[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) This section presents Manyidea Cloud Holdings Limited's unaudited consolidated interim results for the six months ended June 30, 2025, highlighting a shift from profit to loss despite revenue growth [Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) Manyidea Cloud Holdings Limited announced its unaudited consolidated interim results for the six months ended June 30, 2025, showing a shift from profit to loss, with revenue increasing by 21.6% year-on-year, but significant declines in gross profit and net profit Financial Performance Summary for the Six Months Ended June 30, 2025 | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,020,381 | 839,263 | 21.6% | | Gross Profit | 21,772 | 55,643 | -60.9% | | (Loss)/Profit Before Income Tax | (68,352) | 8,226 | -930.9% | | (Loss)/Profit for the Period | (60,627) | 7,167 | -945.9% | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section provides the Group's consolidated financial statements, including statements of profit or loss, other comprehensive income, and financial position, for the six months ended June 30, 2025 [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue grew significantly, but a sharp rise in cost of revenue, reduced other income, and increased impairment losses on trade receivables led to a drastic decline in gross profit and net profit, resulting in a substantial loss Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,020,381 | 839,263 | 21.6% | | Cost of Revenue | (998,609) | (783,620) | 27.4% | | Gross Profit | 21,772 | 55,643 | -60.9% | | Other Income | 209 | 6,647 | -96.9% | | Selling and Marketing Expenses | (3,152) | (3,084) | 2.2% | | Administrative Expenses | (32,876) | (12,581) | 161.3% | | Net Impairment Loss on Trade and Other Financial Assets | (51,988) | (36,915) | 40.8% | | (Loss)/Profit Before Income Tax | (68,352) | 8,226 | -930.9% | | (Loss)/Profit for the Period | (60,627) | 7,167 | -945.9% | | Basic (Loss)/Earnings Per Share (RMB) | (0.814) | 0.007 | -11728.6% | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets and net assets both decreased, with a significant reduction in cash and cash equivalents within current assets, while trade receivables remained high and current liabilities slightly increased, indicating liquidity pressure Key Data from Consolidated Statement of Financial Position | Indicator | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 105,927 | 93,487 | 13.3% | | Total Current Assets | 705,943 | 744,963 | -5.2% | | Total Assets | 811,870 | 838,450 | -3.2% | | Total Current Liabilities | 358,311 | 348,731 | 2.7% | | Net Current Assets | 347,632 | 396,232 | -12.3% | | Net Assets | 446,868 | 482,405 | -7.3% | | Cash and Cash Equivalents | 4,154 | 21,281 | -80.5% | | Equity Attributable to Owners of the Company | 442,039 | 480,973 | -8.1% | [Notes to the Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details the Group's fundamental information, accounting policies, significant judgments, and specific financial item breakdowns, crucial for understanding the consolidated financial statements [Basic Information](index=6&type=section&id=Basic%20Information) Manyidea Cloud Holdings Limited was incorporated in the Cayman Islands in 2021, listed on the Hong Kong Stock Exchange in 2022, and primarily provides integrated marketing services in China as an investment holding company - The company was incorporated in the Cayman Islands on June 10, 2021, and listed on the Main Board of the Hong Kong Stock Exchange on November 9, 2022[9](index=9&type=chunk) - The Group primarily provides integrated marketing services in China[9](index=9&type=chunk) [Application of HKFRS](index=6&type=section&id=Application%20of%20HKFRS) The Group has adopted new or revised HKFRS effective from January 1, 2025, but these changes are not expected to have a significant impact on the current or prior period's results and financial position. The company is also assessing the impact of not-yet-effective amendments such as HKFRS 9, HKFRS 7, and HKFRS 18 on future financial statements - Amendments to HKFRS effective from January 1, 2025 (such as HKAS 21 and HKFRS 1) are not expected to have a significant impact on the Group's current or prior period's results and financial position[10](index=10&type=chunk) - The Group is analyzing not-yet-effective amendments such as HKFRS 9, HKFRS 7, and HKFRS 18 to assess their impact on future financial statements, with HKFRS 18 expected to significantly affect financial statement presentation[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) [Basis of Preparation](index=8&type=section&id=Basis%20of%20Preparation) The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, using the historical cost convention (except for certain financial assets) and presented in RMB. Despite recording a loss and increased trade receivables, the Board believes the Group has the ability to continue as a going concern based on liquidity mitigation measures taken - The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance[15](index=15&type=chunk) - As of June 30, 2025, the Group incurred a loss of **RMB 60,627 thousand**, and the gross carrying amount of trade receivables increased from **RMB 802,516 thousand** as of December 31, 2024, to **RMB 856,584 thousand**[18](index=18&type=chunk) - To mitigate liquidity pressure, the Group has taken measures including actively communicating with banks for financing, strengthening credit control to accelerate collections, maintaining operations, and controlling administrative and finance costs[18](index=18&type=chunk)[19](index=19&type=chunk) [Significant Accounting Policies](index=10&type=section&id=Significant%20Accounting%20Policies) This section details the Group's accounting policies for consolidation, recognition and measurement of assets (including property, plant and equipment, intangible assets, financial instruments, interests in associates, and leased assets), revenue recognition, government grants, income tax, and asset impairment, providing a foundation for understanding the financial statements - The Group classifies investees as subsidiaries and includes them in the consolidated financial statements when it has control over them[20](index=20&type=chunk) - Impairment losses on financial assets are recognized using the Expected Credit Loss (ECL) model, with a simplified approach applied to trade receivables based on lifetime expected credit losses[28](index=28&type=chunk) - Revenue primarily derives from integrated marketing services, including content marketing, digital marketing, public relations event planning, media advertising, and SaaS interactive marketing services, with revenue generally recognized over time using the output method[45](index=45&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) [Significant Accounting Judgments and Key Sources of Estimation Uncertainty](index=24&type=section&id=Significant%20Accounting%20Judgments%20and%20Key%20Sources%20of%20Estimation%20Uncertainty) This section discloses management's key accounting judgments and estimates made in preparing the financial statements, primarily concerning the determination of functional currency, useful lives and residual values of property, plant and equipment and intangible assets, impairment of trade and other financial assets, and recognition of income tax and deferred income tax, all of which significantly impact the financial statement results - Key judgments include determining the functional currency of each entity, based on an assessment of the currency and economic environment that primarily influences the selling prices of goods and services[63](index=63&type=chunk) - Key sources of estimation uncertainty primarily arise from the useful lives and residual values of property, plant and equipment and intangible assets, and the impairment assessment of trade and other financial assets, which are influenced by economic conditions and forecasts of future cash flows[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - The determination of income tax and deferred income tax requires significant judgment and assessment of future tax treatments and taxable profits[66](index=66&type=chunk) [Segment Information](index=26&type=section&id=Segment%20Information) The Group primarily provides integrated marketing services in China, including content marketing, digital marketing, public relations event planning, media advertising, and SaaS interactive marketing services. As the Chief Operating Decision Maker (CODM) reviews the financial performance of the Group as a whole, no discrete operating segment financial information is provided. All revenue and non-current assets are primarily attributable to mainland China - The Group's business primarily involves providing content marketing, digital marketing, public relations event planning, media advertising, and SaaS interactive marketing services in China[69](index=69&type=chunk) - No further information on operating segments is provided as the CODM reviews the Group as a whole[69](index=69&type=chunk) - For the six months ended June 30, 2025, and June 30, 2024, all revenue from external customers and all non-current assets (excluding deferred tax assets and financial assets) of the Group were primarily attributable to mainland China[70](index=70&type=chunk) - For the six months ended June 30, 2025, the Group's largest customer contributed **20.6%** of total revenue, compared to **10.6%** in the corresponding period of 2024[71](index=71&type=chunk) [Revenue](index=27&type=section&id=Revenue) For the six months ended June 30, 2025, the Group's revenue, totaling **RMB 1,020,381 thousand**, was entirely derived from integrated marketing services, representing a 21.6% year-on-year increase. All revenue is recognized over time, reflecting the continuous delivery of services Revenue Analysis | Revenue Type | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Integrated Marketing Services | 1,020,381 | 839,263 | | Timing of revenue recognition: | | | | Over time | 1,020,381 | 837,021 | | At a point in time | – | 2,242 | - The Group has applied the practical expedient to its performance obligations under integrated marketing service sales contracts, excluding information on remaining performance obligations for contracts with an original expected duration of one year or less[72](index=72&type=chunk) [Other Income](index=28&type=section&id=Other%20Income) For the six months ended June 30, 2025, the Group's other income significantly decreased by **96.9%** to **RMB 209 thousand**, primarily due to a substantial reduction in government grants and VAT input tax deductions Other Income Details | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Government grants | 198 | 5,277 | -96.2% | | Bank interest income | 11 | 31 | -64.5% | | Interest income from debt instruments measured at fair value through other comprehensive income | – | 369 | -100.0% | | Value-added tax ("VAT") input tax deduction | – | 969 | -100.0% | | Others | – | 1 | -100.0% | | Total | 209 | 6,647 | -96.9% | - Government grants primarily originate from local government authorities in China, supporting interest subsidies for first-time loans to small and medium-sized enterprises and industrial park policy support[74](index=74&type=chunk) [Other Gains and Losses](index=29&type=section&id=Other%20Gains%20and%20Losses) For the six months ended June 30, 2025, the Group recorded other gains of **RMB 696 thousand**, compared to gains of **RMB 277 thousand** in the prior period, with the primary change stemming from net exchange gains and losses Other Gains and Losses Details | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Net exchange gains and losses | 696 | 191 | | Loss on disposal of property, plant and equipment | – | 86 | | Total | 696 | 277 | [Finance Costs](index=29&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, the Group's finance costs were **RMB 1,621 thousand**, a year-on-year decrease of **8.0%**, primarily due to lower borrowing interest rates Finance Costs Details | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Interest expense on bank borrowings | 1,438 | 1,163 | 23.6% | | Interest expense on third-party loans | – | 570 | -100.0% | | Imputed interest expense on lease liabilities | 183 | 28 | 553.6% | | Total | 1,621 | 1,761 | -8.0% | [Loss Before Income Tax](index=30&type=section&id=Loss%20Before%20Income%20Tax) For the six months ended June 30, 2025, the Group recorded a loss before income tax of **RMB 68,352 thousand**, a significant decline of **930.9%** from a profit of **RMB 8,226 thousand** in the prior period, primarily impacted by increased cost of revenue, administrative expenses, and impairment losses Details of Expenses Related to (Loss)/Profit Before Income Tax | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Amortisation of intangible assets | 918 | 7,796 | | Cost of revenue | 998,609 | 783,620 | | Depreciation expenses | 1,556 | 1,641 | | Employee costs | 13,093 | 12,855 | | Impairment loss allowance recognized on trade receivables | 51,988 | 37,271 | | Research expenses included in administrative expenses | 24,222 | 2,327 | - The significant increase in loss before income tax is primarily due to substantial growth in cost of revenue, administrative expenses, and impairment loss allowance for trade receivables[77](index=77&type=chunk) [Income Tax (Credit)/Expense](index=31&type=section&id=Income%20Tax%20(Credit)%2FExpense) For the six months ended June 30, 2025, the Group recorded an income tax credit of **RMB 7,725 thousand**, compared to an expense of **RMB 1,059 thousand** in the prior period, a year-on-year decrease of **829.5%**, primarily due to a decline in profit before income tax. The Group benefits from various corporate income tax preferential policies in different regions Income Tax (Credit)/Expense Details | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Current tax – PRC corporate income tax | 2,419 | 8,386 | | Deferred tax | (10,144) | (7,327) | | Income tax (credit)/expense | (7,725) | 1,059 | - Entities registered in the Cayman Islands and British Virgin Islands are exempt from corporate income tax, while Hong Kong subsidiaries are subject to a profits tax rate of **16.5%**[78](index=78&type=chunk) - Subsidiaries in mainland China enjoy preferential tax rates under various policies, including a 5-year corporate income tax exemption for a Xinjiang subsidiary (until December 31, 2027), a **15%** tax rate for another Xinjiang subsidiary, preferential tax rates for small and micro enterprises, and a **15%** preferential tax rate for a Hainan subsidiary[79](index=79&type=chunk)[80](index=80&type=chunk) - The weighted average applicable tax rate decreased from **12.9%** in the corresponding period of 2024 to **11.3%** in 2025[81](index=81&type=chunk) [Dividends](index=32&type=section&id=Dividends) For the six months ended June 30, 2025, and June 30, 2024, the company neither paid nor declared any dividends - The company neither paid nor declared any dividends during the reporting period[82](index=82&type=chunk) [Earnings/(Loss) Per Share](index=33&type=section&id=Earnings%2F(Loss)%20Per%20Share) For the six months ended June 30, 2025, basic loss per share attributable to owners of the company was **RMB 0.814**, compared to earnings per share of **RMB 0.007** in the prior period, primarily due to the net loss incurred. Diluted loss per share is the same as basic loss per share due to the absence of potentially dilutive ordinary shares Calculation of (Loss)/Earnings Per Share | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Annual (Loss)/Profit attributable to owners of the Company | (60,625) | 7,189 | | Weighted average number of ordinary shares for basic (loss)/earnings per share | 74,443,836 | 960,000,000 | | Basic (Loss)/Earnings Per Share (RMB) | (0.814) | 0.007 | - Diluted earnings per share is the same as basic earnings per share because there were no potentially dilutive ordinary shares outstanding for the six months ended June 30, 2025, and June 30, 2024[84](index=84&type=chunk) [Intangible Assets](index=34&type=section&id=Intangible%20Assets) As of June 30, 2025, the Group's net book value of intangible assets was **RMB 2,437 thousand**, a decrease from **RMB 3,355 thousand** as of December 31, 2024. The company changed the estimated useful lives of computer software and licenses from 3-10 years to 1-10 years and recognized an impairment loss of approximately **RMB 107,841 thousand** on SaaS intangible assets, reflecting the impact of AI technology development on SaaS business revenue Net Book Value of Intangible Assets | Item | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Computer software | 2,424 | 3,262 | | Licenses | 13 | 93 | | Architectural design | – | – | | Total | 2,437 | 3,355 | - The Group changed the estimated useful lives of computer software and licenses from 3-10 years to 1-10 years, and this change in accounting estimate is expected to result in a reduction in amortization of approximately **RMB 16,900 thousand** for the year ending December 31, 2025[86](index=86&type=chunk)[87](index=87&type=chunk) - Due to an unexpected decline in SaaS business revenue caused by the rapid development of artificial intelligence, the Group conducted an impairment assessment of SaaS intangible assets, recognizing an impairment loss of approximately **RMB 107,841 thousand**[88](index=88&type=chunk)[89](index=89&type=chunk) [Trade and Other Receivables](index=36&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, the Group's total trade receivables were **RMB 856,584 thousand**, with an impairment allowance of **RMB 292,664 thousand**, resulting in a net book value of **RMB 563,920 thousand**. The total trade receivables increased from the end of 2024, and the proportion of receivables over 6 months old rose, reflecting risks from extended customer settlement periods Trade Receivables and Impairment Allowance | Item | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Trade receivables | 856,584 | 802,516 | | Less: Impairment loss allowance recognized | (292,664) | (240,675) | | Net amount | 563,920 | 561,841 | Aging Analysis of Trade Receivables (Before Impairment) | Aging | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | 1 to 6 months | 331,815 | 436,627 | | Over 6 months to 12 months | 261,182 | 139,784 | | Over 1 year to 2 years | 153,756 | 135,840 | | Over 2 years | 109,831 | 90,265 | | Total | 856,584 | 802,516 | - The impairment loss allowance for trade receivables increased from **RMB 111,482 thousand** at the beginning of 2024 to **RMB 292,664 thousand** as of June 30, 2025, reflecting increased credit risk[91](index=91&type=chunk) [Trade and Other Payables](index=37&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, the Group's total trade payables were **RMB 49,102 thousand**, a slight decrease from **RMB 51,108 thousand** at the end of 2024. Trade payables are non-interest bearing, with payment terms generally ranging from 30 to 90 days Aging Analysis of Trade Payables | Aging | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Within 6 months | 37,629 | 43,609 | | Over 6 months to 12 months | 3,280 | 1,193 | | Over 1 year to 2 years | 7,294 | 4,897 | | Over 2 years | 899 | 1,409 | | Total | 49,102 | 51,108 | [Share Capital](index=38&type=section&id=Share%20Capital) As of June 30, 2025, the company's issued and fully paid share capital was **RMB 132 thousand**, comprising **73,290,324** shares. During the reporting period, the company undertook a share consolidation and completed two share issues, including a public offering in April 2024 and subscriptions in June 2024 and March 2025, to raise capital Changes in Issued and Fully Paid Share Capital | Time Point | Number of Shares | Amount (RMB Thousand) | | :--- | :--- | :--- | | As at January 1, 2024 | 800,000,000 | 72 | | Public offering on April 17, 2024 | 400,000,000 | 36 | | Share issue on June 15, 2024 | 160,000,000 | 15 | | As at December 31, 2024 and January 1, 2025 | 1,360,000,000 | 123 | | Share consolidation on February 12, 2025 | (1,292,000,000) | – | | Share issue on March 14, 2025 | 5,290,324 | 9 | | As at June 30, 2025 | 73,290,324 | 132 | - On February 12, 2025, the company undertook a share consolidation, where every twenty ordinary shares of HK$0.0001 each were consolidated into one ordinary share of HK$0.002 each[94](index=94&type=chunk) - In 2024 and March 2025, the company raised capital through a public offering to existing shareholders and subscriptions by independent private investors, primarily for purchasing media resources (especially Douyin distribution channels) and general working capital[94](index=94&type=chunk) [Management Discussion and Analysis](index=40&type=section&id=Management%20Discussion%20and%20Analysis) This section offers management's review of the Group's business performance, financial results, liquidity, and future outlook for the reporting period [Business Review and Outlook](index=40&type=section&id=Business%20Review%20and%20Outlook) In the first half of 2025, the company achieved stable overall revenue performance, with an increased proportion of revenue from major clients and its Douyin business entering a sustainable development trajectory. Looking ahead, the company will continue to focus on social media (e.g., Xiaohongshu, Tencent), enhance its performance-based solutions, and increase investment in AI-powered marketing - In the first half of 2025, the company achieved stable overall revenue performance, with an increasing proportion of revenue from major clients and its Douyin business entering a sustainable development trajectory[95](index=95&type=chunk) - In the second half of the year, the focus will be on social media platforms (Xiaohongshu, Tencent, etc.), enhancing performance-based solutions, concentrating on industry expertise, and improving media operations and traffic optimization capabilities[96](index=96&type=chunk) - The company will increase its efforts to expand AI technology-powered marketing capabilities[96](index=96&type=chunk) [Financial Review](index=40&type=section&id=Financial%20Review) This section provides a detailed review of financial performance during the reporting period. Total revenue increased by **21.6%** year-on-year, primarily driven by Douyin market expansion. However, a significant rise in media advertising resource costs led to a substantial decline in gross profit margin. Increased administrative expenses and impairment allowance for trade receivables further eroded profits, ultimately resulting in a shift from profit to loss - The company primarily provides integrated marketing solutions to clients in the fast-moving consumer goods, footwear and apparel, and household chemical industries in China[97](index=97&type=chunk) Key Financial Review Data | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 1,020,381 | 839,263 | 21.6% | | Cost of Revenue | 998,609 | 783,620 | 27.4% | | Gross Profit | 21,772 | 55,643 | -60.9% | | Selling and Marketing Expenses | 3,152 | 3,084 | 2.2% | | General and Administrative Expenses | 32,876 | 12,581 | 161.3% | | Impairment Loss Allowance on Trade and Other Financial Assets | 51,988 | 36,915 | 40.8% | | Other Income | 209 | 6,647 | -96.9% | | Finance Costs | 1,621 | 1,761 | -8.0% | | (Loss)/Profit Before Income Tax | (68,352) | 8,226 | -930.9% | | Income Tax (Credit)/Expense | (7,725) | 1,059 | -829.5% | | Net (Loss)/Profit | (60,627) | 7,167 | -945.9% | - The increase in cost of revenue was primarily due to rising digital marketing Douyin business revenue, leading to a **30.8%** year-on-year increase in media advertising resource costs[102](index=102&type=chunk) - The decline in gross profit was mainly due to the increased proportion of Douyin revenue, which generally has lower gross profit margins[105](index=105&type=chunk) - Administrative expenses significantly increased by **161.3%**, primarily due to increased investment in new research and development projects[108](index=108&type=chunk) - The impairment loss allowance for trade receivables increased by **40.8%**, mainly due to a substantial rise in revenue leading to a corresponding increase in trade receivables and higher bad debt provisions[109](index=109&type=chunk) [Capital Reserves and Capital Structure](index=45&type=section&id=Capital%20Reserves%20and%20Capital%20Structure) As of June 30, 2025, the Group's total equity was **RMB 446,868 thousand**, a decrease from December 31, 2024, primarily due to share subscriptions and net loss during the reporting period Composition of Total Equity | Item | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Total Equity | 446,868 | 482,405 | | Share Capital | 132 | 123 | | Reserves | 441,907 | 480,850 | - The decrease in total equity was primarily due to share subscriptions and net loss during the reporting period[116](index=116&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The Group's working capital primarily originates from operating activities, but as of June 30, 2025, cash and bank balances significantly decreased, the current ratio slightly declined, and the gearing ratio increased, indicating certain liquidity pressure - The Group's working capital is primarily generated from operating activities, with cash inflows mainly from customer payments for integrated marketing services, and cash outflows primarily for media advertising resource costs and operating expenses[117](index=117&type=chunk) Liquidity Ratios | Indicator | 2025 June 30 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Total Current Assets | 705,943 | 744,963 | | Total Current Liabilities | 358,311 | 348,731 | | Current Ratio | 2.0 times | 2.1 times | | Cash and bank balances | 4,154 | 21,281 | | Borrowings | 78,534 | 73,123 | | Gearing Ratio | 16.6% | 15.0% | [Capital Expenditure and Commitments](index=46&type=section&id=Capital%20Expenditure%20and%20Commitments) For the six months ended June 30, 2025, the Group's total capital expenditure was **RMB 979 thousand**, primarily for property, plant and equipment and right-of-use assets. There were no significant contracted but unprovided capital commitments during the period - Capital expenditure primarily includes expenses for property, plant and equipment, right-of-use assets, and intangible assets[118](index=118&type=chunk) Capital Expenditure Details | Item | 2025 June (RMB Thousand) | | :--- | :--- | | Property, plant and equipment | 420 | | Intangible assets | – | | Right-of-use assets | 559 | | Total | 979 | - As of June 30, 2025, the Group's total capital commitments contracted but not provided for in the consolidated financial statements for property, plant and equipment were approximately zero (June 30, 2024: **RMB 11,090 thousand**)[121](index=121&type=chunk) [Contingent Liabilities](index=47&type=section&id=Contingent%20Liabilities) For the six months ended June 30, 2025, the Group had no unrecorded significant contingent liabilities, guarantees, or any lawsuits filed against it - For the six months ended June 30, 2025, the Group had no unrecorded significant contingent liabilities, guarantees, or any lawsuits filed against it[122](index=122&type=chunk) [Foreign Exchange Risk Management](index=47&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group primarily operates in China, with most transactions settled in RMB, exposing it to foreign exchange risks related to USD and HKD. During the reporting period, the company did not hedge foreign exchange risks through long-term contracts, currency borrowings, or other means, and adopted prudent financial policies to manage cash flows - The Group primarily operates in China, with most transactions settled in RMB, exposing it to foreign exchange risks related to USD and HKD[123](index=123&type=chunk) - During the reporting period, the Group did not hedge foreign exchange risks through any long-term contracts, currency borrowings, or other means[123](index=123&type=chunk) [Credit Risk](index=48&type=section&id=Credit%20Risk) The Group's credit risk primarily arises from trade receivables and contract assets. The company has established policies to ensure services are provided to customers with appropriate credit histories and regularly reviews the recoverability of receivables to ensure adequate impairment loss provisions - Credit risk primarily arises from trade receivables and contract assets[124](index=124&type=chunk) - The company has established policies to ensure services are provided to customers with appropriate credit histories and regularly reviews the recoverability of individual receivables to ensure adequate impairment loss provisions for unrecoverable amounts[124](index=124&type=chunk) [Pledged Assets](index=48&type=section&id=Pledged%20Assets) As of June 30, 2025, the Group had not pledged any assets - As of June 30, 2025, the Group had not pledged any assets[125](index=125&type=chunk) [Significant Investments, Acquisitions and Disposals](index=48&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals) As of June 30, 2025, the Group had no significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures - As of June 30, 2025, the Group had no significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures[126](index=126&type=chunk) [Future Plans for Significant Investments and Capital Assets](index=48&type=section&id=Future%20Plans%20for%20Significant%20Investments%20and%20Capital%20Assets) As of June 30, 2025, the Group had no significant investment plans or capital asset plans other than those disclosed in the prospectus - As of June 30, 2025, the Group had no significant investment plans or capital asset plans other than those disclosed in the company's prospectus published on October 28, 2022[127](index=127&type=chunk) [Employees](index=48&type=section&id=Employees) As of June 30, 2025, the Group had **116** employees. The company attracts, retains, and motivates qualified talent by offering competitive remuneration, benefits, and training programs, and participates in various social security schemes. Total employee costs slightly increased during the reporting period - As of June 30, 2025, the Group had **116** employees[128](index=128&type=chunk) - The company provides competitive salaries, bonuses, and share-based compensation to employees and participates in social security schemes as required by PRC regulations[128](index=128&type=chunk)[129](index=129&type=chunk) - During the reporting period, total employee costs for the Group's directors and other employees amounted to **RMB 13,093 thousand** (corresponding period in 2023: **RMB 12,855 thousand**), with the increase primarily due to higher revenue and staff turnover[129](index=129&type=chunk) [Equity Fundraising Activities in the Past Twelve Months](index=49&type=section&id=Equity%20Fundraising%20Activities%20in%20the%20Past%20Twelve%20Months) Within the twelve months preceding the reporting period, the company conducted two major equity fundraising activities: a June 2024 subscription raising approximately **HK$39.9 million**, primarily for Douyin media resources; and a March 2025 subscription raising approximately **HK$37.1 million**, also mainly for Douyin media resources and general working capital. Additionally, a July 2025 subscription was completed post-reporting period, raising approximately **HK$9.5 million** - On June 15, 2024, the company entered into agreements with two subscribers to subscribe for **160,000,000** shares at **HK$0.25** per share, raising net proceeds of approximately **HK$39.9 million**[130](index=130&type=chunk) - Approximately **75.19%** (approximately **HK$30 million**) of the net proceeds from the 2024 subscription were used for purchasing media resources (specifically Douyin distribution channels) and promotion, with the remaining **24.81%** (approximately **HK$9.9 million**) for general working capital, all of which had been utilized as of June 30, 2025[130](index=130&type=chunk)[131](index=131&type=chunk) - On March 14, 2025, the company entered into agreements with six subscribers to subscribe for **12,000,000** shares at **HK$3.10** per share, raising net proceeds of approximately **HK$37.1 million**[133](index=133&type=chunk) - Approximately **90.00%** (approximately **HK$33.39 million**) of the net proceeds from the March 2025 subscription were used for purchasing media resources (specifically Douyin distribution channels) and promotion, with the remaining **10.00%** (approximately **HK$3.71 million**) for general working capital. As of July 11, 2025, all these funds had been utilized[133](index=133&type=chunk)[134](index=134&type=chunk) - On July 11, 2025, the company entered into agreements with six subscribers to subscribe for **16,000,000** shares at **HK$0.6** per share, raising net proceeds of approximately **HK$9.5 million**, primarily for purchasing Douyin media resources and general working capital, and completed on July 21, 2025[135](index=135&type=chunk)[137](index=137&type=chunk) [Significant Events After the Reporting Period](index=52&type=section&id=Significant%20Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period and up to the date of this announcement, no other significant events occurred apart from the disclosed July 2025 subscription - No significant events occurred subsequent to the reporting period and up to the date of this announcement[138](index=138&type=chunk) [Purchase, Sale or Redemption of Securities](index=52&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Securities) For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities, and the company held no treasury shares - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities[139](index=139&type=chunk) - As of June 30, 2025, the company held no treasury shares[139](index=139&type=chunk) [Corporate Governance](index=52&type=section&id=Corporate%20Governance) The Board is committed to practicing good corporate governance standards and has adopted and applied the Corporate Governance Code set out in Appendix C1 of the Listing Rules. Except for the Chairman and Chief Executive Officer being the same person, the company complies with all applicable code provisions, an arrangement the Board believes is in the best interests of the company and its shareholders - The company has adopted and applied the code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[141](index=141&type=chunk) - The roles of Chairman and Chief Executive Officer are held by the same person (Mr. Liu Jianhui), an arrangement the Board believes is in the best interests of the company and its shareholders as a whole[141](index=141&type=chunk) [Model Code for Securities Transactions](index=53&type=section&id=Model%20Code%20for%20Securities%20Transactions) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix C3 of the Listing Rules, as its code of conduct for directors' securities transactions and has complied with it since its listing date. No instances of non-compliance by directors or relevant employees were identified during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix C3 of the Listing Rules, as its code of conduct for directors' securities transactions[142](index=142&type=chunk) - No instances of non-compliance with the Model Code by directors or relevant employees were identified during the reporting period[142](index=142&type=chunk) [Interim Dividend](index=53&type=section&id=Interim%20Dividend) The Board decided not to declare an interim dividend for the six months ended June 30, 2025 - The Board decided not to declare an interim dividend for the six months ended June 30, 2025[143](index=143&type=chunk) [Review by Audit Committee](index=54&type=section&id=Review%20by%20Audit%20Committee) The Audit Committee has reviewed the accounting principles and policies adopted by the company and discussed the Group's internal controls and financial reporting matters, including the unaudited interim financial information for the six months ended June 30, 2025, deeming them compliant with applicable accounting standards, laws, and regulations - The Audit Committee comprises three members, with Ms. Zhou Yan serving as Chairman[144](index=144&type=chunk) - The Audit Committee has reviewed the unaudited interim financial information for the six months ended June 30, 2025, and considers it to be in compliance with applicable accounting standards, laws, and regulations[144](index=144&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=54&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement has been published on the company's website and the Stock Exchange's website. The interim report for the six months ended June 30, 2025, will be published on the Stock Exchange and the company's website in due course and sent to shareholders upon request - This interim results announcement has been published on the company's website (www.manyidea.cloud) and the Stock Exchange's website (www.hkexnews.hk)[145](index=145&type=chunk) - The interim report for the six months ended June 30, 2025, will be published on the Stock Exchange and the company's website in due course and sent to the company's shareholders (if requested)[145](index=145&type=chunk)

