Zhenlin, Ms. Peng Yunying, and Mr. Guo Xianjiao, as well as independent non-executive directors Ms. Ding Xin, Mr. Zhu Qi, Ms. Zhang Lingke, and Professor Lin Chengguang - As of the date of this announcement, the Board of Directors includes executive directors Mr. Zhou Zhenlin, Ms. Peng Yunying, and Mr. Guo Xianjiao, as well as independent non-executive directors Ms. Ding Xin, Mr. Zhu Qi, Ms. Zhang Lingke, and Professor Lin Chengguang[77](index=77&type=chunk)

[Performance Overview](index=1&type=section&id=Performance%20Overview) [Key Financial Indicators](index=1&type=section&id=Key%20Financial%20Indicators) For the six months ended June 30, 2025, the Group's revenue increased by 10.4% to RMB 30.7 million, but loss before tax and net loss both expanded, with basic and diluted loss per share at RMB 0.023 Key Financial Indicators | Indicator | For the six months ended June 30, 2025 (RMB million) | For the six months ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 30.7 | 27.8 | +10.4% | | Loss before tax | (26.8) | (24.2) | +10.7% (Loss expanded) | | Net loss | (26.9) | (24.5) | +9.8% (Loss expanded) | | Basic and diluted loss per share | 0.023 | 0.025 | -8.0% (Loss narrowed) | [Financial Information](index=2&type=section&id=Financial%20Information) [Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's revenue was RMB 30,709 thousand, an increase from RMB 27,805 thousand in the prior period, but loss for the period expanded to RMB 26,945 thousand due to decreased other income and increased administrative and finance costs Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | For the six months ended June 30, 2025 (RMB thousand) | For the six months ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 30,709 | 27,805 | | Cost of sales | (22,918) | (20,259) | | Gross profit | 7,791 | 7,546 | | Other income and gains | 2,147 | 10,039 | | Selling and distribution expenses | (3,842) | (3,233) | | Administrative expenses | (21,450) | (26,935) | | Finance costs | (8,371) | (7,402) | | Loss before tax | (26,802) | (24,202) | | Income tax expense | (143) | (341) | | Loss and total comprehensive loss for the period | (26,945) | (24,543) | | Loss attributable to owners of the Company | (26,945) | (24,526) | [Condensed Interim Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total non-current assets slightly decreased, total current assets slightly increased, current liabilities remained stable, and non-current liabilities increased, leading to a decrease in net assets from RMB 600,704 thousand at year-end 2024 to RMB 573,759 thousand Condensed Interim Consolidated Statement of Financial Position | Indicator | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 799,904 | 810,692 | | Total current assets | 190,467 | 188,944 | | Total current liabilities | 163,344 | 163,582 | | Total non-current liabilities | 253,268 | 235,350 | | Net assets | 573,759 | 600,704 | | Total equity | 573,759 | 600,704 | [Notes](index=5&type=section&id=Notes) [1. Company Information](index=5&type=section&id=1.%20Company%20Information) The Company, incorporated in the Cayman Islands, primarily engages in marble quarrying, processing, trading, sales, calcium carbonate products, and logistics and warehousing services - The company is incorporated in the Cayman Islands, with main businesses including marble stone, calcium carbonate products, and logistics and warehousing services[7](index=7&type=chunk) [2. Basis of Preparation and Accounting Policies](index=5&type=section&id=2.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) Interim financial information is prepared in accordance with IAS 34 and HKEX Listing Rules, with consistent accounting policies from 2024, and new standards having no material impact on operating results or financial position - Interim financial information is prepared in accordance with International Accounting Standard 34 and the Listing Rules, with accounting policies consistent with the prior year[8](index=8&type=chunk)[9](index=9&type=chunk) - Newly adopted accounting standards have no material impact on the Group's operating results or financial position[10](index=10&type=chunk) [3. Revenue and Segment Information](index=6&type=section&id=3.%20Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from marble and related products, calcium carbonate products, and logistics and warehousing services, with calcium carbonate products contributing 92.7% of total revenue for the six months ended June 30, 2025 - The Group's revenue primarily derives from marble and related products, calcium carbonate products, and logistics and warehousing services[12](index=12&type=chunk) Revenue by Product Category | Product Category | 2025 (RMB thousand) | 2025 (%) | 2024 (RMB thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Marble stone products | 1,061 | 3.5 | – | – | | Calcium carbonate products | 28,477 | 92.7 | 26,856 | 96.6 | | Revenue from marble products | 29,538 | 96.2 | 26,856 | 96.6 | | Logistics and warehousing services | 1,171 | 3.8 | 949 | 3.4 | | Total | 30,709 | 100.0 | 27,805 | 100.0 | - All external revenue is attributable to customers located in China, where the majority of non-current assets are also located[17](index=17&type=chunk)[18](index=18&type=chunk) Major Customers | Major Customer | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer A | 10,758 | 6,859 | | Customer B | Not applicable* | 4,347 | *Corresponding revenue contribution to the Group's total revenue does not exceed 10%. [4. Other Income and Gains](index=8&type=section&id=4.%20Other%20Income%20and%20Gains) Other income and gains for the six months ended June 30, 2025, totaled RMB 2,147 thousand, mainly from government grants, a significant decrease from RMB 10,039 thousand in the prior period due to a one-off gain from loan restructuring Other Income and Gains | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank interest income | 277 | 278 | | Government grants | 1,673 | 1,583 | | Waiver of loan principal and interest due to loan restructuring | – | 8,071 | | Deferred income transferred to profit or loss | 105 | 105 | | Sundry | 92 | 2 | | Total | 2,147 | 10,039 | [5. Finance Costs](index=8&type=section&id=5.%20Finance%20Costs) Finance costs increased to RMB 8,371 thousand for the six months ended June 30, 2025, from RMB 7,402 thousand in the prior period, primarily due to increased interest on other borrowings Finance Costs | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank loans | 1,173 | 1,310 | | Interest on other borrowings | 6,539 | 5,414 | | Reversal of discounting on land restoration provision | 619 | 639 | | Interest on lease liabilities | 40 | 39 | | Total | 8,371 | 7,402 | [6. Loss Before Tax](index=9&type=section&id=6.%20Loss%20Before%20Tax) The Group's loss before tax was RMB 26,802 thousand, primarily influenced by cost of inventories sold, employee benefit expenses, depreciation, expected credit losses, and net exchange losses Loss Before Tax Components | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories sold | 22,236 | 19,492 | | Employee benefit expenses | 9,070 | 7,586 | | Depreciation of property, plant and equipment | 6,327 | 7,994 | | Depreciation of investment properties | 202 | 241 | | Depreciation of right-of-use assets | 4,382 | 4,799 | | Expected credit losses on trade receivables | 2,669 | 2,454 | | Expected credit losses on other receivables | 280 | 265 | | Net exchange losses | 786 | 6 | | Bank interest income | (277) | (278) | [7. Income Tax Expense](index=9&type=section&id=7.%20Income%20Tax%20Expense) Income tax expense for the six months ended June 30, 2025, was RMB 143 thousand, a decrease from RMB 341 thousand in the prior period, with a Chinese subsidiary enjoying a 15% preferential tax rate Income Tax Expense | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current tax - China | 117 | 114 | | Deferred tax | 26 | 227 | | Total | 143 | 341 | - Jiangxi Keyue Technology, a Chinese subsidiary, enjoys a preferential enterprise income tax rate of **15%**[26](index=26&type=chunk) - Cayman Islands and British Virgin Islands are exempt from income tax, and no provision for profits tax was made for Hong Kong due to absence of assessable profits[27](index=27&type=chunk) [8. Loss Per Share Attributable to Ordinary Equity Holders of the Company](index=10&type=section&id=8.%20Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Company) For the six months ended June 30, 2025, basic and diluted loss per share attributable to owners of the Company was RMB 0.023, a narrowing from RMB 0.025 in the prior period, mainly due to an increase in the weighted average number of ordinary shares outstanding Loss Per Share | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Loss attributable to owners of the Company | RMB 26,945,000 | RMB 24,526,000 | | Weighted average number of ordinary shares outstanding | 1,185,094,625 shares | 975,386,273 shares | | Basic and diluted loss per share | RMB 0.023 | RMB 0.025 | - Diluted loss per share is the same as basic loss per share as there are no potential dilutive ordinary shares outstanding[28](index=28&type=chunk) [9. Property, Plant and Equipment and Investment Properties](index=10&type=section&id=9.%20Property,%20Plant%20and%20Equipment%20and%20Investment%20Properties) For the six months ended June 30, 2025, the cost of acquiring property, plant and equipment was RMB 1.2 million, a decrease from RMB 1.7 million in the prior period, with no disposals during the period Acquisition of Property, Plant and Equipment | Item | For the six months ended June 30, 2025 (RMB thousand) | For the six months ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of acquiring property, plant and equipment | 1,200 | 1,700 | - No disposals of property, plant and equipment or investment properties occurred during the period[30](index=30&type=chunk)[31](index=31&type=chunk) [10. Prepayments, Deposits and Other Receivables](index=11&type=section&id=10.%20Prepayments,%20Deposits%20and%20Other%20Receivables) As of June 30, 2025, net current prepayments, deposits, and other receivables increased to RMB 136,857 thousand from RMB 129,626 thousand at year-end 2024, with the non-current portion primarily for land occupation compensation prepayments Prepayments, Deposits and Other Receivables | Item | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total current portion | 149,900 | 142,389 | | Expected credit losses | (13,043) | (12,763) | | Net current portion | 136,857 | 129,626 | | Non-current portion (land occupation compensation) | 2,836 | 3,370 | - Amounts due from associates are unsecured, interest-free, and without fixed repayment terms[33](index=33&type=chunk) - Amounts due from a former subsidiary are interest-free, with fixed repayment terms, and secured by a pledge over its **49%** equity interest in Shanghai Yunyi Enterprise Management Co., Ltd[33](index=33&type=chunk) [11. Trade Receivables](index=12&type=section&id=11.%20Trade%20Receivables) As of June 30, 2025, net trade receivables decreased to RMB 16,070 thousand from RMB 19,073 thousand at year-end 2024, with increased expected credit loss provisions reflecting continued weak customer repayment ability Trade Receivables | Item | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 83,740 | 84,074 | | Provision for expected credit losses | (67,670) | (65,001) | | Net amount | 16,070 | 19,073 | - Trade receivables are interest-free and unsecured, with concentrated credit risk[35](index=35&type=chunk) Ageing Analysis of Trade Receivables | Ageing | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 6,511 | 6,817 | | 1 to 3 months | 4,982 | 6,932 | | 3 to 6 months | 2,106 | 4,142 | | 6 to 12 months | 2,471 | 1,182 | | Total | 16,070 | 19,073 | [12. Trade Payables](index=14&type=section&id=12.%20Trade%20Payables) As of June 30, 2025, trade payables increased to RMB 27,481 thousand from RMB 23,278 thousand at year-end 2024, with most payables aged over three months Trade Payables | Item | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 27,481 | 23,278 | Ageing Analysis of Trade Payables | Ageing | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 6,665 | 20 | | 1 to 2 months | 1,566 | 120 | | Over 3 months | 19,250 | 23,138 | | Total | 27,481 | 23,278 | - Trade payables are interest-free and generally settled within three months of invoice receipt[38](index=38&type=chunk) [13. Other Payables and Accruals](index=14&type=section&id=13.%20Other%20Payables%20and%20Accruals) As of June 30, 2025, other payables and accruals decreased to RMB 71,110 thousand from RMB 76,866 thousand at year-end 2024, mainly due to reduced amounts payable to directors and staff wages and benefits Other Payables and Accruals | Item | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Tax payable other than income tax | 4,628 | 6,143 | | Professional fees | 11,619 | 12,628 | | Wages and benefits | 13,684 | 20,847 | | Amounts payable to directors | 588 | 2,781 | | Interest payable (bank and other borrowings) | 34,785 | 29,263 | | Payable for acquisition of mining rights | 3,707 | 3,707 | | Others | 2,099 | 1,497 | | Total | 71,110 | 76,866 | [14. Interest-Bearing Bank and Other Borrowings](index=15&type=section&id=14.%20Interest-Bearing%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, the Group's total borrowings increased to RMB 244,792 thousand from RMB 225,450 thousand at year-end 2024, comprising RMB 55,194 thousand in bank loans and RMB 189,598 thousand in other borrowings Interest-Bearing Bank and Other Borrowings | Item | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank loans (secured) | 15,000 | 15,000 | | Bank loans (unsecured) | 10,000 | 10,000 | | Bank loans (guaranteed) | 30,194 | 24,630 | | Other borrowings (unsecured) | 189,598 | 175,820 | | Total borrowings | 244,792 | 225,450 | | Classified as current liabilities | (26,694) | (24,730) | | Non-current liabilities | 218,098 | 200,720 | - Bank loans carry effective annual interest rates between **3.85%** and **4.80%**, while other borrowings range from **3.00%** to **24.00%**[40](index=40&type=chunk) [15. Deferred Income](index=16&type=section&id=15.%20Deferred%20Income) As of June 30, 2025, deferred income slightly decreased to RMB 3,694 thousand from RMB 3,799 thousand at year-end 2024, primarily due to RMB 105 thousand transferred to profit or loss Deferred Income Movement | Item | RMB thousand | | :--- | :--- | | As at January 1, 2024 (audited) | 4,009 | | Transferred to profit or loss | (210) | | As at December 31, 2024 and January 1, 2025 (audited) | 3,799 | | Transferred to profit or loss | (105) | | As at June 30, 2025 (unaudited) | 3,694 | [16. Share Capital](index=16&type=section&id=16.%20Share%20Capital) As of June 30, 2025, the Company had 1,185,094,625 ordinary shares issued, with a total par value of RMB 10,690 thousand, following a capital reorganization in 2024 Share Capital | Item | As of June 30, 2025 (HKD) | As of December 31, 2024 (HKD) | | :--- | :--- | :--- | | Authorized share capital (30,000,000,000 shares of HKD 0.01 each) | 300,000 | 300,000 | | Issued and fully paid (1,185,094,625 shares of HKD 0.01 each) | 11,851 | 11,851 | | Equivalent to approximately RMB | 10,690 | 10,690 | - On July 30, 2024, a capital reorganization was approved by shareholders, changing the par value from **HKD 0.2** to **HKD 0.01** per share, with approximately **RMB 169,237 thousand** from capital reduction transferred to the share premium account[43](index=43&type=chunk) - On January 26, 2024, **61,720,000** new shares were issued under a subscription agreement, generating net proceeds of approximately **RMB 10,158 thousand**[46](index=46&type=chunk) - On September 27, 2024, **197,500,000** new shares were issued under a placing agreement, generating net proceeds of approximately **RMB 18,544 thousand**[46](index=46&type=chunk) [17. Share Scheme](index=17&type=section&id=17.%20Share%20Scheme) The Company adopted the 2024 Share Scheme to grant share options and/or awards to eligible participants, with no grants, exercises, or equity-settled expenses recognized for the periods ended June 30, 2025 and 2024 - The Company adopted the 2024 Share Scheme to incentivize eligible participants who contribute to the Group[44](index=44&type=chunk) - No share options or awards were granted or exercised, and no equity-settled expenses were recognized during the period[44](index=44&type=chunk)[45](index=45&type=chunk) [18. Loss on Disposal of a Subsidiary](index=18&type=section&id=18.%20Loss%20on%20Disposal%20of%20a%20Subsidiary) For the six months ended June 30, 2024, the Group disposed of its entire equity interest in Vigoroso Group for a cash consideration of RMB 100,000, resulting in a loss of RMB 157 thousand - On June 30, 2024, the Group disposed of its entire equity interest in Vigoroso Group for a cash consideration of **RMB 100,000**[47](index=47&type=chunk) - The disposal of Vigoroso Group resulted in a loss of **RMB 157 thousand**[48](index=48&type=chunk) - Vigoroso Group primarily engaged in marble stone mining exploration, processing, and sales[47](index=47&type=chunk) [19. Dividends](index=18&type=section&id=19.%20Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for 2025[49](index=49&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=19&type=section&id=Business%20Review) In H1 2025, the Group faced a challenging economic environment with weak domestic demand and slow property sector recovery, adopting cautious strategies including thin-margin sales, strict credit policies, scaling back marble business, and exploring diversification - The Chinese economy shows initial signs of stabilization, but weak domestic demand and slow recovery in the property and construction sectors continue to hinder growth[50](index=50&type=chunk) - The Group adopted cautious strategies, prioritizing businesses with strong cash flow potential, implementing thin-margin strategies to boost sales, and strictly enforcing credit policies[51](index=51&type=chunk) - The Group prudently scaled back its marble product business to align with the declining demand in the property and construction sectors[51](index=51&type=chunk) [Marble and Mining and Calcium Carbonate Business](index=19&type=section&id=Marble%20and%20Mining%20and%20Calcium%20Carbonate%20Business) Marble stone product business generated RMB 1.1 million in revenue, impacted by property sector liquidity, while the calcium carbonate business performed better, contributing RMB 28.5 million, up from RMB 26.9 million in the prior period - Marble stone product business was affected by weak demand in the property and construction sectors, generating approximately **RMB 1.1 million** in revenue for the period[52](index=52&type=chunk) - Calcium carbonate business adopted a moderate low-margin strategy to maintain market share, contributing approximately **RMB 28.5 million** in revenue, a year-on-year increase of approximately **5.9%**[53](index=53&type=chunk) [Rejection of Mining Permit Renewal Application](index=20&type=section&id=Rejection%20of%20Mining%20Permit%20Renewal%20Application) Guizhou Dejiang Sanxin Stone Co., Ltd.'s Dejiang Mine mining permit renewal application was rejected due to failure to submit a geological environmental protection and restoration plan and pay deposits, leading the Group to prioritize the Yongfeng Mine - The mining permit renewal application for Dejiang Mine of Guizhou Dejiang Sanxin Stone Co., Ltd. was rejected[54](index=54&type=chunk) - The rejection was due to failure to submit a comprehensive geological environmental protection and restoration plan and pay related deposits[55](index=55&type=chunk) - The Group decided to prioritize resources into Yongfeng Mine, believing it has stronger cash flow potential[55](index=55&type=chunk) [Logistics and Warehousing Business](index=20&type=section&id=Logistics%20and%20Warehousing%20Business) The logistics and warehousing segment generated approximately RMB 1.2 million in revenue, a 33.3% increase from the prior period, with the Group still committed to its disposal plan and seeking potential buyers - The logistics and warehousing segment generated approximately **RMB 1.2 million** in revenue, representing a **33.3%** increase from the prior period[58](index=58&type=chunk) - The Group remains committed to the disposal plan for this segment and will continue to seek