[Important Notice](index=1&type=section&id=%C2%A71%20Important%20Notice) [Basic Report Information and Dividend Plan](index=1&type=section&id=1%2E1-1%2E7%20Basic%20Report%20Information%20and%20Dividend%20Plan) This report is a summary of CSSC Offshore & Marine Engineering Company Limited's interim report for the six months ended June 30, 2025, with financial data prepared under PRC GAAP, unaudited but reviewed by the Board's Audit Committee; the company proposes a cash dividend of RMB 0.80 (tax inclusive) per 10 shares, totaling approximately RMB 113 million, representing 21.48% of net profit attributable to parent company shareholders for the period - This report is a summary of CSSC Offshore & Marine Engineering Company Limited's 2025 interim report, with financial data prepared under PRC GAAP, unaudited but reviewed by the Board's Audit Committee[3](index=3&type=chunk) 2025 Half-Year Cash Dividend Distribution Plan | Indicator | Amount/Ratio | | :--- | :--- | | Cash dividend per 10 shares | RMB 0.80 (tax inclusive) | | Total proposed cash dividend | RMB 113,080,510.24 (tax inclusive) | | Percentage of net profit attributable to parent company shareholders for Jan-Jun 2025 | 21.48% | | Remaining undistributed profit carried forward | RMB 1,468,170,857.41 | | Capital reserve converted to share capital | Not implemented | | Expected completion date for cash dividend distribution | On or before October 23, 2025 | - This profit distribution plan has been authorized by the 2024 Annual General Meeting for Board decision and does not require further shareholder approval[4](index=4&type=chunk) [Company Profile](index=3&type=section&id=%C2%A72%20Company%20Profile) [Key Financial Data and Indicators](index=3&type=section&id=2%2E1%20Key%20Financial%20Data%20and%20Indicators) During the reporting period, CSSC Offshore & Marine Engineering Company Limited achieved significant growth in operating revenue and total profit, with net profit attributable to listed company shareholders increasing by 258.46% year-on-year; net cash flow from operating activities turned positive, indicating a significant improvement in the company's operating condition, while non-recurring gains and losses had some impact on net profit 2025 Half-Year Key Accounting Data | Key Accounting Data (Jan-Jun) | Current Period (RMB Yuan) | Prior Year Period (RMB Yuan) | % Change from Prior Year Period | | :--- | :--- | :--- | :--- | | Operating Revenue | 10,172,636,741.11 | 8,728,536,063.65 | 16.54 | | Total Profit | 656,113,231.71 | 150,721,702.25 | 335.31 | | Net Profit Attributable to Listed Company Shareholders | 526,386,355.89 | 146,845,686.17 | 258.46 | | Net Profit Attributable to Listed Company Shareholders (Excluding Non-Recurring Gains/Losses) | 490,999,481.55 | 131,051,014.64 | 274.66 | | Net Cash Flow from Operating Activities | 1,530,898,629.05 | -5,557,686,660.25 | N/A | 2025 Half-Year Key Financial Indicators | Key Financial Indicators (Jan-Jun) | Current Period | Prior Year Period | % Change from Prior Year Period | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.3724 | 0.1039 | 258.42 | | Diluted Earnings Per Share (RMB/share) | 0.3724 | 0.1039 | 258.42 | | Basic Earnings Per Share (Excluding Non-Recurring Gains/Losses) (RMB/share) | 0.3474 | 0.0927 | 274.76 | | Weighted Average Return on Net Assets (%) | 3.11 | 0.83 | Increased by 2.28 percentage points | | Weighted Average Return on Net Assets (Excluding Non-Recurring Gains/Losses) (%) | 2.90 | 0.74 | Increased by 2.16 percentage points | - Total profit and net profit attributable to parent company shareholders significantly increased, primarily due to improved production efficiency, deepened cost management leading to higher product gross margins, and increased investment income from better performance of associates and dividends from investees[8](index=8&type=chunk) - Net cash flow from operating activities turned from a negative value in the prior year to a positive **RMB 1.53 billion**, mainly due to increased receipt of shipbuilding progress payments in the current reporting period[8](index=8&type=chunk) 2025 Half-Year Non-Recurring Gains and Losses Items | Non-Recurring Gains and Losses Item | Amount (RMB Yuan) | | :--- | :--- | | Gains or losses from disposal of non-current assets | -1,541,647.08 | | Government grants recognized in current profit or loss | 56,317,959.38 | | Fair value changes and disposal gains or losses from financial assets and liabilities held by non-financial enterprises | 21,351,165.42 | | Other non-operating income and expenses | 3,092,188.45 | | Less: Income tax impact | 13,588,854.17 | | Less: Impact on minority interests (after tax) | 30,243,937.66 | | Total | 35,386,874.34 | [Employee Information and Remuneration Policy](index=6&type=section&id=%C2%A73%20Employee%20Information%20and%20Remuneration%20Policy) As of June 30, 2025, the Group's total number of employees was 4,557, with total employee remuneration paid in the first half of the year amounting to RMB 395 million; the company implements a position-performance-based salary system, with remuneration including wages, bonuses, and other state-mandated welfare plans 2025 Half-Year Employee Information | Indicator | Data | | :--- | :--- | | Total employees (as of June 30, 2025) | 4,557 persons | | Total employee remuneration paid (Jan-Jun 2025) | RMB 395 million | - The Group implements a position-performance-based salary system, with remuneration comprising wages, bonuses, and other state-mandated welfare plans, adhering to relevant Chinese laws and regulations[11](index=11&type=chunk) [Discussion and Analysis of Operations](index=6&type=section&id=%C2%A74%20Discussion%20and%20Analysis%20of%20Operations) [Overall Operating Performance Discussion and Analysis for the Reporting Period](index=6&type=section&id=4%2E1%20Overall%20Operating%20Performance%20Discussion%20and%20Analysis%20for%20the%20Reporting%20Period) In the first half of 2025, the global new shipbuilding market experienced a phased adjustment, with new vessel orders declining but prices remaining high, and China's shipbuilding industry maintaining its leading market share; the Group actively responded to market changes, focusing on the marine defense industry and its main vessel types, achieving significant growth in operating orders and revenue, and delivering multiple products ahead of schedule - In the first half of 2025, global new shipbuilding orders decreased by **34.36%** (by deadweight tons) and **54.36%** (by compensated gross tons) year-on-year, with container ships being the only highlight, increasing by **27.23%** year-on-year[12](index=12&type=chunk) - New vessel prices eased from high levels, with the Clarkson Newbuilding Price Index decreasing by **0.1%** year-on-year in June, but green vessel renewal demand and limited high-quality capacity supported prices[13](index=13&type=chunk) - China's shipbuilding industry continued to lead the world in three major indicators (new orders, completed shipbuilding, and outstanding orders), accounting for **56.12%**, **52.20%**, and **67.28%** (by deadweight tons) of the global market, respectively[14](index=14&type=chunk) - The Group achieved operating orders of **RMB 15.498 billion** in the first half, a year-on-year increase of **64.6%**, completing **88.8%** of its annual plan, and undertaking 6 types of 32 new shipbuilding orders, including container ships, special vessels, and gas carriers[16](index=16&type=chunk) - During the reporting period, the Group completed and delivered **16 vessels**, totaling **454,600 deadweight tons**, achieving operating revenue of **RMB 10.173 billion**, a year-on-year increase of **16.54%**[16](index=16&type=chunk) - As of the end of the reporting period, the Group's outstanding order contract value was approximately **RMB 68 billion**, including about **RMB 65 billion** for shipbuilding orders (140 vessels, 1 offshore engineering equipment unit) and about **RMB 3 billion** for non-shipbuilding products[17](index=17&type=chunk) [Main Business Analysis](index=9&type=section&id=4%2E2%20Main%20Business%20Analysis) During the reporting period, the company's operating revenue and operating costs both increased, with operating revenue growing by 16.54%; financial expenses varied due to exchange rate fluctuations and increased net interest income and expenses, while R&D investment significantly increased; investment income grew substantially, mainly from associates' investment income; balance sheet items showed various changes, with increases in accounts receivable and inventory, and significant growth in contract liabilities and non-current liabilities due within one year 2025 Half-Year Financial Statement Item Changes | Item | Current Period (RMB Yuan) | Prior Year Period (RMB Yuan) | % Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 10,172,636,741.11 | 8,728,536,063.65 | 16.54 | | Operating Cost | 9,218,419,877.97 | 8,079,818,322.37 | 14.09 | | Selling Expenses | 12,169,312.95 | 12,906,616.79 | -5.71 | | Administrative Expenses | 309,540,092.02 | 290,618,064.47 | 6.51 | | Financial Expenses | -119,100,650.46 | -159,756,474.23 | N/A | | R&D Expenses | 549,656,510.52 | 423,009,220.26 | 29.94 | | Net Cash Flow from Operating Activities | 1,530,898,629.05 | -5,557,686,660.25 | N/A | | Net Cash Flow from Investing Activities | 1,276,924,854.65 | 806,396,143.92 | 58.35 | | Net Cash Flow from Financing Activities | -300,581,028.11 | 451,347,377.55 | -166.60 | | Taxes and Surcharges | 23,743,301.09 | 11,454,711.70 | 107.28 | | Other Income | 98,929,395.67 | 58,358,958.88 | 69.52 | | Investment Income | 405,636,862.98 | 122,596,866.59 | 230.87 | | Fair Value Change Income | 9,266,578.75 | -64,857,252.63 | N/A | | Credit Impairment Losses | -637,579.53 | -3,698,846.98 | N/A | | Asset Impairment Losses | -36,840,864.55 | – | N/A | | Gains on Disposal of Assets | -187,689.66 | -32,490,144.44 | N/A | | Non-Operating Income | 3,395,110.41 | 1,564,607.84 | 116.99 | | Non-Operating Expenses | 1,656,879.38 | 1,238,089.30 | 33.83 | | Income Tax Expense | 54,405,068.22 | -33,905,499.07 | N/A | - Operating revenue growth was primarily driven by sufficient outstanding orders, the batch construction advantage of main vessel types, and increased production output and efficiency from lean management[20](index=20&type=chunk) - Investment income significantly increased by **230.87%** year-on-year, mainly due to increased investment income from associates (especially Guangzhou Shipyard International Company Limited) recognized under the equity method[24](index=24&type=chunk)[27](index=27&type=chunk) 2025 Half-Year Balance Sheet Major Item Changes | Item Name | Current Period End (RMB Yuan) | % of Total Assets | Prior Year End (RMB Yuan) | % of Total Assets | % Change from Prior Year End | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 16,380,760,423.37 | 29.09 | 15,260,594,444.32 | 28.47 | 7.34 | | | Trading Financial Assets | 119,063.01 | 0.00 | 1,171,434.07 | 0.00 | -89.84 | Financial derivatives matured and settled during the reporting period | | Notes Receivable | 20,732,902.81 | 0.04 | 56,102,457.89 | 0.10 | -63.04 | Some notes matured and settled during the reporting period | | Accounts Receivable | 1,934,505,426.91 | 3.44 | 1,326,920,478.98 | 2.48 | 45.79 | Uncollected payments due to unreached collection milestones increased at the end of the reporting period | | Receivables Financing | 114,015,583.63 | 0.20 | 236,548,075.95 | 0.44 | -51.8 | Supply chain platform notes matured and settled during the reporting period | | Inventories | 7,225,851,872.50 | 12.83 | 5,905,684,446.80 | 11.02 | 22.35 | | | Contract Assets | 3,091,069,008.37 | 5.49 | 2,388,466,443.95 | 4.46 | 29.42 | | | Long-term Receivables | 469,561,861.68 | 0.83 | 715,985,528.68 | 1.34 | -34.42 | Long-term receivables from deferred sales with financing nature matured and collected during the reporting period | | Long-term Equity Investments | 5,763,132,186.69 | 10.23 | 5,403,984,842.40 | 10.08 | 6.65 | | | Long-term Deferred Expenses | 119,043,239.44 | 0.21 | 79,792,669.10 | 0.15 | 49.19 | Improvement and renovation of fixed assets, production facilities, etc., during the reporting period | | Short-term Borrowings | 539,249,576.40 | 0.96 | 598,343,912.50 | 1.12 | -9.88 | | | Trading Financial Liabilities | 49,405,603.48 | 0.09 | 94,183,471.96 | 0.18 | -47.54 | Fair value changes of some held financial derivatives at the end of the reporting period | | Contract Liabilities | 14,920,868,699.17 | 26.50 | 13,291,127,772.51 | 24.80 | 12.26 | | | Employee Remuneration Payable | 190,383,293.37 | 0.34 | 1,367,643.45 | 0.00 | 13820.54 | Monthly accrual of wages, subsidies, and welfare expenses during the reporting period | | Other Payables | 365,637,588.27 | 0.65 | 265,576,439.57 | 0.50 | 37.68 | New ordinary share dividends payable of RMB 99 million at the end of the reporting period | | Non-current Liabilities Due Within One Year | 2,283,387,967.26 | 4.05 | 1,558,093,634.54 | 2.91 | 46.55 | Long-term borrowings due within one year increased at the end of the reporting period | | Long-term Borrowings | 3,162,900,000.00 | 5.62 | 4,048,900,000.00 | 7.55 | -21.88 | | [Investment Status Analysis](index=14&type=section&id=4%2E3%20Investment%20Status%20Analysis) As of the end of the reporting period, the Group's long-term equity investments amounted to **RMB 5.763 billion**, an increase of **6.65%** from the beginning of the year, mainly due to increased investment income from associates Long-term Equity Investment Changes | Indicator | Period-End Balance (RMB 10,000) | Year-Beginning Balance (RMB 10,000) | % Change | | :--- | :--- | :--- | :--- | | Long-term Equity Investments | 576,313.22 | 540,398.48 | 6.65 | - The increase in long-term equity investments was mainly due to increased investment income from associates during the reporting period[31](index=31&type=chunk) [Non-Fundraising Investment Projects](index=14&type=section&id=4%2E4%20Non-Fundraising%20Investment%20Projects) During the reporting period, the company had no non-fundraising investment projects - During the reporting period, the company had no non-fundraising investment projects[32](index=32&type=chunk) [Significant Matters](index=14&type=section&id=%C2%A75%20Significant%20Matters) [Asset Transactions, Business Combinations](index=14&type=section&id=5%2E1%20Asset%20Transactions%2C%20Business%20Combinations) During the reporting period, the company had no asset transactions or business combinations - During the reporting period, the company had no asset transactions or business combinations[33](index=33&type=chunk) [Profit Distribution and Suspension of Share Transfer Registration for the Reporting Period](index=14&type=section&id=5%2E2%20Profit%20Distribution%20and%20Suspension%20of%20Share%20Transfer%20Registration%20for%20the%20Reporting%20Period) The company proposes a cash dividend of RMB 0.80 (tax inclusive) per 10 shares to all shareholders, totaling approximately RMB 113 million, representing 21.48% of net profit attributable to parent company shareholders for the period; to ensure shareholder eligibility, the company will suspend share transfer registration from September 22 to September 25, 2025 2025 Half-Year Cash Dividend Distribution Plan | Indicator | Amount/Ratio | | :--- | :--- | | Cash dividend per 10 shares | RMB 0.80 (tax inclusive) | | Total proposed cash dividend | RMB 113,080,510.24 (tax inclusive) | | Percentage of net profit attributable to parent company shareholders for Jan-Jun 2025 | 21.48% | | Remaining undistributed profit carried forward | RMB 1,468,170,857.41 | | Capital reserve converted to share capital | Not implemented | - The company will suspend share transfer registration from **September 22, 2025, to September 25, 2025**, to determine shareholder eligibility for the interim dividend[35](index=35&type=chunk) [Major Litigation, Arbitration, and Matters of Widespread Media Questioning](index=15&type=section&id=5%2E3%20Major%20Litigation%2C%20Arbitration%2C%20and%20Matters%20of%20Widespread%20Media%20Questioning) During the reporting period, the company had no major litigation, arbitration, or matters of widespread media questioning - During the reporting period, the company had no major litigation, arbitration, or matters of widespread media questioning[36](index=36&type=chunk) [Custody, Contracting, Leasing Matters](index=15&type=section&id=5%2E4%20Custody%2C%20Contracting%2C%20Leasing%20Matters) The Group has multiple land, building, and structure leases, primarily involving affiliated companies; additionally, the Group's total guarantees for subsidiaries amount to **RMB 2.836 billion**, representing **13.43%** of the company's net assets, all provided for guaranteed entities with a debt-to-asset ratio exceeding **70%** Major Leasing Information | Lessor Name | Lessee Name | Leased Asset Description | Lease Start Date | Lease End Date | Related Party Transaction | | :--- | :--- | :--- | :--- | :--- | :--- | | China State Shipbuilding Corporation Guangzhou Shipbuilding Industry Co., Ltd. | Huangpu Wenchong | Land, buildings, and structures | 2014.5.1 | Relocation completed and production commenced in new plant area | Yes | | Guangzhou CSSC Wenchong Industrial Co., Ltd. | Wenchong Shipyard | Land, buildings, and structures | 2018.11.1 | Relocation completed and production commenced in new plant area | Yes | | Guangdong Guangxin Shipbuilding Trading Co., Ltd. | Wenchuan Heavy Industry | Land, buildings, and structures | 2024.5.1 | 2026.4.30 | No | Company Guarantee Total (as of End of Reporting Period) | Indicator | Amount (RMB 10,000) | % of Company's Net Assets | | :--- | :--- | :--- | | Total new guarantees for subsidiaries during the reporting period | 122,092.05 | | | Total outstanding guarantees for subsidiaries at period-end (B) | 283,587.71 | | | Total Guarantees (A+B) | 283,587.71 | 13.43 | | Of which: Debt guarantees provided directly or indirectly for guaranteed entities with debt-to-asset ratio exceeding 70% (D) | 283,587.71 | | - During the reporting period, the Group's cumulative new external guarantees amounted to **RMB 1.221 billion**, all within the guarantee framework approved by the shareholders' meeting, with no overdue guarantees[40](index=40&type=chunk) - As of the end of the reporting period, the Group's outstanding external guarantees amounted to **RMB 2.836 billion**, all provided by the company's controlling subsidiary Huangpu Wenchong for its subsidiary Wenchuan Heavy Industry, covering bank credit line guarantees, parent company guarantees, advance payment guarantees, and performance guarantees[40](index=40&type=chunk) [Environmental Information Disclosure](index=18&type=section&id=5%2E5%20Environmental%20Information%20Disclosure) Two of the Group's subsidiaries, Guangzhou Huangchuan Offshore Engineering Co., Ltd. and Guangzhou Wenchong Shipyard Co., Ltd., are included in the list of enterprises required to disclose environmental information, and their environmental information disclosure reports can be found on the Guangdong Provincial Department of Ecology and Environment's Enterprise Environmental Information Disclosure System Enterprises Included in the List of Enterprises Required to Disclose Environmental Information | No. | Enterprise Name | Query Index for Environmental Information Disclosure Report | | :--- | :--- | :--- | | 1 | Guangzhou Huangchuan Offshore Engineering Co., Ltd. | Guangdong Provincial Department of Ecology and Environment Enterprise Environmental Information Disclosure System | | 2 | Guangzhou Wenchong Shipyard Co., Ltd. | Guangdong Provincial Department of Ecology and Environment Enterprise Environmental Information Disclosure System | [Explanation of Other Significant Matters](index=18&type=section&id=5%2E6%20Explanation%20of%20Other%20Significant%20Matters) As of June 30, 2025, the Group's asset-liability ratio was **62.50%**, an increase of **2 percentage points** from the beginning of the period; the company had no repurchases, sales, or redemptions of securities, nor did it hold any treasury shares; the Group's capital management objective is to ensure continuous operation and provide adequate returns to shareholders; no significant post-reporting period matters require disclosure - As of **June 30, 2025**, the company had **RMB 10 million** in bank deposits used as collateral for bank acceptance bills, guarantees, and letters of credit, with no other asset pledges[42](index=42&type=chunk) Asset-Liability Ratio Change | Indicator | June 30, 2025 | Beginning of Period | | :--- | :--- | :--- | | Asset-liability ratio | 62.50% | 60.50% | | Change | Increased by 2 percentage points | | - During the reporting period, the Group had no repurchases, sales, or redemptions of listed securities of the company or any of its subsidiaries, and held no treasury shares as of **June 30, 2025**[44](index=44&type=chunk) - The Group's primary capital management objective is to ensure continuous operation and regularly review and manage its capital structure based on economic environment, funding needs, and profitability[45](index=45&type=chunk) - As of the date of this report, the Group had no significant post-reporting period matters requiring disclosure[46](index=46&type=chunk) [Corporate Governance Report](index=19&type=section&id=%C2%A76%20Corporate%20Governance%20Report) [Corporate Governance](index=19&type=section&id=6%2E1%20Corporate%20Governance) The company strictly complies with relevant laws, regulations, and listing rules, continuously improving its corporate governance structure; during the reporting period, the company applied and complied with Appendix C1 of the Hong Kong Listing Rules' Corporate Governance Code, but non-executive directors did not attend shareholder meetings and the chairman position was vacant, which has since been filled by Mr. Luo Bing as the new chairman - The company strictly adheres to the "Company Law," "Securities Law," and listing rules of the China Securities Regulatory Commission and Shanghai and Hong Kong stock exchanges to improve its corporate governance structure, with no significant discrepancies from relevant regulations currently[48](index=48&type=chunk) - For the six months ended **June 30, 2025**, the company applied and complied with Appendix C1 of the Hong Kong Listing Rules' Corporate Governance Code, but non-executive directors Mr. Yin Lu and Mr. Gu Yuan were unable to attend some shareholder meetings due to work reasons[49](index=49&type=chunk) - The company's former chairman, Mr. Xiang Huiming, resigned on **May 21, 2024**, and as of **June 30, 2025**, the positions of chairman and chairman of the Board's Strategy Committee were vacant; on **August 21, 2025**, Mr. Luo Bing was elected as the new chairman and chairman of the Strategy Committee, and the company has fully met the requirements of the Corporate Governance Code[49](index=49&type=chunk) [Directors' Securities Transactions](index=20&type=section&id=6%2E2%20Directors%27%20Securities%20Transactions) The company strictly complies with the restrictions on directors' securities transactions by domestic and overseas regulatory bodies and has adopted the "Model Code for Securities Transactions by Directors of Listed Issuers"; all directors have confirmed full compliance with this code during the reporting period - The company strictly complies with the relevant restrictions on directors' securities transactions by both domestic and Hong Kong regulatory bodies and has adopted the "Model Code for Securities Transactions by Directors of Listed Issuers"[50](index=50&type=chunk) - All directors have confirmed to the company that they have fully complied with the "Model Code for Securities Transactions by Directors of Listed Issuers" during the reporting period[50](index=50&type=chunk) [Board Meetings](index=20&type=section&id=6%2E3%20Board%20Meetings) As of the end of the reporting period, the company's Board of Directors held 4 meetings, with all directors attending; additionally, independent directors held 2 special meetings, the Audit Committee held 4 meetings, and the Remuneration and Appraisal Committee held 1 meeting, approving multiple important proposals - As of the end of the reporting period, the company's Board of Directors held **4 meetings** (including 2 written meetings), with all directors attending (including attendance by proxy)[51](index=51&type=chunk) - During the reporting period, the Board's independent directors held **2 special meetings**, approving **2 proposals**, including the preliminary proposal for the controlling shareholder to change the "Letter of Undertaking to Avoid Competition with CSSC Offshore & Marine Engineering Company Limited"[51](index=51&type=chunk) - The Audit Committee held **4 meetings**, approving **14 proposals**, including the 2024 Annual Report, Internal Control Evaluation Report, and 2025 First Quarter Report[51](index=51&type=chunk) - The Remuneration and Appraisal Committee held **1 meeting**, approving **1 proposal** regarding the 2024 performance appraisal results and remuneration of the company's directors, supervisors, and senior management[51](index=51&type=chunk) [Financial Statements Prepared Under PRC GAAP](index=21&type=section&id=%C2%A77%20Financial%20Statements%20Prepared%20Under%20PRC%20GAAP) [Consolidated Balance Sheet](index=21&type=section&id=%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of June 30, 2025, the Group's total consolidated assets amounted to **RMB 56.312 billion**, an increase of **5.07%** from the end of 2024; total current assets were **RMB 35.625 billion**, total current liabilities were **RMB 30.299 billion**, and the asset-liability ratio was **62.50%** Consolidated Balance Sheet Key Data (as of June 30, 2025) | Item | June 30, 2025 (RMB Yuan) | December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Total Current Assets | 35,625,080,814.03 | 32,140,949,910.03 | | Total Non-current Assets | 20,687,231,943.75 | 21,455,163,705.22 | | Total Assets | 56,312,312,757.78 | 53,596,113,615.25 | | Total Current Liabilities | 30,298,852,019.21 | 26,396,390,403.11 | | Total Non-current Liabilities | 4,898,864,999.14 | 6,029,266,122.27 | | Total Liabilities | 35,197,717,018.35 | 32,425,656,525.38 | | Total Equity Attributable to Parent Company Shareholders | 17,694,327,025.67 | 17,824,706,200.68 | | Total Equity | 21,114,595,739.43 | 21,170,457,089.87 | | Total Liabilities and Equity | 56,312,312,757.78 | 53,596,113,615.25 | [Parent Company Balance Sheet](index=25&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of June 30, 2025, the parent company's total assets amounted to **RMB 16.245 billion**, a slight decrease from the end of 2024; total current assets were **RMB 1.570 billion**, total current liabilities were **RMB 120 million**, and total equity was **RMB 15.070 billion** Parent Company Balance Sheet Key Data (as of June 30, 2025) | Item | June 30, 2025 (RMB Yuan) | December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Total Current Assets | 1,570,081,545.77 | 1,499,544,628.10 | | Total Non-current Assets | 14,675,040,592.92 | 15,042,077,255.41 | | Total Assets | 16,245,122,138.69 | 16,541,621,883.51 | | Total Current Liabilities | 119,695,242.70 | 18,993,165.20 | | Total Non-current Liabilities | 1,055,849,222.96 | 1,240,808,494.84 | | Total Liabilities | 1,175,544,465.66 | 1,259,801,660.04 | | Total Equity | 15,069,577,673.03 | 15,281,820,223.47 | | Total Liabilities and Equity | 16,245,122,138.69 | 16,541,621,883.51 | [Consolidated Income Statement](index=29&type=section&id=%E5%90%88%E5%B9%B6%E5%88%A9%E6%B6%A6%E8%A1%A8) In the first half of 2025, the Group achieved total operating revenue of **RMB 10.173 billion**, a year-on-year increase of **16.54%**; net profit was **RMB 602 million**, with net profit attributable to parent company shareholders of **RMB 526 million**, a significant year-on-year increase of **258.46%**; total comprehensive income was **RMB 43.34 million**, a substantial decrease from the prior year period Consolidated Income Statement Key Data (Jan-Jun 2025) | Item | 2025 Half-Year (RMB Yuan) | 2024 Half-Year (RMB Yuan) | | :--- | :--- | :--- | | I. Total Operating Revenue | 10,172,636,741.11 | 8,728,536,063.65 | | II. Total Operating Cost | 9,994,428,444.09 | 8,658,050,461.36 | | III. Operating Profit | 654,375,000.68 | 150,395,183.71 | | IV. Total Profit | 656,113,231.71 | 150,721,702.25 | | Less: Income Tax Expense | 54,405,068.22 | -33,905,499.07 | | V. Net Profit | 601,708,163.49 | 184,627,201.32 | | Net Profit Attributable to Parent Company Shareholders | 526,386,355.89 | 146,845,686.17 | | VI. Net Other Comprehensive Income After Tax | -558,365,322.44 | 1,834,065,131.74 | | VII. Total Comprehensive Income | 43,342,841.05 | 2,018,692,333.06 | | VIII. Earnings Per Share: Basic Earnings Per Share (RMB/share) | 0.3724 | 0.1039 | [Parent Company Income Statement](index=32&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E5%88%A9%E6%B6%A6%E8%A1%A8) In the first half of 2025, the parent company achieved operating revenue of **RMB 7.332 million**, with net profit of **RMB 444 million**, a significant year-on-year increase; total comprehensive income was **RMB -113 million**, a substantial decrease from the prior year period Parent Company Income Statement Key Data (Jan-Jun 2025) | Item | 2025 Half-Year (RMB Yuan) | 2024 Half-Year (RMB Yuan) | | :--- | :--- | :--- | | I. Operating Revenue | 7,332,000.00 | 6,546,600.00 | | II. Operating Profit | 447,900,426.15 | 120,696,350.83 | | III. Total Profit | 447,899,542.95 | 120,696,350.83 | | Less: Income Tax Expense | 3,849,353.92 | 3,623,480.55 | | IV. Net Profit | 444,050,189.03 | 117,072,870.28 | | V. Net Other Comprehensive Income After Tax | -557,488,547.98 | 1,838,535,032.00 | | VI. Total Comprehensive Income | -113,438,358.95 | 1,955,607,902.28 | [Consolidated Cash Flow Statement](index=34&type=section&id=%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In the first half of 2025, the Group's net cash flow from operating activities was **RMB 1.531 billion**, a significant improvement from the prior year period; net cash flow from investing activities was **RMB 1.277 billion**, and net cash flow from financing activities was **RMB -301 million**; the net increase in cash and cash equivalents was **RMB 2.491 billion** Consolidated Cash Flow Statement Key Data (Jan-Jun 2025) | Item | 2025 Half-Year (RMB Yuan) | 2024 Half-Year (RMB Yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 1,530,898,629.05 | -5,557,686,660.25 | | Net Cash Flow from Investing Activities | 1,276,924,854.65 | 806,396,143.92 | | Net Cash Flow from Financing Activities | -300,581,028.11 | 451,347,377.55 | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | -16,578,773.42 | 21,629,075.25 | | Net Increase in Cash and Cash Equivalents | 2,490,663,682.17 | -4,278,314,063.53 | | Cash and Cash Equivalents at End of Period | 10,403,314,333.35 | 5,422,846,011.31 | [Parent Company Cash Flow Statement](index=37&type=section&id=%E6%AF%8D%E5%85%AC%E5%8F%B8%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In the first half of 2025, the parent company's net cash flow from operating activities was **RMB -1.997 million**, net cash flow from investing activities was **RMB 320 million**, and net cash flow from financing activities was **RMB -0.451 million**; cash and cash equivalents at the end of the period amounted to **RMB 382 million** Parent Company Cash Flow Statement Key Data (Jan-Jun 2025) | Item | 2025 Half-Year (RMB Yuan) | 2024 Half-Year (RMB Yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -1,996,468.13 | -3,579,607.45 | | Net Cash Flow from Investing Activities | 320,274,032.16 | 366,525,840.00 | | Net Cash Flow from Financing Activities | -450,562.67 | | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | -898.99 | -3,165.25 | | Net Increase in Cash and Cash Equivalents | 317,826,102.37 | 362,943,067.30 | | Cash and Cash Equivalents at End of Period | 381,695,038.16 | 413,918,306.52 | [Notes to the Consolidated Financial Statements](index=39&type=section&id=%C2%A78%20Notes%20to%20the%20Consolidated%20Financial%20Statements) [Basis of Financial Statement Preparation](index=39&type=section&id=%E4%B8%80%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E7%BC%96%E5%88%B6%E5%9F%BA%E7%A1%80) These financial statements are prepared in accordance with PRC Enterprise Accounting Standards, CSRC, and Hong Kong Listing Rules, on a going concern basis; management has assessed the going concern ability for 12 months from June 30, 2025, and believes the financial position can meet production and operation needs - These financial statements are prepared in accordance with the "Enterprise Accounting Standards" issued by the Ministry of Finance, "Information Disclosure Rules for Companies Issuing Securities to the Public No. 15" by the China Securities Regulatory Commission, and relevant provisions of the "Hong Kong Companies Ordinance" and the "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited"[76](index=76&type=chunk) - The Group's management has assessed its ability to continue as a going concern for 12 months from **June 30, 2025**, and believes that its current financial position can meet the Group's production and operations, thus the financial statements are prepared on a going concern basis[77](index=77&type=chunk) [Statement of Compliance with Enterprise Accounting Standards](index=39&type=section&id=%E4%BA%8C%E3%80%81%E9%81%B5%E5%BE%AA%E4%BC%81%E4%B8%9A%E4%BC%9A%E8%AE%A1%E5%87%86%E5%88%99%E7%9A%84%E5%A3%B0%E6%98%8E) These financial statements comply with the requirements of the Enterprise Accounting Standards issued by the Ministry of Finance, truly and completely reflecting the Group's consolidated and parent company financial position as of June 30, 2025, and operating results and cash flows for January to June 2025 - These financial statements comply with the requirements of the Enterprise Accounting Standards issued by the Ministry of Finance, truly and completely reflecting the Group's consolidated and parent company financial position as of **June 30, 2025**, and operating results and cash flows for **January to June 2025**[78](index=78&type=chunk) [Notes to Major Items in Consolidated Financial Statements](index=39&type=section&id=%E4%B8%89%E3%80%81%E5%90%88%E5%B9%B6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E4%B8%BB%E8%A6%81%E9%A1%B9%E7%9B%AE%E8%AF%B4%E6%98%8E) This section provides detailed notes on major items in the consolidated financial statements, including notes receivable, accounts receivable, notes payable, accounts payable, retained earnings, net current assets, total assets less current liabilities, operating revenue and cost, financial expenses, investment income, fair value change income, non-operating income, income tax expense, depreciation and amortization, gain (or loss) on disposal of investments or properties, earnings per share, dividends, and segment information, offering period-end balances, changes, and related explanations for each item [1. Notes Receivable](index=40&type=section&id=1%2E%20Notes%20Receivable) Notes Receivable Classified by Type (Period-End Balance) | Item | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Bank Acceptance Bills | 12,577,205.57 | 45,894,339.59 | | Finance Company Acceptance Bills | 8,155,697.24 | 10,208,118.30 | | Total | 20,732,902.81 | 56,102,457.89 | - Among notes receivable endorsed or discounted and not yet due at the balance sheet date, bank acceptance bills amounted to **RMB 10,980,162.56**, and finance company acceptance bills amounted to **RMB 5,847,128.76**[83](index=83&type=chunk) [2. Accounts Receivable](index=42&type=section&id=2%2E%20Accounts%20Receivable) Accounts Receivable Aging Analysis (Period-End Balance) | Aging | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Within 1 year | 1,700,011,504.84 | 1,087,502,662.41 | | 1 to 2 years | 202,573,213.26 | 200,773,733.85 | | 2 to 3 years | 45,971,622.69 | 42,384,569.49 | | 3 to 4 years | 5,198,368.61 | 13,407,264.43 | | 4 to 5 years | 139,816.00 | 732,670.71 | | Over 5 years | 11,759,418.27 | 12,696,822.46 | | Subtotal | 1,965,653,943.67 | 1,357,497,723.35 | | Less: Provision for Bad Debts | 31,148,516.76 | 30,577,244.37 | | Total | 1,934,505,426.91 | 1,326,920,478.98 | - The period-end balance of accounts receivable increased by **45.79%** from the beginning of the period, mainly due to an increase in amounts not yet due for collection[29](index=29&type=chunk) - The Group accrues bad debt provisions for accounts receivable based on aging, with expected default loss rates ranging from **0%** (0-6 months) to **100%** (over 5 years)[87](index=87&type=chunk) Top Five Accounts Receivable and Contract Assets by Debtor (Period-End Balance) | Debtor Name | Accounts Receivable Period-End Balance (RMB Yuan) | Contract Assets Period-End Balance (RMB