Interim Report 2025 中期報告 二零二五年中期報告 – 高陽科技（中國）有限公司 1 Contents 目錄 HI SUN TECHNOLOGY (CHINA) LIMITED – INTERIM REPORT 2025 Business Review 業務回顧 Business Review 業務回顧 INTERIM CONDENSED SEGMENT RESULT ANALYSIS 中期簡明分類業績分析 | | | | Turnover | | EBITDA# | | | --- | --- | --- | --- | --- | --- | --- | | | | | 營業額 | | EBITDA# | | | | | | Unaudited | | Unaudited | | | | | | 未經審核 | | 未經審核 | | | | | | 1H2025 二零二五年 | 1H2024 二零二四年 | 1H2025 二零二五年 | 1H2024 二零二四年 | | | | | 上半年 | 上半年 | 上半年 | 上半年 | | | | Notes | HK$'000 | HK$'00 ...

[Corporate Information](index=3&type=section&id=Corporate%20Information) [Board of Directors and Key Personnel](index=3&type=section&id=Board%20of%20Directors%20and%20Key%20Personnel) This chapter lists the company's board members, including executive and independent non-executive directors, as well as key positions such as CFO and company secretary - Nie Guoming serves as Chairman and CEO, Zhang Shiyang as Chief Financial Officer and Company Secretary[4](index=4&type=chunk) - Lu Jie resigned as Executive Director on **July 3, 2025**[4](index=4&type=chunk) [Advisers and Registrars](index=3&type=section&id=Advisers%20and%20Registrars) This chapter provides important contact and registration information for the company, including auditors, legal counsel, principal bankers, registered office, Hong Kong principal place of business, and share registrar - PricewaterhouseCoopers is the company's auditor[5](index=5&type=chunk) - Principal bankers include Hang Seng Bank, Industrial and Commercial Bank of China (Asia), and The Hongkong and Shanghai Banking Corporation[7](index=7&type=chunk) - The company's stock code is **327**, and its website is **www.paxglobal.com.hk**[9](index=9&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) For the six months ended June 30, 2025, the company's revenue and profit both declined, but gross margin remained stable, while EPS and net profit margin also decreased, and interim dividend increased Financial Highlights for the Six Months Ended June 30, 2025 (HK$ thousand) | Indicator | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,716,164 | 3,013,241 | -9.9% | | Gross Profit | 1,272,545 | 1,409,236 | -9.7% | | Operating Profit | 470,997 | 537,525 | -12.4% | | Profit for the Period | 391,351 | 459,760 | -14.9% | | Profit Attributable to Owners of the Company | 390,877 | 454,583 | -14.0% | | Research and Development Costs | (305,174) | (304,219) | +0.3% | | Total Current Assets | 7,708,931 | 7,646,119 | +0.8% | | Total Assets | 9,208,715 | 9,169,505 | +0.4% | | Net Current Assets | 6,400,937 | 6,130,960 | +4.4% | | Total Equity | 7,805,146 | 7,564,587 | +3.2% | Per Share and Ratio Highlights for the Six Months Ended June 30, 2025 | Indicator | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (HK$) | 0.369 | 0.425 | -13.2% | | Diluted Earnings Per Share (HK$) | 0.363 | 0.416 | -12.7% | | Interim Dividend Per Ordinary Share (HK$) | 0.25 | 0.24 | +4.2% | | Gross Profit Margin | 46.9% | 46.8% | +0.1% | | Operating Profit Margin | 17.3% | 17.8% | -0.5% | | Net Profit Margin | 14.4% | 15.3% | -0.9% | | Current Ratio (times) | 5.9 | 5.0 | +0.9 | [Revenue Analysis](index=7&type=section&id=Revenue%20Analysis) Total revenue decreased by 9.9% year-on-year, mainly due to reduced procurement orders in some markets amid global economic uncertainty, with electronic payment terminal product sales down 10.7% and service revenue up 4.7% due to SaaS solution demand Sales by Region (HK$ thousand) | Region | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | EMEA | 1,083,949 | 1,103,965 | -1.8% | | LACIS | 684,151 | 1,069,814 | -36.0% | | USCA | 498,679 | 358,721 | +39.0% | | APAC | 449,385 | 480,741 | -6.5% | | **Total** | **2,716,164** | **3,013,241** | **-9.9%** | Sales by Product Category (HK$ thousand) | Product Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Sales of Electronic Payment Terminal Products | 2,544,491 | 2,849,245 | -10.7% | | Provision of Services | 171,673 | 163,996 | +4.7% | | **Total** | **2,716,164** | **3,013,241** | **-9.9%** | - Revenue decline primarily due to decreased procurement orders in individual markets amid global economic uncertainty[16](index=16&type=chunk)[17](index=17&type=chunk) - Service revenue growth mainly driven by increased demand for SaaS solutions[21](index=21&type=chunk)[23](index=23&type=chunk) [Expense and Profitability Analysis](index=9&type=section&id=Expense%20and%20Profitability%20Analysis) Gross margin remained stable, but other income and selling expenses decreased, administrative expenses fell due to favorable foreign exchange movements, and financial assets shifted from a net reversal of impairment losses to a net impairment loss, leading to an overall 14.9% decrease in profit for the period - Gross margin remained relatively stable at **46.9% in 2025** and **46.8% in 2024**[24](index=24&type=chunk)[30](index=30&type=chunk) - Other income decreased by **19.8% to HK$29.6 million**, primarily due to reduced VAT refunds[25](index=25&type=chunk)[31](index=31&type=chunk) - Selling expenses decreased by **12.8% to HK$302.7 million**, mainly impacted by lower sales commissions and transportation costs[26](index=26&type=chunk)[32](index=32&type=chunk) - Administrative expenses decreased by **10.6% to HK$515.8 million**, primarily attributable to favorable foreign exchange movements, partially offset by increased employee benefits and other expenses[27](index=27&type=chunk)[33](index=33&type=chunk) - Financial assets shifted from a net reversal of impairment losses of **HK$13.6 million in 2024** to a net impairment loss of **HK$2.8 million in 2025**[28](index=28&type=chunk)[34](index=34&type=chunk) - Profit for the period decreased by **14.9% to HK$391.4 million**, and profit attributable to owners of the company decreased by **14.0% to HK$390.9 million**[29](index=29&type=chunk)[35](index=35&type=chunk) [Business Review and Industry Trends](index=10&type=section&id=Business%20Review%20and%20Industry%20Trends) The company actively addresses opportunities from digital payments and blockchain technology, especially in stablecoin payments, maintains leadership in payment security standards, and continues to promote global adoption of Android smart payment terminals, with MAXSTORE SaaS platform reaching 15 million connected terminals - Developments in digital payments and blockchain technology bring new opportunities to the payment sector, with a continuously favorable policy environment, such as the US GENIUS Act and Hong Kong's Stablecoin Ordinance coming into effect[36](index=36&type=chunk)[39](index=39&type=chunk) - PAX payment terminals now support emerging payment methods like stablecoins in many regions worldwide[36](index=36&type=chunk)[39](index=39&type=chunk) - PAX was re-elected to the PCI SSC Board of Advisors, the only Asian payment terminal provider among over **60 global companies**[38](index=38&type=chunk)[40](index=40&type=chunk) - The A77 Android MiniPOS became the world's first payment terminal to receive **PCI PTS POI v7.0 certification**, demonstrating leading R&D capabilities[42](index=42&type=chunk)[45](index=45&type=chunk) - Android products account for over **65% of the Group's total revenue**, widely used in retail, catering, transportation, and other industry scenarios[43](index=43&type=chunk)[46](index=46&type=chunk) - The MAXSTORE cloud platform has reached **15 million connected terminals**, offering over **16,000 applications**[44](index=44&type=chunk)[47](index=47&type=chunk) [Analysis of Global Regions](index=12&type=section&id=Analysis%20of%20Global%20Regions) The company showed strong performance in EMEA, with USCA market sales growing 39.0% year-on-year and Japan market sales doubling, while the LACIS region faced economic uncertainty and competitive pressure - EMEA region sales reached **HK$1,083.9 million**, continuing to be the largest sales contributor, with considerable performance in Italy, the UK, and France markets[48](index=48&type=chunk)[49](index=49&type=chunk)[53](index=53&type=chunk) - USCA market sales increased by **39.0% year-on-year**, with flagship products like A920Pro and A3700 increasing market penetration, and A920MAX officially entering commercial use[56](index=56&type=chunk)[57](index=57&type=chunk)[62](index=62&type=chunk) - LACIS region sales faced pressure, especially in the Brazilian market, mainly due to economic uncertainty, exchange rate fluctuations, and intensified industry competition[52](index=52&type=chunk)[54](index=54&type=chunk) - Japan market sales in the APAC region doubled, with new products like A920MAX and A8700 successfully winning multiple new projects[60](index=60&type=chunk)[63](index=63&type=chunk) - The newly established Remote Key Injection (RKI) service in Australia successfully obtained PCI PIN certification, strengthening payment security capabilities in the Asia-Pacific region[61](index=61&type=chunk)[63](index=63&type=chunk) [Management Strategy](index=14&type=section&id=Management%20Strategy) The company's strategy focuses on seizing stablecoin payment opportunities, optimizing its payment terminal product line to concentrate resources on high-potential Android models, and strengthening its SaaS ecosystem, accelerating AI technology adoption to enhance value-added service capabilities - Actively embracing new digital currency payment methods, leveraging global sales network and SaaS ecosystem to capture new opportunities in the stablecoin payment sector[64](index=64&type=chunk)[65](index=65&type=chunk)[69](index=69&type=chunk) - Streamlining the payment terminal product line, concentrating resources on high-demand and high-value Android models to strengthen brand influence[66](index=66&type=chunk)[70](index=70&type=chunk) - Building a comprehensive SaaS ecosystem, including value-added services like AirViewer, GoInsight, Cyberlab, and PCI-certified RKI platform[67](index=67&type=chunk)[71](index=71&type=chunk) - Accelerating the adoption of Artificial Intelligence (AI) technology to enhance intelligent support and data application capabilities, laying the foundation for a new generation of smart payment infrastructure[67](index=67&type=chunk)[71](index=71&type=chunk) [Liquidity and Financial Resources](index=15&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, the Group maintained robust liquidity with cash and cash equivalents of HK$2,976.1 million, no borrowings, and increased net current assets, while net cash from operating activities decreased, with no significant future investment or capital asset plans Liquidity Position (HK$ thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 2,976,100 | 3,083,600 | | Short-term Bank Deposits | 165,800 | 162,500 | | Borrowings | Nil | Nil | | Net Current Assets | 6,400,900 | 6,131,000 | | Net Cash from Operating Activities (Six Months) | 153,700 | 430,700 | - The Group has **no significant borrowings** or bank credit facilities, and the debt-to-equity ratio is not applicable[73](index=73&type=chunk)[74](index=74&type=chunk) Currency Distribution of Cash and Cash Equivalents (HK$ thousand) | Currency | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | RMB | 2,133,922 | 1,726,723 | | US$ | 589,405 | 982,728 | | HK$ | 76,001 | 138,012 | | Euro | 74,367 | 113,772 | | Rupee | 48,738 | 53,517 | | Yen | 37,415 | 36,171 | | Other | 16,210 | 32,675 | | **Total** | **2,976,058** | **3,083,598** | - The Group has not entered into agreements or purchased instruments to hedge most foreign exchange risks, and fluctuations in HKD or RMB exchange rates may affect operating results[80](index=80&type=chunk)[86](index=86&type=chunk) - As of June 30, 2025, the Group had **no significant contingent liabilities**[82](index=82&type=chunk)[87](index=87&type=chunk) [Human Resources and Remuneration Policies](index=17&type=section&id=Human%20Resources%20and%20Remuneration%20Policies) As of June 30, 2025, the Group had a total of 1,500 employees, with R&D personnel accounting for the largest proportion, and the company offers competitive remuneration, including fixed salaries, discretionary bonuses, and share options, and subsidizes employees for external training Employee Functional Distribution | Function | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Management | 12 | 12 | | Sales, After-sales Service and Marketing | 284 | 292 | | Research and Development | 882 | 881 | | Quality Control | 87 | 89 | | Administration and Human Resources | 91 | 93 | | Accounting | 43 | 41 | | Production, Procurement and Inventory Control | 101 | 101 | | **Total** | **1,500** | **1,509** | - Total number of employees slightly decreased from **1,509 as of December 31, 2024**, to **1,500 as of June 30, 2025**[88](index=88&type=chunk) - The company provides fixed director's emoluments, discretionary bonuses, and other benefits, while employees receive a fixed monthly salary plus a discretionary annual performance bonus[89](index=89&type=chunk)[91](index=91&type=chunk) - Share options are granted as long-term incentives to certain directors and employees to reward their contributions[89](index=89&type=chunk)[91](index=91&type=chunk) [Additional Information](index=17&type=section&id=Additional%20Information) [Interim Dividend](index=18&type=section&id=Interim%20Dividend) The Board resolved to declare an interim dividend of HK$0.25 per ordinary share for the six months ended June 30, 2025, an increase from the prior year, and set the record date and payment date for shareholders - Declared an interim dividend of **HK$0.25 per ordinary share** for the six months ended June 30, 2025 (compared to **HK$0.24** for the same period in 2024)[93](index=93&type=chunk)[99](index=99&type=chunk) - The dividend will be paid on **Thursday, September 25, 2025**, with the record date for shareholders being **Thursday, September 11, 2025**[93](index=93&type=chunk)[94](index=94&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) [Share Option Scheme](index=18&type=section&id=Share%20Option%20Scheme) The company has a share option scheme to incentivize and retain talent, adopted in 2019 and revised in 2024 to comply with listing rules, with 52,146,000 share options remaining unexercised as of June 30, 2025, at an exercise price of HK$3.57 per share - The Share Option Scheme was adopted on **May 2, 2019**, and revised on **May 22, 2024**, valid until **May 1, 2029**[95](index=95&type=chunk)[96](index=96&type=chunk)[101](index=101&type=chunk) - The scheme aims to recognize the contributions of eligible participants to the Group and to attract, retain, and motivate talent[95](index=95&type=chunk)[101](index=101&type=chunk) - Under the scheme, the maximum number of shares that can be issued is **82,514,550 shares**, representing **7.5% of the total issued shares** on the adoption date[98](index=98&type=chunk)[102](index=102&type=chunk) - The exercise price of share options is determined by the Board and shall not be less than the highest of the closing price on the grant date, the average closing price for the preceding five trading days, and the nominal value of the shares[105](index=105&type=chunk)[109](index=109&type=chunk) Overview of Share Option Movements (thousand options) | Category | Held as of January 1, 2025 | Granted during the Period | Exercised during the Period | Lapsed during the Period | Held as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors | 23,920 | – | – | – | 23,920 | | Employees | 28,326 | – | (100) | – | 28,226 | | **Total** | **52,246** | **–** | **(100)** | **–** | **52,146** | - As of June 30, 2025, all **52,146,000 unexercised share options** were exercisable, with a weighted average exercise price of **HK$3.57 per share**[317](index=317&type=chunk)[318](index=318&type=chunk) [Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures](index=21&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) This chapter discloses the interests and short positions of the company's directors and chief executive in the company's shares and underlying shares as of June 30, 2025, primarily long positions, including beneficially owned shares and share option-related interests Directors' and Chief Executive's Interests in Ordinary Shares (shares) | Director's Name | Capacity | Personal Interest | Other Interests (Share Options) | Total Interests (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | :--- | | Nie Guoming | Beneficial Owner | 4,200,000 | 1,000,000 | 5,200,000 | 0.49% | | Li Wenjin | Beneficial Owner | 2,890,000 | 11,000,000 | 13,890,000 | 1.31% | | Zhang Shiyang | Beneficial Owner | – | 920,000 | 920,000 | 0.09% | | Lu Jie | Beneficial Owner | 8,870,000 | 11,000,000 | 19,870,000 | 1.88% | - Mr. Lu Jie resigned as Executive Director and Chief Executive Officer on **July 3, 2025**[122](index=122&type=chunk) - Percentages are calculated based on the total number of **1,059,642,000 ordinary shares** in issue as of June 30, 2025[122](index=122&type=chunk) [Substantial Shareholders' and Other Persons' Interests in Shares and Underlying Shares](index=22&type=section&id=Substantial%20Shareholders%27%20and%20Other%20Persons%27%20Interests%20in%20Shares%20and%20Underlying%20Shares) This chapter lists the interests and short positions of substantial shareholders, other than directors and the chief executive, in the company's shares as of June 30, 2025, with PAX Technology (China) Limited being the largest shareholder Substantial Shareholders' Interests in Ordinary Shares (shares) | Shareholder Name | Capacity | Class of Securities | Total Shares (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | PAX Technology (China) Limited | Beneficial Owner | Ordinary Shares | 364,000,000 | 34.35% | | Brandes Investment Partners, L.P. | Investment Manager | Ordinary Shares | 145,132,754 | 13.70% | | FMR LLC | Interest of Controlled Corporation | Ordinary Shares | 72,917,824 | 6.88% | - Percentages are calculated based on the total number of **1,059,642,000 ordinary shares** in issue as of June 30, 2025[125](index=125&type=chunk) [Purchase, Sale or Redemption of Shares](index=22&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Shares) For the six months ended June 30, 2025, the company repurchased and cancelled 2,162,000 ordinary shares for a total consideration of approximately HK$9.86 million, aiming to enhance net asset value and earnings per share - The company repurchased and cancelled **2,162,000 ordinary shares** during the six months ended June 30, 2025[127](index=127&type=chunk)[129](index=129&type=chunk)[134](index=134&type=chunk) - The total consideration was **HK$9,863,740**, and all repurchased shares were cancelled, reducing the issued share capital[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[134](index=134&type=chunk) - The Board believes that the share repurchases are in the best interests of the company and its shareholders, potentially increasing net asset value per share and/or earnings per share[129](index=129&type=chunk)[134](index=134&type=chunk) [Compliance with the Model Code for Securities Transactions](index=23&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions) The company has adopted a code for securities transactions stricter than the Listing Rules' Model Code and confirmed that all directors and senior management complied with it during the reporting period - The Group has adopted a written code governing securities transactions by directors and senior management, the terms of which are no less stringent than the Model Code set out in Appendix C3 of the Listing Rules[131](index=131&type=chunk)[135](index=135&type=chunk) - All directors have confirmed compliance with the Model Code and the Securities Dealing Code for the six months ended June 30, 2025, and up to the date of this interim report[132](index=132&type=chunk)[135](index=135&type=chunk) [Corporate Governance Practices](index=24&type=section&id=Corporate%20Governance%20Practices) The company complied with all applicable provisions of the Corporate Governance Code during the reporting period, except for the chairman and chief executive roles being held by the same person, a deviation from code provision C.2.1, which the Board believes aids strategy execution and operational efficiency - The company complied with all applicable provisions of the Corporate Governance Code for the six months ended June 30, 2025[137](index=137&type=chunk)[140](index=140&type=chunk) - Mr. Nie Guoming holds both the Chairman and Chief Executive Officer positions, which deviates from code provision C.2.1[138](index=138&type=chunk)[141](index=141&type=chunk) - The Board believes that the combined role facilitates the execution of the Group's business strategies and enhances operational efficiency, and that the Board structure is appropriate with a balance of power[138](index=138&type=chunk)[141](index=141&type=chunk) [Changes in Directors' Information](index=25&type=section&id=Changes%20in%20Directors%27%20Information) This chapter discloses changes in the Board of Directors, including Mr. Lu Jie's resignation as Executive Director and Chief Executive Officer, and Mr. Nie Guoming's appointment as Chief Executive Officer, both effective July 3, 2025 - Mr. Lu Jie resigned as Executive Director and Chief Executive Officer of the company effective **July 3, 2025**[148](index=148&type=chunk) - Mr. Nie Guoming was appointed as Chief Executive Officer of the company effective **July 3, 2025**[148](index=148&type=chunk) [Directors' Interest in Competing Business](index=25&type=section&id=Directors%27%20Interest%20in%20Competing%20Business) This chapter explains Executive Director Mr. Li Wenjin's interest in PAX Technology (China) Limited and confirms he holds no interests in businesses directly or indirectly competing with the Group, in compliance with the non-competition deed - Mr. Li Wenjin holds **13,800,000 shares** in PAX Technology (China) Limited, representing **0.50% of its total issued shares**[144](index=144&type=chunk)[147](index=147&type=chunk) - The Board believes that Mr. Li Wenjin has no interests in businesses directly or indirectly competing with the Group, in compliance with the non-competition deed[145](index=145&type=chunk)[147](index=147&type=chunk) [Pension Schemes](index=26&type=section&id=Pension%20Schemes) The Group participates in the Mandatory Provident Fund Scheme in Hong Kong, contributes to government-mandated retirement benefit plans for employees in mainland China, and provides a defined benefit pension plan for Korean employees - Hong Kong subsidiaries participate in the Mandatory Provident Fund Scheme, with employers and employees each contributing **5% of the employee's relevant income**[149](index=149&type=chunk)[154](index=154&type=chunk) - Mainland China subsidiaries are required to contribute **7% to 22% of employees' basic salaries** to retirement benefit plans, with local governments assuming retirement benefit responsibilities[151](index=151&type=chunk)[154](index=154&type=chunk) - The Group provides a defined benefit pension plan for Korean employees, managed by an independent trustee and fully funded by the Group[152](index=152&type=chunk)[155](index=155&type=chunk) [Sufficiency of Public Float](index=26&type=section&id=Sufficiency%20of%20Public%20Float) The directors confirmed that the company maintained sufficient public float as required by the Listing Rules at all times during the six months ended June 30, 2025 - The directors confirmed that the company maintained sufficient public float as required by the Listing Rules at all times during the six months ended June 30, 2025[153](index=153&type=chunk)[156](index=156&type=chunk) [Interim Condensed Consolidated Income Statement](index=27&type=section&id=Interim%20Condensed%20Consolidated%20Income%20Statement) This interim condensed consolidated income statement shows that for the six months ended June 30, 2025, the company's revenue and profit for the period both decreased, with basic earnings per share of HK$0.369 and diluted earnings per share of HK$0.363 Key Data from Interim Condensed Consolidated Income Statement (HK$ thousand) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 2,716,164 | 3,013,241 | | Cost of Sales | (1,443,619) | (1,604,005) | | Gross Profit | 1,272,545 | 1,409,236 | | Other Income | 29,568 | 36,851 | | Selling Expenses | (302,663) | (346,978) | | Administrative Expenses | (515,821) | (576,796) | | Operating Profit | 470,997 | 537,525 | | Profit Before Income Tax | 465,950 | 539,303 | | Income Tax Expense | (74,599) | (79,543) | | Profit for the Period | 391,351 | 459,760 | | Profit Attributable to Owners of the Company | 390,877 | 454,583 | | Basic Earnings Per Share (HK$) | 0.369 | 0.425 | | Diluted Earnings Per Share (HK$) | 0.363 | 0.416 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=28&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This interim condensed consolidated statement of comprehensive income shows that for the six months ended June 30, 2025, total comprehensive income for the period was HK$515,001 thousand, mainly comprising profit for the period and exchange differences arising from the translation of financial statements of overseas subsidiaries Key Data from Interim Condensed Consolidated Statement of Comprehensive Income (HK$ thousand) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the Period | 391,351 | 459,760 | | Exchange Differences Arising from Translation of Financial Statements of Overseas Subsidiaries | 119,159 | (77,283) | | Exchange Differences Arising from Items That Will Not Be Reclassified to Profit or Loss | 4,491 | (1,416) | | Total Comprehensive Income for the Period, Net of Tax | 515,001 | 381,061 | | Total Comprehensive Income Attributable to Owners of the Company | 510,036 | 377,300 | | Non-controlling Interests | 4,965 | 3,761 | [Interim Condensed Consolidated Balance Sheet](index=29&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheet) This interim condensed consolidated balance sheet shows that as of June 30, 2025, the Group's total assets slightly increased, total equity and net current assets both rose, and total liabilities decreased Key Data from Interim Condensed Consolidated Balance Sheet (HK$ thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Non-current Assets | 1,499,784 | 1,523,386 | | Total Current Assets | 7,708,931 | 7,646,119 | | **Total Assets** | **9,208,715** | **9,169,505** | | Equity Attributable to Owners of the Company | 7,765,647 | 7,530,053 | | Non-controlling Interests | 39,499 | 34,534 | | **Total Equity** | **7,805,146** | **7,564,587** | | Total Non-current Liabilities | 95,575 | 89,759 | | Total Current Liabilities | 1,307,994 | 1,515,159 | | **Total Liabilities** | **1,403,569** | **1,604,918** | | Total Equity and Liabilities | 9,208,715 | 9,169,505 | [Interim Condensed Consolidated Statement of Changes in Equity](index=31&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This interim condensed consolidated statement of changes in equity shows that for the six months ended June 30, 2025, the company's total equity increased, mainly due to total comprehensive income for the period, alongside share repurchases and dividend payments Key Data from Interim Condensed Consolidated Statement of Changes in Equity (HK$ thousand) | Indicator | Balance as of June 30, 2025 | Balance as of January 1, 2025 | | :--- | :--- | :--- | | Share Capital | 105,964 | 106,170 | | Share Premium | 1,000,742 | 1,010,082 | | Total Reserves | 7,659,683 | 7,423,883 | | Equity Attributable to Owners of the Company | 7,765,647 | 7,530,053 | | Non-controlling Interests | 39,499 | 34,534 | | **Total Equity** | **7,805,146** | **7,564,587** | | Profit for the Period | 391,351 | 459,760 (2024 same period) | | Total Comprehensive Income for the Period | 515,001 | 381,061 (2024 same period) | | Repurchase of Company's Shares | (9,903) | (3,830) (2024 same period) | | Dividends Paid to Company's Shareholders | (264,896) | (246,494) (2024 same period) | | Share Options Exercised | 357 | 8,147 (2024 same period) | [Interim Condensed Consolidated Cash Flow Statement](index=33&type=section&id=Interim%20Condensed%20Consolidated%20Cash%20Flow%20Statement) This interim condensed consolidated cash flow statement shows that for the six months ended June 30, 2025, net cash from operating activities significantly decreased, net cash used in investing activities reduced, and net cash used in financing activities increased, resulting in a net decrease in cash and cash equivalents Key Data from Interim Condensed Consolidated Cash Flow Statement (HK$ thousand) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 153,656 | 430,686 | | Net Cash Used in Investing Activities | (11,378) | (223,541) | | Net Cash Used in Financing Activities | (284,182) | (253,012) | | Net Decrease in Cash and Cash Equivalents | (141,904) | (45,867) | | Cash and Cash Equivalents at End of Period | 2,976,058 | 2,794,057 | [Notes to Interim Condensed Consolidated Financial Information](index=34&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Information) [General Information](index=34&type=section&id=General%20Information) This note outlines that PAX Global Technology Limited and its subsidiaries primarily engage in electronic payment terminal solutions, with the company incorporated in Bermuda and listed on the Main Board of the Hong Kong Stock Exchange - The Group is principally engaged in the development and sale of electronic payment terminal products, and the provision of maintenance, installation, and payment solution services[170](index=170&type=chunk)[175](index=175&type=chunk) - The company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on **December 20, 2010**[171](index=171&type=chunk)[175](index=175&type=chunk) [Basis of Preparation](index=34&type=section&id=Basis%20of%20Preparation) This interim condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024 - This interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[173](index=173&type=chunk)[178](index=178&type=chunk) - This information is unaudited and does not include all the notes normally included in annual consolidated financial statements[177](index=177&type=chunk)[178](index=178&type=chunk) [Accounting Policies](index=35&type=section&id=Accounting%20Policies) The accounting policies adopted by the Group are consistent with those in the 2024 annual consolidated financial statements, except for income tax estimates and the adoption of revised standards, and HKFRS 18 will be mandatorily effective from January 1, 2027, with widespread impacts on presentation and disclosure expected - The accounting policies adopted are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2024, except for income tax estimates and the adoption of revised standards[179](index=179&type=chunk)[183](index=183&type=chunk) - HKFRS 18 will replace HKAS 1 "Presentation of Financial Statements" and is expected to have widespread impacts on presentation and disclosure[182](index=182&type=chunk)[185](index=185&type=chunk) - The Group expects to apply the new standard from its mandatory effective date of **January 1, 2027**, and will require retrospective application[186](index=186&type=chunk)[190](index=190&type=chunk) [Estimates](index=36&type=section&id=Estimates) The significant judgments and estimates made by management in preparing this interim condensed consolidated financial information are the same as those applied in the consolidated financial statements for the year ended December 31, 2024 - The significant judgments and estimates made by management in preparing this interim condensed consolidated financial information are the same as those applied in the consolidated financial statements for the year ended December 31, 2024[189](index=189&type=chunk)[191](index=191&type=chunk) [Financial Risk Management](index=37&type=section&id=Financial%20Risk%20Management) The Group is exposed to market risk, credit risk, and liquidity risk, and manages foreign currency risk by closely monitoring exchange rate movements, with fair value estimates of financial instruments using a three-level hierarchy, and contingent consideration payable and fund investments measured using significant unobservable inputs (Level 3) - The Group's activities expose it to market risk (including foreign currency risk, price risk, cash flow interest rate risk, and fair value interest rate risk), credit risk, and liquidity risk[192](index=192&type=chunk)[195](index=195&type=chunk) - There have been **no significant changes** in risk management policies since **December 31, 2024**[194](index=194&type=chunk)[196](index=196&type=chunk) Financial Assets and Liabilities Measured at Fair Value (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fund Investments Measured at Fair Value Through Profit or Loss | 83,005 | 88,242 | | Contingent Consideration Payable Measured at Fair Value Through Profit or Loss | (31,391) | (29,393) | - Fair value measurement of contingent consideration payable and fund investments uses significant unobservable inputs (Level 3), with a discount rate of **6.8% for contingent consideration payable**[203](index=203&type=chunk)[204](index=204&type=chunk)[276](index=276&type=chunk) - If the fair value of fund investments increases/decreases by **5%**, the Group's profit after tax and equity for the period would increase/decrease by approximately **HK$3,113,000**[277](index=277&type=chunk)[279](index=279&type=chunk) [Revenue, Other Income and Other (Losses)/Gain](index=41&type=section&id=Revenue%2C%20Other%20Income%20and%20Other%20%28Losses%29%2FGain) This note details the composition of revenue, other income, and other (losses)/gain for the six months ended June 30, 2025, showing a decrease in sales revenue from electronic payment terminal products, an increase in service revenue, and a decrease in other income due to reduced VAT refunds Revenue, Other Income and Other (Losses)/Gain (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | **Revenue** | | | | Sales of Electronic Payment Terminal Products | 2,544,491 | 2,849,245 | | Provision of Services | 171,673 | 163,996 | | **Other Income** | | | | Interest Income | 9,480 | 9,928 | | Government Grants | 1,142 | 2,691 | | VAT Refunds | 8,011 | 11,426 | | Other | 10,935 | 12,806 | | **Other (Losses)/Gain** | | | | Fair Value (Loss)/Gain on an Investment Measured at Fair Value Through Profit or Loss | (7,873) | 1,589 | | Fair Value Loss on a Contingent Consideration Payable | (1,998) | – | - Other income decreased primarily due to reduced VAT refunds[211](index=211&type=chunk)[213](index=213&type=chunk) [Segment Information](index=42&type=section&id=Segment%20Information) The Group primarily engages in the electronic payment terminal solutions business and assesses performance from a geographical perspective, with revenue from external customers mainly from Hong Kong and other regions for the six months ended June 30, 2025, significant growth in the US region, and a decrease in mainland China (excluding Hong Kong, Macau, and Taiwan) revenue - The Group is principally engaged in the electronic payment terminal solutions business and considers itself to operate in a **single business segment**[214](index=214&type=chunk)[216](index=216&type=chunk) - The Group primarily operates in **Hong Kong, mainland China (excluding Hong Kong, Macau, and Taiwan), the United States, and Italy**[215](index=215&type=chunk)[217](index=217&type=chunk) Revenue and Segment Operating Profit/(Loss) by Region (HK$ thousand) | Region | Revenue from External Customers (2025) | Segment Operating Profit/(Loss) (2025) | Revenue from External Customers (2024) | Segment Operating Profit/(Loss) (2024) | | :--- | :--- | :--- | :--- | :--- | | Mainland China (excluding Hong Kong, Macau, and Taiwan) | 184,447 | 67,121 | 242,308 | 402,980 | | Hong Kong and Other | 1,810,711 | 326,377 | 2,152,979 | 171,020 | | United States | 498,033 | (139,660) | 358,719 | (89,571) | | Italy | 222,973 | 5,245 | 259,235 | 24,496 | | **Total** | **2,716,164** | **470,997** | **3,013,241** | **537,525** | Non-current Assets by Region (HK$ thousand) | Region | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Mainland China (excluding Hong Kong, Macau, and Taiwan) | 1,187,089 | 1,177,473 | | Hong Kong and Other | 199,690 | 245,116 | | United States | 36,008 | 41,837 | | Italy | 76,997 | 58,960 | | **Total** | **1,499,784** | **1,523,386** | - For the six months ended June 30, 2025, the largest customer contributed approximately **HK$232,419,000** in revenue, representing **8.6% of total revenue**, attributable to the Hong Kong business segment[228](index=228&type=chunk)[229](index=229&type=chunk) - The second largest customer contributed approximately **HK$177,620,000** in revenue, representing **6.5% of total revenue**, attributable to the US business segment[228](index=228&type=chunk)[229](index=229&type=chunk) [Expenses by Nature](index=47&type=section&id=Expenses%20by%20Nature) This note analyzes various expenses by nature for the six months ended June 30, 2025, including cost of inventories sold, employee benefit expenses, R&D costs, sales commissions, depreciation, and amortization Expenses by Nature (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Cost of Inventories Sold | 1,327,135 | 1,529,980 | | Provision for Obsolete Inventories | 62,347 | 4,590 | | Employee Benefit Expenses | 404,538 | 392,024 | | Research and Development Costs | 305,174 | 304,219 | | Sales Commissions | 60,960 | 74,808 | | Depreciation of Property, Plant and Equipment | 34,811 | 29,197 | | Depreciation of Right-of-Use Assets | 14,098 | 15,268 | | Amortization of Intangible Assets | 5,337 | 1,595 | | Net Foreign Exchange (Gain)/Loss | (43,385) | 32,273 | | Net Impairment Loss/(Net Reversal of Impairment Loss) on Financial Assets | 2,761 | (13,623) | [Finance Costs](index=48&type=section&id=Finance%20Costs) This note discloses finance costs for the six months ended June 30, 2025, primarily interest expense on lease liabilities Finance Costs (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest Expense on Lease Liabilities | 2,446 | 2,908 | [Employee Benefit Expenses (Including Directors' Emoluments)](index=48&type=section&id=Employee%20Benefit%20Expenses%20%28Including%20Directors%27%20Emoluments%29) This note details employee benefit expenses for the six months ended June 30, 2025, including wages and salaries, social security, and pension costs Employee Benefit Expenses (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Wages and Salaries | 376,269 | 364,481 | | Social Security and Pension Costs | 28,269 | 27,543 | | **Total** | **404,538** | **392,024** | [Income Tax Expense](index=49&type=section&id=Income%20Tax%20Expense) This note provides a breakdown of income tax expense for the six months ended June 30, 2025, including PRC corporate income tax, Hong Kong profits tax, and overseas profits tax, and explains the R&D expense tax incentives enjoyed by PRC subsidiaries Income Tax Expense (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | PRC Corporate Income Tax | 27,361 | 69,971 | | Hong Kong Profits Tax | 36,004 | 20,180 | | Overseas Profits Tax | 11,597 | 11,389 | | Tax Incentives for R&D Expenses | (30,946) | (27,632) | | Deferred Income Tax | 30,583 | 4,947 | | **Total Income Tax Expense** | **74,599** | **79,543** | - Hong Kong profits tax is provided at a rate of **16.5%**[241](index=241&type=chunk) - PAX Computer Technology (Shenzhen) Co., Ltd. is recognized as a high-tech enterprise, enjoying a preferential corporate income tax rate of **15%**[244](index=244&type=chunk)[249](index=249&type=chunk) [Earnings Per Share](index=50&type=section&id=Earnings%20Per%20Share) This note explains the calculation methods for basic and diluted earnings per share for the six months ended June 30, 2025, and lists the relevant weighted average number of ordinary shares Earnings Per Share Calculation (HK$ thousand/thousand shares) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company | 390,877 | 454,583 | | Weighted Average Number of Ordinary Shares Outstanding | 1,060,685 | 1,070,525 | | Basic Earnings Per Share (HK$) | 0.369 | 0.425 | | Adjustment for Share Options | 14,659 | 22,022 | | Weighted Average Number of Ordinary Shares for Diluted EPS | 1,075,344 | 1,092,547 | | Diluted Earnings Per Share (HK$) | 0.363 | 0.416 | [Dividends](index=52&type=section&id=Dividends) This note reiterates the Board's declaration of an interim dividend of HK$0.25 per ordinary share for the six months ended June 30, 2025, totaling approximately HK$264,961,000 - The Board has resolved to declare an interim dividend of **HK$0.25 per ordinary share** for the six months ended June 30, 2025[254](index=254&type=chunk)[256](index=256&type=chunk) - The total interim dividend is approximately **HK$264,961,000**, to be paid on **September 25, 2025**[254](index=254&type=chunk)[256](index=256&type=chunk) [Property, Plant and Equipment](index=52&type=section&id=Property%2C%20Plant%20and%20Equipment) This note outlines the movements in property, plant and equipment for the six months ended June 30, 2025, including additions, disposals, depreciation, and exchange adjustments Movements in Net Book Value of Property, Plant and Equipment (HK$ thousand) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Book Value as of January 1 | 939,396 | 950,811 | | Additions | 18,088 | 58,628 | | Disposals | (942) | (121) | | Depreciation | (34,811) | (29,197) | | Exchange Adjustments | 32,810 | (22,781) | | **Net Book Value as of June 30** | **954,541** | **957,340** | - Depreciation expense of **HK$7,225,000** has been included in cost of sales, and **HK$27,586,000** in administrative expenses[259](index=259&type=chunk) [Right-of-Use Assets and Lease Liabilities](index=53&type=section&id=Right-of-Use%20Assets%20and%20Lease%20Liabilities) This note details the Group's right-of-use assets (including land use rights, office properties, factories, and warehouses) and lease liabilities as of June 30, 2025, and lists related depreciation expenses and cash outflows Right-of-Use Assets and Lease Liabilities (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Right-of-Use Assets** | | | | Land Use Rights | 100,642 | 100,089 | | Office Properties | 23,729 | 29,755 | | Factories and Warehouses | 79,391 | 77,437 | | **Total** | **203,762** | **207,281** | | **Lease Liabilities** | | | | Non-current | 67,253 | 69,606 | | Current | 17,851 | 18,219 | | **Total** | **85,104** | **87,825** | - Additions to right-of-use assets during the six months ended June 30, 2025, amounted to **HK$4,046,000**[262](index=262&type=chunk) Right-of-Use Asset Related Expenses (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Depreciation of Right-of-Use Assets | 14,098 | 15,268 | | Expenses Related to Short-term Leases | 7,093 | 6,345 | | Interest Expense | 2,446 | 2,908 | | Total Cash Outflow for Leases | 19,279 | 19,796 | [Intangible Assets](index=56&type=section&id=Intangible%20Assets) This note outlines the movements in intangible assets for the six months ended June 30, 2025, including goodwill, trademarks, and contractual customer relationships and others, and explains related additions, amortization, and exchange adjustments Movements in Net Book Value of Intangible Assets (HK$ thousand) | Item | Net Book Value as of January 1, 2025 | Additions | Amortization | Exchange Adjustments | Net Book Value as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Goodwill | 65,959 | – | – | 5,147 | 71,106 | | Trademarks | 2,586 | – | (493) | 235 | 2,328 | | Contractual Customer Relationships and Others | 49,287 | 14,744 | (4,844) | 3,108 | 62,295 | | **Total** | **117,832** | **14,744** | **(5,337)** | **8,490** | **135,729** | - Amortization expense of **HK$5,337,000** has been included in administrative expenses[271](index=271&type=chunk) [Financial Asset Measured at Fair Value](index=57&type=section&id=Financial%20Asset%20Measured%20at%20Fair%20Value) This note explains the Group's fund investments measured at fair value through profit or loss as of June 30, 2025, whose carrying amount is denominated in RMB, and discloses their fair value changes and exchange adjustments Financial Assets Measured at Fair Value (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investments Measured at Fair Value Through Profit or Loss | 83,005 | 88,242 | Movements in Unlisted Fund Investments (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | As of January 1 | 88,242 | 96,918 | | Fair Value (Loss)/Gain Recognized in Profit or Loss | (7,873) | 1,589 | | Exchange Adjustments | 2,636 | (2,316) | | **As of June 30** | **83,005** | **96,191** | - The carrying amount of this investment is denominated in **RMB**[275](index=275&type=chunk) - Fair value measurement of fund investments uses significant unobservable inputs (Level 3) and applies a net asset value model[276](index=276&type=chunk)[279](index=279&type=chunk) [Investments Accounted for Using the Equity Method](index=58&type=section&id=Investments%20Accounted%20for%20Using%20the%20Equity%20Method) This note lists the Group's investments accounted for using the equity method as of June 30, 2025, including investments in Shanghai Kaixian Software Co., Ltd. and Coshine Global Technology Holding Pte. Ltd., and discloses capital injections into Shanghai Kaixian and Coshine Global Technology, as well as the disposal of CPayond equity - As of June 30, 2025, the Group's investments accounted for using the equity method are investments in **Shanghai Kaixian Software Co., Ltd.** and **Coshine Global Technology Holding Pte. Ltd**[278](index=278&type=chunk)[280](index=280&type=chunk) - The Group injected **RMB1,983,000** (approximately **HK$2,134,000**) into Shanghai Kaixian[281](index=281&type=chunk)[282](index=282&type=chunk) - The Group injected **US$138,000** (approximately **HK$1,076,000**) into Coshine Global Technology to acquire a **20% equity interest**[283](index=283&type=chunk) - The Group disposed of its **50% equity interest** in CPayond for a cash consideration of **Euro 3,367,000** (approximately **HK$28,642,000**)[283](index=283&type=chunk) Carrying Amount and Share of Results of Investments Accounted for Using the Equity Method (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Carrying Amount of Individually Immaterial Associates | 17,351 | 15,057 | | Carrying Amount of Individually Immaterial Joint Ventures | – | 29,781 | | **Total** | **17,351** | **44,838** | | **Share of Results Recognized by the Group in the Interim Condensed Consolidated Income Statement** | | | | – Individually Immaterial Associates | (1,413) | (850) | | – An Individually Immaterial Joint Venture | (1,188) | 5,536 | | **Total** | **(2,601)** | **4,686** | [Trade and Bills Receivables](index=61&type=section&id=Trade%20and%20Bills%20Receivables) This note provides an aging analysis of trade and bills receivables as of June 30, 2025, showing an increase in net trade receivables, with credit terms typically ranging from 0 to 180 days Trade and Bills Receivables (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Receivables | 2,839,136 | 2,625,573 | | Less: Impairment Provision for Trade Receivables | (85,296) | (81,959) | | **Net Trade Receivables** | **2,753,840** | **2,543,614** | | Bills Receivables | 673 | 270 | | **Total Trade and Bills Receivables** | **2,754,513** | **2,543,884** | Aging Analysis of Trade Receivables by Invoice Date (HK$ thousand) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 90 days | 1,368,447 | 1,242,756 | | 91 to 180 days | 488,607 | 430,039 | | 181 to 365 days | 605,099 | 714,843 | | Over 365 days | 376,983 | 237,935 | | **Total** | **2,839,136** | **2,625,573** | - Trade receivables include retention amounts of **HK$9,268,000**, of which **HK$8,589,000** are aged over **365 days**[289](index=289&type=chunk)[290](index=290&type=chunk) [Share Capital and Share Option](index=63&type=section&id=Share%20Capital%20and%20Share%20Option) This note details the movements in the company's issued and fully paid share capital as of June 30, 2025, primarily due to share repurchases and share option exercises, and also provides detailed information on the share option scheme, including its purpose, terms, and movements Movements in Issued and Fully Paid Share Capital (thousand shares/HK$ thousand) | Item | Number of Ordinary Shares (thousand shares) | Ordinary Shares of HK$0.1 Par Value (HK$ thousand) | | :--- | :--- | :--- | | As of January 1, 2025 | 1,061,704 | 106,170 | | Repurchased Shares Cancelled during the Period | (2,162) | (216) | | Share Options Exercised | 100 | 10 | | **As of June 30, 2025** | **1,059,642** | **105,964** | - For the six months ended June 30, 2025, the company repurchased and cancelled **2,162,000 ordinary shares** for a total consideration of approximately **HK$9,903,000**[294](index=294&type=chunk) - The Share Option Scheme aims to recognize the contributions of eligible participants to the Group and to attract, retain, and motivate talent[300](index=300&type=chunk)[301](index=301&type=chunk) - On **August 21, 2024**, the Board resolved to extend the exercise period of all outstanding share options by **five years to October 2, 2029**[304](index=304&type=chunk)[305](index=305&type=chunk) - For the six months ended June 30, 2025, a total of **100,000 share options** were exercised, with a weighted average share price of **HK$5.38 per share** immediately before the exercise date[316](index=316&type=chunk)[318](index=318&type=chunk) [Reserves](index=69&type=section&id=Reserves) This note explains the composition of the Group's reserves, including capital reserve and statutory reserve, and PRC subsidiaries are required to allocate 10% of their net profit to the statutory reserve fund until it reaches 50% of their registered capital - Capital reserve refers to the difference between the total acquisition consideration and the total share capital and share premium of directly owned subsidiaries during reorganization[320](index=320&type=chunk)[323](index=323&type=chunk) - PRC subsidiaries are required to allocate **10% of their net profit** to the statutory reserve fund until it reaches **50% of their registered capital**[321](index=321&type=chunk)[324](index=324&type=chunk) - As of June 30, 2025, retained earnings included a statutory reserve fund of **HK$230,427,000**[321](index=321&type=chunk)[324](index=324&type=chunk) [Trade Payables](index=69&type=section&id=Trade%20Payables) This note provides an aging analysis of trade payables as of June 30, 2025, showing that most trade payables are within 90 days, and the Group's suppliers typically grant credit terms of 0 to 180 days Trade Payables (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Payables | 832,910 | 935,193 | | Amounts Due to a Related Party | – | 2,018 | | **Total** | **832,910** | **937,211** | Aging Analysis of Trade Payables by Invoice Date (HK$ thousand) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 90 days | 716,651 | 787,430 | | 91 to 180 days | 113,235 | 145,394 | | 181 to 365 days | 3,024 | 4,387 | | **Total** | **832,910** | **937,211** | - The average credit period granted by the Group's suppliers ranges from **0 to 180 days**[327](index=327&type=chunk)[329](index=329&type=chunk) [Contingent Liabilities](index=70&type=section&id=Contingent%20Liabilities) This note confirms that as of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had **no significant contingent liabilities**[328](index=328&type=chunk)[330](index=330&type=chunk) [Capital Commitment](index=70&type=section&id=Capital%20Commitment) This note discloses the Group's significant capital expenditures contracted but not recognized as liabilities as of June 30, 2025, primarily for property, plant, and equipment in mainland China Capital Commitment (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property, Plant and Equipment in Mainland China | 6,962 | 8,110 | [Related Party Transactions](index=71&type=section&id=Related%20Party%20Transactions) This note details the Group's transactions and balances with related parties for the six months ended June 30, 2025, including sales of electronic payment products and rent payments to subsidiaries of PAX Technology (China) Limited, as well as commissions and service income from joint ventures, and discloses key management compensation Related Party Transactions (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Sales of Electronic Payment Products to a Subsidiary of PAX Technology | 87 | – | | Rent Paid to a Subsidiary of PAX Technology | 172 | 174 | | Commissions Paid to a Joint Venture | 5,303 | 14,367 | | Service Income from a Joint Venture | 199 | 6,737 | - Sales of electronic payment products to PAX subsidiaries were conducted under a framework agreement and complied with the Listing Rules' continuing connected transaction requirements[345](index=345&type=chunk) Key Management Compensation (HK$ thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Fees | 6,700 | 5,095 | | Salaries, Allowances and Benefits in Kind | 3,268 | 3,416 | | Discretionary Bonuses | 6,200 | 6,600 | | Employer's Contributions to Retirement Benefit Schemes | 61 | 88 | | **Total** | **16,229** | **15,199** |