potential buyers[58](index=58&type=chunk) [Resources and Reserves](index=21&type=section&id=Resources%20and%20Reserves) Dejiang Mine's mining permit expired, with total resources of 2.1 million cubic meters and no activity during the period; Yongfeng Mine's permit is valid until 2030, with estimated total resources of 106.6 million cubic meters and reserves of 44.0 million cubic meters, with production of approximately 92 cubic meters during the period Dejiang Mine Resources (As of June 30, 2025) | Category | Million cubic meters | | :--- | :--- | | Controlled | 1.3 | | Inferred | 0.8 | | Total | 2.1 | - Dejiang Mine's mining permit expired on January 1, 2019, and while the Group resubmitted a renewal application, no exploration, development, or production activities occurred during the period[61](index=61&type=chunk)[62](index=62&type=chunk) Yongfeng Mine Resources and Reserves (As of June 30, 2025) | Category | Million cubic meters | | :--- | :--- | | **Resources** | | | Measured | 51.2 | | Controlled | 46.6 | | Inferred | 8.8 | | **Total Resources** | **106.6** | | **Reserves** | | | Proved | 23.0 | | Probable | 21.0 | | **Total Reserves** | **44.0** | - Yongfeng Mine's mining permit is valid until June 5, 2030, allowing for an expanded annual production capacity of **1.1 million cubic meters**[64](index=64&type=chunk)[65](index=65&type=chunk) - During the period, Yongfeng Mine conducted exploration, development, and production activities, with a production volume of approximately **92 cubic meters**[68](index=68&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) The Group's revenue grew by 10.4% driven by calcium carbonate sales, but gross margin slightly deteriorated due to low-margin strategy, other income significantly decreased, administrative and sales expenses declined, while finance costs increased, leading to an expanded net loss [Revenue](index=24&type=section&id=Revenue) During the review period, the Group recorded operating revenue of approximately RMB 30.7 million, a 10.4% increase from the prior period, with calcium carbonate product sales accounting for 92.7% of total revenue Operating Revenue | Item | 2025 (RMB million) | 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Operating revenue | 30.7 | 27.8 | +10.4% | - Calcium carbonate product sales accounted for **92.7%** or approximately **RMB 28.5 million** of the Group's total revenue[69](index=69&type=chunk) [Sales by Product Category](index=24&type=section&id=Sales%20by%20Product%20Category) Calcium carbonate product sales were RMB 28,477 thousand, accounting for 92.7% of total revenue, with marble stone product sales at RMB 1,061 thousand and logistics and warehousing services at RMB 1,171 thousand Sales by Product Category | Product Category | 2025 (RMB thousand) | 2025 (%) | 2024 (RMB thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Marble stone products | 1,061 | 3.5 | – | – | | Calcium carbonate products | 28,477 | 92.7 | 26,856 | 96.6 | | Logistics and warehousing services | 1,171 | 3.8 | 949 | 3.4 | | Total | 30,709 | 100.0 | 27,805 | 100.0 | [Cost of Sales](index=24&type=section&id=Cost%20of%20Sales) Cost of sales was approximately RMB 22.9 million during the review period, with calcium carbonate product costs accounting for approximately 96.9%, consistent with its revenue contribution - Cost of sales was approximately **RMB 22.9 million**, with calcium carbonate product costs accounting for approximately **96.9%**[71](index=71&type=chunk) [Gross Profit and Gross Margin](index=25&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit was approximately RMB 7.8 million, an increase of RMB 0.3 million from the prior period, but gross margin slightly deteriorated from 27.1% to 25.4% due to the low-margin strategy for calcium carbonate business Gross Profit and Gross Margin | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Gross profit | 7.8 | 7.5 | | Gross margin | 25.4% | 27.1% | - Gross margin deterioration was primarily attributed to the moderate low-margin strategy adopted for the calcium carbonate business to maintain market share[72](index=72&type=chunk) [Other Income and Gains](index=25&type=section&id=Other%20Income%20and%20Gains) Other income and gains primarily consisted of government grants of RMB 1.7 million, significantly lower than the prior period's RMB 8.1 million one-off gain from loan restructuring - Other income and gains primarily comprised government grants of approximately **RMB 1.7 million**[73](index=73&type=chunk) - The prior period included a one-off gain of approximately **RMB 8.1 million** from the waiver of loan principal and interest due to loan restructuring[73](index=73&type=chunk) [Selling and Distribution Expenses](index=25&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses were approximately RMB 3.2 million, representing about 10.5% of revenue, a decrease of RMB 0.6 million from RMB 3.8 million in the prior period Selling and Distribution Expenses | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Selling and distribution expenses | 3.2 | 3.8 | | Percentage of revenue | 10.5% | 13.8% | [Administrative Expenses](index=25&type=section&id=Administrative%20Expenses) Administrative expenses were approximately RMB 21.5 million, representing about 69.8% of revenue, a decrease of RMB 5.7 million from RMB 26.9 million in the prior period, mainly due to reduced consulting and professional fees Administrative Expenses | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Administrative expenses | 21.5 | 26.9 | | Percentage of revenue | 69.8% | 96.9% | - The decrease in administrative expenses was primarily due to reduced consulting and professional fees[75](index=75&type=chunk) [Finance Costs](index=26&type=section&id=Finance%20Costs) Finance costs increased to approximately RMB 8.4 million, an increase of RMB 1.0 million from the prior period, mainly due to a higher overall loan level Finance Costs | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Finance costs | 8.4 | 7.4 | - The increase in finance costs was primarily due to a higher overall loan level[76](index=76&type=chunk) [Expected Credit Losses](index=26&type=section&id=Expected%20Credit%20Losses) Impairment loss on trade receivables was approximately RMB 2.7 million, an increase of RMB 0.2 million from the prior period, mainly due to continued weak repayment ability of customers in the property and construction sectors Impairment Loss on Trade Receivables | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Impairment loss on trade receivables | 2.7 | 2.5 | - The increase in impairment loss was primarily due to the continued weak repayment ability of customers in the property and construction sectors and no significant recovery in the business environment[77](index=77&type=chunk) [Human Resources and Remuneration Policy](index=26&type=section&id=Human%20Resources%20and%20Remuneration%20Policy) As of June 30, 2025, the Group's total full-time employees decreased to 181 from 204 in the prior period, while employee costs increased by RMB 1.5 million to RMB 9.1 million due to salary adjustments Human Resources and Employee Costs | Indicator | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Total full-time employees | 181 | 204 | | Employee costs (RMB million) | 9.1 | 7.6 | - The increase in employee costs was primarily due to salary adjustments based on market conditions and qualifications[79](index=79&type=chunk) [Income Tax Expense](index=26&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by approximately RMB 0.2 million - Income tax expense decreased by approximately **RMB 0.2 million**[80](index=80&type=chunk) [Loss and Total Comprehensive Loss Attributable to Owners of the Company for the Review Period](index=27&type=section&id=Loss%20and%20Total%20Comprehensive%20Loss%20Attributable%20to%20Owners%20of%20the%20Company%20for%20the%20Review%20Period) Net loss attributable to owners of the Company expanded to approximately RMB 26.9 million from RMB 24.5 million in the prior period, primarily due to the net effect of decreased other income, increased finance costs, and decreased administrative expenses Net Loss Attributable to Owners | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Net loss | 26.9 | 24.5 | - The increase in net loss was primarily due to the net effect of decreased other income and gains, increased finance costs, and decreased administrative expenses[81](index=81&type=chunk) [Net Current Assets](index=27&type=section&id=Net%20Current%20Assets) As of June 30, 2025, the Group's net current assets slightly increased to approximately RMB 27.1 million from RMB 25.4 million at year-end 2024 Net Current Assets | Indicator | As of June 30, 2025 (RMB million) | As of December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Net current assets | 27.1 | 25.4 | [Current Ratio](index=27&type=section&id=Current%20Ratio) As of June 30, 2025, the current ratio was 1.2, remaining stable compared to year-end 2024 Current Ratio | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Current ratio | 1.2 | 1.2 | [Borrowings](index=27&type=section&id=Borrowings) As of June 30, 2025, the Group's total borrowings increased by RMB 19.3 million to approximately RMB 244.8 million from RMB 225.5 million at year-end 2024 Total Borrowings | Indicator | As of June 30, 2025 (RMB million) | As of December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Total borrowings | 244.8 | 225.5 | | Net increase in borrowings | 19.3 | - | [Gearing Ratio](index=27&type=section&id=Gearing%20Ratio) As of June 30, 2025, the gearing ratio increased to approximately 41.3% from 34.9% at year-end 2024 Gearing Ratio | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Gearing ratio | 41.3% | 34.9% | [Capital Structure](index=27&type=section&id=Capital%20Structure) As of June 30, 2025, the Company had 1,185,094,625 ordinary shares issued, with no changes to the capital structure during the review period or up to the announcement date - As of June 30, 2025, the Company had **1,185,094,625** ordinary shares issued[86](index=86&type=chunk) - There were no changes to the Group's capital structure during the review period and up to the date of this announcement[87](index=87&type=chunk) [Capital Expenditure](index=28&type=section&id=Capital%20Expenditure) During the review period, the Group's expenditure on purchasing property, plant and equipment was RMB 1.2 million Capital Expenditure | Item | 2025 (RMB million) | | :--- | :--- | | Expenditure on purchasing property, plant and equipment | 1.2 | [Foreign Exchange Risk](index=28&type=section&id=Foreign%20Exchange%20Risk) The Group's operations are primarily denominated in RMB, with only certain bank balances in HKD; the Board expects no significant impact from exchange rate fluctuations and did not use hedging instruments - The Group's operations are primarily denominated in RMB, with only certain bank balances denominated in HKD[89](index=89&type=chunk) - The Board expects foreign exchange fluctuations will not have a significant impact on operations, and no financial instruments were used for hedging during the period[89](index=89&type=chunk) [Pledge of Assets](index=28&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group held buildings valued at approximately RMB 18.0 million as collateral for bank and other borrowings Pledged Assets | Item | As of June 30, 2025 (RMB million) | As of December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Pledged buildings | 18.0 | 19.1 | [Significant Events After the Review Period](index=28&type=section&id=Significant%20Events%20After%20the%20Review%20Period) As of the announcement date, no significant post-review period events occurred for the Group - As of the announcement date, no significant post-review period events occurred for the Group[91](index=91&type=chunk) [Prospects](index=28&type=section&id=Prospects) The outlook for China's economic recovery remains uncertain and challenging, influenced by global factors; the Group will monitor business impacts, adjust plans, seek shareholder-beneficial projects, and divest non-core assets to improve debt levels - China's economic recovery is expected to be moderate but remains uncertain and challenging, influenced by geopolitical tensions[92](index=92&type=chunk) - The Group will continue to monitor factors affecting its business, assess potential impacts, and adjust business plans accordingly[92](index=92&type=chunk) - The Group will identify projects or businesses beneficial to shareholders and seek to realize non-core assets to improve overall debt levels[92](index=92&type=chunk) [Corporate Governance Code](index=29&type=section&id=Corporate%20Governance%20Code) [Compliance with Corporate Governance Code](index=29&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company is committed to high corporate governance standards and complied with the Listing Rules' Corporate Governance Code for the six months ended June 30, 2025, except for the unsegregated roles of Chairman and CEO - The Company is committed to maintaining high standards of corporate governance to protect shareholders' interests and enhance corporate value, accountability, and transparency[93](index=93&type=chunk) - The Company deviates from Code Provision C.2.1 of the Corporate Governance Code, as the roles of Chairman and Chief Executive Officer are not segregated, with Ms. Wu serving as both Co-Chairman and Acting Chief Executive Officer[93](index=93&type=chunk)[94](index=94&type=chunk) - The Board believes Ms. Wu's extensive experience and the support from Mr. Cai and management facilitate efficient business planning and decision-making, aligning with the Group's best interests[94](index=94&type=chunk) [Breach of Listing Rules](index=29&type=section&id=Breach%20of%20Listing%20Rules) No breaches of the Listing Rules occurred during the review period ended June 30, 2025 - No breaches of the Listing Rules occurred during the review period[95](index=95&type=chunk) [Model Code for Securities Transactions](index=30&type=section&id=Model%20Code%20for%20Securities%20Transactions) The Company adopted the Model Code for Securities Transactions in Appendix C3 of the Listing Rules, and Directors confirmed compliance during the review period - The Company adopted the Model Code for Securities Transactions as set out in Appendix C3 of the Listing Rules, and Directors confirmed compliance[96](index=96&type=chunk) [Audit Committee](index=30&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, reviewed the Group's accounting principles, internal controls, and financial reporting, including the results announcement and interim financial information - The Audit Committee, composed of three independent non-executive directors, reviewed accounting principles, internal controls, and financial reporting matters[97](index=97&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) [Purchase, Sale or Redemption of the Company's Listed Securities](index=30&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the review period - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period[98](index=98&type=chunk) [Publication of 2025 Interim Results Announcement and Interim Report](index=30&type=section&id=Publication%20of%202025%20Interim%20Results%20Announcement%20and%20Interim%20Report) This results announcement has been published on the Company's and HKEX websites, with the interim report to be published and dispatched to shareholders in due course - This results announcement has been published on the Company's website (www.artgo.cn) and the HKEX website (www.hkexnews.hk)[99](index=99&type=chunk) - The Company's 2025 interim report will be published and dispatched to shareholders in due course[99](index=99&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) [2025 Interim Results Highlights](index=1&type=section&id=2025%20Interim%20Results%20Highlights) Fushouyuan International Group Co Ltd reported unaudited consolidated financial results for the six months ended June 30, 2025, with total revenue of approximately RMB 610.9 million, a 44.5% year-on-year decrease, and a loss attributable to owners of approximately RMB 261.4 million, resulting in a basic loss per share of RMB 11.5 cents, while the Board declared an interim dividend of HK 7.00 cents per share 2025 First Half Key Financial Summary | Indicator | Amount (RMB Million) | | :--- | :--- | | Total Revenue | 610.9 | | Loss Attributable to Owners of the Company | 261.4 | | Basic Loss Per Share | 11.5 cents | | Interim Dividend | HK 7.00 cents per share | - Total revenue decreased by approximately **44.5%** year-on-year[3](index=3&type=chunk) - Loss attributable to owners of the company was approximately **RMB 261.4 million**[3](index=3&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [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 Group recorded total revenue of RMB 610,850 thousand, a significant decrease from RMB 1,099,991 thousand in the prior period, with operations shifting from profit to a total loss of RMB 263,873 thousand for the period, and a loss attributable to owners of the company of RMB 261,411 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 610,850 | 1,099,991 | | Operating (Loss) Profit | (229,249) | 512,237 | | (Loss) Profit Before Tax | (232,370) | 542,737 | | Income Tax Expense | (31,503) | (179,602) | | Total (Loss) Profit for the Period | (263,873) | 363,135 | | (Loss) Profit Attributable to Owners of the Company | (261,411) | 298,801 | | Basic (Loss) Earnings Per Share (RMB Cents) | (11.5) | 13.2 | - Impairment losses of **RMB 217,638 thousand** were recognized for property and equipment, intangible assets, cemetery assets, and goodwill, compared to zero in the prior period[4](index=4&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets decreased to RMB 7,238,279 thousand from RMB 8,181,197 thousand as of December 31, 2024, with reductions in both non-current and current assets, notably in financial assets at fair value through profit or loss and bank balances and cash, while net assets stood at RMB 4,865,631 thousand Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Non-current Assets | 4,390,160 | 4,624,213 | | Current Assets | 2,848,119 | 3,556,984 | | **Total Assets** | **7,238,279** | **8,181,197** | | Current Liabilities | 1,557,568 | 1,163,420 | | Non-current Liabilities | 815,080 | 861,949 | | **Total Liabilities** | **2,372,648** | **2,025,369** | | Net Assets | 4,865,631 | 6,155,828 | | Equity Attributable to Owners of the Company | 4,291,235 | 5,561,154 | | Non-controlling Interests | 574,396 | 594,674 | | **Total Equity** | **4,865,631** | **6,155,828** | - Goodwill decreased from **RMB 1,106,076 thousand** as of December 31, 2024, to **RMB 940,923 thousand** as of June 30, 2025, primarily due to impairment recognized during the period[6](index=6&type=chunk)[21](index=21&type=chunk) - Financial assets at fair value through profit or loss decreased from **RMB 589,176 thousand** as of December 31, 2024, to **RMB 311,892 thousand** as of June 30, 2025[6](index=6&type=chunk)[27](index=27&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [General Information](index=7&type=section&id=General%20Information) Fushouyuan International Group Co Ltd is incorporated in the Cayman Islands and listed on the Stock Exchange, with the Group primarily engaged in providing cemetery services, funeral services, and other related services - The company was incorporated in the Cayman Islands on January 5, 2012, and listed on the Stock Exchange on December 19, 2013[9](index=9&type=chunk) - The Group is primarily engaged in providing cemetery services, funeral services, and other services[9](index=9&type=chunk) [Application of New and Revised IFRSs](index=7&type=section&id=Application%20of%20New%20and%20Revised%20IFRSs) During the period, the Group first applied certain amendments to International Financial Reporting Standards that became mandatorily effective, which had no significant impact on the Group's financial position, performance, or disclosures in the condensed consolidated financial statements for the current and prior periods - The Group first applied certain amendments to International Financial Reporting Standards that became mandatorily effective during the period[10](index=10&type=chunk) - These amendments had no significant impact on the Group's financial