[Financial Summary](index=1&type=section&id=財務摘要) The company reported a 7.3% revenue decrease to RMB 147.9 million and a 42.1% net profit decrease to RMB 24.5 million, despite growth in in-hospital business and R&D investment Key Financial Metrics for H1 2025 | Metric | H1 2025 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | | Revenue | 147.9 | -7.3% | | In-hospital Business Revenue | 25.1 | +8.7% | | Cost of Sales | 65.8 | -7.0% | | Gross Profit | 82.1 | -7.5% | | Gross Margin | 55.5% | -0.2 percentage points | | Net Profit | 24.5 | -42.1% | | R&D Expenses | 33.0 | +14.4% | | Contracted Amount Expected to be Delivered This Year | 417.5 | +11.0% | | In-hospital Business Contracted Amount Expected to be Delivered This Year | 70.7 | +44.0% | | Number of Partner Clients | 965 | +11.0% | [Performance and Strategic Overview](index=2&type=section&id=業績表現與戰略概覽) The company maintains an "AI-driven" strategy, adjusting its business structure to focus on high-potential areas and expanding its network to build a comprehensive intelligent platform across healthcare scenarios [1. Performance Highlights](index=2&type=section&id=1.%20業績表現) Strategic business adjustments led to a 7.3% revenue decline, yet Smart Retail Cloud client growth, increased contracted amounts, strong in-hospital business, and expanded R&D investment were observed - The company's main business revenue decreased by **7.3%** year-on-year to **RMB 147.9 million**, primarily due to strategic business structure adjustments, focusing on future high-potential businesses, and transforming the health management business's profit model towards post-examination management[7](index=7&type=chunk) - The number of Smart Retail Cloud clients increased from 519 in the same period of 2024 to **676** in the current period, a growth of **30.3%**[7](index=7&type=chunk) - As of the announcement date, the contracted amount expected to be delivered this year is approximately **RMB 417.5 million**, a year-on-year increase of approximately **11.0%**[8](index=8&type=chunk) - In-hospital business revenue totaled **RMB 25.1 million**, a year-on-year increase of approximately **8.7%**; the contracted amount for in-hospital business expected to be delivered this year is approximately **RMB 70.7 million**, a year-on-year increase of approximately **44.0%**[9](index=9&type=chunk) - R&D expenses increased by approximately **14.4%** year-on-year, with a focus on computing infrastructure and expanding high-level R&D talent, including several AI experts[10](index=10&type=chunk) - The total number of partner clients reached **965**, a year-on-year increase of approximately **11.0%**; cumulatively covering **2,968** pharmaceutical retail enterprises, over **170,000** pharmacies, over **530** hospitals, and over **680** physical examination institutions[11](index=11&type=chunk) [2. Analysis of Principal Business Operations](index=4&type=section&id=2.%20主要業務經營分析) Adhering to an "AI-driven" strategy, the company developed a vertical intelligent platform across five healthcare scenarios, launching intelligent agents in pharmacy, commercial, and health management, while optimizing To B, To C, and To R businesses through strategic adjustments [(1) Adhering to the "AI-Driven" Core Development Strategy and Accelerating the Construction of a Vertical Intelligent Platform for the Healthcare Industry](index=4&type=section&id=%281%29%20堅持實施「AI驅動」核心發展戰略%2C%20加速構建醫療健康產業垂類智能體平台) The company implements an "AI-driven" strategy, developing a five-scenario intelligent platform with agents launched in pharmacy, commercial, and health management, including a listed AI report interpretation agent - The company has built a vertical intelligent platform for the healthcare industry covering five major scenarios: medical, pharmacy, commercial, health management, and R&D[12](index=12&type=chunk) - Intelligent agents have been launched in pharmacy, commercial, and health management scenarios, with the pharmacy scenario featuring an operational insight intelligent agent, the commercial scenario a consumer insight intelligent agent, and the health management intelligent agent applied to Zhuomu Bird AI-MDT report interpretation[13](index=13&type=chunk) - The 'Zhuomu Bird AI Report Interpretation Intelligent Agent' has been listed on the Guangzhou Data Exchange; the 'Zhuomu Bird Doctor Intelligent Agent' was selected as a typical case for Guangzhou's 'AI+' initiative[13](index=13&type=chunk) [(2) Deeply Cultivating Mature Business Foundations and Expanding New Businesses for Development](index=5&type=section&id=%282%29%20深耕成熟業務基本盤%2C%20拓展新業務謀發展) The company pursues synergistic To B, To C, and To R business development, offering diverse digital solutions and an innovation platform, with varied revenue performance across segments, including growth in Smart Decision and Medical Clouds, and declines in Smart Retail and Health Management Clouds [Client Dimension Analysis](index=5&type=section&id=客戶維度分析) The company extends its core capabilities to To B, To C, and To R segments, offering digital solutions for suppliers and retailers, personalized health management, and an innovation platform for drugs and devices - To B segment: Consolidates outpatient advantages, expands inpatient innovation, and provides digital intelligence decision-making, retail, and medical solutions, having launched the Lingxi Consumer Insight Intelligent Agent[15](index=15&type=chunk)[16](index=16&type=chunk) - To B segment: Digital intelligence retail solutions, centered on the SIC system, serve pharmaceutical retail enterprises, launching pharmacy operational insight intelligent agents, cumulatively serving **2,968** pharmaceutical retail enterprises, managing over **255,000** pharmacy staff, and over **310 million** members[18](index=18&type=chunk) - To B segment: Digital intelligence medical solutions have cumulatively served over **300,000** patients in patient management services; the intelligent iMDT platform has over **20,000** registered oncologists and has organized over **1,200** MDT consultation meetings[20](index=20&type=chunk) - To C segment: Provides 'light and heavy' digital intelligence services, with the light type being Zhuomu Bird AI-MDT solution from Smart Health Management Cloud, which has reached approximately **230** hospitals and **680** private physical examination centers, cumulatively serving over **9.8 million** patient visits[21](index=21&type=chunk)[22](index=22&type=chunk) - To C segment: The heavy type is Zhuomu Bird Oncology Multi-Disciplinary Diagnosis and Treatment Platform from Smart Medical Cloud, providing online multi-disciplinary, personalized, and precise consultation for oncology patients[23](index=23&type=chunk) - To R segment: Extends B-side capabilities, focuses on R&D, and builds a digital intelligence empowerment platform for the entire lifecycle of innovative drugs and medical devices, covering the entire process from clinical development to post-market sales[24](index=24&type=chunk) [Revenue Performance by Business Segment](index=10&type=section&id=各業務板塊收入表現) Smart Decision Cloud revenue grew by 5.1%, Smart Medical Cloud performed well, but Smart Retail Cloud and Smart Health Management Cloud revenues declined, with the latter down 37.5% due to profit model changes Revenue Performance by Business Segment | Business Segment | H1 2025 (RMB million) | YoY Change (%) | Number of Clients Served | Repurchase Rate | | :--- | :--- | :--- | :--- | :--- | | Smart Decision Cloud | 71.7 | +5.1% | 360 | 98.3% | | Smart Retail Cloud | 48.5 | Decline (not specified) | 676 | 81.9% | | Smart Health Management Cloud | 10.6 | -37.5% | - | - | | Smart Medical Cloud | 17.2 | Good (specific growth rate not specified) | - | 96.0% | [(3) AI Renews Core Competitiveness, Continuously Building a Solid Moat](index=11&type=section&id=%283%29%20AI煥新核心競爭力%2C%20持續構築堅實護城河) The company leverages an "AI Foundation — Ecosystem Empowerment — Cooperation Network" strategy, utilizing large AI models and industry events to build a robust data foundation, diverse application scenarios, and extensive partnerships, driving intelligent product evolution and industry empowerment [AI Foundation and Intelligent Agent Platform](index=11&type=section&id=AI底座與智能體平台) Leveraging "Zhuomu Bird" and "Tiangong-1" large AI models, the company built a comprehensive model matrix and intelligent agent platform, achieving rapid deployment and market recognition across diverse healthcare scenarios - The company has built a large model matrix, including data governance platforms, intelligent agent development platforms, text models, and multimodal models, driving product upgrades to full-scenario intelligent agents in the vertical healthcare industry[29](index=29&type=chunk) - Possesses a strong data foundation with a total weight parameter scale of **70 billion**, covering millions of public data, tens of millions of de-identified data, and millions of labeled data, with machine automatic cleaning rates exceeding **97%** and accuracy exceeding **99%**[29](index=29&type=chunk) - Rich application scenarios cover the entire 'medical-pharmaceutical-patient' process, including pharmaceutical enterprise decision-making, retail pharmacies, physical examinations, medical record governance, medical record quality control, and C-end health assistants, cumulatively empowering **20 million** physical examination visits[30](index=30&type=chunk) - The Zhongkang Intelligent Agent Platform integrates core capabilities such as text generation, image/video generation, and data analysis, comprising three modules: Intelligent Agent Center, Intelligent Agent Creation Platform, and Intelligent Agent Operations Backend, supporting bidirectional internal and external empowerment[31](index=31&type=chunk) - The 'Zhuomu Bird Doctor Intelligent Agent' was selected as a typical case for Guangzhou's 'AI+' initiative, the 'Zhuomu Bird AI Report Interpretation Intelligent Agent' was listed on the Guangzhou Data Exchange, and the Pharmacy Operational Insight Intelligent Agent has partnered with leading enterprises[32](index=32&type=chunk) [Ecosystem Empowerment and Industry Cooperation Network](index=13&type=section&id=生態賦能與產業合作網絡) The company established a comprehensive ecosystem empowerment system and extensive industry cooperation network, leveraging its industry research institute and major events to provide strategic support and foster partnerships across healthcare sectors - Zhongkang Industry Research Institute, as the 'ecosystem brain' for industry insights, produces forward-looking, leading, and practical research results and industry insight reports, consolidating its authoritative position in the industry[33](index=33&type=chunk) - The ecosystem empowerment system provides comprehensive, full-chain solutions including strategic planning, research services, resource linkage, market expansion, brand building, industry activities, operational empowerment, and capital operations[34](index=34&type=chunk) - The hosted Xipu Conference has been successfully held for **18** sessions, with over **8,000** delegates and over **60,000** attendees; the Xiding Conference has been successfully held for **10** sessions, with over **8,000** delegates and over **30,000** attendees[34](index=34&type=chunk) - The industry cooperation network is extensive, with partnerships established with over **965** enterprise clients during the reporting period[35](index=35&type=chunk) - The pharmaceutical retail pharmacy cooperation network cumulatively covers **2,968** pharmaceutical retail enterprises, over **170,000** pharmacy stores, managing over **255,000** pharmacy staff, and over **310 million** pharmacy members[36](index=36&type=chunk) - The health management cooperation network cumulatively reached approximately **230** hospitals and **680** physical examination centers, serving over **9.8 million** patients; the medical cooperation network has partnered with over **300** hospitals through patient management services, with over **20,000** registered oncologists on the iMDT platform[36](index=36&type=chunk) [Financial Performance Analysis](index=16&type=section&id=財務表現分析) Revenue and gross profit declined due to strategic adjustments and pricing, while other income decreased significantly from lower interest, grants, and exchange losses; increased R&D costs, despite reduced administrative expenses, led to a substantial drop in profit before tax and profit for the period [Revenue](index=16&type=section&id=收入) Group revenue decreased by 7.3% to RMB 147.9 million, mainly due to strategic business restructuring and a shift in the health management business's profit model Revenue Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 147.9 | 159.5 | -7.3% | - The decrease in revenue was primarily due to the company's strategic adjustment of its business structure, focusing on future high-potential businesses, and transforming the health management business's profit model towards post-examination management[37](index=37&type=chunk) [Cost of Sales](index=16&type=section&id=銷售成本) Cost of sales decreased by 7.0% to RMB 65.8 million, driven by business structure optimization and efficiency gains from the BrainyAI platform Cost of Sales Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cost of Sales | 65.8 | 70.7 | -7.0% | - The decrease in cost of sales was primarily due to the Group's optimized business structure and the application of the BrainyAI platform to improve overall work efficiency, achieving cost reduction and efficiency gains[38](index=38&type=chunk) [Gross Profit and Gross Margin](index=16&type=section&id=毛利及毛利率) Gross profit decreased by 7.5% to RMB 82.1 million, with gross margin slightly down by 0.2 percentage points to 55.5%, primarily due to product pricing adjustments aimed at expanding customer reach Gross Profit and Gross Margin Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 82.1 | 88.8 | -7.5% | | Gross Margin | 55.5% | 55.7% | -0.2 percentage points | - The decrease in gross profit was mainly due to the emergence of two major markets, innovative drugs and non-pharmaceutical products, leading to a strategy of adjusting and lowering some product unit prices to expand customer coverage[39](index=39&type=chunk) [Other Income and Gains](index=16&type=section&id=其他收入及收益) Other income and gains significantly decreased by 44.0% to RMB 13.1 million, primarily due to reduced interest income, exchange losses, and lower government grants Other Income and Gains Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other Income and Gains | 13.1 | 23.5 | -44.0% | - The decrease was primarily due to reduced interest income affected by interest rate cuts in USD and RMB; exchange losses incurred during the period due to exchange rate fluctuations; and decreased government grants influenced by policy factors[40](index=40&type=chunk) [Selling and Distribution Expenses](index=17&type=section&id=銷售及分銷開支) Selling and distribution expenses increased by 2.2% to RMB 17.6 million, mainly due to increased investment in expanding and maintaining chain pharmacies to boost customer loyalty Selling and Distribution Expenses Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 17.6 | 17.2 | +2.2% | - The increase was primarily due to greater investment in the expansion and maintenance of chain pharmacies to enhance their stickiness[41](index=41&type=chunk) [Administrative Expenses](index=17&type=section&id=行政開支) Administrative expenses decreased by 16.0% to RMB 14.2 million, primarily due to cost reduction, improved operational efficiency, and deferred activities Administrative Expenses Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 14.2 | 17.0 | -16.0% | - The decrease was primarily due to the company reasonably cutting redundant expenses, improving operational efficiency, and deferring some activities to the second half of the year[42](index=42&type=chunk) [Research and Development Costs](index=17&type=section&id=研究及開發成本) Research and development costs increased by 14.4% to RMB 33.0 million, mainly driven by increased investment in AI+data, AI+medical, and the integrated intelligent agent creation platform Research and Development Costs Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | R&D Costs | 33.0 | 28.9 | +14.4% | - The increase was primarily due to increased R&D investment in AI+data, AI+medical, and the integrated intelligent agent creation platform during the period[43](index=43&type=chunk) [Profit Before Tax](index=17&type=section&id=除稅前溢利) Profit before tax decreased by 38.5% to RMB 26.2 million, influenced by lower gross profit, increased R&D, reduced government grants, decreased interest and exchange gains, partially offset by lower financial asset impairment losses Profit Before Tax Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Profit Before Tax | 26.2 | 42.5 | -38.5% | - The decrease was primarily due to a **RMB 6.7 million** decline in gross profit from the company's phased adjustment of operating strategies; a **RMB 4.1 million** increase in research and development costs due to greater investment in R&D talent and infrastructure; a **RMB 6.9 million** reduction in government grants; a combined **RMB 5.6 million** decrease in interest income and exchange gains; partially offset by a **RMB 4.7 million** decrease in impairment losses on financial assets[44](index=44&type=chunk) [Income Tax Expense](index=18&type=section&id=所得稅開支) Income tax expense significantly increased from RMB 0.2 million to RMB 1.6 million, mainly due to a higher effective tax rate resulting from the stable profitability of certain subsidiaries Income Tax Expense Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Expense | 1.6 | 0.2 | Significant increase | - The increase was primarily due to some subsidiaries turning profitable in the same period last year, with these lower effective tax rate subsidiaries contributing significantly to profit before tax; as these subsidiaries have achieved stable profitability in the current period, the effective tax rate has increased year-on-year[45](index=45&type=chunk) [Profit for the Period](index=18&type=section&id=期內溢利) The Group's profit for the period decreased by 42.1% to RMB 24.5 million, reflecting the combined impact of various financial factors Profit for the Period Change | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Profit for the Period | 24.5 | 42.3 | -42.1% | [Liquidity and Capital Resources](index=18&type=section&id=流動資金及資本資源) As of June 30, 2025, the Group funded operations via cash flow and global offerings, with no bank borrowings, a 21.1% gearing ratio, and over 100% capital expenditure increase for AI computing servers Liquidity and Liabilities | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 51.4 | 63.7 | | Borrowings | Nil | Nil | | Lease Liabilities | 9.4 | - | | Gearing Ratio | 21.1% | 14.4% | - The Group faces foreign exchange risk from fluctuations between RMB and USD, currently without hedging activities, but will actively explore timely use of financial instruments for hedging[51](index=51&type=chunk) - Capital expenditure was approximately **RMB 3.9 million**, an increase of over **100%** compared to the same period in 2024, primarily for acquiring computing servers to support the AI strategic layout[53](index=53&type=chunk) - As of June 30, 2025, the Group had no significant contingent liabilities, guarantees, or material litigation against it, nor any significant acquisitions or disposals, or major future investment plans[54](index=54&type=chunk)[55](index=55&type=chunk) [Employees and Staff Costs](index=19&type=section&id=員工及員工成本) As of June 30, 2025, the Group had 756 full-time employees, with staff costs decreasing by 3.4%, emphasizing talent development, with 39% medical and 18% AI/tech backgrounds, supported by incentive plans Employee Count and Cost Change | Metric | June 30, 2025 | June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Full-time Employees | 756 | 778 | -2.8% | | Staff Costs | RMB 72.8 million | RMB 75.4 million (estimated) | -3.4% | Employee Count by Function (June 30, 2025) | Function | Number of Employees | Percentage of Total | | :--- | :--- | :--- | | Solutions and Products | 341 | 45% | | R&D | 224 | 30% | | Sales and Marketing | 125 | 16% | | General and Administrative | 66 | 9% | | Total | 756 | 100% | - Approximately **39%** of employees have medical backgrounds and experience, and approximately **18%** have AI and technical backgrounds[57](index=57&type=chunk) - The company has adopted share option schemes and share incentive schemes to motivate outstanding employees and attract top talent[57](index=57&type=chunk) [Subsequent Events](index=20&type=section&id=期後事項) No significant events requiring further disclosure or adjustment have occurred since the reporting period ended - No significant events requiring further disclosure or adjustment have occurred for the Group from the end of the reporting period to the date of this announcement[58](index=58&type=chunk) [Unaudited Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=21&type=section&id=未經審核中期簡明綜合損益及其他全面收益表) This section presents the unaudited consolidated statement of profit or loss and other comprehensive income for the six months ended June 30, 2025, detailing financial performance and earnings per share Unaudited Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Summary) | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 147,925 | 159,531 | | Cost of Sales | (65,823) | (70,743) | | Gross Profit | 82,102 | 88,788 | | Other Income and Gains | 13,145 | 23,454 | | Selling and Distribution Expenses | (17,564) | (17,184) | | Administrative Expenses | (14,243) | (16,963) | | R&D Costs | (33,030) | (28,881) | | Net Impairment Loss on Financial Assets | (1,016) | (5,725) | | Other Expenses | (2,999) | (616) | | Finance Costs | (240) | (329) | | Profit Before Tax | 26,155 | 42,544 | | Income Tax Expense | (1,644) | (196) | | Profit for the Period | 24,511 | 42,348 | | Basic and Diluted Earnings Per Share Attributable to Owners of the Parent (RMB) | 0.06 | 0.10 | [Unaudited Interim Condensed Consolidated Statement of Financial Position](index=22&type=section&id=未經審核中期簡明綜合財務狀況表) This section presents the unaudited consolidated statement of financial position as of June 30, 2025, detailing asset, liability, and equity composition, reflecting structural changes Unaudited Interim Condensed Consolidated Statement of Financial Position (Summary) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 47,409 | 142,797 | | Total Current Assets | 778,292 | 668,099 | | Total Current Liabilities | 135,811 | 92,345 | | Net Current Assets | 642,481 | 575,754 | | Total Assets Less Current Liabilities | 689,890 | 718,551 | | Total Non-current Liabilities | 8,019 | 9,744 | | Net Assets | 681,871 | 708,807 | | Total Equity | 681,871 | 708,807 | [Notes to the Unaudited Interim Condensed Consolidated Financial Information](index=24&type=section&id=未經審核中期簡明綜合財務資料附註) This section provides detailed notes to the interim condensed consolidated financial information, covering company details, accounting policies, segment information, revenue, profit before tax, tax, dividends, EPS, receivables, financial assets, cash, payables, and share capital changes [1. Company Information](index=24&type=section&id=1.%20公司資料) Zhongkang Holdings Limited, an investment holding company incorporated in the Cayman Islands, provides data insight solutions, data-driven publishing, and SaaS products, listed on the HKEX Main Board on July 12, 2022 - The Company is a limited company incorporated in the Cayman Islands on March 4, 2019, primarily engaged in providing data insight solutions, data-driven publishing and events, and SaaS products[62](index=62&type=chunk) - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 12, 2022[63](index=63&type=chunk) [2. Basis of Preparation](index=24&type=section&id=2.%20編製基準) The interim condensed consolidated financial information is prepared under HKAS 34 and should be read with the Group's 2024 annual consolidated financial statements - The interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting[64](index=64&type=chunk) [3. Changes in Accounting Policies](index=24&type=section&id=3.%20會計政策變動) Accounting policies remain consistent with the prior year, with the new adoption of HKAS 21 "Lack of Exchangeability" having no financial impact due to the Group's exchangeable transaction currencies - The financial information for the current period has been prepared in accordance with the revised Hong Kong Financial Reporting Standards, specifically Hong Kong Accounting Standard 21 (Revised) 'Lack of Exchangeability', adopted for the first time[65](index=65&type=chunk)[66](index=66&type=chunk) - As all the Group's transaction currencies are exchangeable, these revisions had no impact on the interim condensed consolidated financial information[66](index=66&type=chunk) [4. Operating Segment Information](index=24&type=section&id=4.%20經營分部資料) The Group operates as a single reportable segment, with management monitoring its overall performance for decision-making - The Group does not disaggregate its business units by services and has only one reportable operating segment[67](index=67&type=chunk) [5. Revenue, Other Income and Gains](index=25&type=section&id=5.%20收入%2C%20其他收入及收益) This section details revenue from customer contracts by product, scenario, market, and recognition timing, outlines performance obligations for data insight, publishing, and SaaS products, and itemizes other income and gains including interest, grants, and exchange differences Customer Contract Revenue Classification (H1 2025) | Classification | RMB thousand | | :--- | :--- | | **By Product Type:** | | | Data Insight Solutions | 84,743 | | Data-Driven Publishing and Events | 32,730 | | SaaS Products | 30,452 | | **By Application Scenario:** | | | Smart Decision Cloud | 71,708 | | Smart Retail Cloud | 48,456 | | Smart Medical Cloud | 17,207 | | Smart Health Management Cloud | 10,554 | | **By Geographical Market:** | | | Mainland China | 146,892 | | Overseas | 1,033 | | **Timing of Revenue Recognition:** | | | Services transferred at a point in time | 75,949 | | Services transferred over time | 71,976 | Other Income and Gains Analysis (H1 2025) | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank interest income | 11,840 | 13,450 | | Government grants | 680 | 7,578 | | Investment income from financial assets at fair value through profit or loss | 616 | 119 | | Net exchange loss | 1,741 | (2,291) (gain) | | Total other income and gains | 13,145 | 23,454 | [6. Profit Before Tax](index=27&type=section&id=6.%20除稅前溢利) This section details the components of profit before tax, including cost of services, depreciation, R&D, interest income, government grants, financial asset fair value losses, and exchange differences Composition of Profit Before Tax (H1 2025) | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of services provided | 65,823 | 70,743 | | Depreciation of property, plant and equipment | 1,551 | 1,277 | | Depreciation of right-of-use assets | 2,335 | 2,326 | | Amortisation of other intangible assets | 390 | 364 | | R&D costs | 33,030 | 28,881 | | Bank interest income | (11,840) | (13,450) | | Government grants | (680) | (7,578) | | Fair value loss on financial assets at fair value through profit or loss | 1,251 | 575 | | Net exchange loss | 1,741 | (2,291) (gain) | | Net impairment of trade receivables | 1,016 | 5,725 | [7. Income Tax](index=27&type=section&id=7.%20所得稅) The Group's income tax is entity-based, with Hong Kong subsidiaries having no taxable profits, Mainland China subsidiaries subject to 25% statutory rate (15% for high-tech, 5% for small/micro), and current period tax expense mainly comprising Mainland China and deferred tax - Guangzhou Zhongkang Digital Technology Co., Ltd., as a high-tech enterprise, enjoys a preferential Chinese enterprise income tax rate of **15%**[75](index=75&type=chunk) - During the period, certain subsidiaries operating in Mainland China were recognized as small and micro enterprises, enjoying a preferential tax rate of **5%**[76](index=76&type=chunk) Income Tax Expense Composition (H1 2025) | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Current - Mainland China tax deducted during the period | 1,933 | 254 | | Deferred tax | (289) | (58) | | Total tax deducted during the period | 1,644 | 196 | [8. Dividends](index=28&type=section&id=8.%20股息) Shareholders approved a final dividend of HKD 7.25 cents per ordinary share for 2024, totaling RMB 50 million, but no interim dividend was declared for the six months ended June 30, 2025 - On March 28, 2025, shareholders approved a final dividend of **HKD 7.25 cents** per ordinary share for the year ended December 31, 2024, totaling approximately **RMB 50,000,000**[78](index=78&type=chunk) - The Board did not declare an interim dividend for the six months ended June 30, 2025[79](index=79&type=chunk) [9. Earnings Per Share Attributable to Owners of the Parent](index=28&type=section&id=9.%20母公司普通股權益持有人應佔每股盈利) This section outlines the profit attributable to ordinary equity holders and the weighted average number of ordinary shares used for basic and diluted EPS calculations, noting no potentially dilutive shares EPS Calculation Data (H1 2025) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent for the purpose of basic and diluted earnings per share (RMB thousand) | 24,744 | 41,675 | | Weighted average number of ordinary shares in issue for the purpose of basic and diluted earnings per share (shares) | 407,727,793 | 417,249,077 | - There were no potentially dilutive ordinary shares outstanding for the Group during the period[81](index=81&type=chunk) [10. Trade and Bills Receivables](index=29&type=section&id=10.%20貿易應收款項及應收票據) As of June 30, 2025, trade and bills receivables totaled RMB 92.98 million, with credit terms of 7-120 days, and this section details their aging analysis and impairment loss provisions Trade and Bills Receivables (June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 122,904 | 123,476 | | Bills receivables | 3,878 | 3,887 | | Impairment | (33,801) | (32,863) | | Total | 92,981 | 94,500 | Aging Analysis of Trade Receivables (June 30, 2025) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 65,110 | 71,307 | | 6 to 12 months | 15,331 | 10,026 | | 1 to 2 years | 7,047 | 7,173 | | 2 to 3 years | 1,615 | 2,107 | | Total | 89,103 | 90,613 | Changes in Impairment Loss Provisions for Trade Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | At beginning of period/year | 32,863 | 23,530 | | Net impairment loss | 1,016 | 9,333 | | Amounts written off as uncollectible | (78) | – | | At end of period/year | 33,801 | 32,863 | [11. Financial Assets at Fair Value Through Profit or Loss](index=30&type=section&id=11.%20按公平值計入損益的金融資產) As of June 30, 2025, financial assets at fair value through profit or loss totaled RMB 39.92 million, mainly short-term financial products and private equity funds from Mainland Chinese banks, all redeemable on demand Financial Assets at Fair Value Through Profit or Loss (June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Unlisted investments, at fair value | 39,871 | 47,884 | | Unlisted equity investments, at fair value | 50 | 50 | | Total | 39,921 | 47,934 | - The aforementioned unlisted investments refer to certain financial products issued by Mainland Chinese commercial banks with maturities within one year and private equity funds issued by Mainland Chinese portfolio companies, all of which are redeemable at any time[86](index=86&type=chunk) [12. Cash and Cash Equivalents](index=30&type=section&id=12.%20現金及現金等價物) As of June 30, 2025, cash and cash equivalents totaled RMB 51.42 million, mainly in RMB and USD, with fixed-rate time deposits ranging from one month to three years Cash and Cash Equivalents (June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash and bank balances | 46,685 | 61,904 | | Time deposits | 593,235 | 555,540 | | Subtotal | 639,920 | 617,444 | | Less: Non-cash equivalent portion | (588,496) | (553,729) | | Cash and cash equivalents | 51,424 | 63,715 | Cash and Cash Equivalents by Currency (June 30, 2025) | Currency | June 30, 2025 (RMB thousand) | | :--- | :--- | | RMB | 45,496 | | USD | 5,780 | | SGD | 87 | | HKD | 61 | | Total | 51,424 | [13. Trade Payables](index=31&type=section&id=13.%20貿易應付款項) As of June 30, 2025, trade payables totaled RMB 15.83 million, mostly due within 3 months, non-interest-bearing, and typically settled within 90 days Aging Analysis of Trade Payables (June 30, 2025) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 13,742 | 13,910 | | 4 to 6 months | 158 | 1,311 | | 7 to 12 months | 1,202 | 219 | | Over 12 months | 725 | 1,178 | | Total | 15,827 | 16,618 | [14. Other Payables and Accrued Expenses](index=31&type=section&id=14.%20其他應付款項及應計費用) As of June 30, 2025, other payables and accrued expenses totaled RMB 111.49 million, mainly comprising payroll, contract liabilities, taxes, and dividends payable Other Payables and Accrued Expenses (June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Payroll payable | 10,289 | 26,249 | | Contract liabilities | 41,442 | 25,766 | | Taxes payable (excluding income tax) | 7,003 | 5,759 | | Dividends payable | 50,000 | – | | Other payables | 2,754 | 5,939 | | Total | 111,488 | 63,713 | [15. Share Capital and Treasury Shares](index=31&type=section&id=15.%20股本及庫存股份) As of June 30, 2025, the company's issued share capital was RMB 30.38 million, treasury shares were RMB 208.98 million, and 407,500 shares were repurchased for a share award scheme Share Capital and Treasury Shares (June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Share capital | 30,384 | 30,384 | | Treasury shares | (208,982) | (207,535) | - In 2025, the Company repurchased **407,500** shares on the Stock Exchange for its share award scheme at a total consideration of approximately **HKD 1,597,000** (equivalent to approximately **RMB 1,447,000**)[91](index=91&type=chunk) [Definitions](index=32&type=section&id=釋義) This section defines key terms and abbreviations used throughout the report, including AI, AI-MDT, conference names, company entities, product names, business models, and financial terminology, for clarity