2025 INTERIM REPORT 中期報告 GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded ...

[Q2 and H1 2025 Earnings Announcement](index=1&type=section&id=2025%E5%B9%B4%E7%AC%AC%E4%BA%8C%E5%AD%A3%E5%BA%A6%E5%8F%8A%E4%B8%8A%E5%8D%8A%E5%B9%B4%E6%A5%AD%E7%B8%BE%E5%85%AC%E5%91%8A) [Company Information and Announcement Overview](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF%E4%B8%8E%E5%85%AC%E5%91%8A%E6%A6%82%E8%A7%88) This section outlines the context, basic information, and access details for Trip.com Group's Q2 and H1 2025 unaudited financial results announcement [Company Profile](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B) - Trip.com Group Limited (Stock Code: 9961) is a company incorporated in the Cayman Islands[2](index=2&type=chunk) [Announcement Publication Information](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF%E4%B8%8E%E5%85%AC%E5%91%8A%E6%A6%82%E8%A7%88) - Trip.com Group released its unaudited financial results for Q2 and H1 2025 on August 28, 2025 (Singapore time)[2](index=2&type=chunk)[3](index=3&type=chunk) - The announcement is available on the HKEX website www.hkexnews.hk and the company's investor relations website investors.trip.com[2](index=2&type=chunk) [Q2 and H1 2025 Performance Summary](index=2&type=section&id=2025%E5%B9%B4%E7%AC%AC%E4%BA%8C%E5%AD%A3%E5%BA%A6%E5%8F%8A%E4%B8%8A%E5%8D%8A%E5%B9%B4%E4%B8%9A%E7%BB%A9%E6%A6%82%E8%A6%81) Trip.com Group achieved strong growth in Q2 2025, particularly in international business and inbound tourism, with management expressing optimism and emphasizing strategic investments in innovation, partnerships, and inbound tourism expansion [Performance Highlights](index=2&type=section&id=%E4%B8%9A%E7%BB%A9%E4%BA%AE%E7%82%B9) - International business segments continued to show **strong growth** in Q2 2025[4](index=4&type=chunk) - Outbound hotel and air ticket bookings have fully surpassed **120% of 2019 pre-pandemic levels**[4](index=4&type=chunk) - International OTA platform total bookings increased by **over 60% year-over-year**[6](index=6&type=chunk) - Inbound tourism bookings increased by **over 100% year-over-year**[6](index=6&type=chunk) [Management Commentary](index=2&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AF%84%E8%AE%BA) - Executive Chairman Mr. James Liang stated that tourism is a key factor for national development and global cooperation, and the company will continue to prioritize strategic investments in innovation, partnership development, and inbound tourism expansion[4](index=4&type=chunk) - CEO Ms. Jane Sun emphasized the company's strategy focuses on capturing the growing demands of diverse customer segments, particularly in the inbound tourism market, and enhancing service capabilities to provide seamless local experiences[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=%E8%B4%A2%E5%8A%A1%E4%B8%9A%E7%BB%A9%E5%88%86%E6%9E%90) Trip.com Group's Q2 2025 net revenue increased by 16% year-over-year, driven by strong tourism recovery, with accommodation and transportation as primary revenue sources and significant growth in profitability, net profit, and adjusted EBITDA [Net Revenue](index=2&type=section&id=%E5%87%80%E8%90%A5%E4%B8%9A%E6%94%B6%E5%85%A5) Q2 2025 Net Revenue | Metric | Amount (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Net Revenue | 14.8 billion | +16% | +7% | [Revenue by Business Segment](index=2&type=section&id=%E5%90%84%E4%B8%9A%E5%8A%A1%E6%9D%BF%E5%9D%97%E6%94%B6%E5%85%A5) Q2 2025 Revenue by Business Segment | Business Segment | Revenue (RMB) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Accommodation Reservation | 6.2 billion | +21% | +12% | | Transportation Ticketing | 5.4 billion | +11% | Stable | | Packaged Tours | 1.1 billion | +5% | +14% | | Corporate Travel | 692 million | +9% | +21% | [Operating Costs and Expenses](index=3&type=section&id=%E8%90%A5%E4%B8%9A%E6%88%90%E6%9C%AC%E4%B8%8E%E8%B4%B9%E7%94%A8) Q2 2025 Operating Costs and Expenses | Metric | Amount (RMB) | YoY Change | QoQ Change | Percentage of Net Revenue | | :--- | :--- | :--- | :--- | :--- | | Cost of Revenue | 2.8 billion | +22% | +4% | 19% | | Product Development Expenses | 3.5 billion | +17% | -1% | 24% | | Sales and Marketing Expenses | 3.3 billion | +17% | +11% | 22% | | General and Administrative Expenses | 1.1 billion | +2% | +6% | 7% | [Profit and Profitability](index=3&type=section&id=%E5%88%A9%E6%B6%A6%E4%B8%8E%E7%9B%88%E5%88%A9%E8%83%BD%E5%8A%9B) Q2 2025 Profit Metrics | Metric | Q2 2025 (RMB) | Q2 2024 (RMB) | QoQ vs Q1 2025 (RMB) | | :--- | :--- | :--- | :--- | | Net Income | 4.9 billion | 3.9 billion | 4.3 billion | | Adjusted EBITDA | 4.9 billion | 4.4 billion | 4.2 billion | | Net Income Attributable to Trip.com Group Shareholders | 4.8 billion | 3.8 billion | 4.3 billion | | Non-GAAP Net Income Attributable to Trip.com Group Shareholders | 5.0 billion | 5.0 billion | 4.2 billion | | Diluted Earnings Per Ordinary Share and Per ADS | 6.97 | 5.57 (Q2 2024) | 6.09 (Q1 2025) | | Non-GAAP Diluted Earnings Per Ordinary Share and Per ADS | 7.20 | 7.25 (Q2 2024) | 5.96 (Q1 2025) | - Income tax expense was **RMB 998 million**, a significant increase compared to Q2 2024 and the previous quarter, primarily due to subsidiary profitability, deferred tax liability changes, and fair value changes in investments[8](index=8&type=chunk) [Cash and Liquidity](index=3&type=section&id=%E7%8E%B0%E9%87%91%E5%8F%8A%E6%B5%81%E5%8A%A8%E6%80%A7) Cash and Liquidity as of June 30, 2025 | Metric | Amount (RMB) | | :--- | :--- | | Balance of cash and cash equivalents, restricted cash, short-term investments, and held-to-maturity time deposits and wealth management products | 94.1 billion | [Recent Developments and Capital Returns](index=4&type=section&id=%E8%BF%91%E6%9C%9F%E5%8F%91%E5%B1%95%E4%B8%8E%E8%B5%84%E6%9C%AC%E5%9B%9E%E6%8A%A5) Trip.com Group remains committed to delivering shareholder value and actively returning capital to investors through share repurchase programs [Share Repurchase Program](index=4&type=section&id=%E8%82%A1%E7%A5%A8%E5%9B%9E%E8%B4%AD%E8%AE%A1%E5%88%92) - As of August 27, 2025, the company repurchased approximately **7 million American Depositary Shares (ADS)** for a total consideration of approximately **$400 million** under the share repurchase program authorized in February 2025[10](index=10&type=chunk) - The Board of Directors approved a new share repurchase program in August 2025, authorizing the repurchase of up to **$5 billion** of its outstanding ordinary shares and/or ADSs[10](index=10&type=chunk) [Conference Call Information](index=4&type=section&id=%E7%94%B5%E8%AF%9D%E4%BC%9A%E8%AE%AE%E4%BF%A1%E6%81%AF) Trip.com Group management will host a conference call to discuss the results, with live webcast and replay services available - The conference call will be held on August 27, 2025, at 8:00 PM U.S. Eastern Time (August 28, 2025, at 8:00 AM Hong Kong Time)[11](index=11&type=chunk) - The call will be webcast live and replayed on https://investors.trip.com, with an archive available for 12 months[11](index=11&type=chunk) [Forward-Looking Statements and Non-GAAP Disclosures](index=5&type=section&id=%E5%89%8D%E7%9E%BB%E6%80%A7%E5%A3%B0%E6%98%8E%E4%B8%8E%E9%9D%9EGAA%E9%9C%B2) This section includes forward-looking statements regarding future performance and explains the company's Non-GAAP financial measures and their reconciliation to GAAP, providing more comparable operational data [Forward-Looking Statements](index=5&type=section&id=%E5%89%8D%E7%9E%BB%E6%80%A7%E5%A3%B0%E6%98%8E) - The announcement contains forward-looking statements subject to inherent risks and uncertainties, where actual results may differ materially from expectations[12](index=12&type=chunk) - Potential risks include economic slowdowns, travel disruptions, competitive failures, growth management failures, strategic investment risks, seasonality, infrastructure damage, loss of key personnel, and regulatory changes[12](index=12&type=chunk) [Non-GAAP Financial Measures Explanation](index=5&type=section&id=%E9%9D%9EGAA%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E8%AF%B4%E6%98%8E) - Trip.com Group provides Non-GAAP financial information, including Non-GAAP net income attributable to Trip.com Group Limited, adjusted EBITDA, adjusted EBITDA margin, and diluted earnings per ordinary share and per ADS[13](index=13&type=chunk) - Non-GAAP metrics adjust for share-based compensation expenses, fair value changes in investments and exchangeable bonds measured at fair value through profit or loss, and their income tax effects, aiming to enhance comparability of operating data across periods[13](index=13&type=chunk)[14](index=14&type=chunk) [About Trip.com Group](index=6&type=section&id=%E5%85%B3%E4%BA%8E%E6%90%BA%E7%A8%8B%E9%9B%86%E5%9B%A2) Trip.com Group is a leading global one-stop travel platform offering comprehensive products, services, and differentiated travel content through brands like Ctrip, Qunar, Trip.com, and Skyscanner - Trip.com Group Limited (NASDAQ: TCOM; HKEX: 9961) is a **leading global one-stop travel platform**[15](index=15&type=chunk) - Founded in 1999, the company listed on NASDAQ in 2003 and on HKEX in 2021[15](index=15&type=chunk) - Key operating brands include Ctrip, Qunar, Trip.com, and Skyscanner, with a mission to 'pursue the perfect trip for a better world'[15](index=15&type=chunk) [Investor Relations Contact Information](index=6&type=section&id=%E6%8A%95%E8%B5%84%E8%80%85%E5%85%B3%E7%B3%BB%E8%81%94%E7%B3%BB%E6%96%B9%E5%BC%8F) This section provides contact information for Trip.com Group's investor relations department - Investors can contact Trip.com Group Investor Relations by phone at +86 (21) 3406 4880 X 12229 or via email at iremail@trip.com[16](index=16&type=chunk) [Financial Statements](index=7&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents Trip.com Group's unaudited consolidated balance sheets, statements of operations, and GAAP to Non-GAAP reconciliations, illustrating the company's financial position and operating results for Q2 and H1 2025 [Unaudited Consolidated Balance Sheets](index=7&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E7%BB%BC%E5%90%88%E8%B5%84%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) Summary of Unaudited Consolidated Balance Sheets as of June 30, 2025 (RMB in millions) | Metric | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | 112,120 | 116,516 | | Total non-current assets | 130,461 | 135,922 | | **Total Assets** | **242,581** | **252,438** | | **Liabilities** | | | | Total current liabilities | 74,010 | 87,454 | | Total non-current liabilities | 25,089 | 15,504 | | **Total Liabilities** | **99,099** | **102,958** | | Mezzanine equity | 743 | 791 | | **Total Shareholders' Equity** | **142,739** | **148,689** | | Total Liabilities, Mezzanine Equity and Shareholders' Equity | 242,581 | 252,438 | [Unaudited Consolidated Statements of Operations](index=9&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E7%BB%BC%E5%90%88%E5%88%A9%E6%BD%A6%E8%A1%A8) Summary of Unaudited Consolidated Statements of Operations for Q2 and H1 2025 (RMB in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | 14,843 | 12,772 | 28,673 | 24,677 | | Gross profit | 12,025 | 10,460 | 23,150 | 20,127 | | Operating income | 4,102 | 3,555 | 7,665 | 6,870 | | Net income | 4,880 | 3,888 | 9,194 | 8,213 | | Net income attributable to Trip.com Group Limited | 4,846 | 3,833 | 9,123 | 8,145 | | Diluted earnings per ordinary share | 6.97 | 5.57 | 13.05 | 11.93 | [Reconciliation of GAAP to Non-GAAP Results](index=11&type=section&id=GAAP%E4%B8%8E%E9%9D%9EGAA%E4%B8%9A%E7%BB%A9%E5%AF%B9%E8%B4%A6) Summary of GAAP to Non-GAAP Reconciliation for Q2 and H1 2025 (RMB in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | 4,880 | 3,888 | 9,194 | 8,213 | | Adjusted EBITDA | 4,880 | 4,436 | 9,127 | 8,410 | | Adjusted EBITDA margin | 33% | 35% | 32% | 34% | | Net income attributable to Trip.com Group Limited (Non-GAAP) | 5,011 | 4,985 | 9,199 | 9,040 | | Diluted earnings per ordinary share (Non-GAAP) | 7.20 | 7.25 | 13.16 | 13.24 | [GAAP to IFRS Reconciliation](index=13&type=section&id=GAAP%E4%B8%8EIFRS%E8%B0%83%E8%8A%82%E8%A1%A8) This section provides a reconciliation between Trip.com Group's US GAAP financial statements and International Financial Reporting Standards (IFRS), detailing key accounting policy differences [Reconciliation Overview](index=13&type=section&id=%E8%B0%83%E8%8A%82%E8%A1%A8%E6%A6%82%E8%BF%B0) - The unaudited interim financial statements are prepared under US GAAP, with a reconciliation provided for differences from IFRS accounting policies[23](index=23&type=chunk)[24](index=24&type=chunk) - The reconciliation has been subject to a limited assurance review by PricewaterhouseCoopers in accordance with International Standard on Assurance Engagements 3000 (Revised)[23](index=23&type=chunk) [Consolidated Statements of Operations Adjustments](index=14&type=section&id=%E7%BB%BC%E5%90%88%E5%88%A9%E6%BD%A6%E8%A1%A8%E8%B0%83%E6%95%B4) - For H1 2025, GAAP net income was **RMB 9,194 million**, adjusted to **RMB 10,417 million** under IFRS, primarily due to fair value changes in convertible bonds[25](index=25&type=chunk) - For H1 2024, GAAP net income was **RMB 8,213 million**, adjusted to **RMB 9,002 million** under IFRS[26](index=26&type=chunk) [Consolidated Balance Sheets Adjustments](index=16&type=section&id=%E7%BB%BC%E5%90%88%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8%E8%B0%83%E6%95%B4) - As of June 30, 2025, GAAP total assets were **RMB 252,438 million**, adjusted to **RMB 252,468 million** under IFRS, with key differences in classification and measurement of intangible assets, investments, and convertible bonds[27](index=27&type=chunk) - As of December 31, 2024, GAAP total assets were **RMB 242,581 million**, adjusted to **RMB 242,599 million** under IFRS[28](index=28&type=chunk) [Basis of Preparation and Accounting Policy Differences](index=18&type=section&id=%E7%BC%96%E5%88%B6%E5%9F%BA%E7%A1%80%E4%B8%8E%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%B7%AE%E5%BC%82) - Key accounting policy differences between GAAP and IFRS include: share-based compensation (straight-line vs graded vesting), leases (straight-line lease expense vs effective interest method interest expense), equity securities without readily determinable fair value (cost less impairment vs FVTPL), available-for-sale debt investments (accumulated other comprehensive income vs FVTPL), convertible bonds (amortized cost vs FVTPL), and software classification (property, equipment and software vs intangible assets)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)

[Report Overview and Company Information](index=1&type=section&id=%E5%A0%B1%E5%91%8A%E6%A6%82%E8%A7%88%E8%88%87%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) [Legal Disclaimer and Announcement Details](index=1&type=section&id=%E6%B3%95%E5%BE%8B%E8%81%B2%E6%98%8E%E8%88%87%E5%85%AC%E5%91%8A%E8%A9%B3%E6%83%85) This announcement presents Noah Holdings Private Wealth Asset Management Limited's unaudited Q2 2025 financial results, issued under HKEX Listing Rules and SFO, advising investor caution - Announcement issued under HKEX Listing Rule 13.09 and SFO Part XIVA inside information provisions[4](index=4&type=chunk) - Q2 2025 results prepared under US GAAP, differing from IFRS[4](index=4&type=chunk) - Interim results for the six months ended June 30, 2025, expected to be published on August 28, 2025 (HKT)[4](index=4&type=chunk) [Company Profile and Reporting Structure Adjustment](index=2&type=section&id=%E5%85%AC%E5%8F%B8%E7%B0%A1%E4%BB%8B%E8%88%87%E5%A0%B1%E5%91%8A%E7%B5%90%E6%A7%8B%E8%AA%BF%E6%95%B4) Noah Holdings Limited announced Q2 2025 unaudited financial results, adopting a refined segment reporting structure from Q4 2024 to disclose net revenue by onshore and offshore business segments - Noah Holdings Limited is a leading wealth management service provider, offering global investment and asset allocation advisory services to high-net-worth Chinese investors worldwide[8](index=8&type=chunk) - From Q4 2024, the company adopted a refined segment reporting structure, disclosing net revenue by onshore and offshore business segments, with Q4 2024 comparative data restated[8](index=8&type=chunk) [Q2 2025 Financial and Operational Highlights](index=2&type=section&id=2025%E5%B9%B4%E7%AC%AC%E4%BA%8C%E5%AD%A3%E5%BA%A6%E8%B2%A1%E5%8B%99%E8%88%87%E7%B6%93%E7%87%9F%E6%91%98%E8%A6%81) [Q2 2025 Financial Highlights](index=2&type=section&id=2025%E5%B9%B4%E7%AC%AC%E4%BA%8C%E5%AD%A3%E5%BA%A6%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) In Q2 2025, Noah Holdings' net revenue increased by 2.2% year-over-year to RMB 629.5 million, operating income grew by 20.2%, and net income attributable to Noah shareholders surged by 79.0% to RMB 178.6 million Q2 2025 Key Financial Metrics Overview | Metric | Q2 2025 (RMB million) | Q2 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenue | 629.5 | 615.8 | +2.2% | | Operating Income | 161.0 | 134.0 | +20.2% | | Net Income Attributable to Noah Shareholders | 178.6 | 99.8 | +79.0% | | Non-GAAP Net Income Attributable to Noah Shareholders | 189.0 | 106.1 | +78.2% | - Net revenue growth primarily due to increased distribution of offshore private securities investment funds and onshore private securities investment funds[10](index=10&type=chunk) [Q2 2025 Operational Performance](index=2&type=section&id=2025%E5%B9%B4%E7%AC%AC%E4%BA%8C%E5%AD%A3%E5%BA%A6%E7%B6%93%E7%87%9F%E6%83%85%E6%B3%81) Noah achieved growth in client numbers and total value of distributed products in Q2 2025, particularly strong in offshore clients and private securities investment funds, while AUM remained relatively stable with offshore AUM increasing Q2 2025 Client and Product Distribution Data | Metric | As of June 30, 2025 | As of June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Registered Clients | 464,631 | 459,072 | +1.2% | | Offshore Registered Clients | 18,967 | 16,786 | +13.0% | | Total Active Clients (Q2) | 9,160 | 8,634 | +6.1% | | Offshore Active Clients (Q2) | 3,650 | 3,244 | +12.5% | | Total Value of Distributed Investment