Yuan) | Total Accounts Receivable and Contract Assets Period-End Balance (RMB Yuan) | % of Total Accounts Receivable and Contract Assets Period-End Balance | | :--- | :--- | :--- | :--- | :--- | | Debtor 1 | 79,235,000.00 | 1,855,455,315.40 | 1,934,690,315.40 | 38.26 | | Debtor 2 | 104,520,000.00 | 493,774,475.25 | 598,294,475.25 | 11.83 | | Debtor 3 | 282,137,783.00 | | 282,137,783.00 | 5.58 | | Debtor 4 | 211,407,775.20 | | 211,407,775.20 | 4.18 | | Debtor 5 | 249,688.37 | 135,205,880.04 | 135,455,568.41 | 2.68 | | Total | 677,550,246.57 | 2,484,435,670.69 | 3,161,985,917.26 | 62.53 | [3. Notes Payable](index=45&type=section&id=3%2E%20Notes%20Payable) Notes Payable Classification (Period-End Balance) | Type of Note | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Bank Acceptance Bills | 931,091,362.79 | 1,363,849,542.52 | | Finance Company Acceptance Bills | 832,734,998.67 | 510,322,494.34 | | Total | 1,763,826,361.46 | 1,874,172,036.86 | - The total notes payable at period-end was **RMB 1,763,826,361.46**, with all notes having an aging within **180 days**[89](index=89&type=chunk) [4. Accounts Payable](index=45&type=section&id=4%2E%20Accounts%20Payable) Accounts Payable Listing (Period-End Balance) | Item | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Material Procurement | 9,005,472,338.42 | 6,662,652,885.92 | | Construction in Progress Payments | 68,220,511.32 | 437,953,360.82 | | Quality Guarantee Deposits | 702,510,351.42 | 736,359,820.62 | | Other Engineering and Labor Services | 113,543,700.17 | 615,863,291.05 | | Total | 9,889,746,901.33 | 8,452,829,358.41 | Accounts Payable Aging Analysis (Period-End Balance) | Aging | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Within 1 year | 7,306,477,080.99 | 6,153,217,058.00 | | 1 to 2 years | 1,598,478,990.05 | 958,967,492.46 | | 2 to 3 years | 287,853,262.76 | 374,870,763.74 | | Over 3 years | 696,937,567.53 | 965,774,044.21 | | Total | 9,889,746,901.33 | 8,452,829,358.41 | - The total accounts payable at period-end was **RMB 9.890 billion**, with significant accounts payable over **1 year** or overdue primarily consisting of estimated payables and quality guarantee deposits to units under China State Shipbuilding Corporation[90](index=90&type=chunk)[92](index=92&type=chunk) [5. Retained Earnings](index=47&type=section&id=5%2E%20Retained%20Earnings) Retained Earnings Movement | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Retained earnings at end of prior period (adjusted) | 2,591,405,648.46 | 2,276,749,345.46 | | Add: Net profit attributable to parent company owners for the year | 526,386,355.89 | 146,845,686.17 | | Less: Ordinary share dividends payable | 98,945,446.47 | 15,548,570.16 | | Add: Other comprehensive income transferred to retained earnings | -467,760.08 | | | Period-end balance | 3,018,378,797.80 | 2,408,046,461.47 | [6. Net Current Assets](index=48&type=section&id=6%2E%20Net%20Current%20Assets) Net Current Assets | Item | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Current Assets | 35,625,080,814.03 | 32,140,949,910.03 | | Less: Current Liabilities | 30,298,852,019.21 | 26,396,390,403.11 | | Net Current Assets | 5,326,228,794.82 | 5,744,559,506.92 | [7. Total Assets Less Current Liabilities](index=48&type=section&id=7%2E%20Total%20Assets%20Less%20Current%20Liabilities) Total Assets Less Current Liabilities | Item | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Total Assets | 56,312,312,757.78 | 53,596,113,615.25 | | Less: Current Liabilities | 30,298,852,019.21 | 26,396,390,403.11 | | Total Assets Less Current Liabilities | 26,013,460,738.57 | 27,199,723,212.14 | [8. Operating Revenue, Operating Cost](index=48&type=section&id=8%2E%20Operating%20Revenue%2C%20Operating%20Cost) Operating Revenue and Operating Cost (Current Period Amount) | Item | Revenue (RMB Yuan) | Cost (RMB Yuan) | | :--- | :--- | :--- | | Main Business | 10,032,831,730.56 | 9,099,088,302.38 | | Other Business | 139,805,010.55 | 119,331,575.59 | | Total | 10,172,636,741.11 | 9,218,419,877.97 | Main Business Gross Profit (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | | :--- | :--- | | Main Business Revenue | 10,032,831,730.56 | | Main Business Cost | 9,099,088,302.38 | | Gross Profit | 933,743,428.18 | Main Business Revenue by Product Category (Current Period Amount) | Product Name | Current Period Amount (RMB Yuan) | | :--- | :--- | | Vessel Products | 9,395,989,883.27 | | Of which: Container Ships | 2,411,731,334.06 | | Of which: Special Vessels and Others | 6,984,258,549.21 | | Offshore Engineering Products | 34,271,270.38 | | Steel Structures | 33,539,675.24 | | Vessel Repair and Modification | 446,468,248.35 | | Electromechanical Products and Others | 122,562,653.32 | | Total | 10,032,831,730.56 | Main Business Revenue by Region (Current Period Amount) | Region Name | Current Period Amount (RMB Yuan) | | :--- | :--- | | China (including Hong Kong, Macau, Taiwan) | 6,807,845,601.08 | | Other Asian Regions | 1,634,612,408.52 | | Europe | 825,424,472.72 | | Oceania | 8,307,287.53 | | North America | 21,998,511.56 | | Africa | 734,643,449.15 | | Total | 10,032,831,730.56 | - As of **June 30, 2025**, the transaction price corresponding to contracts signed but not yet fulfilled was **RMB 57.629 billion**, with **RMB 10.271 billion** expected to be recognized as revenue in **2025** and **RMB 21.649 billion** in **2026**[105](index=105&type=chunk) Top Five Customers by Operating Revenue (Current Period Amount) | Customer | Relationship with the Group | Current Period Amount (RMB Yuan) | % of Total Main Business Revenue | | :--- | :--- | :--- | :--- | | Customer 1 | Non-related party | 4,475,656,894.53 | 44.61 | | Customer 2 | Non-related party | 1,586,306,861.34 | 15.81 | | Customer 3 | Non-related party | 852,615,748.31 | 8.50 | | Customer 4 | Under common control of CSSC Group | 479,745,180.81 | 4.78 | | Customer 5 | Non-related party | 442,303,805.31 | 4.41 | | Total | | 7,836,628,490.30 | 78.11 | Top Five Suppliers by Purchase Amount (Current Period Amount) | Supplier | Relationship with the Group | Current Period Amount (RMB Yuan) | % of Total Main Business Cost | | :--- | :--- | :--- | :--- | | Supplier 1 | Under common control of CSSC Group | 3,789,843,948.33 | 41.65 | | Supplier 2 | Non-related party | 368,983,300.00 | 4.06 | | Supplier 3 | Non-related party | 252,428,713.60 | 2.77 | | Supplier 4 | Non-related party | 247,208,400.00 | 2.72 | | Supplier 5 | Non-related party | 159,078,911.75 | 1.75 | | Total | | 4,817,543,273.68 | 52.95 | [9. Financial Expenses](index=55&type=section&id=9%2E%20Financial%20Expenses) Financial Expenses Details (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Interest Expense | 60,459,609.21 | 53,527,454.83 | | Less: Interest Income | 196,337,751.14 | 183,004,781.70 | | Exchange Gains/Losses | 10,944,638.85 | -34,961,105.31 | | Other Expenses | 5,832,852.62 | 4,681,957.95 | | Total | -119,100,650.46 | -159,756,474.23 | - The change in financial expenses is primarily a combined effect of net exchange losses from exchange rate fluctuations and an increase in net interest income and expenses in the current reporting period[22](index=22&type=chunk) [10. Investment Income](index=56&type=section&id=10%2E%20Investment%20Income) Investment Income Details (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Investment income from long-term equity investments accounted for using equity method | 358,620,177.75 | 54,607,253.60 | | Dividend income from other equity instrument investments during holding period | 55,984,108.56 | 43,601,866.29 | | Investment income from disposal of trading financial assets | -8,967,423.33 | 23,631,659.80 | | Investment income from disposal of long-term equity investments | | 756,086.90 | | Total | 405,636,862.98 | 122,596,866.59 | - Current period investment income significantly increased by **230.87%** year-on-year, mainly from increased investment income from associates recognized under the equity method and increased dividend income from shares[24](index=24&type=chunk)[111](index=111&type=chunk) [11. Fair Value Change Income](index=57&type=section&id=11%2E%20Fair%20Value%20Change%20Income) Fair Value Change Income Sources (Current Period Amount) | Source of Fair Value Change Income | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Trading Financial Assets | -1,052,371.06 | -3,494,098.85 | | Trading Financial Liabilities | 10,318,949.81 | -30,721,087.90 | | Hedging Instruments | | -30,642,065.88 | | Total | 9,266,578.75 | -64,857,252.63 | - Fair value change income turned from a loss in the prior year period to a profit in the current period, mainly influenced by changes in the book fair value of held financial derivatives[24](index=24&type=chunk)[112](index=112&type=chunk) [12. Non-Operating Income](index=57&type=section&id=12%2E%20Non-Operating%20Income) Non-Operating Income Details (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | Amount Included in Current Non-Recurring Gains/Losses (RMB Yuan) | | :--- | :--- | :--- | :--- | | Non-current asset impairment loss | 282,921.96 | 208,056.62 | 282,921.96 | | Insurance compensation | 2,893,148.84 | 366,000.35 | 2,893,148.84 | | Fine income | 217,515.56 | 72,301.71 | 217,515.56 | | Other | 1,524.05 | 28,014.72 | 1,524.05 | | Total | 3,395,110.41 | 1,564,607.84 | 3,395,110.41 | - Non-operating income increased by **116.99%** year-on-year, mainly due to an increase in insurance claim income[26](index=26&type=chunk)[113](index=113&type=chunk) [13. Income Tax Expense](index=57&type=section&id=13%2E%20Income%20Tax%20Expense) Income Tax Expense Table (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Current Income Tax Expense | 9,997,482.35 | -6,974,725.75 | | Deferred Income Tax Expense | 44,407,585.87 | -26,930,773.32 | | Total | 54,405,068.22 | -33,905,499.07 | - The change in income tax expense is mainly due to the year-on-year change in deferred income tax expense, as some subsidiaries' profitability in the current period led to the reversal of deferred income tax assets[26](index=26&type=chunk) - The Group enjoys multiple tax incentives, including VAT exemption, credit, and refund for export goods, immediate VAT refund for software products, additional VAT deduction for advanced manufacturing enterprises, and several subsidiaries enjoying a **15%** income tax rate for high-tech enterprises or a **20%** income tax rate for small and micro-profit enterprises[118](index=118&type=chunk) [14. Depreciation and Amortization](index=61&type=section&id=14%2E%20Depreciation%20and%20Amortization) Depreciation and Amortization Details (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Depreciation of Fixed Assets | 174,321,080.50 | 181,629,598.49 | | Amortization of Intangible Assets | 16,489,485.89 | 16,705,424.13 | | Depreciation of Right-of-Use Assets | 45,782,980.95 | 43,935,983.70 | | Amortization of Long-term Deferred Expenses | 9,729,504.34 | 4,981,148.76 | | Depreciation of Investment Properties | 3,268,712.52 | 3,268,712.52 | | Total | 249,591,764.20 | 250,520,867.60 | [15. Gain (or Loss) on Disposal of Investments or Properties](index=61&type=section&id=15%2E%20Gain%20%28or%20Loss%29%20on%20Disposal%20of%20Investments%20or%20Properties) - The loss on disposal of investments in the current period was **RMB 0**, and the loss on disposal of properties was **RMB 187,689.66**[120](index=120&type=chunk) - The gain on disposal of investments in the prior period was **RMB 756,086.90**, and the gain on disposal of properties was **RMB 0**[120](index=120&type=chunk) [16. Earnings Per Share](index=61&type=section&id=16%2E%20Earnings%20Per%20Share) - Basic and diluted earnings per share were both **RMB 0.3724/share**, a significant increase from **RMB 0.1039/share** in the prior year period[122](index=122&type=chunk)[123](index=123&type=chunk) - Earnings per share are calculated by dividing the current period's net profit attributable to the Group's ordinary shareholders by the weighted average number of ordinary shares outstanding[121](index=121&type=chunk) [17. Dividends](index=63&type=section&id=17%2E%20Dividends) Dividend Distribution | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | Dividends declared for the year ended December 31, 2024 | 98,945,446.47 | 15,548,570.16 | | Interim dividends proposed for the six months ended June 30, 2025 | 113,080,510.24 (tax inclusive) | 16,962,076.54 (tax inclusive) | - This interim dividend distribution plan has been authorized by the 2024 Annual General Meeting for Board decision and does not require further shareholder approval[124](index=124&type=chunk) [18. Segment Information](index=64&type=section&id=18%2E%20Segment%20Information) - The Group's operating activities are divided into **4 reporting segments**: shipbuilding and related businesses, steel structure engineering, vessel repair segment, and other segments, determined based on major product types[125](index=125&type=chunk) Segment Financial Information (Current Period Amount) | Item | Shipbuilding and Related Businesses (RMB Yuan) | Steel Structure Business Segment (RMB Yuan) | Vessel Repair Segment (RMB Yuan) | Other Segments (RMB Yuan) | Inter-segment Eliminations (RMB Yuan) | Total (RMB Yuan) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | External Transaction Revenue | 9,426,285,700.78 | 97,972,885.20 | 451,035,798.79 | 197,342,356.34 | | 10,172,636,741.11 | | Total Profit | 319,011,420.45 | -81,992,026.83 | 320,087.53 | 435,330,880.52 | -16,557,129.96 | 656,113,231.71 | | Total Assets | 45,633,203,647.39 | 4,890,242,448.37 | 9,698,547.51 | 16,139,947,345.55 | -10,360,779,231.04 | 56,312,312,757.78 | | Total Liabilities | 36,454,833,535.79 | 4,045,959,124.51 | 1,012,259.07 | 2,815,755,431.58 | -8,119,843,332.60 | 35,197,717,018.35 | External Transaction Revenue by Origin (Current Period Amount) | Item | Current Period Amount (RMB Yuan) | Prior Period Amount (RMB Yuan) | | :--- | :--- | :--- | | External transaction revenue from domestic sources | 6,817,152,661.25 | 5,440,717,421.83 | | External transaction revenue from other countries | 3,355,484,079.86 | 3,287,818,641.82 | | Total | 10,172,636,741.11 | 8,728,536,063.65 | Non-Current Assets by Location (Period-End Balance) | Item | Period-End Balance (RMB Yuan) | Period-Beginning Balance (RMB Yuan) | | :--- | :--- | :--- | | Non-current assets located in China (excluding Hong Kong) | 14,746,740,801.23 | 12,330,803,838.37 | | Total | 14,746,740,801.23 | 12,330,803,838.37 | [Reference Documents](index=66&type=section&id=%C2%A79%20Reference%20Documents) [Report Access Methods and Board Members](index=66&type=section&id=%E6%8A%A5%E5%91%8A%E6%9F%A5%E9%96%B1%E6%96%B9%E5%BC%8F%E8%88%87%E8%91%A3%E4%BA%8B%E6%9C%83%E6%88%90%E5%91%98) The 2025 interim report is available on the HKEXnews website, SSE disclosure website, and at the company's Board Office; as of the announcement date, the Board comprises 9 members, including executive, non-executive, and independent non-executive directors - The 2025 interim report can be accessed on the HKEXnews website (www.hkexnews.hk), Shanghai Stock Exchange disclosure website (www.sse.com.cn), and at the company's Board Office (15th Floor, Shipbuilding Building, No. 137 Gexin Road, Haizhu District, Guangzhou)[130](index=130&type=chunk) - As of the date of this announcement, the nine members of the Board of Directors include executive directors Mr. Luo Bing and Mr. Chen Liping; non-executive directors Mr. Gu Yuan, Mr. Ren Kaijiang, and Mr. Yin Lu; and independent non-executive directors Mr. Lin Bin, Mr. Nie Wei, Mr. Li Zhijian, and Ms. Xie Xin[130](index=130&type=chunk)

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) This announcement presents the unaudited consolidated interim results of Chuangmei Pharmaceutical Co., Ltd. for the six months ended June 30, 2025, providing an overview of the Group's key financial performance during this reporting period [Performance Summary](index=1&type=section&id=Performance%20Summary) For the six months ended June 30, 2025, the Group's operating revenue, total profit, net profit attributable to parent company shareholders, and earnings per share all decreased year-on-year, reflecting macroeconomic pressures and market policy adjustments Key Financial Indicators for the Six Months Ended June 30 | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,155,071 | 2,347,185 | -8.18% | | Total Profit | 32,629 | 38,928 | -16.18% | | Net Profit Attributable to Parent Company Shareholders | 21,739 | 26,747 | -18.72% | | Basic and Diluted Earnings Per Share (RMB) | 0.2013 | 0.2477 | -18.73% | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated income statement and balance sheet of Chuangmei Pharmaceutical Co., Ltd. and its subsidiaries for the six months ended June 30, 2025, detailing the Group's operating results and financial position [Consolidated Income Statement](index=2&type=section&id=Consolidated%20Income%20Statement) For the six months ended June 30, 2025, the Group's total operating revenue was RMB 2,155.07 million, and net profit was RMB 21.74 million, with all profitability indicators showing a downward trend compared to the same period in 2024 Consolidated Income Statement Key Data (For the Six Months Ended June 30) | Item | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Total Operating Revenue | 2,155,071,479.51 | 2,347,184,933.33 | | Total Operating Costs | 2,115,726,066.82 | 2,303,414,061.34 | | Operating Profit | 33,032,573.22 | 39,341,323.61 | | Total Profit | 32,628,791.19 | 38,927,943.68 | | Net Profit | 21,739,023.67 | 26,747,235.53 | | Net Profit Attributable to Parent Company Shareholders | 21,739,023.67 | 26,747,235.53 | | Basic and Diluted Earnings Per Share (RMB/share) | 0.2013 | 0.2477 | [Consolidated Balance Sheet](index=4&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, the Group's total assets were RMB 3,492.25 million, a slight increase from year-end 2024, while total current liabilities were RMB 2,826.38 million and total shareholders' equity was RMB 591.83 million, both decreasing from year-end 2024 Consolidated Balance Sheet Key Data (As of June 30) | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Total Current Assets | 3,079,169,763.07 | 3,029,992,834.71 | | Total Non-current Assets | 413,081,710.51 | 426,650,847.62 | | Total Assets | 3,492,251,473.58 | 3,456,643,682.33 | | Total Current Liabilities | 2,826,380,478.56 | 2,788,603,021.09 | | Total Non-current Liabilities | 74,041,023.36 | 49,349,713.25 | | Total Liabilities | 2,900,421,501.92 | 2,837,952,734.34 | | Total Equity Attributable to Parent Company Shareholders | 591,829,971.66 | 618,690,947.99 | | Total Shareholders' Equity | 591,829,971.66 | 618,690,947.99 | | Total Liabilities and Shareholders' Equity | 3,492,251,473.58 | 3,456,643,682.33 | [Notes to the Condensed Consolidated Interim Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated interim financial statements, covering company information, basis of preparation, significant accounting policies, and specific data explanations, to enhance understanding of the financial statements [General Information](index=6&type=section&id=General%20Information) Chuangmei Pharmaceutical Co., Ltd. was incorporated in China in 1984 and listed on the HKEX in 2015, primarily engaged in pharmaceutical trade and related services, with financial statements presented in RMB - The company was incorporated in China in 1984 and listed on the Main Board of the Hong Kong Stock Exchange on **December 14, 2015**[9](index=9&type=chunk) - The Group's principal business is pharmaceutical trade and related services[10](index=10&type=chunk) - The condensed consolidated interim financial statements are presented in **RMB**, which is the functional currency of the Company[11](index=11&type=chunk) [Basis of Preparation of Financial Statements](index=6&type=section&id=Basis%20of%20Preparation%20of%20Financial%20Statements) The Group's financial statements are prepared in accordance with Chinese accounting standards, CSRC, and HKEX listing rules, based on a going concern principle, with no significant doubts about its ability to continue as a going concern - The financial statements are prepared in accordance with the **Accounting Standards for Business Enterprises** issued by the Ministry of Finance of China, **Information Disclosure and Compilation Rules for Companies Issuing Securities to the Public No. 15** issued by the China Securities Regulatory Commission, and the **Hong Kong Companies Ordinance** and **Listing Rules**[12](index=12&type=chunk) - The Group has assessed its ability to continue as a going concern for the **12 months** from June 30, 2025, and found no significant doubts, thus the financial statements are presented on a going concern basis[13](index=13&type=chunk) [Significant Accounting Policies and Accounting Estimates](index=6&type=section&id=Significant%20Accounting%20Policies%20and%20Accounting%20Estimates) The Group's financial statements comply with accounting standards, accurately reflecting financial position, operating results, and cash flows, with no changes in significant accounting policies or estimates during the reporting period - These financial statements comply with the requirements of the Accounting Standards for Business Enterprises, truly, accurately, and completely reflecting the financial position of the Company and the Group as of **June 30, 2025**, and the operating results and cash flows for the six months ended **June 30, 2025**[14](index=14&type=chunk) - The Group's accounting period is from **January 1 to December 31** of the Gregorian calendar, with an operating cycle of **12 months**, and the bookkeeping base currency is **RMB**[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) - There were no changes in the Group's significant accounting policies and major accounting estimates during the reporting period[19](index=19&type=chunk) [Operating Revenue and Operating Costs](index=7&type=section&id=Operating%20Revenue%20and%20Operating%20Costs) For the six months ended June 30, 2025, the Group's total operating revenue was RMB 2,155.07 million, primarily from main business, with total operating costs of RMB 1,994.33 million, both decreasing from 2024 Operating Revenue and Operating Costs Details (For the Six Months Ended June 30) | Item | 2025 Revenue (RMB) | 2025 Costs (RMB) | 2024 Revenue (RMB) | 2024 Costs (RMB) | | :--- | :--- | :--- | :--- | :--- | | Main Business | 2,128,769,934.11 | 1,992,617,151.90 | 2,325,459,578.61 | 2,177,837,790.01 | | Other Businesses | 26,301,545.40 | 1,708,944.88 | 21,725,354.72 | 162,213.00 | | Total | 2,155,071,479.51 | 1,994,326,096.78 | 2,347,184,933.33 | 2,178,000,003.01 | [Segment Information](index=7&type=section&id=Segment%20Information) The Group's business is considered a single operating and reporting segment: pharmaceutical distribution and related services, with all operating revenue and non-current assets generated within China - The Group has only one operating and reporting segment: **pharmaceutical distribution and related services**[21](index=21&type=chunk) - All of the Group's operations are located in China, and all operating revenue and non-current assets are generated in China[22](index=22&type=chunk) [Finance Costs](index=8&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, the Group's finance costs were RMB 33.69 million, a 1.21% decrease year-on-year, primarily due to reduced interest expenses Finance Costs Details (For the Six Months Ended June 30) | Item | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Interest Expense | 31,055,269.10 | 33,101,117.52 | | Of which: Bank borrowings and others | 29,621,637.63 | 32,244,615.80 | | Interest expense on lease liabilities | 885,458.13 | 856,501.72 | | Less: Interest income | 1,147,053.30 | 2,882,746.74 | | Add: Exchange gains/(losses) | 6,223.70 | -2,856.37 | | Add: Others | 3,775,286.67 | 3,887,182.98 | | Total | 33,689,726.17 | 34,102,697.39 | [Income Tax Expense](index=8&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, the Group's income tax expense was RMB 10.89 million, a 10.60% decrease year-on-year, mainly comprising PRC corporate income tax and deferred tax, with no taxable income in Hong Kong Income Tax Expense Details (For the Six Months Ended June 30) | Item | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Current income tax calculated according to tax laws and regulations | 11,519,164.74 | 12,309,195.72 | | —PRC corporate income tax | 11,519,164.74 | 12,309,195.72 | | —Hong Kong profits tax | | | | Deferred income tax expense | -629,397.22 | -128,487.57 | | Total | 10,889,767.52 | 12,180,708.15 | - The Group had no taxable income in Hong Kong, thus no Hong Kong income tax[24](index=24&type=chunk) [Return on Net Assets and Earnings Per Share](index=9&type=section&id=Return%20on%20Net%20Assets%20and%20Earnings%20Per%20Share) For the six months ended June 30, 2025, the weighted average return on net assets attributable to parent company shareholders was 3.79%, with basic and diluted earnings per share both at RMB 0.2013 Return on Net Assets and Earnings Per Share (For the Six Months Ended June 30) | Profit for the Reporting Period | Weighted Average Return on Net Assets (%) | Basic Earnings Per Share (RMB/share) | Diluted Earnings Per Share (RMB/share) | | :--- | :--- | :--- | :--- | | Net Profit Attributable to Parent Company Shareholders | 3.79 | 0.2013 | 0.2013 | | Net Profit Attributable to Parent Company Shareholders (Excluding Non-recurring Gains and Losses) | 3.84 | 0.2036 | 0.2036 | [Dividends](index=9&type=section&id=Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board does not recommend the payment of an interim dividend for the six months ended **June 30, 2025** (2024 interim dividend: nil)[27](index=27&type=chunk) [Bills Receivable](index=10&type=section&id=Bills%20Receivable) As of June 30, 2025, total bills receivable were RMB 35.97 million, a significant increase from year-end 2024, primarily commercial acceptance bills, with a corresponding increase in bad debt provision and RMB 3.60 million pledged Bills Receivable Classified (As of June 30) | Item | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Commercial Acceptance Bills | 36,100,000.00 | 5,590,000.00 | | Less: Provision for Bad Debts | 126,350.00 | 19,565.00 | | Total | 35,973,650.00 | 5,570,435.00 | - As of **June 30, 2025**, the amount of pledged bills receivable was **RMB 3.60 million**, all of which were commercial acceptance bills[34](index=34&type=chunk) [Accounts Receivable](index=12&type=section&id=Accounts%20Receivable) As of June 30, 2025, net accounts receivable were RMB 1,183.82 million, a slight increase from year-end 2024, with the largest portion being within one year aging and total bad debt provision of RMB 21.52 million Net Accounts Receivable (As of June 30) | Item | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Accounts Receivable | 1,205,335,300.45 | 1,184,455,239.82 | | Less: Provision for Bad Debts | 21,518,255.45 | 21,217,687.43 | | Net Amount | 1,183,817,045.00 | 1,163,237,552.39 | Accounts Receivable by Aging (As of June 30) | Aging | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Within 1 Year | 1,166,135,680.72 | 1,156,354,646.21 | | 1-2 Years | 24,808,526.12 | 13,018,971.27 | | 2-3 Years | 221,671.72 | 629,729.86 | | Over 3 Years | 14,169,421.89 | 14,451,892.48 | | Total | 1,205,335,300.45 | 1,184,455,239.82 | [Receivables Financing](index=14&type=section&id=Receivables%20Financing) As of June 30, 2025, receivables financing primarily consisted of bank acceptance bills totaling RMB 23.57 million, a significant decrease from RMB 57.62 million at year-end 2024 Receivables Financing (As of June 30) | Item | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Bank Acceptance Bills | 23,573,149.39 | 57,615,292.39 | | Total | 23,573,149.39 | 57,615,292.39 | [Bills Payable](index=14&type=section&id=Bills%20Payable) As of June 30, 2025, bills payable primarily consisted of bank acceptance bills totaling RMB 709.19 million, a decrease from RMB 826.51 million at year-end 2024, with all bills payable due within one year Bills Payable (As of June 30) | Type of Bill | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Bank Acceptance Bills | 709,194,022.88 | 826,507,576.48 | | Total | 709,194,022.88 | 826,507,576.48 | - All of the Group's bills payable at the end of the period have an aging of within **1 year**[45](index=45&type=chunk) [Accounts Payable](index=14&type=section&id=Accounts%20Payable) As of June 30, 2025, total accounts payable were RMB 364.79 million, a decrease from RMB 387.83 million at year-end 2024, mainly comprising goods and equipment payments, with the largest portion due within one year Accounts Payable Details (As of June 30) | Item | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Goods Payments | 363,780,496.38 | 386,978,214.29 | | Equipment Payments | 1,006,410.04 | 847,499.25 | | Total | 364,786,906.42 | 387,825,713.54 | Accounts Payable by Aging (As of June 30) | Aging | Balance as of June 30, 2025 (RMB) | Balance as of December 31, 2024 (RMB) | | :--- | :--- | :--- | | Within 1 Year | 340,650,702.60 | 374,742,200.33 | | 1-2 Years | 22,025,835.02 | 11,505,873.92 | | 2-3 Years | 557,882.63 | 727,758.26 | | Over 3 Years | 1,552,486.17 | 849,881.03 | | Total | 364,786,906.42 | 387,825,713.54 | [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) This section details the macro environment, market trends, policy impacts, and the Group's business performance and future development strategies in China's pharmaceutical distribution industry, highlighting structural transformation and the importance of digitalization and intelligence [Industry Overview](index=15&type=section&id=Industry%20Overview) China's pharmaceutical distribution industry is undergoing profound changes driven by an aging population, deepening healthcare reforms, the "dual circulation" strategy, and digital innovation, leading to increased market concentration and a shift towards intelligent and diversified platforms [Market Trends and Policy Impact](index=15&type=section&id=Market%20Trends%20and%20Policy%20Impact) China's pharmaceutical distribution market is influenced by an aging society, healthcare reform policies like "volume-based procurement" and "tiered diagnosis," and the "dual circulation" strategy, leading to sustained growth in the retail market, especially online pharmacies and instant retail, and increased market concentration - China has officially entered a "moderately aging" society, with rising public health awareness driving a steady increase in demand for pharmaceutical and health services[48](index=48&type=chunk) - In 2024, the market share of China's retail pharmacies (including online pharmacies) continued to grow by **1.5 percentage points**; online pharmacy drug sales increased by **14.4% year-on-year**, and instant retail sales in pharmacies reached **RMB 48.7 billion**, a **31.3% year-on-year increase**[49](index=49&type=chunk) - Healthcare reform policies are accelerating the restructuring of the pharmaceutical market, with the out-of-hospital market rapidly benefiting from prescription outflow, projected to reach **RMB 1.6 trillion** by 2029[51](index=51&type=chunk)[52](index=52&type=chunk) - The National Healthcare Security Administration mandates that from **January 1, 2025**, "dual-channel" managed drugs must have prescriptions circulated through the national unified medical insurance electronic prescription center, completely replacing paper prescriptions[52](index=52&type=chunk) [Digital and Intelligent Transformation](index=17&type=section&id=Digital%20and%20Intelligent%20Transformation) The pharmaceutical industry is accelerating digital and intelligent transformation with the full implementation of drug traceability codes and comprehensive medical insurance QR code settlements, leveraging AI and big data to enhance supply chain efficiency and refined service capabilities - In **March 2025**, four departments including the National Healthcare Security Administration required active promotion of drug traceability codes for full-process, full-volume collection and full-scenario application in medical security and work-related injury insurance fields[55](index=55&type=chunk) - From **July 1, 2025**, designated medical institutions must scan codes at the point of sale to settle medical insurance funds; by **January 1, 2026**, all medical institutions must achieve full collection and upload of drug traceability codes[55](index=55&type=chunk) - The Implementation Plan for Digital and Intelligent Transformation of the Pharmaceutical Industry (2025-2030) supports the application of digital intelligence technology to achieve full-process product traceability, ensuring product quality and safety[56](index=56&type=chunk) - Advanced technologies such as AI, big data, and cloud computing are deeply applied, leading the pharmaceutical distribution industry towards **digital intelligence, diversification, and platformization**[57](index=57&type=chunk) [Business Review](index=18&type=section&id=Business%20Review) The Group's core business is pharmaceutical distribution in China, focusing on Guangdong and surrounding markets, expanding its retail network. Despite a slight reduction in customer and product numbers, it enhances competitiveness through product optimization, brand collaboration, silver economy opportunities, AI empowerment, and logistics advantages [Core Business and Distribution Network](index=18&type=section&id=Core%20Business%20and%20Distribution%20Network) The Group primarily distributes pharmaceuticals in China, sourcing from manufacturers and suppliers to serve distributors, retail pharmacies, and private hospitals. As of June 30, 2025, its network covered 12,170 customers and 11,164 product types, a decrease from the previous year - The Group's principal business is pharmaceutical distribution in China, with the vast majority of operating revenue derived from pharmaceutical distribution[58](index=58&type=chunk) - As of **June 30, 2025**, the distribution network covered **12,170 customers**, including **575 distributors**, **7,965 retail pharmacies**, and **3,630 private hospitals, clinics, health stations, and others**, representing a decrease of **624 customers** compared to the same period last year[58](index=58&type=chunk) Product Quantity (For the Six Months Ended June 30) | Product Category | 2025 | 2024 | | :--- | :--- | :--- | | Proprietary Chinese Medicines | 4,067 | 4,445 | | Western Medicines | 4,184 | 4,316 | | Others | 2,913 | 2,835 | | Total | 11,164 | 11,596 | [Marketing Ecosystem and Product Portfolio](index=18&type=section&id=Marketing%20Ecosystem%20and%20Product%20Portfolio) The Group collaborates closely with brand pharmaceutical companies and downstream customers through a multi-dimensional marketing network, integrating resources, optimizing channels, and providing digital logistics to build a complete industry chain and business ecosystem, actively promoting "ten-million-level" brand client policies - The Group leverages its multi-dimensional marketing network advantages to collaborate closely with brand pharmaceutical companies and downstream customers, jointly building a complete industrial chain and business ecosystem[60](index=60&type=chunk) - It continues to deepen its product portfolio, actively promoting the **"ten-million-level" brand client policy**, and has successfully created multiple strategically cooperative brands with sales exceeding **RMB 10 million**[61](index=61&type=chunk) - The Group has innovatively built a multi-dimensional marketing system, establishing an efficient production-sales matching platform through brand co-marketing, event-driven marketing, and differentiated promotional strategies[61](index=61&type=chunk) - Focusing on the **silver economy**, the Group identifies and cultivates potential products that meet the health needs of the elderly population, working with quality partners to improve the silver health industry ecosystem[62](index=62&type=chunk) [AI Empowerment and Digital Transformation](index=19&type=section&id=AI%20Empowerment%20and%20Digital%20Transformation) The Group has successfully applied AI tools to key business areas like financial management, intelligent process optimization, and drug traceability, significantly improving operational efficiency and compliance, and has initiated AI pilot applications in critical logistics segments - The Group has successfully achieved automation in key business areas such as financial management, intelligent process engine optimization, efficient pharmaceutical data governance, intelligent commodity monitoring, and intelligent verification and compliance management of drug traceability codes[63](index=63&type=chunk) - AI tools have been piloted in critical logistics segments (e.g., intelligent warehouse management, delivery