position and performance and/or disclosures for the current and prior periods[10](index=10&type=chunk) [Significant Accounting Policies](index=7&type=section&id=Significant%20Accounting%20Policies) The consolidated financial statements are prepared on a historical cost basis and in accordance with accounting policies compliant with International Financial Reporting Standards, except for investment properties and certain financial instruments measured at fair value at each period end, with historical cost generally determined by the fair value of consideration received for goods exchanged and services rendered - The consolidated financial statements are prepared on a historical cost basis and in accordance with accounting policies compliant with International Financial Reporting Standards, except for investment properties and certain financial instruments[11](index=11&type=chunk) - Historical cost is generally determined by the fair value of consideration received for goods exchanged and services rendered[12](index=12&type=chunk) [Revenue Recognition](index=7&type=section&id=Revenue%20Recognition) Revenue is measured at the fair value of consideration received or receivable, with revenue from the sale of burial plots recognized when control is transferred, cemetery maintenance service revenue recognized over the service period based on estimated deferred income from expected costs plus reasonable profit, and funeral and other service revenue recognized when services are provided - Revenue from the sale of burial plots is recognized when control related to the burial plot is transferred to the customer[15](index=15&type=chunk) - Revenue from cemetery maintenance services is recognized over the service period, with deferred income calculated based on the expected cost of providing services plus a reasonable profit, less the total future maintenance fees to be collected[15](index=15&type=chunk) - Revenue from funeral and other services is recognized when the services are provided[16](index=16&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) The Group's revenue is derived from cemetery services, funeral services, and other services, with all service types experiencing a year-on-year decrease in revenue for the six months ended June 30, 2025, and a general decline across regions, where Shanghai contributed the most but saw a significant drop [Revenue by Service Type](index=8&type=section&id=Revenue%20by%20Service%20Type) For the six months ended June 30, 2025, cemetery services revenue was RMB 477,375 thousand, funeral services RMB 121,873 thousand, and other services RMB 14,628 thousand, with all service types experiencing a year-on-year decrease in revenue Revenue by Service Type (For the six months ended June 30) | Service Type | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Cemetery Services | 477,375 | 906,082 | | Funeral Services | 121,873 | 184,083 | | Other Services | 14,628 | 15,059 | | Inter-segment Eliminations | (3,026) | (5,233) | | **Total** | **610,850** | **1,099,991** | - Cemetery services revenue decreased by **47.3%** year-on-year, and funeral services revenue decreased by **33.8%** year-on-year[17](index=17&type=chunk) [Revenue by Geographical Region](index=8&type=section&id=Revenue%20by%20Geographical%20Region) For the six months ended June 30, 2025, the Shanghai region contributed 40.2% of the Group's total revenue but saw a significant year-on-year decrease, with major regions like Liaoning, Anhui, and Henan also experiencing general revenue declines, and Fujian having no revenue due to a subsidiary no longer being consolidated Revenue by Geographical Region (For the six months ended June 30) | Region | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Shanghai | 240,970 | 526,143 | | Liaoning | 65,607 | 69,766 | | Anhui | 63,662 | 87,739 | | Henan | 33,165 | 68,805 | | Jiangxi | 32,489 | 46,154 | | Jiangsu | 32,059 | 52,524 | | Shandong | 27,736 | 44,558 | | Zhejiang | 22,632 | 25,354 | | Chongqing | 20,330 | 37,787 | | Heilongjiang | 17,995 | 42,568 | | Guizhou | 14,667 | 23,604 | | Gansu | 12,010 | 13,821 | | Inner Mongolia | 6,761 | 9,332 | | Guangxi | 6,584 | 8,980 | | Shaanxi | 2,300 | 1,530 | | Hubei | 281 | 814 | | Fujian | — | 30,686 | | **Total** | **599,248** | **1,090,165** | - Shanghai region revenue decreased by **54.2%** year-on-year, with its proportion of total revenue falling from **48.3%** to **40.2%**[18](index=18&type=chunk) - Fujian region had no revenue in the current period because a funeral subsidiary is no longer included in the Group's consolidated financial statements[18](index=18&type=chunk) [Loss Before Tax](index=9&type=section&id=Loss%20Before%20Tax) For the six months ended June 30, 2025, the loss before tax was RMB 232,370 thousand, compared to a profit of RMB 542,737 thousand in the prior period, primarily impacted by factors such as staff costs, depreciation and amortization, and amortization of cemetery assets Loss Before Tax Components (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Staff Costs | 180,310 | 255,647 | | Depreciation of Property and Equipment | 28,395 | 25,992 | | Amortization of Right-of-use Assets | 11,032 | 12,060 | | Amortization of Intangible Assets | 12,578 | 11,475 | | Amortization of Cemetery Assets | 35,813 | 40,043 | - Total staff costs decreased by **29.5%** year-on-year to **RMB 180,310 thousand**[19](index=19&type=chunk) [Income Tax Expense](index=9&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense was RMB 31,503 thousand, a significant decrease from RMB 179,602 thousand in the prior period, mainly due to reduced taxable income and changes in deferred tax during the period Income Tax Expense (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | China Corporate Income Tax (Current Period) | 52,612 | 162,288 | | Under-provision in Prior Years | 617 | 162 | | Deferred Tax | (21,726) | 17,152 | | **Total** | **31,503** | **179,602** | - Income tax expense decreased by **82.5%** year-on-year[19](index=19&type=chunk) [Loss Per Share](index=10&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic loss per share was RMB 11.5 cents, compared to basic earnings per share of RMB 13.2 cents in the prior period Loss Per Share Calculation (For the six months ended June 30) | Indicator | 2025 (RMB Thousand/Cents) | 2024 (RMB Thousand/Cents) | | :--- | :--- | :--- | | (Loss) Profit for Calculating Basic (Loss) Earnings Per Share | (261,411) | 298,801 | | Weighted Average Number of Ordinary Shares | 2,271,063,422 | 2,271,063,422 | | Basic (Loss) Earnings Per Share | (11.5) cents | 13.2 cents | [Property and Equipment](index=10&type=section&id=Property%20and%20Equipment) As of June 30, 2025, the carrying value of property and equipment was RMB 571,235 thousand, a slight increase from RMB 565,676 thousand as of December 31, 2024, with construction in progress growing but impairment provisions also increasing Property and Equipment (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Buildings | 342,106 | 350,464 | | Construction in Progress | 172,097 | 142,867 | | Impairment Provision | (9,315) | (1,306) | | **Total** | **571,235** | **565,676** | - Construction in progress increased by **RMB 29,230 thousand**, and impairment provision increased by **RMB 8,009 thousand**[20](index=20&type=chunk) [Goodwill](index=11&type=section&id=Goodwill) As of June 30, 2025, the carrying value of goodwill was RMB 940,923 thousand, a decrease of RMB 165,153 thousand from the beginning of the year, primarily due to goodwill impairment recognized during the period Goodwill Movement (As of June 30) | Indicator | Amount (RMB Thousand) | | :--- | :--- | | January 1, 2025 (Audited) | 1,106,076 | | Less: Goodwill Impairment Recognized During the Period | 165,153 | | **June 30, 2025 (Unaudited)** | **940,923** | - Goodwill impairment of **RMB 165,153 thousand** was recognized during the period[21](index=21&type=chunk) [Cemetery Assets](index=11&type=section&id=Cemetery%20Assets) As of June 30, 2025, total cemetery assets were RMB 1,922,097 thousand, a decrease from December 31, 2024, primarily due to impairment provisions, with land costs, landscaping facilities, and development costs all amortized on a straight-line basis Cemetery Assets (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Land Costs | 1,350,007 | 1,374,151 | | Landscaping Facilities | 254,418 | 255,951 | | Development Costs | 397,776 | 401,444 | | Impairment Provision | (80,104) | (36,137) | | **Total** | **1,922,097** | **1,995,409** | - Impairment provision increased by **RMB 43,967 thousand**[21](index=21&type=chunk) - Land costs, landscaping facilities, and development costs are all amortized using the straight-line method[21](index=21&type=chunk)[22](index=22&type=chunk) [Inventories](index=12&type=section&id=Inventories) As of June 30, 2025, total inventories amounted to RMB 558,421 thousand, primarily comprising burial plots, gravestones, and other items, representing a slight decrease from December 31, 2024 Inventories (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Burial Plots | 441,247 | 450,015 | | Gravestones | 80,508 | 86,983 | | Other | 36,666 | 39,328 | | **Total** | **558,421** | **576,326** | - Total inventories decreased by **RMB 17,905 thousand** year-on-year[24](index=24&type=chunk) [Trade and Other Receivables](index=12&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, trade and other receivables totaled RMB 144,049 thousand, an increase from December 31, 2024, with trade receivables net of credit loss provisions amounting to RMB 91,258 thousand Trade and Other Receivables (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Trade Receivables (Net of Provision) | 91,258 | 98,215 | | Prepayments for Land | 10,525 | — | | **Total** | **144,049** | **132,922** | Trade Receivables Aging Analysis (As of June 30) | Aging | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Within 1 Year | 32,006 | 42,459 | | Over 1 Year but Less Than 2 Years | 28,752 | 34,166 | | Over 2 Years but Less Than 3 Years | 21,272 | 10,537 | | Over 3 Years but Less Than 4 Years | 3,899 | 10,427 | | Over 4 Years but Less Than 5 Years | 5,329 | 626 | | **Total** | **91,258** | **98,215** | - Provision for credit losses on trade receivables increased from **RMB 27,002 thousand** as of December 31, 2024, to **RMB 29,686 thousand** as of June 30, 2025[24](index=24&type=chunk) [Bank Balances and Cash](index=13&type=section&id=Bank%20Balances%20and%20Cash) As of June 30, 2025, bank balances and cash amounted to RMB 1,622,742 thousand, a significant decrease from RMB 2,056,626 thousand as of December 31, 2024, primarily denominated in RMB, with holdings in HKD, USD, and JPY Bank Balances and Cash (As of June 30) | Currency | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | HKD | 314,976 | 560,431 | | USD | 895 | 7,886 | | JPY | 6,319 | — | | **Total Non-RMB Currencies** | **322,190** | **568,317** | Bank Balances Annual Interest Rates (As of June 30) | Currency | 2025 | 2024 | | :--- | :--- | :--- | | RMB | 0.05%–1.35% | 0.10%–1.35% | | HKD | 0.01%–3.60% | 0.01%–3.74% | | USD | 0.05% | 0.05% | | JPY | 0.0001% | — | - Total bank balances and cash decreased by **RMB 433,884 thousand** year-on-year[6](index=6&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=14&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2025, total financial assets at fair value through profit or loss amounted to RMB 311,892 thousand, a significant decrease from RMB 589,176 thousand as of December 31, 2024, primarily consisting of cash management products with portfolios including government debt instruments, treasury bonds, and corporate bonds Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Structured Deposits and Cash Management Products | 311,892 | 589,176 | | **Total** | **311,892** | **589,176** | Cash Management Product Details (As of June 30, 2025) | Bank | Product Name | Currency | Amount (RMB Thousand) | Term/Redemption Time | Expected Yield | Principal Guaranteed | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shanghai Pudong Development Bank | Tian Tian Li Pu Hui Plan | RMB | 2,505 | Redeemable after 1 business day | 1.25% | N | | Shanghai Pudong Development Bank | Tian Tian Li Pu Tian Tong Ying No. 1 | RMB | 548 | Redeemable after 1 business day | 1.28% | N | | Shanghai Rural Commercial Bank | Corporate Quarterly Jinli 3-Month Fixed Open | RMB | 35,147 | Redeemable after 90 business days | 2.00%~2.80% | N | | Shanghai Rural Commercial Bank | Suyin Wealth Qiyuan Cash No. 1F | RMB | 70,034 | Redeemable after 1 business day | 1.38% | N | | Industrial Bank | Xingyin Wealth Tianli Kuaixian F | RMB | 40,371 | Redeemable after 1 business day | 1.87% | N | | China Construction Bank | Hengying (Corporate Version) | RMB | 142,878 | Redeemable after 1 business day | 1.44% | N | | China Construction Bank | Jiaxin Fixed Income Daily | RMB | 20,409 | Redeemable after 1 business day | 1.68% | N | | **Total** | | **RMB** | **311,892** | | | | - These product portfolios include government debt instruments, treasury bonds, and corporate bonds[29](index=29&type=chunk) [Time Deposits](index=15&type=section&id=Time%20Deposits) As of June 30, 2025, time deposits amounted to RMB 381,824 thousand, a slight decrease from RMB 396,008 thousand as of December 31, 2024, with deposit terms ranging from three months to three years and fixed annual interest rates between 1.15% and 4.13% Time Deposits (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Time Deposits | 381,824 | 396,008 | - Time deposit terms range from three months to three years, with fixed annual interest rates between **1.15% and 4.13%** (December 31, 2024: 1.60% to 4.43%)[31](index=31&type=chunk) [Trade and Other Payables](index=15&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables amounted to RMB 864,674 thousand, an increase from RMB 667,564 thousand as of December 31, 2024, with trade payables accounting for RMB 300,124 thousand Trade and Other Payables (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Trade Payables | 300,124 | 319,760 | | Customer Prepayments | 23,047 | 17,829 | | Accrued Wages, Benefits, and Bonuses | 49,923 | 130,860 | | Other Accrued Expenses | 34,443 | 25,721 | | Consideration Payable for Acquisition of Subsidiaries | 21,741 | 22,217 | | Other | 435,396 | 151,177 | | **Total** | **864,674** | **667,564** | Trade Payables Aging Analysis (As of June 30) | Aging | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | 0 to 90 Days | 59,808 | 75,060 | | 91 to 180 Days | 22,948 | 22,450 | | 181 to 365 Days | 33,762 | 48,263 | | Over 365 Days | 183,606 | 173,987 | | **Total** | **300,124** | **319,760** | - The "Other" category within other payables significantly increased from **RMB 151,177 thousand** as of December 31, 2024, to **RMB 435,396 thousand** as of June 30, 2025[32](index=32&type=chunk) [Contract Liabilities](index=16&type=section&id=Contract%20Liabilities) As of June 30, 2025, total contract liabilities amounted to RMB 629,655 thousand, primarily comprising liabilities related to cemetery maintenance services and pre-need contract sales Contract Liabilities (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Cemetery Maintenance Services | 579,839 | 585,101 | | Pre-need Contract Sales | 49,816 | 52,542 | | **Total** | **629,655** | **637,643** | [Cemetery Maintenance Services](index=16&type=section&id=Cemetery%20Maintenance%20Services) Contract liabilities for cemetery maintenance services represent the unearned portion of revenue in accordance with revenue recognition policies, where customers typically prepay 10 to 20 years of maintenance fees, and the Group estimates deferred income based on expected costs plus a reasonable profit - Contract liabilities for cemetery maintenance services represent the portion of revenue from providing cemetery services not yet earned as revenue[35](index=35&type=chunk) - Customers are required to prepay 10 to 20 years of maintenance fees, and deferred income is calculated based on the expected cost of providing services plus a reasonable profit, less the total future maintenance fees to be collected[36](index=36&type=chunk) [Pre-need Contract Sales](index=16&type=section&id=Pre-need%20Contract%20Sales) Pre-need contract sales refer to funeral services sold based on pre-death contracts, where payment occurs at the time of contract signing, and contract liabilities persist until the funeral services are provided and revenue is recognized - Pre-need contract sales refer to funeral services sold based on pre-death contracts[37](index=37&type=chunk) - Contract liabilities will be recognized at the inception of the contract until revenue is recognized upon the provision of funeral services[37](index=37&type=chunk) [Deferred Tax](index=17&type=section&id=Deferred%20Tax) As of June 30, 2025, total deferred tax assets (liabilities) amounted to RMB (8,214) thousand, an improvement from RMB (29,940) thousand as of December 31, 2024, primarily influenced by contract liabilities, loss provisions, and fair value adjustments Deferred Tax Assets (Liabilities) (As of June 30) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Contract Liabilities | 79,532 | 80,531 | | Loss Provisions | 17,808 | 17,137 | | Withholding Income Tax on China-sourced Income | (17,967) | (30,087) | | Unused Deductible Tax Losses | 9,776 | 4,672 | | Fair Value Adjustments | (111,334) | (118,799) | | Right-of-use Assets | (27,047) | (30,489) | | Lease Liabilities | 25,944 | 31,705 | | Cemetery Assets | 15,074 | 15,390 | | **Total** | **(8,214)** | **(29,940)** | - Total deferred tax assets (liabilities) significantly improved from a negative value, primarily influenced by fair value adjustments and changes in withholding income tax on China-sourced income[38](index=38&type=chunk) [Dividends_Note](index=17&type=section&id=Dividends_Note) The Board declared a special dividend of HK 38.82 cents per share on January 24, 2025, with the first tranche of HK 17.24 cents already paid, and also declared and paid a final dividend of HK 9.54 cents per share for 2024, totaling approximately RMB 573.4 million, while an interim dividend of HK 7.00 cents per share for the six months ended June 30, 2025, was declared on August 29, 2025 - A special dividend of **HK 38.82 cents per share** was declared on January 24, 2025, with the first tranche of **HK 17.24 cents** already paid[39](index=39&type=chunk) - The 2024 final dividend of **HK 9.54 cents per share** was declared and paid, totaling approximately **RMB 573.4 million**[39](index=39&type=chunk) - An interim dividend of **HK 7.00 cents per share** for the six months ended June 30, 2025, was declared on August 29, 2025[39](index=39&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) [Chairman's Statement](index=18&type=section&id=Chairman's%20Statement) Chairman Mr. Bai Xiaojiang reviewed the Group's performance for the first half of 2025, noting that despite global economic challenges, the Chinese economy showed resilience and demand for life services steadily increased, with the Group adhering to innovation-driven and high-quality development, advancing digital transformation, and achieving significant accomplishments in ESG, brand building, and public welfare - The Chinese economy continued its recovery amidst multiple challenges, with accelerating population aging and steadily increasing demand for life services[40](index=40&type=chunk) - The Group adheres to innovation-driven and high-quality development, upholding the "3JI" philosophy of "making marks beautiful, making records profound, and making memorials lasting"[40](index=40&type=chunk) [Group Performance and Dividend Distribution](index=18&type=section&id=Group%20Performance%20and%20Dividend%20Distribution) For the six months ended June 30, 2025, the Group recorded revenue of RMB 610.9 million and a loss attributable to owners of RMB 261.4 million, with the Board proposing an interim dividend of HK 7.00 cents per share to shareholders, consistent with the Group's stable and sustainable dividend policy 2025 First Half Group Performance | Indicator | Amount (RMB Million) | | :--- | :--- | | Revenue | 610.9 | | Loss Attributable to Owners of the Company | 261.4 | - The Board proposes to distribute a 2025 interim dividend of **HK 7.00 cents per share** to thank shareholders for their long-term support