Products (Q2) | RMB 17.0 billion | RMB 14.4 billion | +17.7% | | Offshore Investment Product Distribution (Q2) | RMB 8.3 billion | RMB 7.9 billion | +5.1% | - Growth in total value of distributed investment products primarily due to a **44.4%** increase in private securities investment fund distribution[14](index=14&type=chunk)[70](index=70&type=chunk) - As of June 30, 2025, total assets under management (AUM) were **RMB 145.1 billion**, a decrease from **RMB 154.0 billion** on June 30, 2024, but offshore AUM increased by **5.9%** to **RMB 41.4 billion**[15](index=15&type=chunk)[72](index=72&type=chunk) [Management Commentary](index=5&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A9%95%E8%AB%96) [Chairperson's Statement](index=5&type=section&id=%E8%91%A3%E4%BA%8B%E9%95%B7%E8%87%B4%E8%BE%AD) Ms. Wang Jingbo, Co-founder and Chairperson of Noah Holdings, stated the company is steadily progressing amidst challenges, showing recovery in profitability and revenue, with significant growth in operating income and non-GAAP net profit - Operating income grew robustly by **20.2%** year-over-year, and non-GAAP net profit surged by **78.2%** year-over-year[19](index=19&type=chunk) - Offshore revenue continued to grow, now accounting for nearly **50%** of total net revenue, solidifying the effectiveness of the global expansion strategy[19](index=19&type=chunk) - The company will continue to steadfastly execute its strategy to drive long-term sustainable business growth while prudently observing the market environment[19](index=19&type=chunk) [Q2 2025 Detailed Financial Performance](index=5&type=section&id=2025%E5%B9%B4%E7%AC%AC%E4%BA%8C%E5%AD%A3%E5%BA%A6%E8%A9%B3%E7%B4%B0%E8%B2%A1%E5%8B%99%E6%A5%AD%E7%B8%BE) [Net Revenue Analysis](index=5&type=section&id=%E6%B7%A8%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) Q2 2025 net revenue was RMB 629.5 million, up 2.2% year-over-year, mainly driven by increased distribution of offshore and onshore private securities investment funds, with offshore protection and legacy services showing the fastest growth Q2 2025 Net Revenue by Segment | Segment | Q2 2025 (RMB million) | Q2 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Onshore Public Market Securities | 131.8 | 116.8 | +12.8% | | Onshore Asset Management | 177.1 | 198.1 | -10.6% | | Onshore Insurance | 7.2 | 11.7 | -38.7% | | Offshore Wealth Management | 129.4 | 150.6 | -14.1% | | Offshore Asset Management | 108.3 | 97.1 | +11.5% | | Offshore Protection and Legacy Services | 59.0 | 30.9 | +90.9% | | Headquarters | 16.7 | 10.6 | +57.3% | | **Total Net Revenue** | **629.5** | **615.8** | **+2.2%** | - Net revenue from offshore protection and legacy services increased by **90.9%** year-over-year, primarily due to increased distribution fees from offshore insurance products by commission-based brokers[22](index=22&type=chunk) - Net revenue from onshore asset management decreased by **10.6%** year-over-year, mainly due to reduced management fees and performance-based compensation from private equity products[22](index=22&type=chunk) [Operating Costs and Expenses Analysis](index=6&type=section&id=%E7%B6%93%E7%87%9F%E6%88%90%E6%9C%AC%E5%8F%8A%E9%96%8B%E6%94%AF%E5%88%86%E6%9E%90) Total operating costs and expenses in Q2 2025 were RMB 468.5 million, a 2.8% year-over-year decrease, with key components including compensation and benefits, selling expenses, and general and administrative expenses, showing varied changes across segments Q2 2025 Operating Costs and Expenses Breakdown | Item | Amount (RMB million) | Percentage | YoY Change | | :--- | :--- | :--- | :--- | | Compensation and Benefits | 299.3 | 63.9% | +0.8% | | Selling Expenses | 62.3 | 13.3% | +0.7% | | General and Administrative Expenses | 71.2 | 15.2% | -10.9% | | Provision for Credit Losses | 41.2 | 8.8% | N/A | | Other Operating Expenses | 8.6 | 1.8% | -81.4% | | Government Subsidies (Income) | (14.1) | -3.0% | +434.4% | | **Total** | **468.5** | **100.0%** | **-2.8%** | - Operating costs and expenses for onshore public market securities decreased by **57.4%**, mainly due to reduced financial advisor compensation and increased government subsidies[24](index=24&type=chunk) - Headquarters operating costs and expenses increased by **58.9%**, primarily due to increased provision for credit losses related to the suspension of lending business[24](index=24&type=chunk) [Operating Income (Loss)](index=7&type=section&id=%E7%B6%93%E7%87%9F%E6%89%80%E5%BE%97%E6%94%B6%E7%9B%8A%EF%BC%88%E6%90%8D%E5%A4%B1%EF%BC%89) Total operating income in Q2 2025 was RMB 161.0 million, a 20.2% year-over-year increase, with significant growth in onshore public market securities and onshore asset management, and offshore protection and legacy services surging by 186.8% Q2 2025 Operating Income (Loss) by Segment | Segment | Q2 2025 (RMB million) | Q2 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Onshore Public Market Securities | 107.8 | 60.7 | +77.8% | | Onshore Asset Management | 155.1 | 118.4 | +31.0% | | Onshore Insurance | (7.6) | (25.6) | -70.2% | | Offshore Wealth Management | 27.8 | 37.1 | -25.1% | | Offshore Asset Management | 72.6 | 74.2 | -2.1% | | Offshore Protection and Legacy Services | 29.8 | 10.4 | +186.8% | | Headquarters | (224.5) | (141.2) | +59.1% | | **Total Operating Income** | **161.0** | **134.0** | **+20.2%** | - Operating loss from onshore insurance decreased by **70.2%** year-over-year, indicating a narrowing of business losses[25](index=25&type=chunk) [Other Financial Metrics](index=8&type=section&id=%E5%85%B6%E4%BB%96%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99) In Q2 2025, operating margin improved to 25.6%, net profit margin reached 28.4%, interest income decreased by 21.3% year-over-year, investments shifted from gain to loss, and income tax expense increased by 58.2% due to higher withholding tax on dividends in mainland China Q2 2025 Other Financial Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Operating Margin | 25.6% | 21.8% | +3.8 percentage points | | Net Profit Margin | 28.4% | 16.8% | +11.6 percentage points | | Interest Income | RMB 33.5 million | RMB 42.6 million | -21.3% | | Investment Gain (Loss) | (RMB 13.9 million) | RMB 10.4 million | Shift from gain to loss | | Income Tax Expense | RMB 63.7 million | RMB 40.3 million | +58.2% | - Investment loss primarily due to unrealized losses from fair value changes in equity investments[28](index=28&type=chunk) [Net Income and Earnings Per Share](index=8&type=section&id=%E6%B7%A8%E6%94%B6%E7%9B%8A%E8%88%87%E6%AF%8F%E8%82%A1%E6%94%B6%E7%9B%8A) In Q2 2025, net income increased by 72.2% year-over-year to RMB 178.5 million, with net income attributable to Noah shareholders growing by 79.0%, and non-GAAP net income attributable to Noah shareholders rising by 78.2% to RMB 189.0 million Q2 2025 Net Income and Earnings Per Share | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Income | RMB 178.5 million | RMB 103.7 million | +72.2% | | Net Income Attributable to Noah Shareholders | RMB 178.6 million | RMB 99.8 million | +79.0% | | Basic Net Income Per ADS | RMB 2.56 | RMB 1.42 | +80.3% | | Diluted Net Income Per ADS | RMB 2.54 | RMB 1.42 | +78.9% | | Non-GAAP Net Income Attributable to Noah Shareholders | RMB 189.0 million | RMB 106.1 million | +78.2% | | Non-GAAP Diluted Net Income Per ADS | RMB 2.69 | RMB 1.51 | +78.1% | [Balance Sheet and Cash Flow](index=8&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%80%B5%E8%A1%A8%E8%88%87%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) [Key Metrics](index=8&type=section&id=%E9%97%9C%E9%8D%B5%E6%8C%87%E6%A8%99) As of June 30, 2025, cash and cash equivalents were RMB 3,821.8 million, a decrease from the previous quarter and prior year, with net cash inflow from operating activities at RMB 27.6 million, reduced net cash outflow from investing activities, and increased net cash outflow from financing activities due to share repurchases Cash and Cash Flow at Q2 2025 End | Metric | As of June 30, 2025 (RMB million) | As of March 31, 2025 (RMB million) | As of June 30, 2024 (RMB million) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 3,821.8 | 4,075.4 | 4,604.9 | | Net Cash Inflow from Operating Activities (Q2) | 27.6 | - | 49.7 | | Net Cash Outflow from Investing Activities (Q2) | 171.7 | - | 548.2 | | Net Cash Outflow from Financing Activities (Q2) | 71.5 | - | 44.6 | - Net cash inflow from operating activities decreased, primarily due to reduced redemption of trading debt securities in Q2 2025[34](index=34&type=chunk) - Net cash outflow from investing activities decreased, primarily due to reduced purchases of held-to-maturity investments[34](index=34&type=chunk) - Net cash outflow from financing activities increased, primarily due to share repurchases[34](index=34&type=chunk) [Appendix](index=9&type=section&id=%E9%99%84%E9%8C%84) [Conference Call Information](index=9&type=section&id=%E9%9B%BB%E8%A9%B1%E6%9C%83%E8%AD%B0%E4%BF%A1%E6%81%AF) Noah Holdings will host a conference call on Wednesday, August 27, 2025, at 8:00 PM U.S. Eastern Time (Thursday, August 28, 2025, at 8:00 AM Hong Kong Time) to discuss Q2 2025 unaudited financial results and recent business activities - The conference call will be held on August 27, 2025, at 8 PM U.S. Eastern Time, with English and Chinese services available[36](index=36&type=chunk) - A replay of the conference call and webcast recording will be available on the company's investor relations website[36](index=36&type=chunk) [Explanation of Non-GAAP Measures](index=9&type=section&id=%E9%9D%9E%E5%85%AC%E8%AA%8D%E6%9C%83%E8%A8%88%E6%BA%96%E5%89%87%E8%A1%A1%E9%87%8F%E6%A8%99%E6%BA%96%E8%AA%AA%E6%98%8E) The company discloses non-GAAP financial measures to exclude share-based compensation, non-cash settlement expenses, and related tax impacts, supplementing US GAAP data to provide investors with a more comprehensive view of operating performance trends - Non-GAAP measures exclude share-based compensation, non-cash settlement expenses or reversals, and related tax impacts[37](index=37&type=chunk) - These non-GAAP measures should not be considered as substitutes for financial measures prepared in accordance with US GAAP[39](index=39&type=chunk) [About Noah Holdings Limited](index=10&type=section&id=%E9%97%9C%E6%96%BC%E8%AB%BE%E4%BA%9E%E6%8E%A7%E8%82%A1%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8) Noah Holdings Limited is a leading wealth management service provider, offering one-stop advisory services to high-net-worth Chinese investors globally, listed on NYSE and HKEX, with operations spanning wealth and asset management across major Chinese cities and global financial centers - Noah Holdings Limited is listed on the New York Stock Exchange (NOAH) and the Hong Kong Stock Exchange (6686)[40](index=40&type=chunk) - As of June 30, 2025, Noah managed assets totaling **RMB 145.1 billion** and had **464,631** registered clients[40](index=40&type=chunk)[41](index=41&type=chunk) [Foreign Currency Translation Explanation](index=10&type=section&id=%E5%A4%96%E5%B9%A3%E6%8F%9B%E7%AE%97%E8%AA%AA%E6%98%8E) All RMB to USD conversions in this announcement are made at an exchange rate of RMB 7.1636 to USD 1.00, which is the effective noon buying rate on June 30, 2025, as specified in the Federal Reserve Board's H.10 statistical release - The RMB to USD exchange rate is **RMB 7.1636 to USD 1.00**[43](index=43&type=chunk) [Safe Harbor Statement](index=10&type=section&id=%E5%AE%89%E5%85%A8%E6%B8%AF%E8%81%B2%E6%98%8E) This announcement contains forward-looking statements subject to inherent risks and uncertainties, where actual results may differ materially from expectations, and the company undertakes no obligation to update such statements - Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from those contemplated in any forward-looking statement[44](index=44&type=chunk)[45](index=45&type=chunk) - The company undertakes no obligation to update any such information as a result of new information, future events, or otherwise[45](index=45&type=chunk) [Contact Information](index=11&type=section&id=%E8%81%AF%E7%B9%AB%E6%96%B9%E5%BC%8F) Provides contact information for Noah Holdings Limited Investor Relations - Contact: Rick Chan, Phone: +86-21-8035-8292, Email: ir@noahgroup.com[46](index=46&type=chunk) [Financial Statements Appendix](index=11&type=section&id=%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E9%8C%84) This appendix includes Noah Holdings Limited's condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive income, segment condensed statements of operations, additional business data, supplementary revenue data by geographic region and product type, and reconciliation of GAAP to non-GAAP results as of June 30, 2025 - Includes condensed consolidated balance sheets, condensed consolidated statements of operations, and condensed consolidated statements of comprehensive income[47](index=47&type=chunk)[50](index=50&type=chunk)[55](index=55&type=chunk) - Includes segment condensed statements of operations, additional business data, and supplementary revenue data (by geographic region and product type)[57](index=57&type=chunk)[61](index=61&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - Includes reconciliation of GAAP to non-GAAP results[73](index=73&type=chunk)[75](index=75&type=chunk)

[Unaudited Interim Results Overview](index=1&type=section&id=Unaudited%20Interim%20Results%20Overview) The company achieved a profit for the period, significantly improving from a loss in the prior year, despite a decrease in revenue, while strengthening its financial position [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the company achieved a profit of HKD 1,418 thousand, a significant improvement from a loss of HKD 28,663 thousand in the prior year, with revenue decreasing by 16.2% but gross profit margin remaining stable at 32.4% Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 51,060 | 60,932 | -16.2% | | Cost of sales | (34,527) | (41,271) | -16.3% | | Gross profit | 16,533 | 19,661 | -16.0% | | Other income, gains and losses, net | 12,022 | (5,432) | Turnaround to profit | | Selling and distribution expenses | (14,066) | (14,779) | -4.8% | | General and administrative expenses | (7,860) | (18,069) | -56.5% | | Finance costs | (6,768) | (4,658) | +45.3% | | Reversal of expected credit losses / (impairment losses), net | 3,115 | (5,557) | Turnaround to profit | | Impairment loss on right-of-use assets | (1,444) | – | New | | Profit / (loss) before income tax | 1,532 | (28,834) | Turnaround to profit | | Income tax (expense) / credit | (114) | 171 | Turned to expense | | Profit / (loss) for the period | 1,418 | (28,663) | Turnaround to profit | | Basic and diluted earnings / (loss) per share | 0.18 HKD cents | (3.72) HKD cents | Turnaround to profit | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's net current assets increased to HKD 43,930 thousand, with total assets less current liabilities rising to HKD 54,025 thousand, indicating an improved net liability position and capital deficit Key Data from Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 10,095 | 8,796 | +14.8% | | Current assets | 100,807 | 113,250 | -11.0% | | Current liabilities | 56,877 | 72,998 | -22.1% | | Net current assets | 43,930 | 40,252 | +9.1% | | Total assets less current liabilities | 54,025 | 49,048 | +10.1% | | Non-current liabilities | 70,986 | 67,428 | +5.3% | | Net liabilities | (16,961) | (18,380) | Decreased by 8.0% | | Share capital | 7,705 | 7,705 | 0% | | Reserves | (24,666) | (26,085) | Decreased by 5.4% | | Capital deficit | (16,961) | (18,380) | Decreased by 8.0% | [Notes to the Unaudited Condensed Consolidated Interim Financial Statements](index=5&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section details the accounting policies, significant judgments, and specific financial statement items, providing context for the interim financial results [Basis of Preparation and Going Concern](index=5&type=section&id=Basis%20of%20Preparation%20and%20Going%20Concern) The financial statements are prepared in accordance with HKAS 34 and Appendix D2 of the Listing Rules, presented in HKD, with the Board affirming the Group's ability to continue as a going concern despite net liabilities - The Group had **net liabilities of HKD 16,961 thousand** as of June 30, 2025[9](index=9&type=chunk) - The Board has thoroughly reviewed cash flow forecasts covering a period of no less than **12 months** into the future[9](index=9&type=chunk) - To improve its financial position, the Board is implementing measures including actively recovering loans receivable, considering the realization of financial assets at fair value through profit or loss, and implementing aggressive cost-saving initiatives[10](index=10&type=chunk) - The Board considers it appropriate to prepare the financial statements on a going concern basis[11](index=11&type=chunk) [Principal Accounting Policies and Judgements](index=6&type=section&id=Principal%20Accounting%20Policies%20and%20Judgements) The financial statements are prepared on a historical cost basis, with certain financial instruments measured at fair value, and the application of new HKFRS amendments had no significant impact - The financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value[12](index=12&type=chunk) - Amendments to Hong Kong Financial Reporting Standards (e.g., HKAS 21 and HKFRS 1 amendments) were first applied during the period but had no significant impact[13](index=13&type=chunk) - Significant judgments and sources of estimation uncertainty made by management in preparing the statements are consistent with those in the 2024 annual financial statements[14](index=14&type=chunk) [Revenue, Other Income, Gains and Losses, Net and Segment Information](index=7&type=section&id=Revenue%2C%20Other%20Income%2C%20Gains%20and%20Losses%2C%20Net%20and%20Segment%20Information) The Group's total revenue for the period was HKD 51,060 thousand, a 16.2% decrease year-on-year, primarily from Chinese herbal health products, money lending, and investment in financial instruments, with the latter achieving