route optimization) to optimize resource allocation and decision-making efficiency[63](index=63&type=chunk) - Subsequently, the Group will gradually advance full-process digital integration to achieve an end-to-end intelligent business closed loop, and continuously iterate adaptive AI models to expand AI applications in new scenarios such as intelligent customer service and precise outreach[63](index=63&type=chunk) [Core Logistics Advantages and Third-Party Logistics](index=19&type=section&id=Core%20Logistics%20Advantages%20and%20Third-Party%20Logistics) As a leading modern pharmaceutical supply chain service provider in South China, the Group operates distribution centers in Guangzhou, Shantou, Shenzhen, and Zhuhai, equipped with cold chain and smart warehousing, efficiently meeting its own distribution needs and expanding third-party logistics services, with significant growth in related clients and revenue - The Group has established medium-to-large modern pharmaceutical distribution centers in Guangzhou, Shantou, Shenzhen, and Zhuhai, building a comprehensive logistics network and information system, strictly adhering to GSP management standards[64](index=64&type=chunk) - The distribution centers are equipped with advanced cold chain and refrigerated transport vehicles and intelligent warehousing equipment, capable of meeting differentiated pharmaceutical distribution needs[64](index=64&type=chunk) - During the reporting period, the number of clients for third-party pharmaceutical logistics entrusted services and other value-added services such as warehousing or transportation, in cooperation with manufacturers, commercial distributors, and chain pharmacies, increased by **15.23% year-on-year**, with corresponding revenue increasing by **21.52% year-on-year**[65](index=65&type=chunk) - The Group has consistently received multiple industry honors for many years, including "Best Pharmaceutical Cold Chain Logistics Center," "Recommended Pharmaceutical Cold Chain Logistics Service Enterprise," and "Excellent Pharmaceutical Logistics and Distribution Enterprise"[66](index=66&type=chunk) [Future Outlook](index=21&type=section&id=Future%20Outlook) The Group will adhere to its "deep cultivation in Guangdong, radiating to surrounding areas" strategy, fully advance AI-powered digital transformation, deepen strategic cooperation with brand manufacturers, strengthen core pharmaceutical logistics capabilities, expand third-party logistics, and explore new domestic and international industrial collaborations for high-quality development [Market Strategy](index=21&type=section&id=Market%20Strategy) The Group will maintain its "deep cultivation in Guangdong, radiating to surrounding areas" market strategy, building a comprehensive pharmaceutical retail network across Guangdong and neighboring regions, expanding and refining its distribution network to achieve dense coverage for sales, services, and logistics - The Group will continue to implement the **"deep cultivation in Guangdong, radiating to surrounding areas"** market strategy, building a comprehensive pharmaceutical retail network covering Guangdong Province and surrounding areas[69](index=69&type=chunk) - It will strengthen risk management, improve operational quality, seize opportunities from the expansion of the grassroots medical market, optimize network layout, and expand drug delivery coverage[69](index=69&type=chunk) [AI-Powered Digital Transformation](index=22&type=section&id=AI-Powered%20Digital%20Transformation) The Group will continue to deepen its "Smart Internet + Pharma" strategy, fully integrating digitalization and AI to build an intelligent supply chain ecosystem, deploying large-scale pre-trained models and AI agents to optimize processes, enhance organizational efficiency, and leverage data assets for AI-driven deep data analysis and precise decision-making - It will continue to deepen the **"Smart Internet + Pharma" strategy**, comprehensively promoting the deep integration of digitalization and AI technology, focusing on building a new intelligent supply chain ecosystem[70](index=70&type=chunk) - By systematically deploying large-scale pre-trained models and AI agents, it will optimize business processes, shift high-frequency repetitive tasks to automated intelligent processing, and enhance organizational efficiency[70](index=70&type=chunk) - Relying on its vast data assets in the pharmaceutical distribution sector, it will build an **AI-driven deep data analysis platform** to support scientific and forward-looking decision-making[70](index=70&type=chunk) [Deepening Strategic Cooperation with Brand Manufacturers](index=22&type=section&id=Deepening%20Strategic%20Cooperation%20with%20Brand%20Manufacturers) The Group will further deepen cooperation with brand manufacturers to secure more growth opportunities in non-tender markets, enrich its product portfolio, and expand into high-growth potential markets, leveraging its retail network to provide comprehensive brand promotion and product implementation support for suppliers - It will further deepen cooperation with various brand manufacturers to secure more growth opportunities for products shifting to non-tender markets and enrich its product portfolio[72](index=72&type=chunk) - Fully utilizing the Group's resources and advantages in the pharmaceutical retail network, it will build a vibrant innovative marketing ecosystem, providing upstream suppliers with comprehensive brand promotion and product implementation solutions and support services[72](index=72&type=chunk) [Strengthening Core Pharmaceutical Logistics Capabilities](index=23&type=section&id=Strengthening%20Core%20Pharmaceutical%20Logistics%20Capabilities) The Group will comprehensively integrate transport resources, advance smart logistics capabilities, enhance delivery services, and strengthen regional integrated logistics synergy, optimizing efficiency and cost control through multi-warehouse collaboration and intelligent scheduling, while actively expanding third-party pharmaceutical logistics services - It will comprehensively integrate existing transportation resources, promote the construction of smart logistics capabilities, further enhance delivery service capabilities, and strengthen the synergistic effect of regional integrated logistics[73](index=73&type=chunk) - Relying on a collaborative operating model of multi-warehouse linkage and intelligent scheduling, it aims to achieve optimal efficiency and cost control from source to terminal delivery[73](index=73&type=chunk) - It will actively expand third-party pharmaceutical logistics services, providing upstream suppliers and downstream customers with professional and convenient warehousing, logistics, and freight transportation, as well as more value-added services[73](index=73&type=chunk) [Pioneering New Domestic and International Industrial Cooperation](index=23&type=section&id=Pioneering%20New%20Domestic%20and%20International%20Industrial%20Cooperation) Leveraging state-owned shareholder resources, the Group will actively seek high-quality domestic and international products and strategic collaborations to build a more complete product supply chain, expand profitable new businesses, and optimize its business structure and profit model, consolidating its leading position in South China's non-tender pharmaceutical market - It will leverage the rich resources and advantages of its state-owned shareholders to actively seek high-quality domestic and international products and strategic collaborations, building a more complete product supply chain[74](index=74&type=chunk) - It will expand into more profitable new businesses, continuously optimizing its business structure and profit model, and promoting the deep integration of emerging technologies with core competitiveness[74](index=74&type=chunk) - It will consolidate its leading position in the non-tender pharmaceutical market in South China and continue to increase investment in digitalization and business innovation[74](index=74&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) This section provides a detailed review of the Group's financial performance for the six months ended June 30, 2025, including changes in operating revenue, costs, gross profit, expenses, and net profit, along with an analysis of liquidity, asset-liability structure, and related risks [Operating Revenue](index=24&type=section&id=Operating%20Revenue) For the six months ended June 30, 2025, the Group's operating revenue was RMB 2,155.07 million, a year-on-year decrease of 8.18%, primarily due to slowing macroeconomic growth, a high base in Q1 2024, and declining drug prices from centralized procurement policies Operating Revenue by Business Type (For the Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Main Business | 2,128,770 | 2,325,460 | | Other Businesses | 26,302 | 21,725 | | Operating Revenue | 2,155,071 | 2,347,185 | Main Business Revenue by Customer Type (For the Six Months Ended June 30) | Customer Type | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Distributors | 1,030,348 | 1,093,126 | | Retail Pharmacies | 1,040,097 | 1,151,208 | | Private Hospitals, Clinics, Health Stations, and Others | 58,325 | 81,126 | | Main Business Revenue | 2,128,770 | 2,325,460 | - Operating revenue decreased by **8.18% year-on-year**, primarily due to slowing macroeconomic growth, a high base in the first quarter of 2024 leading to a **20.52% year-on-year decrease** in the first quarter of 2025, and the deepening of drug centralized procurement policies resulting in lower terminal prices for some drugs[79](index=79&type=chunk) - Main business revenue achieved restorative growth in the second quarter, with a **6.48% year-on-year increase** in the second quarter of 2025[79](index=79&type=chunk) [Operating Costs, Gross Profit, and Gross Margin](index=24&type=section&id=Operating%20Costs%2C%20Gross%20Profit%2C%20and%20Gross%20Margin) For the six months ended June 30, 2025, operating costs decreased by 8.43% to RMB 1,994.33 million, slightly more than the revenue decline. Gross profit decreased by 4.99% to RMB 160.75 million, but gross margin increased by 0.25 percentage points to 7.46%, driven by lower procurement costs, product structure optimization, and growth in third-party logistics - Operating costs decreased by **8.43% year-on-year** to **RMB 1,994.33 million**, a decrease slightly higher than that of operating revenue[80](index=80&type=chunk) - Gross profit decreased by **4.99% year-on-year** to **RMB 160.75 million**[80](index=80&type=chunk) - Gross margin increased by **0.25 percentage points** from **7.21%** in the same period of 2024 to **7.46%** in the same period of 2025[80](index=80&type=chunk) - The improvement in gross margin was primarily due to leveraging channel advantages to reduce procurement costs, continuous adjustment of product structure to introduce high-margin products, and a **21.52% year-on-year increase** in third-party logistics business revenue[80](index=80&type=chunk)[81](index=81&type=chunk) [Selling Expenses](index=25&type=section&id=Selling%20Expenses) For the six months ended June 30, 2025, selling expenses decreased by 3.87% to RMB 60.44 million, primarily due to the company's efficient allocation of marketing resources and reduction of inefficient marketing channels - Selling expenses decreased by **3.87% year-on-year** to **RMB 60.44 million**[82](index=82&type=chunk) - This was mainly due to the Company's efficient allocation of marketing resources and the reduction of inefficient marketing channels[82](index=82&type=chunk) [Administrative Expenses](index=25&type=section&id=Administrative%20Expenses) For the six months ended June 30, 2025, administrative expenses decreased by 3.68% to RMB 22.47 million, mainly due to cost reduction and efficiency gains from digital office implementation, leading to reduced office, travel, and staff costs - Administrative expenses decreased by **3.68% year-on-year** to **RMB 22.47 million**[83](index=83&type=chunk) - This was mainly due to the implementation of digital office, resulting in a year-on-year decrease of **RMB 0.51 million** in office and travel expenses, and a year-on-year decrease of **RMB 0.46 million** in staff remuneration[83](index=83&type=chunk) [Finance Costs](index=25&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, finance costs decreased by 1.21% to RMB 33.69 million, primarily due to a RMB 2.05 million reduction in interest expenses from lower borrowing rates - Finance costs decreased by **1.21% year-on-year** to **RMB 33.69 million**[84](index=84&type=chunk) - This was mainly due to a decrease in borrowing interest rates, leading to a year-on-year reduction of **RMB 2.05 million** in interest expenses[84](index=84&type=chunk) [Income Tax Expense](index=25&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense decreased by 10.60% to RMB 10.89 million, recognized in accordance with accounting standards for current income tax and adjustments to deferred tax assets and liabilities - Income tax expense decreased by **10.60% year-on-year** to **RMB 10.89 million**[85](index=85&type=chunk) - This was recognized in accordance with accounting standards for current income tax expense and adjustments to deferred tax assets and deferred tax liabilities[85](index=85&type=chunk) [Net Profit](index=25&type=section&id=Net%20Profit) For the six months ended June 30, 2025, net profit decreased by 18.72% to RMB 21.74 million, primarily due to slowing macroeconomic growth, high base effect leading to revenue decline, rigid cost structure, and a significant increase in credit impairment losses - Net profit decreased by **18.72% year-on-year** to **RMB 21.74 million**[86](index=86&type=chunk) - This was primarily due to slowing macroeconomic growth and a high base effect leading to a phased decline in operating revenue, coupled with a rigid cost structure, where expense optimization measures did not fully offset the pressure from narrowing gross profit[86](index=86&type=chunk) - Credit impairment losses significantly increased compared to the same period last year, negatively impacting net profit[86](index=86&type=chunk) [Liquidity and Financial Resources](index=25&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, the Group held RMB 212.24 million in cash and bank balances, with net current assets of RMB 252.79 million and a current ratio of 1.09, largely consistent with year-end 2024, and total bank borrowings of RMB 1,010.88 million at fixed interest rates - As of **June 30, 2025**, the Group held cash and bank balances of **RMB 212.24 million**, an increase from **RMB 171.79 million** at December 31, 2024[87](index=87&type=chunk) - Net current assets were **RMB 252.79 million**, and the current ratio was **1.09**, largely consistent with December 31, 2024[87](index=87&type=chunk) - Total bank borrowings amounted to **RMB 1,010.88 million** (short-term borrowings of **RMB 967.68 million** and long-term borrowings of **RMB 43.20 million**), with all bank borrowings bearing fixed interest rates[88](index=88&type=chunk) [Bills Receivable, Accounts Receivable, and Receivables Financing](index=26&type=section&id=Bills%20Receivable%2C%20Accounts%20Receivable%2C%20and%20Receivables%20Financing) As of June 30, 2025, the combined total of bills receivable, accounts receivable, and receivables financing was RMB 1,243.36 million, a 1.38% increase from year-end 2024, remaining largely stable - As of **June 30, 2025**, the total amount of bills receivable, accounts receivable, and receivables financing was **RMB 1,243.36 million**, an increase of **1.38%** compared to December 31, 2024, remaining largely stable[89](index=89&type=chunk) [Bills Payable and Accounts Payable](index=26&type=section&id=Bills%20Payable%20and%20Accounts%20Payable) As of June 30, 2025, the combined total of bills payable and accounts payable was RMB 1,073.98 million, a 11.56% decrease from year-end 2024, primarily due to the Group's strategic procurement arrangements and effective capital allocation based on market supply and demand - As of **June 30, 2025**, the total amount of bills payable and accounts payable was **RMB 1,073.98 million**, a decrease of **11.56%** compared to December 31, 2024[90](index=90&type=chunk) - This was mainly due to the Group's procurement arrangements based on market supply and demand and effective allocation of capital utilization[90](index=90&type=chunk) [Treasury Policy](index=26&type=section&id=Treasury%20Policy) The Group adopts a prudent financial management strategy, closely monitoring liquidity, assessing customer credit to mitigate risk, and ensuring the liquid structure of assets, liabilities, and other commitments aligns with funding requirements - The Group adopts a prudent financial management strategy, maintaining a sound liquidity position during the reporting period[91](index=91&type=chunk) - It closely monitors the Group's liquidity position to ensure that the liquid structure of assets, liabilities, and other commitments meets funding needs[91](index=91&type=chunk) [Foreign Exchange Risk](index=26&type=section&id=Foreign%20Exchange%20Risk) The Group's transactions, most assets, and all liabilities are denominated in RMB, resulting in extremely low foreign exchange risk, with no financial instruments used to hedge foreign currency risk during the reporting period - The Group's transactions are denominated in RMB, and most of its assets and all its liabilities are denominated in RMB, resulting in extremely low foreign exchange risk[92](index=92&type=chunk) - For the six months ended **June 30, 2025**, the Group did not use any financial instruments to hedge foreign currency risk[92](index=92&type=chunk) [Interest Rate Risk](index=26&type=section&id=Interest%20Rate%20Risk) As of June 30, 2025, the Group had no bank borrowings bearing floating interest rates, indicating a low interest rate risk - As of **June 30, 2025**, the Group had no bank borrowings bearing floating interest rates[93](index=93&type=chunk) [Capital Gearing Ratio](index=26&type=section&id=Capital%20Gearing%20Ratio) As of June 30, 2025, the Group's capital gearing ratio was 57.44%, an increase from 51.37% at year-end 2024 Capital Gearing Ratio | Date | Capital Gearing Ratio | | :--- | :--- | | June 30, 2025 | 57.44% | | December 31, 2024 | 51.37% | - The capital gearing ratio is calculated as net debt at period-end divided by total capital[95](index=95&type=chunk) [Other Information](index=27&type=section&id=Other%20Information) This section provides other important information for the six months ended June 30, 2025, including capital commitments, employee details, significant investments, asset pledges, contingent liabilities, and corporate governance, offering a comprehensive overview of the company's operations and governance [Capital Commitments](index=27&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no capital commitments, consistent with the situation at year-end 2024 - As of **June 30, 2025**, the Group had no capital commitments (December 31, 2024: nil)[96](index=96&type=chunk) [Employee Information](index=27&type=section&id=Employee%20Information) As of June 30, 2025, the Group had 849 employees, an increase of 15 from the previous year, with total staff costs of RMB 47.57 million, and the Group focuses on employee development, offering competitive remuneration and training - As of **June 30, 2025**, the Group had **849 employees**, an increase of **15 employees** compared to June 30, 2024[97](index=97&type=chunk) - For the six months ended **June 30, 2025**, total staff costs were **RMB 47.57 million**, compared to **RMB 45.83 million** for the same period in 2024[97](index=97&type=chunk) - The Group provides competitive salaries and benefits and focuses on employee career development, regularly conducting internal and external training[97](index=97&type=chunk) [Significant Investments Held](index=27&type=section&id=Significant%20Investments%20Held) For the six months ended June 30, 2025, the Group held no significant investments - For the six months ended **June 30, 2025**, the Group had no significant investments[98](index=98&type=chunk) [Future Plans for Material Investments and Capital Assets](index=27&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) During the reporting period and up to the date of this announcement, the Group had no future plans regarding material investments and capital assets - During the reporting period and up to the date of this announcement, the Group had no future plans regarding material investments and capital assets[99](index=99&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures](index=27&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%2C%20and%20Joint%20Ventures) For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures - For the six months ended **June 30, 2025**, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[100](index=100&type=chunk) [Pledges of Assets](index=27&type=section&id=Pledges%20of%20Assets) As of June 30, 2025, the Group had utilized total bank credit of RMB 1,455.82 million, secured by properties and plant with a carrying value of RMB 207.11 million and land use rights of RMB 65.82 million - As of **June 30, 2025**, the Group had utilized total bank credit of **RMB 1,455.82 million**[101](index=101&type=chunk) - Pledged assets include properties and plant with a carrying value of **RMB 207.11 million** and land use rights of **RMB 65.82 million**[101](index=101&type=chunk) [Assets with Restricted Ownership or Use Rights](index=27&type=section&id=Assets%20with%20Restricted%20Ownership%20or%20Use%20Rights) As of June 30, 2025, the Group's assets with restricted ownership or use rights totaled RMB 574.26 million, primarily including monetary funds pledged as guarantees for bank acceptance bills and borrowings, and bills receivable pledged to banks, along with other pledged assets - As of **June 30, 2025**, the Group's restricted monetary funds amounted to **RMB 297.73 million**, serving as guarantees for bank acceptance bills and borrowings[102](index=102&type=chunk) - Restricted bills receivable amounted to **RMB 3.60 million**, pledged to banks[102](index=102&type=chunk) - Other pledged assets totaled **RMB 272.93 million**, with total assets with restricted ownership or use rights amounting to **RMB 574.26 million**[102](index=102&type=chunk) [Contingent Liabilities](index=28&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities, consistent with the situation at year-end 2024 - As of **June 30, 2025**, the Group had no material contingent liabilities (December 31, 2024: nil)[104](index=104&type=chunk) [Significant Events After Reporting Period](index=28&type=section&id=Significant%20Events%20After%20Reporting%20Period) As of the date of this announcement, there were no significant events after the reporting period requiring disclosure by the Group - As of the date of this announcement, there were no significant events after the reporting period requiring disclosure by the Group[105](index=105&type=chunk) [Interim Dividends](index=28&type=section&id=Interim%20Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board does not recommend the payment of an interim dividend for the six months ended **June 30, 2025** (2024 interim dividend: nil)[106](index=106&type=chunk) [Corporate Governance Practices](index=28&type=section&id=Corporate%20Governance%20Practices) For the six months ended June 30, 2025, the Company consistently complied with the code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules and will continue to review its practices to enhance corporate governance standards - For the six months ended **June 30, 2025**, the Company has consistently complied with the code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[107](index=107&type=chunk) - The Company will continue to review its corporate governance practices to enhance its corporate governance standards[107](index=107&type=chunk) [Standard Code for Securities Transactions by Directors and Supervisors](index=28&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors%20and%20Supervisors) The Company has adopted the Standard Code for Securities Transactions by Directors and Supervisors as set out in Appendix C3 of the Listing Rules and confirms that all directors and supervisors complied with it during the reporting period - The Company has adopted the Standard Code for Securities Transactions by Directors and Supervisors as set out in Appendix C3 of the Listing Rules as a code of conduct for directors and supervisors to deal in the Company's securities[108](index=108&type=chunk) - The Company confirms that all directors and supervisors complied with the required standards set out in the Standard Code for the six months ended **June 30, 2025**[108](index=108&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=28&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and no treasury shares were held at period-end - For the six months ended **June 30, 2025**, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[109](index=109&type=chunk) - As of **June 30, 2025**, the Company did not hold any treasury shares[109](index=109&type=chunk) [Audit Committee and Review of Interim Results](index=28&type=section&id=Audit%20Committee%20and%20Review%20of%20Interim%20Results) The Audit Committee, comprising three members, has reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, and found them prepared in compliance with applicable accounting standards, rules, and regulations, with appropriate disclosures - The Audit Committee comprises **three members**, including two independent non-executive directors and one non-executive director[110](index=110&type=chunk) - The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements for the six months ended **June 30, 2025**, and is of the opinion that they were prepared in compliance with applicable accounting standards, rules, and regulations, and that appropriate disclosures have been made[110](index=110&type=chunk) [Publication of Information on HKEX and Company Website](index=29&type=section&id=Publication%20of%20Information%20on%20HKEX%20and%20Company%20Website) This announcement has been published on the Company's and HKEX websites, and the interim report will be dispatched to shareholders and posted on these websites in due course - This announcement has been published on the Company's website (www.chmyy.com) and the HKEX website (www.hkexnews.hk)[111](index=111&type=chunk) - The Company's interim report for the six months ended **June 30, 2025**, will be dispatched to the Company's shareholders and posted on the aforementioned websites in due course[111](index=111&type=chunk)

[Announcement Summary](index=1&type=section&id=Announcement%20Summary) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) H1 2025 revenue reached **RMB 6.0 million** from cosmetics sales, but net loss widened by **16.5%** to **RMB 83.3 million**, driven by increased R&D and marketing expenses H1 2025 Financial Highlights | Metric | For the six months ended June 30, 2025 (RMB million) | For the six months ended June 30, 2024 (RMB million) | Change (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 6.0 | 0.0 | 6.0 | N/A | | Net Loss | (83.3) | (71.5) | (11.8) | 16.5% | | R&D Costs | (48.6) | (39.3) | (9.3) | 23.6% | | Administrative Expenses | (25.2) | (33.9) | 8.7 | (25.6%) | | Marketing Costs | (8.3) | (1.8) | (6.5) | 369.0% | | Cash and Cash Equivalents (End of Period) | 52.9 | - | - | - | - The Board resolved **not to declare any interim dividend** for the six months ended June 30, 2025[3](index=3&type=chunk) [R&D Milestones and Achievements](index=3&type=section&id=R%26D%20Milestones%20and%20Achievements) The company's core dermatological pipelines, KX-826 and GT20029, achieved positive clinical progress in alopecia and acne indications, while new raw material KT-939 also launched global sales, forming a 'three-pronged' business model [KX-826](index=3&type=section&id=KX-826) KX-826 topical solution for Chinese alopecia showed positive topline data in long-term safety Phase III, combination therapy observation, and pivotal Phase II trials, demonstrating excellent safety and efficacy; Phase III has enrolled **666 patients**, expected to complete by early 2026 - KX-826 topical solution for Chinese alopecia's long-term safety Phase III clinical trial achieved topline data, meeting primary endpoints with statistically significant and clinically meaningful results, demonstrating excellent safety and efficacy[4](index=4&type=chunk) - The clinical observation study of KX-826 combined with minoxidil for Chinese adult male alopecia met its primary endpoint, aiming to optimize future formal Phase III clinical trial design[4](index=4&type=chunk) - KX-826 topical solution **1.0%** for alopecia's pivotal Phase II clinical trial achieved topline data, meeting primary endpoints with statistically significant and clinically meaningful results, demonstrating excellent efficacy and safety[4](index=4&type=chunk) - KX-826 topical solution **1.0%** for alopecia's pivotal Phase III clinical trial has completed enrollment of **666 patients**, expected to finish by early 2026[4](index=4&type=chunk) [AR-PROTAC Compound (GT20029)](index=4&type=section&id=AR-PROTAC%20Compound%20%28GT20029%29) GT20029 gel for acne's China Phase II clinical trial reported topline data, successfully meeting primary endpoints with excellent efficacy, safety, and PK characteristics, and determined the recommended Phase III dose at **0.5%** - AR-PROTAC compound GT20029 gel for acne's China Phase II clinical trial reported topline data, successfully meeting primary endpoints with excellent efficacy, safety, and PK characteristics, and determined the recommended Phase III dose at **0.5%**[5](index=5&type=chunk) [New Raw Material (KT-939)](index=4&type=section&id=New%20Raw%20Material%20%28KT-939%29) KT-939, a whitening and spot-reducing cosmetic active ingredient, completed its first sale, marking the launch of the company's B2B active cosmetic ingredient business and forming a 'three-pronged' business model - KT-939 as a whitening and spot-reducing cosmetic active ingredient completed its first sale, marking the launch of global sales for active ingredients[6](index=6&type=chunk) - The company has formed a 'three-pronged' business model encompassing B2B active cosmetic ingredient business, B2C active cosmetic product business, and topical innovative drug R&D business[6](index=6&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) [Business Overview](index=4&type=section&id=Business%20Overview) The company is a clinical-stage innovative drug enterprise focused on dermatology and functional cosmetics, with 5 drug candidates in Phase I-III clinical trials; its cosmetics business complements drug R&D by providing funding and market data, with core products KX-826 and GT20029 advancing to Phase II/III and Phase II, respectively, and the high-end cosmetics brand KOSHINÉ launched in H2 2024 - The company is a clinical-stage innovative drug enterprise in China focused on addressing unmet clinical needs and extending into functional cosmetics[7](index=7&type=chunk) - The cosmetics business provides funding for drug R&D activities and market data for future drug sales strategies[7](index=7&type=chunk) - The company has **5** potential first-in-class/best-in-class drug candidates in Phase I-III clinical stages, with a pipeline primarily covering dermatological (e.g., alopecia, acne) and oncology indications[7](index=7&type=chunk) - In H2 2024, the company officially launched sales of its new high-end cosmetics brand KOSHINÉ, with a total of **eight** products currently on the market, including anti-hair loss liquid series, anti-acne cream, and whitening series[8](index=8&type=chunk) - The company has developed a multi-channel digital marketing strategy, expanding to traditional e-commerce platforms like Tmall and JD.com, actively deploying on emerging content-driven e-commerce platforms like Douyin and Xiaohongshu, and also expanding global sales channels such as Amazon US[8](index=8&type=chunk)[9](index=9&type=chunk) [Corporate Strategy and Product Pipeline](index=4&type=section&id=Corporate%20Strategy%20and%20Product%20Pipeline) The company's strategy focuses on dermatology and functional cosmetics, aiming to develop first-in-class/best-in-class drugs to address unmet clinical needs; the cosmetics business supports drug R&D with funding and market insights, with **5** drug candidates in Phase I-III clinical trials, and core products KX-826 and GT20029 in Phase II/III - The company is committed to becoming a leader in the research, development, and commercialization of innovative therapies and high-end cosmetics[7](index=7&type=chunk) - The pipeline primarily covers dermatological (e.g., alopecia, acne) and oncology indications, with cosmetic categories including anti-hair loss, anti-acne, and whitening products[7](index=7&type=chunk) - Two core products, KX-826 and GT20029, have advanced to Phase II/III and Phase II clinical trials, respectively[7](index=7&type=chunk) [Cosmetics Business Development and Marketing Strategy](index=5&type=section&id=Cosmetics%20Business%20Development%20and%20Marketing%20Strategy) Since H2 2024, the company officially launched sales of its high-end cosmetics brand KOSHINÉ, with eight products already on the market; through outsourced production and prioritizing online sales channels, the company implements multi-channel digital marketing strategies, including traditional e-commerce platforms and content-driven platforms, and actively expands into overseas markets like Amazon US, to enhance brand awareness and market penetration - The KOSHINÉ brand has launched **eight** products, including anti-hair loss liquid series, anti-acne cream, and whitening series, with the KX-826-based anti-acne cream and KT-939-based whitening series launched in early 2025[8](index=8&type=chunk) - The company outsources cosmetics production, prioritizes online sales channels, and has developed a multi-channel digital marketing strategy[8](index=8&type=chunk) - Through data-driven precise advertising, conversion rates on major platforms like Tmall Global, Douyin Flagship Store, and JD Worldwide have significantly improved[9](index=9&type=chunk) - The company highly values fostering deep consumer interaction on high-quality content platforms like Xiaohongshu and WeChat, achieving a closed-loop marketing model of 'content seeding—brand cultivation—sales conversion'[9](index=9&type=chunk) [Core Products and R&D Progress](index=6&type=section&id=Core%20Products%20and%20R%26D%20Progress) The company deeply focuses on AR targets in dermatology, with core products KX-826 and GT20029 achieving multiple positive clinical advancements in alopecia and acne indications, including completing several Phase II/III clinical trials and obtaining topline data; concurrently, other pipeline products such as GT1708F, ALK-1 antibody, GT0486, and c-Myc molecular glue have also progressed in oncology and other disease areas, and new raw material KT-939 has initiated commercialization - The company possesses a risk-balanced and diversified portfolio of drug candidates, committed to addressing numerous unmet clinical needs with significant market potential[13](index=13&type=chunk) - The company has developed **5** clinical-stage drugs and **1** new raw material, obtaining clinical trial approvals in China (including Taiwan), the US, and other countries and regions[14](index=14&type=chunk) [KX-826 (AR Antagonist)](index=8&type=section&id=KX-826%20%28AR%E6%8B%AE%E6%8A%97%E5%89%82%29) KX-826 is a topical AR antagonist that treats alopecia and acne by blocking the AR signaling pathway, holding patents globally; for alopecia, several China and US clinical trials showed excellent safety, efficacy, and statistical significance, with China's Phase III trial completing patient enrollment; for acne, China's Phase II trial demonstrated preliminary efficacy and good safety - KX-826 is a topical drug that blocks the AR signaling pathway, reducing the sensitivity of AR in hair follicles and sebaceous glands to androgens, thereby minimizing systemic side effects[14](index=14&type=chunk) - The company holds patents for KX-826 in multiple countries globally and in China, with the core patent valid until September 8, 2030

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。 Virtual Mind Holding Company Limited 天 機 控 股 有 限 公 司 （ 於 開 曼 群 島 註 冊 成 立 的 有 限 公 司 ） （股份代號：1520） 截至二零二五年六月三十日止六個月的 中期業績公告 天機控股有限公司（「本公司」，連同其附屬公司，統稱「本集團」）董事（「董事」）會（「董事 會」）謹此宣佈本集團截至二零二五年六月三十日止六個月的未經審核簡明綜合業績。本 公告載有本公司二零二五年中期報告全文，乃符合香港聯合交易所有限公司證券上市規 則（「上市規則」）有關中期業績初步公告附載資料的相關規定。 Corporate Information 公司資料 BOARD OF DIRECTORS EXECUTIVE DIRECTORS Mei Weiyi (Chairman) Li Yang Tin Yat Yu Carol Wong Wai Kai Richard ...