I. Financial Summary [1.1 Overview of Key Financial Indicators](index=1&type=section&id=1.1%20%E5%85%B3%E9%94%AE%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E6%A6%82%E8%A7%88) Revenue slightly decreased by 1.1% to HK$134,513 thousand, gross profit fell 47.3% to HK$14,564 thousand, and loss for the period narrowed 24.5% to HK$29,889 thousand | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 134,513 | 136,075 | -1.1% | | Cost of sales | (119,949) | (108,457) | +10.6% | | Gross profit | 14,564 | 27,618 | -47.3% | | Gross profit margin (%) | 10.8% | 20.3% | -9.5 p.p.t. | | Loss for the period from continuing operations | (29,889) | (21,553) | +38.7% | | Loss for the period from discontinued operations | – | (18,049) | -100% | | Loss for the period | (29,889) | (39,602) | -24.5% | | Loss attributable to owners of the Company | (20,501) | (24,635) | -16.8% | | Loss attributable to non-controlling interests | (9,388) | (14,967) | -37.3% | | Basic and diluted loss per share (HK cents) | (2.0) | (2.4) | -16.7% | II. Condensed Consolidated Financial Statements [2.1 Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=2.1%20%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the company reported revenue of HK$134,513 thousand, cost of sales of HK$119,949 thousand, resulting in a gross profit of HK$14,564 thousand, with an operating loss of HK$28,358 thousand and a loss for the period of HK$29,889 thousand | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 134,513 | 136,075 | | Cost of sales | (119,949) | (108,457) | | Gross profit | 14,564 | 27,618 | | Other income and other gains | 1,543 | 5,996 | | Selling and distribution expenses | (8,399) | (11,968) | | Administrative expenses | (18,419) | (22,599) | | Research and development expenses | (11,405) | (16,433) | | Other expenses | (6,242) | (2,741) | | Operating loss | (28,358) | (20,127) | | Finance costs | (1,531) | (1,075) | | Loss before tax | (29,889) | (21,549) | | Loss for the period from continuing operations | (29,889) | (21,553) | | Loss for the period from discontinued operations | – | (18,049) | | Loss for the period | (29,889) | (39,602) | | Loss attributable to owners of the Company | (20,501) | (24,635) | | Loss attributable to non-controlling interests | (9,388) | (14,967) | [2.2 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=2.2%20%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 a loss for the period of HK$29,889 thousand, with net other comprehensive income of HK$2,579 thousand, primarily from exchange differences on translating overseas operations, resulting in a total comprehensive expense of HK$27,310 thousand | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the period | (29,889) | (39,602) | | Fair value changes of equity investments designated at fair value through other comprehensive income | 84 | (32) | | Exchange differences on translating overseas operations | 2,495 | (4,144) | | Other comprehensive income/(expense) for the period, net of tax | 2,579 | (4,176) | | Total comprehensive expense for the period | (27,310) | (43,778) | | Total comprehensive expense attributable to owners of the Company | (18,850) | (28,528) | | Total comprehensive expense attributable to non-controlling interests | (8,460) | (15,250) | [2.3 Condensed Consolidated Statement of Financial Position](index=5&type=section&id=2.3%20%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 were HK$28,051 thousand, total current assets were HK$228,217 thousand, and total current liabilities were HK$220,480 thousand, resulting in net current assets of HK$7,737 thousand and net assets of HK$30,178 thousand, a significant decrease from December 31, 2024 | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Total non-current assets | 28,051 | 37,392 | | Total current assets | 228,217 | 218,526 | | Total current liabilities | 220,480 | 189,131 | | Net current assets | 7,737 | 29,395 | | Total assets less current liabilities | 35,788 | 66,787 | | Total non-current liabilities | 5,610 | 9,299 | | Net assets | 30,178 | 57,488 | | Equity attributable to owners of the Company | 73,690 | 92,540 | | Non-controlling interests | (43,512) | (35,052) | | Total equity | 30,178 | 57,488 | III. Notes to the Condensed Consolidated Financial Statements [3.1 Company Information](index=7&type=section&id=3.1%20%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) Sky Light Holdings Limited, incorporated in the Cayman Islands on December 18, 2013, and listed on the Main Board of the Stock Exchange on July 2, 2015, is an investment holding company whose subsidiaries primarily engage in the production and distribution of home surveillance cameras, digital imaging products, and other electronic products - The company primarily engages in the production and distribution of home surveillance cameras, digital imaging products, and other electronic products[11](index=11&type=chunk)[13](index=13&type=chunk) [3.2 Basis of Preparation](index=7&type=section&id=3.2%20%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 and the Listing Rules, with accounting policies consistent with the 2024 annual report, and no early adoption of new or revised HKFRSs - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and the Listing Rules, with accounting policies consistent with the 2024 annual report, and no early adoption of new or revised HKFRSs[12](index=12&type=chunk) [3.3 Adoption of New and Revised Hong Kong Financial Reporting Standards](index=8&type=section&id=3.3%20%E6%8E%A1%E7%B4%8D%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) During the interim period, the Group first applied revised Hong Kong Financial Reporting Standards effective January 1, 2025, which had no significant impact on financial performance or position - The Group first applied revised Hong Kong Financial Reporting Standards effective January 1, 2025, which had no significant impact on financial performance or position[14](index=14&type=chunk) [3.4 Operating Segment Information](index=8&type=section&id=3.4%20%E7%B6%93%E7%87%9F%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group's operating segments include manufacturing and selling camera products and related accessories (continuing operations) and the discontinued AI vending machine business, with revenue primarily from the EU, Hong Kong, the US, and mainland China - The Group's operations consist of manufacturing and selling camera products and related accessories (continuing operations) and the discontinued AI vending machine business[17](index=17&type=chunk) [3.4.1 Business Segments](index=9&type=section&id=3.4.1%20%E4%B8%9A%E5%8A%A1%E5%88%86%E9%83%A8) For the six months ended June 30, 2025, revenue from continuing operations of manufacturing and selling camera products and related accessories was HK$134,513 thousand, with a segment result of HK$14,564 thousand, while the AI vending machine business, now discontinued, contributed no revenue | Business Segment | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | **Continuing Operations** | | | | Revenue from manufacturing and selling camera products and related accessories | 134,513 | 136,075 | | Segment result from manufacturing and selling camera products and related accessories | 14,564 | 27,618 | | **Discontinued Operations** | | | | Revenue from AI vending machine business | – | 3,036 | | Segment result from AI vending machine business | – | 1,748 | | Total loss for the period | (29,889) | (39,602) | [3.4.2 Geographical Information](index=10&type=section&id=3.4.2%20%E5%9C%B0%E7%90%86%E4%BF%A1%E6%81%AF) As of June 30, 2025, revenue from the EU was HK$46,905 thousand, Hong Kong HK$27,693 thousand, the US HK$24,143 thousand, and mainland China HK$7,665 thousand, with non-current assets primarily located in mainland China | Region | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | | :--- | :--- | :--- | | European Union | 46,905 | 62,066 | | Hong Kong | 27,693 | 2,499 | | United States of America | 24,143 | 38,729 | | Mainland China | 7,665 | 26,676 | | Other countries/regions | 28,107 | 9,141 | | **Total** | **134,513** | **139,111** | | Region | Non-current Assets as of June 30, 2025 (HK$ thousand) | Non-current Assets as of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Mainland China | 16,693 | 23,445 | | Hong Kong | 1,925 | 127 | | Other countries/regions | 2,760 | 4,938 | | **Total** | **21,378** | **28,510** | [3.4.3 Major Customer Information](index=10&type=section&id=3.4.3%20%E4%B8%BB%E8%A6%81%E5%AE%A2%E6%88%B6%E4%BF%A1%E6%81%AF) As of June 30, 2025, Customer A remained the largest customer, contributing HK$30,319 thousand in revenue, while Customers B, C, and D emerged as new major customers, and Customer F was no longer a major customer | Customer | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Customer A | 30,319 | 32,908 | | Customer B | 24,648 | Not applicable | | Customer C | 23,921 | Not applicable | | Customer D | 16,196 | Not applicable | | Customer E | 14,604 | 25,097 | | Customer F | Not applicable | 14,592 | [3.5 Revenue](index=11&type=section&id=3.5%20%E6%94%B6%E5%85%A5) For the six months ended June 30, 2025, total revenue from continuing operations was HK$134,513 thousand, primarily from sales of industrial products (HK$133,395 thousand), with manufacturing services contributing HK$1,118 thousand, and no revenue from the discontinued AI vending machine business | Type of Goods or Services | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sales of industrial products | 133,395 | 135,528 | | Provision of manufacturing services | 1,118 | 547 | | **Total revenue from contracts with customers** | **134,513** | **136,075** | | Revenue recognized at a point in time: goods transferred | 134,513 | 136,075 | | Revenue from discontinued AI vending machine operations | – | 3,036 | [3.6 Finance Costs](index=11&type=section&id=3.6%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, total finance costs increased by 42.4% to HK$1,531 thousand, primarily due to higher interest on bank and other borrowings | Source of Interest | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank and other borrowings | 1,213 | 659 | | Lease liabilities | 318 | 416 | | **Total** | **1,531** | **1,075** | [3.7 Income Tax Expense](index=12&type=section&id=3.7%20%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 from continuing operations was zero, compared to HK$4 thousand in the prior period, with certain mainland China subsidiaries enjoying a preferential 15% tax rate as high-tech enterprises | Tax Type | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current tax: China corporate income tax | – | 4 | - Mainland China subsidiaries (Sky Light Electronics (Shenzhen) Co, Ltd and Xi'an Tianrui Software Co, Ltd) enjoy a preferential corporate income tax rate of **15%** due to their high-tech enterprise qualifications[29](index=29&type=chunk) [3.8 Loss for the Period](index=13&type=section&id=3.8%20%E6%9C%9F%E5%85%A7%E8%99%A7%E6%90%8D) For the six months ended June 30, 2025, the loss for the period was HK$29,889 thousand, primarily impacted by increased cost of inventories sold, higher net inventory provisions, increased impairment losses on trade and factoring receivables, and net exchange losses | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Cost of inventories sold | 119,949 | 108,457 | | Depreciation of property, plant and equipment | 1,647 | 4,512 | | Depreciation of right-of-use assets | 4,588 | 6,437 | | Amortisation of intangible assets | 629 | 638 | | Research and development expenses | 11,405 | 16,433 | | Employee benefit expenses (excluding directors' and chief executive's emoluments) | 32,331 | 31,877 | | Provision for inventories/(reversal of provision) | 10,641 | (2,991) | | Impairment loss on trade and factoring receivables | 4,460 | 2,676 | | Net exchange loss/(gain) | 2,090 | (3,612) | | Gain on disposal of property, plant and equipment | (1,720) | (817) | - The reversal of inventory provision was primarily due to the utilization of previously provided inventories[34](index=34&type=chunk) [3.9 Dividends](index=14&type=section&id=3.9%20%E8%82%A1%E6%81%AF) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of an interim dividend for 2025[35](index=35&type=chunk) [3.10 Loss Per Share](index=14&type=section&id=3.10%20%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) For the six months ended June 30, 2025, basic and diluted loss per share was 2.0 HK cents, a narrowing from 2.4 HK cents in the prior period, with all losses attributable to continuing operations - No diluted adjustment was made to the basic loss per share amount due to the anti-dilutive effect of the share option scheme[36](index=36&type=chunk) [3.10.1 From Continuing and Discontinued Operations](index=15&type=section&id=3.10.1%20%E4%BE%86%E8%87%AA%E6%8C%81%E7%BA%8C%E5%8F%8A%E5%B7%B2%E7%B5%82%E6%AD%A2%E7%87%9F%E9%81%8B) For the six months ended June 30, 2025, loss attributable to owners of the Company was HK$20,501 thousand, with basic and diluted loss per share of 2.0 HK cents | Indicator | 2025 (HK$ thousand/thousand shares) | 2024 (HK$ thousand/thousand shares) | | :--- | :--- | :--- | | Loss attributable to owners of the Company for the purpose of calculating basic loss per share | (20,501) | (24,635) | | Weighted average number of ordinary shares in issue for the purpose of calculating basic loss per share | 1,008,587 | 1,008,587 | | Basic loss per share (HK cents) | (2.0) | (2.4) | | Diluted loss per share (HK cents) | (2.0) | (2.4) | [3.10.2 From Continuing Operations](index=15&type=section&id=3.10.2%20%E4%BE%86%E8%87%AA%E6%8C%81%E7%BA%8C%E7%87%9F%E9%81%8B) For the six months ended June 30, 2025, loss for the period from continuing operations attributable to owners of the Company was HK$20,501 thousand, with basic loss per share of 2.0 HK cents | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the period from continuing operations | (20,501) | (15,176) | [3.10.3 From Discontinued Operations](index=15&type=section&id=3.10.3%20%E4%BE%86%E8%87%AA%E5%B7%B2%E7%B5%82%E6%AD%A2%E7%87%9F%E9%81%8B) For the six months ended June 30, 2025, basic loss per share from discontinued operations was zero HK cents, compared to 0.9 HK cents in the prior period, reflecting the elimination of losses from discontinued businesses - For the first half of 2025, basic loss per share from discontinued operations was **zero HK cents** (2024: 0.9 HK cents)[39](index=39&type=chunk) [3.11 Trade and Factoring Receivables](index=16&type=section&id=3.11%20%E8%B2%A3%E6%98%93%E5%8F%8A%E4%BF%9D%E7%90%86%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade and factoring receivables significantly decreased to HK$41,731 thousand from HK$70,012 thousand at the end of 2024, with increased impairment losses and a higher proportion of receivables overdue by more than 3 months | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables | 52,670 | 62,005 | | Impairment loss | (24,952) | (20,192) | | **Net trade receivables** | **27,718** | **41,813** | | Factoring receivables | 14,306 | 28,751 | | Impairment loss | (293) | (552) | | **Net factoring receivables** | **14,013** | **28,199** | | **Total** | **41,731** | **70,012** | | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 month | 24,578 | 33,029 | | 1 to 2 months | 1,080 | 8,941 | | 2 to 3 months | 5,544 | 9,977 | | Over 3 months | 10,529 | 18,065 | | **Total** | **41,731** | **70,012** | [3.12 Restricted and Pledged Bank Deposits](index=17&type=section&id=3.12%20%E5%8F%97%E9%99%90%E5%88%B6%E5%8F%8A%E5%B7%B2%E6%8A%B5%E6%8A%BC%E9%8A%80%E8%A1%8C%E5%AD%98%E6%AC%BE) As of June 30, 2025, restricted and pledged bank deposits amounted to HK$2,747 thousand, largely consistent with the end of 2024, primarily used as collateral for bank financing | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Restricted and pledged bank deposits | 2,747 | 2,717 | - Restricted and pledged bank deposits are primarily used as collateral for bank financing[43](index=43&type=chunk) [3.13 Trade Payables](index=17&type=section&id=3.13%20%E8%B2%A3%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade payables increased to HK$76,899 thousand from HK$68,028 thousand at the end of 2024, with most payables due within one month | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 month | 49,024 | 40,152 | | 1 to 2 months | 4,718 | 13,988 | | 2 to 3 months | 12,470 | 5,229 | | Over 3 months | 10,687 | 8,659 | | **Total** | **76,899** | **68,028** | - Trade payables are non-interest bearing and generally settled within **30 to 150 days**[44](index=44&type=chunk) [3.14 Interest-Bearing Bank and Other Borrowings](index=18&type=section&id=3.14%20%E8%A8%88%E6%81%AF%E9%8A%80%E8%A1%8C%E5%8F%8A%E5%85%B6%E4%BB%96%E5%80%9F%E6%AC%BE) As of June 30, 2025, interest-bearing bank loans increased to HK$32,876 thousand from HK$25,759 thousand at the end of 2024, all secured, denominated in USD and RMB, with effective annual interest rates ranging from 3.0% to 5.7%, and repayable within one year | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest-bearing bank loans (secured) | 32,876 | 25,759 | | Borrowings repayable within one year | 32,876 | 25,759 | - Bank loans are secured by life insurance policies, bank deposits, personal guarantees from controlling shareholders, corporate guarantees from subsidiaries, and directors' properties[47](index=47&type=chunk) - The effective annual interest rates for secured bank loans range from **3.0% to 5.7%** (December 31, 2024: 3.0% to 6.6%)[47](index=47&type=chunk) [3.15 Capital Commitments](index=18&type=section&id=3.15%20%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94) As of June 30, 2025, the Group's contracted but unprovided capital commitments for the purchase of plant and machinery were HK$2,014 thousand, largely consistent with the end of 2024, with total bank facilities of HK$110,101 thousand, of which HK$32,876 thousand was utilized | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Contracted but not provided for: purchase of plant and machinery | 2,014 | 2,048 | - The Group has total bank facilities of **HK$110,101 thousand** from banks in Hong Kong and China, of which **HK$32,876 thousand** was utilized at the reporting date[47](index=47&type=chunk) [3.16 Events After the Reporting Period](index=19&type=section&id=3.16%20%E6%9C%9F%E5%BE%8C%E4%BA%8B%E4%BB%B6) Subsequent to the reporting period, the company completed a convertible bond placement of up to HK$70,000,000, increased its stake in Vietnamese subsidiary JSC to 99.45% through capital injection, loan capitalization, and acquisition, and acquired assets for RMB20,000,000 to establish a new supermarket instant delivery system service business segment - The company completed a convertible bond placement with a principal amount of up to **HK$70,000,000** and an **8%** coupon rate[49](index=49&type=chunk) - Through capital injection, loan capitalization, and acquisition, the Group's shareholding in Vietnamese subsidiary JSC increased to **99.45%**[50](index=50&type=chunk) - The company acquired assets for **RMB20,000,000** (approximately **HK$22,000,000**) to establish a new business segment for supermarket instant delivery system services[51](index=51&type=chunk) IV. Management Discussion and Analysis [4.1 Business Review](index=20&type=section&id=4.1%20%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group primarily manufactures and sells camera products and related accessories, and has expanded into supermarket instant delivery system services in China, with camera business revenue slightly down and a loss recorded due to weak global demand and inventory provisions, while the instant delivery service has commenced operations - Revenue from camera products and related accessories was approximately **HK$134.5 million**, a **1.1% decrease** year-on-year, with a loss of approximately **HK$29.9 million**, primarily due to weak global consumer electronics demand and additional inventory provisions[52](index=52&type=chunk) - The Group is strategically transforming from a core Joint Design Manufacturing (JDM) business to an Original Design Manufacturing (ODM) business, with positive results achieved[53](index=53&type=chunk) - The Group has launched a new business segment for supermarket instant retail delivery system services in China and is in discussions with several top-tier online and large physical chain supermarkets[54](index=54&type=chunk) - Asset purchase agreements have been signed for approximately **3,200 electric delivery vehicles** and related accessories, and a smart management software licensing agreement has been entered into with an independent software development company[54](index=54&type=chunk) [4.1.1 Camera Products and Related Accessories Business](index=20&type=section&id=4.1.1%20%E7%9B%B8%E6%A9%9F%E7%94%A2%E5%93%81%E5%8F%8A%E7%9B%B8%E9%97%9C%E9%85%8D%E4%BB%B6%E6%A5%AD%E5%8B%99) Revenue from camera products and related accessories decreased by 1.1% year-on-year to HK$134.5 million, resulting in a HK$29.9 million loss and a gross profit margin decline to 10.8%, primarily due to weak global demand and HK$13.6 million in inventory provisions, as the Group transitions from JDM to ODM business - Revenue from camera products and related accessories was approximately **HK$134.5 million**, a decrease of approximately **1.1%** compared to mid-2024[52](index=52&type=chunk) - The camera business recorded a loss of approximately **HK$29.9 million**, with gross profit margin decreasing to **10.8%**, mainly due to an additional net inventory provision of approximately **HK$13.6 million**[52](index=52&type=chunk) - The Group has begun a strategic transformation towards Original Design Manufacturing (ODM) business to improve financial performance[53](index=53&type=chunk) [4.1.2 Instant Delivery System Services for Supermarkets](index=20&type=section&id=4.1.2%20%E7%82%BA%E5%95%86%E8%B6%85%E6%8F%90%E4%BE%9B%E5%8D%B3%E6%99%82%E9%85%8D%E9%80%81%E7%B3%BB%E7%B5%B1%E6%9C%8D%E5%8B%99) In December 2024, the Group decided to launch a new business segment for supermarket instant retail delivery system services in China to capitalize on the rapid growth of the instant retail delivery industry, and is currently in discussions with various supermarkets and has procured electric delivery vehicles and smart management software - The China supermarket instant retail delivery industry has grown rapidly since 2020, driven by changing consumer habits, widespread food delivery during the pandemic, increased mobile phone penetration, and growing demand for convenience[53](index=53&type=chunk) - The Group is in discussions with several top-tier internet online supermarkets and large physical chain supermarkets to provide a one-stop integrated instant delivery system service[54](index=54&type=chunk) - Approximately **3,200 electric delivery vehicles** and related accessories have been procured, and a smart management software licensing agreement has been entered into with an independent software development company[54](index=54&type=chunk) [4.2 Outlook](index=22&type=section&id=4.2%20%E5%B1%95%E6%9C%9B) Facing global economic weakness and price competition, the camera business will prioritize ODM development, with the Shenzhen factory focusing on ODM and the Vietnam factory on OEM, while the instant delivery system service is viewed as a blue ocean market with significant potential to expand business and revenue streams - The camera business will prioritize ODM development, with the Shenzhen factory primarily engaged in ODM and the Vietnam factory focused on OEM[55](index=55&type=chunk) - The Group will continue to develop innovative products, actively expand product categories, strengthen its sales team (especially in Japan and Europe), and enhance operational capabilities[57](index=57&type=chunk) - Providing instant delivery system services for supermarkets is considered a blue ocean market with immense business potential, especially given the rapid expansion of China's fresh food e-commerce market[56](index=56&type=chunk) [4.2.1 Camera Products and Related Accessories Business](index=22&type=section&id=4.2.1%20%E7%9B%B8%E6%A9%9F%E7%94%A2%E5%93%81%E5%8F%8A%E7%9B%B8%E9%97%9C%E9%85%8D%E4%BB%B6%E6%A5%AD%E5%8B%99) Due to global economic weakness and US tariffs, customers are conservative about new product development, leading the Group to prioritize ODM business, with the Shenzhen factory focusing on ODM and the Vietnam factory on OEM, expecting new ODM products to significantly contribute to second-half 2025 revenue - Global economic weakness and US tariffs have led customers to be conservative in new product development, prompting the Group to prioritize ODM business development[55](index=55&type=chunk) - The Shenzhen factory will primarily engage in ODM business, while the Vietnam factory will mainly focus on OEM business[55](index=55&type=chunk) - The Group believes that new ODM products will make a significant contribution to revenue in the second half of 2025[55](index=55&type=chunk) [4.2.2 Instant Delivery System Services for Supermarkets](index=22&type=section&id=4.2.2%20%E7%82%BA%E5%95%86%E8%B6%85%E6%8F%90%E4%BE%9B%E5%8D%B3%E6%99%82%E9%85%8D%E9%80%81%E7%B3%BB%E7%B5%B1%E6%9C%8D%E5%8B%99) The Group views providing instant delivery system services for supermarkets as a blue ocean market with significant business potential, especially given the rapid expansion of China's fresh food e-commerce market, which will help expand and diversify its business and increase revenue streams - Providing instant delivery system services for supermarkets is considered a blue ocean market with immense business potential, especially given the rapid expansion of China's fresh food e-commerce market[56](index=56&type=chunk) - The Group will expand and diversify its business and increase revenue streams by entering this new business segment[56](index=56&type=chunk) [4.3 Financial Review](index=23&type=section&id=4.3%20%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This period's financial performance shows a slight revenue decrease, a nearly halved gross profit, and a significant drop in gross profit margin to 10.8% due to increased inventory provisions, while other income and gains substantially decreased, and selling, distribution, administrative, and R&D expenses all declined, reflecting strict cost control, but increased other expenses and finance costs led to a net loss for the period [4.3.1 Turnover](index=23&type=section&id=4.3.1%20%E7%87%9F%E6%A5%AD%E9%A1%8D) For the six months ended June 30, 2025, the Group's turnover was HK$134.5 million, a slight decrease of 1.1% year-on-year, primarily due to a significant reduction in digital imaging product shipments, with home surveillance cameras accounting for the largest share of revenue and other product revenue growing substantially | Product Category | 2025 (HK$ thousand) | % of Total Revenue | 2024 (HK$ thousand) | % of Total Revenue | Revenue Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Home surveillance cameras | 63,759 | 47.4% | 69,889 | 51.4% | (8.8)% | | Digital imaging products | 19,391 | 14.4% | 48,120 | 35.4% | (59.7)% | | Other products | 50,245 | 37.4% | 17,519 | 12.8% | 186.8% | | **Total sales of products** | **133,395** | **99.2%** | **135,528** | **99.6%** | **(1.6)%** | | Manufacturing service income | 1,118 | 0.8% | 547 | 0.4% | 104.4% | | **Total** | **134,513** | **100%** | **136,075** | **100.0%** | **(1.1)%** | | Customer Location | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | European Union | 46,905 | 62,066 | | Hong Kong | 27,693 | 2,499 | | United States | 24,143 | 38,729 | | Mainland China | 7,665 | 23,640 | | Other countries and regions | 28,107 | 9,141 | | **Total** | **134,513** | **136,075** | [4.3.2 Cost of Sales](index=24&type=section&id=4.3.2%20%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, cost of sales increased by 10.6% to HK$119.9 million, representing 89.2% of turnover, primarily due to increased inventory provisions - Cost of sales was approximately **HK$119.9 million**, an increase of approximately **10.6%** compared to mid-2024, accounting for approximately **89.2%** of turnover (mid-2024: approximately 79.7%)[61](index=61&type=chunk) - The increase in cost of sales was primarily due to increased inventory provisions[61](index=61&type=chunk) [4.3.3 Gross Profit](index=25&type=section&id=4.3.3%20%E6%AF%9B%E5%88%A9) For the six months ended June 30, 2025, gross profit was HK$14.6 million, a 47.3% decrease from the prior period, with gross profit margin falling from 20.3% to 10.8%, mainly due to increased costs from inventory provisions | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 134,513 | 136,075 | | Cost of sales | (119,949) | (108,457) | | Gross profit | 14,564 | 27,618 | | Gross profit margin | 10.8% | 20.3% | - Gross profit margin decreased from approximately **20.3%** in mid-2024 to approximately **10.8%** in mid-2025, primarily due to increased costs from inventory provisions[62](index=62&type=chunk) [4.3.4 Other Income and Other Gains](index=25&type=section&id=4.3.4%20%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%A2%9E%E7%9B%8A) For the six months ended June 30, 2025, other income and other gains significantly decreased to HK$1.5 million from HK$6.0 million in the prior period, primarily due to a reduction in net exchange gains of approximately HK$5.7 million - Other income and other gains significantly decreased to approximately **HK$1.5 million** (mid-2024: approximately **HK$6.0 million**), primarily due to a reduction in net exchange gains of approximately **HK$5.7 million**[63](index=63&type=chunk) [4.3.5 Selling and Distribution Expenses](index=26&type=section&id=4.3.5%20%E9%8A%B7%E5%94%AE%E5%8F%8A%E5%88%86%E9%8A%B7%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, selling and distribution expenses significantly decreased by 29.8% to HK$8.4 million, mainly due to a reduction in salaries and allowances of approximately HK$1.1 million and a decrease in advertising expenses of approximately HK$1.9 million - Selling and distribution expenses significantly decreased by approximately **29.8%** to approximately **HK$8.4 million** from approximately **HK$12.0 million** in mid-2024[64](index=64&type=chunk) - The decrease was primarily due to a reduction in salaries and allowances of approximately **HK$1.1 million** and a decrease in advertising expenses of approximately **HK$1.9 million**[64](index=64&type=chunk) [4.3.6 Administrative Expenses](index=26&type=section&id=4.3.6%20%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, administrative expenses significantly decreased by 18.5% to HK$18.4 million, primarily due to a reduction in salaries and allowances of approximately HK$4.0 million and the Group's strict cost control measures - Administrative expenses significantly decreased by approximately **18.5%** to approximately **HK$18.4 million** from approximately **HK$22.6 million** in mid-2024[65](index=65&type=chunk) - The decrease was primarily due to a reduction in salaries and allowances of approximately **HK$4.0 million** and the Group's strict cost control measures[65](index=65&type=chunk) [4.3.7 Research and Development Costs](index=26&type=section&id=4.3.7%20%E7%A0%94%E7%99%BC%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, research and development costs were HK$11.4 million, a 30.6% decrease from the prior period, primarily due to a reduction in R&D staff remuneration and benefits of approximately HK$3.6 million and the Group's strict cost control - Research and development costs were approximately **HK$11.4 million**, a decrease of approximately **30.6%** from approximately **HK$16.4 million** in mid-2024[66](index=66&type=chunk) - The decrease was primarily due to a reduction in R&D staff remuneration and benefits of approximately **HK$3.6 million** and the Group's strict cost control[66](index=66&type=chunk) [4.3.8 Other Expenses](index=27&type=section&id=4.3.8%20%E5%85%B6%E4%BB%96%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, other expenses significantly increased to HK$6.2 million from HK$2.7 million in the prior period, primarily due to an increase in impairment losses on trade and factoring receivables of approximately HK$1.7 million - Other expenses significantly increased to approximately **HK$6.2 million** from approximately **HK$2.7 million** in mid-2024[67](index=67&type=chunk) - The increase was primarily due to an increase in impairment losses on trade and factoring receivables of approximately **HK$1.7 million**[67](index=67&type=chunk) [4.3.9 Finance Costs](index=27&type=section&id=4.3.9%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, finance costs significantly increased by 42.4% to HK$1.5 million, primarily due to an increase in interest on bank and other