significant profit - The Group's principal businesses are the sale of Chinese herbal health products, money lending, and investment in financial instruments[15](index=15&type=chunk) Revenue Composition (HKD thousands) | Revenue Source | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue from contracts with customers - Trading of Chinese herbal health products | 50,975 | 60,426 | -15.6% | | Interest income | 323 | 611 | -47.1% | | Loss on disposal of financial instruments, net | (238) | (105) | +126.7% | | **Total Revenue** | **51,060** | **60,932** | **-16.2%** | - Other income, gains and losses, net: primarily fair value gains on financial assets at fair value through profit or loss of **HKD 12,410 thousand** (2024: loss of HKD 5,431 thousand)[15](index=15&type=chunk) [Segment Revenue and Results](index=8&type=section&id=Segment%20Revenue%20and%20Results) This section details the revenue and pre-tax profit or loss for each operating segment, including Chinese herbal health products, money lending, and investment in financial instruments Segment Revenue and Profit/(Loss) Before Income Tax (HKD thousands) | Segment | Six Months Ended June 30, 2025 Revenue | Six Months Ended June 30, 2025 Profit/(Loss) | Six Months Ended June 30, 2024 Revenue | Six Months Ended June 30, 2024 Profit/(Loss) | | :--- | :--- | :--- | :--- | :--- | | Chinese Herbal Health Products | 50,975 | (4,399) | 60,426 | (1,996) | | Money Lending Business | 323 | 869 | 611 | (13,739) | | Investment in Financial Instruments | (238) | 11,369 | (105) | (6,415) | | **Total Reportable Segments** | **51,060** | **7,839** | **60,932** | **(22,150)** | - Company revenue and expenses are not included in the segment profit/(loss) measure used by the chief operating decision maker to assess segment performance[16](index=16&type=chunk) [Segment Assets and Liabilities](index=9&type=section&id=Segment%20Assets%20and%20Liabilities) This section presents the breakdown of assets and liabilities by operating segment, showing changes in each segment's financial position Segment Assets (HKD thousands) | Segment | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Chinese Herbal Health Products | 55,349 | 75,206 | -26.4% | | Money Lending Business | 10,177 | 8,760 | +16.2% | | Investment in Financial Instruments | 43,520 | 35,591 | +22.3% | | **Total Segment Assets** | **109,046** | **119,557** | **-8.8%** | Segment Liabilities (HKD thousands) | Segment | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Chinese Herbal Health Products | 34,154 | 45,314 | -24.6% | | Money Lending Business | 2,570 | 806 | +218.9% | | Investment in Financial Instruments | 18,295 | 20,586 | -11.2% | | **Total Segment Liabilities** | **55,019** | **66,706** | **-17.5%** | [Geographical Information](index=10&type=section&id=Geographical%20Information) This section provides a geographical breakdown of the Group's revenue, indicating the primary regions contributing to sales Revenue by Geographical Area (HKD thousands) | Region | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Hong Kong | 51,060 | 60,932 | [Major Customers Information](index=10&type=section&id=Major%20Customers%20Information) This section discloses information regarding the Group's major customers, specifically whether any single external customer contributes 10% or more to total revenue - For the six months ended June 30, 2025 and 2024, no external customer contributed **10% or more** to the Group's revenue[22](index=22&type=chunk) [Finance Costs](index=11&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, the Group's finance costs increased to HKD 6,768 thousand, primarily due to higher interest on bonds issued in 2024 Finance Costs (HKD thousands) | Type of Finance Cost | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Interest on borrowings | 1,692 | 1,535 | +10.2% | | Interest on lease liabilities | 347 | 334 | +3.9% | | Interest on convertible loan notes | 1,061 | 2,789 | -62.0% | | Interest on bonds payable | 3,668 | – | New | | **Total** | **6,768** | **4,658** | **+45.3%** | [Income Tax (Expense)/Credit](index=11&type=section&id=Income%20Tax%20%28Expense%29%2FCredit) For the six months ended June 30, 2025, the Group recorded an income tax expense of HKD 114 thousand, a shift from a credit of HKD 171 thousand in the prior year, with no tax provision for Hong Kong or PRC subsidiaries due to lack of taxable profit - Income tax (expense)/credit: **HKD (114) thousand** expense in 2025, compared to **HKD 171 thousand** credit in 2024[23](index=23&type=chunk) - Hong Kong subsidiaries did not generate taxable profits, so no Hong Kong profits tax provision was made[23](index=23&type=chunk) - PRC subsidiaries did not generate taxable profits, so no enterprise income tax provision was made[24](index=24&type=chunk) [Profit/(Loss) for the Period](index=12&type=section&id=Profit%2F%28Loss%29%20for%20the%20Period) The Group's profit for the period was influenced by factors such as cost of goods sold, depreciation, and staff costs Profit/(Loss) for the Period Components (HKD thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cost of goods sold | 31,666 | 41,271 | | Depreciation of right-of-use assets | 2,975 | 3,357 | | Depreciation of property, plant and equipment | 183 | 132 | | Staff costs (including directors' emoluments) | 11,936 | 21,743 | [Dividends](index=12&type=section&id=Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - No interim dividend is recommended for the first half of 2025[27](index=27&type=chunk) [Earnings/(Loss) Per Share](index=12&type=section&id=Earnings%2F%28Loss%29%20Per%20Share) For the six months ended June 30, 2025, basic and diluted earnings per share were HKD 0.18 cents, a significant improvement from a loss of HKD 3.72 cents in the prior year, primarily due to the period's profit Earnings/(Loss) Per Share Calculation Data (HKD thousands) | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Profit/(loss) for the purpose of calculating basic and diluted earnings/(loss) per share | 1,418 | (28,663) | | Weighted average number of ordinary shares | 770,480,836 | 770,480,836 | - The convertible loan notes were not assumed to be converted for calculating diluted earnings/(loss) per share, as they would result in an increase/decrease in earnings/(loss) per share[30](index=30&type=chunk) [Property, Plant and Equipment and Right-of-use Assets](index=13&type=section&id=Property%2C%20Plant%20and%20Equipment%20and%20Right-of-use%20Assets) For the six months ended June 30, 2025, the Group acquired property, plant and equipment costing HKD 84 thousand and recognized additional right-of-use assets of approximately HKD 5,948 thousand, with an impairment loss of HKD 1,444 thousand recognized for right-of-use assets due to loss-making stores - Cost of property, plant and equipment acquired: **HKD 84 thousand** (2024: HKD 141 thousand)[31](index=31&type=chunk) - Additional right-of-use assets recognized: **HKD 5,948 thousand** (2024: HKD 1,552 thousand), primarily for retail stores and office leases in Hong Kong[31](index=31&type=chunk) - Impairment loss on right-of-use assets recognized: **HKD 1,444 thousand** (2024: nil), mainly due to certain loss-making stores in the Chinese herbal health products segment[34](index=34&type=chunk) - Impairment assessment was based on the value-in-use calculation of cash-generating units, using a five-year financial budget and a pre-tax discount rate of **14%**[33](index=33&type=chunk) [Loans Receivable](index=14&type=section&id=Loans%20Receivable) As of June 30, 2025, net loans receivable from the money lending business increased to HKD 10,139 thousand, with all loans unsecured and bearing interest rates between 8% and 13%, including a significant loan to a major shareholder's ultimate holding company Loans Receivable (HKD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gross loans receivable from money lending business | 307,111 | 308,655 | -0.5% | | Less: Net provision for expected credit losses | (296,972) | (300,087) | -1.0% | | **Net Loans Receivable** | **10,139** | **8,568** | **+18.3%** | - All loans are unsecured, with annual interest rates ranging from **8% to 13%**[35](index=35&type=chunk) - Loans receivable include a **HKD 6,268 thousand** loan to the ultimate holding company of a major shareholder[35](index=35&type=chunk) Loans Receivable Maturity Profile (HKD thousands) | Maturity Date | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within one year | 9,609 | 7,719 | | Over one year | 530 | 849 | [Financial Assets at Fair Value Through Profit or Loss](index=14&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2025, total financial assets at fair value through profit or loss increased to HKD 43,520 thousand, primarily comprising Hong Kong-listed equity securities Financial Assets at Fair Value Through Profit or Loss (HKD thousands) | Type | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Listed equity securities in Hong Kong — Current | 42,807 | 35,015 | +22.2% | | Unlisted equity securities — Non-current | 713 | 576 | +23.8% | | **Total** | **43,520** | **35,591** | **+22.3%** | - The fair value of listed equity securities is determined based on quotations from the Stock Exchange, while unlisted equity securities are valued using the asset-based approach[36](index=36&type=chunk) [Trade and Other Receivables, Deposits and Prepayments](index=15&type=section&id=Trade%20and%20Other%20Receivables%2C%20Deposits%20and%20Prepayments) As of June 30, 2025, total trade and other receivables, deposits, and prepayments decreased to HKD 6,550 thousand, mainly due to a reduction in trade receivables Trade and Other Receivables, Deposits and Prepayments (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade receivables (net of allowance) | 1,595 | 4,064 | -60.7% | | Deposits and other receivables | 3,247 | 3,434 | -5.4% | | Prepayments | 1,708 | 1,347 | +26.8% | | **Total** | **6,550** | **8,845** | **-26.0%** | - Trade receivables aging analysis: **HKD 1,591 thousand** for 0-90 days, and **HKD 4 thousand** for over 365 days[37](index=37&type=chunk) - The normal credit period ranges from **30 to 90 days**[37](index=37&type=chunk) [Trade and Other Payables and Accruals](index=15&type=section&id=Trade%20and%20Other%20Payables%20and%20Accruals) As of June 30, 2025, total trade and other payables and accruals significantly decreased to HKD 16,622 thousand, primarily driven by a substantial reduction in trade payables Trade and Other Payables and Accruals (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade payables | 4,486 | 18,069 | -75.2% | | Other payables and accruals | 12,136 | 15,421 | -21.3% | | **Total** | **16,622** | **33,490** | **-50.3%** | - Trade payables aging analysis: **HKD 4,347 thousand** for 0-90 days, and **HKD 139 thousand** for over 365 days[39](index=39&type=chunk) [Borrowings](index=16&type=section&id=Borrowings) As of June 30, 2025, the Group's total borrowings were HKD 32,391 thousand, slightly lower than December 31, 2024, primarily consisting of margin loans from securities brokers and other loans, all classified as current liabilities Borrowings (HKD thousands) | Type | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Margin loans from securities brokers | 16,581 | 18,872 | -12.1% | | Other loans | 15,810 | 13,700 | +15.4% | | **Total** | **32,391** | **32,572** | **-0.6%** | - Margin loans bear interest at **8%-10% per annum** and are secured by a portfolio of listed equity securities valued at **HKD 42,807 thousand**[39](index=39&type=chunk) - Other loans bear interest at **12% per annum**, are secured by a share charge over issued shares of a subsidiary, and guaranteed by the Company[40](index=40&type=chunk) - All borrowings are classified as current liabilities due to the inclusion of a repayment on demand clause[40](index=40&type=chunk) [Share Capital](index=17&type=section&id=Share%20Capital) As of June 30, 2025, the company's issued and fully paid share capital remained unchanged at HKD 7,705 thousand, comprising 770,481 thousand ordinary shares with a par value of HKD 0.01 each - Issued and fully paid ordinary shares: **770,481 thousand shares**, par value **HKD 0.01 per share**, totaling **HKD 7,705 thousand**[42](index=42&type=chunk) - Authorized share capital includes **USD 40 thousand** in convertible redeemable cumulative preference shares with a par value of USD 100,000 per share, and **150,000,000 thousand** ordinary shares with a par value of HKD 0.01 per share[42](index=42&type=chunk) [Share Option Scheme](index=17&type=section&id=Share%20Option%20Scheme) The Group adopted a new share option scheme on August 15, 2024, to recognize contributions from eligible participants, with a total of 77,048,083 options available for grant, representing 10% of issued shares, and no options were granted or exercised during the period - The 2012 Share Option Scheme expired on September 14, 2022, with no outstanding options as of June 30, 2025[41](index=41&type=chunk) - A new share option scheme was adopted on **August 15, 2024**, to acknowledge and recognize contributions from eligible participants to the Group[43](index=43&type=chunk) - Eligible participants include directors, employees, suppliers, contractors, distributors, agents, consultants, and advisors[43](index=43&type=chunk) - The total number of options available for grant under the new scheme is **77,048,083**, representing **10%** of the issued shares[43](index=43&type=chunk)[44](index=44&type=chunk) - Maximum entitlement for each participant: the total number of shares after exercise shall not exceed **1%** of the issued shares within any 12-month period[44](index=44&type=chunk) - Grants to a substantial shareholder or independent non-executive director and their associates exceeding **0.1%** require shareholder approval[45](index=45&type=chunk) - The exercise period for share options is determined by the Board, not exceeding **ten years** from the date of grant[46](index=46&type=chunk) - Grantees must hold the options for at least **12 months** before they can be exercised[46](index=46&type=chunk) - The exercise price shall not be less than the highest of the closing price on the grant date, the average closing price for the preceding five days, and the nominal value[46](index=46&type=chunk) - The new share option scheme will terminate on **August 15, 2034**[46](index=46&type=chunk) - As of June 30, 2025, no share options were granted, exercised, lapsed, or cancelled under the new scheme[47](index=47&type=chunk) [Contingent Liabilities](index=19&type=section&id=Contingent%20Liabilities) As of June 30, 2025, and December 31, 2024, the Group had no contingent liabilities - The Group had no contingent liabilities at the end of the reporting period[48](index=48&type=chunk) [Related Party Transactions](index=20&type=section&id=Related%20Party%20Transactions) For the six months ended June 30, 2025, the Group with related parties (primarily the ultimate holding company of a major shareholder) engaged in short-term lease expenses and interest income transactions, and maintained outstanding loan balances Related Party Transactions (HKD thousands) | Type of Transaction | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Short-term lease expenses | 180 | 796 | | Interest income | 270 | 380 | Related Party Balances (HKD thousands) | Type of Balance | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans receivable (ultimate holding company of a major shareholder) | 6,268 | 7,092 | [Comparative Figures](index=20&type=section&id=Comparative%20Figures) Certain comparative figures have been reclassified to ensure consistency with the current period's presentation - Some comparative figures have been reclassified for consistency[51](index=51&type=chunk) [Management Discussion and Analysis](index=21&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the Group's financial performance, business operations, and future outlook, including strategies for growth and risk management [Interim Dividend](index=21&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - No interim dividend is recommended for the first half of 2025[52](index=52&type=chunk) [Results, Business Review and Prospects](index=21&type=section&id=Results%2C%20Business%20Review%20and%20Prospects) The Group's revenue declined due to reduced contributions from Chinese herbal health products and money lending, but effective cost control, expected credit loss reversals, and fair value gains on financial assets led to a turnaround to profit [Results Overview](index=21&type=section&id=Results%20Overview) This section provides a high-level summary of the Group's financial performance, highlighting key changes in revenue, gross profit margin, and profit attributable to owners - Revenue decreased by approximately **16%** year-on-year to approximately **HKD 51 million**[53](index=53&type=chunk) - Gross profit margin remained stable at approximately **32%**[53](index=53&type=chunk) - Profit attributable to owners was approximately **HKD 1 million**, compared to a loss of approximately **HKD 29 million** in the prior year[53](index=53&type=chunk) [Business Review](index=21&type=section&id=Business%20Review) This section reviews the performance of the Group's core business segments, including Chinese herbal health products, money lending, and investment in financial instruments - Revenue decreased by approximately **16%**, primarily due to reduced revenue from Chinese herbal health products (from approximately **HKD 60 million** to approximately **HKD 51 million**) and money lending business (from approximately **HKD 1 million** to approximately **HKD 0.3 million**)[54](index=54&type=chunk) - Gross profit margin remained stable at approximately **32%**[54](index=54&type=chunk) - Other income, gains and losses, net, turned from a loss of **HKD 5 million** in 2024 to a net gain of **HKD 12 million** in 2025, mainly from fair value gains on financial assets[55](index=55&type=chunk) - Selling and distribution expenses remained stable at approximately **HKD 14 million**, reflecting effective cost control measures[55](index=55&type=chunk) - General