[Financial Summary](index=1&type=section&id=Financial%20Summary) The group's revenue decreased by 38.5% to RMB 454.2 million, while gross profit increased by 61.9% to RMB 17.4 million, and loss attributable to owners of the parent significantly narrowed | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 454.2 | 738.0 | -38.5% | | Gross Profit | 17.4 | 10.8 | +61.9% | | Gross Profit Margin | 3.8% | 1.5% | +2.3 percentage points | | Loss attributable to owners of the parent | (16.0) | (52.4) | -69.5% (loss narrowed) | | Basic loss per share | RMB (3.15) cents | RMB (10.36) cents | -69.6% (loss narrowed) | [Condensed Interim Consolidated Financial Statements](index=2&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) This section presents the group's financial performance, comprehensive income, and financial position for the interim period, highlighting key changes in revenue, profit, and assets [Condensed Interim Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The group's revenue for the six months ended 30 June 2025 decreased by 38.5% to RMB 454.2 million, while gross profit increased by 61.9% to RMB 17.4 million, and loss for the period significantly narrowed | Indicator | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 454,249 | 738,039 | | Cost of sales | (436,843) | (727,289) | | Gross profit | 17,406 | 10,750 | | Other income and gains | 22,599 | 20,133 | | Selling and distribution expenses | (19,280) | (30,390) | | Administrative expenses | (33,719) | (46,710) | | Other expenses | (75) | (473) | | Finance costs | (2,984) | (5,644) | | Loss before tax | (16,053) | (52,334) | | Income tax expense | (181) | (106) | | Loss for the period | (16,234) | (52,440) | | Loss attributable to owners of the parent | (15,984) | (52,356) | | Basic and diluted loss per share | RMB (3.15) cents | RMB (10.36) cents | [Condensed Interim Consolidated Statement of Comprehensive Income](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Comprehensive%20Income) The group's total comprehensive loss for the six months ended 30 June 2025 significantly narrowed to RMB 16.184 million, primarily due to reduced loss for the period and a positive shift in exchange differences from overseas operations | Indicator | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the period | (16,234) | (52,440) | | Exchange differences on translation of overseas operations | 50 | (175) | | Total comprehensive loss for the period | (16,184) | (52,615) | | Total comprehensive loss attributable to owners of the parent | (15,934) | (52,531) | [Condensed Interim Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Financial%20Position) As of 30 June 2025, total current assets decreased to RMB 250.703 million, primarily due to reduced cash and cash equivalents, leading to a decrease in net current assets and total equity | Indicator | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | **ASSETS** | | | | Total non-current assets | 188,103 | 189,955 | | Total current assets | 250,703 | 334,050 | | **LIABILITIES** | | | | Total current liabilities | 225,711 | 252,711 | | Total non-current liabilities | 129,092 | 171,134 | | **EQUITY** | | | | Total equity | 84,003 | 100,160 | | Equity attributable to owners of the parent | 84,163 | 100,070 | | Net current (liabilities) / assets | 24,992 | 81,339 | [Notes to the Financial Statements](index=7&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed interim consolidated financial statements, covering company information, accounting policies, and specific financial items [Company and Group Information](index=7&type=section&id=1.%20Company%20and%20Group%20Information) The company, incorporated in the Cayman Islands and listed in Hong Kong, primarily engages in motor vehicle sales and services in China - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on **4 October 2018** and is listed on the Main Board of The Stock Exchange of Hong Kong Limited[13](index=13&type=chunk) - The Company is an investment holding company and its subsidiaries are principally engaged in the sale of motor vehicles and provision of services in the PRC[13](index=13&type=chunk) [Basis of Presentation and Changes in Accounting Policies](index=7&type=section&id=2.1%20Basis%20of%20Presentation) Interim financial information is prepared in accordance with IAS 34 and presented in RMB, with no significant financial impact from newly adopted IFRS standards - The unaudited condensed interim consolidated financial information has been prepared in accordance with International Accounting Standard **34 Interim Financial Reporting** and is presented in RMB[14](index=14&type=chunk) - The Group has adopted a number of new and revised International Financial Reporting Standards, including IFRS 17, IAS 1, IAS 8, and IAS 12, which did not have a significant financial impact on the condensed interim consolidated financial information[15](index=15&type=chunk) [Operating Segment Information](index=8&type=section&id=3.%20Operating%20Segment%20Information) The group operates as a single segment in Mainland China, focusing on motor vehicle sales and services, with no single customer contributing 10% or more of total revenue - The Group is principally engaged in the sale of motor vehicles and provision of services in Mainland China, which is considered as a **single operating segment**, thus no further operating segment information is presented[16](index=16&type=chunk) - The Group operates its businesses in one geographical segment, namely Mainland China, and accordingly, no geographical segment information is presented[17](index=17&type=chunk) - During the reporting period, no revenue from sales of motor vehicles or provision of services to a single customer accounted for **10% or more** of the Group’s total revenue[18](index=18&type=chunk) [Revenue, Other Income and Gains](index=9&type=section&id=4.%20Revenue%2C%20Other%20Income%20and%20Gains) Total revenue decreased by 38.5% to RMB 454.2 million, primarily from motor vehicle sales, while other income and gains increased by 12.4% to RMB 22.599 million, mainly from commission income and sales support Revenue from Contracts with Customers | Type of Goods or Services | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Motor vehicle sales | 298,662 | 553,199 | | Others | 155,587 | 184,840 | | **Total revenue from contracts with customers** | **454,249** | **738,039** | | Timing of revenue recognition: | | | | Transferred at a point in time | 370,577 | 661,935 | | Transferred over time | 83,672 | 76,104 | Other Income and Gains | Other Income and Gains Items | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank interest income | 1,003 | 487 | | Government grants received | 443 | 607 | | Gain on disposal of property, plant and equipment | 3,917 | 1,417 | | Others | 17,236 | 17,622 | | **Total** | **22,599** | **20,133** | - Other income mainly includes commission income for releasing car mortgages for customers, car financing commission income from third-party financing institutions, and sales support provided by car manufacturers for operating activities[23](index=23&type=chunk) [Loss Before Tax](index=11&type=section&id=5.%20Loss%20Before%20Tax) Loss before tax significantly narrowed from RMB 52.334 million to RMB 16.053 million, driven by reduced costs and increased gains from asset disposals Loss Before Tax Components | Expense/Income Items | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Employee benefit expenses (excluding directors' emoluments) | 24,906 | 37,103 | | Cost of inventories sold | 350,764 | 652,180 | | Cost of services rendered | 67,308 | 54,225 | | Depreciation of property, plant and equipment | 16,943 | 21,293 | | Depreciation of right-of-use assets | 5,476 | 7,514 | | Gain on disposal of property, plant and equipment | (3,917) | (1,417) | | Write-down/(reversal of write-down) of inventories to net realisable value | (4,021) | (2,631) | | Interest income | (1,003) | (487) | [Finance Costs](index=12&type=section&id=6.%20Finance%20Costs) Finance costs decreased by 47.1% to RMB 2.984 million, primarily due to lower interest on bank and other borrowings and lease liabilities Finance Cost Breakdown | Finance Cost Items | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank and other borrowings | 1,766 | 4,356 | | Interest on lease liabilities | 1,218 | 1,288 | | **Total** | **2,984** | **5,644** | [Income Tax](index=12&type=section&id=7.%20Income%20Tax) Entities in Cayman Islands and BVI are exempt from income tax, while certain PRC subsidiaries enjoy tax incentives, leading to a slight increase in income tax expense to RMB 0.181 million due to increased taxable profit - The Group’s entities incorporated in the Cayman Islands and the British Virgin Islands are not subject to any income tax[28](index=28&type=chunk) - In 2025, certain subsidiaries of the Group operating in Mainland China were certified as small-profit enterprises, enjoying a **75% reduction** on taxable income up to **RMB 3,000,000** and a preferential corporate income tax rate of **20%**[30](index=30&type=chunk) Income Tax Expense | Income Tax Items | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Current — China for the period | 181 | 1,028 | | Deferred income tax | — | (922) | | **Total tax expense for the period** | **181** | **106** | [Dividends](index=13&type=section&id=8.%20Dividends) The Board does not recommend paying any interim dividend for the six months ended 30 June 2025, consistent with the prior period - The Board does not recommend the payment of any interim dividend for the six months ended 30 June 2025 (six months ended 30 June 2024: nil)[33](index=33&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=13&type=section&id=9.%20Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) Basic and diluted loss per share significantly narrowed to RMB (3.15) cents, with no diluted adjustment due to the anti-dilutive effect of outstanding share options Loss Per Share Calculation | Indicator | Six Months Ended 30 June 2025 | Six Months Ended 30 June 2024 | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the parent (RMB thousand) | (15,984) | (52,356) | | Weighted average number of ordinary shares in issue (thousands) | 508,202 | 505,202 | | Basic and diluted loss per share (RMB cents) | (3.15) | (10.36) | - No adjustment has been made to the basic loss per share for dilution as the outstanding share options had an anti-dilutive effect on the basic loss per share presented[35](index=35&type=chunk) [Property, Plant and Equipment](index=15&type=section&id=10.%20Property%2C%20Plant%20and%20Equipment) Asset acquisition costs significantly decreased, while net gains from asset disposals increased, reflecting a shift in asset management strategy Property, Plant and Equipment Movements | Item | Six Months Ended 30 June 2025 (RMB thousand) | Six Months Ended 30 June 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of assets acquired | 4,897 | 12,557 | | Net book value of assets disposed of | 7,241 | 10,783 | | Net gain on disposal | 3,917 | 1,417 | [Inventories](index=15&type=section&id=11.%20Inventories) Total inventories slightly decreased to RMB 117.134 million as of 30 June 2025, with vehicles remaining the largest component, and pledged inventories for borrowings increased Inventories Breakdown | Type of Inventories | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Vehicles | 107,150 | 108,378 | | Spare parts | 9,984 | 10,301 | | **Total** | **117,134** | **118,679** | - As at 30 June 2025, inventories with a carrying amount of approximately **RMB 60,966,000** were pledged by the Group to secure interest-bearing bank and other borrowings, an increase from RMB 45,793,000 as at 31 December 2024[39](index=39&type=chunk) [Trade Receivables](index=15&type=section&id=12.%20Trade%20Receivables) Trade receivables increased to RMB 19.915 million as of 30 June 2025, primarily within three months, with an increase in impairment provision, while the group maintains strict credit control Trade Receivables Net Amount | Indicator | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 20,116 | 12,343 | | Impairment | (201) | (123) | | **Net** | **19,915** | **12,220** | Trade Receivables Ageing Analysis | Ageing Analysis | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 12,874 | 10,407 | | 3 to 12 months | 7,041 | 1,813 | | **Total** | **19,915** | **12,220** | Movement in Impairment Provision | Movement in Impairment Provision | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | At beginning of period/year | 123 | 59 | | Impairment | 78 | 64 | | At end of period/year | 201 | 123 | [Prepayments, Other Receivables and Other Assets](index=17&type=section&id=13.%20Prepayments%2C%20Other%20Receivables%20and%20Other%20Assets) Total prepayments, other receivables, and other assets decreased to RMB 73.975 million, mainly due to a significant reduction in advances to suppliers, with no significant credit concentration risk Prepayments, Other Receivables and Other Assets Breakdown | Item | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Advances to suppliers | 15,530 | 81,137 | | Deposits | 33,387 | 10,486 | | Recoverable value-added tax | 17,604 | 16,665 | | Prepayments | 358 | 1,702 | | Other receivables | 7,096 | 8,662 | | **Total** | **73,975** | **118,652** | - The Group strives to maintain strict control over its outstanding receivables to minimise credit risk, and there is no significant concentration of credit risk[42](index=42&type=chunk) [Trade Payables and Bills Payable](index=18&type=section&id=14.%20Trade%20Payables%20and%20Bills%20Payable) Total trade payables and bills payable slightly decreased to RMB 29.336 million, primarily due within three months, with bills payable secured by pledged deposits Trade Payables and Bills Payable Ageing Analysis | Ageing Analysis | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 16,628 | 11,000 | | 3 to 12 months | 12,708 | 18,021 | | Over 1 year | 0 | 1,778 | | **Total** | **29,336** | **30,799** | - Trade payables and bills payable are interest-free and normally settled within **90 to 180 days**[44](index=44&type=chunk) - As at 30 June 2025, the Group’s bills payable were secured by pledged deposits of approximately **RMB 4,334,000**[44](index=44&type=chunk) [Interest-Bearing Bank and Other Borrowings](index=19&type=section&id=15.%20Interest-Bearing%20Bank%20and%20Other%20Borrowings) Total interest-bearing bank and other borrowings decreased to RMB 91.129 million, all current, with interest rates ranging from 2.75% to 4.92% and secured by inventories, right-of-use assets, and related party buildings Interest-Bearing Bank and Other Borrowings Breakdown | Type of Borrowings | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Current bank and other borrowings | 91,129 | 95,610 | | Non-current bank and other borrowings | 0 | 2,006 | | **Total** | **91,129** | **97,616** | - The Group’s bank and other borrowings are secured by certain inventories (**RMB 60,966,000**), right-of-use assets (**RMB 8,840,000**) and buildings owned by a related party[45](index=45&type=chunk) - The effective interest rates of the borrowings range from **2.75% to 4.92%** per annum[45](index=45&type=chunk) [Share Capital](index=20&type=section&id=16.%20Share%20Capital) The company's issued share capital increased to RMB 4.585 million due to the exercise of share options Share Capital Structure | Share Capital Type | 30 June 2025 (HKD) | 31 December 2024 (HKD) | | :--- | :--- | :--- | | Authorised share capital (2,000,000,000 shares of HKD 0.01 each) | 20,000,000 | 20,000,000 | | Issued and fully paid share capital (508,202,000 shares of HKD 0.01 each) | 5,082,020 | 5,052,020 | | Equivalent to (RMB thousand) | 4,585 | 4,558 | - **3,000,000** share options were exercised at a subscription price of **HKD 0.48** per share, resulting in the issue of **3,000,000** shares for a total cash consideration of **HKD 1,440,000** (approximately **RMB 1,296,000**)[47](index=47&type=chunk) [Related Party Transactions and Balances](index=20&type=section&id=17.%20Related%20Party%20Transactions%20and%20Balances) The group has related party transactions and balances with Mr. Luo Houjie and his controlled companies, with RMB 89.911 million due to Mr. Luo Houjie, mostly repayable in 2026, unsecured and interest-free - Key related parties include Mr. Luo Houjie, a director of the Company, and Zhongshan Dongri Automobile Co., Ltd. and Zhongshan Chuangshiji Automobile Co., Ltd. controlled by him[48](index=48&type=chunk) Related Party Balances | Related Party | 30 June 2025 (RMB thousand) | 31 December 2024 (RMB thousand) | | :--- | :--- | :--- | | Amount due to Mr. Luo Houjie | 89,911 | 131,041 | - Outstanding balances with related parties are unsecured and interest-free, with **RMB 85,000,000** repayable in **2026** and the remainder repayable on demand[50](index=50&type=chunk) - During the reporting period, certain subsidiaries leased buildings and leasehold land owned by Zhongshan Dongri Automobile Co., Ltd. and Zhongshan Chuangshiji Automobile Sales and Service Co., Ltd. at zero consideration under rental concessions[51](index=51&type=chunk) [Management Discussion and Analysis](index=22&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the industry, a review of the group's business and financial performance, and an outlook on future strategies and market conditions [Industry Overview](index=22&type=section&id=Industry%20Overview) In H1 2025, China's automotive market saw record production and sales, driven by new energy vehicles, but intense competition and price wars squeezed profit margins - In the first half of 2025, China's automobile production and sales both exceeded **15 million units** for the first time, achieving double-digit year-on-year growth[52](index=52&type=chunk) - New energy vehicles accounted for **44.3%** of market share, becoming the core driving force for growth in the automotive market[52](index=52&type=chunk) - Automobile manufacturers and dealers faced squeezed profit margins or even losses due to price wars, posing a challenge to achieve profit growth alongside sales growth[52](index=52&type=chunk) [Business Review](index=22&type=section&id=Business%20Review) The group's revenue decreased by 38.5% to RMB 454.2 million, but gross profit increased by 61.9% to RMB 17.4 million, with a gross profit margin of 3.8%, operating 19 stores and representing 13 automotive brands in the Greater Bay Area Key Financial Indicators | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 454.2 | 738.0 | -38.5% | | Gross Profit | 17.4 | 10.8 | +61.9% | | Gross Profit Margin | 3.8% | 1.5% | +2.3 percentage points | - The Group operates a total of **19 stores**, one insurance agency company, three used car trading centers, and one company engaged in charging station construction and ride-hailing operations in Greater Bay Area cities such as Zhongshan and Foshan[53](index=53&type=chunk) - The Group is authorised by car manufacturers for as many as **13 brands**, including GAC Aion, Hyper, Leapmotor, IM Motors, FAW-Volkswagen, Buick, Chevrolet, FAW Toyota, Dongfeng Nissan, Cadillac, and Beijing Hyundai[54](index=54&type=chunk) [Motor Vehicle Sales](index=23&type=section&id=Motor%20Vehicle%20Sales) Motor vehicle sales revenue decreased by 46% to RMB 298.7 million, with new car sales impacted by market competition and consumer sentiment, and used car sales by new car price reductions Motor Vehicle Sales Performance | Sales Type | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total motor vehicle sales | 298.7 | 553.2 | -46% | | New car sales revenue | 294.0 (2,797 units) | 543.2 (4,832 units) | -45.9% | | Used car sales revenue | 4.6 (376 units) | 10.0 (335 units) | -54% | - The decline in new car sales was mainly due to the complex and volatile international environment, continuous competition in the domestic automotive market, varying regional subsidy policies, strong consumer wait-and-see sentiment, and slow recovery in new car sales[56](index=56&type=chunk) - The sluggish growth in used car sales primarily stemmed from the “Two New” policies and frequent price reductions in the new car market, leading to insufficient demand for used cars and low transaction prices[57](index=57&type=chunk) [Other Comprehensive Automotive Services](index=23&type=section&id=Other%20Comprehensive%20Automotive%20Services) Other comprehensive automotive services revenue decreased by 15.8% to RMB 155.6 million, with repair services showing high gross profit margin despite revenue decline, and insurance agency services revenue growing but gross profit significantly falling Other Comprehensive Automotive Services Performance | Service Type | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total comprehensive automotive services revenue | 155.6 | 184.8 | -15.8% | | Repair and maintenance services revenue | 71.9 | 108.7 | -33.9% | | Repair and maintenance services gross profit margin | 32.4% | N/A | N/A | | Insurance agency services revenue | 50.6 | 43.0 | +15.0% | | Insurance agency services gross profit | 1.6 | 5.8 | -72.4% | | Other services revenue | 33.1 | 33.1 | 0% | [New Energy Vehicle Related Services](index=24&type=section&id=New%20Energy%20Vehicle%20Related%20Services) New energy vehicle related services revenue increased by 5.7% to RMB 25.8 million, with gross profit growing by 17.6% to RMB 2.0 million, as a key development strategy New Energy Vehicle Related Services Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | New energy vehicle related services revenue | 25.8 | 24.4 | +5.7% | | New energy vehicle related services gross profit | 2.0 | 1.7 | +17.6% | - New energy vehicle related services include charging service fees generated from the electric vehicle charging network in the Greater Bay Area, and rental and management fees from participating in online ride-hailing operations[62](index=62&type=chunk) [Prospects and Outlook](index=25&type=section&id=Prospects%20and%20Outlook) The group anticipates continued growth in automotive consumption in H2 2025, driven by government policies and new product launches, while adapting its brand structure, operating model, and expanding new energy charging stations with a light-asset approach - In the second half of 2025, the competitive landscape of the automotive market will not fundamentally change, and the intensity of price wars will decrease but not completely cease[64](index=64&type=chunk) - The Group will continue to adjust its brand structure and operating model to quickly adapt to market changes, and adjust its organisational structure and team effectiveness to promote business development[64](index=64&type=chunk) - The Group will transition to a light-asset investment model for new energy charging station expansion, and continuously seek new business growth and profit contribution points, as well as other industry breakthroughs[64](index=64&type=chunk) [Financial Performance Analysis](index=26&type=section&id=Financial%20Performance%20Analysis) Despite a decline in revenue, the group's financial performance improved with significantly narrowed loss, enhanced gross profit and margin due to business model transformation and cost control, and reduced operating expenses [Revenue](index=26&type=section&id=Revenue) Total revenue decreased by 38.5% to RMB 454.2 million, primarily due to lower motor vehicle sales, which accounted for 65.8% of total revenue Revenue Breakdown | Revenue Source | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Proportion (2025) | Proportion (2024) | | :--- | :--- | :--- | :--- | :--- | | Motor vehicle sales | 298.7 | 553.2 | 65.8% | 75.0% | | Other comprehensive automotive services | 155.6 | 184.8 | 34.2% | 25.0% | | **Total Revenue** | **454.2** | **738.0** | **100%** | **100%** | - The decrease in revenue was mainly due to the decline in motor vehicle sales[65](index=65&type=chunk) [Cost of Sales and Gross Profit Margin](index=26&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit%20Margin) Cost of sales decreased by 39.9% to RMB 436.8 million, while gross profit increased by 61.1% to RMB 17.4 million, and gross profit margin improved from 1.5% to 3.8%, reflecting a shift towards service-oriented business Cost of Sales and Gross Profit Margin Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | 436.8 | 727.3 | -39.9% | | Gross profit | 17.4 | 10.8 | +61.1% | | Gross profit margin | 3.8% | 1.5% | +2.3 percentage points | - Cost of sales primarily comprised motor vehicle costs, accounting for approximately **70.0%** (prior period: approximately **81.3%**) of the cost of sales during the reporting period[66](index=66&type=chunk) - The increase in gross profit was mainly due to the Group’s transformation from a single sales-oriented model to a service-oriented model, allocating limited resources to business segments with higher profit contributions[66](index=66&type=chunk) [Other Income and Gains](index=26&type=section&id=Other%20Income%20and%20Gains) Other income and gains increased by 12.4% to RMB 22.6 million, primarily from commission income for car mortgages, car explosion-proof film, third-party financing, and advertising support from manufacturers Other Income and Gains Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Other income and gains | 22.6 | 20.1 | +12.4% | - Mainly attributable to commission income for releasing car mortgages for customers, commission income for car explosion-proof film, car financing commission income from third-party financing institutions, and advertising support provided by car manufacturers for advertising activities[67](index=67&type=chunk) [Selling and Distribution Expenses](index=27&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses significantly decreased by 36.6% to RMB 19.3 million, mainly due to reduced salaries, wages, advertising, and office expenses for sales personnel Selling and Distribution Expenses Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 19.3 | 30.4 | -36.6% | - The decrease in selling and distribution expenses was mainly due to lower salaries and wages for sales personnel, advertising, and office expenses compared to the prior period[68](index=68&type=chunk) [Administrative Expenses](index=27&type=section&id=Administrative%20Expenses) Administrative expenses decreased by RMB 13.0 million to RMB 33.7 million, primarily due to reductions in administrative staff salaries, depreciation, maintenance, and miscellaneous expenses, despite an increase in rental expenses Administrative Expenses Breakdown | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (RMB million) | | :--- | :--- | :--- | :--- | | Administrative expenses | 33.7 | 46.7 | -13.0 | | Decrease in administrative staff salaries and wages | -2.5 | N/A | N/A | | Increase in rental expenses | +4.1 | N/A | N/A | | Decrease in depreciation and amortisation of property, plant and equipment and right-of-use assets | -5.0 | N/A | N/A | | Decrease in repair and maintenance expenses | -1.0 | N/A | N/A | | Decrease in miscellaneous expenses | -8.4 | N/A | N/A | [Finance Costs](index=27&type=section&id=Finance%20Costs) Finance costs significantly decreased to RMB 3.0 million, primarily due to reduced financing needs and lower bank loan interest rates Finance Costs Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 3.0 | 5.6 | -46.4% | - The decrease in finance costs was due to the Group’s reduced financing needs and lower bank loan interest rates[70](index=70&type=chunk) [Loss for the Period](index=27&type=section&id=Loss%20for%20the%20Period) Loss for the period significantly narrowed to RMB 16.2 million, mainly due to improved new car inventory structure, gross profit margin, and reduced administrative expenses Loss for the Period Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Loss for the period | 16.2 | 52.4 | -69.1% (loss narrowed) | - The significant reduction in loss was mainly due to improvements in new car inventory structure and new car gross profit margin, as well as reduced administrative expenses[71](index=71&type=chunk) [Income Tax Expense](index=27&type=section&id=Income%20Tax%20Expense) Income tax expense slightly increased to RMB 0.2 million, primarily due to an increase in the group's taxable profit during the reporting period Income Tax Expense Performance | Indicator | Six Months Ended 30 June 2025 (RMB million) | Six Months Ended 30 June 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Income tax expense | 0.2 | 0.1 | +100% | - The increase in income tax expense was mainly due to the increase in the Group’s taxable profit during the reporting period[72](index=72&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=28&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) The group maintains prudent financial management, with operating cash flow and short-term borrowings as primary funding sources, a decreased net gearing ratio, and reduced cash and interest-bearing borrowings Liquidity and Capital Structure Indicators | Indicator | 30 June 2025 | 31 December 2024 | | :--- | :--- | :--- | | Net gearing ratio | **2.16 times** | 2.28 times | | Pledged bank deposits and cash and cash equivalents balance (RMB million) | 39.7 | 84.5 | | Interest-bearing bank and other borrowings (RMB million) | 91.1 | 97.6 | | Total equity attributable to owners of the parent (RMB million) | 84.2 | 100.1 | - The decrease in net gearing ratio was mainly due to the significant contraction of the Group’s loss and liabilities during the reporting period[73](index=73&type=chunk) - Interest-bearing bank and other borrowings are all denominated in RMB, with interest rates ranging from **2.75% to 5.3%** per annum[73](index=73&type=chunk) [Capital Expenditure and Commitments](index=28&type=section&id=Capital%20Expenditure%20and%20Commitments) As of 30 June 2025, capital commitments related to building expenditure significantly decreased to RMB 0.5 million Capital Commitments | Item | 30 June 2025 (RMB million) | 31 December 2024 (RMB million) | | :--- | :--- | :--- | | Capital commitments relating to building expenditure | 0.5 | 4.7 | [Foreign Exchange](index=28&type=section&id=Foreign%20Exchange) The group's foreign exchange risk is negligible as most transactions are RMB-denominated in China, and no derivative instruments were used for hedging during the period - The Group primarily operates in China, with most operating transactions denominated in RMB, resulting in negligible foreign exchange risk[76](index=76&type=chunk) - The Group did not enter into any derivative instruments to hedge its foreign exchange risk during the reporting period[76](index=76&type=chunk) [Contingent Liabilities](index=29&type=section&id=Contingent%20Liabilities) As of 30 June 2025, the group had no significant contingent liabilities - As at 30 June 2025, the Group had no significant contingent liabilities (as at 31 December 2024: nil)[77](index=77&type=chunk) [Significant Investments, Acquisitions and Disposals](index=29&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals) The group had no significant acquisitions, disposals, investments, or capital asset plans during the reporting period and up to the announcement date - During the reporting period and up to the date of this announcement, the Group had no significant acquisitions or disposals[78](index=78&type=chunk) - As at the date of this announcement, the Group had no significant investments or plans for capital assets[79](index=79&type=chunk) [Pledge of Assets](index=29&type=section&id=Pledge%20of%20Assets) As of 30 June 2025, the group's utilised bank facilities of approximately RMB 91.1 million were secured by certain inventories, right-of-use assets, and pledged deposits Pledged Assets | Type of Pledged Assets | 30 June 2025 (RMB million) | 31 December 2024 (RMB million) | | :--- | :--- | :--- | | Bank facilities utilised | 91.1 | 97.6 | | Certain inventories | 61.0 | 45.8 | | Net book value of buildings | 0 | 5.0 | | Net book value of right-of-use assets | 8.8 | 8.6 | | Pledged deposits (for bills payable) | 4.3 | 4.5 | | Other pledged deposits | 0 | 1.0 | [Employees and Remuneration Policy](index=30&type=section&id=Employees%20and%20Remuneration%20Policy) As of 30 June 2025, the group had 488 employees, primarily in China, offering competitive remuneration reviewed annually based on performance, with directors' emoluments determined by the Board upon recommendation from the Remuneration Committee Employee Numbers | Indicator | 30 June 2025 | 31 December 2024 | | :--- | :--- | :--- | | Total number of employees | **488 employees** | 526 employees | - The Group offers a competitive remuneration package to its employees, with annual reviews of salary increments, discretionary bonuses, and promotions based on individual performance[81](index=81&type=chunk) - The emoluments of executive directors are reviewed by the Remuneration Committee, and those of independent non-executive directors are determined by the Board based on the Remuneration Committee’s recommendations[81](index=81&type=chunk) [Changes Since 31 December 2024](index=30&type=section&id=Changes%20Since%2031%20December%202024) No other significant changes to the group's financial position or information disclosed in the 2024 annual report, except as stated in this announcement - Save as disclosed in this announcement, there have been no other significant changes to the Group’s financial position or the information disclosed in the “Management Discussion and Analysis” section of the Company’s 2024 annual report[82](index=82&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=30&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended 30 June 2025 and up to the announcement date - During the six months ended 30 June 2025 and up to the date of this announcement, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company’s listed securities[83](index=83&type=chunk) [Corporate Governance and Other Information](index=31&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the company's adherence to corporate governance standards, post-reporting period events, securities trading policies, share option scheme, and other relevant disclosures [Corporate Governance Code](index=31&type=section&id=Corporate%20Governance%20Code) The company complied with all code provisions of the Corporate Governance Code, with a deviation where the Chairman and CEO roles are held by the same person, which the Board believes benefits management and ensures power balance - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules, save for the deviation where both the Chairman and Chief Executive Officer roles are held by Mr. Luo[84](index=84&type=chunk) - The Board believes that vesting the roles of Chairman and Chief Executive Officer in the same person facilitates the Group’s management, and the operations of senior management and the Board ensure a balance of power and authority[84](index=84&type=chunk) [Events After Reporting Period](index=31&type=section&id=Events%20After%20Reporting%20Period) A significant event after the reporting period was the resignation of Ernst & Young as the company's auditor due to fee disagreement, and the appointment of Pacia CPA Limited as the new auditor - Ernst & Young resigned as the Company’s auditor, effective from **27 August 2025**, due to the Company’s inability to reach a consensus with Ernst & Young on the audit fees for the financial period ending **31 December 2025**[85](index=85&type=chunk) - Pacia CPA Limited was appointed as the new auditor of the Company, effective from **27 August 2025**, upon the recommendation of the Company’s audit committee[85](index=85&type=chunk) [Standard Code for Securities Transactions by Directors](index=32&type=section&id=Directors%20進行%20證券交易的標準守則) The company adopted and confirmed compliance with the Standard Code for Securities Transactions by Directors of Listed Issuers during the reporting period - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules[86](index=86&type=chunk) - All Directors of the Company have confirmed their compliance with the required standards set out in the Standard Code throughout the six months ended 30 June 2025[86](index=86&type=chunk) [Share Option Scheme](index=32&type=section&id=購股權計劃) The company's share option scheme, adopted on 16 September 2019, aims to incentivise directors and employees, with 21.8 million options outstanding as of 30 June 2025, representing approximately 4.3% of issued share capital - The Company adopted a share option scheme on **16 September 2019**, aiming to provide any director and full-time employee of any member of the Group with an opportunity to acquire ownership interests in the Company and encourage their contributions to enhance company value[87](index=87&type=chunk) Share Option Movements | Indicator | 1 January 2025 | Granted | Exercised | Lapsed | 30 June 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Number of share options for directors | 12,680,000 | — | 3,000,000 | 2,880,000 | 6,800,000 | | Number of share options for employees | 14,738,000 | 5,500,000 | — | 5,238,000 | 15,000,000 | | **Total** | **27,418,000** | **5,500,000** | **3,000,000** | **8,118,000** | **21,800,000** | - As at 30 June 2025, **21,800,000** share options remained outstanding under the Company’s share option scheme, representing approximately **4.3%** of the Company’s issued share capital as at the date of this announcement[87](index=87&type=chunk) [Review by Audit Committee](index=37&type=section&id=審核委員會之審閱) The Audit Committee reviewed the unaudited interim results for the six months ended 30 June 2025 and confirmed that the financial information and report were prepared in accordance with applicable standards and regulations, with no disagreements - The Audit Committee has reviewed the unaudited interim results for the six months ended 30 June 2025 and discussed them with the Company’s management[95](index=95&type=chunk) - The Audit Committee is of the opinion that the financial information and report have been prepared in accordance with applicable accounting standards, the Listing Rules, and other applicable legal requirements, with adequate disclosures, and the Audit Committee has no disagreement[95](index=95&type=chunk) [Sufficiency of Public Float](index=37&type=section&id=公眾持股量充足) The company maintained the public float required by the Listing Rules, with at least 25% of its total issued shares held by the public - The Company has maintained the public float as required by the Listing Rules, with at least **25%** of the total issued shares of the Company held by the public[96](index=96&type=chunk) [Publication of Interim Results and Interim Report](index=37&type=section&id=刊發中期業績及中期報告) The interim results announcement for the reporting period has been published on the HKEX and company websites, and the interim report will be dispatched to shareholders and published on the same websites in due course - The interim results announcement for the reporting period has been published on the HKEX website (www.hkexnews.hk) and the Company’s website (www.car2000.com.cn)[97](index=97&type=chunk) - The interim report for the reporting period will be dispatched to shareholders in due course according to their chosen method of receiving communications and will be published on the HKEX and the Company’s aforementioned websites[97](index=97&type=chunk) [Acknowledgement](index=37&type=section&id=致謝) The Board extends its sincere gratitude to management, all employees for their dedicated service and contributions, and shareholders for their continuous support to the group - The Board extends its sincere gratitude to the management and all employees for their dedicated service and contributions, and to all shareholders for their continuous support to the Group[98](index=98&type=chunk) [By Order of the Board](index=37&type=section&id=承董事會命) This announcement is issued by Mr. Luo Houjie, Chairman, Executive Director, and Chief Executive Officer, with the Board comprising three executive and three independent non-executive directors as of the announcement date - This announcement is issued by Mr. Luo Houjie, Chairman, Executive Director, and Chief Executive Officer[99](index=99&type=chunk) - As at the date of this announcement, the executive directors are Mr. Luo Houjie, Mr. Chen Huaquan and Ms. Li Huifang; and the independent non-executive directors are Mr. Li Weiqiang, Mr. Li Weining and Ms. Yan Fei[99](index=99&type=chunk)