and trust[41](index=41&type=chunk) [Brand Building and Social Responsibility](index=19&type=section&id=Brand%20Building%20and%20Social%20Responsibility) Fushouyuan was awarded the "Annual Responsible Brand Award" at the 14th Public Welfare Festival, was shortlisted for the "2024 World Innovative Brands 500" list at the Davos World Brand Summit with a brand value of USD 2.916 billion, ranking 380th, and Shanghai Fushouyuan consecutively won the "National Civilized Unit" honor for three terms - Awarded the "Annual Responsible Brand Award" at the 14th Public Welfare Festival[42](index=42&type=chunk) - Shortlisted for the "2024 World Innovative Brands 500" at the Davos World Brand Summit, with a brand value of **USD 2.916 billion**, ranking **380th**[42](index=42&type=chunk) - Shanghai Fushouyuan consecutively won the "National Civilized Unit" honor for three terms[42](index=42&type=chunk) [ESG and Digital Transformation](index=19&type=section&id=ESG%20and%20Digital%20Transformation) Fushouyuan achieved significant progress in ESG, with its MSCI rating upgraded from AA to the highest AAA level, and was included in the Hang Seng Corporate Sustainability Benchmark Index for four consecutive years, maintaining an A+ rating, while actively promoting digital transformation to form a preliminary digital life service system, launching innovative services such as AI memorial and digital mourning halls - MSCI rating upgraded from **AA to the highest AAA level**, entering the top 1% of the MSCI China Investable Market Index constituents[43](index=43&type=chunk) - Included in the Hang Seng Corporate Sustainability Benchmark Index for four consecutive years, with the latest score increasing to **65.20 points**, maintaining an **A+ rating**[43](index=43&type=chunk) - A preliminary digital life service system has been formed, covering all scenario needs through four core functions: digital mourning halls, AI memorial, Fushou Online, and Memorial Home Yuan[43](index=43&type=chunk) [Public Welfare and Future Outlook](index=20&type=section&id=Public%20Welfare%20and%20Future%20Outlook) Fushouyuan actively participates in life education and public welfare, supporting the "2025 National Human Organ Donation Memorial Event" and continuously carrying out multiple public welfare projects, while looking ahead, the Group will continue to enhance corporate governance, advance sustainable development strategies, innovate service models, and fulfill corporate social responsibility - Supported the "2025 National Human Organ Donation Memorial Event" and continuously carried out multiple public welfare projects such as poverty alleviation, assistance to the needy, elderly care, orphan relief, and preferential treatment for beneficiaries[44](index=44&type=chunk) - Looking ahead, the Group will continue to enhance corporate governance, firmly advance sustainable development strategies, and promote low-carbon, low-energy consumption, and efficient operations[44](index=44&type=chunk) - Adhering to the principle of "respecting life and warming hearts," the Group will continue to promote digital transformation through the corporate spirit of "innovation, responsibility, and win-win"[44](index=44&type=chunk) [Market Overview](index=21&type=section&id=Market%20Overview) The Chinese funeral industry faces vast and continuously growing market demand driven by new urbanization, accelerating population aging, and increasing cremation rates, with macro-economic policies stimulating service consumption potential, but a complex external environment and cautious consumer spending, while improving funeral policies and regulations promote industry standardization and modernization, making technology-enabled and digital transformation key directions - The acceleration and synergy of new urbanization, population aging trends, and increasing cremation rates will continuously generate vast demand for funeral services[47](index=47&type=chunk) - In the first half of 2025, GDP grew by **5.3%** year-on-year, urban residents' per capita disposable income increased by **4.7%** in real terms, and service consumption expenditure grew by **4.9%**[48](index=48&type=chunk) - The revision of the "Regulations on Funeral and Interment Management (Draft for Public Comment)" and related management measures will deepen funeral reform and improve the funeral service system[49](index=49&type=chunk)[50](index=50&type=chunk) - Online memorial services have become an important way for people to express their grief, and the internet is driving the transformation and upgrading of the funeral industry from traditional to modern[51](index=51&type=chunk) [Industry Development Trends](index=21&type=section&id=Industry%20Development%20Trends) The Chinese funeral industry is experiencing trends of new urbanization, accelerating population aging, and continuously increasing cremation rates, which collectively drive the growth and deepening development of demand for funeral services - By the end of 2024, China's urban permanent population reached **943.5 million**, with an urbanization rate of **67.0%**[47](index=47&type=chunk) - By the end of 2024, the population aged 60 and above was **310.31 million**, accounting for **22.0%**, and is expected to exceed **400 million** by 2035[47](index=47&type=chunk) - In 2021, **5.966 million** bodies were cremated nationwide, with a cremation rate of **58.8%**[47](index=47&type=chunk) [Economic Environment and Consumer Behavior](index=22&type=section&id=Economic%20Environment%20and%20Consumer%20Behavior) In the first half of 2025, China's economy started steadily with GDP growing by 5.3% year-on-year, and both resident income and consumption expenditure saw real growth, indicating huge potential for service consumption, yet the complex external environment and insufficient domestic demand growth momentum, coupled with residents' cautious spending, led to more prudent consumer behavior in funeral scenarios 2025 First Half Macroeconomic Data | Indicator | Amount/Growth Rate | | :--- | :--- | | Gross Domestic Product | RMB 66,053.6 billion (5.3% year-on-year growth) | | Per Capita Disposable Income of Urban Residents | RMB 28,844 (4.7% real growth) | | Per Capita Consumption Expenditure of Urban Residents | RMB 17,545 (4.6% real growth) | | National Per Capita Service Consumption Expenditure | RMB 6,504 (4.9% growth) | - Service consumption expenditure accounted for **45.5%** of residents' total consumption expenditure, indicating that service consumption is a crucial area for future consumption growth[48](index=48&type=chunk) - The current external environment remains complex and severe, with insufficient domestic demand growth momentum and residents' consumption capacity needing further improvement, leading to cautious customer consumption behavior in funeral scenarios[48](index=48&type=chunk)[53](index=53&type=chunk) [Policies and Regulations](index=22&type=section&id=Policies%20and%20Regulations) China's funeral sector continues to deepen reform and innovation, with the Ministry of Civil Affairs issuing the "Regulations on Funeral and Interment Management (Draft for Public Comment)" and the "Ministry of Civil Affairs 2025 Legislative Work Plan" to strengthen public welfare attributes, improve management systems, and regulate industry practices, while also releasing multiple recommended industry standards to enhance service supply and promote healthy industry development - The Ministry of Civil Affairs issued the "Regulations on Funeral and Interment Management (Draft for Public Comment)," primarily making revisions in strengthening public welfare attributes, improving institutional mechanisms, and perfecting service management systems[49](index=49&type=chunk) - The "Ministry of Civil Affairs 2025 Legislative Work Plan" explicitly included the revision of the "Regulations on Funeral and Interment Management," "Interim Measures for Cemetery Management," and the formulation of "Measures for Funeral Home Management" in its legislative plan[50](index=50&type=chunk) - The Ministry of Civil Affairs issued 10 recommended industry standards, including the "Funeral Reception Service Standards," effective immediately, aiming to enhance service supply and strengthen supervision and management[50](index=50&type=chunk) [Technology in Funeral Services and Digital Transformation](index=24&type=section&id=Technology%20in%20Funeral%20Services%20and%20Digital%20Transformation) The Ministry of Civil Affairs issued the "14th Five-Year Plan for Civil Affairs Informatization Development" to promote the construction of a national integrated funeral management and service information platform, enhancing informatization levels, with online memorial services becoming an important method, and the internet driving the transformation and upgrading of the funeral industry from traditional to modern, making technology-enabled funeral services a future development direction - The Ministry of Civil Affairs issued the "14th Five-Year Plan for Civil Affairs Informatization Development," aiming to build a national integrated funeral management and service information platform to enhance informatization levels[51](index=51&type=chunk) - During the 2025 Qingming Festival holiday, a total of **1,576** online memorial platforms were opened nationwide, serving approximately **927,500** online memorial customers[51](index=51&type=chunk) - "Using scientific and technological thinking and methods to give the deceased more dignity, and enhancing funeral services with modern technology to make them more humane and high-end" will be the future direction of the funeral industry[51](index=51&type=chunk) [Industry Drivers and Development Potential](index=24&type=section&id=Industry%20Drivers%20and%20Development%20Potential) The development of China's funeral industry is driven by multiple factors including increasing per capita disposable income, promotion of traditional culture, urbanization, population aging, and rising cremation rates, which not only increase the total demand for services but also raise requirements for service quality and diversification, signaling a deepening and stable development of the industry - Factors such as increasing per capita disposable income, promotion of traditional Chinese culture, urbanization, population aging trends, and rising cremation rates collectively drive the development of the funeral industry[52](index=52&type=chunk) - The increase in public demand for funeral services is more reflected in the demand for improved service quality and diversified, differentiated service content[52](index=52&type=chunk) - The funeral industry will gradually integrate into the overall planning for the development of the aging care sector, coordinating its development with various "elderly-serving" industries[52](index=52&type=chunk) [Business Review and Strategy](index=25&type=section&id=Business%20Review%20and%20Strategy) Facing changes in the economic environment and customer consumption behavior, the Group focuses on both market and product dimensions, enhancing core competitiveness through service extension, technological leadership, and cultural innovation, developing multi-price point products and deepening digital strategy in cemetery business, focusing on digital transformation and venue upgrades in funeral business, expanding the pre-need contract market through service content enhancement and cross-industry cooperation, and optimizing product performance and expanding overseas markets for eco-friendly cremator business, while continuously advancing market expansion and talent development, and leveraging Liji College's role in industry education and policy research - The Group continuously focuses on both market and product dimensions, making efforts in service extension, technological leadership, and cultural innovation, implementing tailored strategies for each "park" to meet diverse and differentiated customer needs[53](index=53&type=chunk) - The Group's business has entered **40+ cities** in **19 provinces, autonomous regions, and municipalities**, including Shanghai, Henan, and Chongqing, and is steadily advancing expansion plans in other important provinces' capital cities and key blank areas nationwide[60](index=60&type=chunk) - Liji College hosted the "2025 Cemetery Operations Management Professional Training" and "International Respectful Body Aesthetics (Embalming) Training," and participated in drafting the "Standards for Construction and Service of Public Welfare Burial (Placement) Facilities in Pudong New Area, Shanghai"[61](index=61&type=chunk) [Cemetery Services](index=25&type=section&id=Cemetery%20Services) In the cemetery business, the Group develops more price-range burial plot products to increase market share, fully upgrades the cemetery business system and seamlessly integrates with the "Fushouyuan Service Online" mini-program to enhance customer convenience for online transactions, and intensifies R&D efforts for ecological, land-saving, and artistic products, incorporating digital technology and applying innovative services such as AI memorial videos and digital mourning halls - Developed more price-range burial plot product categories, targeting a broader and growing customer base, with a long-term focus on increasing market share[54](index=54&type=chunk) - All cemeteries have completed a comprehensive upgrade of their business systems and seamlessly integrated with the "Fushouyuan Service Online" mini-program, enhancing the efficiency of customer information digital management and the convenience of online transactions[54](index=54&type=chunk) - Increased R&D efforts for ecological, land-saving, and artistic products, incorporating digital technology, and applying innovative services such as AI memorial videos and digital mourning halls[54](index=54&type=chunk)[55](index=55&type=chunk) [Funeral Services](index=26&type=section&id=Funeral%20Services) Funeral services focus on digital transformation, sales process optimization, and venue upgrades, with AI memorial services as the core product, leveraging technology to redefine the service experience, significantly enhancing "animated old photos" and "digital human replication of the deceased's voice and appearance" functions, while comprehensively upgrading Chongqing Yuzhong Anletang to create the Anle Life Memorial Hall, introducing digital human imaging technology and a life public welfare cafe - With AI memorial services as the core product, the Group redefines the service experience through technology empowerment, significantly enhancing the "animated old photos" and "digital human replication of the deceased's voice and appearance" functions[56](index=56&type=chunk) - Chongqing Yuzhong Anletang underwent a comprehensive upgrade to create the Anle Life Memorial Hall, establishing **8 digital mourning halls** and introducing digital human imaging technology and a life public welfare cafe[56](index=56&type=chunk) [Design Segment](index=26&type=section&id=Design%20Segment) The Group's design segment, through its wholly-owned subsidiary Tianquan Jiajing, focuses on research and planning design under new funeral circumstances, emphasizing the integration of ecology, intelligence, and humanity, and developing low-cost strategies for funeral facility design, construction, and maintenance models - Tianquan Jiajing focuses on research and planning design under new funeral circumstances, emphasizing the integration of ecology, intelligence, and humanity[57](index=57&type=chunk) - Developed low-cost strategies for funeral facility design, construction, and maintenance models that align with social civilization development and modern intelligent memorial needs[57](index=57&type=chunk) [Pre-need Contract Business](index=27&type=section&id=Pre-need%20Contract%20Business) The pre-need contract business aims to provide life planning advice and end-of-life management solutions to the public, helping the Group secure customers early, with 10,252 contracts signed during the period, and the Group focusing on designing integrated multi-professional support services such as palliative care, grief counseling, and emotional intervention, while promoting comprehensive cooperation with insurance companies - During the period, a total of **10,252** pre-need contracts were signed (2024 prior period: 11,923 contracts)[58](index=58&type=chunk) - Focused on designing integrated pre-need contracts that combine multi-professional support services such as palliative care, grief counseling, and emotional intervention[58](index=58&type=chunk) - Continued to promote comprehensive and multi-type cooperation with insurance companies, aiming to achieve business growth and rapid market expansion through cross-industry collaboration[58](index=58&type=chunk) [Eco-friendly Cremator Business](index=27&type=section&id=Eco-friendly%20Cremator%20Business) The Group's eco-friendly cremator business integrates R&D, independent production, comprehensive support, and after-sales services, with the Group continuously optimizing product performance and production processes, strengthening customer after-sales service, actively maintaining domestic and international customers, expanding into new overseas markets, and continuously conducting data statistical analysis and verification of equipment to optimize adjustments for reducing cremation time and fuel consumption - Continuously optimized product performance and production processes, with a focus on strengthening customer after-sales service to further enhance customer experience and product quality[59](index=59&type=chunk) - Actively maintained domestic and international customers, expanded into new overseas markets, and provided good pre-sales technical support and after-sales maintenance services[59](index=59&type=chunk) - Continuously conducted data statistical analysis and verification of various flat-plate furnaces, ash collection furnaces, and exhaust gas purification system equipment, constantly optimizing adjustments to further reduce cremation time and fuel consumption[59](index=59&type=chunk) [Market Expansion and Talent Development](index=28&type=section&id=Market%20Expansion%20and%20Talent%20Development) The Group's business has entered over 40 cities in 19 provinces, autonomous regions, and municipalities, and is steadily advancing expansion plans in other important provinces, while highly valuing organizational vitality and talent development, actively building multi-channel development models for employees and innovative organizational incentive mechanisms, introducing group-wide management support systems, improving management and professional promotion pathways, and establishing organizational performance and labor cost control early warning mechanisms - The Group's business has entered **40+ cities** in **19 provinces, autonomous regions, and municipalities**, including Shanghai, Henan, and Chongqing[60](index=60&type=chunk) - Steadily advancing expansion plans in capital cities of other important provinces and key blank areas nationwide[60](index=60&type=chunk) - Introduced a group-wide management support system, improved both management and professional promotion pathways, and established organizational performance and labor cost control early warning mechanisms[60](index=60&type=chunk) [Liji College and Industry Education](index=28&type=section&id=Liji%20College%20and%20Industry%20Education) Liji College, a corporate vocational education institution for the funeral industry and a core member of the National Funeral Industry Production-Education Integration Community, hosted the "2025 Cemetery Operations Management Professional Training" and "International Respectful Body Aesthetics (Embalming) Training," and actively participated in industry exchanges and policy research, co-drafting the "Standards for Construction and Service of Public Welfare Burial (Placement) Facilities in Pudong New Area, Shanghai" - Liji College hosted the "2025 Cemetery Operations Management Professional Training" and "International Respectful Body Aesthetics (Embalming) Training"[61](index=61&type=chunk) - Co-participated in drafting and releasing the district standard for the "Standards for Construction and Service of Public Welfare Burial (Placement) Facilities in Pudong New Area, Shanghai"[61](index=61&type=chunk) [Brand