and administrative expenses significantly decreased by **56.5%** to approximately **HKD 8 million**, primarily due to streamlined management team structure and salary adjustments[56](index=56&type=chunk) - Finance costs increased by approximately **45.3%** to approximately **HKD 7 million**, mainly due to changes in the calculation method for bond interest in 2024[57](index=57&type=chunk) - Net reversal of impairment losses under the expected credit loss model was approximately **HKD 3 million**, compared to an impairment loss of approximately **HKD 6 million** in the prior year, reflecting improved customer credit risk and repayment of some impaired loans[58](index=58&type=chunk) - Impairment loss on right-of-use assets was approximately **HKD 1 million**, due to certain loss-making stores in the Chinese herbal health products segment[59](index=59&type=chunk) - The turnaround to profit was primarily driven by the reversal of expected credit losses, a significant reduction in general and administrative expenses, and unrealized fair value gains on financial assets[60](index=60&type=chunk) [Chinese Herbal Health Products](index=23&type=section&id=Chinese%20Herbal%20Health%20Products) The Chinese herbal health products segment experienced a decrease in revenue and an increase in loss due to a challenging retail environment in Hong Kong, despite the "Nam Pei Hong" brand's recognition - Segment revenue was approximately **HKD 51 million** (2024: HKD 60 million), with a segment loss (pre-tax) of approximately **HKD 4 million** (2024: HKD 2 million)[62](index=62&type=chunk) - The decrease in revenue and increase in loss were mainly due to the challenging economic environment in Hong Kong's local retail sector, with consumers being more budget-conscious and tending to spend in mainland China[62](index=62&type=chunk) - The "Nam Pei Hong" brand is widely recognized in Hong Kong and Southern mainland China, with **10 retail stores** as of June 30, 2025[61](index=61&type=chunk) [Money Lending Business](index=23&type=section&id=Money%20Lending%20Business) The money lending business saw a decrease in interest income but achieved a segment profit due to a net reversal of expected credit loss impairment, with ongoing efforts to recover outstanding loans - Loan interest income was approximately **HKD 0.3 million** (2024: HKD 1 million), with a segment profit (pre-tax) of approximately **HKD 1 million** (2024: loss of HKD 14 million)[63](index=63&type=chunk) - The decrease in interest income was mainly because loans receivable previously classified as Stage 3 (credit-impaired) no longer generated interest income[63](index=63&type=chunk) - The segment's turnaround to profit was primarily due to a reduction in impairment losses on loans receivable under the expected credit loss model, with a net reversal of impairment losses of approximately **HKD 3 million** recognized during the period[63](index=63&type=chunk) - No new loans were granted during the period, but the repayment date for a revolving loan of approximately **HKD 9 million** provided to the ultimate holding company of a major shareholder was extended[64](index=64&type=chunk) - Customers repaid approximately **HKD 3 million** in loan principal and interest, while the ultimate holding company of a major shareholder drew down approximately **HKD 1 million**[64](index=64&type=chunk) - As of June 30, 2025, out of **11 outstanding loans**, **2 loans** (approximately **HKD 8 million**) were classified as Stage 1, and **9 loans** (approximately **HKD 299 million**) were classified as Stage 3[65](index=65&type=chunk) - The cumulative net provision for expected credit losses was approximately **HKD 297 million**, a decrease of approximately **HKD 3 million** from December 31, 2024, mainly due to improved credit risk profiles of certain customers and repayment of some impaired loans[67](index=67&type=chunk)[68](index=68&type=chunk) - Customer E has sold properties and parking spaces, with the Group receiving net proceeds of **HKD 3.5 million** and actively pursuing the remaining balance[70](index=70&type=chunk) - Customer I: Discussions are ongoing with a third party to acquire the loans receivable through the transfer of properties in Guangzhou and mainland China[71](index=71&type=chunk) - Customers J, G, F, and K have settled part of their outstanding debts, and the Group is negotiating settlement arrangements[72](index=72&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) - Customer L entered into a deed of settlement in May 2024 and has partially repaid the amounts in installments[81](index=81&type=chunk) [Investment in Financial Instruments](index=28&type=section&id=Investment%20in%20Financial%20Instruments) The investment in financial instruments segment generated a pre-tax profit, primarily driven by fair value gains on financial assets at fair value through profit or loss, with active portfolio management to enhance performance - Segment gain (pre-tax) was approximately **HKD 11 million** (2024: loss of HKD 6 million)[82](index=82&type=chunk) - Key influencing factors: net fair value gains on financial assets at fair value through profit or loss of approximately **HKD 12 million** (2024: loss of HKD 5 million), and realized losses on disposal of financial assets of approximately **HKD 0.2 million** (2024: HKD 0.1 million)[82](index=82&type=chunk) Equity Investment Changes (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Beginning/End of period | 35,591 | 40,420 | | Acquisitions | – | 1,866 | | Gains/(losses) from fair value changes | 12,410 | (4,187) | | Disposals | (4,481) | (2,508) | | **End/Beginning of period** | **43,520** | **35,591** | - Significant listed equity investments include Huanxi Media Group, Grand Harbour Development, Yunfeng Financial Group, and Geowave Technology Holdings, with Yunfeng Financial Group contributing **HKD 9,008 thousand** in fair value gains[83](index=83&type=chunk) - The Group's investment objective is to achieve capital gains and dividend income, actively adjusting its investment portfolio to enhance performance[83](index=83&type=chunk) [Prospects](index=30&type=section&id=Prospects) This section outlines the future outlook and strategic initiatives for each of the Group's business segments, addressing challenges and opportunities [Chinese Herbal Health Products Prospects](index=30&type=section&id=Chinese%20Herbal%20Health%20Products%20Prospects) The Chinese herbal health products segment faces challenges from a weak retail market and changing consumer behavior, but plans to counter this with product innovation, targeted promotions, strategic partnerships, and stringent cost management - Challenges faced: sluggish retail market, weak consumer sentiment, mainland economic downturn, changing spending patterns of visitors to Hong Kong, local residents' preference for mainland shopping, price competition, customs regulations, labor shortages, and rising operating costs[84](index=84&type=chunk) - Strategies: prioritize promotion of seasonal health products like soup packs, launch trial packs for Lingzhi capsules, Platycodon Grandiflorum soothing throat lozenges, and black and white immune essence extracts, and expand own-brand portable health products[85](index=85&type=chunk) - Marketing: participate in SOGO and YATA VIP day promotions, launch an official account on Xiaohongshu, and introduce "Tuesday Senior Discounts" and member package discount coupons[86](index=86&type=chunk) - Strategic cooperation: partner with MAME LAB to launch pre-natal and post-natal care packages[86](index=86&type=chunk) - Cost management: strengthen overseas procurement, optimize supply chain, strictly control headcount and staff costs, and optimize sales incentive mechanisms[87](index=87&type=chunk) - Future outlook: continue strong promotional activities, launch innovative products and tailored promotional campaigns to maintain and strengthen market position[87](index=87&type=chunk) [Money Lending Business Prospects](index=31&type=section&id=Money%20Lending%20Business%20Prospects) The money lending business anticipates a challenging operating environment due to economic uncertainty, requiring close monitoring of repayment habits, proactive recovery plans, and enhanced credit risk management - Operating environment faces challenges: gloomy economic conditions, cautious potential borrowers, increased default risks, and geopolitical tensions affecting borrower demand[89](index=89&type=chunk) - Strategies: closely monitor customer repayment habits, develop action plans for recovery (revising repayment terms, increasing collateral/guarantees, reaching settlements, legal actions, enforcing collateral/guarantees)[89](index=89&type=chunk) - Strengthen credit policies and risk management[89](index=89&type=chunk) [Investment in Financial Instruments Prospects](index=31&type=section&id=Investment%20in%20Financial%20Instruments%20Prospects) The investment in financial instruments segment will focus on closely monitoring global economic conditions and investment sentiment, actively adjusting its portfolio to improve performance and realize gains - Strategies: closely monitor global economy, investment sentiment, investor base, and future outlook[90](index=90&type=chunk) - Actively adjust investment portfolio to improve performance and realize equity holdings in a timely manner[90](index=90&type=chunk) [Portfolio Management](index=32&type=section&id=Portfolio%20Management) The Group's business strategy aims to optimize resource utilization, enhance overall performance, and diversify its investment portfolio by actively seeking opportunities for investment or acquisition in promising ventures to create shareholder value - Strategy: optimize resource utilization, improve overall performance, and promote portfolio diversification[91](index=91&type=chunk) - Actively seek business opportunities to diversify income sources through investment/acquisition of promising businesses or projects to create shareholder value[91](index=91&type=chunk) [Group Resources and Liquidity](index=32&type=section&id=Group%20Resources%20and%20Liquidity) As of June 30, 2025, the Group had cash and bank balances of approximately HKD 4 million, with total borrowings, convertible loan notes, and bonds payable totaling approximately HKD 97 million, an improved liquidity ratio of 1.8, and a reduced net liability position, affirming sufficient working capital for the next 12 months Resources and Liquidity (HKD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and bank balances | 4,000 | 10,000 | -60.0% | | Total borrowings | 32,000 | 33,000 | -3.0% | | Convertible loan notes | 15,000 | 14,000 | +7.1% | | Bonds payable | 50,000 | 49,000 | +2.0% | | **Total Borrowings, Convertible Loan Notes, and Bonds Payable** | **97,000** | **96,000** | **+1.0%** | - Some financial assets (approximately **HKD 43 million**) have been pledged as collateral for borrowings of approximately **HKD 17 million**[93](index=93&type=chunk) - Approximately **HKD 15 million** in borrowings are secured by a share charge over subsidiary shares and guaranteed by the Company[93](index=93&type=chunk) - All borrowings (HKD 32 million) are classified as current liabilities[94](index=94&type=chunk) - The 2024 bonds (approximately **HKD 55 million** in ordinary bonds and approximately **HKD 17 million** in convertible bonds) were issued to offset the outstanding principal of the 2018 convertible bonds[95](index=95&type=chunk) - Inventories decreased by approximately **28%** to approximately **HKD 36 million**, mainly due to winter being the traditional peak season for the industry[96](index=96&type=chunk) - Trade receivables decreased to approximately **HKD 2 million**, consistent with reduced revenue from Chinese herbal health products and improved collection management[97](index=97&type=chunk) - Trade payables significantly decreased to approximately **HKD 4 million**, due to subsequent settlements and reduced procurement[97](index=97&type=chunk) - Gearing ratio: **88%** (December 31, 2024: **79%**)[98](index=98&type=chunk) - Current ratio: **1.8** (December 31, 2024: **1.6**)[98](index=98&type=chunk) - Net liability position decreased from approximately **HKD 18 million** to approximately **HKD 17 million**, primarily due to operating profit during the period[98](index=98&type=chunk) - The Board believes the Group has sufficient working capital for the next **12 months**[99](index=99&type=chunk) - The Group will continue to review existing businesses, improve operational and financial performance, and identify potential business and investment opportunities[100](index=100&type=chunk) [Foreign Exchange Risk](index=34&type=section&id=Foreign%20Exchange%20Risk) The Group is exposed to currency risk primarily from receivables, payables, and bank balances denominated in non-functional currencies, with management monitoring and considering hedging significant exposures despite no current foreign currency hedging policy - Currency risk primarily arises from receivables/payables and bank balances denominated in non-functional currencies[101](index=101&type=chunk) - There is currently no foreign currency hedging policy, but management will monitor and consider hedging significant risks[101](index=101&type=chunk) [Share Capital Structure](index=34&type=section&id=Share%20Capital%20Structure) There were no changes to the Group's share capital structure during the period - No changes to the share capital structure occurred during the period[102](index=102&type=chunk) [Significant Investments and Acquisitions](index=34&type=section&id=Significant%20Investments%20and%20Acquisitions) The Group did not undertake any significant investments, acquisitions, or disposals of subsidiaries during the period - No significant investments, acquisitions, or disposals of subsidiaries occurred during the period[103](index=103&type=chunk) [Employees](index=34&type=section&id=Employees) As of June 30, 2025, the Group employed approximately 77 staff and contract workers, with staff costs of approximately HKD 12 million, and compensation determined by experience, performance, and market conditions, including discretionary bonuses, MPF, and training - Approximately **77 employees** and contract workers were employed[104](index=104&type=chunk) - Staff costs (including directors' emoluments) were approximately **HKD 12 million** (2024: HKD 22 million)[105](index=105&type=chunk) - Remuneration is determined based on experience, performance, market conditions, industry practices, and applicable labor laws[105](index=105&type=chunk) - Discretionary bonuses, MPF contribution schemes, insurance, and various training programs are provided[105](index=105&type=chunk) [Share Option Scheme](index=35&type=section&id=Share%20Option%20Scheme_MD%26A) The Group's new share option scheme, adopted on August 15, 2024, complies with the requirements of Rule 17.03 of the Listing Rules - The new share option scheme was approved and adopted on **August 15, 2024**, complying with Rule 17.03 of the Listing Rules[106](index=106&type=chunk) - Details are provided in Note 17 to the financial statements[106](index=106&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=35&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) Neither the company nor its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the six months ended June 30, 2025 - No purchase, redemption, or sale of the company's listed securities occurred during the period[107](index=107&type=chunk) [Contingent Liabilities](index=35&type=section&id=Contingent%20Liabilities_MD%26A) As of June 30, 2025, the Group had no other significant contingent liabilities or guarantees beyond those already disclosed - As of the end of the reporting period, the Group had no other significant contingent liabilities or guarantees[108](index=108&type=chunk) [Corporate Governance Code](index=35&type=section&id=Corporate%20Governance%20Code) The Board confirms that the company has complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025 - The company complied with all provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[109](index=109&type=chunk) [Standard Code for Securities Transactions by Directors](index=35&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted a code of conduct for directors' securities transactions no less exacting than the Standard Code in Appendix C3 of the Listing Rules, and all directors confirmed compliance during the period - The company has adopted a code of conduct for directors' securities transactions, and all directors confirmed compliance[110](index=110&type=chunk) [Audit Committee](index=36&type=section&id=Audit%20Committee) The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements, risk management, and internal control systems for the six months ended June 30, 2025, and concurred with the accounting policies and practices adopted by the company - The Audit Committee reviewed the interim financial statements, risk management, and internal control systems, and concurred with the accounting policies and practices[111](index=111&type=chunk) [By Order of the Board](index=36&type=section&id=By%20Order%20of%20the%20Board) This announcement is issued by Mr. Li Xiongwei, Chairman and Executive Director, on behalf of the Board of Directors - Mr. Li Xiongwei, Chairman and Executive Director, issued the announcement on behalf of the Board[112](index=112&type=chunk) - Executive Directors include Li Xiongwei, Zhang Guowei, Liang Yixi, Lao Mingyun, Yuan Huixia, Yang Qiangsheng; Independent Non-executive Directors include Li Xuejian, Zeng Zhanpeng[113](index=113&type=chunk)

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 CMGE Technology Group Limited 中手游科技集 團 有限公司 （於開曼群島註冊成立的有限公司） （股份代號：0302） 截 至 2025 年 6 月 30 日止六個月 中期業績公告 中手游科技集團有限公司（「本公司」，連同其附屬公司及在中華人民共和國（「中 國」）的合併營運實體，統稱「本集團」）董事（「董事」）會（「董事會」）欣然公佈本集團 截至2025年6月30日止六個月（「報告期間」）的未經審核綜合中期業績。本報告期間 之中期業績已由本公司之審核委員會（「審核委員會」）審閱。 財務摘要 | | 截至6月30日止六個月 | | | --- | --- | --- | | | 2025年 | 2024年 | | | 人民幣千元 | 人民幣千元 | | | （未經審核） | （未經審核） | | 收益 | 763,034 | 1,233,336 | | 期內虧損 | (644,2 ...