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) [Financial Summary](index=1&type=section&id=Financial%20Summary) For the six months ended June 30, 2025, the company experienced significant declines in revenue, EBITDA, profit attributable to owners, and earnings per share, reflecting challenging operating conditions | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 118,833 | 165,807 | (28.3) | | EBITDA | 65,883 | 102,569 | (35.8) | | Profit attributable to owners of the Company | 10,823 | 33,621 | (67.8) | | Basic earnings per share (HK cents) | 0.09 | 0.35 | (74.3) | | Diluted earnings per share (HK cents) | 0.09 | 0.29 | (69.0) | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue decreased by 28.3% year-on-year, with profit for the period significantly down by 67.8%, driven by increased impairment provisions despite controlled operating expenses, while foreign exchange differences from overseas operations turned from loss to gain | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 118,833 | 165,807 | (28.3) | | Direct costs | (25,503) | (29,766) | (14.3) | | Other income | 1,486 | 2,016 | (26.3) | | Selling and distribution expenses | (10,564) | (14,306) | (26.1) | | Staff costs | (4,547) | (9,404) | (51.6) | | Depreciation of property, plant and equipment | (14,397) | (17,880) | (19.5) | | Amortization of intangible assets | (9,506) | (12,677) | (25.1) | | Impairment provision for property, plant and equipment | (2,537) | (860) | 195.0 | | Impairment provision for intangible assets | (9,620) | (3,310) | 190.6 | | Finance costs | (11,353) | (20,124) | (43.6) | | Profit for the period | 9,792 | 32,911 | (70.3) | | Profit for the period attributable to owners of the Company | 10,823 | 33,621 | (67.8) | | Exchange differences on overseas operations attributable to owners of the Company | 51,231 | (33,354) | 253.7 | | Total comprehensive income for the period | 61,331 | (660) | 9392.6 | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets slightly increased, with improved current assets and net current liabilities, stable non-current assets, and an overall increase in total equity | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 2,113,031 | 2,089,660 | 1.1 | | Total current assets | 232,554 | 180,875 | 28.6 | | Total assets | 2,345,585 | 2,270,535 | 3.3 | | Total current liabilities | 408,509 | 404,871 | 0.9 | | Net current liabilities | (175,955) | (223,996) | (21.4) | | Total non-current liabilities | 85,362 | 75,281 | 13.4 | | Net assets | 1,851,714 | 1,790,383 | 3.4 | | Equity attributable to owners of the Company | 1,843,405 | 1,781,351 | 3.5 | | Total equity | 1,851,714 | 1,790,383 | 3.4 | [Notes to the Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Basis of Preparation](index=6&type=section&id=Basis%20of%20Preparation) Interim financial statements are prepared under HKAS 34 and Listing Rules using historical cost, with management asserting going concern despite net current liabilities, based on assumptions of shareholder funding, contractor negotiations, fundraising, and cash flow maintenance - Interim financial statements comply with HKAS 34 and Appendix D2 of the Listing Rules, prepared on a historical cost basis[9](index=9&type=chunk)[11](index=11&type=chunk) - As of June 30, 2025, the Group had **net current liabilities of approximately HK$175,955,000**, indicating a material uncertainty regarding going concern[12](index=12&type=chunk) - Management believes the Group has sufficient working capital for the next 12 months, based on assumptions including shareholder financial support, negotiations with contractors, fundraising, and maintaining operating cash flow[13](index=13&type=chunk)[14](index=14&type=chunk) [Adoption of New and Revised HKFRS](index=7&type=section&id=Adoption%20of%20New%20and%20Revised%20HKFRS) During the period, the company adopted all new and revised HKFRS, which did not result in significant changes to accounting policies, financial statement presentation, or reported amounts - The Group has adopted all new and revised HKFRS effective from January 1, 2025[16](index=16&type=chunk) - The application of new standards did not lead to significant changes in accounting policies, financial statement presentation, or reported amounts, and no material impact is expected in the future[16](index=16&type=chunk) [Revenue and Operating Segment Information](index=7&type=section&id=Revenue%20and%20Operating%20Segment%20Information) The Group primarily operates in natural gas exploration, production, and distribution, which is its sole revenue source, but both its revenue and profit significantly declined, while the food and beverage sales and money lending segments generated no revenue and incurred losses - The Group has three reportable operating segments: natural gas exploration, production and distribution; sales of food and beverages; and money lending business[17](index=17&type=chunk)[19](index=19&type=chunk) Reportable Segment Revenue and Profit (For the six months ended June 30) | Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2025 Profit Before Income Tax (HK$ thousand) | 2024 Profit Before Income Tax (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Natural gas exploration, production and distribution | 118,833 | 165,807 | 25,745 | 54,909 | | Sales of food and beverages business | – | – | (2) | (96) | | Money lending business | – | – | (36) | (93) | | **Total** | **118,833** | **165,807** | **25,707** | **54,720** | - All revenue is derived from the China market, primarily from natural gas, with revenue recognized at a point in time[24](index=24&type=chunk) [Other Income](index=10&type=section&id=Other%20Income) For the six months ended June 30, 2025, the company's interest income and other income both decreased | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest income | 17 | 194 | | Others | 1,469 | 1,822 | | **Total** | **1,486** | **2,016** | [Finance Costs](index=10&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, the company's finance costs significantly decreased by 43.6% year-on-year, primarily due to reduced interest on other borrowings and the liability component of convertible bonds | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest on other borrowings | 8,826 | 13,703 | | Interest on lease liabilities | 67 | 129 | | Interest on liability component of convertible bonds | 2,460 | 6,292 | | **Total interest expense** | **11,353** | **20,124** | [Profit Before Income Tax](index=11&type=section&id=Profit%20Before%20Income%20Tax) For the six months ended June 30, 2025, profit before income tax was HK$16,909 thousand, a significant decrease from HK$41,933 thousand in the prior year, primarily due to increased impairment provisions, reduced depreciation and amortization, and lower staff costs Profit Before Income Tax Components (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation of right-of-use assets | 403 | 3,152 | | Depreciation of property, plant and equipment | 14,397 | 17,880 | | Amortization of intangible assets | 9,506 | 12,677 | | Fair value loss on financial assets at fair value through profit or loss | 1,158 | 3,496 | | Impairment provision for property, plant and equipment | 2,537 | 860 | | Impairment provision for intangible assets | 9,620 | 3,310 | | Staff costs (including directors' emoluments) | 4,547 | 9,404 | [Income Tax Expense](index=11&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, income tax expense primarily comprised deferred tax expense of HK$7,117 thousand, with no provision for Hong Kong profits tax or PRC corporate income tax due to non-Hong Kong sourced income and available tax losses | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current tax | – | – | | Deferred tax expense | 7,117 | 9,022 | | **Total tax expense for the period** | **7,117** | **9,022** | - The Group made no provision for Hong Kong profits tax or PRC corporate income tax, as income was not sourced from Hong Kong and unutilized tax losses were available to offset profits[29](index=29&type=chunk) [Dividends](index=11&type=section&id=Dividends) For the six months ended June 30, 2025, the company neither paid nor proposed any dividends, with no further proposals since the reporting period end - For the six months ended June 30, 2025, the company neither paid nor proposed dividends[30](index=30&type=chunk) [Earnings Per Share](index=12&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, both basic and diluted earnings per share were HK$0.09 cents, a significant decrease from the prior year, with diluted EPS matching basic EPS due to the anti-dilutive effect of convertible bonds Basic Earnings Per Share (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to owners of the Company (HK$ thousand) | 10,823 | 33,621 | | Weighted average number of ordinary shares in issue | 12,165,344,000 | 9,593,520,796 | | **Basic earnings per share (HK cents)** | **0.09** | **0.35** | - For the six months ended June 30, 2025, diluted earnings per share were the same as basic earnings per share because the potential ordinary shares from convertible bonds had an anti-dilutive effect[33](index=33&type=chunk) [Property, Plant and Equipment](index=13&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the company added approximately HK$1,823 thousand in property, plant, and equipment, while the Kashgar project recognized an impairment provision of approximately HK$2,357 thousand due to its carrying amount exceeding the recoverable amount - The Group added approximately **HK$1,823 thousand** in property, plant and equipment[34](index=34&type=chunk) - An impairment provision of approximately **HK$2,357 thousand** was recognized for the Kashgar project, as the carrying amount of its cash-generating unit exceeded its recoverable amount[35](index=35&type=chunk) - The pre-tax discount rate used to assess the recoverable amount decreased from **16.8% in 2024 to 15.8% in 2025**[35](index=35&type=chunk) [Exploration and Evaluation Assets](index=13&type=section&id=Exploration%20and%20Evaluation%20Assets) For the six months ended June 30, 2025, the Group neither acquired exploration and evaluation assets nor recognized impairment provisions, as the Kashgar project's cash-generating unit's carrying amount was close to its recoverable amount - The Group neither acquired exploration and evaluation assets nor recognized impairment provisions[36](index=36&type=chunk)[37](index=37&type=chunk) - The recoverable amount of the Kashgar project is based on value in use, determined using discounted cash flow, with a pre-tax discount rate of **15.8%**[37](index=37&type=chunk) [Intangible Assets](index=13&type=section&id=Intangible%20Assets) For the six months ended June 30, 2025, intangible assets amortization was approximately HK$9,506 thousand, with an impairment loss provision of approximately HK$9,620 thousand recognized, primarily due to the Kashgar project's cash-generating unit's carrying amount exceeding its recoverable amount - Intangible assets amortization amounted to approximately **HK$9,506 thousand**, amortized using the unit of production method[38](index=38&type=chunk) - An impairment loss provision of approximately **HK$9,620 thousand** was recognized for intangible assets, a significant increase from the prior year, primarily because the carrying amount of the Kashgar project's cash-generating unit exceeded its recoverable amount[39](index=39&type=chunk) - The recoverable amount of the Kashgar project's cash-generating unit is based on value in use, calculated using discounted cash flow, with a pre-tax discount rate of **15.8%**[39](index=39&type=chunk) [Trade Receivables](index=14&type=section&id=Trade%20Receivables) As of June 30, 2025, total trade receivables increased to HK$146,524 thousand from December 31, 2024, with all receivables within three months, neither overdue nor impaired, and most pledged as collateral for other borrowings | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 3 months | 146,524 | 116,251 | - Approximately **HK$145,420 thousand** of trade receivables were pledged as collateral for other borrowings[40](index=40&type=chunk) [Other Payables and Accruals](index=14&type=section&id=Other%20Payables%20and%20Accruals) As of June 30, 2025, total other payables and accruals increased to HK$123,792 thousand from December 31, 2024, primarily comprising payables for property, plant, and equipment/exploration and evaluation costs, and advances from China National Petroleum Corporation | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Payables for property, plant and equipment/exploration and evaluation costs | 71,591 | 66,181 | | Other payables and accruals | 52,201 | 43,439 | | **Total** | **123,792** | **109,620** | - Other payables and accruals primarily refer to amounts payable to subcontractors for exploration, evaluation, and development work, and advances from China National Petroleum Corporation[42](index=42&type=chunk) [Amounts Due to a Shareholder](index=14&type=section&id=Amounts%20Due%20to%20a%20Shareholder) Amounts due to a shareholder are unsecured, interest-free, and repayable on demand - Amounts due to a shareholder are unsecured, interest-free, and repayable on demand[43](index=43&type=chunk) [Other Borrowings](index=15&type=section&id=Other%20Borrowings) As of June 30, 2025, total other borrowings slightly decreased to HK$251,272 thousand from December 31, 2024, with a significant reduction in secured borrowings offset by an increase in unsecured borrowings, where secured borrowings are collateralized by trade receivables and natural gas revenue sharing/sales rights | Type | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Secured other borrowings | 123,120 | 203,700 | | Unsecured other borrowings | 128,152 | 58,108 | | **Total** | **251,272** | **261,808** | - Secured other borrowings are denominated in RMB, bear an annual interest rate of **8.5%**, and are collateralized by the Group's trade receivables, natural gas sharing amounts, and sales revenue rights under product sharing and sales agreements[44](index=44&type=chunk) - Unsecured other borrowings are denominated in HKD and RMB, bear an annual interest rate of **5%**, and are repayable within one year[45](index=45&type=chunk) [Convertible Bonds](index=15&type=section&id=Convertible%20Bonds) As of June 30, 2025, the liability component of convertible bonds increased to HK$47,923 thousand due to interest expense, with no conversions occurring during the period, and the outstanding principal amount remaining at HK$232,790 thousand | Item | Liability Component (HK$ thousand) | Equity Component (HK$ thousand) | | :--- | :--- | :--- | | December 31, 2024 and January 1, 2025 | 45,463 | 238,324 | | Interest expense | 2,460 | – | | **June 30, 2025** | **47,923** | **238,324** | - For the six months ended June 30, 2025, there were **no conversions of convertible bonds**[46](index=46&type=chunk) - As of June 30, 2025, the outstanding principal amount of convertible bonds was **HK$232,790 thousand**, maturing thirty years from the issue date[47](index=47&type=chunk) [Share Capital](index=16&type=section&id=Share%20Capital) As of June 30, 2025, the company's authorized and issued and fully paid share capital remained unchanged, with a par value of HK$0.05 per share | Item | Number of Shares | Amount (HK$ thousand) | | :--- | :--- | :--- | | Authorized share capital (HK$0.05 par value per share) | 25,000,000,000 | 1,250,000 | | Issued and fully paid share capital (HK$0.05 par value per share) | 12,165,344,000 | 608,267 | [Related Party Transactions](index=16&type=section&id=Related%20Party%20Transactions) For the six months ended June 30, 2025, key management personnel remuneration from related parties was zero, a significant decrease from the prior year | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Directors - Short-term employee benefits | – | 530 | | Directors - Bonuses | – | 685 | | **Total key management personnel remuneration** | **–** | **1,215** | [Subsequent Events](index=17&type=section&id=Subsequent%20Events) On August 14, 2025, the company proposed a capital reorganization, including share consolidation, reduction of issued share capital, and subdivision of unissued shares, followed by a rights issue to raise approximately HK$238.7 million for operations and facility development, with these events not yet effective as of the announcement date - The company proposed a capital reorganization, including share consolidation (40 shares into 1), reduction of issued share capital (par value reduced from HK$2.00 to HK$0.05 per share), and subdivision of unissued shares within the authorized share capital[50](index=50&type=chunk) - Subject to the capital reorganization becoming effective, the Board proposed a rights issue to raise approximately **HK$238.7 million**, offering 1 rights share for every 2 adjusted shares held at a subscription price of **HK$1.57 per share**, to fund further operations and facility development[52](index=52&type=chunk) - The capital reorganization, amendments to the Articles of Association, and the rights issue were not yet effective as of the announcement date[51](index=51&type=chunk)[52](index=52&type=chunk) [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) [Company Profile](index=18&type=section&id=Company%20Profile) China Energy Development Holdings Limited primarily engages in investment holding, with subsidiaries operating in oil and gas exploration, natural gas distribution, food and beverage sales, and money lending, focusing on the Kashgar project (oil and gas exploration, development, and production) and the Karamay project (natural gas pipeline transportation and sales) in Xinjiang, China - The company's main business is investment holding, with subsidiaries engaged in oil and gas exploration, natural gas distribution, food and beverage sales, and money lending businesses[53](index=53&type=chunk) - The Group has two main projects: the Kashgar project (oil and natural gas exploration, development, and production) and the Karamay project (natural gas pipeline transportation and sales), both located in Xinjiang, China[53](index=53&type=chunk)[54](index=54&type=chunk) [Business Review](index=18&type=section&id=Business%20Review) In the first half of 2025, China's deteriorating economic conditions challenged the company's operations, with volatile natural gas market demand leading to significant declines in revenue and profit for the natural gas exploration, production, and distribution segment, while food and beverage sales and money lending segments recorded no revenue and continued losses - In the first half of 2025, China's economic situation continued to deteriorate, posing challenges to the domestic business environment, with significant fluctuations in natural gas market demand[55](index=55&type=chunk) - The natural gas exploration, production and distribution segment recorded revenue of approximately **HK$118,833 thousand** (a year-on-year decrease of **28.3%**) and profit before income tax of approximately **HK$25,746 thousand** (a year-on-year decrease of **53.1%**)[58](index=58&type=chunk) - The sales of food and beverages business and money lending business segments recorded no revenue, incurring segment losses before tax expenses of **HK$2 thousand** and **HK$36 thousand**, respectively[59](index=59&type=chunk)[60](index=60&type=chunk) [Operating Results](index=20&type=section&id=Operating%20Results) During the period, the company's revenue decreased by 28.3% year-on-year, primarily due to water invasion in the Kashgar gas field and reduced demand in the Karamay project, with EBITDA also down by 35.8%, and significant increases in impairment provisions for property, plant, and equipment and intangible assets leading to a 67.8% reduction in profit attributable to owners - The Group's revenue decreased by **28.3%** year-on-year to **HK$118,833 thousand**, mainly due to water invasion in the Kashgar project's gas field and reduced demand for natural gas pipeline transportation and sales in the Karamay project[61](index=61&type=chunk)[62](index=62&type=chunk) - EBITDA decreased by **35.8%** to **HK$65,883 thousand**, consistent with the trend of declining revenue[62](index=62&type=chunk) - Impairment provision for property, plant and equipment increased by **195%** to **HK$2,537 thousand**, and for intangible assets by **190.6%** to **HK$9,620 thousand**, primarily due to a reduced difference between the recoverable amount and carrying amount of the Kashgar project's cash-generating unit[63](index=63&type=chunk)[64](index=64&type=chunk) - Profit attributable to owners of the Company decreased by **67.8%** to **HK$10,823 thousand**, mainly impacted by reduced revenue and increased impairment provisions, partially offset by lower other expenses[66](index=66&type=chunk) - EBITDA margin decreased by **6.5%** to **55.4%**, and net profit margin decreased by **11.2%** to **9.1%**[67](index=67&type=chunk) - The depreciation of RMB against HKD improved, leading to foreign exchange differences from overseas operations turning from a loss of **HK$33,354 thousand** to a gain of **HK$51,231 thousand**[68](index=68&type=chunk) [Natural Gas Business Analysis](index=22&type=section&id=Natural%20Gas%20Business%20Analysis) Operating results for the natural gas exploration, production, and distribution segment show significant declines in both revenue and operating profit, with no exploration and evaluation costs incurred during the period Natural Gas Segment Operating Results (For the six months ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 118,833 | 165,807 | | Direct costs | (25,503) | (29,766) | | Operating expenses | (13,923) | (17,896) | | Amortization | (9,506) | (12,677) | | Depreciation | (14,023) | (20,253) | | Impairment provision | (12,157) | (4,170) | | Finance costs | (8,893) | (13,831) | | **Operating profit before income tax expense** | **25,745** | **54,909** | - For the six months ended June 30, 2025, the Group incurred no exploration and evaluation costs[72](index=72&type=chunk) [Fair Value of Financial Assets at FVTPL](index=23&type=section&id=Fair%20Value%20of%20Financial%20Assets%20at%20FVTPL) As of June 30, 2025, the fair value of financial assets at FVTPL decreased by 7.8% year-on-year to HK$13,618 thousand, primarily due to a weak stock market sentiment caused by slow economic recovery - The fair value of financial assets at fair value through profit or loss decreased by approximately **HK$1,158 thousand** or **7.8%** year-on-year to approximately **HK$13,618 thousand**[73](index=73&type=chunk) - This decrease was primarily due to weak stock market sentiment affected by slow economic recovery[73](index=73&type=chunk) [Other Payables and Accruals (Operating Results)](index=23&type=section&id=Other%20Payables%20and%20Accruals%20(Operating%20Results)) Other payables and accruals increased by 12.9% year-on-year to HK$123,792 thousand, primarily due to increased settlements with contractors during the period - Other payables and accruals increased by approximately **HK$14,172 thousand** or **12.9%** year-on-year to approximately **HK$123,792 thousand**[74](index=74&type=chunk) - The increase was mainly due to increased settlements with contractors during the period[74](index=74&type=chunk) [Other Borrowings (Operating Results)](index=23&type=section&id=Other%20Borrowings%20(Operating%20Results)) Total other borrowings amounted to HK$251,272 thousand, with a decrease in secured borrowings and an increase in unsecured borrowings, and all outstanding secured other borrowings were settled as of July 18, 2025 - Other borrowings of approximately **HK$251,272 thousand** are repayable by June 30, 2026[75](index=75&type=chunk) - As of July 18, 2025, the outstanding secured other borrowings were fully settled[76](index=76&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=24&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2025, the Group's cash and bank balances increased, and the current ratio improved, while the total liabilities to total assets ratio remained stable, and the outstanding principal amount of convertible bonds was unchanged Liquidity and Financial Resources (As of June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Other borrowings (secured) | 123,120 | 203,760 | | Other borrowings (unsecured) | 128,152 | 58,108 | | Cash and cash equivalents | 57,272 | 34,346 | | Current ratio | 56.9% | 44.7% | | Total liabilities to total assets ratio | 21.1% | 21.1% | - The outstanding principal amount of convertible bonds was **HK$232,790 thousand**, with no conversions occurring during the period[78](index=78&type=chunk) [Outlook](index=24&type=section&id=Outlook) The company will continue to advance natural gas exploration and development, optimize the Kashgar North project, and address water invasion issues, while management seeks additional financing for project development, and the food and beverage and money lending businesses will maintain prudent and conservative strategies - As natural gas remains a key transitional energy source, the company will continue to promote oil and gas exploration and development, optimize the Kashgar North project, and implement remedial measures for water invasion in gas well areas[79](index=79&type=chunk)[82](index=82&type=chunk) - Company management will continue to follow up with potential lenders and investors to seek additional debt and/or equity financing for further project development[82](index=82&type=chunk) - The sales of food and beverages business and money lending business will continue to adopt prudent management and conservative approaches, evaluating value and performance, and seeking high-quality borrowers to mitigate risks[84](index=84&type=chunk)[85](index=85&type=chunk) [Financial Risk Management](index=26&type=section&id=Financial%20Risk%20Management) The Group adopts prudent cash management and risk monitoring policies to minimize foreign currency exchange rate and interest rate fluctuation risks, with cash primarily denominated in HKD, USD, and RMB, and bank financing obtained at stable rates, with no foreign exchange hedging transactions during the period - The Group adopts prudent cash management and risk monitoring policies aimed at minimizing foreign currency exchange rate and interest rate fluctuation risks[86](index=86&type=chunk) - Cash is generally held in short-term deposits denominated in HKD, USD, and RMB, and bank financing is obtained at stable interest rates[86](index=86&type=chunk) - During the review period, the Group did not enter into any hedging transactions related to foreign exchange[86](index=86&type=chunk) [Major Investments](index=26&type=section&id=Major%20Investments) As of June 30, 2025, the Group held no major investments other than financial assets at fair value through profit or loss - As of June 30, 2025, the Group held no major investments other than financial assets at fair value through profit or loss (approximately **HK$13,618 thousand**)[87](index=87&type=chunk) [Major Acquisitions and Disposals](index=26&type=section&id=Major%20Acquisitions%20and%20Disposals) For the six months ended June 30, 2025, the Group had no major acquisitions or disposals - The Group had no major acquisitions or disposals during the six months ended June 30, 2025[88](index=88&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=26&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[89](index=89&type=chunk) [Asset Pledges](index=26&type=section&id=Asset%20Pledges) As of June 30, 2025, trade receivables and natural gas revenue sharing/sales rights were pledged as collateral for other borrowings, and post-reporting period, these pledges were released upon settlement of outstanding secured other borrowings - As of June 30, 2025, trade receivables (approximately **HK$146,524 thousand**) were pledged as collateral for other borrowings[90](index=90&type=chunk) - Rights to natural gas sharing amounts and sales revenue were also pledged as collateral for other borrowings[90](index=90&type=chunk) - The pledges for secured other borrowings were released on July 24, 2025, as the outstanding secured other borrowings were settled on July 18, 2025[90](index=90&type=chunk) [Foreign Exchange Risk](index=27&type=section&id=Foreign%20Exchange%20Risk) The Group primarily faces exchange rate risks from HKD and RMB fluctuations, with a policy for operating entities to transact in local currencies to mitigate risk, and while no derivative contracts were entered into for hedging during the period, management will monitor and consider hedging as necessary - The Group's exchange rate risk primarily arises from fluctuations in HKD and RMB exchange rates[91](index=91&type=chunk) - The Group's policy is for operating entities to conduct business in their respective local currencies to mitigate currency risk[91](index=91&type=chunk) - During the review period, the Group did not enter into any derivative contracts to reduce exchange rate risk, but management will closely monitor and consider hedging significant foreign currency risks as necessary[91](index=91&type=chunk) [Capital Commitments](index=27&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had capital expenditure commitments of approximately HK$418 thousand in the natural gas exploration, production, and distribution segment, and capital commitments of approximately HK$111,228 thousand for capital injection into a subsidiary | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Capital expenditure commitments for natural gas exploration, production and distribution segment | 418 | 1,708 | | Capital injection into a subsidiary | 111,228 | 111,300 | [Contingent Liabilities](index=27&type=section&id=Contingent%20Liabilities) As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities[93](index=93&type=chunk) [Employees and Remuneration Policy](index=27&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group's total headcount decreased to 50 employees, with a significant year-on-year reduction in staff costs, and the company remunerates based on performance, experience, and industry practice, with annual review of compensation policies - As of June 30, 2025, the Group employed a total of **50 staff** (December 31, 2024: 54 staff)[94](index=94&type=chunk) - Staff costs (including directors' emoluments) for the year ended June 30, 2025, totaled approximately **HK$4,547 thousand** (June 30, 2024: approximately HK$9,404 thousand), representing a significant year-on-year decrease[94](index=94&type=chunk) - The company remunerates employees based on performance, experience, and industry practice, with compensation policies for management and department heads reviewed annually[94](index=94&type=chunk) [Interim Dividend](index=27&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[95](index=95&type=chunk) [Other Information](index=28&type=section&id=Other%20Information) [Subsequent Events (Other Information)](index=28&type=section&id=Subsequent%20Events%20(Other%20Information)) Other than the capital reorganization and rights issue proposals disclosed in Note 20, there were no other significant events subsequent to the reporting period and up to the date of this announcement - Other than those disclosed in Note 20 of this announcement, there were no significant events subsequent to the reporting period and up to the date of this announcement[96](index=96&type=chunk) [Changes in Directors' and Senior Management's Information](index=28&type=section&id=Changes%20in%20Directors'%20and%20Senior%20Management's%20Information) During the period, Mr. Liu Wenxuan was appointed Deputy General Manager of Xinjiang Xintai Natural Gas Co., Ltd., Chairman of Xinjiang Mingxin Oil & Gas Exploration and Development Co., Ltd., and Chairman of China Era Energy Investment (Hong Kong) Co., Ltd., while Mr. Li Wentai previously served as an independent non-executive director of Yunhong Silicon Xin Group Holdings Limited - Mr. Liu Wenxuan was appointed Deputy General Manager of Xinjiang Xintai Natural Gas Co., Ltd., Chairman of Xinjiang Mingxin Oil & Gas Exploration and Development Co., Ltd., and Chairman of China Era Energy Investment (Hong Kong) Co., Ltd. since July 2024[97](index=97&type=chunk) - Mr. Li Wentai served as an independent non-executive director of Yunhong Silicon Xin Group Holdings Limited from June 2021 to November 2024[97](index=97&type=chunk) [Corporate Governance Practices](index=29&type=section&id=Corporate%20Governance%20Practices) The Group is committed to maintaining good corporate governance standards but has several deviations from the Corporate Governance Code, including non-segregation of Chairman and CEO roles, Chairman's absence from AGMs, non-fixed term director appointments, less than quarterly board meetings, and lack of internal audit function, though measures have been taken to address some deviations, including appointing a female independent non-executive director to enhance board diversity - The Group deviates from Corporate Governance Code Provision C.2.1, as the roles of Chairman and Chief Executive Officer are held by the same person (Mr. Liu Wenxuan)[99](index=99&type=chunk) - The Group deviates from Corporate Governance Code Provision C.2.2, as the Chairman did not attend the Annual General Meeting[99](index=99&type=chunk) - The Group deviates from Corporate Governance Code Provision B.2.2, as independent non-executive directors are not appointed for a specific term but are subject to retirement by rotation under the Articles of Association[100](index=100&type=chunk) - The Group deviates from Corporate Governance Code Provision C.5.1, as regular Board meetings are held only semi-annually, and management accounts are not distributed monthly[100](index=100&type=chunk) - The Group deviates from Corporate Governance Code Provision D.2.5, as it has no internal audit function due to its operational nature, size, scale, and cost control measures[100](index=100&type=chunk) - The Board has appointed Ms. Qian Yingying as an independent non-executive director to enhance the diversity of Board members[101](index=101&type=chunk) [Standard Code for Securities Transactions by Directors](index=31&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) For the six months ended June 30, 2025, all directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules - For the six months ended June 30, 2025, all directors confirmed compliance with the required standards set out in the Model Code[102](index=102&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Audit Committee comprises two non-executive directors and three independent non-executive directors, with three members holding professional accounting qualifications, and has reviewed the unaudited consolidated financial statements for the period, deeming them compliant with applicable accounting standards and disclosure requirements - The Audit Committee consists of two non-executive directors and three independent non-executive directors[103](index=103&type=chunk) - Three Audit Committee members (Mr. Li Wentai, Ms. Qian Yingying, and Mr. Chen Jianxin) hold recognized professional accounting qualifications and possess experience in auditing and accounting[103](index=103&type=chunk) - The Audit Committee has reviewed the Group's unaudited consolidated financial statements for the six months ended June 30, 2025, and considers them to be in compliance with applicable accounting standards, the Listing Rules, and other legal requirements[103](index=103&type=chunk) [Publication of Interim Results and Report](index=32&type=section&id=Publication%20of%20Interim%20Results%20and%20Report) This interim results announcement has been published on the HKEX website and the company's website, and the interim report will be dispatched to shareholders and published on the aforementioned websites - This interim results announcement has been published on the HKEX website (http://www.hkexnews.hk) and the company's website (http://www.cnenergy.com.hk)[104](index=104&type=chunk) [Acknowledgement](index=32&type=section&id=Acknowledgement) The Board, on behalf of the company, extends its gratitude to all employees for their efforts and loyalty during the period - The Board expresses its gratitude to all employees for their efforts and dedication during the period[105](index=105&type=chunk)

[Company Profile](index=3&type=section&id=Company%20Profile) China Isotope & Radiation Corporation, established in 1983, is a leading enterprise in China's isotope and radiation application field with 42 years of experience, focusing on nuclear medicine and radiation applications, forming a "6+N" industrial layout, and serving over 18,000 medical institutions - China Isotope & Radiation Corporation is a leading enterprise in China's isotope and radiation application field, with **42 years of industry experience**, and is a high-tech enterprise with the most comprehensive product range and industrial chain globally in isotopes, their products, and radiation processing[5](index=5&type=chunk)[6](index=6&type=chunk)[8](index=8&type=chunk) - The company's business focuses on two major industrial directions: nuclear medical health and radiation application, forming a "6+N" industrial layout centered on 6 major businesses including nuclides, radiopharmaceuticals, nuclear medical equipment, integrated nuclear medicine solutions, radiation sources and applications, and radiation applications[6](index=6&type=chunk)[8](index=8&type=chunk) - As of June 30, 2025, the company has formed a network of **37 medical centers**, has **8 R&D and production bases**, serves over **18,000 medical institutions**, and serves over **60 million people annually**[9](index=9&type=chunk)[10](index=10&type=chunk) - In recent years, the company has accounted for nearly **70%** of the large Class A radiotherapy equipment approved by the National Health Commission, becoming the leading brand for Class A radiotherapy equipment[9](index=9&type=chunk)[10](index=10&type=chunk) [Company Information](index=5&type=section&id=Company%20Information) This section provides basic company information for China Isotope & Radiation Corporation, including legal name, registered office, and principal place of business, along with key contact details for the board of directors, committees, legal advisors, auditors, and H-share registrar - The company's legal name is China Isotope & Radiation Corporation[12](index=12&type=chunk) - Changes in the board of directors include Mr. Han Yongjiang's resignation as Chairman on July 4, 2025, and Mr. Xiao Yafei's appointment as the new Chairman on July 25, 2025[12](index=12&type=chunk)[13](index=13&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - The Supervisory Committee was dissolved as of June 3, 2025, with all supervisors stepping down[19](index=19&type=chunk)[24](index=24&type=chunk)[292](index=292&type=chunk) [Definitions](index=11&type=section&id=Definitions) This section defines key terms and abbreviations used in the report, covering professional vocabulary related to corporate governance, related parties, financial indicators, and laws and regulations, ensuring clarity and consistency [Highlights](index=15&type=section&id=Highlights) During the reporting period, China Isotope & Radiation Corporation achieved significant progress in various areas, including the full industrial chain integration of carbon-14 isotopes, partial production capability at the North China base, and the entry of Fluorine [18F] Betaprazine Injection into Phase III clinical trials - On May 16, 2025, the first batch of commercial reactor-produced **carbon-14 isotope products** from CNNC Qin Tong was launched, marking the full industrial chain integration of China's carbon-14 isotope from independent R&D and production to market supply[28](index=28&type=chunk)[30](index=30&type=chunk) - On July 3, 2025, some workshops at Atom High-Tech's North China base achieved full production capability, marking an important step in automated radiopharmaceutical production[28](index=28&type=chunk)[31](index=31&type=chunk) - On May 27, 2025, the Phase III clinical trial for **Fluorine [18F] Betaprazine Injection** was initiated, bringing new hope for Alzheimer's disease diagnosis[34](index=34&type=chunk)[36](index=36&type=chunk) - In March 2025, the company successfully signed a contract for the supply of equipment for a **million-Curie design source loading irradiation facility in Bangladesh**, achieving a new breakthrough in overseas irradiation facility projects[35](index=35&type=chunk)[39](index=39&type=chunk) - On March 17, 2025, China Isotope & Radiation Corporation's **CyberKnife** received **19 Class A large medical equipment configuration permits** for 2024, accounting for **68%**[35](index=35&type=chunk)[40](index=40&type=chunk) - In June 2025, China Isotope & Radiation Corporation's **Carbon [14C] Barium Carbonate products** achieved batch export to Europe and America for the first time, establishing sales cooperation with leading enterprises in multiple countries[48](index=48&type=chunk)[50](index=50&type=chunk) - In July 2025, China Isotope & Radiation Corporation was again recognized as a "**Benchmark**" enterprise in the State-owned Assets Supervision and Administration Commission's (SASAC) scientific reform initiative[53](index=53&type=chunk)[56](index=56&type=chunk) [Financial Highlights](index=20&type=section&id=Financial%20Highlights) For the six months ended June 30, 2025, China Isotope & Radiation Corporation achieved revenue of RMB 2,857,764 thousand, a year-on-year increase of 1.7%, with operating profit and profit attributable to equity holders of the company both increasing, and basic earnings per share reaching RMB 0.54 2025 H1 Key Financial Data | Indicator | For the six months ended June 30, 2025 (RMB thousands) | For the six months ended June 30, 2024 (RMB thousands) | Year-on-year change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,857,764 | 2,810,279 | 1.7% | | Gross Profit | 1,459,529 | 1,464,150 | -0.3% | | Operating Profit | 457,569 | 409,429 | 11.8% | | Profit Before Tax | 431,130 | 392,273 | 9.9% | | Profit Attributable to Equity Holders of the Company | 171,994 | 154,496 | 11.3% | | Basic/Diluted Earnings Per Share (RMB) | 0.54 | 0.48 | 12.5% | | Gross Margin | 51.1% | 52.1% | -1.0pp | | Operating Profit Margin | 16.0% | 14.6% | 1.4pp | | Net Profit Margin | 11.9% | 10.9% | 1.0pp | **Balance Sheet (Period End):** | Indicator | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 15,651,793 | 14,767,361 | 6.0% | | Total Liabilities | 7,691,302 | 7,022,766 | 9.5% | | Net Assets | 7,960,491 | 7,744,595 | 2.8% | [Management Discussion and Analysis](index=21&type=section&id=Management%20Discussion%20and%20Analysis) This section details China Isotope & Radiation Corporation's operating performance, business segment development, market expansion, scientific innovation, digital transformation, capital operations, capacity building, ecosystem co-construction, quality and safety management, future development strategies, and key risks for the first half of 2025 - The Group's operating revenue for the first half of 2025 reached **RMB 2,857.8 million**, a year-on-year increase of **1.7%**; net profit was **RMB 341.0 million**, a year-on-year increase of **11.2%**; and net profit attributable to owners of the parent company was **RMB 172.0 million**, a year-on-year increase of **11.3%**[59](index=59&type=chunk)[61](index=61&type=chunk) - The company focuses on two major industrial directions: nuclear medical health and radiation application, forming a "6+N" industrial layout, primarily engaged in the R&D, manufacturing, and sale of nuclides, radiopharmaceuticals, and radiation source products, and providing irradiation sterilization, material modification, and EPC services[58](index=58&type=chunk)[60](index=60&type=chunk) [Business Review](index=21&type=section&id=Business%20Review) As of June 30, 2025, China Isotope & Radiation Corporation operates five business segments, with sustained market expansion efforts in the first half of the year, achieving continuous growth in economic benefits, with operating revenue increasing by 1.7% year-on-year, and net profit and net profit attributable to owners of the parent company both achieving double-digit growth 2025 H1 Key Financial Indicators | Indicator | Amount (RMB millions) | Year-on-year growth (%) | | :--- | :--- | :--- | | Operating Revenue | 2,857.8 | 1.7% | | Net Profit | 341.0 | 11.2% | | Net Profit Attributable to Owners of the Parent Company | 172.0 | 11.3% | [Business Segments](index=22&type=section&id=Business%20Segments) The Group operates five segments: radiopharmaceuticals, radiation source products, irradiation, nuclear medical equipment and related services, and other businesses; radiopharmaceutical revenue declined due to reduced demand and increased competition in the breath test market 2025 H1 Revenue by Business Segment | Business Segment | For the six months ended June 30, 2025 (RMB millions) | Percentage (%) | For the six months ended June 30, 2024 (RMB millions) | Percentage (%) | Year-on-year change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Radiopharmaceuticals | 1,651.6 | 57.8 | 1,767.9 | 62.9 | -6.6% | | Radiation Source Products | 252.0 | 8.8 | 256.9 | 9.1 | -1.9% | | Irradiation | 88.7 | 3.1 | 86.5 | 3.1 | 2.5% | | Nuclear Medical Equipment and Related Services | 247.7 | 8.7 | 273.8 | 9.8 | -9.6% | | Other Businesses | 617.8 | 21.6 | 425.2 | 15.1 | 45.3% | | **Total** | **2,857.8** | **100.0** | **2,810.3** | **100.0** | **1.7%** | [Radiopharmaceuticals](index=22&type=section&id=Radiopharmaceuticals) Radiopharmaceutical business revenue decreased by 6.6% year-on-year, mainly due to reduced market demand and increased competition for breath test products, despite successful expansion in the fluorine drug market - Radiopharmaceutical business revenue was **RMB 1,651.6 million**, a year-on-year decrease of **6.6%**[66](index=66&type=chunk)[68](index=68&type=chunk) - Revenue from diagnostic and therapeutic radiopharmaceuticals was **RMB 847.9 million**, a year-on-year decrease of **1.9%**, with fluorine drug market expansion leading to a **12.8% increase** in revenue, but sodium iodide drug sales were affected by changes in clinical guidelines[66](index=66&type=chunk)[68](index=68&type=chunk) - Breath test revenue was **RMB 786.66 million**, a year-on-year decrease of **11.5%**, primarily due to reduced market demand and increased competition[66](index=66&type=chunk)[68](index=68&type=chunk) - The company launched the "Nuclide Therapy Work Strengthening and Efficiency Improvement Special Action Project" to enhance the level of grassroots nuclide targeted therapy and the influence of nuclear medicine[62](index=62&type=chunk)[64](index=64&type=chunk) [Radiation Source Products](index=24&type=section&id=Radiation%20Source%20Products) Revenue from radiation source products decreased by 1.9% year-on-year, mainly due to the prioritization of industrial radiation sources for internal group use, reducing external sales - Radiation source product revenue was **RMB 252.0 million**, a year-on-year decrease of **1.9%**[70](index=70&type=chunk)[73](index=73&type=chunk) - The decline in revenue was mainly due to the prioritization of industrial radiation sources for internal use by the Group, which reduced external sales[70](index=70&type=chunk)[73](index=73&type=chunk) - Market share for Gamma Knife sources and industrial radiography sources remained stable, and Phase I of the Jiajiang Radiation Source Base project is nearing production[69](index=69&type=chunk)[72](index=72&type=chunk) [Irradiation](index=25&type=section&id=Irradiation) Revenue from irradiation-related businesses increased by 2.5% year-on-year, primarily driven by an increase in irradiation sterilization volume - Irradiation-related business revenue was **RMB 88.7 million**, a year-on-year increase of **2.5%**[74](index=74&type=chunk)[77](index=77&type=chunk) - The increase in revenue was mainly due to a higher volume of irradiation sterilization services compared to the same period last year[74](index=74&type=chunk)[77](index=77&type=chunk) - Tianjin and Yulin irradiation projects are progressing as scheduled, aiming to build comprehensive sterilization service bases[75](index=75&type=chunk)[76](index=76&type=chunk) [Nuclear Medical Equipment and Related Services](index=26&type=section&id=Nuclear%20Medical%20Equipment%20and%20Related%20Services) Revenue from nuclear medical equipment and related services decreased by 9.6% year-on-year; despite the revenue decline, CNNC Accuray's CyberKnife system received 19 Class A large medical equipment configuration permits in 2024, accounting for 68%, demonstrating its leading position in the localization of high-end radiotherapy equipment - Nuclear medical equipment and related services revenue was **RMB 247.7 million**, a year-on-year decrease of **9.6%**[78](index=78&type=chunk)[80](index=80&type=chunk) - CNNC Accuray's X-ray stereotactic radiosurgery system (CyberKnife) received **19 Class A large medical equipment configuration permits** in 2024, accounting for **68%**[78](index=78&type=chunk)[79](index=79&type=chunk) [Other Businesses](index=27&type=section&id=Other%20Businesses) Revenue from trade services and other businesses increased by 45.3% year-on-year, with international business export revenue reaching a new high, growing by 63.4% - Trade services and other businesses revenue was **RMB 617.8 million**, a year-on-year increase of **45.3%**[82](index=82&type=chunk)[84](index=84&type=chunk) - International business export revenue was **RMB 349.5 million**, a year-on-year increase of **63.4%**, setting a new historical record[82](index=82&type=chunk)[84](index=84&type=chunk) - The company again won the bid for the Bangladesh irradiation facility project, helped domestic oil logging sources go global, and achieved the first batch export of domestic medical isotopes to Europe and America[82](index=82&type=chunk)[83](index=83&type=chunk) [Market Expansion](index=28&type=section&id=Market%20Expansion) China Isotope & Radiation Corporation continued to advance brand building and market promotion, participating in multiple important industry conferences and exhibitions to fully showcase its position in the nuclear technology application industry - The Group participated in the 2025 Radioactive Drug Innovation and Development Conference, the first China-Ocean Peace Use of Nuclear Technology Forum, etc., fully demonstrating its industry position[87](index=87&type=chunk)[88](index=88&type=chunk) - The company continued to promote sales model reform, fostering synergistic development of breath test products, radiopharmaceuticals, radiation sources, and radiotherapy equipment businesses[89](index=89&type=chunk)[91](index=91&type=chunk) - In collaboration with the Chinese Society of Nuclear Medicine, the company launched a demonstration project to promote nuclear medicine diagnosis and treatment work, completing the initiation of **5 demonstration projects** in grassroots hospitals during the reporting period[89](index=89&type=chunk)[91](index=91&type=chunk) [International Business](index=29&type=section&id=International%20Business) During the reporting period, China Isotope & Radiation Corporation actively expanded its international market, exporting products to dozens of countries and regions, achieving export revenue of RMB 349.5 million, a year-on-year increase of 63.4% - The Group exported products to dozens of countries and regions including Brazil, Peru, and Nigeria, achieving export revenue of **RMB 349.5 million**[90](index=90&type=chunk)[92](index=92&type=chunk) - Export revenue increased by **63.4%** year-on-year, with multiple breakthroughs in international business, including re-signing the Bangladesh irradiation facility project, repeat purchases of cold kits, and new registrations for breath diagnostic products in Saudi Arabia and Niger[90](index=90&type=chunk)[93](index=93&type=chunk) - The company actively promoted its role as an IAEA Collaborating Centre, assisted the Ministry of Commerce in organizing foreign aid training, and hosted the IAEA Conference on Radiation Science and Technology, enhancing its international influence[94](index=94&type=chunk)[97](index=97&type=chunk) [Scientific Research and Innovation](index=30&type=section&id=Scientific%20Research%20and%20Innovation) China Isotope & Radiation Corporation achieved significant results in scientific research and innovation, with a substantial increase in patent applications and grants, continuously strengthening its technological capabilities - As of June 30, 2025, the Group held **1,054 valid patents**, including **224 invention patents**, with **74 patent applications** and **106 patent grants** during the reporting period[96](index=96&type=chunk)[99](index=99&type=chunk) - Multiple diagnostic and therapeutic radiopharmaceuticals are in various clinical trial stages, including Fluorine [18F] Betaprazine Injection initiating Phase III clinical trials, and Iodine [131I]-MIBG Injection, Fluorine [18F] Fluciclovine Injection, etc., undergoing Phase III clinical trials[95](index=95&type=chunk)[98](index=98&type=chunk) - The Group's first batch of commercial reactor-produced carbon-14 isotope products was launched, achieving full industrial chain integration; the production