borrowings of approximately HK$0.5 million - Finance costs significantly increased by approximately **42.4%** to approximately **HK$1.5 million** from approximately **HK$1.1 million** in mid-2024[68](index=68&type=chunk) - The increase was primarily due to an increase in interest on bank and other borrowings of approximately **HK$0.5 million**[68](index=68&type=chunk) [4.3.10 Net Loss](index=27&type=section&id=4.3.10%20%E8%99%A7%E6%90%8D%E6%B7%A8%E9%A1%8D) Based on the aforementioned factors, the Group recorded a net loss of approximately HK$29.9 million for the six months ended June 30, 2025, with a loss attributable to non-controlling interests of approximately HK$9.4 million - The Group recorded a loss of approximately **HK$29.9 million** for mid-2025 (loss attributable to non-controlling interests of approximately **HK$9.4 million**)[69](index=69&type=chunk) [4.4 Liquidity and Financial Resources](index=28&type=section&id=4.4%20%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) This period saw an increase in net cash flow from operating activities, a shift from net outflow to net inflow in investing activities, and a shift from net outflow to net inflow in financing activities, resulting in a net increase in cash and cash equivalents, while the Group's gearing ratio significantly rose due to increased interest-bearing bank borrowings, capital expenditure decreased, and no significant off-balance sheet transactions occurred, with the Group facing foreign exchange risk but not engaging in hedging, and internal financial investment policies dictating low-risk investment standards [4.4.1 Cash Flow](index=28&type=section&id=4.4.1%20%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) For the six months ended June 30, 2025, net cash generated from operating activities was HK$12.0 million, net cash generated from investing activities was HK$5.4 million, and net cash generated from financing activities was HK$0.9 million, resulting in a net increase in cash and cash equivalents of HK$18.3 million | Cash Flow Type | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 12,003 | 8,476 | | Net cash generated from/(used in) investing activities | 5,440 | (1,188) | | Net cash generated from/(used in) financing activities | 885 | (10,191) | | Net increase/(decrease) in cash and cash equivalents | 18,328 | (2,903) | | Effect of exchange rate changes | 2,666 | (4,697) | | Cash and cash equivalents at January 1 | 38,450 | 35,352 | | Cash and cash equivalents at June 30 | 59,444 | 27,752 | - Net cash generated from operating activities primarily reflects loss before tax, increase in inventories, decrease in trade receivables, and increase in other payables[70](index=70&type=chunk) - Net cash generated from investing activities primarily includes proceeds from disposal of property, plant and equipment[71](index=71&type=chunk) [4.4.2 Borrowings and Pledges of Assets](index=29&type=section&id=4.4.2%20%E5%80%9F%E6%AC%BE%E5%8F%8A%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group had total bank facilities of HK$110.1 million, of which HK$32.9 million was utilized, with bank loans secured by life insurance policies, bank deposits, personal guarantees from controlling shareholders, corporate guarantees from subsidiaries, and directors' properties, bearing effective annual interest rates from 3.0% to 5.7%, all repayable within one year - The Group obtained bank facilities of approximately **HK$110.1 million** from banks in Hong Kong and China, of which approximately **HK$32.9 million** was utilized[72](index=72&type=chunk) - Bank loans are secured by life insurance policies, bank deposits, personal guarantees from controlling shareholders, corporate guarantees from subsidiaries, and directors' properties[72](index=72&type=chunk) - The effective annual interest rates for secured bank loans range from **3.0% to 5.7%**, and all borrowings are repayable within one year[72](index=72&type=chunk) [4.4.3 Gearing Ratio](index=29&type=section&id=4.4.3%20%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) As of June 30, 2025, the Group's gearing ratio increased significantly to 151.6% from 75.1% at the end of 2024, primarily due to an increase in interest-bearing bank borrowings - The gearing ratio increased from approximately **75.1%** as of December 31, 2024, to approximately **151.6%** as of June 30, 2025[73](index=73&type=chunk) - The increase in gearing ratio was primarily due to an increase in interest-bearing bank borrowings in mid-2025[73](index=73&type=chunk) [4.4.4 Capital Expenditure](index=29&type=section&id=4.4.4%20%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, the Group's capital expenditure for the purchase of property, plant and equipment and intangible assets was approximately HK$2.0 million, a decrease from HK$3.5 million in the prior period - The Group made investments in the purchase of property, plant and equipment and intangible assets of approximately **HK$2.0 million** in mid-2025 (mid-2024: approximately **HK$3.5 million**)[74](index=74&type=chunk) [4.4.5 Off-Balance Sheet Transactions](index=29&type=section&id=4.4.5%20%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8%E5%A4%96%E4%BA%A4%E6%98%93) As of June 30, 2025, the Group had not entered into any significant off-balance sheet transactions - The Group had not entered into any significant off-balance sheet transactions in mid-2025[75](index=75&type=chunk) [4.4.6 Foreign Exchange Risk and Exchange Rate Risk](index=30&type=section&id=4.4.6%20%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA%E5%8F%8A%E5%8C%AF%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group faces transactional currency risk, with approximately 90.8% of sales denominated in currencies other than the functional currency in mid-2025, and while exchange rate fluctuations had no significant impact this period, the Group did not engage in derivative activities or use financial instruments to hedge foreign exchange risk - Approximately **90.8%** of the Group's sales are denominated in currencies other than the functional currency of the relevant operating units, exposing it to transactional currency risk[76](index=76&type=chunk) - Exchange rate fluctuations had no significant impact on the Group in mid-2025, and it did not engage in derivative activities or use financial instruments to hedge foreign exchange risk[76](index=76&type=chunk) [4.4.7 Financial Policy](index=30&type=section&id=4.4.7%20%E8%B2%A1%E6%94%BF%E6%94%BF%E7%AD%96) The Group held no investments under its financial policy in mid-2025, which dictates investment only in bank-listed lowest-risk wealth management products and debt securities rated above "BBB" or "baa" with a maturity of less than one year or readily convertible to cash, ensuring outstanding balances of wealth management products do not exceed 50% of the total cash and cash equivalents plus wealth management products - The Group had no investments under its financial policy in mid-2025[77](index=77&type=chunk) - The internal financial investment policy stipulates investment only in bank-listed lowest-risk wealth management products and debt securities rated above "BBB" or "baa", with a maturity of less than one year or readily convertible to cash[77](index=77&type=chunk) - The outstanding balance of wealth management products must not exceed **50%** of the total cash and cash equivalents plus wealth management products[77](index=77&type=chunk) [4.5 Employees and Remuneration Policy](index=31&type=section&id=4.5%20%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group's total number of employees increased to 1,014, with staff costs of approximately HK$32.3 million, a decrease from the prior period, and the Group aims to provide above-market remuneration to R&D personnel and regularly reviews its remuneration and benefits policies to attract and retain talent - As of June 30, 2025, the Group employed a total of **1,014 employees** (December 31, 2024: 764 employees)[79](index=79&type=chunk) - Staff costs (excluding directors' emoluments and contributions to pension schemes) were approximately **HK$32.3 million** in mid-2025 (mid-2024: approximately **HK$35.3 million**)[79](index=79&type=chunk) - The Group strives to provide above-market remuneration to R&D personnel and regularly reviews its remuneration and benefits policies[79](index=79&type=chunk) [4.6 Material Investments Held](index=31&type=section&id=4.6%20%E6%89%80%E6%8C%81%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) As of June 30, 2025, the Group held no material investments valued at 5% or more of the company's total assets - The Group held no investments valued at **5%** or more of the Company's total assets in mid-2025[80](index=80&type=chunk) [4.7 Future Plans for Material Investments or Capital Assets](index=31&type=section&id=4.7%20%E6%9C%89%E9%97%9C%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%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) As of the date of this announcement, the Group has no future plans for material investments or capital assets - As of the date of this announcement, the Group has no plans for material investments or capital assets[81](index=81&type=chunk) [4.8 Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=31&type=section&id=4.8%20%E6%B6%89%E5%8F%8A%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E3%80%81%E7%9B%B8%E8%81%AF%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%90%88%E7%87%9F%E4%BC%81%E6%A5%AD%E7%9A%84%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE) As of June 30, 2025, the Group had no material acquisitions or disposals involving subsidiaries, associates, and joint ventures - The Group had no material acquisitions or disposals involving subsidiaries, associates, and joint ventures in mid-2025[82](index=82&type=chunk) V. Financial Position and Subsequent Events [5.1 Contingent Liabilities](index=32&type=section&id=5.1%20%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2025, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities as of June 30, 2025[83](index=83&type=chunk) [5.2 Dividends](index=32&type=section&id=5.2%20%E8%82%A1%E6%81%AF) The Board does not recommend the payment of an interim dividend for mid-2025, consistent with the prior period - The Board does not recommend the payment of an interim dividend for mid-2025[84](index=84&type=chunk) [5.3 Financial Position as of June 30, 2025](index=32&type=section&id=5.3%20%E6%96%BC2025%E5%B9%B46%E6%9C%8830%E6%97%A5%E7%9A%84%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81) As of June 30, 2025, the Group's total equity was HK$30.2 million, total assets HK$256.3 million, and total liabilities HK$226.1 million, with total equity significantly decreasing from the end of 2024 | Indicator | June 30, 2025 (HK$ million) | December 31, 2024 (HK$ million) | | :--- | :--- | :--- | | Total equity | 30.2 | 57.5 | | Total assets | 256.3 | 255.9 | | Total liabilities | 226.1 | 198.4 | [5.4 Events After Reporting Period](index=32&type=section&id=5.4%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) Subsequent to the reporting period, the company completed a convertible bond placement of up to HK$70,000,000, increased its stake in Vietnamese subsidiary JSC to 99.45% through capital injection, loan capitalization, and acquisition, and acquired assets for RMB20,000,000 to establish a new supermarket instant delivery system service business segment [5.4.1 Placement of Convertible Bonds Under General Mandate](index=32&type=section&id=5.4.1%20%E6%A0%B9%E6%93%9A%E4%B8%80%E8%88%AC%E6%8E%88%E6%AC%8A%E9%85%8D%E5%94%AE%E5%8F%AF%E6%8F%9B%E8%82%A1%E5%82%B5%E5%88%B8) The company entered into a new placement agreement with a placing agent to complete a convertible bond placement with a principal amount of up to HK$70,000,000 and an 8% coupon rate, following the termination of a previous 5% coupon rate placement agreement - The company entered into a new placing agreement with Funderstone Securities Limited to complete a convertible bond placement with a principal amount of up to **HK$70,000,000** and an **8%** coupon rate[87](index=87&type=chunk) - A previous placing agreement with a principal amount of up to **HK$70,000,000** and a **5%** coupon rate was terminated[86](index=86&type=chunk) [5.4.2 Discloseable Transaction Regarding JSC Equity](index=33&type=section&id=5.4.2%20%E6%9C%89%E9%97%9CJSC%E8%82%A1%E6%9C%AC%E7%9A%84%E9%A0%88%E4%BA%88%E6%8A%AB%E9%9C%B2%E4%BA%A4%E6%98%93) Through SL Vietnam's capital injection into JSC (US$1,000,000), Sky Light Imaging's loan capitalization into JSC (US$11,000,000), and SL Vietnam's acquisition of JSC joint venture partner shares (US$100,000), the Group's shareholding in JSC increased to 99.45% - SL Vietnam injected **US$1,000,000** into JSC, subscribing for **2,495,500** new JSC shares[90](index=90&type=chunk) - Sky Light Imaging capitalized **US$11,000,000** of outstanding loans, subscribing for **5,046,285** new JSC shares[90](index=90&type=chunk) - SL Vietnam acquired **2,348,675** JSC shares from a JSC joint venture partner for **US$100,000**, after which the Group will hold **99.45%** of JSC's total issued share capital[89](index=89&type=chunk)[90](index=90&type=chunk) [5.4.3 Discloseable Transaction for Asset Acquisition](index=34&type=section&id=5.4.3%20%E9%A0%88%E4%BA%88%E6%8A%AB%E9%9C%B2%E4%BA%A4%E6%98%93%E6%94%B6%E8%B3%BC%E8%B3%87%E7%94%A2) A wholly-owned indirect subsidiary of the company acquired 3,200 electric delivery vehicles, 4,000 sets of new energy batteries, and 160 sets of new energy charging equipment for RMB20,000,000 (approximately HK$22,000,000) to establish a new business segment for supermarket instant delivery system services - A wholly-owned indirect subsidiary of the company acquired **3,200 electric delivery vehicles**, **4,000 sets of new energy batteries**, and **160 sets of new energy charging equipment** for **RMB20,000,000** (approximately **HK$22,000,000**)[92](index=92&type=chunk) - This acquisition aims to establish a new business segment for the Group's supermarket instant delivery system services[92](index=92&type=chunk) VI. Other Information [6.1 Purchase, Sale or Redemption of Listed Securities](index=34&type=section&id=6.1%20%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) As of June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and the company held no treasury shares - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[93](index=93&type=chunk) - As of June 30, 2025, the company held no treasury shares[94](index=94&type=chunk) [6.2 Corporate Governance Code](index=35&type=section&id=6.2%20%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The company has adopted the principles and code provisions of the Corporate Governance Code under Appendix C1 of the Listing Rules, and has complied with all applicable code provisions during this period, except for code provision C.2.1 regarding the separation of roles for Chairman and Chief Executive Officer, which the Board believes benefits unified leadership and business prospects - The company has adopted the principles and code provisions of the Corporate Governance Code under Appendix C1 of the Listing Rules[95](index=95&type=chunk) - The company deviates from code provision C.2.1, with Mr Deng Rongfang serving concurrently as Chairman of the Board and Chief Executive Officer[96](index=96&type=chunk) - The Board believes Mr Deng's dual role provides strong and unified leadership, with sufficient safeguards to ensure a balance of power on the Board[96](index=96&type=chunk) [6.3 Standard Code for Securities Transactions by Directors](index=35&type=section&id=6.3%20%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The company has adopted the Standard Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules, with all directors confirming full compliance during this period, and written guidelines for employees with inside information have been established, with no non-compliance found - The company has adopted the Standard Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules, and directors confirm full compliance[97](index=97&type=chunk) - The company has established written guidelines for employees who may possess inside information regarding securities transactions, with no non-compliance found during this period[98](index=98&type=chunk) [6.4 Audit Committee](index=36&type=section&id=6.4%20%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, comprising three independent non-executive directors with Ms Lo Wan Man as chairperson, has reviewed these interim results and is satisfied they are prepared in accordance with applicable accounting standards, with no disagreements on accounting treatments - The Audit Committee comprises three independent non-executive directors, with Ms Lo Wan Man as chairperson[99](index=99&type=chunk) - The Committee has reviewed these interim results, is satisfied they are prepared in accordance with applicable accounting standards, and has no disagreements on accounting treatments[99](index=99&type=chunk) [6.5 Publication of Interim Results and Interim Report](index=36&type=section&id=6.5%20%E5%88%8A%E7%99%BC%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) This 2025 interim results announcement has been published on the HKEXnews website and the company's website, and the interim report will be dispatched to shareholders and available on the aforementioned websites in due course - This 2025 interim results announcement has been published on the HKEXnews website and the company's website[100](index=100&type=chunk) - The company's 2025 interim report will be dispatched to shareholders and available on the aforementioned websites in due course[100](index=100&type=chunk) VII. Acknowledgement [7.1 Board's Appreciation](index=37&type=section&id=7.1%20%E8%91%A3%E4%BA%8B%E6%9C%83%E8%87%B4%E8%AC%9D) The Board extends its gratitude to all stakeholders and business partners for their unwavering support, and to the directors, management, and employees for their dedication and contributions to the business's progress - The Board thanks all stakeholders, business partners, directors, management, and employees for their support and contributions to the business's progress[101](index=101&type=chunk)

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公告 全部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責 任。 Chuan Holdings Limited 川控股有限公司 * （於開曼群島註冊成立的有限公司） （股份代號：1420） 截至2025年6月30日止六個月之 中期業績公告 川控股有限公司（「本公司」）董事（「董事」）會（「董事會」）欣然宣佈本公司及其 附屬公司（統稱「本集團」）截至2025年6月30日止六個月（「回顧期間」或「報告期 間」）的未經審核綜合中期業績，連同比較數字如下： * 僅供識別 1 簡明綜合全面收益表 截至2025年6月30日止六個月 | | | 截至6月30日止六個月 | | | --- | --- | --- | --- | | | 附註 | 2025年 | 2024年 | | | | 千新加坡元 | 千新加坡元 | | | | （未經審核） （未經審核） | | | 收益 | 5 | 54,861 | 63,505 | | 銷售成本 | | (45,078) | (56,572 ...

Financial Performance - For the six months ended June 30, 2025, the Group recorded revenue of approximately RMB80,606 million, representing a year-on-year increase of 2.58%[11] - Gross profit for the same period increased by 3.05% to RMB5,543 million[11] - Profit attributable to owners of the parent company rose by 13.97% to approximately RMB1,730 million[11] - Earnings per share increased by 13.97% to RMB0.77[11] - The group's net profit attributable to shareholders rose by approximately 13.97% to about RMB 1.730 billion in the same period[17] - Revenue for the six months ended June 30, 2025, increased to RMB 80,605,678, up 2.6% from RMB 78,580,818 in the same period of 2024[151] - Profit for the period reached RMB 1,729,777, an increase of 13.9% from RMB 1,517,800 in the previous year[152] - Total comprehensive income for the period was RMB 1,745,558,000, which includes foreign exchange differences of RMB 15,110,000[161] Business Segments - The new energy vehicles business segment sustained robust growth, contributing significantly to the Group's overall performance[12] - The AI data center business achieved a sharp increase in server shipments, unlocking new growth opportunities[12] - The consumer electronics business generated revenue of RMB 60.947 billion, with components revenue at approximately RMB 13.752 billion and assembly revenue at approximately RMB 47.195 billion[22][24] - In the first half of 2025, new energy vehicles accounted for 44.3% of total sales volume in the industry, with production and sales volumes reaching 6.968 million and 6.937 million units, representing year-on-year increases of 41.4% and 40.3% respectively[31] - The Group's revenue from the new energy vehicle business segment amounted to approximately RMB12,450 million, representing a year-on-year increase of approximately 60.50%, accounting for 15.45% of total revenue[31] Market Trends - Global smartphone shipments increased by only 0.1% to 586 million units in the first half of 2025, while China's smartphone market size grew by 0.4% year-on-year to 139 million units[20] - The foldable-screen smartphone market in China saw shipments of approximately 4.984 million units, marking a year-on-year increase of 12.6%[20] - The global AI data center market is projected to reach USD 236.44 billion in 2025, indicating a year-on-year growth of 40.9%[26] - The global AI server market is expected to grow by 27.6% year on year to USD 39.23 billion in 2025, reaching USD 132.81 billion by 2030[49] - The global new energy vehicle sales are projected to increase by approximately 25% year-on-year to 22 million units in 2025, with about two-thirds of sales expected to be in China[55] Research and Development - The Group's R&D investment in the first half of 2025 was approximately RMB2,231 million, reflecting a strong commitment to innovation-driven growth[34] - The Group is actively investing in new product research and development, particularly in AI data centers and AI robotics, to capitalize on emerging market opportunities[26] - The Group has established a comprehensive patent portfolio in the AI data center segment, covering liquid cooling systems, power systems, and AI server system design, supporting rapid growth in this new business[39] - The Group has applied for a total of 11,580 patents and has been granted 8,119 patents as of June 30, 2025, demonstrating a strong commitment to intellectual property development[37] Financial Position - Operating cash inflow was approximately RMB 10,002 million, a significant increase from RMB 183 million in the first half of 2024[66] - As of June 30, 2025, interest-bearing bank and other borrowings were approximately RMB 9,652 million, down from RMB 10,807 million at the end of 2024[73] - The gearing ratio as of June 30, 2025, was -5.27%, indicating a strong financial position compared to 18.01% at the end of 2024[74] - Cash and cash equivalents at the end of the period stood at RMB 13,080,158, up from RMB 8,130,150 in the previous year, marking an increase of approximately 61%[168] Corporate Governance - The Board emphasized maintaining high standards of corporate governance and compliance with the Corporate Governance Code during the reporting period[122][123] - The Company has confirmed compliance with the Model Code regarding securities transactions by its Directors, with no incidents of non-compliance noted during the Period[125] - The Company has implemented measurable objectives for Board diversity, including gender, age, and cultural background[136] Sustainability and Future Outlook - The Group is committed to sustainable development, aligning with national policies on carbon neutrality and continuously refining green technologies[42] - The Group aims to strengthen core technology R&D and expand its advantages in vertical integration to seize future market opportunities[44] - Emerging business segments such as servers, AI data centers, and AI robots are expected to grow rapidly, driving the Group's sustainable development[45]

[Company Information](index=4&type=section&id=公司資料) BYD Electronic (International) Company Limited was spun off from BYD Company Limited and listed on the HKEX main board on December 20, 2007, operating as a global leading provider of high-tech innovative products across diverse markets - BYD Electronic (International) Company Limited was spun off from BYD Company Limited and listed on the HKEX main board on **December 20, 2007**[4](index=4&type=chunk)[5](index=5&type=chunk) - The Group is a global leading provider of high-tech innovative products, with businesses covering smartphones, new energy vehicles, AI data centers, smart homes, and other fields[4](index=4&type=chunk)[5](index=5&type=chunk) - Board members include executive directors Mr. Wang Nianqiang and Mr. Jiang Xiangrong; non-executive directors Mr. Wang Chuanfu and Mr. Wang Bo; and independent non-executive directors Mr. Zhong Guowu, Mr. Qian Jingjie, and Ms. Wang Ying[7](index=7&type=chunk)[8](index=8&type=chunk) [Financial Highlights](index=6&type=section&id=財務摘要) The Group's interim results for the six months ended June 30, 2025, show revenue of RMB 80,606 million, gross profit of RMB 5,543 million, and profit attributable to owners of the parent of RMB 1,730 million, with EPS of RMB 0.77 Interim Results Highlights for the Six Months Ended June 30, 2025 | Indicator | H1 2025 (RMB millions) | YoY Change | | :--- | :--- | :--- | | Revenue | 80,606 | +2.58% | | Gross Profit | 5,543 | +3.05% | | Profit attributable to owners of the parent | 1,730 | +13.97% | | Earnings per share | RMB 0.77 | +13.97% | - The Group's consumer electronics business achieved steady growth, with improved operational efficiency and profitability[13](index=13&type=chunk) - The new energy vehicle business segment maintained rapid growth, benefiting from the automotive industry's intelligent transformation trend[13](index=13&type=chunk) - The AI data center business achieved leapfrog growth, with rapid increase in server shipments and multiple liquid cooling and power products passing client certification[13](index=13&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=管理層討論及分析) [Business Review](index=7&type=section&id=業務回顧) In H1 2025, despite global economic challenges, China's economy showed resilience, and the Group expanded market share, achieving steady business development with record-high overall business scale driven by robust consumer electronics, new opportunities from AI server shipments, and strong new energy vehicle growth - In H1 2025, China's GDP grew by **5.3% year-on-year**, with macro-economic policies showing effectiveness[16](index=16&type=chunk)[18](index=18&type=chunk) Group Sales and Profit Attributable to Shareholders for H1 2025 | Indicator | Amount (RMB) | YoY Growth | | :--- | :--- | :--- | | Sales | 80.606 billion | 2.58% | | Profit attributable to shareholders | 1.730 billion | 13.97% | [Consumer Electronics Business](index=8&type=section&id=消費電子業務) Despite market pressure, the Group focused on high-value products, strengthened its position in flagship model supply chains, and improved profitability in precision components through automation, while increasing overseas major client assembly share and focusing on high-end Android services - Global smartphone shipments in H1 2025 slightly increased by **0.1% to 586 million units**, with China market growing by **0.4% to 139 million units**[21](index=21&type=chunk) - Global tablet shipments increased by **8.9% year-on-year to 76 million units**[21](index=21&type=chunk) - China's foldable smartphone market shipments increased by **12.6% year-on-year to approximately 4.984 million units**[21](index=21&type=chunk) H1 2025 Consumer Electronics Business Revenue | Business Type | Revenue (RMB) | | :--- | :--- | | Total Consumer Electronics Business Revenue | 60.947 billion | | Component Revenue | 13.752 billion | | Assembly Revenue | 47.195 billion | [New Smart Products Business](index=9&type=section&id=新型智能產品業務) The convergence of AI, 5G, and IoT reshapes the tech landscape, driving new smart product markets, with AI data centers expanding rapidly and liquid cooling becoming mainstream, as the Group actively deploys in AI data centers and AI robots, achieving strong AI server shipment growth, client certification for data center liquid cooling and power products, and large-scale internal application of intelligent logistics robots - IDC forecasts servers with embedded GPUs to grow by **46.7% year-on-year in 2025**, accounting for nearly **50% of the global server market value**[27](index=27&type=chunk)[29](index=29&type=chunk) - MarketsandMarkets predicts the global AI data center market size will reach **USD 236.44 billion in 2025**, a **40.9% year-on-year increase**[27](index=27&type=chunk)[29](index=29&type=chunk) H1 2025 New Smart Products Business Revenue | Indicator | Revenue (RMB) | | :--- | :--- | | New Smart Products Business Revenue | 7.209 billion | [New Energy Vehicle Business](index=10&type=section&id=新能源汽車業務) China's new energy vehicle market continues to lead globally with high growth in production, sales, and exports, accelerating intelligent transformation, while the Group leverages its first-mover technological advantages in smart cockpits, intelligent driving assistance, smart suspension, and thermal management, achieving mass production and significant shipment growth for multiple products, with smart suspension systems now being mass-produced for mainstream car models - In H1 2025, new energy vehicle production reached **6.968 million units** and sales reached **6.937 million units**, increasing by **41.4% and 40.3% year-on-year**, respectively[32](index=32&type=chunk)[33](index=33&type=chunk) - New energy vehicle exports in H1 2025 reached **1.06 million units**, a **75.2% year-on-year increase**[32](index=32&type=chunk)[33](index=33&type=chunk) - In June, the retail penetration rate of new energy passenger vehicles was as high as **53.3%**, with autonomous brand new energy vehicle penetration at **75.4%**[32](index=32&type=chunk)[33](index=33&type=chunk) H1 2025 New Energy Vehicle Business Revenue | Indicator | Revenue (RMB) | YoY Growth | % of Total Revenue | | :--- | :--- | :--- | :--- | | New Energy Vehicle Business Revenue | 12.450 billion | 60.50% | 15.45% | [R&D and Innovation](index=12&type=section&id=研發與創新) The Group has built a complete technology chain and unique competitive advantages through deep accumulation in innovative materials, precision molds, software/hardware development, and large-scale manufacturing, shifting its R&D focus to new energy vehicles and AI-related businesses while continuously deepening intelligent transformation, with 11,580 patent applications and 8,119 granted patents as of June 30, 2025, and R&D investment of approximately RMB 2.231 billion in H1 2025 - As of June 30, 2025, the Group had cumulatively applied for **11,580 patents** and been granted **8,119 patents**[35](index=35&type=chunk)[38](index=38&type=chunk) - R&D investment in H1 2025 was approximately **RMB 2.231 billion**[35](index=35&type=chunk)[38](index=38&type=chunk) - The R&D focus has shifted from traditional consumer electronics to new energy vehicles and AI-related business areas[36](index=36&type=chunk)[38](index=38&type=chunk) - In the automotive product sector, a patent layout covering smart cockpits, intelligent driving assistance systems, smart suspension systems, and thermal management systems has been formed[37](index=37&type=chunk)[38](index=38&type=chunk) - In the AI data center sector, extensive patent reserves have been established for liquid cooling systems, power systems, and AI server system design[40](index=40&type=chunk)[44](index=44&type=chunk) - Large-scale application of AMR intelligent logistics robots and active development of AI robots and core components to improve manufacturing efficiency[41](index=41&type=chunk)[44](index=44&type=chunk) [Future Strategy](index=14&type=section&id=未來策略) For H2 2025, with China's economic resilience and strengthened macro policies to expand domestic demand and foster new consumption growth, the Group will continue to deepen core technology R&D, enhance vertical integration advantages, strengthen strategic cooperation with major clients, consolidate its leading position in consumer electronics, drive high growth in new energy vehicle business, and accelerate the development of emerging businesses like AI data centers and AI robots for sustainable growth - The state will continue to deepen policy support, focusing on new energy vehicles and electronic intelligent manufacturing represented by AI and high-end chips[45](index=45&type=chunk)[46](index=46&type=chunk) - The Ministry of Commerce issued the "Notice on Organizing and Launching the 2025 New Energy Consumption Season Activities in Thousands of Counties and Ten Thousand Towns" to promote new energy vehicles in rural areas[45](index=45&type=chunk)[46](index=46&type=chunk) - The Group will continue to deepen core technology R&D and enhance high-end manufacturing innovation capabilities, strengthen vertical integration barriers, and deepen strategic cooperation with major clients[45](index=45&type=chunk)[46](index=46&type=chunk) [Consumer Electronics Business Outlook](index=15&type=section&id=消費電子業務展望) Rapid development of edge AI technology is expected to stimulate a new wave of replacement demand, with AI smartphone penetration projected to reach 34% in 2025, supported by national consumption promotion policies, especially trade-in subsidies for phones and tablets, while the foldable phone market will fully develop, with the entry of leading US phone brands potentially being a turning point, and AI PCs becoming a core driver of PC industry transformation, as the Group continues to expand its leading edge in precision manufacturing technology, focusing on high-value premium products, and deepening strategic cooperation with overseas major clients and Android clients - Canalys predicts AI smartphone penetration will reach **34% in 2025**, and expects AI smartphones to maintain a high penetration trend from **2025 to 2026**[48](index=48&type=chunk)[51](index=51&type=chunk) - New purchase subsidy policies for consumer electronics such as mobile phones and tablets will continue until **December 31, 2025**[48](index=48&type=chunk)[51](index=51&type=chunk) - TrendForce predicts foldable smartphone shipments will reach **19.8 million units in 2025**, with market penetration remaining at approximately **1.6%**[48](index=48&type=chunk)[51](index=51&type=chunk) - Counterpoint expects over half of laptops to feature AI capabilities by **2026**, with AI PC demand becoming a significant growth driver[48](index=48&type=chunk)[51](index=51&type=chunk) [New Smart Products Business Outlook](index=16&type=section&id=新型智能產品業務展望) The integration of AI and 5G technologies creates vast market demand, with AI and large model technologies accelerating evolution, driving explosive growth in