Culture and Social Influence](index=29&type=section&id=Brand%20Culture%20and%20Social%20Influence) The Group continues to uphold its corporate mission of "people-oriented, culture-rooted," transforming from a traditional funeral service provider to a comprehensive funeral and life technology service provider, with "Fushouyuan" related information across the entire network totaling 23,295 entries during the 2025 Qingming Festival, an 18% year-on-year increase, widely recognized for its digital exploration and innovative civilized memorial initiatives, and receiving multiple accolades in public welfare, media communication, brand development, and spiritual civilization construction - The Group transformed from a traditional funeral service provider to a comprehensive funeral and life technology service provider, evolving from the physical "Fushouyuan" to the spiritual "Fushouyuan"[62](index=62&type=chunk) - During the 2025 Qingming Festival, "Fushouyuan" related information across the entire network totaled **23,295 entries**, an **18%** year-on-year increase, with total online coverage, positive coverage, and central media coverage all reaching new highs[62](index=62&type=chunk) - Received the "Annual Responsible Brand Award" at the 14th Public Welfare Festival, the Excellent Work Award in the "Civil Affairs China" section of the 15th Beijing International Film Festival Short Video Unit, and Shanghai Fushouyuan consecutively won the "National Civilized Unit" honorary title for three terms[62](index=62&type=chunk) [Financial Performance Analysis](index=30&type=section&id=Financial%20Performance%20Analysis) In the first half of 2025, the Group's total revenue decreased by 44.5% year-on-year to RMB 610.9 million, with a loss attributable to owners of RMB 261.4 million, a 187.5% year-on-year decrease, primarily due to reduced cemetery and funeral service volumes, lower average selling prices, and the deconsolidation of some subsidiaries, while operating expenses increased due to higher asset impairment and bad debt provisions, leading to a shift from operating profit to loss, and although income tax expense significantly decreased, it could not offset the operating loss 2025 First Half Key Financial Performance | Indicator | 2025 First Half (RMB Million) | 2024 First Half (RMB Million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 610.9 | 1,100.0 | -44.5% | | Loss Attributable to Owners of the Company | 261.4 | 298.8 (Profit) | -187.5% | - Operating expenses increased by **RMB 252.3 million** or **42.9%**, primarily due to an increase of **RMB 206.0 million** in asset impairment and bad debt provisions, which includes **RMB 217.6 million** in impairment losses for property and equipment, intangible assets, cemetery assets, and goodwill[77](index=77&type=chunk)[80](index=80&type=chunk) - Income tax expense was **RMB 31.5 million**, a year-on-year decrease of **82.5%**, mainly due to reduced taxable income and a decrease in the withholding income tax rate to **5%** for intra-group dividends from domestic to offshore holding companies, in compliance with double taxation agreements[86](index=86&type=chunk) [Overall Performance Overview](index=30&type=section&id=Overall%20Performance%20Overview) In the first half of 2025, the Group's total revenue reached RMB 610.9 million, a 44.5% decrease from the prior period, and the loss attributable to owners of the company was RMB 261.4 million, a 187.5% decrease from the profit in the prior period - Total revenue reached **RMB 610.9 million**, a decrease of approximately **44.5%** from the prior period[63](index=63&type=chunk) - Loss attributable to owners of the company was **RMB 261.4 million**, a decrease of approximately **187.5%** from the profit attributable in the prior period[63](index=63&type=chunk) [Revenue Analysis](index=30&type=section&id=Revenue%20Analysis) During the period, the Group's total revenue decreased by RMB 489.1 million or 44.5%, primarily across the three major business segments of cemetery services, funeral services, and other services, with all segments experiencing year-on-year revenue declines, and cemetery services showing the largest decrease, while the Shanghai region contributed the most revenue but also saw a significant drop - Total revenue decreased by **RMB 489.1 million** or **44.5%**, from **RMB 1,100.0 million** in the prior period to **RMB 610.9 million**[64](index=64&type=chunk) [Revenue by Business Segment](index=30&type=section&id=Revenue%20by%20Business%20Segment) In the first half of 2025, cemetery services accounted for 78.1% of revenue, funeral services for 20.0%, and other services for 2.4%, with all business segments experiencing year-on-year revenue declines, and cemetery services showing the largest decrease Revenue by Business Segment (For the six months ended June 30) | Business Segment | 2025 Revenue (RMB Thousand) | 2025 Share (%) | 2024 Revenue (RMB Thousand) | 2024 Share (%) | | :--- | :--- | :--- | :--- | :--- | | Cemetery Services | 477,375 | 78.1% | 906,082 | 82.4% | | Funeral Services | 121,873 | 20.0% | 184,083 | 16.7% | | Other Services | 14,628 | 2.4% | 15,059 | 1.4% | | Inter-segment Eliminations | (3,026) | (0.5%) | (5,233) | (0.5%) | | **Total** | **610,850** | **100.0%** | **1,099,991** | **100.0%** | - Cemetery services revenue decreased by **47.3%** year-on-year, and funeral services revenue decreased by **33.8%** year-on-year[64](index=64&type=chunk) [Cemetery Services Revenue](index=31&type=section&id=Cemetery%20Services%20Revenue) Cemetery services revenue decreased by 47.3% year-on-year to RMB 477,375 thousand, with operating burial plot sales service revenue declining by 51.0%, sales volume decreasing by 6.7%, and average selling price decreasing by 47.5%, primarily due to cautious customer spending, product structure adjustments, and VAT impact, while newly acquired or constructed cemeteries contributed RMB 2.9 million in revenue Cemetery Services Revenue Details (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Burial Plot Sales Service Revenue (RMB Thousand) | 398,792 | 815,867 | | Operating Burial Plot Sales Volume (Units) | 6,253 | 6,704 | | Operating Burial Plot Sales Revenue (RMB Thousand) | 396,164 | 808,815 | | Public Welfare Burial Plot and Village Relocation Sales Volume (Units) | 1,055 | 2,527 | | Public Welfare Burial Plot and Village Relocation Sales Revenue (RMB Thousand) | 2,628 | 7,052 | | Other Cemetery Services Revenue (RMB Thousand) | 78,583 | 90,215 | | **Total Cemetery Services Revenue (RMB Thousand)** | **477,375** | **906,082** | - Operating burial plot sales service revenue decreased by **RMB 412.7 million** or **51.0%** year-on-year, with sales volume decreasing by **451 units** or **6.7%**, and average selling price decreasing by **RMB 57,000 per unit** or **47.5%**[66](index=66&type=chunk) - Operating burial plot sales service revenue from comparable cemeteries decreased by **RMB 415.5 million** or **51.4%** year-on-year, with sales volume decreasing by **520 units** or **7.8%**[69](index=69&type=chunk) - Operating burial plot sales service revenue from newly acquired or constructed cemeteries increased by **RMB 2.9 million**, primarily from the cemetery project in Dezhou, Shandong[69](index=69&type=chunk) [Funeral Services Revenue](index=33&type=section&id=Funeral%20Services%20Revenue) Funeral services revenue decreased by 33.8% year-on-year to RMB 121,873 thousand, with service volume decreasing by 25.5% and average selling price declining by 11.2%, mainly due to the expiration of a cooperation project in Hefei, Anhui, the deconsolidation of a subsidiary in Xiamen, Fujian, and changes in the proportion of different service categories Funeral Services Revenue Details (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Number of Customers (Households) | 26,000 | 34,884 | | Revenue (RMB Thousand) | 121,873 | 184,083 | | Average Selling Price (RMB/Household) | 4,687 | 5,277 | - Funeral services revenue decreased by **RMB 62.2 million** or **33.8%**, with service volume decreasing by **8,884 households** or **25.5%**, and average selling price decreasing by **RMB 590 per household** or **11.2%**[72](index=72&type=chunk) - The decrease in revenue was primarily due to the expiration of a funeral cooperation project in Hefei, Anhui, before the end of last year, and a funeral subsidiary in Xiamen, Fujian, no longer being included in the Group's consolidated financial statements due to the expiration of its original cooperation agreement[72](index=72&type=chunk) [Revenue by Geographical Region_MD&A](index=34&type=section&id=Revenue%20by%20Geographical%20Region_MD%26A) Revenue in all regions generally decreased year-on-year, primarily affected by market competition, cautious customer spending, product structure adjustments, and VAT, while revenue in Shaanxi increased year-on-year, and Fujian had no revenue due to a subsidiary no longer being consolidated Cemetery Services and Funeral Services Revenue by Geographical Region (For the six months ended June 30) | Region | 2025 Revenue (RMB Thousand) | 2025 Share (%) | 2024 Revenue (RMB Thousand) | 2024 Share (%) | | :--- | :--- | :--- | :--- | :--- | | Shanghai | 240,970 | 40.2% | 526,143 | 48.3% | | Liaoning | 65,607 | 11.0% | 69,766 | 6.4% | | Anhui | 63,662 | 10.6% | 87,739 | 8.0% | | Henan | 33,165 | 5.5% | 68,805 | 6.3% | | Jiangxi | 32,489 | 5.4% | 46,154 | 4.2% | | Jiangsu | 32,059 | 5.4% | 52,524 | 4.8% | | Shandong | 27,736 | 4.6% | 44,558 | 4.1% | | Zhejiang | 22,632 | 3.8% | 25,354 | 2.3% | | Chongqing | 20,330 | 3.4% | 37,787 | 3.5% | | Heilongjiang | 17,995 | 3.0% | 42,568 | 3.9% | | Guizhou | 14,667 | 2.4% | 23,604 | 2.2% | | Gansu | 12,010 | 2.0% | 13,821 | 1.3% | | Inner Mongolia | 6,761 | 1.1% | 9,332 | 0.9% | | Guangxi | 6,584 | 1.1% | 8,980 | 0.8% | | Shaanxi | 2,300 | 0.4% | 1,530 | 0.1% | | Hubei | 281 | 0.1% | 814 | 0.1% | | Fujian | — | — | 30,686 | 2.8% | | **Total** | **599,248** | **100.0%** | **1,090,165** | **100.0%** | - Revenue in the Shaanxi region increased year-on-year, primarily because a company in Yan'an, Shaanxi, was a recently acquired entity with a low comparison base[75](index=75&type=chunk) - The Fujian region had no revenue in the current period because a funeral subsidiary is no longer included in the Group's consolidated financial statements[75](index=75&type=chunk) [Other Services Revenue](index=35&type=section&id=Other%20Services%20Revenue) Other services revenue primarily stemmed from providing professional design services to domestic cemeteries and funeral homes (RMB 7.5 million) and cremator sales and related services (RMB 2.9 million) - Other services revenue primarily stemmed from professional design services (**RMB 7.5 million**) and cremator sales and related services (**RMB 2.9 million**)[76](index=76&type=chunk) [Operating Expenses Analysis](index=35&type=section&id=Operating%20Expenses%20Analysis) In the first half of 2025, the Group's operating expenses increased by RMB 252.3 million or 42.9% year-on-year, mainly due to an increase of RMB 206.0 million in asset impairment and bad debt provisions, as well as higher tax costs for some subsidiaries, while staff costs, project costs, material and supply consumption, and marketing and sales channel costs all decreased - Operating expenses increased by **RMB 252.3 million** or **42.9%** year-on-year[77](index=77&type=chunk) - Asset impairment and bad debt provisions increased by a total of **RMB 206.0 million**, including **RMB 217.6 million** in impairment losses for property and equipment, intangible assets, cemetery assets, and goodwill[77](index=77&type=chunk)[80](index=80&type=chunk) [Staff Costs](index=35&type=section&id=Staff%20Costs) Staff costs decreased by RMB 75.3 million or 29.5% year-on-year, primarily due to a reduction in employee salaries and bonuses commensurate with the decline in sales service revenue Staff Costs (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Staff Costs | 180,310 | 255,647 | - Staff costs decreased primarily due to a reduction in employee salaries and bonuses as cemetery and funeral sales service revenue declined[77](index=77&type=chunk) [Project Costs](index=35&type=section&id=Project%20Costs) Product project costs decreased by RMB 12.7 million or 32.8% year-on-year, primarily due to a reduction in construction volume commensurate with lower sales, and the Group's enhanced planning, optimized investment intensity, and improved input-output turnover rate Project Costs (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Project Costs | 26,020 | 38,705 | - Product project costs decreased primarily due to a reduction in construction volume commensurate with lower sales, in addition to the Group's enhanced planning for park and cemetery construction, optimized investment intensity, and improved input-output turnover rate[77](index=77&type=chunk) [Materials and Supplies Consumption](index=35&type=section&id=Materials%20and%20Supplies%20Consumption) Materials and supplies consumption decreased by approximately RMB 22.1 million or 28.6% year-on-year, primarily due to reduced direct material consumption resulting from lower cemetery and funeral sales service volumes Materials and Supplies Consumption (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Materials and Supplies Consumption | 55,184 | 77,241 | - Materials and supplies consumption decreased primarily due to reduced direct material consumption resulting from lower cemetery and funeral sales service volumes during the period[78](index=78&type=chunk) [Marketing and Sales Channel Costs](index=36&type=section&id=Marketing%20and%20Sales%20Channel%20Costs) Marketing and sales channel costs decreased by RMB 3.7 million or 17.9% year-on-year, primarily due to lower sales service volumes, the Group's control over marketing cost expenditures, and sales commission ratios Marketing and Sales Channel Costs (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Marketing and Sales Channel Costs | 16,724 | 20,381 | - Marketing and sales channel costs decreased primarily due to lower sales service volumes during the period, the Group's further control over marketing cost expenditures, and the management of sales commission ratios[79](index=79&type=chunk) [Depreciation and Amortization](index=36&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization decreased by RMB 1.8 million or 2.0% year-on-year, primarily due to some assets being fully depreciated Depreciation and Amortization (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Depreciation and Amortization | 87,818 | 89,570 | - Depreciation and amortization decreased primarily because some assets were fully depreciated during the period, resulting in lower depreciation and amortization expenses compared to the prior period[79](index=79&type=chunk) [Other General Operating Expenses](index=36&type=section&id=Other%20General%20Operating%20Expenses) Other general operating expenses increased by approximately RMB 145.4 million or 194.4% year-on-year, mainly due to slight increases in repair and office expenses and higher tax costs for some subsidiaries, partially offset by reductions in entertainment, travel, and vehicle transportation expenses Other General Operating Expenses (For the six months ended June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Other General Operating Expenses | 220,239 | 74,810 | - Other general operating expenses significantly increased primarily due to slight increases in repair and office expenses compared to the prior period, as well as higher tax costs for some subsidiaries due to different tax factors[79](index=79&type=chunk) [Impairment Losses](index=36&type=section&id=Impairment%20Losses) Impairment losses of RMB 217.6 million were recognized for property and equipment, intangible assets, cemetery assets, and goodwill, primarily for goodwill and related assets of cemetery projects in Shandong, Jiangxi, Hebei, and Hubei provinces Impairment Losses (For the six months ended June 30) | Impairment Type | Amount (RMB Million) | | :--- | :--- | | Impairment Losses on Property and Equipment, Intangible Assets, Cemetery Assets, and Goodwill | 217.6 | - Impairment provision of approximately **RMB 77.9 million** was recognized primarily for goodwill of a cemetery project in Shandong Province[80](index=80&type=chunk) - Impairment provision of approximately **RMB 68.5 million** was recognized for goodwill and related assets of a cemetery project in Jiangxi Province[80](index=80&type=chunk) - Impairment provision of approximately **RMB 37.6 million** was recognized for goodwill of a cemetery project in Hebei Province, and approximately **RMB 32.8 million** for goodwill and related assets of a cemetery project in Hubei Province[80](index=80&type=c

[Company Information and Financial Summary](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF%E4%B8%8E%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) [Company Overview](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E6%A6%82%E8%A7%88) Duiba Group Limited (Stock Code: 1753) announced its unaudited interim results for the six months ended June 30, 2025, with the company incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange - Duiba Group Limited (Stock Code: 1753) announced its unaudited interim results for the six months ended June 30, 2025[2](index=2&type=chunk)[3](index=3&type=chunk) - The company was incorporated in the Cayman Islands, and its shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on May 7, 2019[3](index=3&type=chunk)[14](index=14&type=chunk) [Summary of Financial Information](index=1&type=section&id=%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%96%99%E6%91%98%E8%A6%81) For the six months ended June 30, 2025, the company's total revenue decreased by **23.7%** year-on-year, primarily due to lower revenue from user operation SaaS platform business and internet advertising business Summary of Financial Information for the Six Months Ended June 30 | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Revenue from User Operation SaaS Platform Business | 89,574 | 116,965 | | Revenue from Internet Advertising Business | 230,251 | 318,169 | | Other Revenue | 29,798 | 23,125 | | **Total Revenue** | **349,623** | **458,259** | | **Year-on-Year Change in Revenue** | **-23.7%** | - | - The company's revenue for the six months ended June 30, 2025, decreased by approximately **23.7%** compared to the same period in 2024[3](index=3&type=chunk) [Non-HKFRS Measures](index=1&type=section&id=%E9%9D%9E%E9%A6%99%E6%B8%AF%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A%E5%87%86%E5%88%99%E8%AE%A1%E9%87%8F%E6%8C%87%E6%A0%87) The company uses "adjusted loss for the period" as a non-HKFRS measure to supplement its condensed consolidated financial statements, reflecting operating performance by adding back share-based payments, with an adjusted loss of **RMB 24,522 thousand** for H1 2025, widening year-on-year - The company uses "adjusted loss for the period," a non-HKFRS measure, as an additional financial indicator to eliminate the impact of items not reflecting operating performance[4](index=4&type=chunk) Adjusted Loss for the Period | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Loss for the period | (26,728) | (19,078) | | Add: Share-based payments | 2,206 | 1,465 | | **Adjusted Loss for the Period** | **(24,522)** | **(17,613)** | - Adjusted loss for the period is defined as loss for the period plus share-based payments, and is not a measure required or presented under HKFRS[5](index=5&type=chunk) [Unaudited Interim Condensed Consolidated Financial Statements](index=3&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%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) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&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) For the six months ended June 30, 2025, the company recorded a loss for the period of **RMB 26,728 thousand**, a wider loss compared to the prior year, with basic and diluted loss per share of **RMB 2.5 cents** Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Six Months Ended June 30 | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Revenue | 349,623 | 458,259 | | Cost of Sales | (292,373) | (396,757) | | Gross Profit | 57,250 | 61,502 | | Other Income and Gains | 35,927 | 29,270 | | Selling and Distribution Expenses | (46,547) | (41,305) | | Administrative Expenses | (49,916) | (52,521) | | Net Impairment Loss on Financial Assets | (10,581) | (9,211) | | Other Expenses | (1,398) | (167) | | Finance Costs | (9,644) | (6,919) | | Share of Loss of an Associate (net of tax) | (1,439) | (176) | | Loss Before Tax | (26,348) | (19,527) | | Income Tax (Expense) / Credit | (380) | 449 | | **Loss for the Period** | **(26,728)** | **(19,078)** | | Total Comprehensive Loss for the Period | (28,822) | (15,885) | | Loss per Share Attributable to Ordinary Equity Holders of the Parent (RMB) | (0.025) | (0.018) | [Consolidated Statement of Financial Position](index=5&type=section&id=%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 company's total equity was **RMB 1,298,619 thousand**, a slight decrease from the end of 2024, with net current assets remaining high but interest-bearing bank borrowings significantly increasing Summary of Consolidated Statement of Financial Position as of June 30 | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 4,960 | 2,171 | | Investment in an Associate | 234,373 | 234,922 | | Total Non-current Assets | 306,989 | 401,547 | | **Current Assets** | | | | Trade Receivables | 805,249 | 723,783 | | Prepayments, Other Receivables and Other Assets | 379,091 | 584,592 | | Cash and Cash Equivalents | 433,393 | 280,750 | | Total Current Assets | 2,221,797 | 1,969,233 | | **Current Liabilities** | | | | Trade Payables | 90,549 | 82,207 | | Interest-bearing Bank Borrowings | 855,815 | 667,164 | | Total Current Liabilities | 1,229,668 | 1,044,168 | | **Net Current Assets** | **992,129** | **925,065** | | **Total Equity** | **1,298,619** | **1,325,235** | [Consolidated Statement of Cash Flows](index=7&type=section&id=%E7%BB%BC%E5%90%88%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, net cash flows from operating activities turned into a net inflow of **RMB 86.0 million**, primarily due to a decrease in prepayments, with cash and cash equivalents significantly increasing at period-end Summary of Consolidated Statement of Cash Flows for the Six Months Ended June 30 | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Net Cash Flows from / (Used in) Operating Activities | 86,000 | (374,925) | | Net Cash Flows (Used in) / from Investing Activities | 165,020 | (94,154) | | Net Cash Flows from Financing Activities | 161,571 | 153,264 | | Net Increase / (Decrease) in Cash and Cash Equivalents | 153,417 | (56,641) | | Cash and Cash Equivalents at End of Period | 433,393 | 232,033 | - Net cash inflow from operating activities was **RMB 86.0 million**, compared to a net cash outflow from operating activities of **RMB 374.9 million** in H1 2024, primarily due to a decrease in prepayments as of June 30, 2025, compared to the balance as of December 31, 2024[11](index=11&type=chunk)[55](index=55&type=chunk) [Notes to the Unaudited Interim Condensed Consolidated Financial Information](index=10&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%96%99%E9%99%84%E6%B3%A8) [Company Information and Basis of Preparation](index=10&type=section&id=%E5%85%AC%E5%8F%B8%E8%B5%84%E6%96%99%E4%B8%8E%E7%BC%96%E5%88%B6%E5%9F%BA%E5%87%86) Duiba Group Limited is an investment holding company incorporated in the Cayman Islands, with subsidiaries primarily engaged in user operation SaaS platform and internet advertising businesses, and interim financial information is prepared in RMB under HKAS 34 - The Company is an investment holding company, and its subsidiaries are principally engaged in user operation Software as a Service (SaaS) platform business and internet advertising business[14](index=14&type=chunk) - The unaudited interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting and is presented in RMB[15](index=15&type=chunk) [Changes in Accounting Policies and Disclosures](index=10&type=section&id=%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%8F%8A%E6%8A%AB%E9%9C%B2%E5%8F%98%E5%8A%A8) This period's financial information first adopted amendments to HKFRS accounting standards, with amendments to HKAS 21 regarding lack of exchangeability having no impact on the interim condensed consolidated financial information - The accounting policies adopted in preparing the unaudited 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 amendments to HKFRS accounting standards issued by the Hong Kong Institute of Certified Public Accountants for the first time for the current period’s financial information[16](index=16&type=chunk) - The amendments to HKAS 21 regarding lack of exchangeability have no impact on the interim condensed consolidated financial information as the currencies in which the Group transacts are exchangeable into the presentation currency[17](index=17&type=chunk) [Operating Segment Information](index=11&type=section&id=%E7%BB%8F%E8%90%A5%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group has only one reportable operating segment, with all revenue and non-current assets derived from China; during the reporting period, the top two customers contributed significantly to revenue, but the third largest customer's revenue fell below the **10%** disclosure threshold - The Group does not classify its business units by product, but has only one reportable operating segment[18](index=18&type=chunk) - All of the Group’s revenue is derived from customers in China, and all non-current assets are located in China[19](index=19&type=chunk) Major Customer Revenue Contribution | Customer | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Customer 1 | 59,484 | 68,140 | | Customer 2 | 55,768 | 62,437 | | Customer 3 | Not applicable* | 46,327 | *The corresponding revenue from this customer is not disclosed as it did not individually account for 10% or more of the Group's revenue during the reporting period. [Revenue, Other Income and Gains](index=11&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 revenue primarily comes from user operation SaaS platform and internet advertising businesses, both of which saw year-on-year declines in H1 2025, while other income and gains mainly include interest income and government grants Revenue Analysis | Business | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | User Operation SaaS Platform Business | 89,574 | 116,965 | | Internet Advertising Business | 230,251 | 318,169 | | Other | 29,798 | 23,125 | | **Total** | **349,623** | **458,259** | Other Income and Gains | Item | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Interest Income | 7,392 | 13,224 | | Government Grants | 20,134 | 11,594 | | Investment Income from Financial Assets at Fair Value Through Profit or Loss | 7,239 | 87 | | **Total** | **35,927** | **29,270** | [Loss Before Tax](index=13&type=section&id=%E7%A8%85%E5%89%8D%E8%99%A7%E6%8D%9F) The Group's loss before tax is primarily affected by cost of sales, selling and distribution expenses, administrative expenses, net impairment loss on financial assets, and R&D costs, with both net impairment loss on financial assets and finance costs increasing in H1 2025 Major Deductions / (Additions) to Loss Before Tax | Item | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Cost of Inventories Sold | 58,646 | 89,899 | | Cost of Services Provided | 233,727 | 306,858 | | Depreciation of Property, Plant and Equipment | 327 | 1,069 | | Net Impairment Loss on Financial Assets | 10,581 | 9,211 | | Research and Development Costs | 22,892 | 23,802 | | Employee Benefit Expenses | 66,771 | 64,878 | - Amortisation of intangible assets for the six months ended June 30, 2025, is included in "Administrative expenses"[25](index=25&type=chunk) - Net fair value loss on financial assets at fair value through profit or loss is included in "Other expenses"[26](index=26&type=chunk) [Income Tax](index=14&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85) The Group's income tax expense consists mainly of current tax and deferred tax, with a total tax expense of **RMB 380 thousand** for H1 2025, compared to a credit in the prior year Total Income Tax Expense / (Credit) for the Period | Item | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Current Tax | (1,089) | 613 | | Deferred Tax | 1,469 | (1,062) | | **Total Income Tax Expense / (Credit) for the Period** | **380** | **(449)** | - The current tax credit for the six months ended June 30, 2025, was due to adjustments to the provisional tax calculation for the previous year resulting from the application of revised tax rates[28](index=28&type=chunk) [Dividends](index=14&type=section&id=%E8%82%A1%E6%81%AF) The Board does not recommend the declaration of any interim dividend for the reporting period - The Board does not recommend the declaration of any interim dividend for the reporting period (for the six months ended June 30, 2024: nil)[29](index=29&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=14&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%B8%B5%E6%8D%9F) For H1 2025, basic loss per share attributable to ordinary equity holders of the parent was **RMB 2.5 cents**, a widening of the loss from **RMB 1.8 cents** in the prior year Loss Per Share Calculation | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the parent for basic and diluted loss per share calculation (RMB) | (26,728,000) | (19,078,000) | | Weighted average number of ordinary shares in issue for basic loss per share calculation | 1,067,437,500 | 1,063,154,500 | | **Basic and Diluted Loss Per Share (RMB)** | **(0.025)** | **(0.018)** | [Property, Plant and Equipment](index=15&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 the company's property, plant and equipment increased to **RMB 4,960 thousand**, primarily due to increased additions during the period Changes in Carrying Amount of Property, Plant and Equipment | Item | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Carrying Amount at Beginning of Period/Year | 2,171 | 2,796 | | Additions | 3,131 | 1,100 | | Depreciation Charged During Period/Year | (327) | (1,632) | | Disposals | (15) | (93) | | **Carrying Amount at End of Period/Year** | **4,960** | **2,171** | [Investment in an Associate](index=15&type=section&id=%E6%96%BC%E4%B8%80%E9%96%93%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E4%B9%8B%E6%8A%95%E8%B3%87) As of June 30, 2025, the Group held a **19%** equity interest in Zhejiang Gushang Intelligent Technology Co., Ltd., with a carrying amount of **RMB 234,373 thousand**, primarily engaged in project operations Investment in an Associate | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Investment in an Associate | 234,373 | 234,922 | | **Company Name** | **Zhejiang Gushang Intelligent Technology Co., Ltd.** | | | **Group's Share of Ownership Interest Percentage** | **19%** | | | **Principal Business** | **Project Operations** | | [Trade Receivables](index=15&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, net trade receivables were **RMB 805,249 thousand**, an increase from the end of 2024, with credit terms mainly 30 to 90 days and overdue balances regularly reviewed by senior management Trade Receivables | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Trade Receivables | 877,502 | 785,455 | | Less: Impairment of Trade Receivables | (72,253) | (61,672) | | **Net Amount** | **805,249** | **723,783** | - Trade receivables are non-interest bearing, with credit terms mainly 30 to 90 days, and overdue balances are regularly reviewed by senior management[34](index=34&type=chunk) Aging Analysis of Trade Receivables | Aging | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | 0 to 30 Days | 217,897 | 354,265 | | 31 to 90 Days | 231,012 | 178,194 | | 91 to 180 Days | 192,010 | 47,071 | | 181 to 365 Days | 109,842 | 129,118 | | 1 to 2 Years | 54,488 | 15,135 | | **Total** | **805,249** | **723,783** | [Trade Payables](index=16&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, trade payables were **RMB 90,549 thousand**, an increase from the end of 2024, are interest-free, and generally settled within 60 days Trade Payables | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Trade Payables | 90,549 | 82,207 | Aging Analysis of Trade Payables | Aging | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | 0 to 180 Days | 42,434 | 51,571 | | 181 to 365 Days | 22,878 | 3,555 | | 1 to 2 Years | 5,120 | 6,897 | | 2 to 3 Years | 8,057 | 8,028 | | Over 3 Years | 12,060 | 12,156 | | **Total** | **90,549** | **82,207** | - Trade payables are interest-free and generally settled within 60 days[37](index=37&type=chunk) [Share Capital](index=16&type=section&id=%E8%82%A1%E6%9C%AC) As of June 30, 2025, the company's number of issued shares was **1,076,823,200**, with share capital and share premium remaining stable Overview of Share Capital Changes | Item | Number of Shares | Share Capital (thousands of RMB) | Share Premium (thousands of RMB) | Total (thousands of RMB) | | :--- | :--- | :--- | :--- | :--- | | As of December 31, 2024, January 1, 2025, and June 30, 2025 | 1,076,823,200 | 70 | 1,942,530 | 1,942,600 | [Management Discussion and Analysis](index=17&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) [Business Review](index=17&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE) Duiba Group is a leading user operation SaaS service provider and internet advertising platform operator in China, offering full-lifecycle operation services to customers in finance and internet industries; during this period, both paid customer numbers and new contract value for SaaS platform business decreased, and internet advertising revenue also significantly reduced - The Company is a leading user operation Software as a Service (SaaS) service provider and internet advertising platform operator in China, providing full-lifecycle operation services for user growth, activity retention, and traffic monetization to tens of thousands of customers[40](index=40&type=chunk) [User Operation SaaS Platform Business](index=17&type=section&id=%E7%94%A8%E6%88%B7%E8%BF%90%E8%90%A5SaaS%E5%B9%B3%E5%8F%B0%E4%B8%9A%E5%8A%A1) The user operation SaaS platform business aims to help enterprises attract and retain online users through various tools; as of June 30, 2025, both paid customer numbers and new contract value decreased year-on-year, leading to a **23.4%** reduction in business revenue - As of June 30, 2025, the number of paying customers using fee-based user operation SaaS services was **487** (H1 2024: **531**), including **128** financial industry customers (H1 2024: **170**)[42](index=42&type=chunk) - For the six months ended June 30, 2025, the number of new contracts (including renewals) for the user operation SaaS platform business reached **177** (H1 2024: **224**), with a total value of **RMB 50.4 million** (H1 2024: **RMB 75.5 million**)[42](index=42&type=chunk) User Operation SaaS Platform Business Financial Performance | Indicator | 2025 (thousands of RMB) | 2024 (thousands of RMB) | | :--- | :--- | :--- | | Revenue | 89,574 | 116,965 | | Cost of Sales | (61,547) | (98,244) | | Selling and Distribution Expenses | (25,832) | (22,365) | | Administrative Expenses (excluding R&D expenses) | (11,543) | (15,596) | | Research and Development Expenses | (16,692) | (14,203) | | **Segment Loss** | **(26,040)** | **(33,443)** | [Internet Advertising Business](index=18&type=section&id=%E4%BA%92%E8%81%94%E7%B6%B2%E5%BB%A3%E5%91%8A%E6%A5%AD%E5%8B%99) The Group's internet advertising business aggregates App scenario traffic, systematically operates activity content, and monetizes large-scale traffic using big data and AI technology; for H1 2025, revenue from this business decreased by approximately **27.6%**, primarily charged under the CPC model - The Group's internet advertising business aggregates traffic from various App scenarios, systematically operates activity content, and monetizes large-scale traffic through advertising[45](index=45&type=chunk) - For the six months ended June 30, 2025, revenue from the internet advertising business decreased by approximately **27.6%** to **RMB 230.3 million** (H1 2024: **RMB 318.2 million**)[46](index=46&type=chunk) - Most revenue is derived from the CPC (cost-per-click) model, where charges are incurred only when viewers interact with advertising tools and are directed to the advertiser's designated page[45](index=45&type=chunk) [Research and Development](index=19&type=section&id=%E7%A0%94%E5%8F%91) As of June 30, 2025, the R&D department had **133** employees, accounting for **26.7%** of the Group's total employees, with R&D expenses slightly decreasing year-on-year - As of June 30, 2025, the number of employees in the R&D department was **133** (June 30, 2024: **145**), accounting for approximately **26.7%** of the Group's total employees (June 30, 2024: approximately **33.4%**)[47](index=47&type=chunk) - The Group's R&D expenses decreased by approximately **3.8%** from **RMB 23.8 million** in H1 2024 to **RMB 22.9 million** in H1 2025[47](index=47&type=chunk) [Financial Review](index=19&type=section&id=%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%BE) Affected by industry uncertainties, the Group's total revenue for H1 2025 decreased by **23.7%** year-on-year, gross profit declined by **6.8%**, and loss for the period widened; however, operating cash flow turned positive, while the gearing ratio increased - In H1 2025, due to the continuous uncertainty in industry growth, advertisers' budget plans became more conservative, leading to a further reduction in the scale of the internet advertising business and a further decline in the company's profitability[48](index=48&type=chunk) [Revenue](index=19&type=section&id=%E6%94%B6%E5%85%A5) For the six months ended June 30, 2025, the Group's total revenue was **RMB 349.6 million**, a **23.7%** year-on-year decrease, primarily due to reduced revenue from internet advertising and user operation SaaS platform businesses - For the six months ended June 30, 2025, the Group recorded total revenue of **RMB 349.6 million**, a decrease of approximately **23.7%** compared to **RMB 458.3 million** in H1 2024[49](index=49&type=chunk) - Revenue from the internet advertising business decreased by approximately **27.6%** to **RMB 230.3 million**, and revenue from the user operation SaaS platform business decreased by approximately **23.4%** to **RMB 89.6 million**[49](index=49&type=chunk) [Gross Profit](index=20&type=section&id=%E6%AF%9B%E5%88%A9) For H1 2025, the Group's gross profit was **RMB 57.3 million**, a **6.8%** year-on-year decrease, while the gross profit margin improved to **16.4%**, mainly due to higher gross profit margins in both user operation SaaS platform and internet advertising businesses - For the six months ended June 30, 2025, the Group recorded gross profit of **RMB 57.3 million**, a decrease of approximately **6.8%** compared to **RMB 61.5 million** in H1 2024[50](index=50&type=chunk) - The gross profit margin was approximately **16.4%** (H1 2024: approximately **13.4%**), with gross profit margins for user operation SaaS platform business and internet advertising business being approximately **31.3%** and **8.4%** respectively (H1 2024: approximately **16.0%** and **6.5%** respectively)[50](index=50&type=chunk) [Selling and Distribution Expenses](index=20&type=section&id=%E9%94%80%E5%94%AE%E5%8F%8A%E5%88%86%E9%94%80%E5%BC%80%E6%94%AF) For H1 2025, selling and distribution expenses increased by **12.6%** to **RMB 46.5 million**, with its percentage of total revenue rising to **13.3%**, primarily due to an increase in sales and operations employees - For the six months ended June 30, 2025, the Group recorded selling and distribution expenses of **RMB 46.5 million**, an increase of approximately **12.6%** compared to **RMB 41.3 million** in H1 2024[51](index=51&type=chunk) - The percentage of selling and distribution expenses to the Group's total revenue increased to approximately **13.3%** (H1 2024: approximately **9.0%**), mainly due to the increase in the number of the Group's sales and operations employees to **303** as of June 30, 2025 (H1 2024: **235**)[51](index=51&type=chunk) [Administrative Expenses](index=20&type=section&id=%E8%A1%8C%E6%94%BF%E5%BC%80%E6%94%AF) For H1 2025, administrative expenses decreased by **5.0%** to **RMB 49.9 million**, mainly due to stricter internal controls, while its percentage of total revenue increased to **14.3%** due to reduced total revenue - For the six months ended June 30, 2025, the Group recorded administrative expenses of **RMB 49.9 million**, a decrease of approximately **5.0%** compared to **RMB 52.5 million** in H1 2024, primarily due to stricter internal controls on related expenses in H1 2025[52](index=52&type=chunk) - The percentage of administrative expenses to the Group's total revenue increased to approximately **14.3%** (H1 2024: approximately **11.5%**), mainly due to the decrease in total revenue during the current period[52](index=52&type=chunk) [Loss for the Period](index=20&type=section&id=%E6%9C%9F%E5%86%85%E4%B8%B5%E6%8D%9F) For H1 2025, loss attributable to shareholders of the company was **RMB 26.7 million**, with basic loss per share of **RMB 2.5 cents**, indicating a widening loss year-on-year - For the six months ended June 30, 2025, loss attributable to shareholders of the company was **RMB 26.7 million** (H1 2024: loss attributable to shareholders of **RMB 19.1 million**)[53](index=53&type=chunk) - Basic loss per share of the company was **RMB 2.5 cents** (H1 2024: basic loss per share of the company was **RMB 1.8 cents**)[53](index=53&type=chunk) [Adjusted Loss for the Period](index=20&type=section&id=%E7%BB%8F%E8%B0%83%E6%95%B4%E6%9C%9F%E5%86%85%E4%B8%B5%E6%8D%9F) The Group's adjusted loss for the period was **RMB 24.5 million**, a widening from **RMB 17.6 million** in the prior year - The Group's adjusted loss for the period was **RMB 24.5 million** (H1 2024: adjusted loss for the period of **RMB 17.6 million**)[54](index=54&type=chunk) [Cash Flows](index=21&type=section&id=%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F) For H1 2025, net cash inflow from operating activities was **RMB 86.0 million**, primarily due to a decrease in prepayments, contrasting with a net outflow in the prior year - For the six months ended June 30, 2025, net cash inflow from operating activities was **RMB 86.0 million** (H1 2024: net cash outflow from operating activities of **RMB 374.9 million**), with this change primarily due to a decrease in prepayments as of June 30, 2025, compared to the balance as of December 31, 2024[55](index=55&type=chunk) [Gearing Ratio](index=21&type=section&id=%E8%B5%84%E6%9C%AC%E8%B4%9F%E5%80%BA%E6%AF%94%E7%8E%87) As of June 30, 2025, the Group's gearing ratio was approximately **37.9%**, an increase from **34.5%** as of June 30, 2024, mainly due to increased interest-bearing bank borrowings - As of June 30, 2025, the Group's gearing ratio was approximately **37.9%**, compared to approximately **34.5%** as of June 30, 2024, primarily due to an increase in the Group's interest-bearing bank borrowings during the current period[56](index=56&type=chunk) - The gearing ratio is calculated as net debt divided by total capital plus net debt, where net debt includes interest-bearing bank borrowings, trade payables, and other payables and accrued items, less cash and cash equivalents[56](index=56&type=chunk) [Liquidity and Capital Structure](index=21&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E5%8F%8A%E8%B5%84%E6%9C%AC%E6%9E%B6%E6%9E%84) The Group's daily working capital primarily comes from internal operating activities and bank borrowings; as of June 30, 2025, cash and cash equivalents were approximately **RMB 433.4 million**, with interest-bearing bank borrowings of **RMB 855.8 million** - The Group's daily working capital is primarily sourced from cash flows generated from internal operating activities and bank borrowings[57](index=57&type=chunk) - As of June 30, 2025, the Group had cash and cash equivalents of approximately **RMB 433.4 million** (as of June 30, 2024: approximately **RMB 232.0 million**)[57](index=57&type=chunk) - As of June 30, 2025, the Group's interest-bearing bank borrowings amounted to **RMB 855.8 million**, bearing interest in RMB[57](index=57&type=chunk) [Capital Commitments](index=21&type=section&id=%E8%B5%84%E6%9C%AC%E6%89%BF%E6%8B%85) As of June 30, 2025, the Group had no significant capital commitments - As of June 30, 2025, the Group had no significant capital commitments[58](index=58&type=chunk) [Foreign Exchange Risk Management](index=21&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9%E7%AE%A1%E7%90%86) The Group has transactional currency exposure from shares issued in currencies other than the functional currency of operating units, but currently does not intend to hedge, continuously monitoring economic conditions and foreign exchange risk - The Group has transactional currency exposure arising from shares issued in currencies other than the functional currency of the operating units[59](index=59&type=chunk) - Currently, the Group does not intend to hedge its exposure to foreign exchange fluctuations, but senior management continuously monitors economic conditions and foreign exchange risk, considering appropriate hedging measures when necessary[59](index=59&type=chunk) [Significant Acquisitions, Disposals of Subsidiaries, Associates and Joint Ventures, and Material Investments](index=22&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B4%AD%E3%80%81%E5%87%BA%E5%94%AE%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%E4%BC%81%E4%B8%9A%E5%8F%8A%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B5%84) As of June 30, 2025, the Group held a **19.0%** equity interest in Zhejiang Gushang Intelligent Technology Co., Ltd., with a carrying amount of **RMB 234.4 million**, representing approximately **9.3%** of total assets, with no other significant acquisitions, disposals, or investments during the period - As of June 30, 2025, the Group, through its wholly-owned subsidiaries, held an aggregate **19.0%** equity interest in Zhejiang Gushang Intelligent Technology Co., Ltd., with a total carrying amount of **RMB 234.4 million**[60](index=60&type=chunk) - Gushang Intelligent Technology's principal business includes the construction of buildings and parking lots in Hangzhou Zijingang Science and Technology City, with the topping-out ceremony completed in December 2023[60](index=60&type=chunk) - As of June 30, 2025, the carrying amount of the investment in Gushang Intelligent Technology accounted for approximately **9.3%** of the Group's total assets, with no other significant acquisitions, disposals, or investments during the current period[60](index=60&type=chunk) [Future Plans for Material Investments or Capital Assets](index=22&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B5%84%E6%88%96%E8%B5%84%E6%9C%AC%E8%B5%84%E4%BA%A7%E4%B9%8B%E6%9C%AA%E6%9D%A5%E8%AE%A1%E5%88%92) As of June 30, 2025, the Group had no specific plans for any material investments or acquisitions of capital assets outside the ordinary course of business - As of June 30, 2025, the Group had no specific plans for any material investments or acquisitions of capital assets outside the ordinary course of business[61](index=61&type=chunk) [Contingent Liabilities](index=22&type=section&id=%E6%88%96%E6%9C%89%E8%B4%9F%E5%80%BA) Hengfei Holding Limited initiated legal proceedings against the company and executive director Mr. Chen Xiaoliang; on August 26, 2025, the Hong Kong High Court ruled in favor of the plaintiff, ordering the company to pay damages to be assessed, while claims against Mr. Chen Xiaoliang were dismissed - Hengfei Holding Limited commenced legal proceedings against the Company and Mr. Chen Xiaoliang, a shareholder and executive director, alleging improper retention, delayed return, and failure or refusal to return the plaintiff's share certificates in the Company, causing losses[62](index=62&type=chunk) - As of June 30, 2025, the Directors believed that the Company had a valid defense against the claim and that the amount of the claim could not be reliably estimated, thus no provision was made (other than for legal and other costs)[62](index=62&type=chunk) - On August 26, 2025, the Court of First Instance of the High Court of Hong Kong ruled in favor of the plaintiff, ordering the Company to pay damages (to be assessed separately) and legal costs; the plaintiff's claims against Mr. Chen Xiaoliang were dismissed[63](index=63&type=chunk) [Pledge of Assets](index=23&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group recorded pledged deposits of **RMB 519.4 million** as collateral for interest-bearing bank borrowings, an increase from the end of 2024 - As of June 30, 2025, the Group recorded pledged deposits of **RMB 519.4 million** as collateral for interest-bearing bank borrowings (as of December 31, 2024: **RMB 379.5 million**)[64](index=64&type=chunk) [Events After Reporting Period](index=23&type=section&id=%E6%9C%9F%E5%90%8E%E4%BA%8B%E9%A0%85) On August 26, 2025, the Hong Kong High Court ruled on the legal proceedings initiated by Hengfei Holding Limited against the company and Mr. Chen Xiaoliang, as detailed in the "Contingent Liabilities" section - On August 26, 2025, the Court of First Instance of the High Court of Hong Kong ruled on the legal proceedings initiated by Hengfei Holding Limited against the Company and Mr. Chen Xiaoliang, a shareholder and executive director[65](index=65&type=chunk) [Organization and Talent Assurance](index=23&type=section&id=%E7%BB%84%E7%BB%87%E4%B8%8E%E4%BA%BA%E6%89%8D%E4%BF%9D%E9%9A%9C) As of June 30, 2025, the Group had **498** employees, with staff costs and employee benefits expenses of approximately **RMB 68.8 million**; the company prioritizes identifying and developing high-potential talent and incentivizes them through share options and share awards - As of June 30, 2025, the Group had **498** employees (December 31, 2024: **493**), including **81** sales employees, **62** administrative employees, **222** operations employees, and **133** R&D employees[66](index=66&type=chunk) - Staff costs and employee benefits expenses for the six months ended June 30, 2025, were approximately **RMB 68.8 million** (H1 2024: approximately **RMB 66.8 million**)[66](index=66&type=chunk) - Identifying and developing high-potential talent has been a top priority for the company's management this year, with incentives provided through the granting of share options and share awards[66](index=66&type=chunk) [Social Responsibility](index=23&type=section&id=%E7%A4%BE%E4%BC%9A%E8%B4%A3%E4%BB%BB) Adhering to the philosophy of "serving the people and giving back to society," the Group actively contributes to society, donating **RMB 24 thousand** to the Hangzhou Dianzi University Education Development Foundation during this period - The Group adheres to the philosophy of "serving the people and giving back to society," actively seeking opportunities to contribute to society and create a better living environment for local communities[67](index=67&type=chunk) - The Group donated **RMB 24 thousand** to the Hangzhou Dianzi University Education Development Foundation during the current period[67](index=67&type=chunk) [Future Outlook](index=23&type=section&id=%E6%9C%AA%E6%9D%A5%E5%B1%95%E6%9C%9B) Looking ahead to H2 2025, the overall growth of the internet advertising industry is expected to be limited; the Group will focus on internal cost reduction and efficiency improvement while expanding business capabilities to increase revenue from non-internet advertising businesses - Due to the significant impact of macroeconomic conditions on advertisers' budgets and preferences, the Group's internet advertising business experienced a slight decline in revenue and gross profit for the six months ended June 30, 2025[68](index=68&type=chunk) - Looking ahead to H2 2025, the overall growth of the internet advertising industry is expected to be very limited[68](index=68&type=chunk) - The Group will focus on internal cost reduction and efficiency improvement while striving to expand its business capabilities and increase revenue from non-internet advertising businesses[68](index=68&type=chunk) [Other Information](index=24&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) [Interim Dividend](index=24&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board does not recommend the declaration of any interim dividend for the current period - The Board does not recommend the declaration of any interim dividend for the current period (H1 2024: nil)[69](index=69&type=chunk) [Corporate Governance Practices](index=24&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A7%84) The company is committed to maintaining high standards of corporate governance and has adopted the Corporate Governance Code in Appendix C1 of the Listing Rules; despite the Chairman and CEO being the same person, the Board believes this arrangement enhances decision-making efficiency and execution, establishing sufficient balance of power and appropriate safeguards - The Company has adopted the Corporate Governance Code as set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as its own corporate governance code[70](index=70&type=chunk) - Mr. Chen Xiaoliang currently holds the positions of Chairman and Chief Executive Officer of the Company, and the Board believes this arrangement will enhance decision-making efficiency and execution processes[70](index=70&type=chunk) - The Board believes that a sufficient balance of power and appropriate safeguards have been established, and Mr. Chen Xiaoliang holding both positions will not negatively impact the balance of power and authority between the Board and the Company's senior management team[72](index=72&type=chunk) [Standard Code for Securities Transactions](index=25&type=section&id=%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93%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 in Appendix C3 of the Listing Rules, and all directors have confirmed compliance 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 as its own code of conduct for directors' securities transactions[73](index=73&type=chunk) - Following specific inquiries with all Directors, each Director has confirmed compliance with the required standards set out in the Standard Code for the six months ended June 30, 2025[73](index=73&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=25&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%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) During the period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and as of June 30, 2025, the company held no treasury shares - During the current period, neither the Company nor any of its subsidiaries or consolidated affiliated entities purchased, sold, or redeemed any of the Company's listed securities[74](index=74&type=chunk) - As of June 30, 2025, the Company held no treasury shares[74](index=74&type=chunk) [Audit Committee](index=25&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The Board's Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, in conjunction with the company's management - The Board's Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, in conjunction with the company's management[75](index=75&type=chunk) [Publication of Interim Results and 2025 Interim Report on HKEX and Company Website](index=25&type=section&id=%E4%BA%8E%E8%81%94%E4%BA%A4%E6%89%80%E5%8F%8A%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%BD%91%E7%AB%99%E5%88%8A%E7%99%BB%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E5%8F%8A2025%E5%B9%B4%E4%B8%AD%E6%9C%9F%E6%8A%A5%E5%91%8A) This interim results announcement has been published on the HKEX website and the company's website, and the 2025 interim report containing all information required by the Listing Rules will be dispatched to shareholders and published in due course - This interim results announcement has been published on the HKEX website (https://www.hkexnews.hk) and the Company's website (http://www.duiba.cn)[76](index=76&type=chunk) - The 2025 interim report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the HKEX and the Company's respective websites in due course[76](index=76&type=chunk) [Composition of the Board of Directors](index=25&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E6%9E%84%E6%88%90) As of the announcement date, the Board comprises executive directors Mr. Chen Xiaoliang, Mr. Zhu Jiangbo, and Mr. Cheng Peng; non-executive director Ms. Yang Jiaqing; and independent non-executive directors Mr. Gan Weimin, Dr. Gao Fuping, and Dr. Shi Jianxun - As of the date of this announcement, the Board comprises executive directors Mr. Chen Xiaoliang, Mr. Zhu Jiangbo, and Mr. Cheng Peng; non-executive director Ms. Yang Jiaqing; and independent non-executive directors Mr. Gan Weimin, Dr. Gao Fuping, and Dr. Shi Jianxun[77](index=77&type=chunk)

[Company Announcements and Financial Highlights](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E5%85%AC%E5%91%8A%E5%8F%8A%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The company announced its unaudited interim results for the six months ended June 30, 2025, showing significant revenue and profit growth, a narrowed loss per share, and continued share suspension [Interim Results Announcement](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%85%AC%E5%91%8A) LET Group Holdings Limited announced its unaudited condensed consolidated interim results for the six months ended June 30, 2025, highlighting significant growth in key financial metrics while its shares remain suspended - The Board of Directors announced the unaudited condensed consolidated interim results for the six months ended June 30, 2025[4](index=4&type=chunk) - The company's shares will remain suspended from trading[3](index=3&type=chunk) [Financial Highlights](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) For the six months ended June 30, 2025, the company's total revenue increased by 65% to approximately HK$313 million, gross profit rose by 14%, profit attributable to equity holders significantly increased, and basic loss per share narrowed Financial Highlights for the Six Months Ended June 30, 2025 | Metric | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 312,855 | 189,910 | +65% | | Gross Profit | 116,141 | 102,267 | +14% | | Profit Attributable to Equity Holders | 99,540 | 58,883 | +69% | | Basic Loss Per Share Attributable to Equity Holders (HK cents) | (0.49) | (1.09) | Loss narrowed | - Total revenue increased by **65%** to approximately **HK$312.86 million**[4](index=4&type=chunk) - Gross profit increased by **14%** to approximately **HK$116.14 million**[4](index=4&type=chunk) - Profit attributable to equity holders was approximately **HK$99.54 million**, a significant increase from the same period last year[4](index=4&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the condensed consolidated financial statements, including the statement of profit or loss and other comprehensive income, and the statement of financial position, for the reporting period [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=%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 company reported significant revenue growth and a substantial increase in profit for the period, primarily driven by a positive shift in other income, gains, and losses, despite higher finance costs Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Extract) | Metric | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 312,855 | 189,910 | | Cost of Sales | (196,714) | (87,643) | | Gross Profit | 116,141 | 102,267 | | Other Income, Gains and Losses | 227,011 | (169,837) | | Finance Costs | (15,439) | (3,234) | | Profit Before Tax | 183,759 | 25,630 | | Profit for the Period | 173,161 | 18,569 | | Basic Loss Per Share Attributable to Equity Holders (HK cents) | (0.49) | (1.09) | - Profit for the period significantly increased from **HK$18.57 million** in the same period of 2024 to **HK$173.16 million** in 2025[5](index=5&type=chunk) - Total other comprehensive income (expense) shifted from a **HK$97.15 million** expense in 2024 to an **HK$88.34 million** income in 2025, primarily due to exchange differences[5](index=5&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the company's total non-current assets increased, mainly driven by growth in property, operating rights, and equipment, while net current assets decreased, but total equity continued to grow Condensed Consolidated Statement of Financial Position (Extract) | Metric | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Total Non-Current Assets | 7,125,264 | 6,337,536 | | Total Current Assets | 1,164,816 | 