technology for carrier-free Lutetium-177 nuclide was introduced from ITM Group, establishing the first domestic production line with an annual capacity of **ten thousand Curies**[109](index=109&type=chunk)[111](index=111&type=chunk) - The independently developed Gamma Beam Stereotactic Radiosurgery System (Gamma Knife) received its medical device registration certificate on July 5, 2024, offering advantages of more precise, intelligent, and efficient treatment[110](index=110&type=chunk)[112](index=112&type=chunk) [Patents and Awards](index=30&type=section&id=Patents%20and%20Awards) During the reporting period, the company achieved significant results in intellectual property work, applying for 74 patents, obtaining 106 authorizations, and accumulating a total of 1,054 valid patents - During the reporting period, the Group applied for **74 patents** and obtained **106 patent grants**[96](index=96&type=chunk)[99](index=99&type=chunk) - As of June 30, 2025, the Group owned **1,054 valid patents**, including **224 invention patents**[96](index=96&type=chunk)[99](index=99&type=chunk) - During the reporting period, **7 trademarks** were registered, **9 copyrights** were registered, **1 national standard** and **2 national pharmacopoeia standards** were issued, and **2 national standards** are under compilation[96](index=96&type=chunk)[99](index=99&type=chunk) [Diagnostic Drugs](index=31&type=section&id=Diagnostic%20Drugs) The company made progress in the R&D of diagnostic drugs for tumors and neurodegenerative diseases, with patient enrollment for Phase III clinical trials of Iodine [131I] Metaiodobenzylguanidine Injection and Technetium [99mTc] Sulfur Colloid completed, and other drugs in Phase III trials - Patient enrollment for Phase III clinical trials of **Iodine [131I] Metaiodobenzylguanidine Injection** for pheochromocytoma diagnosis has been completed[101](index=101&type=chunk) - Phase III clinical trials for **Fluorine [18F] Fluciclovine Injection** for prostate cancer diagnosis are underway, expected to fill a domestic gap[101](index=101&type=chunk) - Patient enrollment for Phase III clinical trials of **Technetium [99mTc] Sulfur Colloid** for breast cancer sentinel lymph node imaging has been completed[102](index=102&type=chunk) - Phase I clinical trials for Alzheimer's disease (AD) diagnostic drug **Fluorine [18F] Betaprazine Injection** have been completed, and Phase III clinical trials have been initiated[104](index=104&type=chunk) - Phase III clinical trials for Parkinson's disease diagnostic drug **6-[18F] Fluoro-L-Dopa Injection** are underway, which will fill a domestic PET Parkinson's drug gap[104](index=104&type=chunk) [Theranostic Drugs](index=34&type=section&id=Theranostic%20Drugs) The company made progress in theranostic drugs for neuroendocrine tumors, with Gallium [68Ga] DOTATATE Injection and Lutetium [177Lu] Oxo-octreotide Injection currently undergoing Phase III clinical trials, expected to significantly improve diagnosis and treatment efficiency upon market launch - **Gallium [68Ga] DOTATATE Injection** and **Lutetium [177Lu] Oxo-octreotide Injection** are undergoing Phase III clinical trials, expected to significantly improve the diagnosis and treatment efficiency for neuroendocrine tumor patients[105](index=105&type=chunk)[107](index=107&type=chunk) [Oncology Therapeutic Drugs](index=34&type=section&id=Oncology%20Therapeutic%20Drugs) Palladium [103Pd] sealed seed source, an implantable product for brachytherapy, has completed all preclinical research, suitable for permanent implantation therapy for various solid tumors - **Palladium [103Pd] sealed seed source** has completed all preclinical research, suitable for brachytherapy of prostate cancer, pancreatic cancer, lung cancer, and other solid tumors[106](index=106&type=chunk)[108](index=108&type=chunk) [Nuclides](index=35&type=section&id=Nuclides) The Group successfully launched the first batch of commercial reactor-produced carbon-14 isotope products, achieving full industrial chain integration, and introduced carrier-free Lutetium-177 nuclide production technology, establishing the first domestic production line with an annual capacity of ten thousand Curies - The first batch of commercial reactor-produced **carbon-14 isotope products** was launched, achieving full industrial chain integration of China's carbon-14 isotope[109](index=109&type=chunk)[111](index=111&type=chunk) - The production technology for carrier-free **Lutetium-177 nuclide** was introduced from ITM Group, establishing the first domestic production line with an annual capacity of **ten thousand Curies**, with product indicators meeting European Pharmacopoeia requirements and GMP-grade production and supply capabilities[109](index=109&type=chunk)[111](index=111&type=chunk) [Nuclear Medical Equipment](index=35&type=section&id=Nuclear%20Medical%20Equipment) The Group's independently developed Gamma Beam Stereotactic Radiosurgery System (Gamma Knife) received its medical device registration certificate on July 5, 2024, offering advanced features for precise, intelligent, and efficient cancer treatment - The independently developed **Gamma Beam Stereotactic Radiosurgery System (Gamma Knife)** successfully received its medical device registration certificate on July 5, 2024[110](index=110&type=chunk)[112](index=112&type=chunk) - The Gamma Knife features kV cone-beam CT image guidance, sub-millimeter automatic correction with a six-dimensional couch, high dose rate, and AI-driven automatic organ contouring, enabling more precise, intelligent, and shorter single-treatment times[110](index=110&type=chunk)[112](index=112&type=chunk) [R&D Platforms](index=36&type=section&id=R%26D%20Platforms) China Isotope & Radiation Corporation possesses a comprehensive internal and external R&D platform system, including multiple external platforms and internal R&D centers, actively collaborating with top research institutions and universities, and strengthening high-level talent development with 670 R&D personnel - The Group owns external R&D platforms such as the IAEA Collaborating Centre for Radiopharmaceuticals and Radiation Sources, and the National Atomic Energy Agency Nuclear Technology (Radiopharmaceutical Engineering Transformation) R&D Center[113](index=113&type=chunk)[114](index=114&type=chunk) - Internal R&D centers include the Radiopharmaceutical R&D Center, Stable Isotope and Breath Test Technology R&D Center, Radiation Source and Application R&D Center, and Radiation Application Technology R&D Center[115](index=115&type=chunk)[117](index=117&type=chunk) - The company actively establishes scientific research cooperation with leading domestic research institutes, universities, and hospitals such as the National Institute of Metrology, Shanghai Institute of Materia Medica, Beijing Normal University, and Peking Union Medical College Hospital, and has **670 R&D personnel**[115](index=115&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Digital Transformation](index=38&type=section&id=Digital%20Transformation) China Isotope & Radiation Corporation actively promotes digital transformation, researching overall solutions and ensuring project organization and resource allocation, while exploring AI+nuclear technology applications and accelerating industrial digitalization - The Group actively promotes digital transformation, researching overall solutions and ensuring project organization and resource allocation[119](index=119&type=chunk)[120](index=120&type=chunk) - Promoting the "Nuclear Smart Hub" ERP system, completing business standard dissemination and difference identification analysis, and entering the solution adaptation phase[119](index=119&type=chunk)[120](index=120&type=chunk) - Actively exploring new scenarios for AI+nuclear technology applications, conducting research and project initiation for AI applications in scientific innovation fields such as radiopharmaceutical R&D[119](index=119&type=chunk)[120](index=120&type=chunk) - Accelerating industrial digitalization, conducting self-assessment of smart manufacturing maturity, advancing the construction of isotope-related smart factories, and building a digital platform for production quality[119](index=119&type=chunk)[120](index=120&type=chunk) [Capital Operations](index=39&type=section&id=Capital%20Operations) During the reporting period, China Isotope & Radiation Corporation did not add new external equity investment projects, while its innovation industry investment fund, with a paid-in capital balance of RMB 410 million, introduced new investors and primarily invests in nuclear technology applications - During the reporting period, the Group had no new external equity investment projects[121](index=121&type=chunk)[123](index=123&type=chunk) - As of June 30, 2025, the company's paid-in capital balance in the CIRC Innovation Industry Investment Fund was **RMB 410 million**, accounting for **45.08%**[121](index=121&type=chunk)[124](index=124&type=chunk) - The CIRC Fund introduced the National Military-Civilian Integration Industry Investment Fund and the Beijing Daxing Development Guidance Fund, enhancing its capital advantages, primarily investing in nuclear technology application fields, with some invested enterprises planning independent listings[122](index=122&type=chunk)[125](index=125&type=chunk) [Production Capacity and Base Construction](index=40&type=section&id=Production%20Capacity%20and%20Base%20Construction) To meet the demand for radiopharmaceuticals, China Isotope & Radiation Corporation accelerated the national layout of medical centers and base construction, enhancing production capacity, with key projects like the North China, East China, and South China medical bases, and the Jiajiang Radiation Source Base, progressing steadily - The national network layout of medical centers continues to expand, with **29 operating centers** accumulated, including the completion and production of Technetium drug production lines in Guiyang and Urumqi[126](index=126&type=chunk)[128](index=128&type=chunk) - Phase I hot testing of some production lines at the North China Medical Base has been completed, equipment installation at the East China Medical Base project has been completed, and the South China Base has initially completed the adjustment plan for its project proposal[126](index=126&type=chunk)[128](index=128&type=chunk) - Phase II of the High-Enrichment 13CO Gas Enrichment Construction Project has completed preliminary feasibility studies; once completed, it will become the first **ton-level** high-enrichment 13CO gas production base in China[129](index=129&type=chunk)[130](index=130&type=chunk) - Phase I of the Jiajiang Radiation Source R&D and Production Base project passed the review by the National Nuclear Safety Expert Committee, and the Qinshan Isotope Production Base project completed hot testing for carbon-14 and strontium-89[129](index=129&type=chunk)[130](index=130&type=chunk) - The Tianjin Irradiation Project officially commenced construction, and the Zhangjiagang Gamma Irradiation Facility Renovation Project significantly improved production efficiency, capacity, and product quality[129](index=129&type=chunk)[130](index=130&type=chunk) [Co-building a Nuclear Medicine Development Ecosystem](index=42&type=section&id=Co-building%20a%20Nuclear%20Medicine%20Development%20Ecosystem) China Isotope & Radiation Corporation assisted 13 hospitals in the Western Sichuan region in forming a nuclide therapy alliance, creating a nuclide therapy network covering 20 million people, promoting regional coordinated development, and deepening strategic cooperation with the Chinese Society of Nuclear Medicine - The Group assisted **13 hospitals** in the Western Sichuan region in forming a nuclide therapy alliance, creating a nuclide therapy network covering **20 million people**, promoting regional disciplinary development from "single-point breakthroughs" to "regional coordination"[131](index=131&type=chunk)[133](index=133&type=chunk) - Deepening strategic cooperation with the Chinese Society of Nuclear Medicine, jointly promoting the construction of national nuclear medicine diagnosis and treatment demonstration bases; as of June 2025, **7 demonstration projects** have been initiated[132](index=132&type=chunk)[134](index=134&type=chunk) - Actively promoting the application of the "Fuzhi 1.0" smart nuclear medicine system and initiating the R&D of "Fuzhi 2.0," aiming to achieve inter-hospital connectivity and multi-center integrated diagnosis and treatment[135](index=135&type=chunk)[136](index=136&type=chunk) [Quality and Safety](index=44&type=section&id=Quality%20and%20Safety) In the first half of 2025, China Isotope & Radiation Corporation focused on "Year of Excellence" to comprehensively advance quality work, achieve quality objectives, and continuously carry out special actions to enhance the effectiveness of quality systems at medical centers, while maintaining a strong safety record - Quality objectives were met in the first half of the year, with the quality system fully established ahead of schedule and maintained in dynamic balance; special actions to enhance the effectiveness of quality systems at medical centers continued[137](index=137&type=chunk)[138](index=138&type=chunk) - No production safety or environmental accidents occurred from January to June; the three-year special action for fundamental safety production improvement was thoroughly implemented[139](index=139&type=chunk)[140](index=140&type=chunk) - A "full-scope, full-process, full-lifecycle" radiation safety management system was established, achieving steady improvement in safety management levels[139](index=139&type=chunk)[140](index=140&type=chunk) - In the first half of the year, **8 member units** successfully passed on-site assessments for safety production standardization, effectively enhancing enterprise safety production management[139](index=139&type=chunk)[140](index=140&type=chunk) [Future Development](index=46&type=section&id=Future%20Development) In the second half of 2025, China Isotope & Radiation Corporation will focus on high-quality stable growth, scientific innovation, market expansion, capacity building, and governance efficiency improvement, aiming to accelerate key product growth, international market expansion, and R&D progress - In the second half of the year, the focus will be on high-quality stable growth, expanding effective investment, accelerating the reservation of high-quality projects, and intensifying market breakthroughs to achieve stable growth in key products such as isotopes and their products, and nuclear medical equipment[141](index=141&type=chunk)[142](index=142&type=chunk) - Vigorously promoting scientific innovation, establishing a market-oriented scientific innovation system, advancing key R&D projects to achieve milestone progress, and accelerating clinical trials for **8 radiopharmaceuticals**[141](index=141&type=chunk)[143](index=143&type=chunk) - Strengthening market expansion, optimizing the distributor model, focusing on South America, Southeast Asia, the Middle East, North Africa, and countries along the "Belt and Road" to promote large-scale export of core products[144](index=144&type=chunk)[145](index=145&type=chunk) - Enhancing production capacity, accelerating the construction of three major key special projects, ensuring the Phase I production of the Jiajiang Radiation Source Base and obtaining production licenses for Phase I of the North China Medical Base to start trial production[146](index=146&type=chunk) - Improving governance efficiency, compiling the "15th Five-Year Plan" with high standards, promoting the implementation of the excellent performance model and the online application of the "Nuclear Smart Hub" ERP, and safeguarding the bottom lines of safety, environmental protection, quality, and confidentiality[147](index=147&type=chunk) [Key Risks and Uncertainties](index=48&type=section&id=Key%20Risks%20and%20Uncertainties) China Isotope & Radiation Corporation faces various risks and uncertainties, including operational, investment, market, interest rate, liquidity, and economic environment risks, which could adversely affect its operating results and financial position - Operational risk: Risk of loss due to inadequate or missing internal procedures, personnel, or systems, or due to external events[148](index=148&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) - Investment risk: The possibility of any investment incurring a loss relative to its expected return; the company has established an authorization system and conducts detailed analysis[148](index=148&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk) - Market risk: Risk of profitability being harmed or the ability to achieve business objectives being affected due to market competition[148](index=148&type=chunk)[154](index=154&type=chunk)[158](index=158&type=chunk) - Economic environment risk: The Group's majority of business is located in mainland China, and its operating results and financial position are affected by economic development in mainland China and other regions; an economic slowdown may have an adverse impact[148](index=148&type=chunk)[157](index=157&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) [Financial Review](index=50&type=section&id=Financial%20Review) The Group's revenue for the first half of 2025 increased by 1.7% year-on-year to RMB 2,857.8 million, primarily driven by increased revenue from other business segments, while gross profit slightly decreased, and operating profit and profit for the period both increased 2025 H1 Income Statement Key Data | Indicator | For the six months ended June 30, 2025 (RMB millions) | For the six months ended June 30, 2024 (RMB millions) | Year-on-year change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,857.8 | 2,810.3 | 1.7% | | Cost of Sales | 1,398.2 | 1,346.1 | 3.9% | | Gross Profit | 1,459.5 | 1,464.2 | -0.3% | | Gross Margin | 51.1% | 52.1% | -1.0pp | | Other Income, Gains and Losses | 46.9 | 26.0 | 80.5% | | Selling and Distribution Expenses | 601.9 | 678.2 | -11.2% | | Administrative Expenses, R&D Costs and Credit Impairment Losses | 447.0 | 402.6 | 11.0% | | Finance Costs | 29.8 | 24.1 | 23.8% | | Profit Before Tax | 431.1 | 392.3 | 9.9% | | Profit for the Period | 341.0 | 306.7 | 11.2% | [Revenue](index=50&type=section&id=Revenue) The Group's revenue primarily comes from five segments: radiopharmaceuticals, radiation source products, irradiation, nuclear medical equipment and related services, and other businesses, with total revenue increasing by 1.7% year-on-year to RMB 2,857.8 million - Revenue increased by **1.7%** year-on-year to **RMB 2,857.8 million**[163](index=163&type=chunk)[166](index=166&type=chunk) - Mainly due to increased revenue from the other business segment[163](index=163&type=chunk)[166](index=166&type=chunk) [Cost of Sales, Gross Profit and Gross Margin](index=50&type=section&id=Cost%20of%20Sales%2C%20Gross%20Profit%20and%20Gross%20Margin) Cost of sales increased by 3.9% year-on-year to RMB 1,398.2 million, mainly due to increased cost of sales in the other business segment, while gross profit decreased by 0.3% to RMB 1,459.5 million, and gross margin fell from 52.1% to 51.1% - Cost of sales increased by **3.9%** year-on-year to **RMB 1,398.2 million**[164](index=164&type=chunk)[167](index=167&type=chunk) - Gross profit decreased by **0.3%** year-on-year to **RMB 1,459.5 million**, with gross margin falling from **52.1% to 51.1%**[164](index=164&type=chunk)[168](index=168&type=chunk) - The decrease in gross profit and gross margin was mainly due to lower radiopharmaceutical revenue and the lower gross margin of the other business segment, which had a larger revenue increase[164](index=164&type=chunk)[168](index=168&type=chunk) [Other Income, Gains and Losses](index=50&type=section&id=Other%20Income%2C%20Gains%20and%20Losses) Other income, gains, and losses significantly increased by 80.5% year-on-year to RMB 46.9 million, primarily benefiting from increased government grants and dividend income - Other income increased by **80.5%** year-on-year to **RMB 46.9 million**[165](index=165&type=chunk)[169](index=169&type=chunk) - Mainly due to increased government grants and dividend income[165](index=165&type=chunk)[169](index=169&type=chunk) [Selling and Distribution Expenses](index=51&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased by 11.2% year-on-year to RMB 601.9 million, with the percentage of revenue falling from 24.1% to 21.1%, primarily due to reduced sales service fees resulting from changes in radiopharmaceutical sales policies - Selling and distribution expenses decreased by **11.2%** year-on-year to **RMB 601.9 million**[170](index=170&type=chunk)[174](index=174&type=chunk) - As a percentage of revenue, it decreased from **24.1% to 21.1%**[170](index=170&type=chunk)[175](index=175&type=chunk) - Mainly due to reduced sales service fees caused by changes in radiopharmaceutical sales policies[170](index=170&type=chunk)[174](index=174&type=chunk) [Administrative Expenses, Research and Development Costs and Credit Impairment Losses](index=51&type=section&id=Administrative%20Expenses%2C%20Research%20and%20Development%20Costs%20and%20Credit%20Impairment%20Losses) Administrative expenses, R&D costs, and credit impairment losses combined increased by 11.0% year-on-year to RMB 447.0 million, with the percentage of revenue rising from 14.3% to 15.6%, mainly due to increased staff costs and expensed R&D expenditures - Administrative expenses, R&D costs, and credit impairment losses combined increased by **11.0%** year-on-year to **RMB 447.0 million**[171](index=171&type=chunk)[176](index=176&type=chunk) - As a percentage of revenue, it increased from **14.3% to 15.6%**[171](index=171&type=chunk)[177](index=177&type=chunk) - Mainly due to increased staff costs and expensed R&D expenditures[171](index=171&type=chunk)[176](index=176&type=chunk) [Finance Costs](index=51&type=section&id=Finance%20Costs) Finance costs increased by 23.8% year-on-year to RMB 29.8 million, primarily due to increased interest expenses driven by the company's increased funding needs for business development - Finance costs increased by **23.8%** year-on-year to **RMB 29.8 million**[172](index=172&type=chunk)[178](index=178&type=chunk) - Mainly due to increased funding needs for the company's business development, leading to higher interest expenses[172](index=172&type=chunk)[178](index=178&type=chunk) [Share of Loss of Associates and Share of Profit of Joint Ventures](index=51&type=section&id=Share%20of%20Loss%20of%20Associates%20and%20Share%20of%20Profit%20of%20Joint%20Ventures) Share of loss of associates increased by 54.4% year-on-year to RMB 7.5 million, mainly due to a decrease in associate profits, while share of profit of joint ventures decreased by 7.7% year-on-year to RMB 10.9 million due to a slight decrease in joint venture profits - Share of loss of associates increased by **54.4%** year-on-year to **RMB 7.5 million**, mainly due to a decrease in associate profits[173](index=173&type=chunk)[179](index=179&type=chunk) - Share of profit of joint ventures decreased by **7.7%** year-on-year to **RMB 10.9 million**, mainly due to a slight decrease in joint venture profits[180](index=180&type=chunk)[185](index=185&type=chunk) [Profit Before Tax](index=52&type=section&id=Profit%20Before%20Tax) Considering the above factors, profit before tax increased by 9.9% year-on-year to RMB 431.1 million - Profit before tax increased by **9.9%** year-on-year to **RMB 431.1 million**[181](index=181&type=chunk)[186](index=186&type=chunk) [Income Tax Expense](index=52&type=section&id=Income%20Tax%20Expense) Income tax expense increased by 5.3% year-on-year to RMB 90.1 million, with the effective tax rate decreasing from 21.8% to 20.9% - Income tax expense increased by **5.3%** year-on-year to **RMB 90.1 million**[182](index=182&type=chunk)[187](index=187&type=chunk) - The effective tax rate decreased from **21.8% to 20.9%**[182](index=182&type=chunk)[187](index=187&type=chunk) [Profit for the Period](index=52&type=section&id=Profit%20for%20the%20Period) Considering the above factors, profit for the period increased by 11.2% year-on-year to RMB 341.0 million - Profit for the period increased by **11.2%** year-on-year to **RMB 341.0 million**[183](index=183&type=chunk)[188](index=188&type=chunk) [Financial Position](index=52&type=section&id=Financial%20Position) As of June 30, 2025, the Group's total assets, total liabilities, and net assets all increased, with net current assets growing by 7.7% and the adjusted net gearing ratio rising to 38.4% 2025 H1 Balance Sheet Overview | Indicator | As of June 30, 2025 (RMB millions) | As of December 31, 2024 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 15,651.8 | 14,767.4 | 6.0% | | Total Liabilities | 7,691.3 | 7,022.8 | 9.5% | | Net Assets | 7,960.5 | 7,744.6 | 2.8% | [Overview](index=52&type=section&id=Overview) As of June 30, 2025, the Group's total assets increased to RMB 15,651.8 million, total liabilities to RMB 7,691.3 million, and net assets to RMB 7,960.5 million - As of June 30, 2025, the Group's total assets were **RMB 15,651.8 million**, total liabilities were **RMB 7,691.3 million**, and total equity was **RMB 7,960.5 million**[184](index=184&type=chunk)[189](index=189&type=chunk) [Net Current Assets](index=53&type=section&id=Net%20Current%20Assets) Net current assets increased by 7.7% from RMB 3,895.0 million as of December 31, 2024, to RMB 4,193.1 million as of June 30, 2025, primarily due to increases in prepayments and inventories Current Assets, Current Liabilities, and Net Current Assets | Indicator | As of June 30, 2025 (RMB millions) | As of December 31, 2024 (RMB millions) | | :--- | :--- | :--- | | Total Current Assets | 9,638.5 | 8,918.4 | | Total Current Liabilities | 5,445.4 | 5,023.4 | | Net Current Assets | 4,193.1 | 3,895.0 | - Net current assets increased by **7.7%** to **RMB 4,193.1 million**, mainly due to increases in prepayments and inventories[192](index=192&type=chunk)[193](index=193&type=chunk) [Adjusted Net Gearing Ratio and Quick Ratio](index=54&type=section&id=Adjusted%20Net%20Gearing%20Ratio%20and%20Quick%20Ratio) As of June 30, 2025, the adjusted net gearing ratio was 38.4% (34.9% as of December 31, 2024), and the quick ratio was 1.5 times (1.6 times as of December 31, 2024) Gearing Ratio and Quick Ratio | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Adjusted Net Gearing Ratio | 38.4% | 34.9% | | Quick Ratio | 1.5 times | 1.6 times | [Trade and Other Receivables](index=54&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, net trade and other receivables amounted to RMB 5,135.7 million, after deducting an allowance for doubtful debts of RMB 276.6 million - As of June 30, 2025, trade and other receivables were **RMB 5,135.7 million**, after deducting an allowance for doubtful debts of **RMB 276.6 million**[195](index=195&type=chunk)[200](index=200&type=chunk) [Trade and Other Payables](index=54&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, trade and other payables amounted to RMB 4,086.9 million, primarily comprising trade payables, accrued expenses, and other payables - As of June 30, 2025, trade and other payables were **RMB 4,086.9 million**[196](index=196&type=chunk)[201](index=201&type=chunk) [Issuance of Bonds](index=54&type=section&id=Issuance%20of%20Bonds) On October 25, 2024, the company issued RMB 500 million of technology innovation corporate bonds with a coupon rate of 2.25%, maturing in 2027 - On October 25, 2024, the company issued **RMB 500 million** of corporate bonds with a coupon rate of **2.25%**, maturing in 2027[197](index=197&type=chunk)[202](index=202&type=chunk) [Bank Loans and Pledged Assets](index=55&type=section&id=Bank%20Loans%20and%20Pledged%20Assets) As of June 30, 2025, the Group's total bank loans amounted to RMB 2,086.34 million, including RMB 359.70 million borrowed from CNNC Finance, with assets pledged for borrowings totaling RMB 116.00 million - As of June 30, 2025, the Group's total bank loans were **RMB 2,086.34 million** (December 31, 2024: RMB 1,682.43 million)[203](index=203&type=chunk)[207](index=207&type=chunk) - Total loans from CNNC Finance were **RMB 359.70 million** (December 31, 2024: RMB 297.01 million)[203](index=203&type=chunk)[207](index=207&type=chunk) - As of June 30, 2025, assets pledged for borrowings amounted to **RMB 116.00 million**[203](index=203&type=chunk)[207](index=207&type=chunk) [Capital Expenditures](index=55&type=section&id=Capital%20Expenditures) During the reporting period, the Group's capital expenditures amounted to RMB 264.9 million, primarily for additions to property, plant, and equipment and intangible assets - During the reporting period, capital expenditures were **RMB 264.9 million**[204](index=204&type=chunk)[208](index=208&type=chunk) [Contingent Liabilities](index=55&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the company had no significant contingent liabilities - As of June 30, 2025, the company had no significant contingent liabilities[205](index=205&type=chunk)[209](index=209&type=chunk) [Foreign Exchange and Exchange Rate Risk](index=55&type=section&id=Foreign%20Exchange%20and%20Exchange%20Rate%20Risk) The Group's revenue is primarily received in RMB, and some bank deposits denominated in foreign currencies (HKD) face currency risk, with the company monitoring foreign exchange movements but currently having no hedging policy - The Group's revenue is primarily received in RMB, and some bank deposits denominated in foreign currencies (HKD) face currency risk[206](index=206&type=chunk)[210](index=210&type=chunk) - The company monitors foreign exchange movements but currently has no foreign exchange hedging policy[206](index=206&type=chunk)[210](index=210&type=chunk) [Credit Risk](index=56&type=section&id=Credit%20Risk) The Group manages credit risk by continuously monitoring credit risk, investigating the creditworthiness of new customers, assessing credit quality, and defining credit limits, and believes there is no significant concentration of credit risk due to a large number of customers - The company has established policies to continuously monitor credit risk, conduct creditworthiness investigations for new customers, assess credit quality, and define credit limits[211](index=211&type=chunk)[212](index=212&type=chunk) - Given that trade receivables and bills receivable involve a large number of customers, the company believes there is no significant concentration of credit risk[213](index=213&type=chunk)[215](index=215&type=chunk) [Liquidity Risk](index=56&type=section&id=Liquidity%20Risk) The Group regularly monitors liquidity needs, maintaining sufficient cash reserves and committed funds to meet short-term and long-term liquidity requirements, and the directors believe the company has sufficient monetary capital to fund operations, thus posing no significant liquidity risk - The company regularly monitors liquidity needs, ensuring sufficient cash reserves and committed funds are maintained[214](index=214&type=chunk)[216](index=216&type=chunk) - The directors believe the company has sufficient monetary capital to fund operations, and therefore there is no significant liquidity risk[214](index=214&type=chunk)[216](index=216&type=chunk) [Dividend Policy](index=57&type=section&id=Dividend%20Policy) The company's dividend policy stipulates that 10% of the after-tax profit for the year must be allocated to the statutory surplus reserve, and discretionary surplus reserves may also be allocated, with dividend declaration decisions depending on operating results, cash flow, financial position, future prospects, and legal and contractual restrictions - When distributing after-tax profit for the year, the company shall allocate **10%** to the statutory surplus reserve; no further allocation is required when the accumulated amount exceeds **50%** of the registered capital[217](index=217&type=chunk)[218](index=218&type=chunk) - Dividends for domestic shares are declared and paid in RMB, while dividends for H-shares are declared in RMB and paid in HKD, with the exchange rate being the arithmetic average of the middle rates of HKD to RMB published by the People's Bank of China for the five business days preceding the declaration date[219](index=219&type=chunk)[221](index=221&type=chunk) - Dividend declaration decisions depend on operating results, cash flow, financial position, future prospects, and legal and contractual restrictions[220](index=220&type=chunk)[222](index=222&type=chunk) [Interim Dividend](index=59&type=section&id=Interim%20Dividend) The Board of Directors recommended an interim dividend of RMB 0.0807 per share (tax inclusive) for the six months ended June 30, 2025, totaling RMB 25,813,904.43, with payment expected by November 14, 2025, and applicable tax withholdings for non-resident enterprise shareholders and individual H-share holders - The Board of Directors recommended an interim dividend of **RMB 0.0807 per share** (tax inclusive) for the six months ended June 30, 2025, totaling **RMB 25,813,904.43**[223](index=223&type=chunk)[225](index=225&type=chunk) - The 2025 interim dividend is expected to be paid by **November 14, 2025**, with H-share dividends denominated in RMB and paid in HKD[223](index=223&type=chunk)[225](index=225&type=chunk) - The company will withhold and pay **10%** enterprise income tax for non-resident enterprise shareholders and individual income tax for individual H-share holders according to tax agreements between their countries of residence and China[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) [Suspension of Share Register Closure](index=61&type=section&id=Suspension%20of%20Share%20Register%20Closure) To convene the extraordinary general meeting and distribute the 2025 interim dividend, the company will suspend share transfer registration from September 12 to September 17, 2025, and from September 23 to September 26, 2025, respectively, to determine shareholders eligible to attend the meeting and receive dividends - To convene the extraordinary general meeting, share transfer registration will be suspended from **September 12 to September 17, 2025**[231](index=231&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk) - To receive the 2025 interim dividend, share transfer registration will be suspended from **September 23 to September 26, 2025**[231](index=231&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk) [No Material Adverse Change](index=62&type=section&id=No%20Material%20Adverse%20Change) The directors confirmed that as of June 30, 2025, there have been no material adverse changes in the company's financial and operating conditions or prospects - As of June 30, 2025, there have been no material adverse changes in the company's financial and operating conditions or prospects[235](index=235&type=chunk)[237](index=237&type=chunk) [Events After Reporting Period](index=62&type=section&id=Events%20After%20Reporting%20Period) After the reporting period, in August 2025, China Baoyuan gratuitously transferred all its 108,085,353 domestic shares of the company to CNNC Group, with the transfer registration completed on August 21, 2025, making CNNC Group the direct controlling company - In August 2025, China Baoyuan gratuitously transferred all its **108,085,353 domestic shares** of the company to CNNC Group[236](index=236&type=chunk)[238](index=238&type=chunk) - The relevant share transfer registration was completed on **August 21, 2025**, making CNNC Group the direct controlling company of the company[236](index=236&type=chunk)[238](index=238&type=chunk) [Use of Proceeds from Initial Public Offering](index=62&type=section&id=Use%20of%20Proceeds%20from%20Initial%20Public%20Offering) The company's H-shares were listed on July 6, 2018, with net proceeds from the global offering of approximately HKD 1.69 billion, of which RMB 268.1 million was used for working capital and general corporate purposes, and RMB 536.1 million for selective mergers and acquisitions - Net proceeds from the global offering were approximately **HKD 1.69 billion**[239](index=239&type=chunk)[240](index=240&type=chunk) Use of Proceeds from IPO (as of June 30, 2025) | Purpose | Initial Allocation (RMB millions) | Amount Used as of June 30, 2025 (RMB millions) | Remaining Amount as of June 30, 2025 (RMB millions) | Expected Time to Fully Utilize Remaining Amount | | :--- | :--- | :--- | :--- | :--- | | Investment in production and R&D bases for diagnostic and therapeutic radiopharmaceuticals | 597.3 | 460.0 | 0.0 | - | | Establishment of new production facilities | 84.5 | 50.0 | 0.0 | - | | Investment in R&D of various diagnostic and therapeutic radiopharmaceuticals, raw materials for radiation source products, medical radioisotopes, and urea breath test products and related raw materials | 253.6 | 105.5 | 12.8 | 2025 | | Investment/Selective (Mergers and) Acquisitions | 286.5 | 536.1 | 0.0 | - | | Working capital and general corporate purposes | 143.3 | 268.1 | 0.0 | - | | **Total** | **1,432.5** | **1,419.7** | **12.8** | | - The actual timing of use for R&D investment projects may differ from expectations due to ongoing planning for some newly initiated projects, subject to actual project progress[243](index=243&type=chunk) [Employees and Remuneration Policy](index=64&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group employed 3,361 employees, with staff costs of approximately RMB 378.7 million, and its remuneration policy aims to incentivize and retain excellent employees by providing salaries, bonuses, and various benefits, including retirement, medical, and housing provident fund plans - As of June 30, 2025, the Group employed **3,361 employees** (June 30, 2024: 3,132 employees)[244](index=244&type=chunk)[246](index=246&type=chunk) - For the six months ended June 30, 2025, staff costs were approximately **RMB 378.7 million** (same period in 2024: RMB 378.5 million)[244](index=244&type=chunk)[246](index=246&type=chunk) - The company's remuneration policy aims to incentivize and retain excellent employees, providing salaries, bonuses, and employee benefits, including retirement benefit plans, medical and work injury insurance plans, and housing provident fund plans[244](index=244&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) [Hedging Activities](index=65&type=section&id=Hedging%20Activities) For the six months ended June 30, 2025, the Group did not enter into any hedging transactions for foreign exchange or interest rate risks - For the six months ended June 30, 2025, the Group did not enter into any hedging transactions for foreign exchange or interest rate risks[249](index=249&type=chunk)[253](index=253&type=chunk) [Significant Investments, Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=65&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) For the six months ended June 30, 2025, the Group had no significant investments, disposals, or acquisitions of subsidiaries, associates, and joint ventures - For the six months ended June 30, 2025, the Group had no significant investments, disposals, or acquisitions of subsidiaries, associates, and joint ventures[250](index=250&type=chunk)[254](index=254&type=chunk) [Future Plans for Material Investments or Capital Assets](index=65&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) The Group will actively explore domestic and international investment opportunities to increase revenue sources, but as of the latest practicable date, the company has no specific future plans for material investments or acquisitions of capital assets - The Group will actively explore domestic and international investment opportunities, but as of the latest practicable date, the company has no specific future plans for material investments or acquisitions of capital assets[251](index=251&type=chunk)[252](index=252&type=chunk)[255](index=255&type=chunk) [Corporate Governance Report and Other Information](index=66&type=section&id=Corporate%20Governance%20Report%20and%20Other%20Information) This section outlines China Isotope & Radiation Corporation's corporate governance practices, including compliance with Appendix C1 of the Listing Rules and the Model Code for Securities Transactions, with ongoing efforts to enhance corporate governance, changes in board and supervisory committee members, and disclosure of interests - The company has adopted and complied with the principles and code provisions of Appendix C1 "Corporate Governance Code" of the Listing Rules[257](index=257&type=chunk)[259](index=259&type=chunk) - All directors confirmed strict compliance with the "Model Code for Securities Transactions by Directors of Listed Issuers" during the reporting period[258](index=258&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - As of the date of this interim report, the company has appointed **four independent non-executive directors**, and the Audit and Risk Management Committee comprises two independent non-executive directors and one non-executive director[262](index=262&type=chunk)[264](index=264&type=chunk)[263](index=263&type=chunk)[265](index=265&type=chunk) - As of June 30, 2025, the company's total share capital was **RMB 319,874,900**, divided into **79,968,800 H-shares** and **239,906,100 domestic shares**, with no changes during the reporting period[268](index=268&type=chunk)[270](index=270&type=chunk) - As of June 30, 2025, directors and chief executives held no disclosable interests or short positions in shares[269](index=269&type=chunk)[271](index=271&type=chunk) - As of June 30, 2025, the company had no significant litigation or arbitration matters[283](index=283&type=chunk)[286](index=286&type=chunk) - During the reporting period, the company consistently complied with OFAC-related commitments[284](index=284&type=chunk)[287](index=287&type=chunk) [Compliance with Model Code for Securities Transactions](index=66&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions) The Group has adopted a "Customized Code" no less stringent than Appendix C3 of the Listing Rules, and all directors confirmed strict compliance during the reporting period, with no violations by employees identified - The Group has adopted a "Customized Code" no less stringent than Appendix C3 "Model Code for Securities Transactions by Directors of Listed Issuers" of the Listing Rules[258](index=258&type=chunk)[260](index=260&type=chunk) - All directors confirmed strict compliance with the "Customized Code" during the reporting period, and the company found no violations by employees[258](index=258&type=chunk)[261](index=261&type=chunk) [Independent Non-Executive Directors](index=67&type=section&id=Independent%20Non-Executive%20Directors) The company has appointed a sufficient number of independent non-executive directors with appropriate professional qualifications or financial management expertise, as required by the Listing Rules, with four such directors appointed as of the interim report date - The company has appointed a sufficient number of independent non-executive directors with appropriate professional qualifications or financial management expertise as required by the Listing Rules[262](index=262&type=chunk)[264](index=264&type=chunk) - As of the date of this interim report, the company has appointed **four independent non-executive directors**, including Mr. Pan Zhaoguo, Ms. Chen Jingshan, Mr. Lu Chuang, and Mr. An Rui[262](index=262&type=chunk)[264](index=264&type=chunk) [Audit and Risk Management Committee](index=67&type=section&id=Audit%20and%20Risk%20Management%20Committee) As of the interim report date, the Audit and Risk Management Committee comprises two independent non-executive directors and one non-executive director, with terms of reference compliant with the Listing Rules, and has reviewed the Group's accounting principles, internal controls, and interim financial results - The Audit and Risk Management Committee comprises Mr. Pan Zhaoguo (Chairman), Mr. Lu Chuang, and Mr. Chen Zan, in compliance with the Listing Rules[263](index=263&type=chunk)[265](index=265&type=chunk) - The Committee has reviewed the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters with management[263](index=263&type=chunk)[266](index=266&type=chunk) - On August 28, 2025, the Committee reviewed and confirmed the interim results announcement and unaudited condensed consolidated interim financial information for the six months ended June 30, 2025[263](index=263&type=chunk)[267](index=267&type=chunk) [Share Capital](index=68&type=section&id=Share%20Capital) As of June 30, 2025, the company's total share capital was RMB 319,874,900, divided into 79,968,800 H-shares and 239,906,100 domestic shares, with no changes during the reporting period - As of June 30, 2025, the company's total share capital was **RMB 319,874,900**[268](index=268&type=chunk)[270](index=270&type=chunk) - The share capital is divided into **79,968,800 H-shares** and **239,906,100 domestic shares**, with a par value of **RMB 1.00 per share**[268](index=268&type=chunk)[270](index=270&type=chunk) - The company's share capital remained unchanged during the reporting period[268](index=268&type=chunk)[270](index=270&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=68&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As of June 30, 2025, the company's directors and chief executive did not hold any interests or short positions in shares, underlying shares, and debentures required to be disclosed to the company and the Stock Exchange under Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance - As of June 30, 2025, the company's directors and chief executive held no interests or short positions in shares, underlying shares, and debentures required to be disclosed to the company and the Stock Exchange[269](index=269&type=chunk)[271](index=271&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=68&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, CNNC Group and its subsidiaries (CIAE, NPIC, CNNC Fund, China Baoyuan) collectively held approximately 98.43% of the company's domestic share capital, with other major shareholders holding varying proportions of H-share interests Substantial Shareholders' Interests and Short Positions (as of June 30, 20

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容 而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Bank of Qingdao Co., Ltd.* 青 島 銀 行 股 份 有 限 公 司 * （ 於 中 華 人 民 共 和 國 註 冊 成 立 的 股 份 有 限 公 司 ） （H股股份代號：3866） 截至2025年6月30日止六個月中期業績公告 青島銀行股份有限公司（「本行」）董事會欣然宣佈本行及其附屬公司（「本公司」）截至2025 年6月30日止六個月之未經審計中期業績。本公告列載本行2025年中期報告全文，並符 合香港聯合交易所有限公司（「香港聯交所」）證券上市規則中有關中期業績初步公告附載 的資料之要求。 發佈中期業績公告及中期報告 本業績公告中英文版本可在本行網站（http://www.qdccb.com/）和香港聯交所披露易網站 （http://www.hkexnews.hk/）查閱。在對中英文文本的理解上發生歧義時，以中文文本為 準。本行2025年中期報告的印刷版本將會隨後按要求寄 ...