the AI data center and AI server markets, as liquid cooling becomes mainstream for green data centers and the industrial robot market continues to grow, while the Group will increase R&D investment in data centers, build high-barrier product layouts for AI servers and liquid cooling systems, and leverage the commonality of AI robot and smart vehicle technologies to comprehensively deploy in AI robot core components and complete systems - MarketsandMarkets expects the global AI data center market size to reach **USD 236.44 billion by 2030**, with a **CAGR of 31.6% from 2025 to 2030**[50](index=50&type=chunk)[52](index=52&type=chunk) - Precedence predicts the global AI server market size will grow by **27.6% year-on-year to USD 39.23 billion in 2025**, reaching **USD 132.81 billion by 2030**[50](index=50&type=chunk)[52](index=52&type=chunk) - Research Nester expects the global data center liquid cooling market size to reach **USD 89.77 billion by 2037**, with a **CAGR of 40.3% from 2025 to 2037**[54](index=54&type=chunk)[55](index=55&type=chunk) - Fortune Business Insights expects the global industrial robot market size to grow from **USD 21.94 billion in 2025 to USD 55.55 billion in 2032**, with a **CAGR of 14.2%**[54](index=54&type=chunk)[55](index=55&type=chunk) [New Energy Vehicle Business Outlook](index=18&type=section&id=新能源汽車業務展望) China's new energy vehicle industry is transitioning from scale leadership to technological leadership, entering a new stage of intelligent and high-quality development, with policy-driven consumption potential unleashed and intelligent connected features becoming a competitive focus, as 2025 is seen as the "Year of Intelligent Driving Parity" with accelerated popularization of intelligent driving technology, while the Group will continue to benefit from automotive industry changes and increased intelligent driving penetration, with smart cockpit, thermal management, and intelligent driving assistance product shipments maintaining growth, smart suspension products being fitted to more models, and per-vehicle value steadily increasing - China Association of Automobile Manufacturers predicts China's new energy vehicle sales will reach **16 million units in 2025**, with electrification penetration expected to exceed **50%**[56](index=56&type=chunk)[59](index=59&type=chunk) - BloombergNEF expects global new energy vehicle sales to grow by approximately **25% year-on-year to 22 million units in 2025**, with about two-thirds from China[56](index=56&type=chunk)[59](index=59&type=chunk) - Mordor Intelligence expects the global ADAS market size to grow from **USD 38.54 billion in 2025 to USD 68.68 billion by 2030**, with a **CAGR of 12.3%**[56](index=56&type=chunk)[59](index=59&type=chunk) - MarketsandMarkets predicts the global L3 autonomous passenger vehicle market size will grow from **291,000 units in 2025 to 8.7 million units by 2035**, with a **CAGR of 40.5%**[56](index=56&type=chunk)[59](index=59&type=chunk) - Global Info Research predicts the global smart suspension market size will reach **USD 3.6 billion by 2031**, with a **CAGR of 6.6% from 2025 to 2031**[58](index=58&type=chunk)[59](index=59&type=chunk) [Financial Review](index=21&type=section&id=財務回顧) In H1 2025, the Group's revenue increased by 2.58% year-on-year, and profit attributable to owners of the parent increased by 13.97% year-on-year, primarily due to growth in the new energy vehicle business and reduced expenses, with a significant increase in operating cash inflow and ample liquidity, and the capital gearing ratio significantly improved from 18.01% at the end of 2024 to -5.27% - Revenue increased by **2.58%** year-on-year, and profit attributable to owners of the parent increased by **13.97%** year-on-year[63](index=63&type=chunk)[69](index=69&type=chunk) - Gross profit increased by approximately **3.05% to RMB 5,543 million**, with gross margin remaining stable at approximately **6.88%** from 6.85% in H1 2024[66](index=66&type=chunk)[72](index=72&type=chunk) [Operating Results](index=21&type=section&id=經營業績) In H1 2025, the Group's revenue reached RMB 80,606 million, a 2.58% year-on-year increase; gross profit was RMB 5,543 million, a 3.05% year-on-year increase; and profit attributable to owners of the parent was RMB 1,730 million, a 13.97% year-on-year increase H1 2025 Operating Results | Indicator | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 80,606 | 78,581 | +2.58% | | Gross Profit | 5,543 | 5,379 | +3.05% | | Profit attributable to owners of the parent | 1,730 | 1,518 | +13.97% | [Segment Information](index=21&type=section&id=分部資料) In H1 2025, the Group's revenue from China (including Hong Kong, Macau, and Taiwan) accounted for 35% of total revenue, with overseas revenue accounting for 65%, showing an increase in China's revenue share and a slight decrease in overseas revenue share compared to H1 2024 Regional Segment Revenue by Customer Location | Region | H1 2025 | H1 2024 | | :--- | :--- | :--- | | China (including Hong Kong, Macau, and Taiwan) | 35% | 32% | | Overseas | 65% | 68% | [Liquidity and Financial Resources](index=21&type=section&id=流動資金與財務資源) In H1 2025, the Group's operating cash inflow significantly increased to approximately RMB 10,002 million from RMB 183 million in H1 2024, primarily due to increased cash received from sales of goods and services, while interest-bearing bank and other borrowings decreased to approximately RMB 9,652 million as of June 30, 2025, from RMB 10,807 million at the end of 2024, indicating ample liquidity and a capital gearing ratio improvement from 18.01% at the end of 2024 to -5.27% Key Liquidity and Financial Resources Indicators | Indicator | H1 2025 (RMB millions) | H1 2024 (RMB millions) | | :--- | :--- | :--- | | Operating cash inflow | 10,002 | 183 | | Interest-bearing bank and other borrowings (period-end) | 9,652 | 10,807 (end of 2024) | | Trade receivables and financing turnover days | 56 days | 54 days | | Inventory turnover days | 47 days | 49 days | | Capital gearing ratio (period-end) | -5.27% | 18.01% (end of 2024) | [Other Financial Matters](index=22&type=section&id=其他財務事項) In H1 2025, the Group had no significant investments, acquisitions, or disposals of subsidiaries, with controllable foreign exchange risk as most receipts and payments are settled in RMB and USD, while employing approximately 156,000 employees with staff costs accounting for about 12.81% of revenue, capital commitments of approximately RMB 620 million, and an ongoing lawsuit with Foxconn whose final outcome and compensation amount cannot be reliably estimated - In H1 2025, the Group had no significant investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures[76](index=76&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - As of June 30, 2025, the Group employed approximately **156,000 employees**, with total staff costs accounting for approximately **12.81% of revenue**[85](index=85&type=chunk)[92](index=92&type=chunk) Capital Commitments | Item | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | | :--- | :--- | :--- | | Total Capital Commitments | 620 | 807 | - The lawsuit with Foxconn is still in legal proceedings, and the final outcome and the amount of relevant payments (if applicable) for settlement cannot be reliably estimated[95](index=95&type=chunk)[53](index=53&type=chunk)[235](index=235&type=chunk) [Shareholders and Corporate Governance](index=24&type=section&id=股東及企業管治) This section discloses directors' and chief executive's interests in shares of the company and associated corporations, the implementation of the share award scheme, major shareholders' holdings, and the company's compliance with corporate governance, including board diversity policy and audit committee operations, with the Board not recommending an interim dividend for H1 2025 - The company has adopted a share award scheme, with an intended participation of no more than **3,000 people**, including executive directors, management, middle management, and core employees[103](index=103&type=chunk)[106](index=106&type=chunk) - The total capital involved in the share award scheme does not exceed **RMB 250 million**, and the purchase of target shares in the secondary market was completed on July 9, 2025, totaling **7,096,000 shares**[108](index=108&type=chunk)[109](index=109&type=chunk) - The company has complied with the applicable code provisions in Appendix C1 Part 2 of the Listing Rules and the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix C3[124](index=124&type=chunk)[125](index=125&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - The Board has adopted a board diversity policy and achieved gender diversity on the Board as of June 30, 2025, with one female director[136](index=136&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The Board does not recommend the payment of an interim dividend for H1 2025[146](index=146&type=chunk)[150](index=150&type=chunk) [Directors' and Chief Executive's Interests](index=24&type=section&id=董事及最高行政人員權益) As of June 30, 2025, the company's directors and chief executive held interests in shares of the company and BYD Company Limited, with Mr. Wang Nianqiang holding 0.76% of the Company's shares and 0.60% of BYD's shares, and Mr. Wang Chuanfu holding 17.06% of BYD's shares Directors' and Chief Executive's Interests in Shares | Director Name | Company Name | Capacity | Number of Issued Shares Held | Approximate % of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | :--- | | Mr. Wang Nianqiang | The Company | Beneficial Owner and Beneficiary | 17,102,000 | 0.76% | | Mr. Wang Nianqiang | BYD | Beneficial Owner | 18,299,740 | 0.60% | | Mr. Jiang Xiangrong | The Company | Spouse's Interest | 169,000 | <0.01% | | Mr. Wang Bo | The Company | Beneficiary | 2,805,000 | 0.12% | | Mr. Wang Chuanfu | BYD | Beneficial Owner | 518,351,550 | 17.06% | | Mr. Qian Jingjie | The Company | Beneficial Owner | 5,000 | <0.01% | [Share Scheme](index=25&type=section&id=股份計劃) The company adopted a share award scheme on March 17, 2025, to incentivize executive directors, management, and core employees, with a total amount not exceeding RMB 250 million, and completed the secondary market purchase of 7,096,000 target shares for approximately HKD 227.48 million on July 9, 2025, with awards subject to vesting schedules and performance metrics - The share award scheme is intended for no more than **3,000 participants**, including executive directors, management, middle management, and core employees[103](index=103&type=chunk)[106](index=106&type=chunk) - The total capital involved in this share award scheme does not exceed **RMB 250 million**[108](index=108&type=chunk) - On July 9, 2025, the purchase of target shares under this share award scheme was completed in the secondary market, totaling **7,096,000 shares**, representing approximately **0.31% of the total issued shares**, for a total consideration of approximately **HKD 227,481,425**[109](index=109&type=chunk) [Major Shareholders](index=27&type=section&id=主要股東) As of June 30, 2025, Golden Link Worldwide Limited, BYD (H.K.) Co., Limited, and BYD Company Limited were the company's major shareholders, each holding 65.76% of the company's shares Major Shareholder Holdings | Shareholder Name | Nature of Interest | Number of Ordinary Shares Held | Approximate % of Total Issued Shares | | :--- | :--- | :--- | :--- | | Golden Link Worldwide Limited | Beneficial Interest | 1,481,700,000 | 65.76% | | BYD (H.K.) Co., Limited | Interest in Controlled Corporation | 1,481,700,000 | 65.76% | | BYD Company Limited | Interest in Controlled Corporation | 1,481,700,000 | 65.76% | - BYD Company Limited is the sole shareholder of BYD HK, which in turn is the sole shareholder of Golden Link, thus BYD HK and BYD Company Limited are deemed to have an interest in the Company's shares held by Golden Link[119](index=119&type=chunk)[121](index=121&type=chunk) [Corporate Governance](index=28&type=section&id=企業管治) The Board is committed to maintaining high standards of corporate governance, complying with the Corporate Governance Code and the Model Code for Securities Transactions by Directors, with changes in Board members in H1 2025 including Mr. Zhong Guowu's cessation as an independent non-executive director of Tokyo Chuo Auction Holdings Limited, Mr. Jiang Xiangrong's appointment as Vice President of BYD, and Ms. Wang Ying's appointment as an independent director of Huanlejia Food Group Co., Ltd., while the Board has adopted a diversity policy and improved gender diversity, with female employees accounting for approximately 33.30% of total domestic staff, and the Audit Committee has reviewed the unaudited results for the period - Mr. Zhong Guowu ceased to be an independent non-executive director of Tokyo Chuo Auction Holdings Limited effective **June 20, 2025**[127](index=127&type=chunk)[132](index=132&type=chunk) - Mr. Jiang Xiangrong was appointed as Vice President of BYD effective **June 21, 2025**[128](index=128&type=chunk)[132](index=132&type=chunk) - Ms. Wang Ying was appointed as an independent director of Huanlejia Food Group Co., Ltd. effective **June 23, 2025**[128](index=128&type=chunk)[132](index=132&type=chunk) - As of the report date, the number of female employees in the Group's domestic operations accounted for approximately **33.30% of the total workforce**[142](index=142&type=chunk)[147](index=147&type=chunk) - The Audit Committee convened a meeting on **August 29, 2025**, to review the accounting policies and practices adopted by the Group and discuss auditing, internal control, risk management, and financial reporting matters[144](index=144&type=chunk)[148](index=148&type=chunk) [Interim Dividend](index=30&type=section&id=中期股息) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (H1 2024: nil) - The Board does not recommend the payment of an interim dividend for the period (six months ended June 30, 2024: nil)[146](index=146&type=chunk)[150](index=150&type=chunk) [Financial Statements](index=31&type=section&id=財務報表) [Interim Condensed Consolidated Statement of Profit or Loss](index=31&type=section&id=中期簡明合併損益表) For the six months ended June 30, 2025, the Group recorded revenue of RMB 80,605,678 thousand, gross profit of RMB 5,542,965 thousand, profit for the period of RMB 1,729,777 thousand, and earnings per share of RMB 0.77 Interim Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30, 2025) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 80,605,678 | 78,580,818 | | Cost of sales | (75,062,713) | (73,201,786) | | Gross profit | 5,542,965 | 5,379,032 | | Research and development expenses | (2,230,952) | (2,472,846) | | Selling and distribution expenses | (1,042,891) | (902,902) | | Administrative expenses | (887,497) | (795,484) | | Profit before tax | 1,896,470 | 1,635,780 | | Income tax expense | (166,693) | (117,980) | | Profit for the period | 1,729,777 | 1,517,800 | | Earnings per share | RMB 0.77 | RMB 0.67 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=32&type=section&id=中期簡明合併綜合收益表) For the six months ended June 30, 2025, the Group's profit for the period was RMB 1,729,777 thousand, with net other comprehensive income of RMB 15,781 thousand, primarily from fair value changes of receivables financing and exchange differences on translation of foreign operations, resulting in total comprehensive income of RMB 1,745,558 thousand for the period Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30, 2025) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the period | 1,729,777 | 1,517,800 | | Receivables financing: fair value changes | 671 | 298 | | Exchange differences on translation of foreign operations | 15,110 | 8,703 | | Net other comprehensive income for the period | 15,781 | 9,001 | | Total comprehensive income for the period | 1,745,558 | 1,526,801 | [Interim Condensed Consolidated Statement of Financial Position](index=33&type=section&id=中期簡明合併財務狀況表) As of June 30, 2025, the Group's total assets were RMB 82,589,653 thousand, a decrease from RMB 90,347,204 thousand at the end of 2024, with net current assets of RMB 5,846,495 thousand and total equity of RMB 32,843,549 thousand, a slight increase from RMB 32,401,664 thousand at the end of 2024 Interim Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total non-current assets | 29,481,231 | 29,931,693 | | Total current assets | 53,108,422 | 60,415,511 | | Total assets | 82,589,653 | 90,347,204 | | Total current liabilities | 47,261,927 | 50,823,330 | | Total non-current liabilities | 2,484,177 | 7,122,210 | | Total equity | 32,843,549 | 32,401,664 | [Interim Condensed Consolidated Statement of Changes in Equity](index=35&type=section&id=中期簡明合併權益變動表) For the six months ended June 30, 2025, the Group's total equity increased from RMB 32,401,664 thousand on January 1, 2025, to RMB 32,843,549 thousand, primarily due to profit for the period of RMB 1,729,777 thousand, repurchase of ordinary shares of RMB 38,071 thousand, share-based payments recognized in equity of RMB 14,218 thousand, and declaration of 2024 final dividend of RMB 1,279,820 thousand Interim Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, 2025) | Item | Share Capital (RMB thousands) | Retained Profits (RMB thousands) | Total Equity (RMB thousands) | | :--- | :--- | :--- | :--- | | As at January 1, 2025 | 4,052,228 | 27,555,573 | 32,401,664 | | Profit for the period | – | 1,729,777 | 1,729,777 | | Repurchase of ordinary shares | – | – | (38,071) | | Share-based payments recognized in equity | – | – | 14,218 | | 2024 final dividend | – | (1,279,820) | (1,279,820) | | As at June 30, 2025 | 4,052,228 | 28,005,530 | 32,843,549 | [Interim Condensed Consolidated Statement of Cash Flows](index=37&type=section&id=中期簡明合併現金流量表) For the six months ended June 30, 2025, the Group generated net cash flow from operating activities of RMB 10,002,148 thousand, used net cash flow in investing activities of RMB 2,242,428 thousand, and used net cash flow in financing activities of RMB 1,749,567 thousand, resulting in a significant increase in cash and cash equivalents at period-end to RMB 13,080,158 thousand compared to the beginning of the period Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | 10,002,148 | 182,990 | | Net cash flows used in investing activities | (2,242,428) | (1,554,924) | | Net cash flows used in financing activities | (1,749,567) | (1,067,246) | | Net increase/(decrease) in cash and cash equivalents | 6,010,153 | (2,439,180) | | Cash and cash equivalents at end of period | 13,080,158 | 8,130,150 | [Notes to the Financial Information](index=40&type=section&id=財務資料附註) [Company and Group Information](index=40&type=section&id=公司及集團資料) The Company was incorporated in Hong Kong on June 14, 2007, and listed on the HKEX on December 20, 2007, operating as a global leading provider of high-tech innovative products across diverse markets including smartphones, new energy vehicles, and AI data centers, with BYD Company Limited as its ultimate controlling company - The Company was incorporated in Hong Kong on **June 14, 2007**, and its shares were listed on the HKEX on **December 20, 2007**[170](index=170&type=chunk)[174](index=174&type=chunk) - The Group is a global leading provider of high-tech innovative products, with businesses covering smartphones, tablets, new energy vehicles, AI data centers, smart homes, and other diversified market segments[171](index=171&type=chunk)[174](index=174&type=chunk) - The Company's ultimate controlling company is BYD Company Limited[172](index=172&type=chunk)[174](index=174&type=chunk) [Accounting Policies](index=40&type=section&id=會計政策) The interim condensed consolidated financial information is prepared in accordance with HKAS 34 and consistent with the accounting policies used in the 2024 consolidated financial statements, except for the first-time adoption of the revised HKFRS 21, which addresses currency exchangeability assessment but has no material impact on the Group's financial information - The interim condensed consolidated financial information is prepared in accordance with **HKAS 34 "Interim Financial Reporting"**[173](index=173&type=chunk)[175](index=175&type=chunk) - Accounting policies are consistent with the 2024 consolidated financial statements, except for the first-time adoption of the revised **HKFRS 21 "Lack of Exchangeability"**[177](index=177&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - The amendments to **HKAS 21** relate to the assessment of currency exchangeability, but as the Group's transaction and functional currencies are exchangeable, there is no impact on the interim condensed consolidated financial information[181](index=181&type=chunk)[183](index=183&type=chunk) [Operating Segment Information](index=42&type=section&id=經營分部資料) The Group's primary business involves manufacturing, assembling, and selling mobile phone components, modules, and other products, and for management purposes, it is organized into a single operating segment based on industry practice and vertical integration strategy, with management monitoring overall performance for resource allocation and evaluation - The Group's principal business is the manufacturing, assembly, and sale of mobile phone components, modules, and other products[182](index=182&type=chunk)[184](index=184&type=chunk) - The Group is organized into a single operating segment based on industry practice and management's vertical integration strategy[182](index=182&type=chunk)[184](index=184&type=chunk) [Revenue](index=43&type=section&id=收入) For the six months ended June 30, 2025, the Group's total revenue was RMB 80,605,678 thousand, predominantly from sales of mobile phone components, modules, and other products, with a smaller portion from service provision, and geographically, overseas revenue accounted for 65% while China (including Hong Kong, Macau, and Taiwan) accounted for 35% Revenue Information by Category from Customer Contracts (For the six months ended June 30, 2025) | Category | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | **Type of goods or services** | | | | Sales of mobile phone components, modules and other products | 80,014,514 | 77,964,893 | | Provision of services | 591,164 | 615,925 | | **Geographical markets** | | | | China (including Hong Kong, Macau and Taiwan) | 28,606,080 | 25,105,612 | | Overseas | 51,999,598 | 53,475,206 | | **Timing of revenue recognition** | | | | Goods transferred at a point in time | 80,299,796 | 78,221,936 | | Services transferred over time | 305,882 | 358,882 | [Profit Before Tax](index=44&type=section&id=除稅前溢利) The Group's profit before tax is stated after deducting costs such as cost of inventories sold, cost of services provided, depreciation of property, plant and equipment, depreciation of right-of-use assets, amortization of intangible assets, net impairment loss on trade receivables, write-down of inventories to net realizable value, and loss on disposal of items of property, plant and equipment Items Deducted from Profit Before Tax (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of inventories sold | 74,302,273 | 72,439,220 | | Cost of services provided | 560,221 | 570,163 | | Depreciation of property, plant and equipment | 2,261,345 | 2,318,456 | | Depreciation of right-of-use assets | 282,278 | 295,167 | | Amortization of intangible assets | 465,599 | 466,623 | | Net impairment loss on trade receivables | (43,632) | 4,267 | | Write-down of inventories to net realizable value | 200,219 | 192,403 | | Loss on disposal of items of property, plant and equipment | 6,352 | 16,849 | [Income Tax](index=45&type=section&id=所得稅) The Group is subject to income tax on profits in the jurisdictions where it operates, with Chinese subsidiaries generally taxed at a statutory rate of 25%, while certain high-tech enterprises (e.g., BYD Precision, Huizhou Electronics, Shantou Electronics) and Western Development policy beneficiaries (e.g., Xi'an Electronics, Chengdu Electronics) enjoy a preferential rate of 15%, and the Group has assessed the potential risks of Pillar Two legislative models, applying mandatory exceptions and concluding no material impact - Chinese subsidiaries are subject to corporate income tax at a statutory rate of **25%**[192](index=192&type=chunk)[196](index=196&type=chunk) - BYD Precision, Huizhou Electronics, and Shantou Electronics, as high-tech enterprises, enjoy a preferential corporate income tax rate of **15%**[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Xi'an Electronics and Chengdu Electronics enjoy a preferential corporate income tax rate of **15%** under the Western Development policy[194](index=194&type=chunk)[196](index=196&type=chunk) Major Components of Income Tax Expense (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current – China | 330,236 | 505,726 | | Current – Other regions | 23,965 | 13,651 | | Deferred | (187,508) | (401,397) | | Total tax expense for the period | 166,693 | 117,980 | - The Group has applied the mandatory exception and determined there is no material impact when recognizing and disclosing information on deferred tax assets and liabilities arising from Pillar Two income tax[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) [Dividends](index=47&type=section&id=股息) The Board has declared a final dividend of RMB 0.568 per ordinary share for 2024, totaling RMB 1,279,820 thousand Declared Dividends (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Final declared – RMB 0.568 per ordinary share (2024: RMB 0.538) | 1,279,820 | 1,212,224 | [Earnings Per Share](index=48&type=section&id=每股盈利) For the six months ended June 30, 2025, basic earnings per share were RMB 0.77, calculated based on profit attributable to ordinary equity holders of the parent of RMB 1,729,777 thousand and a weighted average of 2,253,204,500 ordinary shares outstanding, with no potentially dilutive ordinary shares outstanding during the period Basic Earnings Per Share Calculation (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent used in calculating basic earnings per share | 1,729,777 | 1,517,800 | | Weighted average number of ordinary shares outstanding during the period used in calculating basic earnings per share (shares) | 2,253,204,500 | 2,253,204,500 | [Property, Plant and Equipment](index=49&type=section&id=物業、廠房及設備) For the six months ended June 30, 2025, the Group added assets at a cost of RMB 2,508,509 thousand, disposed of assets with a net book value of RMB 293,681 thousand, resulting in a net loss on disposal of RMB 6,352 thousand Changes in Property, Plant and Equipment (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of additions | 2,508,509 | 1,922,675 | | Net book value of assets disposed | 293,681 | 67,726 | | Net loss on disposal | 6,352 | 16,849 | [Trade Receivables](index=50&type=section&id=應收貿易款項) As of June 30, 2025, the net book value of trade receivables was RMB 17,208,452 thousand, a significant decrease from RMB 32,306,016 thousand at the end of 2024, with the majority due within 90 days, and receivables from controlling companies, fellow subsidiaries, and other related parties totaling RMB 5,405,910 thousand Ageing Analysis of Trade Receivables (As of June 30, 2025) | Ageing | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 90 days | 16,856,646 | 31,715,854 | | 91 to 180 days | 223,656 | 578,315 | | 181 to 360 days | 128,150 | 11,847 | | Total | 17,208,452 | 32,306,016 | Receivables from Related Parties (As of June 30, 2025) | Related Party | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Receivables from ultimate controlling company | 156,284 | 157,134 | | Receivables from intermediate controlling company | 144,284 | 143,763 | | Receivables from fellow subsidiaries | 5,103,760 | 7,872,492 | | Receivables from other related parties | 1,582 | 364 | | Total | 5,405,910 | 8,173,753 | [Trade Payables and Bills Payable](index=51&type=section&id=應付貿易賬款及應付票據) As of June 30, 2025, total trade payables and bills payable were RMB 27,100,653 thousand, a decrease from RMB 35,331,180 thousand at the end of 2024, with the majority due within 90 days, and payables to controlling companies, fellow subsidiaries, and other related companies totaling RMB 12,107,428 thousand Ageing Analysis of Trade Payables and Bills Payable (As of June 30, 2025) | Ageing | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 90 days | 23,894,220 | 33,978,257 | | 91 to 180 days | 2,708,424 | 1,088,433 | | 181 to 360 days | 436,115 | 227,180 | | 1 to 2 years | 52,792 | 29,492 | | Over 2 years | 9,102 | 7,818 | | Total | 27,100,653 | 35,331,180 | Payables to Related Parties (As of June 30, 2025) | Related Party | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Payables to ultimate controlling company | 202,364 | 233,081 | | Payables to intermediate controlling company | 6,796,984 | 10,485,778 | | Payables to fellow subsidiaries | 5,108,080 | 12,516,371 | | Total | 12,107,428 | 23,235,230 | [Share Capital](index=52&type=section&id=股本) As of June 30, 2025, the Company's issued and fully paid ordinary shares totaled 2,253,204,500 shares, with a total share capital of RMB 4,052,228 thousand Share Capital (As of June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Number of issued and fully paid ordinary shares | 2,253,204,500 | 2,253,204,500 | | Total share capital | 4,052,228 | 4,052,228 | [Contingent Liabilities](index=53&type=section&id=或然負債) The Group is involved in a lawsuit with Foxconn International Holdings Limited, initiated in 2007, alleging illegal use of confidential information, and as of the report date, the lawsuit remains in legal proceedings, with the Board deeming it difficult to reliably estimate the final outcome and the amount payable for settlement - The Group is involved in a lawsuit with Foxconn International Holdings Limited, alleging the use of illegally obtained confidential information[231](index=231&type=chunk)[234](index=234&type=chunk) - As of the report date, the lawsuit remains in legal proceedings, and the final outcome and the amount of relevant payments (if applicable) for settlement cannot be reliably estimated[233](index=233&type=chunk)[235](index=235&type=chunk) [Capital Commitments](index=54&type=section&id=資本承擔) As of June 30, 2025, the Group's total capital commitments were approximately RMB 620,380 thousand, primarily for contracted but unprovided expenditures on plant and machinery and buildings Capital Commitments (As of June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Plant and machinery | 584,547 | 767,040 | | Buildings | 35,833 | 39,866 | | Total | 620,380 | 806,906 | [Related Party Transactions](index=54&type=section&id=關聯方交易) In H1 2025, the Group engaged in several significant related party transactions, including sales and purchases of plant and machinery and inventories, lease and processing service fees, and procurement service agency fees and electricity charges, all conducted in the ordinary course of business and in compliance with Listing Rules, with outstanding balances including loans and lease liabilities with related parties as of June 30, 2025 Summary of Related Party Transactions (For the six months ended June 30, 2025) | Nature of Transaction | Related Party | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | | Sale of plant and machinery | Ultimate controlling company/Fellow subsidiaries | 8,972 | 11,126 | | Purchase of plant and machinery | Ultimate controlling company/Fellow subsidiaries | 5,446 | 8,371 | | Purchase of inventories | Ultimate controlling company/Fellow subsidiaries | 1,375,253 | 1,004,119 | | Sale of inventories | Ultimate controlling company/Fellow subsidiaries | 12,162,147 | 6,256,606 | | Lease and ancillary service payments | Ultimate controlling company/Fellow subsidiaries | 484,289 | 424,421 | | Exclusive processing services received | Ultimate controlling company/Fellow subsidiaries | 362,962 | 544,099 | | Exclusive processing services provided | Ultimate controlling company/Fellow subsidiaries | 530,422 | 364,560 | | Agency fees for procurement services | Intermediate controlling company/Fellow subsidiaries | 38,925 | 40,834 | | Electricity charges received | Ultimate controlling company/Fellow subsidiaries | 55,546 | 50,242 | - The Company's wholly-owned subsidiary, Lingyu, obtained a loan of **RMB 9,600,000 thousand** from intermediate controlling company BYD HK Co., Ltd., bearing fixed interest rates of **3.18%-3.77%**[246](index=246&type=chunk)[247](index=247&type=chunk) Lease Liabilities with Related Parties (As of June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current lease liabilities – Ultimate controlling company | 133,130 | 78,884 | | Current lease liabilities – Fellow subsidiaries | 258,858 | 92,910 | | Non-current lease liabilities – Ultimate controlling company | 123,966 | 31,129 | | Non-current lease liabilities – Fellow subsidiaries | 101,848 | 25,769 | | Total | 617,802 | 228,692 | Key Management Personnel Remuneration (For the six months ended June 30, 2025) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 9,102 | 7,680 | | Contributions to pension schemes | 29 | 41 | | Total | 9,131 | 7,721 | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=58&type=section&id=金融工具的公允價值及公允價值層級) There are no significant differences between the carrying amounts and fair values of the Group's financial instruments, with management assessing that the fair values of short-term deposits, cash and cash equivalents, and trade receivables are similar to their carrying amounts, while non-listed equity investments are valued using the market approach and interest-bearing bank and other borrowings are valued by discounting expected future cash flows, and derivative financial instruments and receivables financing have fair values equal to their carrying amounts, measured using valuation techniques similar to forward prices - There are no significant differences between the carrying amounts and fair values of the Group's financial instruments[256](index=256&type=chunk)[259](index=259&type=chunk) - The fair value of non-listed equity investments is valued using the market approach, and the fair value of interest-bearing bank and other borrowings is calculated by discounting expected future cash flows[261](index=261&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk) Assets Measured at Fair Value (As of June 30, 2025) | Item | Level 2 (RMB thousands) | Level 3 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | | Receivables financing | 227,948 | – | 227,948 | | Other non-current financial assets | – | 443,783 | 443,783 | | Total | 227,948 | 443,783 | 671,731 | Liabilities Measured at Fair Value (As of June 30, 2025) | Item | Level 2 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | | Derivative financial instruments | 17,037 | 17,037 | Liabilities with Disclosed Fair Value (As of June 30, 2025) | Item | Level 2 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | | Loan from intermediate controlling company | 9,651,536 | 9,651,536 | [Approval of Financial Statements](index=62&type=section&id=審批財務報表) The financial statements were approved and authorized for issue by the Board on August 29, 2025 - The financial statements were approved and authorized for issue by the Board on **August 29, 2025**[279](index=279&type=chunk)[280](index=280&type=chunk)