1,304,796 | | Total Current Liabilities | 904,484 | 588,412 | | Net Current Assets | 260,332 | 716,384 | | Total Equity | 4,764,655 | 4,503,154 | | Total Equity | 4,764,655 | 4,503,154 | - Property, operating rights, and equipment increased from **HK$4.63 billion** as of December 31, 2024, to **HK$5.41 billion** as of June 30, 2025[7](index=7&type=chunk) - Net current assets decreased from **HK$716.38 million** as of December 31, 2024, to **HK$260.33 million** as of June 30, 2025[8](index=8&type=chunk) [Notes to the Financial Statements](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) This section provides detailed notes to the condensed consolidated financial statements, covering general information, accounting policies, segment reporting, and other financial items [General Information](index=6&type=section&id=%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) The company, incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange, primarily engages in investment holding, hotel and casino operations in the Philippines and Russia, trade in Russia, and property development in Japan - The company's principal activities include investment holding and operations in the Philippines, Russia, and Japan[10](index=10&type=chunk) - Mr. Lo Yan Yee is the ultimate controlling party of the company[9](index=9&type=chunk) [Basis of Preparation and Going Concern](index=6&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96%E5%8F%8A%E6%8C%81%E7%BA%8C%E7%B6%93%E7%87%9F) The condensed consolidated financial statements are prepared in accordance with HKAS 34, with significant going concern uncertainties identified, including net cash outflows from operations, loan defaults, and funding shortfalls for the main hotel and casino project, which the Board is actively addressing - The Group generated net cash outflows from operating activities of approximately **HK$165.76 million** for the six months ended June 30, 2025[11](index=11&type=chunk) - The company defaulted on the repayment of other borrowings totaling **HK$137.5 million**, which remained unpaid after the reporting period[11](index=11&type=chunk) - The main hotel and casino project is expected to be completed in the third quarter of 2026, but the remaining available bank financing may be insufficient for completion, requiring additional funds[12](index=12&type=chunk) - The Group has implemented several plans and measures to mitigate liquidity risks, including negotiating with lenders, disposing of non-core assets, enhancing non-current assets, controlling operating expenses, and seeking alternative financing[15](index=15&type=chunk) [Basis of Preparation](index=6&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix D2 to the Listing Rules - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[11](index=11&type=chunk) [Going Concern Uncertainties and Mitigation Measures](index=6&type=section&id=%E6%8C%81%E7%BA%8C%E7%B6%93%E7%87%9F%E4%B8%8D%E7%A2%BA%E5%AE%9A%E6%80%A7%E5%8F%8A%E7%B7%A9%E8%A7%A3%E6%8E%AA%E6%96%BD) The company faces significant uncertainties regarding operating cash outflows, loan defaults, and insufficient funding for capital commitments; management is actively negotiating with lenders, planning non-core asset disposals, controlling expenses, and seeking new financing to ensure going concern - The Group generated net cash outflows from operating activities of approximately **HK$165.76 million** for the six months ended June 30, 2025[11](index=11&type=chunk) - The company defaulted on the repayment of other borrowings totaling **HK$137.5 million**[11](index=11&type=chunk) - The main hotel and casino project is expected to be completed in the third quarter of 2026, but the remaining available bank financing may be insufficient for completion, requiring additional funds[12](index=12&type=chunk) - The Board has considered future liquidity and funding sources, implementing measures such as negotiating with lenders, disposing of non-core assets, controlling operating expenses, and identifying other debt and/or equity financing[14](index=14&type=chunk)[15](index=15&type=chunk) [Significant Accounting Policies](index=8&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) The Group first applied revised HKFRSs, effective January 1, 2025, during this interim period, which had no material impact on the financial position or performance of current and prior periods - The Group first applied revised Hong Kong Financial Reporting Standards, including amendments to HKAS 21 'Lack of Exchangeability', for the six months ended June 30, 2025[16](index=16&type=chunk) - The application of revised HKFRSs had no material impact on the Group's financial position or performance for the current and prior periods[16](index=16&type=chunk) [Revenue and Segment Information](index=8&type=section&id=%E6%94%B6%E5%85%A5%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group's operating segments include integrated resorts in the Philippines and Russia, Russian trade business, and Japanese property development; total revenue significantly increased for the six months ended June 30, 2025, primarily from Russian integrated resorts and trade, with no revenue from Philippine and Japanese segments - The Group's operating segments include integrated resorts in the Philippines and Russian Federation, trade business in the Russian Federation, and property development[18](index=18&type=chunk) [Operating Segments](index=8&type=section&id=%E7%B6%93%E7%87%9F%E5%88%86%E9%83%A8) The Group's operating segments primarily focus on integrated resort development and operation in the Philippines, hotel gaming and trade business in the Russian Federation, and property development in Japan - Key operating segments include integrated resorts in the Philippines, hotel and gaming operations in the Russian Federation, trade business in the Russian Federation, and property development in Japan[18](index=18&type=chunk) [Revenue Breakdown](index=9&type=section&id=%E6%94%B6%E5%85%A5%E6%8B%86%E5%88%86) For the six months ended June 30, 2025, total revenue was HK$312.86 million, a 64.8% increase year-on-year, with Russian Federation integrated resorts contributing HK$212.73 million and Russian Federation trade business contributing HK$100.13 million, while Philippine and property development segments generated no revenue Revenue by Operating Segment | Segment | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Integrated Resorts in the Philippines | – | – | | Integrated Resorts in the Russian Federation | 212,725 | 189,910 | | Trade Business in the Russian Federation | 100,130 | – | | Property Development | – | – | | **Total Revenue** | **312,855** | **189,910** | - Trade business in the Russian Federation contributed **HK$100.13 million** in revenue during the first half of 2025, compared to zero in the same period last year[20](index=20&type=chunk) [Segment Results](index=11&type=section&id=%E5%88%86%E9%83%A8%E6%A5%AD%E7%B8%BE) For the six months ended June 30, 2025, the Russian Federation integrated resorts segment reported a profit of HK$62.17 million, while the Philippine integrated resorts segment recorded a loss of HK$54.25 million, and the trade business segment incurred a loss of HK$3.09 million Results by Operating Segment | Segment | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Integrated Resorts in the Philippines | (54,247) | (43,044) | | Integrated Resorts in the Russian Federation | 62,166 | 41,745 | | Trade Business in the Russian Federation | (3,092) | – | | Property Development | (119) | (436) | | **Profit Before Tax** | **183,759** | **25,630** | - The Russian Federation integrated resorts segment's results increased from **HK$41.75 million** in the same period of 2024 to **HK$62.17 million** in 2025[24](index=24&type=chunk) [Segment Assets and Liabilities](index=12&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E7%94%A2%E5%8F%8A%E8%B2%A0%E5%82%B5) As of June 30, 2025, the Philippine integrated resorts segment held the highest total assets at HK$6.72 billion and the largest segment liabilities at HK$3.15 billion, while assets in the Russian trade business segment significantly increased Assets and Liabilities by Operating Segment | Segment | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | **Segment Assets** | | | | Integrated Resorts in the Philippines | 6,717,056 | 6,162,413 | | Integrated Resorts in the Russian Federation | 1,121,228 | 1,098,352 | | Trade Business in the Russian Federation | 33,773 | – | | Property Development | 409,819 | 372,327 | | **Segment Liabilities** | | | | Integrated Resorts in the Philippines | 3,154,053 | 2,757,038 | | Integrated Resorts in the Russian Federation | 140,314 | 136,723 | | Trade Business in the Russian Federation | – | – | | Property Development | 83 | 80 | - Segment assets for trade business in the Russian Federation increased from zero as of December 31, 2024, to **HK$33.77 million** as of June 30, 2025[25](index=25&type=chunk) [Other Income, Gains and Losses](index=13&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E3%80%81%E6%94%B6%E7%9B%8A%E5%8F%8A%E虧%E6%90%8D) For the six months ended June 30, 2025, other income, gains, and losses significantly shifted from a loss to a substantial gain, primarily driven by a large increase in net exchange gains Other Income, Gains and Losses | Metric | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Bank Interest Income | 28,609 | 15,175 | | Net Exchange Gains (Losses) | 197,929 | (185,325) | | **Total** | **227,011** | **(169,837)** | - Net exchange gains shifted from a **HK$185.33 million** loss in the same period of 2024 to a **HK$197.93 million** gain in 2025, primarily contributing to the positive change in other income, gains, and losses[27](index=27&type=chunk) [Finance Costs](index=14&type=section&id=%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, total finance costs significantly increased, mainly due to higher interest on bank and other borrowings, with a portion of these costs capitalized Finance Costs | Metric | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Interest on Bank Borrowings | 66,141 | 51,850 | | Interest on Other Borrowings | 13,721 | 588 | | Interest on Lease Liabilities | 17,960 | 18,058 | | Total Finance Costs | 100,335 | 74,114 | | Less: Capitalized in Property, Operating Rights and Equipment under Construction | (84,896) | (70,880) | | **Finance Costs Expensed** | **15,439** | **3,234** | - Interest on bank borrowings increased from **HK$51.85 million** in the same period of 2024 to **HK$66.14 million** in 2025[29](index=29&type=chunk) - Interest on other borrowings significantly increased from **HK$0.59 million** in the same period of 2024 to **HK$13.72 million** in 2025[29](index=29&type=chunk) [Profit for the Period Items](index=15&type=section&id=%E6%9C%9F%E5%85%A7%E6%BA%A2%E5%88%A9%E9%A0%85%E7%9B%AE) For the six months ended June 30, 2025, profit for the period was achieved after deducting items such as depreciation, directors' emoluments, staff costs, and cost of sales, with total staff costs and operating expenses for trade business showing significant increases Profit for the Period After Charging (Crediting) Items | Metric | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Total Depreciation | 78,840 | 79,518 | | Total Depreciation Expensed | 31,246 | 30,481 | | Directors' Emoluments | 6,689 | 6,227 | | Total Staff Costs | 132,480 | 107,842 | | Total Staff Costs Expensed | 121,632 | 101,927 | | Cost of Sales – Operating Expenses for Gaming and Hotel Operations | 93,492 | 87,643 | | Cost of Sales – Operating Expenses for Trade Business | 103,222 | – | - Total staff costs increased from **HK$107.84 million** in the same period of 2024 to **HK$132.48 million** in 2025[30](index=30&type=chunk) - Operating expenses for trade business were **HK$103.22 million** in the first half of 2025, compared to zero in the same period last year[30](index=30&type=chunk) [Income Tax Expense](index=16&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, income tax expense increased, primarily due to a significant rise in Russian withholding tax; the company's tax policies vary across jurisdictions, with no provisions made in some regions due to the absence of taxable profits or losses Income Tax Expense | Tax Type | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Philippine Withholding Tax | 614 | 2,938 | | Russian Withholding Tax | 9,859 | 4,044 | | Russian Corporate Tax | 125 | 79 | | **Total** | **10,598** | **7,061** | - Russian withholding tax increased from **HK$4.04 million** in the same period of 2024 to **HK$9.86 million** in 2025[31](index=31&type=chunk) - No corporate income tax provision was made for subsidiaries incorporated in the Philippines and Japan, as they did not earn taxable profits or incur losses[35](index=35&type=chunk)[37](index=37&type=chunk) [Dividends](index=17&type=section&id=%E8%82%A1%E6%81%AF) No dividends were proposed, declared, or paid by the company for the six-month periods ended June 30, 2025, and 2024 - No dividends were proposed, declared, or paid for the six-month periods ended June 30, 2025, and 2024[40](index=40&type=chunk) [Loss Per Share](index=18&type=section&id=%E6%AF%8F%E8%82%A1%E虧%E6%90%8D) For the six months ended June 30, 2025, basic loss per share attributable to equity holders narrowed to 0.49 HK cents, down from 1.09 HK cents in the prior year, with diluted loss per share also decreasing accordingly Loss Per Share Calculation | Metric | June 30, 2025 (Thousand HKD) | June 30, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Loss for Basic Loss Per Share Attributable to Equity Holders | (34,252) | (75,280) | | Loss for Diluted Loss Per Share | (38,168) | (99,421) | | Weighted Average Number of Ordinary Shares | 6,936,972,746 | 6,936,972,746 | | Basic Loss Per Share (HK cents) | (0.49) | (1.09) | | Diluted Loss Per Share (HK cents) | (0.55) | (1.43) | - Basic loss per share attributable to equity holders narrowed from **1.09 HK cents** in the same period of 2024 to **0.49 HK cents** in 2025[41](index=41&type=chunk) [Prepayments and Deposits for Non-Current Assets](index=19&type=section&id=%E9%9D%9E%E6%B5%81%E5%8B%95%E8%B3%87%E7%94%A2%E9%A0%90%E4%BB%98%E6%AC%BE%E5%8F%8A%E6%8C%89%E9%87%91) As of June 30, 2025, total prepayments and deposits for non-current assets increased to HK$369.65 million, primarily due to deposits for the construction of the main hotel and casino Prepayments and Deposits for Non-Current Assets | Metric | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Deposits for Construction of Main Hotel and Casino | 365,228 | 297,905 | | Deposits for Purchase of Property, Operating Rights and Equipment | 13,270 | 15,675 | | Less: Impairment Provision | (8,847) | (8,847) | | **Total** | **369,651** | **304,733** | - Deposits for the construction of the main hotel and casino increased from **HK$297.91 million** as of December 31, 2024, to **HK$365.23 million** as of June 30, 2025[43](index=43&type=chunk) [Other Receivables and Prepayments](index=19&type=section&id=%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E5%8F%8A%E9%A0%90%E4%BB%98%E6%AC%BE) As of June 30, 2025, total other receivables and prepayments increased to HK$524.80 million, primarily due to an increase in recoverable indirect taxes and other deposits Other Receivables and Prepayments | Metric | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Other Receivables | 9,057 | 4,955 | | Recoverable Indirect Taxes | 345,790 | 314,397 | | Other Deposits | 70,340 | 2,118 | | Prepayments | 99,743 | 73,690 | | Less: Impairment Provision | (135) | (135) | | **Total** | **524,795** | **395,025** | - Recoverable indirect taxes (primarily input VAT paid by Suntrust for the main hotel and casino construction) increased from **HK$314.40 million** as of December 31, 2024, to **HK$345.79 million** as of June 30, 2025[44](index=44&type=chunk) [Trade and Other Payables](index=20&type=section&id=%E6%87%89%E4%BB%98%E8%B3%A6%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE) As of June 30, 2025, total trade and other payables significantly increased to HK$883.71 million, primarily due to substantial increases in construction costs payable and interest payable Trade and Other Payables | Metric | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Trade Payables | 1

Revenue and Profitability - Revenue for the six months ended June 30, 2025, was RMB 4,176,000, a decrease of 69.1% compared to RMB 13,524,000 for the same period in 2024[4] - The profit attributable to owners of the company was RMB 885,804,000, compared to a loss of RMB 21,685,000 in the previous year[4] - Basic and diluted earnings per share for the period were RMB 1.32, compared to a loss per share of RMB 0.04 in 2024[4] - The company's revenue decreased from approximately RMB 135 million in the first half of 2024 to about RMB 42 million in the first half of 2025, representing a decline of approximately 69%[38] - The group turned a loss of approximately RMB 21.7 million in the first half of 2024 into a profit of approximately RMB 885.8 million in the first half of 2025, mainly due to the aforementioned sale generating other income[56] Financial Position - Total assets less current liabilities amounted to RMB (69,587,000) as of June 30, 2025, compared to RMB (912,054,000) as of December 31, 2024[6] - The company reported a net cash balance of RMB 10,699,000 as of June 30, 2025[10] - The total financial liabilities measured at fair value through profit or loss amounted to RMB 59,534,000 as of June 30, 2025[10] - Following the restructuring and sale of the subsidiary, the company's net debt improved significantly from approximately RMB 930.4 million to about RMB 70.7 million as of June 30, 2025[38] - Trade and other receivables decreased from approximately RMB 114.3 million on December 31, 2024, to approximately RMB 3.8 million on June 30, 2025, a decline of 96.7%[57] - Trade and other payables decreased from approximately RMB 874.9 million on December 31, 2024, to approximately RMB 17.9 million on June 30, 2025[58] - As of June 30, 2025, the group had no bank borrowings, compared to approximately RMB 28.8 million on December 31, 2024[59] Operational Changes and Strategy - The company is actively seeking new clients and potential new funding through various channels, including issuing new shares[12] - The company aims to shift from long-term government contracts to shorter cycle projects to reduce financial pressure and improve cash flow[44] - The company maintains a light-asset business model, focusing on subcontracting to reduce procurement costs and improve operational flexibility[45] - The company has established long-term partnerships with developers and engineering firms, enhancing its ability to secure projects[44] - The company plans to continue optimizing operational efficiency while maintaining comprehensive project management control through its subcontracting model[45] Challenges and Risks - The company has faced significant uncertainty regarding its ability to continue as a going concern due to outstanding debts and ongoing litigation[11] - The company faced significant challenges due to the weak macroeconomic environment and ongoing litigation affecting its operations[38] Asset Management - Contract assets for construction services amounted to RMB 3,809,000 as of June 30, 2025, compared to RMB 766,797,000 as of December 31, 2024[28] - The company has no trade receivables as of June 30, 2025, compared to RMB 688,722,000 as of December 31, 2024[25] - All non-current assets are located in China as of June 30, 2025, consistent with the previous year[17] Cash Flow and Liquidity - The company reported cash and cash equivalents of RMB 10,699,000 as of June 30, 2025, a significant increase from RMB 507,000 as of December 31, 2024[29] - The current ratio improved to 21.0% as of June 30, 2025, from 17.5% on December 31, 2024[66] Corporate Governance - The company has adopted new and revised Hong Kong Financial Reporting Standards, which did not result in significant changes to its accounting policies[13] - The company has no income tax expenses for the six months ended June 30, 2025, as it operates overseas and is not subject to Hong Kong profits tax[21] - The board did not recommend the distribution of an interim dividend for the period ending June 30, 2025[65]