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) The Company released its unaudited consolidated financial results for the six months ended June 30, 2025, including comparative figures for the prior year [Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) The Company announced its unaudited consolidated financial results for the six months ended June 30, 2025, with comparative figures for the same period in 2024 - This announcement presents the unaudited consolidated financial results of Meizhong Jiahe Medical Technology Development Group Co., Ltd. for the six months ended June 30, 2025[2](index=2&type=chunk)[3](index=3&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The Company's financial performance for the period is summarized, detailing key metrics and their year-over-year changes [Key Financial Indicators](index=1&type=section&id=Key%20Financial%20Indicators) Total revenue for H1 2025 decreased by 8.3% to RMB 200.9 million, while hospital business revenue grew by 11.2%, with gross profit turning positive and adjusted net loss expanding | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 200.9 | 219.0 | -8.3% | | Hospital Business Revenue | 153.2 | 137.8 | +11.2% | | Gross Profit / (Loss) | 0.4 | (34.5) | Turnaround to Profit | | Net Loss | (200.0) | (202.0) | -1.0% | | Adjusted Net Loss (Non-HKFRS Measure) | (200.0) | (161.1) | +24.2% | - Adjusted net loss (non-HKFRS measure) refers to the loss for the reporting period adjusted for listing expenses, aiming to provide a clearer understanding of business operating performance[5](index=5&type=chunk) [Management Discussion and Analysis](index=3&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the Group's operational performance, strategic advancements, and market outlook for the first half of 2025 [Business Review](index=3&type=section&id=Business%20Review) The business review details the Company's H1 2025 performance, strategic progress, and market outlook, focusing on hospital business, proton therapy, asset-light models, and AI medical innovations [Hospital Business](index=3&type=section&id=Hospital%20Business) The Group focuses on high-end oncology, operating four medical institutions and one under construction in the Greater Bay Area and Yangtze River Delta, providing comprehensive, specialized cancer care, particularly proton therapy - The Group focuses on high-end oncology, operating **4 self-owned medical institutions** and **1 under construction**, primarily located in Guangzhou and Shanghai[8](index=8&type=chunk) [Guangdong-Hong Kong-Macao Greater Bay Area](index=3&type=section&id=Guangdong-Hong%20Kong-Macao%20Greater%20Bay%20Area) Guangzhou Taihe Cancer Hospital, the first proton therapy center in South China, fully launched clinical operations in December 2024, expected to significantly boost the Group's competitiveness and revenue in high-end radiotherapy - Guangzhou Taihe Cancer Hospital's Proton Center fully launched clinical diagnosis and treatment on **December 16, 2024**, as the **first officially operational proton therapy system in South China**[9](index=9&type=chunk) - This milestone signifies a major step for the Group in precision oncology, particularly in the high-end radiotherapy services market, with **revenue and profit expected to undergo a qualitative change**[9](index=9&type=chunk) [Yangtze River Delta Region](index=3&type=section&id=Yangtze%20River%20Delta%20Region) The Group operates Shanghai Imaging Center, Shanghai Jiahe Yunying Comprehensive Outpatient Department, and Shanghai Meizhong Jiahe Oncology Outpatient Department in the Yangtze River Delta, with Shanghai Taihecheng Cancer Hospital under construction in strategic partnership with MD Anderson Cancer Center for precise radiotherapy - Shanghai Imaging Center utilizes cutting-edge imaging equipment for various disease screenings and diagnoses, while Shanghai Jiahe Yunying Comprehensive Outpatient Department provides comprehensive services[10](index=10&type=chunk) - Shanghai Meizhong Jiahe Oncology Outpatient Department functions as a day-care radio-chemotherapy center, offering comprehensive cancer diagnosis, radiotherapy, and chemotherapy services[10](index=10&type=chunk) - The under-construction Shanghai Taihecheng Cancer Hospital will be a standardized tertiary oncology specialty hospital featuring precision radiotherapy, built in strategic partnership with **MD Anderson Cancer Center**[10](index=10&type=chunk) [Asset-Light Business Model](index=4&type=section&id=Asset-Light%20Business%20Model) Leveraging its oncology and hospital operation expertise, the Group launched an asset-light model for medical equipment, software, and services, targeting enterprise clients and lower-tier medical institutions to enhance partner hospital capabilities through advanced equipment, technology, and operational support - The Group launched an **asset-light business model** for medical equipment, software, and related services, specifically targeting enterprise clients and lower-tier city medical institutions[11](index=11&type=chunk) - By supplying advanced medical equipment, providing professional technological empowerment, and operational management support, the Group assists partner hospitals in enhancing their radiotherapy and imaging diagnostic capabilities[11](index=11&type=chunk) - Since **2019**, CSS services have been offered, covering cloud platforms, software, and related services, enhancing disease diagnosis and treatment efficiency and accuracy through platforms like Jiahe Yunying and Jiahe Feiyun[11](index=11&type=chunk) [Deepening Proton Therapy](index=4&type=section&id=Deepening%20Proton%20Therapy) Guangzhou Taihe Cancer Hospital's Proton Center deepened clinical practice in H1 2025, validating proton therapy's advantages in complex cases, completing the nation's first choroidal malignant melanoma proton therapy, and ranking among the top 3 national proton-heavy ion centers - Guangzhou Hospital's Proton Center continues to deepen clinical practice, offering superior treatment options for complex cases such as head and neck tumors, nervous system tumors, lung tumors, prostate cancer, and pediatric tumors[12](index=12&type=chunk) - On **July 14, 2025**, Guangzhou Hospital's Proton Center successfully completed the **nation's first proton therapy for choroidal malignant melanoma**, saving the patient from enucleation[13](index=13&type=chunk) - Guangzhou Hospital's Proton Therapy Center was ranked **third nationwide** in the 'China Proton and Heavy Ion Center TOP 10 Ranking (2024-2025)' published by 'Proton China'[14](index=14&type=chunk) [Building Differentiated Value and Full-Cycle Treatment](index=5&type=section&id=Building%20Differentiated%20Value%20and%20Full-Cycle%20Treatment) The Group's hospitals establish a differentiated drug supply system by offering original and innovative international drugs and enabling 'sporadic procurement,' while also developing full-cycle treatment services, including surgery, advanced radiotherapy, and comprehensive rehabilitation, to enhance patient quality of life - Guangzhou Hospital's Pharmacy Department offers **191 original research drugs** and **over 50 patented brand drugs**, covering all disease types of anti-tumor medications, and has established efficient introduction mechanisms and green channels[15](index=15&type=chunk) - Guangzhou Taihe Cancer Hospital is among the **first medical institutions nationwide** approved to resume import, sale, and use of Paclitaxel (albumin-bound) for injection (Abraxane)[15](index=15&type=chunk) - The Group is developing **full-cycle treatment services** to improve patient quality of life, covering key areas such as surgery (e.g., breast-conserving surgery), advanced radiotherapy, and comprehensive rehabilitation[16](index=16&type=chunk) [Multi-Layered Payment Network and Proton Therapy Accessibility](index=6&type=section&id=Multi-Layered%20Payment%20Network%20and%20Proton%20Therapy%20Accessibility) In H1 2025, the Group advanced its medical payment ecosystem, partnering with MSH China and Zhongjiandai (Beijing) Technology Service Co., Ltd. to enable direct payment for special needs treatments, while Shenzhen Huiminbao's new proton-heavy ion coverage integrated high-end services into inclusive commercial health insurance, significantly reducing basic medical insurance fund payments - MSH China launched its 'Enjoy Life' 2025 medical insurance, including Guangzhou Taihe Cancer Hospital in its designated private hospital network, enabling **direct payment for special needs treatments**[17](index=17&type=chunk) - **Shenzhen Huiminbao** added coverage for innovative diagnostic and treatment items like proton-heavy ion therapy, allowing insured patients to receive **reimbursement for proton therapy** at Guangzhou Taihe Cancer Hospital[18](index=18&type=chunk) Hospital Business Basic Medical Insurance Fund Payment Ratio Change | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Basic Medical Insurance Fund Payment Ratio | 25% | 41% | [Innovation Breakthroughs and Translational Applications](index=6&type=section&id=Innovation%20Breakthroughs%20and%20Translational%20Applications) The Group successfully developed and deployed an 'Automatic Review System for Radiotherapy Data Records,' published multiple SCI papers, filed invention patents, led the formulation of proton therapy industry standards, and secured several national and provincial continuing education projects, demonstrating strong R&D capabilities - The Group successfully developed and officially deployed the **'Automatic Review System for Radiotherapy Data Records'** at Shanghai Meizhong Jiahe Oncology Outpatient Department and Guangzhou Taihe Cancer Hospital[19](index=19&type=chunk) - Guangzhou Hospital published **eight SCI academic papers** in H1 and has **two invention patent applications** under review[20](index=20&type=chunk) - The hospital led the drafting of two standards organized by the China International Economic and Technical Cooperation Promotion Association Standardization Working Committee: **'Clinical Application Specifications for Proton Therapy'** and **'Dose Verification Technical Specifications for Proton Therapy'**[20](index=20&type=chunk) [International Professional Exchange and Cooperation](index=7&type=section&id=International%20Professional%20Exchange%20and%20Cooperation) In H1 2025, the Group's medical institutions hosted high-level delegations and academic exchanges from Singapore National Cancer Centre and the Thai government, held a Sino-US radiotherapy frontier academic exchange, and received a Mayo Clinic visit to Shijiazhuang Edison Oncology Hospital, deepening international cooperation and enhancing brand influence - Professor Toh Han Chong, Deputy Director of the **National Cancer Centre Singapore**, led a delegation to Guangzhou Taihe Cancer Hospital, and the Governor of Phuket, Thailand, led a government delegation for visits, fostering international medical and referral cooperation[21](index=21&type=chunk) - The **'Sino-US Radiotherapy Frontier Academic Exchange Conference on Stereotactic Radiotherapy New Technologies and Clinical Applications'** was held, featuring renowned American senior medical physicist Professor Benedict as a keynote speaker[22](index=22&type=chunk) - **Mayo Clinic** conducted an on-site inspection of Shijiazhuang Edison Oncology Hospital, exploring new pathways for international medical cooperation and contributing to the Group's international strategic layout[22](index=22&type=chunk) [Medical Equipment, Software, and Related Services Business](index=8&type=section&id=Medical%20Equipment%2C%20Software%2C%20and%20Related%20Services%20Business) The Group's medical equipment, software, and related services business focuses on project optimization, efficient delivery, and strategic product line expansion, building a 'core equipment + expert advantage + value-added services' matrix, enhancing grassroots hospital capabilities through AI and digital imaging cloud platforms, and fostering client ecosystems for diversified growth - The business focuses on optimizing and upgrading core projects and efficient delivery, while accelerating strategic expansion of product lines[24](index=24&type=chunk) - Successfully built a **'core equipment + expert advantage + value-added services' three-dimensional product matrix**, offering end-to-end high-end solutions from project initiation to upgrade delivery[24](index=24&type=chunk) - Enhanced technological empowerment for grassroots hospitals through new **AI and digital imaging cloud platform services**; Beijing Yundu Company signed a cooperation agreement with Inner Mongolia Minzu University Affiliated Hospital for the Jiahe Cloud Nuclear Medicine Cloud Platform[24](index=24&type=chunk) [Major Breakthroughs and Strategic Layout in AI Medical Field](index=9&type=section&id=Major%20Breakthroughs%20and%20Strategic%20Layout%20in%20AI%20Medical%20Field) The Group achieved a major breakthrough in AI medical, successfully developing and deploying the world's first proton therapy vertical large language model at Guangzhou Taihe Cancer Hospital, significantly enhancing clinical efficacy, with future plans to build an oncology radiotherapy/diagnosis large model AI matrix and expand market applications via an asset-light model to capture a trillion-level market share - Successfully developed and deployed the **world's first large language model for the proton therapy vertical domain**, deeply integrating nearly **10,000 high-quality radiotherapy case data** accumulated by its oncology institutions[26](index=26&type=chunk) - The model has been deployed at Guangzhou Taihe Cancer Hospital, significantly improving the accuracy of identifying treatment difficulties, the ability to recommend personalized solutions, and the adaptability to international standard treatment pathways[26](index=26&type=chunk) - The Group established a phased development path: vertically extending to build an **AI matrix of oncology radiotherapy large models and oncology diagnosis large models**; horizontally expanding market applications through management output and network empowerment[27](index=27&type=chunk) [Market Outlook and H2 Strategy](index=10&type=section&id=Market%20Outlook%20and%20H2%20Strategy) Addressing the challenges and opportunities of an aging population and rising cancer incidence, the Group will deepen proton therapy adoption, strengthen international cooperation and medical service exports, and actively engage in academic and research collaborations to solidify its technological leadership and meet diverse, stratified oncology needs - China's rising cancer incidence drives new demands for early screening and intervention, precision diagnosis and treatment, cancer rehabilitation and quality of life, and full-cycle management[28](index=28&type=chunk) - The Group will deepen the popularization of proton therapy technology, enhance public awareness of precision radiotherapy, strengthen patient trust, and establish specialized teams to optimize clinical pathway management[29](index=29&type=chunk) - In the second half, the Group will strengthen international cooperation and medical service exports, actively participate in domestic and international academic exchange activities and scientific research collaborations, and consolidate its technological leadership[29](index=29&type=chunk) [Financial Review](index=11&type=section&id=Financial%20Review) This section provides a detailed analysis of the Group's financial performance, including revenue, cost of sales, gross profit, operating expenses, and net loss [Revenue Analysis](index=11&type=section&id=Revenue%20Analysis) Total revenue decreased by 8.3% to RMB 200.9 million, with hospital business revenue growing 11.2% to RMB 153.2 million due to Guangzhou Hospital's proton therapy, while medical equipment, software, and related services revenue declined 41.3% due to macroeconomic factors Revenue Breakdown (by Service Item) | Service Item | 2025 (RMB thousand) | 2025 (%) | 2024 (RMB thousand) | 2024 (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Hospital Business | 153,244 | 76.3 | 137,840 | 62.9 | +11.2% | | Medical Equipment, Software, and Related Services | 47,659 | 23.7 | 81,148 | 37.1 | -41.3% | | - Sale and Installation of Medical Equipment and Software | 37,436 | 18.6 | 73,208 | 33.4 | -48.9% | | - Management and Technical Support | 8,206 | 4.1 | 2,099 | 1.0 | +290.9% | | - Operating Lease | 2,017 | 1.0 | 5,841 | 2.7 | -65.5% | | **Total** | **200,903** | **100.0** | **218,988** | **100.0** | **-8.3%** | - The increase in hospital business revenue is primarily due to the operation of Guangzhou Hospital's proton therapy business, which commenced in **December 2024**[32](index=32&type=chunk) - The decrease in revenue from medical equipment, software, and related services is mainly due to delayed overall business demand in the current macroeconomic environment and operating leases no longer being a primary business of the Company[34](index=34&type=chunk) [Cost of Revenue Analysis](index=12&type=section&id=Cost%20of%20Revenue%20Analysis) Cost of revenue decreased by 20.9% to RMB 200.5 million, primarily due to significant reductions in medical equipment and software costs, drug and consumable costs, and employee benefits expenses, reflecting the Group's cost-reduction and efficiency-improvement initiatives Cost of Revenue Breakdown (by Nature) | Cost Item | 2025 (RMB thousand) | 2025 (%) | 2024 (RMB thousand) | 2024 (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Medical Equipment and Software Costs | 32,320 | 16.1 | 70,174 | 27.7 | -53.9% | | Costs of Drugs, Consumables, and Other Inventories | 32,611 | 16.2 | 44,868 | 17.7 | -27.3% | | Employee Benefits Expenses | 49,081 | 24.5 | 58,993 | 23.3 | -16.8% | | Depreciation and Amortization | 65,645 | 32.7 | 56,281 | 22.2 | +16.6% | | Lease, Repair, and Maintenance | 12,144 | 6.1 | 13,790 | 5.4 | -11.9% | | **Total** | **200,520** | **100.0** | **253,500** | **100.0** | **-20.9%** | - The decrease in medical equipment and software costs is primarily due to reduced revenue from the sale and installation of medical equipment and software[35](index=35&type=chunk) - The decrease in employee benefits expenses is mainly due to improved human resource efficiency and the Group's implementation of cost reduction and efficiency improvement initiatives[35](index=35&type=chunk) - The decrease in costs of drugs, consumables, and other inventories is primarily due to a reduction in drug sales revenue resulting from the Company's revenue structure adjustment[39](index=39&type=chunk) [Gross Profit and Gross Margin](index=14&type=section&id=Gross%20Profit%20and%20Gross%20Margin) The Group's gross profit turned from a RMB 34.5 million loss in H1 2024 to a RMB 0.4 million profit in H1 2025, with gross margin increasing from -15.8% to 0.2%, driven by improved hospital business, narrowed losses in medical equipment and software services, revenue structure adjustments, enhanced proton therapy benefits, and cost-efficiency strategies Gross Profit and Gross Margin (by Service Item) | Service Item | 2025 Amount (RMB thousand) | 2025 Gross Margin (%) | 2024 Amount (RMB thousand) | 2024 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Hospital Business | 555 | 0.4 | (30,415) | (22.1) | | Medical Equipment, Software, and Related Services | (172) | (0.4) | (4,097) | (5.0) | | - Sale and Installation of Medical Equipment and Software | 4,810 | 12.8 | 556 | 0.8 | | - Management and Technical Support | (1,277) | (15.6) | (5,322) | (253.5) | | - Operating Lease | (3,705) | (183.7) | 669 | 11.5 | | **Total** | **383** | **0.2** | **(34,512)** | **(15.8)** | - Hospital business gross profit and gross margin significantly improved, mainly due to the Company's revenue structure adjustment, enhanced benefits from proton therapy business, and the implementation of cost reduction and efficiency improvement initiatives[38](index=38&type=chunk) - The increase in gross profit and gross margin from the sale and installation of medical equipment and software is primarily due to the implementation of cost reduction and efficiency improvement initiatives and optimized pricing strategies[43](index=43&type=chunk) [Operating Expenses](index=15&type=section&id=Operating%20Expenses) Selling and distribution, administrative, and R&D expenses all decreased, primarily due to reduced staff costs, lower promotional expenses, the absence of listing expenses, and the Group's cost-reduction and efficiency-improvement initiatives Major Operating Expense Changes | Expense Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 21,126 | 24,974 | -15.4% | Reduced staff costs, promotional expenses, and cost-efficiency initiatives | | Administrative Expenses | 55,345 | 79,090 | -30.0% | Reduced staff costs, absence of listing expenses, and cost-efficiency initiatives | | R&D Expenses | 13,618 | 14,128 | -3.6% | Reduced staff costs and cost-efficiency initiatives | [Other Income and Impairment Losses](index=16&type=section&id=Other%20Income%20and%20Impairment%20Losses) Other income and net gains significantly decreased by 95.8% due to a gain on disposal of a subsidiary in 2024, while impairment provisions for trade receivables, other receivables, and amounts due from related parties substantially increased due to higher balances and aging Other Income and Impairment Loss Changes | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Other Income and Other Net Gains | 1,850 | 43,644 | -95.8% | Gain on disposal of a subsidiary in 2024 | | Net Impairment Loss Provision for Trade Receivables | (30,654) | (2,353) | +1202.8% | Increase in trade receivables balance and aging | | Net Impairment Loss Provision for Other Receivables | (7,681) | (1,473) | +421.5% | Increase in other receivables balance | | Net Impairment Loss (Provision) / Reversal for Amounts Due from Related Parties | (7,812) | 3,816 | N/A (Reversal to Provision) | Long-term aging balance of amounts due from related parties | | Share of Results of Associates | (888) | (631) | +40.7% | Associates incurred losses | | Income Tax Credit | 1,971 | 2,503 | -21.3% | Decrease in deferred tax | [Net Loss and Non-HKFRS Measures](index=17&type=section&id=Net%20Loss%20and%20Non-HKFRS%20Measures) The Group's net loss slightly decreased by 1.0% to RMB 200.0 million in H1 2025 from RMB 202.0 million in H1 2024, while adjusted net loss (non-HKFRS, excluding listing expenses) increased by 24.2% to RMB 200.0 million, indicating an expanded core business loss Net Loss and Adjusted Net Loss | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Loss and Total Comprehensive Income for the Period | (200,021) | (202,019) | -1.0% | | Adjusted Net Loss (Non-HKFRS Measure) | (200,021) | (161,060) | +24.2% | - Adjusted net loss (non-HKFRS measure) is presented by adding back listing expenses to the loss for the reporting period, aiming to provide investors and management with a clearer understanding of the relevant performance of business operations[51](index=51&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=17&type=section&id=Liquidity%2C%20Financial%20Resources%2C%20and%20Capital%20Structure) This section reviews the Group's liquidity, financial resources, and capital structure, including cash flow, debt, and key financial ratios [Liquidity and Cash Position](index=17&type=section&id=Liquidity%20and%20Cash%20Position) The Group primarily funds operations and capital expenditures through operating cash flow, bank loans, and other borrowings; as of June 30, 2025, cash and cash equivalents increased by 52.4% to RMB 170.0 million, with a decrease in current liabilities but an expanded net current liabilities position - The Group's liquidity requirements will be met through a combination of cash flows from operating activities, bank loans and other borrowings, and other funds raised from capital markets from time to time[53](index=53&type=chunk) - Current liabilities decreased from approximately **RMB 1,135.9 million** as of December 31, 2024, to approximately **RMB 1,111.8 million** as of June 30, 2025, primarily due to a reduction in accrued expenses and other payables[54](index=54&type=chunk) Cash and Cash Equivalents | Indicator | June 30, 2025 (RMB million) | June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 170.0 | 111.5 | +52.4% | [Cash Flow Analysis](index=19&type=section&id=Cash%20Flow%20Analysis) Net cash used in operating activities significantly decreased to RMB 60.4 million due to cost-efficiency measures, net cash used in investing activities decreased to RMB 25.3 million primarily from financial asset disposals and no joint venture investments in H1 2024, and net cash from financing activities substantially decreased to RMB 51.2 million due to reduced bank and other borrowings and new share issuance Cash Flow Data | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (60,406) | (178,796) | +118,390 | | Net Cash Used in Investing Activities | (25,289) | (464,349) | +439,060 | | Net Cash From Financing Activities | 51,179 | 714,105 | -662,926 | | Net (Decrease) / Increase in Cash and Cash Equivalents | (34,516) | 70,960 | -105,476 | - The decrease in net cash used in operating activities is primarily due to the Group's implementation of cost reduction and efficiency improvement initiatives, which reduced operating losses before working capital changes in H1 2025[57](index=57&type=chunk) - The decrease in net cash from financing activities is mainly due to reduced proceeds from bank and other borrowings and the issuance of new shares in H1 2025[58](index=58&type=chunk) [Foreign Exchange Risk Management](index=19&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group's functional currency is RMB, with operations primarily in RMB and assets denominated in RMB, USD, and HKD; risk is managed by closely monitoring exchange rate fluctuations without hedging arrangements or other significant foreign exchange risks - The Group's functional currency is **RMB**, with operations primarily conducted in RMB, and all assets denominated in **RMB, USD, and HKD**[59](index=59&type=chunk) - The Group has not implemented any hedging arrangements and manages foreign exchange risk by closely monitoring fluctuations in exchange rates[59](index=59&type=chunk) [Capital Expenditures and Commitments](index=20&type=section&id=Capital%20Expenditures%20and%20Commitments) Total capital expenditures in H1 2025 were approximately RMB 24.1 million, mainly for property, plant, and equipment, right-of-use assets, and intangible assets; the Group has capital commitments of RMB 13.7 million for property, plant, and equipment and RMB 260.1 million for associate capital injections, with no significant contingent liabilities or major future investment plans Total Capital Expenditures | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Capital Expenditures | 24.1 | 31.1 | -22.5% | Capital Commitments | Item | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Acquisition of Property, Plant and Equipment | 13,682 | 16,692 | | Capital Injection into Associates | 260,099 | 260,099 | - As of June 30, 2025, the Group had no significant contingent liabilities, guarantees, or any material litigation or claims that are not yet understood or pose a threat to any member of the Group[62](index=62&type=chunk) [Asset Pledges and Debt Guarantees](index=20&type=section&id=Asset%20Pledges%20and%20Debt%20Guarantees) As of June 30, 2025, total bank borrowings of RMB 2,624.3 million are primarily secured by subsidiary equity, guaranteed by the Company, guarantee funds, and medical imaging equipment; an additional RMB 994.2 million is secured by subsidiary revenue, and RMB 1,523.8 million is guaranteed by controlling shareholder and Chairman Dr. Yang Jianyu - Total bank borrowings of **RMB 2,624.3 million** are primarily secured by the issued share capital of the Group's subsidiaries, including **80% of Guangzhou Hospital** and **100% of Shanghai Taihecheng Cancer Hospital and Shanghai Meizhong Jiahe Medical Imaging Diagnosis Co., Ltd.**[65](index=65&type=chunk) - Total borrowings of **RMB 994.2 million** are secured by the revenue of the Group's subsidiaries Shanghai Taihecheng Cancer Hospital, Shanghai Meizhong Jiahe Medical Imaging Diagnosis Co., Ltd., and Shanghai Outpatient Department[66](index=66&type=chunk) - Bank and other borrowings totaling **RMB 1,523.8 million** are guaranteed by the controlling shareholder and Chairman of the Board, **Dr. Yang Jianyu**[66](index=66&type=chunk) [Net Current Liabilities and Debt Structure](index=21&type=section&id=Net%20Current%20Liabilities%20and%20Debt%20Structure) As of June 30, 2025, net current liabilities expanded to RMB 529.8 million due to decreased current assets; total debt was RMB 3,220.2 million, with 16.1% at fixed interest rates, and the maturity structure shows 13.2% due within one year and 25.0% due in over five years Net Current Liabilities | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Net Current Liabilities | 529.8 | 422.2 | Debt Details | Debt Type | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Current Debt | 441,628 | 406,731 | | Total Non-Current Debt | 2,778,555 | 2,807,302 | | **Total** | **3,220,183** | **3,214,033** | Bank and Other Borrowings Maturity Profile | Maturity Period | June 30, 2025 Balance (RMB thousand) | June 30, 2025 (%) | | :--- | :--- | :--- | | Within One Year | 408,455 | 13.2 | | After One Year but Within Two Years | 358,354 | 11.6 | | After Two Years but Within Five Years | 1,550,638 | 50.2 | | Over Five Years | 771,573 | 25.0 | | **Total** | **3,089,020** | **100.0** | [Key Financial Ratios](index=23&type=section&id=Key%20Financial%20Ratios) The Group's profitability ratios show gross margin turning positive to 0.2% while net profit margin remains negative at 99.6%; liquidity ratios, including current and quick ratios, both decreased, and the debt-to-asset ratio rose to 68.4%, indicating increased liquidity pressure Key Financial Ratios | Ratio | June 30, 2025 | June 30, 2024 / December 31, 2024 | | :--- | :--- | :--- | | Gross Margin | 0.2% | (15.8)% | | Net Profit Margin | (99.6%) | (92.3)% | | Current Ratio | 0.52 | 0.63 (December 31, 2024) | | Quick Ratio | 0.51 | 0.60 (December 31, 2024) | | Debt-to-Asset Ratio | 68.4% | 67.8% (December 31, 2024) | [Other Information](index=23&type=section&id=Other%20Information) This section covers employee information, legal and compliance matters, post-reporting events, use of proceeds, public float, and corporate governance [Employees, Training, and Remuneration Policy](index=23&type=section&id=Employees%2C%20Training%2C%20and%20Remuneration%20Policy) As of June 30, 2025, the Group's employee count was 573, a 17.1% year-over-year decrease, with total staff costs of approximately RMB 100.2 million; the Group provides internal and external training, offers basic salaries and performance-related bonuses, and adheres to China's labor law social insurance schemes Employee Count and Costs | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Employee Count | 573 | 691 | | Total Staff Costs (RMB million) | 100.2 | N/A | - The Group provides internal and external training to enhance employee skills and knowledge, with remuneration primarily comprising basic salaries and performance-related bonuses[75](index=75&type=chunk) - The Group participates in various employee social insurance schemes organized by local municipal and provincial governments, including maternity, pension, medical, work injury, and unemployment benefits, as well as housing provident funds[77](index=77&type=chunk) [Litigation, Compliance, and Securities Transactions](index=24&type=section&id=Litigation%2C%20Compliance%2C%20and%20Securities%20Transactions) During the reporting period, the Group had no material breaches of laws or regulations, no significant adverse compliance events, and neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities, nor held any treasury shares - During the reporting period, the Group had no material breaches of laws and regulations, nor any non-compliance events that the Directors believe could have a significant adverse impact on the business, financial position, or operating results as a whole[78](index=78&type=chunk) - For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on the Stock Exchange[79](index=79&type=chunk) [Events After Reporting Period](index=24&type=section&id=Events%20After%20Reporting%20Period) On July 29, 2025, the Company completed a placement of 48,723,600 new H shares, raising approximately RMB 238 million net proceeds; on August 26, 2025, controlling shareholder Beijing Taihecheng pledged 35.6 million H shares to SPD Bank as security for the Company's liabilities - On **July 29, 2025**, the Company completed the placement of **48,723,600 new H shares** under general mandate, at a placement price of **HKD 5.54 per share**[80](index=80&type=chunk) - On **August 26, 2025**, Beijing Taihecheng agreed to pledge **35.6 million H shares** of the Company to SPD Bank to further secure the Company's liabilities[80](index=80&type=chunk) [Use of Proceeds from Listing and Placement](index=25&type=section&id=Use%20of%20Proceeds%20from%20Listing%20and%20Placement) As of June 30, 2025, net proceeds of approximately HKD 466.36 million from the global offering were fully utilized for interest-bearing bank loan repayment, Shanghai hospital construction, and working capital; net proceeds of approximately HKD 93.94 million from the June 2025 placement are planned for medical equipment procurement, loan repayment, and working capital, expected to be fully used by December 31, 2025 Actual Use of Net Proceeds from Global Offering (as of June 30, 2025) | Use | Net Proceeds After Reallocation (HKD million) | Amount Utilized as of June 30, 2025 (HKD million) | | :--- | :--- | :--- | | Repayment of part of interest-bearing bank borrowings | 230.42 | 230.42 | | Funding for the construction of Shanghai Hospital | 142.71 | 142.71 | | Working capital and other general corporate purposes | 93.23 | 93.23 | | **Total** | **466.36** | **466.36** | Planned Use of Net Proceeds from Placement (as of June 30, 2025) | Use | Net Proceeds from Placement (HKD million) | Amount Utilized as of June 30, 2025 (HKD million) | Unutilized Amount (HKD million) | Expected Full Utilization Time | | :--- | :--- | :--- | :--- | :--- | | Funding for procurement of medical equipment, consumables, and drugs for the Company's medical institutions | 37.576 | 0 | 37.576 | Before December 31, 2025 | | Repayment of loans provided by financial institutions to the Company and its subsidiaries | 28.182 | 0 | 28.182 | Before December 31, 2025 | | Supplementing working capital for the Company and its subsidiaries for general corporate purposes | 28.182 | 0 | 28.182 | Before December 31, 2025 | | **Total** | **93.94** | **0** | **93.94** | | [Sufficient Public Float](index=26&type=section&id=Sufficient%20Public%20Float) The Company received an HKEX waiver for the 25% public float requirement, allowing a lower percentage between 15% and 25%; as of the announcement date, the public holds at least 31.90% of total issued shares, meeting the requirement - The Company was granted a waiver by the Stock Exchange from strict compliance with Listing Rule 8.08(1)(a), allowing the public float percentage to be the lower of **15% to 25%**[85](index=85&type=chunk) - As of the announcement date, the public holds at least **31.90%** of the Company's total issued shares[85](index=85&type=chunk) [Corporate Governance and Audit](index=27&type=section&id=Corporate%20Governance%20and%20Audit) The Company is committed to good corporate governance, adhering to the Corporate Governance Code and Model Code for Securities Transactions by Directors; the Audit Committee reviewed interim results, independent auditors conducted a review, no interim dividend is declared, and the interim report will be published timely - The Company adopted the Corporate Governance Code provisions as its own corporate governance practices, effective from the listing date, and complied with the code provisions during the reporting period[86](index=86&type=chunk) - The Company adopted the Model Code as its own code of conduct for securities transactions by its directors, supervisors, and relevant employees, with all relevant personnel confirming compliance[88](index=88&type=chunk) - The Audit Committee reviewed the accounting policies and practices adopted by the Group, discussed internal controls and financial reporting matters, and the independent auditor reviewed the interim financial information[89](index=89&type=chunk) - The Company will not declare an interim dividend for the six months ended June 30, 2025[90](index=90&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=28&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, covering accounting policies, income statement, balance sheet, and other disclosures [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=28&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group reported revenue of RMB 200.9 million, gross profit of RMB 0.4 million, a total loss and comprehensive income of RMB 200.0 million, and basic and diluted loss per share of RMB 0.24 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 200,903 | 218,988 | | Cost of Revenue | (200,520) | (253,500) | | Gross Profit / (Loss) | 383 | (34,512) | | Other Income and Other Net Gains | 1,850 | 43,644 | | Selling and Distribution Expenses | (21,126) | (24,974) | | Administrative Expenses | (55,345) | (79,090) | | R&D Expenses | (13,618) | (14,128) | | Listing Expenses | – | (40,959) | | Finance Costs | (66,329) | (53,696) | | Loss and Total Comprehensive Income for the Period | (200,021) | (202,019) | | Basic and Diluted Loss Per Share (RMB) | (0.24) | (0.25) | [Condensed Consolidated Statement of Financial Position](index=29&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets were RMB 5,772.2 million, with a high proportion of non-current assets; net current liabilities were RMB 529.8 million, net assets RMB 1,821.5 million, and total equity RMB 1,821.5 million Condensed Consolidated Statement of Financial Position Summary | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-Current Assets | 5,190,160 | 5,192,942 | | Current Assets | 582,046 | 713,620 | | Current Liabilities | (1,111,796) | (1,135,864) | | Net Current Liabilities | (529,750) | (422,244) | | Non-Current