[Company Information](index=1&type=section&id=Company%20Information) The company's name changed to China Energy Storage Technology Development Co., Ltd., with this announcement detailing its unaudited interim results - The company's name has changed from Asia Allied International Medical Technology Group Limited to **China Energy Storage Technology Development Co., Ltd.**[2](index=2&type=chunk)[3](index=3&type=chunk) - This announcement presents the unaudited interim results for the six months ended June 30, 2025[3](index=3&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the group's condensed consolidated financial statements, including statements of profit or loss, comprehensive income, and financial position [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group experienced a significant revenue decline, leading to a substantial decrease in gross profit and operating profit, resulting in an expanded loss compared to the prior period Key Data from Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator ('000 HKD) | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :------------------- | :--------------- | :--------------- | :--------- | | Revenue | 188,226 | 264,698 | -28.9% | | Cost of sales | (147,217) | (190,974) | -22.9% | | Gross profit | 41,009 | 73,724 | -44.4% | | Other income | 9,801 | 6,242 | +57.0% | | Other gains and losses | (853) | (21,629) | +96.1% | | Operating profit/(loss) | (9,080) | 838 | -1182.8% | | Finance costs | (6,645) | (2,359) | +181.7% | | Loss before tax | (15,725) | (1,521) | +933.9% | | Loss for the period | (16,497) | (4,786) | +244.7% | | Loss attributable to owners of the Company | (16,273) | (3,908) | +316.4% | | Basic loss per share (HK cents) | 7.26 | 1.96 | +270.4% | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Total comprehensive expense for the period slightly decreased, primarily due to a favorable shift from exchange loss to gain, partially offsetting the increased loss for the period Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator ('000 HKD) | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :------------------- | :--------------- | :--------------- | :--------- | | Loss for the period | (16,497) | (4,786) | +244.7% | | Exchange differences on translation of overseas operations | 6,486 | (5,368) | N/A | | Total comprehensive expense for the period | (10,011) | (10,154) | -1.4% | | Attributable to owners of the Company | (9,787) | (9,276) | +5.5% | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets and liabilities slightly decreased, total equity also reduced, but the current ratio remained robust Key Data from Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator ('000 HKD) | 2025 June 30 (Unaudited) | 2024 Dec 31 (Audited) | Change (%) | | :------------------- | :----------------------- | :-------------------- | :--------- | | Total non-current assets | 73,305 | 78,646 | -6.8% | | Total current assets | 801,876 | 801,491 | +0.05% | | Total assets | 875,181 | 880,137 | -0.56% | | Total equity | 532,180 | 536,885 | -0.88% | | Total non-current liabilities | 37,387 | 42,122 | -11.3% | | Total current liabilities | 305,614 | 301,130 | +1.5% | | Total liabilities | 343,001 | 343,252 | -0.07% | [Notes to the Condensed Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements) This section details the basis of preparation, accounting policies, segment information, other income, finance costs, loss components, and trade balances [Basis of Preparation and Principal Accounting Policies](index=7&type=section&id=Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) The interim condensed consolidated financial statements are prepared under HKAS 34 on a historical cost basis, with no significant changes from new/revised standards - The financial statements are prepared in accordance with **Hong Kong Accounting Standard 34** and should be read in conjunction with the annual report for the year ended December 31, 2024[11](index=11&type=chunk) - The financial statements are prepared on a **historical cost basis**, except for investment properties which are measured at fair value[12](index=12&type=chunk) - The adoption of new/revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards did not result in **significant changes** to accounting policies or reported amounts[12](index=12&type=chunk)[13](index=13&type=chunk) [Revenue and Segment Information](index=7&type=section&id=Revenue%20and%20Segment%20Information) The Group operates in four segments: electronic manufacturing, securities investment, real estate supply chain, and money lending, with electronic manufacturing revenue significantly down and investment/lending segments near zero - The Group's four reportable segments are: **electronic manufacturing services and distribution of communication products**, **investment in securities and other assets and others**, **real estate supply chain services**, and **money lending**[14](index=14&type=chunk) Segment Revenue and Profit/(Loss) (For the six months ended June 30) | Segment ('000 HKD) | 2025 Revenue | 2024 Revenue | Revenue Change (%) | 2025 Profit/(Loss) | 2024 Profit/(Loss) | | :----------------- | :----------- | :----------- | :----------------- | :----------------- | :----------------- | | Electronic Manufacturing Services and Distribution of Communication Products | 183,965 | 247,369 | -25.6% | 3,456 | 22,025 | | Investment in Securities and Other Assets and Others | – | 12,200 | -100% | (15,346) | (19,048) | | Real Estate Supply Chain Services | 4,261 | 4,799 | -11.3% | 4,045 | 1,231 | | Money Lending | – | 119 | -100% | (29) | (222) | | Total | 188,226 | 264,698 | -28.9% | (7,874) | 3,613 | [Other Income and Gains/Losses](index=10&type=section&id=Other%20Income%20and%20Gains%2FLosses) Other income increased due to higher consulting fees, while net exchange losses significantly narrowed in other gains and losses Details of Other Income (For the six months ended June 30) | Item ('000 HKD) | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :-------------- | :--------------- | :--------------- | :--------- | | Bank interest income | 5,038 | 5,046 | -0.2% | | Government grants | 573 | 74 | +674.3% | | Consulting fee income | 3,000 | – | N/A | | Others | 885 | 156 | +467.3% | | Total | 9,801 | 6,242 | +57.0% | [Finance Costs and Income Tax](index=11&type=section&id=Finance%20Costs%20and%20Income%20Tax) Finance costs significantly increased due to higher interest on borrowings and bonds payable, with income tax expense primarily from Hong Kong profits tax Details of Finance Costs (For the six months ended June 30) | Item ('000 HKD) | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :-------------- | :--------------- | :--------------- | :--------- | | Interest on loans from independent third parties | 1,160 | 414 | +180.2% | | Interest on bonds payable | 4,086 | – | N/A | | Interest on lease liabilities | 1,399 | 1,549 | -9.7% | | Total | 6,645 | 2,359 | +181.7% | [Components of Loss for the Period and Loss Per Share](index=12&type=section&id=Components%20of%20Loss%20for%20the%20Period%20and%20Loss%20Per%20Share) The loss for the period was influenced by sales costs, depreciation, R&D, and employee benefits, leading to a substantial increase in basic loss per share with no dilution Major Components of Loss for the Period (For the six months ended June 30) | Item ('000 HKD) | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :-------------- | :--------------- | :--------------- | :--------- | | Cost of sales | 147,217 | 190,974 | -22.9% | | Depreciation (property, plant and equipment) | 2,416 | 3,755 | -35.7% | | Depreciation (right-of-use assets) | 5,434 | 6,650 | -18.3% | | Research and development expenses | 6,612 | 5,376 | +23.0% | | Total employee benefits expense | 78,121 | 77,452 | +0.9% | [Trade Receivables/Payables](index=14&type=section&id=Trade%20Receivables%2FPayables) As of June 30, 2025, total trade receivables decreased, mainly within 90 days, while total trade payables also decreased, but the proportion over 365 days increased Ageing Analysis of Trade Receivables (As of June 30) | Ageing | 2025 June 30 ('000 HKD) | 2024 Dec 31 ('000 HKD) | Change (%) | | :------------ | :---------------------- | :--------------------- | :--------- | | 0 to 90 days | 74,629 | 98,302 | -24.1% | | 91 to 180 days | 19,926 | 18,670 | +6.7% | | 181 to 365 days | 2,858 | 292 | +878.8% | | Over 365 days | – | 30 | -100% | | Total | 97,413 | 117,294 | -17.0% | [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business operations, financial performance, liquidity, capital, and risk management in a challenging global economic environment [Business and Operations Review](index=15&type=section&id=Business%20and%20Operations%20Review) Global economic complexities and China's economic slowdown led to an overall revenue decline, with the Group actively transitioning to energy storage business [Electronic Manufacturing Services and Distribution of Communication Products](index=15&type=section&id=Electronic%20Manufacturing%20Services%20and%20Distribution%20of%20Communication%20Products) Electronic manufacturing services revenue decreased due to US tariffs, and the distribution segment is planned for closure due to declining demand - Electronic manufacturing services revenue decreased by **25.6% to HKD 184 million** (2024: HKD 247.4 million), primarily due to market volatility caused by **US tariffs**[35](index=35&type=chunk) - The distribution segment has ceased operations and plans to close related subsidiaries due to a continuous decline in demand for **commercial telephone system products** in the North American market[36](index=36&type=chunk) [Real Estate Supply Chain Services and Energy Storage Products](index=16&type=section&id=Real%20Estate%20Supply%20Chain%20Services%20and%20Energy%20Storage%20Products) Real estate supply chain services revenue remained relatively stable, and the Group rebranded in 2023 to enter the energy storage business in response to government policies - Real estate supply chain services revenue decreased by **11.2% to HKD 4.3 million** (2024: HKD 4.8 million), remaining relatively stable[37](index=37&type=chunk) - The Group was renamed **China Energy Storage Technology Development Co., Ltd.** in 2023 and commenced energy storage business in response to the government's "dual carbon" goals policy[33](index=33&type=chunk) [Investment in Securities and Other Assets and Others](index=16&type=section&id=Investment%20in%20Securities%20and%20Other%20Assets%20and%20Others) The investment in securities and other assets business contributed negligible segment revenue for the current period, a significant decrease from the prior year - For the six months ended June 30, 2025, segment revenue from investment in securities and other assets and others was approximately **zero HKD** (2024: HKD 12.2 million)[38](index=38&type=chunk) [Money Lending Business](index=16&type=section&id=Money%20Lending%20Business) The money lending business generated approximately zero revenue with no active loan accounts, while the Group maintains strict credit policies and plans to explore new opportunities [Loan Portfolio](index=17&type=section&id=Loan%20Portfolio) As of June 30, 2025, the Group had no active loan accounts, all being unsecured personal loans, with zero interest income or outstanding balances from top five clients - As of June 30, 2025, the Group had **no active loan accounts** (2024: 4), all of which were unsecured personal loans[42](index=42&type=chunk) - For the current period, interest income and outstanding loan and interest balances from the **top five clients were zero** (2024: accounted for 0.04% of total income and 100% of total loans receivable, respectively)[42](index=42&type=chunk) [Internal Control and Credit Rating](index=17&type=section&id=Internal%20Control%20and%20Credit%20Rating) The Group implements strict credit policies, including identity verification and repayment capacity assessment, with management overseeing loan approvals and credit quality monitoring - The Group has established **strict credit policies and control measures** to mitigate credit risk, including identity verification, assessment of repayment ability, and due diligence[43](index=43&type=chunk) - Management is responsible for **evaluating and approving loans** within predetermined credit limits and regularly monitoring credit policies and the credit quality of the loan portfolio[43](index=43&type=chunk) - Borrowers are **independent third parties** and have undergone credit rating in compliance with the Company's credit rating policy[45](index=45&type=chunk) [Loan Impairment Policy](index=18&type=section&id=Loan%20Impairment%20Policy) The Group assesses expected credit losses under HKFRS 9, classifying loans into three stages and regularly evaluating impairment based on historical experience and economic forecasts - The Group applies the requirements of **HKFRS 9** regarding expected credit losses and regularly conducts impairment assessments for each loan under the money lending business[46](index=46&type=chunk) - Loans are classified into **three stages** based on the increase in credit risk, with Stage 3 representing credit-impaired loans[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [Loan Approval, Renewal, and Collection](index=19&type=section&id=Loan%20Approval%2C%20Renewal%2C%20and%20Collection) Loan approvals involve internal credit assessments and AML compliance, renewals include updated evaluations, and the Group pursues legal actions for overdue loans while monitoring repayment records - Before loan approval, an **internal credit assessment** is conducted, including identity verification, proof of income/assets, collateral assessment, and public inquiries to comply with anti-money laundering regulations[51](index=51&type=chunk) - Loan renewals involve similar **updated assessments**, considering the borrower's past repayment record and changes in market conditions[52](index=52&type=chunk) - The Group regularly reviews repayment records and the loan portfolio, taking appropriate actions such as **legal demand letters and legal proceedings** for overdue loans, and ensuring compliance with the Money Lenders Ordinance and anti-money laundering regulations[54](index=54&type=chunk)[55](index=55&type=chunk)[60](index=60&type=chunk) [Interest Rates](index=20&type=section&id=Interest%20Rates) Loan interest rates are determined by market conditions, competition, available funds, and borrower quality, with the current loan portfolio having a 10% annual interest rate and no impairment losses - Loan interest rates are determined based on the overall **market environment, competitor rates, available funds, and the overall quality of the borrower**[56](index=56&type=chunk) - As of June 30, 2025, the annual interest rate for the existing loan portfolio was **10%**[56](index=56&type=chunk) - For the six months ended June 30, 2025, the Group recorded **zero HKD** in impairment losses on loans and interest receivables[57](index=57&type=chunk) [Geographical Analysis](index=21&type=section&id=Geographical%20Analysis) Revenue for the period primarily originated from European countries, the US, China (including Hong Kong), and other regions, with a decreased proportion from Europe and the US Revenue Contribution by Region (For the six months ended June 30) | Region | 2025 Revenue ('000 HKD) | 2024 Revenue ('000 HKD) | % of Total Revenue (2025) | % of Total Revenue (2024) | | :------------ | :---------------------- | :---------------------- | :------------------------ | :------------------------ | | Europe (Switzerland, Belgium, France) | 65,700 | 95,400 | 34.9% | 36.0% | | United States | 39,900 | 71,700 | 21.2% | 27.1% | | China (including Hong Kong) | 26,100 | 33,300 | 13.9% | 12.6% | | Others | 56,400 | 64,300 | 30.0% | 24.3% | | Total | 188,100 | 264,700 | 100% | 100% | [Financial Review](index=21&type=section&id=Financial%20Review) The Group's revenue, cost of sales, and gross profit declined, with gross margin impacted by US tariffs, while other income rose, net exchange losses narrowed, and finance costs significantly increased, leading to a larger loss attributable to owners Key Financial Metrics Changes (For the six months ended June 30) | Indicator | 2025 ('000 HKD) | 2024 ('000 HKD) | Change (%) | 2025 % of Revenue | 2024 % of Revenue | | :------------------- | :-------------- | :-------------- | :--------- | :---------------- | :---------------- | | Revenue | 188,200 | 264,700 | -28.9% | 100% | 100% | | Cost of sales | 147,200 | 191,000 | -22.9% | 78.2% | 72.2% | | Gross profit | 41,000 | 73,700 | -44.4% | 21.8% | 27.8% | | Other income | 9,800 | 6,200 | +58.1% | 5.2% | 2.3% | | Other gains and losses | (900) | (21,600) | +95.8% | -0.5% | -8.2% | | Reversal of impairment losses | 4,500 | – | N/A | 2.4% | 0% | | Selling and distribution expenses | 14,000 | 15,700 | -10.8% | 7.4% | 5.9% | | Administrative expenses | 43,000 | 48,800 | -11.9% | 22.8% | 18.4% | | Research and development expenses | 6,600 | 5,400 | +22.2% | 3.5% | 2.0% | | Finance costs | 6,600 | 2,400 | +175.0% | 3.5% | 0.9% | | Loss attributable to owners of the Company | 16,300 | 3,900 | +317.9% | -8.6% | -1.5% | - Gross margin decreased to **21.8%** (2024: 27.8%), primarily due to lower sales volumes resulting from **US tariffs** and a higher proportion of fixed factory costs[64](index=64&type=chunk) - Finance costs increased mainly due to **higher borrowings and bonds payable** compared to the previous period[71](index=71&type=chunk) [Liquidity, Capital, and Risk Management](index=23&type=section&id=Liquidity%2C%20Capital%2C%20and%20Risk%20Management) The Group maintains a robust current ratio and increased cash, with a slightly higher gearing ratio but sufficient financial resources, while managing foreign exchange risk without a hedging policy [Liquidity and Financial Resources](index=23&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's current ratio is 2.6 times, cash and cash equivalents increased to HKD 331.3 million, with increased total borrowings and bonds payable, resulting in a gearing ratio of 39.2% - The Group's current ratio is **2.6 times** (December 31, 2024: 2.8 times), maintaining a robust position[75](index=75&type=chunk) - Cash and cash equivalents amounted to **HKD 331.3 million**, an increase of HKD 19.3 million compared to December 31, 2024[75](index=75&type=chunk) Borrowings and Bonds Payable (As of June 30) | Item ('000 HKD) | 2025 June 30 | 2024 Dec 31 | Change (%) | | :-------------- | :----------- | :---------- | :--------- | | Total borrowings | 17,300 | 14,300 | +21.0% | | Bonds payable | 33,800 | 25,000 | +35.2% | - The gearing ratio was **39.2%** (December 31, 2024: 39.0%), calculated as total liabilities divided by total assets[76](index=76&type=chunk) [Capital Structure](index=24&type=section&id=Capital%20Structure) As of June 30, 2025, the company's total issued shares remained consistent with the prior year-end at 224,289,185 shares of HKD 0.2 par value each - As of June 30, 2025, the total number of issued shares of the Company was **224,289,185 shares** with a par value of HKD 0.2 per share, consistent with December 31, 2024[77](index=77&type=chunk) [Foreign Exchange Risk](index=24&type=section&id=Foreign%20Exchange%20Risk) The Group's sales and purchases are mainly in USD, RMB, and EUR, with low USD risk due to the HKD peg, while RMB is subject to controls, and no hedging policy is currently in place - The Group's majority of sales and purchases are denominated in **US dollars, Renminbi, and Euros**, with low US dollar foreign exchange risk due to the Hong Kong dollar peg[78](index=78&type=chunk) - Renminbi is not freely convertible and is subject to **foreign exchange controls** by the Chinese government; the Group currently has no foreign exchange hedging policy but will closely monitor and consider hedging tools as appropriate[78](index=78&type=chunk) [Capital Expenditure and Commitments](index=24&type=section&id=Capital%20Expenditure%20and%20Commitments) Capital expenditure for the period was approximately HKD 2.5 million, with commitments of HKD 3.9 million, primarily for acquiring plant and machinery for the electronic manufacturing services business - For the period ended June 30, 2025, capital expenditure was approximately **HKD 2.5 million**, and capital commitments were approximately **HKD 3.9 million**[79](index=79&type=chunk) - Capital expenditure and commitments are primarily related to the acquisition of **plant and machinery** to meet the demands of the electronic manufacturing services business[79](index=79&type=chunk) [Financial Guarantee Contracts](index=25&type=section&id=Financial%20Guarantee%20Contracts) The Group has an outstanding guarantee for a supplier of a disposed subsidiary, limited to USD 650,000, with a counter-indemnity in place, making liability unlikely - The Group has an outstanding guarantee for a supplier of a disposed subsidiary, limited to **USD 650,000** (approximately HKD 5.1 million)[80](index=80&type=chunk)[81](index=81&type=chunk) - The disposed subsidiary has provided a **counter-indemnity** to the Group, and management believes it is highly unlikely that the Group will incur any liability from this guarantee[81](index=81&type=chunk) [Contingent Liabilities, Pledge of Assets, and Material Investments](index=25&type=section&id=Contingent%20Liabilities%2C%20Pledge%20of%20Assets%2C%20and%20Material%20Investments) As of June 30, 2025, the Group had no material contingent liabilities, pledged assets, or significant investments - As of June 30, 2025, the Group had **no material contingent liabilities**[82](index=82&type=chunk) - As of June 30, 2025, the Group had **no pledged assets**[83](index=83&type=chunk) - As of June 30, 2025, the Group had **no material investments**[84](index=84&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Events%20After%20the%20Reporting%20Period) The company has no events after the reporting period to disclose - The Company has **no events after the reporting period**[85](index=85&type=chunk) [Human Resources](index=25&type=section&id=Human%20Resources) As of June 30, 2025, the Group employed approximately 800 staff, offering competitive remuneration to attract and retain talent for smooth operations and expansion - As of June 30, 2025, the Group employed approximately **800 employees**[86](index=86&type=chunk) - The Group offers **competitive remuneration packages** to attract and retain quality talent, ensuring smooth operations and meeting continuous expansion needs[86](index=86&type=chunk) [Prospects](index=26&type=section&id=Prospects) The Group anticipates rapid growth in China's energy storage sector driven by policy, technology, and demand, planning innovation, business model optimization, and global expansion, including a new Cambodian subsidiary for the US market - The Group believes China's energy storage industry will maintain **rapid growth** driven by policy, technology, and market demand, and plans to focus on **technological innovation, business model optimization, and global expansion**[87](index=87&type=chunk) - In July 2025, the Group registered a subsidiary in **Cambodia**, planning to invest approximately **USD 5 million** to establish production facilities to enjoy tax incentives and enhance marketing efforts to attract potential US customers[88](index=88&type=chunk) - Facing global economic challenges such as high interest rates, geopolitical conflicts, debt crises, and recurring inflation, the Group will continue to **closely monitor market conditions** and adjust its business development strategies[88](index=88&type=chunk) [Other Information](index=26&type=section&id=Other%20Information) This section covers dividend policy, share transactions, corporate governance, audit committee review, and the current composition of the Board of Directors [Dividends and Share Transactions](index=26&type=section&id=Dividends%20and%20Share%20Transactions) The Board does not recommend an interim dividend for the period, and neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities - The Board does not recommend the payment of an **interim dividend** for the current period (2024: nil)[89](index=89&type=chunk) - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's **listed securities** during the period[90](index=90&type=chunk) [Corporate Governance and Audit Committee](index=27&type=section&id=Corporate%20Governance%20and%20Audit%20Committee) The company adheres to the Listing Rules' Model Code, with deviations regarding the combined Chairman/CEO role and independent non-executive director attendance, while the Audit Committee reviewed the interim financial statements - The Company has adopted the **Model Code for Securities Transactions by Directors** of Listed Issuers as set out in Appendix C1 of the Listing Rules and is committed to maintaining a high standard of corporate governance[91](index=91&type=chunk)[92](index=92&type=chunk) - There are two deviations from the Corporate Governance Code provisions: the roles of **Chairman and Chief Executive Officer are not separated** (held concurrently by Mr. Lam Dai Luen), and some **Independent Non-executive Directors were unable to attend the Annual General Meeting**[93](index=93&type=chunk)[94](index=94&type=chunk) - The Audit Committee, together with management, has reviewed the **accounting principles and policies** adopted by the Group and the unaudited condensed interim financial statements for the period[95](index=95&type=chunk) [Board of Directors](index=28&type=section&id=Board%20of%20Directors) As of the announcement date, the Board comprises executive directors Mr. Lam Dai Luen (Chairman), Mr. Lau Chi Wai, Ms. Bian Sulan, Mr. Wang Qi, and Ms. Wu Jingjing, along with independent non-executive directors Ms. Cheung Sau Lin, Mr. Li Wai Mo, and Mr. Hu Zi Jing - The Board of Directors includes Executive Directors **Mr. Lam Dai Luen (Chairman), Mr. Lau Chi Wai, Ms. Bian Sulan, Mr. Wang Qi, and Ms. Wu Jingjing**[97](index=97&type=chunk) - Independent Non-executive Directors include **Ms. Cheung Sau Lin, Mr. Li Wai Mo, and Mr. Hu Zi Jing**[97](index=97&type=chunk)

Share Structure and Listings - The company reported a total of 8,558,945,933 shares issued as of June 30, 2025, including 6,240,169,933 A-shares and 2,318,776,000 H-shares[29]. - The A-shares are listed on the Shanghai Stock Exchange with a stock code of 601633, while H-shares are listed on the Hong Kong Stock Exchange with stock codes 02333 (HKD) and 82333 (RMB)[29]. - The company has a total of 100 shares per lot for A-shares and 500 shares per lot for H-shares[29]. Financial Performance - Total operating revenue for the first half of the year reached ¥92.33 billion, a year-on-year increase of 0.99%[35]. - Net profit attributable to shareholders decreased by 10.21% to ¥6.34 billion compared to the same period last year[35]. - The net profit after deducting non-recurring gains and losses fell by 36.39% to ¥3.58 billion[35]. - The company's total assets increased by 2.02% to ¥222.13 billion compared to the end of the previous year[35]. - Basic earnings per share decreased by 10.84% to ¥0.74[36]. - The weighted average return on net assets dropped by 2.51 percentage points to 7.56%[36]. - Total revenue for the period ending June 30, 2025, was RMB 92.33 billion, a 0.99% increase from RMB 91.43 billion for the same period in 2024[55]. - Vehicle sales revenue reached RMB 79.75 billion, up 1.04% from RMB 78.93 billion year-over-year[55]. - Gross profit decreased to RMB 16.97 billion, reflecting a 6.92% decline compared to RMB 18.24 billion in the previous year[55]. - The gross margin decreased by 1.57 percentage points to 18.38% from 19.95%[55]. Operational Highlights - The company is entering a new product cycle, aiming to enhance sales and operating revenue while accelerating the establishment of direct user channels[35]. - Significant investments in new vehicle models and technologies are being made to boost brand promotion[35]. - The company continues to focus on expanding its market presence in the SUV and pickup segments, leveraging its diverse brand portfolio[43]. - Great Wall Motors has established 9 R&D bases and 5 software R&D centers, with nearly 50,000 patent applications and over 30,000 authorized patents by June 2025, covering more than 40 countries and regions[44]. - The company has launched the Hi4 family of hybrid architectures, including four major structures, enhancing user experience with superior range and performance[46]. - Great Wall Motors has a global production layout of "10+3+N," with 10 manufacturing bases in China and 3 overseas, ensuring stable production and quality[47]. - The company has built over 360 retail centers and 50 delivery centers in the first half of the year, enhancing user experience through standardized services[48]. Market Trends and Sales - In the first half of 2025, the automotive industry saw production and sales of 15.62 million and 15.65 million vehicles, respectively, representing year-on-year growth of 12.5% and 11.4%[49]. - The passenger car market continued to perform well, with production and sales reaching 13.52 million and 13.53 million vehicles, reflecting year-on-year growth of 13.8% and 13%[50]. - New energy vehicle production and sales reached 6.97 million and 6.94 million units, with year-on-year growth of 41.4% and 40.3%, accounting for 44.3% of total new car sales[51]. - The export of vehicles reached 3.08 million units in the first half of the year, with a year-on-year increase of 10.4%, including a 75.2% increase in new energy vehicle exports[53]. - Total vehicle sales reached 568,852 units in the first half of 2025, reflecting a year-on-year increase of 2.52%[78]. - Sales of new energy vehicles amounted to 160,435 units, marking a significant year-on-year growth of 23.64%[78]. - Haval brand sold 323,702 units in the first half of 2025, achieving an 8.89% increase compared to the same period last year[80]. - Tank brand's sales reached 104,129 units, contributing to a total global sales milestone of over 700,000 units[80]. - Wey brand saw a remarkable sales increase of 60.34%, with 32,369 units sold in the first half of 2025[82]. - Great Wall Pickup achieved sales of 93,649 units in the first half of the year, a year-on-year increase of 4.01%, maintaining a nearly 50% market share in China[84]. Research and Development - The company continues to enhance its global sales network, now covering over 30 countries and regions[80]. - The introduction of the next-generation all-power intelligent platform is expected to enhance the company's competitive edge in the high-end new energy market[82]. - The company is committed to technological innovation and expanding its product offerings in the smart new energy sector[81]. - Great Wall Motors has developed the Hi4 family of hybrid technology, including four major architectures, enhancing power response efficiency by 20% and achieving over 1000 horsepower with a unique three-engine intelligent power structure[91]. - The company has established R&D systems in Germany, Japan, and India, and has set up three complete vehicle production bases in Thailand and Brazil, enhancing its global business layout[95]. Financial Management and Governance - The company has not faced any significant risks that could materially impact its production and operations during the reporting period[6]. - The financial information in the report is prepared in accordance with the Chinese Accounting Standards and relevant regulations[4]. - The company guarantees the truthfulness, accuracy, and completeness of the semi-annual report, with no false records or major omissions[7]. - There are no non-operational fund occupations by controlling shareholders or related parties reported[6]. - The company has not violated any decision-making procedures regarding external guarantees[6]. - The report includes a risk statement indicating that future plans do not constitute a substantive commitment to investors[5]. - The company did not engage in any significant acquisitions or asset sales during the reporting period[62]. - The company has no significant future investment or acquisition plans as of June 30, 2025[130]. - The audit committee has reviewed the mid-term performance announcement and financial reports, confirming compliance with applicable accounting standards[138]. - There are no significant events after the reporting period that require disclosure[143]. Employee Incentives and Stock Options - Great Wall Motors announced the implementation of the 2023 restricted stock incentive plan, with the first grant of restricted stocks completed[155]. - The company reported the completion of the cancellation of part of the restricted stocks under the 2023 incentive plan[157]. - Great Wall Motors disclosed the results of the self-exercise of convertible bonds and stock options under the 2021 incentive plan[158]. - The first unlocking of the restricted stocks under the 2023 incentive plan was announced, indicating progress in employee incentives[158]. - The company confirmed the completion of the first grant of stock options under the 2023 stock option incentive plan[156]. - The company is focusing on enhancing employee motivation through stock options and restricted stock grants[158]. - The incentive plans aim to transform employees from "workers" to "partners," promoting long-term development and aligning interests with shareholders[162]. - The plans are designed to attract and stabilize talented management and core personnel, enhancing the company's human resource advantages[163]. - The performance targets set in the plans are intended to boost competitiveness and motivate management and core personnel[163]. - The total number of shares available for issuance under the 2021 Restricted Stock Incentive Plan is 43.184 million shares, accounting for 0.50% of the total shares issued as of the semi-annual report date[164]. - The total number of stock options available under the 2021 Stock Option Incentive Plan is 397.101 million options, representing 4.64% of the total shares issued as of the semi-annual report date[164].

[Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The Group's revenue for the six months ended June 30, 2025, was HK$362,235 thousand, a 5.9% decrease year-on-year, with profit for the period at HK$30,405 thousand, down 29.1%, and basic and diluted earnings per share at HK cents 2.44 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 362,235 | 385,093 | | Cost of sales | (266,876) | (277,380) | | Gross profit | 95,359 | 107,713 | | Other income | 8,563 | 7,537 | | Net other gains and losses | (334) | 2,716 | | Selling and distribution expenses | (21,117) | (19,744) | | Administrative expenses | (40,405) | (37,017) | | Finance costs | (6,968) | (7,297) | | Profit before tax | 35,098 | 53,908 | | Income tax expense | (4,693) | (11,002) | | Profit for the period | 30,405 | 42,906 | | Profit for the period attributable to owners of the Company | 30,443 | 42,906 | | Basic and diluted earnings per share (HK cents) | 2.44 | 3.43 | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets less current liabilities were HK$823,869 thousand, a decrease from HK$857,402 thousand as of December 31, 2024, with net assets at HK$796,705 thousand and net current assets at HK$599,118 thousand Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 138,619 | 128,849 | | Right-of-use assets | 75,386 | 75,385 | | Lease deposits | 5,674 | 5,608 | | Deferred tax assets | 5,072 | 3,465 | | **Current assets** | | | | Inventories | 243,931 | 133,457 | | Trade and other receivables | 59,447 | 105,205 | | Financial assets at fair value through other comprehensive income | 20,038 | 74,873 | | Financial assets at fair value through profit or loss | 115,878 | 111,110 | | Bank balances and cash | 451,829 | 418,507 | | **Current liabilities** | | | | Trade and other payables | 241,209 | 182,633 | | Lease liabilities | 2,541 | 1,795 | | Bank borrowings | 33,213 | - | | Tax payable | 15,042 | 14,629 | | **Non-current liabilities** | | | | Deferred tax liabilities | 14 | 12 | | Lease liabilities | 27,150 | 27,713 | | **Net assets** | 796,705 | 829,677 | | **Equity attributable to owners of the Company** | 793,233 | 829,677 | | **Non-controlling interests** | 3,472 | - | [Notes to the Condensed Consolidated Interim Financial Statements](index=4&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes to the condensed consolidated interim financial statements, covering preparation basis, accounting policy changes, revenue segmentation, income tax, profit for the period, dividends, earnings per share, receivables, payables, and contingent liabilities [1. Basis of Preparation](index=4&type=section&id=1.%20Basis%20of%20Preparation) This section outlines the basis for preparing the condensed consolidated interim financial results, adhering to HKEX Listing Rules and consistent accounting policies with the prior year, except for new standards - The condensed consolidated interim financial results are prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[8](index=8&type=chunk) - The accounting policies and methods of computation used are consistent with those adopted in the Group's 2024 annual financial statements, except for the adoption of new and revised standards effective from January 1, 2025[8](index=8&type=chunk) - Financial information for the fiscal year ended December 31, 2024, is derived from the statutory financial statements, for which the auditor issued an unmodified opinion report on March 31, 2025[8](index=8&type=chunk) [2. Changes in Accounting Policies](index=4&type=section&id=2.%20Changes%20in%20Accounting%20Policies) This section details the adoption of new and revised accounting standards, specifically HKAS 21 (Amendment) 'Lack of Exchangeability', and their non-significant impact on the Group's financial position and performance - HKAS 21 (Amendment) "Lack of Exchangeability" was first applied during this interim period[9](index=9&type=chunk) - The application of the amendments to Hong Kong Financial Reporting Standards has not had a significant impact on the Group's financial position and performance for the current and prior periods[9](index=9&type=chunk) [3. Revenue and Segment Information](index=4&type=section&id=3.%20Revenue%20and%20Segment%20Information) This section provides details on the Group's revenue sources, primarily from sleepwear, loungewear, grey fabric manufacturing, and processing services, with a single reportable segment and geographical breakdown - Revenue primarily derived from sleepwear products, loungewear products, grey fabric manufacturing and sales, and processing services[10](index=10&type=chunk) - The Group has only one reportable segment, based on consolidated results presented to the chief operating decision maker[10](index=10&type=chunk) Revenue Recognition Timing (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sale of products (sleepwear products, loungewear products and grey fabric) | 362,235 | 385,093 | | At a point in time | 362,235 | 385,093 | Geographical Information - Revenue from External Customers (For the six months ended June 30) | Region | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | United States | 223,409 | 250,169 | | Ireland | 55,086 | 57,632 | | United Kingdom | 48,799 | 45,817 | | Spain | 17,493 | 16,912 | | Canada | 16,054 | 7,006 | | Latin America | 1,214 | 650 | | China | 157 | 6,907 | | Honduras | 23 | - | | **Total** | **362,235** | **385,093** | Revenue from Major Customers (For the six months ended June 30) | Customer | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Customer A | 218,818 | 246,654 | | Customer B | 125,969 | 123,876 | [4. Income Tax Expense](index=6&type=section&id=4.%20Income%20Tax%20Expense) This section details the Group's income tax expense, including current and deferred tax, and outlines the applicable tax rates for its operations in Hong Kong, China, Cambodia, Vietnam, and Honduras Income Tax Expense (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current tax | 6,302 | 12,322 | | Deferred tax | (1,609) | (1,320) | | **Total** | **4,693** | **11,002** | - Hong Kong profits tax operates under a two-tiered system, with a tax rate of **8.25%** on the first HK$2,000,000 of assessable profits and **16.5%** on profits above this threshold[16](index=16&type=chunk) - Chinese subsidiaries are subject to a corporate income tax rate of **25%**, with a **5%** withholding tax on profits distributed to the Hong Kong holding company[17](index=17&type=chunk) - Cambodian and Vietnamese subsidiaries are subject to an income tax rate of **20%**, while the Honduran subsidiary is subject to an income tax rate of **25%**[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) [5. Profit for the Period](index=7&type=section&id=5.%20Profit%20for%20the%20Period) This section details the components of profit for the period, specifically highlighting depreciation expenses for property, plant, and equipment, right-of-use assets, and short-term lease expenses Items Included in Profit for the Period (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 7,383 | 6,656 | | Depreciation of right-of-use assets | 2,397 | 2,275 | | Expenses relating to short-term leases | 980 | 900 | [6. Interim Dividend](index=7&type=section&id=6.%20Interim%20Dividend) This section states that no interim dividend was paid or declared for the six months ended June 30, 2025, while noting the final dividend declared for the year ended December 31, 2024 - No interim dividend was paid or declared by the Company for the six months ended June 30, 2025 (2024: nil)[22](index=22&type=chunk) - The Board declared a final dividend of **HK$0.056** per share (2024: HK$0.0485 per share), totaling approximately **HK$70,000,000** (2024: HK$60,600,000), for the year ended December 31, 2024[22](index=22&type=chunk) [7. Earnings Per Share](index=8&type=section&id=7.%20Earnings%20Per%20Share) This section details the calculation of basic earnings per share, based on profit attributable to owners and the weighted average number of ordinary shares, noting the absence of potential ordinary shares Earnings Per Share Calculation (For the six months ended June 30) | Item | 2025 (HK$ thousand/thousand shares) | 2024 (HK$ thousand/thousand shares) | | :--- | :--- | :--- | | Profit for the purpose of calculating basic earnings per share | 30,443 | 42,906 | | Weighted average number of ordinary shares for basic earnings per share | 1,250,000 | 1,250,000 | - There were no potential ordinary shares issued for the six months ended June 30, 2025 and 2024, thus basic and diluted earnings per share are identical[23](index=23&type=chunk) [8. Trade and Other Receivables](index=8&type=section&id=8.%20Trade%20and%20Other%20Receivables) This section provides a breakdown of trade and other receivables, including an aging analysis of trade receivables, and outlines the Group's credit policy Trade and Other Receivables (As of June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables, net | 37,263 | 42,572 | | Prepayments | 8,273 | 16,317 | | Prepayments to import and export companies | 460 | 34,694 | | Deposits | 101 | 327 | | Other taxes recoverable | 9,793 | 9,992 | | Other receivables, net | 3,557 | 1,303 | | **Total** | **59,447** | **105,205** | Aging Analysis of Trade Receivables (As of June 30) | Aging | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 30 days | 19,878 | 24,346 | | 31 to 60 days | 12,963 | 15,321 | | 61 to 90 days | 4,418 | 2,531 | | Over 90 days | 4 | 374 | | **Total** | **37,263** | **42,572** | - The Group provides a credit period of **0 to 120 days** for its trade receivables[24](index=24&type=chunk) [9. Trade and Other Payables](index=9&type=section&id=9.%20Trade%20and%20Other%20Payables) This section details the Group's trade and other payables, including an aging analysis of trade payables, and specifies the credit period for goods purchased Trade and Other Payables (As of June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables | 88,159 | 80,485 | | Prepayments and payables for purchases from import and export companies | 20,166 | 30,471 | | Accrued expenses | 48,281 | 63,694 | | Dividends payable | 70,000 | - | | Other taxes payable | 7,623 | 4,219 | | Payables for acquisition of property, plant and equipment | 1,193 | 1,207 | | Other payables | 5,787 | 2,557 | | **Total** | **241,209** | **182,633** | Aging Analysis of Trade Payables (As of June 30) | Aging | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 30 days | 72,892 | 73,435 | | 31 to 60 days | 8,033 | 6,648 | | 61 to 90 days | 4,406 | 137 | | Over 90 days | 2,828 | 265 | | **Total** | **88,159** | **80,485** | - The credit period for goods purchased is **0 to 90 days** from the invoice date[25](index=25&type=chunk) [10. Contingent Liabilities](index=9&type=section&id=10.%20Contingent%20Liabilities) This section confirms that the Group had no significant contingent liabilities as of June 30, 2025 - As of June 30, 2025, the Group had no significant contingent liabilities (2024: nil)[26](index=26&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business review, financial performance, future outlook, financial resources, liquidity, and corporate governance, highlighting strategies for diversification and market expansion amidst global economic challenges [Business Review](index=10&type=section&id=Business%20Review) This section outlines the Group's core OEM apparel manufacturing business, its vertically integrated operations, and strategic initiatives for production base diversification and market expansion - The Group is primarily engaged in OEM apparel manufacturing, specializing in sleepwear and loungewear products, operating a vertically integrated business[27](index=27&type=chunk) - Production facilities are located in Henan Province, China, Phnom Penh, Cambodia, and Honduras, with production also carried out through subcontractors in Vietnam, and a representative office in the US to enhance design and pre/post-sales activities[27](index=27&type=chunk) - Facing global economic uncertainties, the Group maintains a diversified production base strategy, with a new factory in Cambodia commencing trial operations in the first half of 2025, and new bases under construction in Vietnam and Kenya[28](index=28&type=chunk) - Revenue from **Customer B** grew steadily by approximately **1.7%** to **HK$126,000,000**; combined revenue from Europe and Canada increased by approximately **7.9%** to **HK$137,400,000**, increasing their contribution to total revenue from **33.1%** to **37.9%**[28](index=28&type=chunk) [Financial Review](index=10&type=section&id=Financial%20Review) This section provides a detailed analysis of the Group's financial performance, covering revenue, gross profit, other income, expenses, and profit attributable to owners, along with key factors influencing these metrics - For the six months ended June 30, 2025, the Group's revenue slightly decreased by approximately **5.9%**, gross profit margin decreased by **1.7%**, and net profit margin decreased by **2.7%**[29](index=29&type=chunk) - The trial operation of the new Cambodian factory and ongoing improvements in operational efficiency at the Honduran factory led to increased production costs and a lower gross profit margin[29](index=29&type=chunk) - Additional staff employment for operating new factories and constructing new production bases increased administrative expenses, reducing profit attributable to owners of the Company[29](index=29&type=chunk) [Revenue](index=10&type=section&id=Revenue%20(MD%26A)) This section reports the Group's revenue for the six months ended June 30, 2025, noting a slight decrease compared to the prior year - For the six months ended June 30, 2025, the Group's revenue was approximately **HK$362,200,000**, a decrease of approximately **5.9%** compared to the same period in 2024[30](index=30&type=chunk) [Gross Profit](index=11&type=section&id=Gross%20Profit) This section details the Group's gross profit and average gross profit margin for the first half of 2025, explaining the factors contributing to the decline - Gross profit for the first half of 2025 was approximately **HK$95,400,000**, with an average gross profit margin of approximately **26.3%**, a decrease from **HK$107,700,000** and **28.0%** in the same period of 2024[31](index=31&type=chunk) - The decline in gross profit margin was primarily due to relatively higher production costs from the trial operation of the new Cambodian factory and ongoing improvements in operational efficiency at the Honduran factory[31](index=31&type=chunk) [Other Income](index=11&type=section&id=Other%20Income) This section highlights the increase in other income for the six months ended June 30, 2025, primarily driven by higher interest income from bank deposits - For the six months ended June 30, 2025, other income was approximately **HK$8,600,000**, an increase from approximately **HK$7,500,000** in the same period of 2024[32](index=32&type=chunk) - The increase was mainly due to an increase in interest income of approximately **HK$1,300,000** resulting from higher bank deposit amounts[32](index=32&type=chunk) [Other Gains and Losses](index=11&type=section&id=Other%20Gains%20and%20Losses) This section reports a net other loss for the six months ended June 30, 2025, primarily due to losses on market-traded bonds and funds, and reduced foreign exchange gains - For the six months ended June 30, 2025, a net other loss of approximately **HK$300,000** was recorded, compared to a gain of approximately **HK$2,700,000** in the same period of 2024[33](index=33&type=chunk) - This was primarily due to realized and unrealized losses of **HK$400,000** on market-traded bonds and fund investments (compared to a gain of HK$1,300,000 in 2024) and a decrease in foreign exchange gains of approximately **HK$1,300,000**[33](index=33&type=chunk) [Selling and Distribution Expenses](index=11&type=section&id=Selling%20and%20Distribution%20Expenses) This section details the increase in selling and distribution expenses, primarily attributed to higher transportation costs for raw materials and increased air freight demand due to tariff disruptions - Selling and distribution expenses were approximately **HK$21,100,000**, an increase of **7%** compared to the same period in 2024[34](index=34&type=chunk) - The increase was mainly due to higher transportation costs, including increased volume of raw materials shipped from Asia to the Honduran production base, rising average shipping fees, and increased demand for air freight due to tariff disruptions[34](index=34&type=chunk) [Administrative Expenses](index=11&type=section&id=Administrative%20Expenses) This section explains the increase in administrative expenses, driven by the Group's expansion of operations, including new factory trials and production base constructions, leading to additional staff employment - Administrative expenses were approximately **HK$40,400,000**, an increase of approximately **HK$3,400,000** compared to the same period in 2024[35](index=35&type=chunk) - The increase was primarily due to the Group's continuous expansion of operations, including the trial operation of the new Cambodian factory, ongoing operations at the Honduran factory, and the construction of new production bases in Vietnam and Kenya, leading to additional staff employment[35](index=35&type=chunk) [Finance Costs](index=11&type=section&id=Finance%20Costs) This section reports a decrease in finance costs, mainly due to reduced trade finance interest expenses, partially offset by increased lease liability interest from new factory leases - Finance costs were approximately **HK$6,900,000**, a decrease from **HK$7,300,000** in the same period of 2024[36](index=36&type=chunk) - Trade finance interest expenses decreased by approximately **HK$1,400,000**, mainly due to reduced financing amounts resulting from lower revenue and interest rate cuts by the US Federal Reserve[36](index=36&type=chunk) - Lease liability interest increased, primarily due to new leases for the Cambodian and Kenyan factories[36](index=36&type=chunk) [Profit Attributable to Owners of the Company](index=12&type=section&id=Profit%20Attributable%20to%20Owners%20of%20the%20Company) This section reports a significant decrease in profit attributable to owners of the Company, primarily due to reduced revenue, lower gross profit margins, and increased operating expenses - Profit attributable to owners of the Company decreased by approximately **29.1%** from approximately **HK$42,900,000** in the same period of 2024 to approximately **HK$30,400,000** in the same period of 2025[37](index=37&type=chunk) - The decrease in net profit was mainly due to the aforementioned decline in revenue, lower gross profit margin, and increased expenses[37](index=37&type=chunk) [Receivables and Payables](index=12&type=section&id=Receivables%20and%20Payables) This section details the changes in trade and other receivables and payables, attributing the decrease in receivables to reduced reliance on import/export companies and the increase in payables to higher trade payables and declared dividends - As of June 30, 2025, trade and other receivables were approximately **HK$59,400,000**, lower than approximately **HK$105,200,000** as of December 31, 2024[38](index=38&type=chunk) - The decrease in receivables was mainly due to reduced reliance on import and export companies and timely receipt of raw materials[38](index=38&type=chunk) - Trade and other payables were approximately **HK$241,200,000**, an increase of approximately **HK$58,600,000** compared to 2024, primarily due to increased trade payables and the recognition of dividends payable of approximately **HK$70,000,000**[38](index=38&type=chunk) [Prospects](index=12&type=section&id=Prospects) This section outlines the Group's future strategies, including stabilizing existing businesses, expanding production bases in Vietnam and Kenya, diversifying customer base, and developing its own brand, while monitoring new tariff regulations - The Group aims to achieve stable growth in its existing businesses while planning future expansion to seize business opportunities once global and domestic demand regains resilience[39](index=39&type=chunk) - Management will closely monitor new tariff laws and regulations, integrate production facility resources in Henan Province, and evaluate new business opportunities[39](index=39&type=chunk) - The Honduran production facility will continue to help shorten delivery times to American customers and diversify political risks, while the new Cambodian factory will continue to improve operational efficiency, expected to reach optimal capacity within 2025[39](index=39&type=chunk) - The Vietnamese apparel production base is expected to have a monthly capacity of approximately **2,000,000** pieces, targeting initial trial production in 2026; the new Kenyan base aims for initial trial production in the first half of 2026 to increase capacity, diversify bases, reduce costs, and shorten delivery times to European customers[40](index=40&type=chunk) - The Group will continue to diversify its customer base and the geographical distribution of customer demand, with an anticipated increase in procurement orders from European customers[41](index=41&type=chunk) - Initial activities for the first own brand (COZ) continued during the period, with plans to gradually develop and promote this new brand[41](index=41&type=chunk) [Financial Resources and Liquidity](index=13&type=section&id=Financial%20Resources%20and%20Liquidity) This section provides an overview of the Group's financial position, including current assets, liabilities, liquidity ratio, cash and bank balances, foreign exchange hedging, and investments in market-traded bonds and funds - As of June 30, 2025, current assets were approximately **HK$891,100,000**, current liabilities were approximately **HK$292,000,000**, and the current ratio was approximately **3.05** (December 31, 2024: 4.24)[42](index=42&type=chunk) - Cash and bank balances were approximately **HK$451,800,000**, comprising approximately **16.2%** HKD, **8.8%** RMB, **69.9%** USD, and **5.1%** other currencies[42](index=42&type=chunk) - The Group entered into foreign exchange option contracts to hedge exchange rate risk between RMB and HKD, totaling approximately **HK$32,000,000**[42](index=42&type=chunk) - As of June 30, 2025, the Group held **11** sets of market-traded bond instruments with a total principal of approximately **US$6,250,000** (approximately **HK$48,800,000**) and a market value of approximately **US$2,300,000** (approximately **HK$17,700,000**), recording an unrealized loss of approximately **HK$1,800,000**[44](index=44&type=chunk) - As of June 30, 2025, the Group held **10** sets of funds with a total principal of approximately **US$12,800,000** (approximately **HK$99,600,000**) and a market value of approximately **US$12,600,000** (approximately **HK$98,200,000**), recording realized gains and unrealized gains of approximately **HK$100,000** and **HK$1,300,000**, respectively[45](index=45&type=chunk) [Material Acquisitions and Disposals](index=14&type=section&id=Material%20Acquisitions%20and%20Disposals) This section confirms that the Group did not undertake any material acquisitions or disposals during the six months ended June 30, 2025 - The Group had no material acquisitions and disposals during the six months ended June 30, 2025[47](index=47&type=chunk) [Material Investments](index=14&type=section&id=Material%20Investments) This section states that, apart from those mentioned in financial resources, the Group had no other material investments during the six months ended June 30, 2025 - Save as disclosed in the "Financial Resources and Liquidity" section, the Group had no other material investments during the six months ended June 30, 2025[48](index=48&type=chunk) [Contingent Liabilities (MD&A)](index=14&type=section&id=Contingent%20Liabilities%20(MD%26A)) This section confirms that the directors were not aware of any significant contingent liabilities as of June 30, 2025 - As of June 30, 2025, the Directors were not aware of any significant contingent liabilities[49](index=49&type=chunk) [Events After the Reporting Period](index=14&type=section&id=Events%20After%20the%20Reporting%20Period) This section notes the payment of a HK$70 million dividend after the reporting period and confirms no other significant post-reporting period events affecting the Group's future operations - The Company paid a dividend of approximately **HK$70,000,000** on July 9, 2025[50](index=50&type=chunk) - Save as disclosed above and in this announcement, no other significant events after June 30, 2025, occurred that might materially affect the Group's future operations, assets, and liabilities[50](index=50&type=chunk) [Purchase, Sale or Redemption of Shares](index=14&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Shares) This section confirms that neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities of the Company during the six months ended June 30, 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended June 30, 2025[51](index=51&type=chunk) [Employees and Remuneration Policy](index=14&type=section&id=Employees%20and%20Remuneration%20Policy) This section provides details on the Group's employee count and remuneration policy, which is based on performance and experience, including benefits like medical insurance, retirement plans, and training - As of June 30, 2025, the Group employed **1,916** staff and workers (December 31, 2024: 2,028)[52](index=52&type=chunk) - Employee remuneration is determined based on performance and experience, reviewed regularly, and benefits include medical insurance, retirement schemes, training, and share option schemes[52](index=52&type=chunk) [Directors' Interests in Transactions, Arrangements or Contracts](index=15&type=section&id=Directors'%20Interests%20in%20Transactions%2C%20Arrangements%20or%20Contracts) This section confirms that, apart from service contracts, no significant contracts in which directors had a material interest were entered into or remained in effect during the review period - Save for the service contracts and letters of appointment with each Director, neither the Company nor any of its subsidiaries entered into any material contracts in which a Director had a direct or indirect material interest that was subsisting at the end of the review period or at any time during the year[54](index=54&type=chunk) [Standard Code for Securities Transactions](index=15&type=section&id=Standard%20Code%20for%20Securities%20Transactions) This section confirms the Company's adoption and directors' compliance with the Standard Code for Securities Transactions as set out in Appendix C3 of the Listing Rules - The Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules and confirms that the Directors have complied with all relevant requirements during the six months ended June 30, 2025[55](index=55&type=chunk) [Corporate Governance Code](index=15&type=section&id=Corporate%20Governance%20Code) This section confirms the Company's compliance with the Corporate Governance Code, noting a deviation where the Chairman and CEO roles are held by the same individual for consistent leadership - For the six months ended June 30, 2025, the Company has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules[56](index=56&type=chunk) - One deviation exists: the roles of Chairman and Chief Executive Officer are held by the same individual (Mr. Tam Kwok Pui), an arrangement the Board believes ensures consistent leadership and efficient strategic planning[56](index=56&type=chunk) [Interim Dividend (MD&A)](index=15&type=section&id=Interim%20Dividend%20(MD%26A)) This section states that the Board of Directors does not recommend paying any interim dividend for the six months ended June 30, 2025 - The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2025 (2024: nil)[57](index=57&type=chunk) [Audit Committee](index=16&type=section&id=Audit%20Committee) This section identifies the members of the Audit Committee, chaired by Mr. Mak King Sau, and confirms its review of the Group's unaudited condensed consolidated interim financial statements - The Audit Committee is chaired by Mr. Mak King Sau, an independent non-executive Director, with members including Mr. Wu Chun Fai and Ms. Lau Chun Ni[58](index=58&type=chunk) - The Committee has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025[58](index=58&type=chunk) [Remuneration Committee](index=16&type=section&id=Remuneration%20Committee) This section identifies the members of the Remuneration Committee, chaired by Ms. Lau Chun Ni, including an executive director and an independent non-executive director - The Remuneration Committee is chaired by Ms. Lau Chun Ni, an independent non-executive Director, with members including Mr. Tam Kwok Pui, an executive Director, and Mr. Mak King Sau, an independent non-executive Director[59](index=59&type=chunk) [Nomination Committee](index=16&type=section&id=Nomination%20Committee) This section identifies the members of the Nomination Committee, chaired by Mr. Tam Kwok Pui, including two independent non-executive directors - The Nomination Committee is chaired by Mr. Tam Kwok Pui, an executive Director, with members including Mr. Wu Chun Fai and Mr. Mak King Sau, both independent non-executive Directors[60](index=60&type=chunk) [Publication of Interim Results and Interim Report](index=16&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This section specifies that the interim results announcement will be published on the HKEX and Company websites, and the interim report will be dispatched to shareholders and published online in due course - The interim results announcement will be published on the HKEX website (www.hkexnews.hk) and the Company's website (www.justinallengroup.com)[61](index=61&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the Company's and HKEX websites in due course[61](index=61&type=chunk)