Liabilities | (2,838,896) | (2,869,888) | | Net Assets | 1,821,514 | 1,900,810 | | Total Equity | 1,821,514 | 1,900,810 | [Details of Notes](index=31&type=section&id=Details%20of%20Notes) This section provides detailed notes to the condensed consolidated financial statements, including general information, accounting policies, basis of preparation and estimates, revenue disaggregation, finance costs, income tax credit, dividends, loss per share calculation, aging analysis of trade receivables and payables, and share capital movements [General Information](index=31&type=section&id=General%20Information) Meizhong Jiahe Medical Technology Development Group Co., Ltd. was incorporated in China on July 23, 2008, listed on HKEX on January 9, 2024, primarily engaged in radiotherapy and imaging equipment leasing, trading, management, technical services, and high-end cancer treatment, with Morgancreek Investment Holdings Limited as its ultimate controlling company - The Company was incorporated as a limited liability company in China on **July 23, 2008**, under the Company Law of the People's Republic of China, and listed on The Stock Exchange of Hong Kong Limited on **January 9, 2024**[95](index=95&type=chunk) - The Group is primarily engaged in **leasing of radiotherapy and imaging diagnostic equipment**, **trading of radiotherapy and imaging diagnostic equipment**, providing **management and technical services to hospitals**, and offering **high-end cancer treatment services**[95](index=95&type=chunk) - The ultimate controlling company is **Morgancreek Investment Holdings Limited**, a limited liability company incorporated under the laws of the British Virgin Islands[95](index=95&type=chunk) [Accounting Policies and Basis of Preparation](index=31&type=section&id=Accounting%20Policies%20and%20Basis%20of%20Preparation) The interim condensed consolidated financial statements are prepared under HKAS 34, on a historical cost basis and going concern assumption, despite losses and net current liabilities, as directors believe sufficient working capital exists considering unused credit, placement proceeds, and cost controls - The interim condensed consolidated financial statements are prepared in accordance with **Hong Kong Accounting Standard 34 Interim Financial Reporting** issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[98](index=98&type=chunk) - The financial statements have been prepared on a **historical cost basis**, except for the derivative component of convertible bonds and financial assets at fair value through profit or loss, which are measured at fair value[99](index=99&type=chunk) - Despite the Group recording losses and net current liabilities, the Directors believe that the Group has **sufficient working capital** to prepare the financial statements on a **going concern basis**, considering unused credit facilities, proceeds from placement, and cost control measures[100](index=100&type=chunk)[103](index=103&type=chunk) [Revenue Disaggregation](index=33&type=section&id=Revenue%20Disaggregation) Revenue primarily derived from oncology hospitals and clinics (RMB 153.2 million) and medical equipment, software, and related services (RMB 47.7 million), with most revenue (RMB 139.1 million) recognized at a point in time and the remainder (RMB 59.8 million) over time Revenue by Major Services and Products | Services and Products | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Oncology Hospitals and Clinics | 153,244 | 137,840 | | Sale and Installation of Medical Equipment and Software | 37,436 | 73,208 | | Management and Technical Support | 8,206 | 2,099 | | Operating Lease Income | 2,017 | 5,841 | | **Total Revenue** | **200,903** | **218,988** | Revenue Recognition Timing | Recognition Timing | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Over Time | 59,783 | 40,204 | | At a Point in Time | 139,103 | 172,943 | [Finance Costs](index=34&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, total finance costs were RMB 66.3 million, primarily comprising interest expenses on bank and other borrowings of RMB 84.3 million, partially offset by amounts capitalized into qualifying assets Finance Costs Details | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest Expenses on Bank and Other Borrowings | 84,342 | 72,339 | | Interest Expenses on Lease Liabilities | 4,139 | 6,998 | | Interest Expenses on Convertible Bonds | 478 | 480 | | Less: Amounts Capitalized into Qualifying Assets | (22,630) | (26,121) | | **Total** | **66,329** | **53,696** | [Income Tax Credit](index=34&type=section&id=Income%20Tax%20Credit) Income tax credit decreased by 21.3% from RMB 2.5 million in H1 2024 to RMB 2.0 million in H1 2025, mainly due to reduced deferred tax; the Group's PRC entities are subject to a 25% corporate income tax rate, with some high-tech enterprises enjoying a preferential 15% rate Income Tax Credit Details | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Deferred Tax (Credited to Profit or Loss for the Period) | (1,971) | (2,498) | | **Total** | **(1,971)** | **(2,503)** | - The Group's PRC entities are subject to income tax at a rate of **25%**, with certain companies recognized as high-tech enterprises since **2019** enjoying a preferential income tax rate of **15%**[107](index=107&type=chunk)[109](index=109&type=chunk) [Dividends](index=35&type=section&id=Dividends) No dividends were paid or proposed for the six months ended June 30, 2025, or 2024 - No dividends were paid or proposed for the six months ended June 30, 2025, and 2024, nor have any dividends been proposed since the end of the reporting period[110](index=110&type=chunk) [Loss Per Share](index=35&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic and diluted loss per share attributable to owners of the Company was RMB 0.24, a slight improvement from RMB 0.25 in H1 2024; diluted loss per share is identical to basic loss per share as there are no potentially dilutive ordinary shares Loss Per Share | Indicator | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic Loss Per Share Attributable to Owners of the Company | (0.24) | (0.25) | - As the Group had no potentially dilutive ordinary shares for the six months ended June 30, 2025, and 2024, the diluted loss per share is **identical to the basic loss per share**[112](index=112&type=chunk) [Trade Receivables and Payables](index=35&type=section&id=Trade%20Receivables%20and%20Payables) As of June 30, 2025, net trade receivables decreased to RMB 39.2 million from RMB 51.5 million on December 31, 2024, with a significant increase in impairment provisions; trade payables decreased to RMB 101.3 million from RMB 112.1 million, with changes in aging structure Net Trade Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Receivables | 116,313 | 97,985 | | Less: Impairment Provision | (77,159) | (46,505) | | **Net Amount** | **39,154** | **51,480** | Trade Payables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Payables | 101,272 | 112,146 | - Impairment provision for trade receivables increased from **RMB 46.5 million** as of December 31, 2024, to **RMB 77.2 million** as of June 30, 2025[111](index=111&type=chunk) [Movements in Share Capital](index=37&type=section&id=Movements%20in%20Share%20Capital) As of June 30, 2025, the Company's issued and fully paid share capital was 734,938 thousand shares, an increase of 18,600 thousand shares from December 31, 2024, primarily due to the successful placement of 18,600,000 shares on June 4, 2025, raising approximately RMB 91.8 million Movements in Share Capital | Item | June 30, 2025 (thousand shares) | June 30, 2025 (RMB thousand) | December 31, 2024 (thousand shares) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | As at January 1 | 716,338 | 716,338 | 676,918 | 676,918 | | Placement Shares | 18,600 | 18,600 | – | – | | **As at June 30 / December 31** | **734,938** | **734,938** | **716,338** | **716,338** | - On **June 4, 2025**, a total of **18,600,000 placement shares** were successfully placed at a price of **HKD 5.38 per placement share**, raising total proceeds of approximately **RMB 91,824,000**[114](index=114&type=chunk) [Definitions and Board Information](index=38&type=section&id=Definitions%20and%20Board%20Information) This section provides definitions of key terms used in the announcement and lists the composition of the Board of Directors [Definitions](index=38&type=section&id=Definitions) This section provides definitions of key terms used in the announcement to ensure a clear understanding of specialized terminology and company-specific names - Definitions of key terms used in the announcement, such as **'Beijing Taihecheng,' 'Guangzhou Hospital,' and 'H Shares,'** are provided to aid reader comprehension of the report content[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Board Information](index=40&type=section&id=Board%20Information) This section lists the composition of the Board of Directors as of the announcement date, including executive, non-executive, and independent non-executive directors - As of the announcement date, the Board of Directors comprises Executive Directors **Dr. Yang Jianyu, Ms. Fu Xiao, and Mr. Chang Liang**; Non-executive Directors **Mr. Wang Lei, Mr. Song Qingbao, and Mr. Shi Botao**; and Independent Non-executive Directors **Ms. Li Xuemei, Mr. Sun Yansheng, and Mr. Wu Guoxian**[119](index=119&type=chunk)

[Interim Results Summary](index=2&type=section&id=Interim%20Results%20Summary) [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) Revenue declined, leading to a loss for the period, primarily due to reduced operating profit and increased financial asset impairment Key Data from Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Metric | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue from contracts with customers | 318,899 | 384,121 | -16.98% | | Operating profit | 3,837 | 24,689 | -84.40% | | Impairment (provision) / reversal of financial assets | (10,329) | 5,329 | -293.80% | | (Loss) / Profit before income tax | (1,692) | 14,562 | -111.62% | | (Loss) / Profit for the period | (1,950) | 5,313 | -136.70% | | (Loss) / Profit attributable to equity holders of the Company | (8,241) | 34 | -24,338.24% | | Basic and diluted (loss) / earnings per share | (0.34) HK cents | 0.001 HK cents | -34,100.00% | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive loss expanded to **HKD 3,797 thousand**, driven by increased other comprehensive losses, including exchange differences Key Data from Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | (Loss) / Profit for the period | (1,950) | 5,313 | -136.70% | | Other comprehensive loss for the period, net of tax | (1,847) | (8,503) | -78.28% | | Total comprehensive loss for the period | (3,797) | (3,190) | 19.03% | | Attributable to equity holders of the Company | (9,741) | (8,154) | 19.46% | | Attributable to non-controlling interests | 5,944 | 4,964 | 19.74% | - Exchange differences significantly narrowed from a loss of **HKD 8,503 thousand** in 2024 to a loss of **HKD 1,395 thousand** in 2025, but the derecognition of subsidiaries resulted in an additional loss of **HKD 105 thousand** from the reclassification of exchange reserves[5](index=5&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets and liabilities decreased, net current assets significantly increased, and total equity slightly reduced as of June 30, 2025 Key Data from Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 874,990 | 911,023 | -3.95% | | Total liabilities | 481,397 | 513,772 | -6.30% | | Net assets | 393,593 | 397,251 | -0.92% | | Net current assets | 141,780 | 32,831 | 331.83% | | Cash and cash equivalents | 133,796 | 163,857 | -18.35% | | Total loans | 180,000 | 140,000 | 28.57% | - Total non-current assets decreased from **HKD 396,264 thousand** to **HKD 383,096 thousand**, primarily due to a reduction in interests in associates[6](index=6&type=chunk) - Total current liabilities significantly decreased from **HKD 481,928 thousand** to **HKD 350,114 thousand**, mainly due to reductions in other payables and accrued expenses, and loans[7](index=7&type=chunk) [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Financial%20Statements) [Basis of Preparation and Accounting Policies](index=6&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) Interim financial statements are prepared under HKAS 34, consistent with 2024 policies, with no significant impact from new standards - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[8](index=8&type=chunk) - New standards and interpretations effective January 1, 2025, including amendments to HKAS 21 and HKFRS 1, have no significant impact on the Group's condensed consolidated interim financial statements[9](index=9&type=chunk) [Segment Information](index=7&type=section&id=Segment%20Information) Healthcare operations ceased in April 2024 due to voluntary liquidation, leading to a significant revenue decline in that segment - The Group's principal operating segments are security and insurance business, aviation and logistics business, and healthcare business[13](index=13&type=chunk) - The healthcare business entered voluntary liquidation on April 15, 2024, and all business operations ceased[13](index=13&type=chunk) Revenue and Operating Profit / (Loss) by Operating Segment (For the six months ended June 30) | Segment | 2025 Revenue (HKD thousands) | 2024 Revenue (HKD thousands) | 2025 Operating Profit / (Loss) (HKD thousands) | 2024 Operating Profit / (Loss) (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Security and insurance business | 237,969 | 250,200 | 28,794 | 49,344 | | Aviation and logistics business | 79,147 | 117,052 | (3,686) | 2,950 | | Healthcare business | 27 | 6,144 | 3,535 | 105 | | Others | 1,756 | 10,725 | (24,806) | (27,710) | | **Total** | **318,899** | **384,121** | **3,837** | **24,689** | [Revenue from Contracts with Customers](index=10&type=section&id=Revenue%20from%20Contracts%20with%20Customers) Total revenue from customer contracts decreased by **16.98%** to **HKD 318,899 thousand**, with a significant drop in revenue recognized at a point in time Revenue from Contracts with Customers Breakdown (For the six months ended June 30) | Timing of Revenue Recognition | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | At a point in time | 66,219 | 122,328 | -45.87% | | Over time | 252,680 | 261,793 | -3.50% | | **Revenue from external customer contracts** | **318,899** | **384,121** | **-16.98%** | [Finance Costs](index=10&type=section&id=Finance%20Costs) Total finance costs decreased significantly to **HKD 5,783 thousand**, primarily due to the elimination of convertible bond interest and new loan interest Finance Costs Details (For the six months ended June 30) | Item | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Interest on lease liabilities | 165 | 243 | -32.10% | | Interest on convertible bonds | - | 10,021 | -100.00% | | Interest on other loans | 5,618 | - | N/A | | **Total** | **5,783** | **10,264** | **-43.66%** | [Income Tax Expense](index=11&type=section&id=Income%20Tax%20Expense) Income tax expense significantly decreased to **HKD 258 thousand**, mainly due to a substantial reduction in current income tax provisions outside Hong Kong Income Tax Expense Details (For the six months ended June 30) | Item | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Current income tax - Hong Kong | - | (2,721) | -100.00% | | Current income tax - Outside Hong Kong | (881) | (7,241) | -87.82% | | Deferred income tax | 623 | 713 | -12.62% | | **Total income tax expense** | **(258)** | **(9,249)** | **-97.21%** | [(Loss) / Profit for the Period](index=12&type=section&id=(Loss)%20%2F%20Profit%20for%20the%20Period) The Group recorded a loss of **HKD 1,950 thousand** for the period, influenced by increased operating expenses, financial asset impairment, and net other gains Key Items Affecting (Loss) / Profit for the Period (For the six months ended June 30) | Item | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Rental expenses | 1,460 | 2,845 | -48.68% | | Depreciation and amortization | 14,533 | 16,571 | -12.30% | | Other operating expenses | 29,977 | 14,109 | 112.48% | | Net other gains / (losses) | 14,830 | (9,205) | 261.10% | | Impairment (provision) / reversal of financial assets | (10,329) | 5,329 | -293.80% | - Net other gains turned from a loss of **HKD 9,205 thousand** in 2024 to a gain of **HKD 14,830 thousand** in 2025, primarily due to gains from the disposal of an associate and derecognition of subsidiaries[21](index=21&type=chunk) [(Loss) / Earnings Per Share](index=13&type=section&id=(Loss)%20%2F%20Earnings%20Per%20Share) Basic and diluted loss per share was **0.34 HK cents**, compared to earnings of **0.001 HK cents** last year, due to increased loss attributable to equity holders (Loss) / Earnings Per Share Data (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Weighted average number of ordinary shares in issue | 2,403,385,881 | 2,403,385,881 | | (Loss) / Profit attributable to equity holders of the Company (HKD thousands) | (8,241) | 34 | | Basic and diluted (loss) / earnings per share | (0.34) HK cents | 0.001 HK cents | - Basic and diluted (loss) / earnings per share are the same as all potentially dilutive ordinary shares had an anti-dilutive effect in both periods[22](index=22&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board does not recommend any interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors of the Company does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (June 30, 2024: nil)[25](index=25&type=chunk) [Trade Receivables](index=14&type=section&id=Trade%20Receivables) Trade receivables increased to **HKD 307,410 thousand** as of June 30, 2025, with a notable rise in receivables over three months old Trade Receivables and Loss Allowance (As of June 30) | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables from contracts with customers | 307,410 | 279,286 | 10.07% | | Less: Loss allowance | (42,564) | (33,654) | 26.46% | | **Net** | **264,846** | **245,632** | **7.82%** | Trade Receivables Aging Analysis (As of June 30) | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Within 1 month | 116,336 | 154,609 | -24.76% | | 1 to 2 months | 42,233 | 36,287 | 16.38% | | 2 to 3 months | 19,965 | 21,982 | -9.17% | | Over 3 months | 128,876 | 66,408 | 94.07% | | **Total** | **307,410** | **279,286** | **10.07%** | [Trade Payables](index=15&type=section&id=Trade%20Payables) Trade payables slightly decreased to **HKD 92,398 thousand** as of June 30, 2025, with a significant increase in payables over three months old Trade Payables Aging Analysis (As of June 30) | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Within 1 month | 23,472 | 82,789 | -71.66% | | 1 to 2 months | 1,929 | 588 | 228.06% | | 2 to 3 months | 5 | 831 | -99.40% | | Over 3 months | 66,992 | 10,914 | 513.82% | | **Total** | **92,398** | **95,122** | **-2.86%** | [Loans](index=16&type=section&id=Loans) Total loans increased to **HKD 180,000 thousand**, primarily due to the reclassification of convertible bonds and new short-term loans - On October 21, 2024, the Company rearranged the outstanding principal of **HKD 140,000 thousand** convertible bonds into other loans[30](index=30&type=chunk) - The Company obtained **HKD 100,000 thousand** unsecured term loan financing from an existing shareholder with a three-year repayment period; terms were revised on February 13, 2025, removing the lender's right to demand full repayment at any time, reclassifying it as a non-current liability[32](index=32&type=chunk) - The Company also obtained **HKD 80,000 thousand** in unsecured short-term loans from two independent third parties and a director-shareholder for convertible bond repayment and working capital, both repayable by October 21, 2025[32](index=32&type=chunk)[33](index=33&type=chunk) Other Loan Repayment Status (As of June 30) | Repayment Period | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Within 1 year | 80,000 | 40,000 | | 2 to 5 years | 100,000 | 100,000 | | **Total** | **180,000** | **140,000** | [Share Capital](index=18&type=section&id=Share%20Capital) The Company's authorized and issued share capital remained unchanged as of June 30, 2025 Share Capital Structure (As of June 30) | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Authorized share capital (6,000,000,000 shares of HKD 0.10 each) | 600,000 | 600,000 | | Issued share capital (2,403,385,881 shares of HKD 0.10 each) | 240,339 | 240,339 | [Derecognition of Subsidiaries](index=19&type=section&id=Derecognition%20of%20Subsidiaries) The Group derecognized healthcare and a security subsidiary in April 2025 due to voluntary liquidation, recognizing a one-time non-cash gain of **HKD 3,672 thousand** - The healthcare business segment and one subsidiary of the security segment entered voluntary liquidation on April 15, 2025, and the Group has derecognized these subsidiaries[35](index=35&type=chunk) - The Group recognized a one-time non-cash gain of **HKD 3,672 thousand** from the derecognition of subsidiaries during the period[35](index=35&type=chunk) Assets and Liabilities of Derecognized Subsidiaries (As of June 30, 2025) | Item | Amount (HKD thousands) | | :--- | :--- | | Total assets | 5,791 | | Total liabilities | (9,358) | | Net liabilities | (3,567) | | Reclassification of exchange reserve | (105) | | Gain on derecognition | 3,672 | [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) [Review of Results](index=20&type=section&id=Review%20of%20Results) Overall revenue declined, and operating performance slightly deteriorated due to business termination, reduced security operations, and geopolitical instability [Overall Performance](index=20&type=section&id=Overall%20Performance) Group revenue decreased by **16.98%** to **HKD 318,899 thousand**, primarily due to terminated businesses, reduced security operations, and geopolitical instability Overall Revenue by Business Segment (For the six months ended June 30) | Business Segment | 2025 (HKD thousands) | 2024 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Security business | 237,969 | 250,200 | -4.89% | | Aviation and logistics business | 79,147 | 117,052 | -32.38% | | Healthcare business | 27 | 6,144 | -99.56% | | Others | 1,756 | 10,725 | -83.62% | | **Total** | **318,899** | **384,121** | **-16.98%** | - The Group's overall operating performance slightly deteriorated compared to the prior year[39](index=39&type=chunk) [Security Business](index=21&type=section&id=Security%20Business) Security business remained profitable but saw reduced revenue and net profit due to project completion and geopolitical delays in Africa and Asia - Security business total revenue was **HKD 237,969 thousand** (2024: **HKD 250,200 thousand**), accounting for approximately **75%** of the Group's revenue (2024: approximately **65%**)[40](index=40&type=chunk) - Security business net profit was **HKD 20,917 thousand** (2024: **HKD 42,221 thousand**), a decrease of approximately **50%**[40](index=40&type=chunk) - The profit decline was primarily due to the completion of several security projects in Africa and Asia, incomparable scale of newly acquired projects, and slowed project progress due to geopolitical instability in certain countries[40](index=40&type=chunk) [Aviation Business](index=22&type=section&id=Aviation%20Business) Aviation revenue slightly decreased, but profit increased due to fleet optimization and improved utilization of medium-sized aircraft, enhancing long-term profitability - Aviation business turnover was **HKD 55,323 thousand** (2024: **HKD 56,524 thousand**), a **3%** decrease[42](index=42&type=chunk) - The aviation segment recorded a profit of **HKD 3.4 million** (2024: **HKD 2.6 million**)[42](index=42&type=chunk) - Fleet capacity utilization hours decreased by approximately **8%**, but the increase in medium-sized aircraft at the Kenya base and higher utilization per flight are expected to enhance long-term profitability[42](index=42&type=chunk) [Logistics Business](index=22&type=section&id=Logistics%20Business) Logistics revenue significantly decreased by **62%** in Shanghai, leading to an expanded loss, prompting management to consider repositioning to mitigate losses - Revenue from the Shanghai logistics base significantly decreased by approximately **62%** from **HKD 60,528 thousand** in 2024 to **HKD 23,233 thousand** in 2025[43](index=43&type=chunk) - The logistics segment recorded a loss of **HKD 7,695 thousand** (2024: loss of **HKD 1,401 thousand**)[43](index=43&type=chunk) - The Group intends to further scale down the logistics segment's business operations and allocate more resources to other segments[43](index=43&type=chunk) [Healthcare Business](index=22&type=section&id=Healthcare%20Business) Healthcare operations were terminated and entered voluntary liquidation in April 2025 due to underperformance, resulting in impairment provisions for related assets - The healthcare business segment entered voluntary liquidation in April 2025, ceasing operations[44](index=44&type=chunk) - The Company has fully provided for impairment on goodwill and intangible assets acquired for this segment and made impairment provisions for inventory and other receivables[44](index=44&type=chunk) [Assets Held for Sale and Disposal of an Associate](index=23&type=section&id=Assets%20Held%20for%20Sale%20and%20Disposal%20of%20an%20Associate) The Group completed the sale of a **40%** interest in an associate for **HKD 51,480 thousand**, generating a net gain of **HKD 11,074 thousand**, with the remaining **10%** reclassified - The Group completed the sale of a **40%** interest in an associate (engaged in general insurance business in Africa) to an independent third party for **HKD 51,480 thousand** (approximately **USD 6,600 thousand**)[45](index=45&type=chunk) - The disposal generated a net gain of **HKD 11,074 thousand**[45](index=45&type=chunk) - After the disposal, the Group holds only a **10%** interest in the associate, which has been classified as a financial asset at fair value through profit or loss[45](index=45&type=chunk) [Prospects](index=23&type=section&id=Prospects) The Group anticipates a challenging 2025 due to macroeconomic uncertainties and geopolitical tensions, focusing on expanding security and aviation services to enhance competitiveness - 2025 remains a challenging year, influenced by global and Hong Kong economic instability, major global elections, geopolitical tensions, and economic uncertainties[46](index=46&type=chunk) - The security segment remains the Group's core business and primary revenue source, expecting to secure larger, higher-value security contracts in multiple regions, especially providing security for international and Chinese enterprises[46](index=46&type=chunk) - The aviation division will continue to actively streamline its existing fleet capacity and expand its service offerings in 2025 with a larger capacity fleet[47](index=47&type=chunk) - The Group will continue to focus on strengthening its overseas and local security capabilities, aiming to drive continuous operational improvements and enhance profitability[48](index=48&type=chunk) [Employees](index=24&type=section&id=Employees) The Group implements performance-based HR policies, offering comprehensive training and benefits, with **2,362** employees as of June 30, 2025, and no share options granted under the new plan - The Group has established human resources policies and procedures based on employee performance and contribution, providing comprehensive on-the-job training, retirement benefit schemes, and medical insurance[49](index=49&type=chunk) - The Company adopted a new share scheme on June 28, 2023, to incentivize and retain key employees, but as of June 30, 2025, and the date of this announcement, no share options or share awards have been granted under the new share scheme[49](index=49&type=chunk) - The total number of employees as of June 30, 2025, was **2,362** (December 31, 2024: **2,176** employees)[51](index=51&type=chunk) [Financial Review](index=25&type=section&id=Financial%20Review) [Liquidity and Financial Resources](index=25&type=section&id=Liquidity%20and%20Financial%20Resources) Total assets, liabilities, and shareholders' equity decreased, while cash and bank balances reduced, and total loans increased, leading to a higher gearing ratio Liquidity and Financial Resources Key Data (As of June 30) | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 874,990 | 911,023 | -3.95% | | Total liabilities | 481,397 | 513,772 | -6.30% | | Shareholders' equity | 263,910 | 273,651 | -3.41% | | Available cash and bank balances | 133,795 | 163,857 | -18.35% | | Total loans | 180,000 | 140,000 | 28.57% | | Gearing ratio | 20.6% | 15.4% | 33.77% | - The Group's net asset value per share (excluding non-controlling interests) as of June 30, 2025, was approximately **HKD 0.11**, consistent with December 31, 2024[52](index=52&type=chunk) [Financial Policies](index=25&type=section&id=Financial%20Policies) The Group maintains a prudent financial policy with strict cash management, primarily holding HKD, RMB, and USD, and monitors exchange rate risks without hedging due to high costs - The Group adopts a prudent financial policy with strict cash management, typically placing cash surpluses in time deposits[54](index=54&type=chunk) - The Group primarily operates in Africa, Asia, and Mainland China (including Hong Kong), with major transaction currencies including USD, Kenyan Shilling, Nigerian Naira, Myanmar Kyat, Bangladeshi Taka, Lao Kip, and Cambodian Riel[55](index=55&type=chunk) - The Company did not use financial instruments for hedging during the period due to the high opportunity cost of available hedging, but closely monitors exchange rate risks and seeks opportunities to mitigate them[55](index=55&type=chunk) [Material Investments and Major Acquisitions and Disposals](index=26&type=section&id=Material%20Investments%20and%20Major%20Acquisitions%20and%20Disposals) Aside from the disclosed associate disposal, the Group held no other material investments nor undertook significant acquisitions or disposals during the period - For the six months ended June 30, 2025, the Group held no material investments and undertook no other significant acquisitions or disposals of subsidiaries, associates, or joint ventures, except for the completed disposal under 'Assets Held for Sale and Disposal of an Associate'[57](index=57&type=chunk) [Pledge of Assets](index=26&type=section&id=Pledge%20of%20Assets) The Group had no assets pledged to banks as collateral for banking facilities as of June 30, 2025, or December 31, 2024 - The Group had no assets pledged to banks as collateral for banking facilities as of June 30, 2025, and December 31, 2024[58](index=58&type=chunk) [Future Plans for Material Investments, Capital Assets, and Capital Commitments](index=27&type=section&id=Future%20Plans%20for%20Material%20Investments,%20Capital%20Assets,%20and%20Capital%20Commitments) The Group has no specific future plans for material investments or capital commitments but continuously evaluates new opportunities to expand revenue and improve profitability - As of June 30, 2025, the Group had no specific future plans for material investments, capital assets, or significant capital expenditure commitments[59](index=59&type=chunk) - The Group continuously evaluates new investment opportunities to expand its revenue base, improve the Group's profitability, and enhance shareholder value in the long term[59](index=59&type=chunk) [Other Disclosures](index=27&type=section&id=Other%20Disclosures) [Contingent Liabilities](index=27&type=section&id=Contingent%20Liabilities) The Group faces contingent liabilities from a **USD 5.8 million** claim by Aircraft Engine Leasing Finance Inc. and an **RMB 28.7 million** claim from a Shanghai logistics client, both under dispute - The Group has a claim from Aircraft Engine Leasing Finance Inc. for approximately **USD 5,800 thousand** (approximately **HKD 45,500 thousand**); the Group believes the claim is unfounded and has filed a counter-claim for over **EUR 10,000 thousand** (approximately **HKD 83,300 thousand**), with no conclusion yet[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Shanghai Logistics (an indirect wholly-owned subsidiary of the Company) faces a claim from a client for **RMB 28,700 thousand** (approximately **HKD 31,800 thousand**), while Shanghai Logistics has filed a counter-claim for **RMB 10,384 thousand** (approximately **HKD 11,505 thousand**)[62](index=62&type=chunk) - The Maritime Court judge initially ruled that Shanghai Logistics must pay **RMB 7,315 thousand** (approximately **HKD 8,105 thousand**) and could not recover its counter-claim; Shanghai Logistics appealed to the Shanghai Higher People's Court on August 20, 2025[64](index=64&type=chunk) [Supplemental Information](index=29&type=section&id=Supplemental%20Information) The Company was placed on the US export control list in June 2023, denies allegations, and has implemented comprehensive compliance policies while seeking removal - The Company was placed on the US Department of Commerce's Bureau of Industry and Security export control list on June 12, 2023, for allegedly using Western and NATO resources to train Chinese military pilots[65](index=65&type=chunk) - The Company firmly denies involvement in any alleged activities and has engaged external legal and professional advisors to resolve the matter with the Department of Commerce, submitting a delisting petition in September 2024 and sending a follow-up letter in June 2025 detailing its efforts and commitments[65](index=65&type=chunk) - The Company has appointed an internal compliance officer and implemented comprehensive compliance policies and a new oversight framework under the direct supervision of the Company's Risk Committee[66](index=66&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=30&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of its listed securities, nor held any treasury shares during the six months ended June 30, 2025 - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of its listed securities, nor held any treasury shares during the six months ended June 30, 2025[68](index=68&type=chunk) [Compliance with Corporate Governance Code](index=30&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company complied with the Corporate Governance Code, except for the separation of Chairman and CEO roles due to a vacant CEO position, which the Board is actively addressing - The Company complied with the code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, except for code provision C.2.1 regarding the separation of the roles of Chairman and Chief Executive Officer[69](index=69&type=chunk) - After the CEO resigned on April 25, 2024, no successor was appointed, and the Chairman did not assume the CEO's duties; the Board is actively considering appointing a new CEO in due course[69](index=69&type=chunk) [Model Code for Securities Transactions](index=30&type=section&id=Model%20Code%20for%20Securities%20Transactions) All directors complied with the Model Code for Securities Transactions by Directors throughout their tenure for the six months ended June 30, 2025 - All directors complied with the Model Code for Securities Transactions by Directors throughout their tenure for the six months ended June 30, 2025[70](index=70&type=chunk) [Directors' Information](index=31&type=section&id=Directors'%20Information) Mr. Zhang Yukuan resigned as a non-executive director on January 14, 2025, and Ms. Ye Ying was appointed as a non-executive director on the same day - On January 14, 2025, Mr. Zhang Yukuan resigned as a non-executive director of the Company due to other personal commitments[71](index=71&type=chunk) - On the same day, Ms. Ye Ying was appointed as a non-executive director of the Company[71](index=71&type=chunk) [Staff and Remuneration Policies](index=31&type=section&id=Staff%20and%20Remuneration%20Policies) The Group employed **2,362** staff with total employee benefit expenses of **HKD 155,725 thousand**, with remuneration based on market levels, individual responsibility, and Group performance - As of June 30, 2025, the Group employed a total of **2,362** employees (June 30, 2024: **2,386** employees)[73](index=73&type=chunk) - For the six months ended June 30, 2025, total employee benefit expenses (including directors' emoluments) amounted to **HKD 155,725 thousand** (June 30, 2024: **HKD 166,547 thousand**)[73](index=73&type=chunk) - Remuneration is determined by reference to market levels paid by comparable companies, individual employees' responsibilities, and the Group's performance, with benefits in kind and discretionary bonuses provided[73](index=73&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Audit Committee reviewed the unaudited condensed consolidated interim financial statements, confirming compliance with applicable accounting standards, Listing Rules, and legal requirements - The Audit Committee, comprising three independent non-executive directors, reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025[74](index=74&type=chunk) - The Audit Committee believes these results comply with applicable accounting standards, the Listing Rules, and other legal requirements, and are adequately disclosed[74](index=74&type=chunk) [Interim Dividends](index=31&type=section&id=Interim%20Dividends) The Board resolved not to declare any interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board resolved not to declare any interim dividend to holders of the Company's ordinary shares for the six months ended June 30, 2025 (for the six months ended June 30, 2024: nil)[75](index=75&type=chunk) [Publication of Announcement](index=32&type=section&id=Publication%20of%20Announcement) This announcement is published on the HKEXnews website and the Company's website; the interim report will be dispatched to shareholders and published online in due course - This announcement is published on the website of Hong Kong Exchanges and Clearing Limited (the "HKEXnews website") (www.hkexnews.hk) and the Company's website (www.fsgroup.com)[76](index=76&type=chunk) - The Company's interim report for the period, containing all information required by the Listing Rules, will be dispatched to the Company's shareholders and published on the HKEXnews website and the Company's website in due course[76](index=76&type=chunk)