[Company Information and Announcement Overview](index=1&type=section&id=Company%20Information%20and%20Announcement%20Overview) [Basic Announcement Information](index=1&type=section&id=Basic%20Announcement%20Information) This announcement details the unaudited results of Alibaba Group Holding Limited for the quarter ended June 30, 2025 - Company Name: Alibaba Group Holding Limited[2](index=2&type=chunk) - Stock Codes: 9988 (HKD counter) and 89988 (RMB counter); NYSE code BABA[2](index=2&type=chunk) - Announcement Date: August 29, 2025[3](index=3&type=chunk) - Reporting Period: Unaudited results for the three months ended June 30, 2025 (quarter ended June 2025)[3](index=3&type=chunk) [Board of Directors](index=1&type=section&id=Board%20of%20Directors) As of the announcement date, the Board of Directors is chaired by Mr Joseph C TSAI and includes several executive and independent directors - Chairman of the Board: Mr Joseph C TSAI[3](index=3&type=chunk) - Directors: Mr Eddie Yongming WU, Mr J Michael EVANS, Ms Maggie Wei WU[3](index=3&type=chunk) - Independent Directors: Mr Jerry YANG, Ms Wan Ling MARTELLO, Mr Weijian SHAN, Ms Irene Yun-Lien LEE, Mr Albert Kong Ping NG, Mr Kabir MISRA[3](index=3&type=chunk) [CEO and CFO Statements](index=2&type=section&id=CEO%20and%20CFO%20Statements) The CEO and CFO highlighted strong growth driven by consumer and AI+Cloud strategies, with significant investments in instant retail and AI - **CEO Eddie Yongming WU**: The company achieved strong growth by focusing on its Consumer and AI+Cloud strategies, with significant investments in instant retail driving record-high monthly active consumers and daily orders, while Cloud Intelligence Group's revenue growth accelerated[5](index=5&type=chunk) - **CFO Toby HONG**: Core business revenue grew robustly, with customer management revenue up 10% and Cloud Intelligence Group up 26%, while AI-related product revenue saw triple-digit growth for the eighth consecutive quarter and AIDC's losses narrowed significantly[5](index=5&type=chunk) [Quarterly Performance Summary](index=2&type=section&id=Quarterly%20Performance%20Summary) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) The Group's revenue grew 2% to RMB 247.652 billion, while net income surged 76% due to investment gains - **Revenue Growth**: Revenue was **RMB 247.652 billion**, a **2% year-over-year increase**; on a comparable basis excluding disposed businesses, revenue grew 10%[6](index=6&type=chunk) - **Operating Income Decline**: Operating income was **RMB 34.988 billion**, a **3% decrease** year-over-year, mainly due to a decrease in adjusted EBITA[6](index=6&type=chunk) - **Net Income Surge**: Net income attributable to ordinary shareholders was **RMB 43.116 billion**, and net income was **RMB 42.382 billion**, a **76% increase** year-over-year, primarily driven by changes in the market prices of equity investments and a gain from the disposal of Trendyol's local services business[6](index=6&type=chunk) - **Non-GAAP Net Income Decline**: Non-GAAP net income was **RMB 33.51 billion**, a **decrease of 18%** year-over-year[6](index=6&type=chunk) - **Negative Free Cash Flow**: Free cash flow was a **net outflow of RMB 18.815 billion**, compared to a net inflow of RMB 17.372 billion in the same period last year, mainly due to increased spending on cloud infrastructure and investments in "Taobao Flash-Go"[7](index=7&type=chunk) [Key Financial Metrics](index=5&type=section&id=Key%20Financial%20Metrics) Key metrics show a 2% revenue increase to RMB 247.652 billion, a 3% operating income decrease, and a 76% net income surge driven by investment gains Key Financial Metrics | Metric | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | YoY Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 243,236 | 247,652 | 34,571 | 2% | | Operating income | 35,989 | 34,988 | 4,884 | (3)% | | Operating margin | 15% | 14% | | | | Adjusted EBITDA | 51,161 | 45,735 | 6,384 | (11)% | | Adjusted EBITA | 45,035 | 38,844 | 5,422 | (14)% | | Net income | 24,022 | 42,382 | 5,916 | 76% | | Net income attributable to ordinary shareholders | 24,269 | 43,116 | 6,019 | 78% | | Non-GAAP net income | 40,691 | 33,510 | 4,678 | (18)% | | Diluted earnings per ADS | 9.89 | 17.98 | 2.51 | 82% | | Non-GAAP diluted earnings per ADS | 16.44 | 14.75 | 2.06 | (10)% | - **Reason for Operating Income Decrease**: Primarily due to a decrease in adjusted EBITA, partially offset by reduced amortization of intangible assets, lower share-based compensation expense, and a one-time provision in the prior year[16](index=16&type=chunk) - **Reason for Adjusted EBITA Decrease**: Mainly attributable to investments in "Taobao Flash-Go" as well as user experience, user acquisition, and technology, partially offset by double-digit revenue growth from Alibaba China Commerce Group and improved operating efficiency across several businesses[16](index=16&type=chunk) - **Reason for Net Income Increase**: Primarily due to changes in the market prices of equity investments and a gain from the disposal of Trendyol's local services business, partially offset by the decrease in operating income[16](index=16&type=chunk) [Business and Strategic Progress](index=3&type=section&id=Business%20and%20Strategic%20Progress) [Strategic Adjustments and Segment Reporting Structure](index=3&type=section&id=Business%20and%20Strategic%20Progress) The Group integrated Taotian Group, Ele.me, and Fliggy into Alibaba China Commerce Group and simplified its reporting structure - **Strategic Integration**: Completed the strategic integration of Taotian Group, Ele.me, and Fliggy to form Alibaba China Commerce Group, aiming to advance the "user-first" strategy and enhance user experience[9](index=9&type=chunk) - **Simplified Reporting Structure**: Cainiao, Amap, and Digital Media and Entertainment Group (rebranded as Orca Entertainment) were reclassified into the "All Other" segment[9](index=9&type=chunk) - **New Reporting Segments**: Alibaba China Commerce Group, Alibaba International Digital Commerce Group, Cloud Intelligence Group, and All Other[9](index=9&type=chunk) [Alibaba China Commerce Group](index=3&type=section&id=Alibaba%20China%20Commerce%20Group) The group focused on instant retail with "Taobao Flash-Go," driving a 25% increase in Taobao app's monthly active consumers - **Investment in Instant Retail**: Launched "Taobao Flash-Go" service to strengthen the Taobao app's leadership in instant retail, driving a **25% year-over-year increase** in the Taobao app's monthly active consumers[10](index=10&type=chunk) - **Customer Management Revenue Growth**: Increased by **10% year-over-year to RMB 89.252 billion**, primarily driven by a higher take rate from new basic software service fees and increased penetration of "All-site Marketing"[10](index=10&type=chunk) - **88VIP Membership Growth**: The number of 88VIP members continued to grow by **double digits, exceeding 53 million**, as the company enhances its value proposition and retention[11](index=11&type=chunk) [Revenue Performance](index=7&type=section&id=Alibaba%20China%20Commerce%20Group%3A%20Segment%20Revenue) Total revenue for Alibaba China Commerce Group grew 10% year-over-year to RMB 140.072 billion, driven by strong growth across its segments Alibaba China Commerce Group: Segment Revenue | Business | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | YoY Change % | | :--- | :--- | :--- | :--- | :--- | | Customer Management | 81,088 | 89,252 | 12,459 | 10% | | Direct Sales, Logistics and Others | 27,434 | 29,325 | 4,093 | 7% | | **E-commerce Business Total** | **108,522** | **118,577** | **16,552** | **9%** | | Instant Retail | 13,196 | 14,784 | 2,064 | 12% | | China Wholesale Commerce | 5,952 | 6,711 | 937 | 13% | | **Alibaba China Commerce Group Total** | **127,670** | **140,072** | **19,553** | **10%** | - **Driver of Customer Management Revenue Growth**: Primarily driven by an increase in take rate[23](index=23&type=chunk) - **Driver of Instant Retail Revenue Growth**: Mainly attributable to order volume growth from the "Taobao Flash-Go" service[24](index=24&type=chunk) [Adjusted EBITA](index=8&type=section&id=Alibaba%20China%20Commerce%20Group%3A%20Segment%20Adjusted%20EBITA) Adjusted EBITA decreased by 21% year-over-year to RMB 38.389 billion due to increased investments in "Taobao Flash-Go" and user experience - **Adjusted EBITA Decrease**: Adjusted EBITA was **RMB 38.389 billion**, a **decrease of 21%** year-over-year[26](index=26&type=chunk) - **Reason for Decrease**: Primarily due to increased investments in "Taobao Flash-Go" as well as user experience, user acquisition, and technology[26](index=26&type=chunk) [Alibaba International Digital Commerce Group (“AIDC”)](index=4&type=section&id=Alibaba%20International%20Digital%20Commerce%20Group%20(%E2%80%9CAIDC%E2%80%9D)) AIDC's revenue grew 19% to RMB 34.741 billion, with losses narrowing significantly as it approached break-even - **Revenue Growth**: Revenue **increased by 19% year-over-year to RMB 34.741 billion**, primarily driven by the strong performance of its cross-border businesses[12](index=12&type=chunk) - **Significant Loss Reduction**: Losses narrowed significantly year-over-year and quarter-over-quarter, **approaching break-even**[12](index=12&type=chunk) - **Improved Operating Efficiency**: The unit economics of AliExpress's Choice business continued to improve significantly, while Trendyol's international business also saw quarter-over-quarter improvement due to logistics optimization and investment efficiency[12](index=12&type=chunk) [Revenue Performance](index=8&type=section&id=Alibaba%20International%20Digital%20Commerce%20Group%3A%20Segment%20Revenue) AIDC's total revenue grew 19% year-over-year to RMB 34.741 billion, fueled by strong performance in both retail and wholesale commerce Alibaba International Digital Commerce Group: Segment Revenue | Business | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | YoY Change % | | :--- | :--- | :--- | :--- | :--- | | International Retail Commerce | 23,691 | 28,395 | 3,964 | 20% | | International Wholesale Commerce | 5,602 | 6,346 | 886 | 13% | | **Alibaba International Digital Commerce Group Total** | **29,293** | **34,741** | **4,850** | **19%** | - **Driver of International Retail Commerce Growth**: Primarily driven by revenue growth from AliExpress and Trendyol[27](index=27&type=chunk) - **Driver of International Wholesale Commerce Growth**: Mainly due to an increase in revenue from value-added services related to cross-border business[28](index=28&type=chunk) [Adjusted EBITA](index=8&type=section&id=Alibaba%20International%20Digital%20Commerce%20Group%3A%20Segment%20Adjusted%20EBITA) AIDC's adjusted EBITA loss narrowed by 98% to RMB 59 million, driven by significant operational efficiency improvements across its businesses - **Adjusted EBITA Loss Narrowed**: Loss of **RMB 59 million**, a **98% improvement** year-over-year from a loss of RMB 3,706 million in 2024[29](index=29&type=chunk) - **Reason for Improvement**: Primarily due to significant improvements in AliExpress's operational efficiency, as well as efficiency gains in several businesses including Alibaba.com, Lazada, and Trendyol[29](index=29&type=chunk) [Cloud Intelligence Group](index=4&type=section&id=Cloud%20Intelligence%20Group) The group's revenue grew 26% to RMB 33.398 billion, driven by public cloud growth and strong adoption of AI products - **Accelerated Revenue Growth**: Revenue **increased by 26% year-over-year to RMB 33.398 billion**, with overall revenue (excluding inter-segment revenue) also accelerating to 26% growth[13](index=13&type=chunk) - **AI-driven Growth**: Growth was primarily driven by public cloud revenue, which included increased adoption of AI-related products[13](index=13&type=chunk) - **Strong AI Revenue**: Revenue from **AI-related products achieved triple-digit year-over-year growth** for the eighth consecutive quarter[13](index=13&type=chunk) [Revenue Performance](index=8&type=section&id=Cloud%20Intelligence%20Group%3A%20Segment%20Revenue) Cloud Intelligence Group's revenue grew 26% year-over-year to RMB 33.398 billion, fueled by public cloud and increased AI product adoption Cloud Intelligence Group: Segment Revenue | Business | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | YoY Change % | | :--- | :--- | :--- | :--- | :--- | | Cloud Intelligence Group | 26,549 | 33,398 | 4,662 | 26% | - **Growth Driver**: Primarily driven by revenue growth from public cloud business, which included increased adoption of AI-related products[30](index=30&type=chunk) [Adjusted EBITA](index=9&type=section&id=Cloud%20Intelligence%20Group%3A%20Segment%20Adjusted%20EBITA) Adjusted EBITA grew 26% year-over-year to RMB 2.954 billion, reflecting public cloud revenue growth and improved operational efficiency - **Adjusted EBITA Growth**: Adjusted EBITA was **RMB 2.954 billion**, a **26% increase** year-over-year[31](index=31&type=chunk) - **Growth Driver**: Primarily due to revenue growth from public cloud business and improved operational efficiency[31](index=31&type=chunk) [All Other](index=9&type=section&id=All%20Other) The "All Other" segment revenue decreased 28% to RMB 58.599 billion, mainly due to the disposal of Sun Art and Intime - **Revenue Decrease**: Revenue **decreased by 28% year-over-year to RMB 58.599 billion**[32](index=32&type=chunk) - **Reason for Decrease**: Primarily due to a decrease in revenue from the disposal of Sun Art and Intime, as well as a decrease in revenue from Cainiao[32](index=32&type=chunk) - **Partial Growth**: Revenue from Freshippo, Alibaba Health, and Amap recorded growth[32](index=32&type=chunk) [Revenue Performance](index=9&type=section&id=All%20Other%3A%20Segment%20Revenue) The "All Other" segment revenue declined 28% year-over-year to RMB 58.599 billion, mainly due to business disposals and lower Cainiao revenue All Other: Segment Revenue | Business | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | YoY Change % | | :--- | :--- | :--- | :--- | :--- | | All Other | 81,354 | 58,599 | 8,180 | (28)% | - **Reason for Decrease**: Primarily due to a decrease in revenue from the disposal of Sun Art and Intime, as well as a decrease in revenue from Cainiao[32](index=32&type=chunk) [Adjusted EBITA](index=9&type=section&id=All%20Other%3A%20Segment%20Adjusted%20EBITA) The segment's adjusted EBITA loss widened by 31% to RMB 1.415 billion, primarily due to increased investments in technology businesses - **Adjusted EBITA Loss Widened**: Loss of **RMB 1.415 billion**, a **31% increase** year-over-year from a loss of RMB 1,077 million in 2024[33](index=33&type=chunk) - **Reason for Widened Loss**: Primarily due to increased investments in technology businesses[33](index=33&type=chunk) [Other Financial Results](index=10&type=section&id=Other%20Financial%20Results) [Costs and Expenses](index=10&type=section&id=Costs%20and%20Expenses) Total costs and expenses were RMB 212.813 billion, with a notable increase in sales and marketing expenses due to investments in "Taobao Flash-Go" - **Cost of Revenue Ratio Decreased**: Cost of revenue as a percentage of revenue **decreased from 60.1% to 55.1%**, mainly due to the disposal of Sun Art and Intime, the scale-down of low-margin direct sales businesses, and improved monetization and operating efficiency[35](index=35&type=chunk) - **Sales and Marketing Expenses Surged**: Sales and marketing expenses **increased by 62.9% to RMB 53.178 billion**, with the ratio to revenue rising from 13.4% to 21.5%, primarily due to investments in "Taobao Flash-Go" and user experience and acquisition for Alibaba China Commerce Group[36](index=36&type=chunk) - **General and Administrative Expenses Decreased**: General and administrative expenses **decreased by 44.3% to RMB 7.398 billion**, with the ratio to revenue falling from 5.5% to 3.0%, mainly due to a one-time provision for a shareholder class action lawsuit in the prior year[37](index=37&type=chunk) - **Share-based Compensation Expense Decreased**: Total share-based compensation expense **decreased by 14% to RMB 3.545 billion**, mainly due to an increased grant proportion of long-term cash incentives, which reduced the number of equity awards granted by Alibaba Group[38](index=38&type=chunk) [Cost of Revenue](index=10&type=section&id=Cost%20of%20Revenue) Cost of revenue was RMB 136.429 billion, representing 55.1% of revenue, a 5.0 percentage point decrease year-over-year - **Cost of Revenue**: **RMB 136,429 million** (US$19,045 million)[35](index=35&type=chunk) - **Percentage of Revenue**: **55.1%** (compared to 60.1% in the same quarter of 2024)[35](index=35&type=chunk) - **Reason for Decrease**: Disposal of Sun Art and Intime, scale-down of low-margin direct sales businesses, and improved monetization and operating efficiency[35](index=35&type=chunk) [Product Development Expenses](index=11&type=section&id=Product%20Development%20Expenses) Product development expenses were RMB 15.001 billion, representing 6.1% of revenue, a 0.6 percentage point increase year-over-year - **Product Development Expenses**: **RMB 15,001 million** (US$2,094 million)[36](index=36&type=chunk) - **Percentage of Revenue**: **6.1%** (compared to 5.5% in the same quarter of 2024)[36](index=36&type=chunk) [Sales and Marketing Expenses](index=11&type=section&id=Sales%20and%20Marketing%20Expenses) Sales and marketing expenses were RMB 53.178 billion, representing 21.5% of revenue, an 8.1 percentage point increase year-over-year - **Sales and Marketing Expenses**: **RMB 53,178 million** (US$7,423 million)[36](index=36&type=chunk) - **Percentage of Revenue**: **21.5%** (compared to 13.4% in the same quarter of 2024)[36](index=36&type=chunk) - **Reason for Increase**: Primarily due to increased investments in "Taobao Flash-Go" and user experience and acquisition for Alibaba China Commerce Group[36](index=36&type=chunk) [General and Administrative Expenses](index=11&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses were RMB 7.398 billion, representing 3.0% of revenue, a 2.5 percentage point decrease year-over-year - **General and Administrative Expenses**: **RMB 7,398 million** (US$1,033 million)[37](index=37&type=chunk) - **Percentage of Revenue**: **3.0%** (compared to 5.5% in the same quarter of 2024)[37](index=37&type=chunk) - **Reason for Decrease**: Primarily due to a one-time provision for a shareholder class action lawsuit in the prior year[37](index=37&type=chunk) [Share-based Compensation Expense](index=11&type=section&id=Share-based%20Compensation%20Expense) Total share-based compensation expense decreased by 14% to RMB 3.545 billion due to a higher grant proportion of long-term cash incentives - **Total Share-based Compensation Expense**: **RMB 3,545 million** (US$495 million), a **14% decrease** year-over-year[37](index=37&type=chunk) - **Reason for Decrease**: A higher grant proportion of long-term cash incentives, which reduced the number of equity awards granted by Alibaba Group[38](index=38&type=chunk) Share-based Compensation Expense by Type | Incentive Type | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | YoY Change % | | :--- | :--- | :--- | :--- | :--- | | Alibaba Group's equity awards | 3,091 | 2,321 | 324 | (25)% | | Others (Subsidiaries and Ant Group) | 1,040 | 1,224 | 171 | 18% | | **Total** | **4,131** | **3,545** | **495** | **(14)%** | [Amortization and Impairment of Intangible Assets](index=11&type=section&id=Amortization%20and%20Impairment%20of%20Intangible%20Assets) Amortization and impairment of intangible assets decreased by 55% to RMB 807 million as certain intangible assets were fully amortized - **Amortization and Impairment of Intangible Assets**: **RMB 807 million** (US$113 million), a **55% decrease** year-over-year[39](index=39&type=chunk) - **Reason for Decrease**: Primarily due to certain intangible assets being fully amortized[39](index=39&type=chunk) [Operating Income and Adjusted EBITA/EBITDA](index=12&type=section&id=Operating%20Income%20and%20Operating%20Margin) Operating income decreased 3% to RMB 34.988 billion, with adjusted EBITA down 14%, mainly due to increased investments - **Operating Income**: **RMB 34,988 million** (US$4,884 million), a **3% decrease** year-over-year[40](index=40&type=chunk) - **Operating Margin**: **14%** (compared to 15% in the same quarter of 2024)[40](index=40&type=chunk) - **Adjusted EBITDA**: **RMB 45,735 million** (US$6,384 million), an **11% decrease** year-over-year[41](index=41&type=chunk) - **Adjusted EBITA**: **RMB 38,844 million** (US$5,422 million), a **14% decrease** year-over-year[41](index=41&type=chunk) - **Reason for Decrease**: Primarily attributable to investments in "Taobao Flash-Go" and user experience, user acquisition, and technology, partially offset by double-digit revenue growth from Alibaba China Commerce Group and improved operating efficiency across several businesses[41](index=41&type=chunk) [Interest and Investment Income, Net](index=12&type=section&id=Interest%20and%20Investment%20Income%2C%20Net) Net interest and investment income was RMB 17.376 billion, a significant improvement from a net loss of RMB 1.478 billion last year - **Interest and Investment Income, Net**: **RMB 17,376 million** (US$2,426 million), compared to a net loss of RMB 1,478 million in the same quarter of 2024[43](index=43&type=chunk) - **Reason for Significant Improvement**: Primarily due to changes in the market prices of equity investments and a gain from the disposal of Trendyol's local services business[43](index=43&type=chunk) [Income Tax Expenses](index=12&type=section&id=Income%20Tax%20Expenses) Income tax expenses for the quarter were RMB 8.865 billion, a decrease from RMB 10.063 billion in the prior year - **Income Tax Expenses**: **RMB 8,865 million** (US$1,237 million), compared to RMB 10,063 million in the same quarter of 2024[46](index=46&type=chunk) [Share of Results of Equity Method Investees](index=12&type=section&id=Share%20of%20Results%20of%20Equity%20Method%20Investees) Share of results of equity method investees was RMB 1.013 billion, a 33% decrease year-over-year, mainly due to lower profit contribution from Ant Group - **Share of Results of Equity Method Investees**: **RMB 1,013 million** (US$141 million), a **33% decrease** year-over-year[47](index=47&type=chunk) Share of Results of Equity Method Investees | Item | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Ant Group | 3,917 | 1,547 | 216 | | Others | (588) | 455 | 63 | | Impairment losses | (2,157) | – | – | | Others(1) | 333 | (989) | (138) | | **Total** | **1,505** | **1,013** | **141** | - **Reason for Ant Group's Decreased Profit Contribution**: Primarily due to its investments in new growth initiatives and technology, as well as a decrease in the fair value of certain investments[48](index=48&type=chunk) [Net Income and Non-GAAP Net Income](index=13&type=section&id=Net%20Income%20and%20Non-GAAP%20Net%20Income) Net income surged 76% to RMB 42.382 billion, driven by investment gains, while non-GAAP net income decreased 18% to RMB 33.510 billion - **Net Income**: **RMB 42,382 million** (US$5,916 million), a **76% increase** year-over-year[49](index=49&type=chunk) - **Reason for Net Income Increase**: Primarily due to changes in the market prices of equity investments and a gain from the disposal of Trendyol's local services business, partially offset by the decrease in operating income[49](index=49&type=chunk) - **Non-GAAP Net Income**: **RMB 33,510 million** (US$4,678 million), an **18% decrease** year-over-year[49](index=49&type=chunk) [Diluted EPS/ADS](index=13&type=section&id=Diluted%20EPS%2FADS%20and%20Non-GAAP%20Diluted%20EPS%2FADS) Diluted earnings per ADS surged 82% to RMB 17.98, while non-GAAP diluted earnings per ADS decreased 10% to RMB 14.75 - **Diluted Earnings per ADS**: **RMB 17.98** (US$2.51), an **82% increase** year-over-year[51](index=51&type=chunk) - **Non-GAAP Diluted Earnings per ADS**: **RMB 14.75** (US$2.06), a **10% decrease** year-over-year[51](index=51&type=chunk) - **Diluted Earnings per Share**: **RMB 2.25** (US$0.31 or HK$2.47), an **82% increase** year-over-year[51](index=51&type=chunk) - **Non-GAAP Diluted Earnings per Share**: **RMB 1.84** (US$0.26 or HK$2.02), a **10% decrease** year-over-year[51](index=51&type=chunk) [Cash Flow and Liquidity](index=14&type=section&id=Cash%20Flow%20and%20Liquidity) [Cash and Liquid Investments](index=14&type=section&id=Cash%20and%20Cash%20Equivalents%2C%20Short-term%20Investments%20and%20Other%20Treasury%20Investments) As of June 30, 2025, total cash and other liquid investments stood at RMB 585.663 billion, a decrease of RMB 11.469 billion from March 31 - **Total Cash and Other Liquid Investments**: **RMB 585,663 million** (US$81,755 million)[53](index=53&type=chunk) - **Quarterly Decrease**: A **decrease of RMB 11,469 million**[53](index=53&type=chunk) - **Reason for Decrease**: Net cash outflow from free cash flow of RMB 18,815 million, cash outflow for investment and acquisition activities of RMB 8,429 million, and cash used in share repurchases of RMB 5,840 million[53](index=53&type=chunk) [Operating Cash Flow and Free Cash Flow](index=14&type=section&id=Net%20Cash%20Provided%20by%20Operating%20Activities%20and%20Free%20Cash%20Flow) Net cash from operating activities was RMB 20.672 billion, while free cash flow was a net outflow of RMB 18.815 billion - **Net Cash Provided by Operating Activities**: **RMB 20,672 million** (US$2,886 million), a **39% decrease** year-over-year[54](index=54&type=chunk) - **Free Cash Flow**: A **net outflow of RMB 18,815 million** (US$2,626 million), compared to a net inflow of RMB 17,372 million in the same quarter of 2024[54](index=54&type=chunk) - **Reason for Free Cash Flow Decrease**: Primarily attributable to increased investments in cloud business infrastructure and "Taobao Flash-Go"[54](index=54&type=chunk) [Investing Cash Flow](index=14&type=section&id=Net%20Cash%20Provided%20by%20Investing%20Activities) Net cash provided by investing activities was RMB 18.328 billion, mainly reflecting a decrease in short-term investments and proceeds from disposals - **Net Cash Provided by Investing Activities**: **RMB 18,328 million** (US$2,558 million)[55](index=55&type=chunk) - **Major Cash Inflows**: A decrease in short-term investments of RMB 35,652 million, cash proceeds from disposal of investments of RMB 17,457 million, and a decrease in other treasury investments of RMB 12,364 million[55](index=55&type=chunk) - **Major Cash Outflows**: Capital expenditures of RMB 38,676 million and cash outflow for investment and acquisition activities of RMB 8,429 million[55](index=55&type=chunk) [Financing Cash Flow](index=14&type=section&id=Net%20Cash%20Used%20in%20Financing%20Activities) Net cash used in financing activities was RMB 2.731 billion, primarily reflecting cash used in share repurchases - **Net Cash Used in Financing Activities**: **RMB 2,731 million** (US$381 million)[56](index=56&type=chunk) - **Major Cash Outflow**: Cash used in share repurchases of RMB 5,840 million[56](index=56&type=chunk) - **Major Cash Inflow**: Net proceeds from bank borrowings of RMB 3,287 million[56](index=56&type=chunk) [Share Repurchases and Employee Information](index=4&type=section&id=Share%20Repurchases%20and%20Employee%20Information) [Share Repurchases](index=4&type=section&id=Share%20Repurchases) The company repurchased 56 million ordinary shares for US$815 million, with US$19.3 billion remaining under its repurchase authorization - **Repurchases this Quarter**: Repurchased **56.0 million ordinary shares** (equivalent to 7.0 million ADSs) for **US$815 million**[14](index=14&type=chunk) - **Repurchase Authorization**: As of June 30, 2025, **US$19.3 billion** remained under the share repurchase authorization, which is effective through March 2027[14](index=14&type=chunk) [Employees](index=14&type=section&id=Employees) As of June 30, 2025, the total number of employees was 123,711, a slight decrease from the previous quarter - **Total Employees**: **123,711** (as of June 30, 2025)[57](index=57&type=chunk) - **Quarter-over-Quarter Change**: A decrease from 124,320 as of March 31, 2025[57](index=57&type=chunk) [Notes to Financial Statements](index=18&type=section&id=Notes%20to%20Financial%20Statements) [Unaudited Consolidated Income Statements](index=18&type=section&id=Unaudited%20Consolidated%20Income%20Statements) The consolidated income statement shows a 2% revenue increase to RMB 247.652 billion and a 76% surge in net income to RMB 42.382 billion Unaudited Consolidated Income Statements | Metric | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Revenue | 243,236 | 247,652 | 34,571 | | Cost of revenue | (146,106) | (136,429) | (19,045) | | Operating income | 35,989 | 34,988 | 4,884 | | Net income | 24,022 | 42,382 | 5,916 | | Net income attributable to ordinary shareholders | 24,269 | 43,116 | 6,019 | | Diluted earnings per ADS | 9.89 | 17.98 | 2.51 | - **Revenue Growth**: **RMB 247,652 million**, a **2% increase** year-over-year[69](index=69&type=chunk) - **Net Income Growth**: **RMB 42,382 million**, a **76% increase** year-over-year[69](index=69&type=chunk) [Unaudited Consolidated Balance Sheets](index=19&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were RMB 1,847.085 billion, with total liabilities at RMB 753.766 billion Unaudited Consolidated Balance Sheets | Metric | March 31, 2025 (RMB Million) | June 30, 2025 (RMB Million) | June 30, 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Total assets | 1,804,227 | 1,847,085 | 257,843 | | Cash and cash equivalents | 145,487 | 183,120 | 25,563 | | Short-term investments | 228,826 | 191,737 | 26,766 | | Total liabilities | 714,121 | 753,766 | 105,222 | | Total shareholders' equity | 1,009,858 | 1,013,672 | 141,503 | - **Total Assets**: **RMB 1,847,085 million**[70](index=70&type=chunk) - **Cash and Cash Equivalents**: **RMB 183,120 million**[70](index=70&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=21&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the quarter, net cash from operating activities was RMB 20.672 billion, while net cash from investing activities was RMB 18.328 billion Unaudited Condensed Consolidated Statements of Cash Flows | Metric | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 33,636 | 20,672 | 2,886 | | Net cash provided by (used in) investing activities | (35,829) | 18,328 | 2,558 | | Net cash used in financing activities | (19,582) | (2,731) | (381) | | Cash, cash equivalents, restricted cash and escrow receivables at end of period | 265,308 | 224,579 | 31,350 | - **Operating Cash Flow**: **RMB 20,672 million**[72](index=72&type=chunk) - **Investing Cash Flow**: **RMB 18,328 million**[72](index=72&type=chunk) [Reconciliations of Non-GAAP Financial Measures](index=22&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) [Reconciliations of Net Income to Adjusted EBITA and Adjusted EBITDA](index=22&type=section&id=Reconciliations%20of%20Net%20Income%20to%20Adjusted%20EBITA%20and%20Adjusted%20EBITDA) Net income of RMB 42.382 billion reconciles to an adjusted EBITA of RMB 38.844 billion and an adjusted EBITDA of RMB 45.735 billion Reconciliation of Net Income to Adjusted EBITA and Adjusted EBITDA | Item | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Net income | 24,022 | 42,382 | 5,916 | | Operating income | 35,989 | 34,988 | 4,884 | | Share-based compensation expense | 4,109 | 3,194 | 446 | | Amortization and impairment of intangible assets and others | 1,792 | 662 | 92 | | Provision for shareholder class action lawsuit | 3,145 | – | – | | **Adjusted EBITA** | **45,035** | **38,844** | **5,422** | | Depreciation and impairment of property and equipment, etc | 6,126 | 6,891 | 962 | | **Adjusted EBITDA** | **51,161** | **45,735** | **6,384** | [Reconciliations of Net Income to Non-GAAP Net Income](index=23&type=section&id=Reconciliations%20of%20Net%20Income%20to%20Non-GAAP%20Net%20Income) Net income of RMB 42.382 billion reconciles to a non-GAAP net income of RMB 33.510 billion after adjustments Reconciliation of Net Income to Non-GAAP Net Income | Item | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Net income | 24,022 | 42,382 | 5,916 | | Share-based compensation expense | 4,109 | 3,194 | 446 | | Amortization and impairment of intangible assets | 1,792 | 807 | 113 | | Provision for shareholder class action lawsuit | 3,145 | – | – | | (Gains) losses on deemed disposals/disposals/revaluation of investments | 4,581 | (13,128) | (1,832) | | Impairment of investments and others | 4,311 | 1,013 | 141 | | Income tax effects | (1,269) | (758) | (106) | | **Non-GAAP net income** | **40,691** | **33,510** | **4,678** | [Reconciliations of Diluted EPS/ADS to Non-GAAP Diluted EPS/ADS](index=24&type=section&id=Reconciliations%20of%20Diluted%20EPS%2FADS%20to%20Non-GAAP%20Diluted%20EPS%2FADS) Diluted earnings per ADS of RMB 17.98 reconciles to a non-GAAP diluted earnings per ADS of RMB 14.75 Reconciliation of Diluted EPS/ADS to Non-GAAP Diluted EPS/ADS | Item | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Net income attributable to ordinary shareholders – diluted | 24,220 | 43,025 | 6,006 | | Non-GAAP adjustments to net income attributable to ordinary shareholders | 16,045 | (7,734) | (1,080) | | **Non-GAAP net income attributable to ordinary shareholders for computing non-GAAP diluted EPS/ADS** | **40,265** | **35,291** | **4,926** | | Diluted earnings per share | 1.24 | 2.25 | 0.31 | | Non-GAAP diluted earnings per share | 2.05 | 1.84 | 0.26 | | Diluted earnings per ADS | 9.89 | 17.98 | 2.51 | | Non-GAAP diluted earnings per ADS | 16.44 | 14.75 | 2.06 | [Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow](index=25&type=section&id=Reconciliations%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Net cash from operating activities of RMB 20.672 billion reconciles to a free cash flow outflow of RMB 18.815 billion Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | Item | 2024 (RMB Million) | 2025 (RMB Million) | 2025 (USD Million) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 33,636 | 20,672 | 2,886 | | Less: Purchase of property and equipment (excluding land use rights and construction in progress relating to corporate campuses) | (11,939) | (38,629) | (5,392) | | Less: Changes in the buyer protection fund deposits | (4,325) | (858) | (120) | | **Free cash flow** | **17,372** | **(18,815)** | **(2,626)** | [Other Information](index=15&type=section&id=Other%20Information) [Webcast and Conference Call Information](index=15&type=section&id=Webcast%20and%20Conference%20Call%20Information) Management held a conference call on August 29, 2025, to discuss the financial results, with a webcast available on the company's website - **Conference Date**: August 29, 2025[58](index=58&type=chunk) - **Access**: Registration links for English and Chinese sessions were provided, with a live webcast and archive available on the investor relations website[58](index=58&type=chunk)[59](index=59&type=chunk) [About Alibaba Group](index=15&type=section&id=About%20Alibaba%20Group) Alibaba Group is a global technology company focused on e-commerce and cloud computing, providing digital infrastructure and services to businesses - **Core Businesses**: Focused on e-commerce and cloud computing[60](index=60&type=chunk) - **Services Provided**: Offers digital infrastructure, logistics, efficiency tools, and marketing for merchants, brands, and retailers; provides leading cloud infrastructure, services, and collaboration tools for enterprises[60](index=60&type=chunk) [Investor Relations Contact](index=15&type=section&id=Investor%20Relations%20Contact) Contact information is provided for the investor relations director and media contacts - **Investor Relations Contact**: Lydia Liu (Director of Investor Relations)[61](index=61&type=chunk) - **Media Contacts**: Cathy Yan, Ivy Ke[61](index=61&type=chunk) [Exchange Rate Information](index=15&type=section&id=Exchange%20Rate%20Information) This announcement uses an exchange rate of RMB 7.1636 to US$1.00 and RMB 0.91195 to HK$1.00 as of June 30, 2025 - **RMB to USD Exchange Rate**: **RMB 7.1636 to US$1.00** (as of June 30, 2025)[61](index=61&type=chunk) - **RMB to HKD Exchange Rate**: **RMB 0.91195 to HK$1.00** (as of June 30, 2025)[61](index=61&type=chunk) [Safe Harbor Statements](index=16&type=section&id=Safe%20Harbor%20Statements) This announcement contains forward-looking statements that involve inherent risks and uncertainties, and actual results may differ materially - **Legal Basis**: Made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995[62](index=62&type=chunk) - **Risk Factors**: Competition, investment risks, strategic transaction risks, economic fluctuations, geopolitical tensions, and adjustments to shareholder return plans[62](index=62&type=chunk) - **Update Obligation**: The company does not undertake any obligation to update any forward-looking statement, except as required under applicable law[62](index=62&type=chunk) [Non-GAAP Financial Measures](index=16&type=section&id=Non-GAAP%20Financial%20Measures) The Group uses non-GAAP measures such as adjusted EBITDA and free cash flow to supplement its GAAP financial statements - **Non-GAAP Measures Used**: Adjusted EBITDA, adjusted EBITA, non-GAAP net income, non-GAAP diluted EPS/ADS, and free cash flow[63](index=63&type=chunk) - **Purpose**: To identify underlying business trends, provide useful information on operating performance and liquidity, and enhance the overall understanding of past performance and future prospects[64](index=64&type=chunk) - **Important Note**: These measures should not be considered in isolation or as a substitute for GAAP measures and may not be comparable to similar measures used by other companies[65](index=65&type=chunk)