[Company Information and Financial Summary](index=1&type=section&id=I.%20Company%20Information%20and%20Financial%20Summary) This section provides an overview of China Shuifa Singyes Energy Holdings Limited's basic information and a summary of its financial performance for the six months ended June 30, 2025 [Company Basic Information](index=1&type=section&id=1.1%20Company%20Basic%20Information) China Shuifa Singyes Energy Holdings Limited announced its unaudited interim results for the six months ended June 30, 2025 - Company Name: China Shuifa Singyes Energy Holdings Limited[2](index=2&type=chunk) - Reporting Period: Six months ended June 30, 2025[2](index=2&type=chunk) - Report Nature: Unaudited interim results announcement[2](index=2&type=chunk) [Financial Summary](index=1&type=section&id=1.2%20Financial%20Summary) During the reporting period, the company's revenue increased by 22.45% year-on-year, but due to a decrease in gross profit margin, loss attributable to owners of the company expanded to RMB 19,184 thousands, with a loss per share of RMB (0.008) Financial Summary for the Six Months Ended June 30 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,684,853 | 1,375,933 | 22.45% | | Profit before income tax | 7,935 | 36,037 | -77.98% | | Income tax expense | 5,562 | 24,900 | -77.66% | | Loss attributable to owners of the company for the period | (19,184) | (16,461) | 16.54% | | Loss per share attributable to owners of the company (basic and diluted) | RMB (0.008) | RMB (0.007) | 14.29% | [Condensed Consolidated Financial Statements](index=2&type=section&id=II.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated financial statements, including the statement of comprehensive income and statement of financial position [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=2.1%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue increased to RMB 1,684,853 thousands, but a significant rise in cost of sales led to a decrease in gross profit; operating profit and profit before income tax both significantly decreased, resulting in a profit for the period of RMB 2,373 thousands, a 78.7% year-on-year decline Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,684,853 | 1,375,933 | 22.45% | | Cost of sales | (1,330,524) | (931,075) | 42.90% | | Gross profit | 354,329 | 444,858 | -20.35% | | Operating profit | 228,530 | 293,577 | -22.23% | | Net finance costs | (220,138) | (257,688) | -14.57% | | Profit before income tax | 7,935 | 36,037 | -77.98% | | Income tax expense | (5,562) | (24,900) | -77.66% | | Profit for the period | 2,373 | 11,137 | -78.70% | | Loss attributable to owners of the company for the period | (19,184) | (16,461) | 16.54% | | Profit attributable to non-controlling interests for the period | 21,557 | 27,598 | -21.90% | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=2.2%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets slightly decreased, primarily due to a reduction in cash and cash equivalents; non-current liabilities increased while current liabilities decreased, leading to a slight decline in total liabilities; both equity attributable to owners of the company and non-controlling interests decreased, resulting in a lower total equity Key Data from Condensed Consolidated Statement of Financial Position | Metric | 2025年6月30日 (RMB thousands) | 2024年12月31日 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total non-current assets | 8,956,216 | 8,803,397 | 1.74% | | Total current assets | 13,521,944 | 14,002,485 | -3.30% | | Cash and cash equivalents | 270,257 | 823,022 | -67.17% | | Total assets | 22,478,160 | 22,805,882 | -1.44% | | **Equity** | | | | | Equity attributable to owners of the company | 4,167,325 | 4,231,924 | -1.53% | | Non-controlling interests | 1,094,333 | 1,071,825 | 2.10% | | Total equity | 5,261,658 | 5,303,749 | -0.79% | | **Liabilities** | | | | | Total non-current liabilities | 5,491,740 | 5,074,520 | 8.22% | | Total current liabilities | 11,724,762 | 12,427,613 | -5.66% | | Total liabilities | 17,216,502 | 17,502,133 | -1.63% | [Notes to the Condensed Consolidated Financial Statements](index=6&type=section&id=III.%20Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, covering general information, accounting policies, segment data, and other financial disclosures [General Information](index=6&type=section&id=3.1%20General%20Information) The company was incorporated in Bermuda, primarily engaged in traditional curtain walls, wind farm construction, and the design, manufacturing, supply, and installation of solar photovoltaic building integrated systems, as well as the manufacturing and sale of solar products; there was no significant change in the nature of its principal business during the reporting period, and its ultimate holding company is Shuifa Group Co., Ltd., a Chinese state-owned enterprise - The company was incorporated in Bermuda on October 24, 2003[8](index=8&type=chunk) - Principal businesses include traditional curtain walls, wind farm construction, design, manufacturing, supply and installation of solar photovoltaic building integrated systems, and manufacturing and sale of solar products[8](index=8&type=chunk) - The ultimate holding company is Shuifa Group Co., Ltd., a state-owned enterprise in China[9](index=9&type=chunk) [Basis of Preparation](index=6&type=section&id=3.2%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and the Listing Rules of the Hong Kong Stock Exchange, adopting the going concern basis of accounting - Prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the Listing Rules of the Hong Kong Stock Exchange[10](index=10&type=chunk) - Accounting basis: Going concern[10](index=10&type=chunk) [Accounting Policies](index=6&type=section&id=3.3%20Accounting%20Policies) The condensed consolidated financial statements are prepared on a historical cost basis and presented in RMB; during the reporting period, IAS 21 (Amendment) 'Lack of Exchangeability' was first applied, but it had no significant impact on the financial position and performance - Basis of preparation: Historical cost basis, except for certain equity investments and financial assets measured at fair value[11](index=11&type=chunk) - Presentation currency: RMB[11](index=11&type=chunk) - Newly applied accounting standard: IAS 21 (Amendment) 'Lack of Exchangeability', with no significant impact[12](index=12&type=chunk) [Revenue and Segment Information](index=7&type=section&id=3.4%20Revenue%20and%20Segment%20Information) The company assesses performance based on four main business segments: construction services, product sales, electricity sales, and others; in the first half of 2025, construction services revenue significantly increased, but product sales revenue decreased, leading to a year-on-year reduction in gross profit - Operating segments: Construction services, product sales, electricity sales, others[13](index=13&type=chunk) Segment Performance Overview (For the Six Months Ended June 30) | Segment | 2025 Revenue (RMB thousands) | 2025 Gross Profit (RMB thousands) | 2024 Revenue (RMB thousands) | 2024 Gross Profit (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Construction services | 1,032,373 | 57,841 | 570,211 | 88,498 | | Product sales | 303,808 | 115,272 | 419,657 | 143,532 | | Electricity sales | 329,087 | 184,187 | 328,733 | 184,033 | | Others | 19,585 | 6,651 | 57,332 | 42,620 | | Group total | 1,684,853 | 354,329 | 1,375,933 | 444,858 | [Income Tax Expense](index=8&type=section&id=3.5%20Income%20Tax%20Expense) Subsidiaries in mainland China are subject to a 25% corporate income tax rate, with some eligible for preferential rates of 15% or 'three-year exemption and three-year half reduction' for high-tech enterprises, encouraged industries in western regions, or solar power station projects; Hong Kong subsidiaries are taxed at 16.5%; income tax expense significantly decreased year-on-year during the reporting period - Corporate income tax rate in mainland China: **25%**, with some eligible companies enjoying **15%** or “three-year exemption and three-year half reduction” preferential rates[16](index=16&type=chunk) - Hong Kong subsidiaries' tax rate: **16.5%**[17](index=17&type=chunk) Income Tax Expense (For the Six Months Ended June 30) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current income tax | 14,254 | 38,864 | | Deferred income tax credit | (8,692) | (13,964) | | Income tax expense | 5,562 | 24,900 | [Loss Per Share](index=9&type=section&id=3.6%20Loss%20Per%20Share) For the six months ended June 30, 2025, basic loss per share attributable to owners of the company was RMB (0.008), an increase from the same period last year; no diluted adjustment was made as the exercise price of unexercised share options was higher than the average market price of the company's shares - Basic loss per share is calculated based on the loss attributable to owners of the company and the weighted average number of ordinary shares outstanding[19](index=19&type=chunk) - No diluted adjustment was made because the exercise price of share options was higher than the average market price[19](index=19&type=chunk) Loss Per Share (For the Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to owners of the company (RMB thousands) | (19,184) | (16,461) | | Weighted average number of ordinary shares outstanding (thousands) | 2,521,082 | 2,521,082 | | Basic loss per share (RMB) | (0.008) | (0.007) | [Dividends](index=9&type=section&id=3.7%20Dividends) The Board of Directors does not recommend the payment of an interim dividend for the reporting period, consistent with the same period last year - The Directors do not recommend the payment of an interim dividend for the current period (2024: nil)[21](index=21&type=chunk) [Trade and Bills Receivables](index=9&type=section&id=3.8%20Trade%20and%20Bills%20Receivables) As of June 30, 2025, total trade receivables amounted to RMB 5,616,181 thousands, a slight decrease from the end of 2024; total electricity tariff subsidies receivable amounted to RMB 2,270,104 thousands, an increase from the end of 2024 Aging Analysis of Trade Receivables and Electricity Tariff Subsidies Receivable | Aging | Trade receivables (2025年6月30日, RMB thousands) | Trade receivables (2024年12月31日, RMB thousands) | Electricity tariff subsidies receivable (2025年6月30日, RMB thousands) | Electricity tariff subsidies receivable (2024年12月31日, RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Within 180 days | 1,325,269 | 2,140,944 | 168,076 | 236,787 | | 181-365 days | 1,049,751 | 318,093 | 236,787 | 213,183 | | One to two years | 1,003,904 | 709,111 | 213,183 | 465,021 | | Two to three years | 444,859 | 761,886 | 465,021 | 469,382 | | Over three years | 1,792,398 | 1,855,918 | 1,187,037 | 720,385 | | **Total** | **5,616,181** | **5,785,952** | **2,270,104** | **2,104,758** | [Trade and Bills Payables](index=10&type=section&id=3.9%20Trade%20and%20Bills%20Payables) As of June 30, 2025, total trade and bills payables amounted to RMB 4,289,401 thousands, a slight decrease from the end of 2024 Aging Analysis of Trade and Bills Payables | Aging | 2025年6月30日 (RMB thousands) | 2024年12月31日 (RMB thousands) | | :--- | :--- | :--- | | Within three months | 1,106,970 | 1,828,913 | | Three to six months | 391,576 | 582,326 | | Six to twelve months | 1,286,081 | 301,462 | | One to two years | 617,889 | 799,289 | | Two to three years | 464,633 | 606,410 | | Over three years | 422,252 | 207,067 | | **Total** | **4,289,401** | **4,325,467** | [Share Capital](index=10&type=section&id=3.10%20Share%20Capital) During the reporting period, there was no change in the company's issued share capital, with both authorized and issued and fully paid share capital remaining stable - The company's issued share capital remained unchanged during the period[23](index=23&type=chunk) Share Capital Information | Metric | 2025年6月30日 (thousands) | 2024年12月31日 (thousands) | | :--- | :--- | :--- | | Authorized share capital (3,200,000,000 ordinary shares of USD 0.01 each) | USD 32,000 | USD 32,000 | | Issued and fully paid share capital (2,521,081,780 ordinary shares of USD 0.01 each) | USD 25,211 | USD 25,211 | | Equivalent to RMB thousands | 174,333 | 174,333 | [Business and Financial Review](index=11&type=section&id=IV.%20Business%20and%20Financial%20Review) This section provides a comprehensive review of the company's business operations and financial performance during the reporting period [Performance Overview](index=11&type=section&id=4.1%20Performance%20Overview) During the reporting period, the company's revenue increased by 22.5% year-on-year to RMB 1.685 billion, primarily driven by increased clean energy EPC revenue; however, the overall gross profit margin decreased from 32.3% in the same period last year to 21.0%, leading to an expanded loss attributable to owners of the company of RMB 19.18 million; net cash generated from operating activities significantly increased by 223.3%, and finance costs decreased by 14.6% - Revenue increased by **22.5%** year-on-year to **RMB 1.685 billion**, primarily due to increased clean energy EPC revenue[24](index=24&type=chunk) - Loss attributable to owners of the company was **RMB 19.18 million**, mainly due to the overall gross profit margin decreasing from **32.3%** in the same period last year to **21.0%**[24](index=24&type=chunk) - Net cash generated from operating activities significantly increased by **223.3%** to **RMB 286 million**, primarily due to timely collection from key projects and centralized procurement[27](index=27&type=chunk) - Finance costs decreased by **14.6%** year-on-year[27](index=27&type=chunk) - New contracts signed and uncompleted projects under construction amounted to approximately **RMB 4 billion**[28](index=28&type=chunk) [Business Review](index=12&type=section&id=4.2%20Business%20Review) The company continues to focus on the clean energy sector, intensifying efforts to expand solar and wind EPC projects, and actively fostering new business formats such as high-end curtain walls, smart energy-saving buildings, and new materials; concurrently, it proactively adjusted its business structure, reducing the proportion of traditional glass curtain wall business to adapt to market changes - The company focuses on its core business, consolidating the development, investment, construction, and operation of photovoltaic and wind power projects, while strengthening strategic layout and resource acquisition[29](index=29&type=chunk) - Actively cultivating new business formats such as high-end curtain walls, smart energy-saving buildings, and new materials industries[29](index=29&type=chunk) - Proactively adjusted business structure, reducing the traditional glass curtain wall business segment to mitigate the impact of the real estate market[25](index=25&type=chunk) [Revenue Classification](index=12&type=section&id=4.2.1%20Revenue%20Classification) Clean energy EPC revenue significantly increased by 143.6%, becoming the main growth driver, while revenue from curtain walls and green buildings, and product sales decreased Revenue Classification (For the Six Months Ended June 30) | Revenue Category | 2025 (RMB millions) | 2024 (RMB millions) | Increase / (Decrease) (%) | Revenue Share (%) | | :--- | :--- | :--- | :--- | :--- | | Clean Energy EPC | 835.2 | 342.8 | 143.6 | 49.6 | | Curtain Walls and Green Buildings | 197.2 | 227.4 | (13.3) | 11.7 | | Electricity Sales | 329.1 | 328.7 | 0.1 | 19.5 | | Product Sales | 303.8 | 419.7 | (27.6) | 18.0 | | Others | 19.6 | 57.3 | (65.8) | 1.2 | | **Total Revenue** | **1,684.9** | **1,375.9** | **22.5** | **100.0** | [Clean Energy EPC Business](index=13&type=section&id=4.2.2%20Clean%20Energy%20EPC%20Business) Clean energy EPC revenue significantly increased by 143.7% year-on-year, benefiting from the effective utilization of its Grade-A qualification for general contracting of power engineering construction, securing multiple large-scale clean energy EPC contracts, and successfully completing project construction and grid connection - Clean energy EPC revenue significantly increased by **143.7%** compared to the same period last year[31](index=31&type=chunk) - Successfully undertook the Hainan 62MW project and multiple "PV + aquaculture" projects in Shandong, and signed several large-scale clean energy EPC contracts in Xi'an, Hainan, and Shandong[31](index=31&type=chunk) - The "Blue Sail Project" distributed photovoltaic project, in cooperation with CSSC Group, achieved a cumulative grid-connected capacity exceeding **100 MW**[31](index=31&type=chunk) [Overseas Market Expansion](index=13&type=section&id=4.2.3%20Overseas%20Market%20Expansion) The company achieved fruitful results in overseas markets such as Hong Kong, Australia, Japan, and Africa, including the Hong Kong Airport green building project, the upgrade of Sydney's landmark buildings, the completion of Japan's first photovoltaic power station cluster project, and the advancement of projects in 'Belt and Road' countries in Africa - Steadily advanced the Hong Kong Airport green building project in the Hong Kong market and successfully won the bid for the Hong Kong Environmental Protection Department's Outlying Islands photovoltaic power station project[32](index=32&type=chunk) - Participated in the upgrade of a century-old landmark building in Sydney, Australia, focusing on green building low-carbon design[32](index=32&type=chunk) - Successfully completed its first photovoltaic power station cluster project undertaken in the Japanese market[32](index=32&type=chunk) - In the African market, the Angola government building curtain wall project progressed smoothly, reached a consensus with Kenya on solar and wind power supply solutions, and secured a new small-scale ground photovoltaic power station project in Tanzania[32](index=32&type=chunk) [Curtain Walls and Green Buildings Business](index=13&type=section&id=4.2.4%20Curtain%20Walls%20and%20Green%20Buildings%20Business) Total revenue from curtain walls and green buildings business decreased by 13.3% year-on-year, primarily due to the company's proactive adjustment of its business strategy to reduce the proportion of traditional curtain wall business, thereby mitigating the negative impact of the real estate industry - Total revenue from curtain walls and green buildings business decreased by **13.3%** compared to the same period last year[33](index=33&type=chunk) - The decrease was mainly due to the company's proactive adjustment of its business strategy to reduce the proportion of traditional curtain wall business revenue[33](index=33&type=chunk) [Electricity Sales Business](index=13&type=section&id=4.2.5%20Electricity%20Sales%20Business) Total electricity sales revenue slightly increased by 0.1% year-on-year, with business volume remaining stable; the company's self-owned power stations exceed 1.27 GW in scale, and power generation increased by 6.8% year-on-year - Total electricity sales revenue slightly increased by **0.1%** compared to the same period last year, with business volume remaining stable[33](index=33&type=chunk) - Self-owned power stations exceed **1.27 GW** in scale, including 31 distributed and centralized ground photovoltaic power stations in mainland China and one overseas photovoltaic power station[33](index=33&type=chunk) - Power generation in the first half of 2025 was **509.3 million kWh**, an increase of **6.8%** compared to the same period in 2024[33](index=33&type=chunk) [Product Sales Business](index=14&type=section&id=4.2.6%20Product%20Sales%20Business) Total product sales revenue decreased by 27.6% year-on-year, primarily due to a decline in solar product sales revenue - Total product sales revenue decreased by **27.6%** compared to the same period last year[34](index=34&type=chunk) - The decrease was mainly due to a decline in sales revenue of solar products (photovoltaic modules, inverters, etc)[34](index=34&type=chunk) [Financial Review](index=14&type=section&id=4.3%20Financial%20Review) During the reporting period, the company's revenue grew, but gross profit margin decreased year-on-year; other income and gains significantly increased, distribution expenses slightly rose, and administrative expenses decreased; capital expenditure increased, mainly for self-owned power station construction; the company's liquidity primarily came from project revenue, borrowings, and advances from Shuifa Group, with a debt structure dominated by long-term interest-bearing liabilities; one equity disposal was completed during the period, with no other significant mergers and acquisitions [Revenue](index=14&type=section&id=4.3.1%20Revenue) During the reporting period, the company's revenue reached RMB 1.685 billion, a year-on-year increase of 22.5%, primarily driven by the clean energy EPC business - Revenue for the reporting period was **RMB 1.685 billion**, an increase of **22.5%** compared to the same period last year[35](index=35&type=chunk) - Clean energy EPC revenue was **RMB 835.20 million**, a year-on-year increase of **143.6%**, accounting for **49.6%** of total revenue[35](index=35&type=chunk) [Gross Profit Margin](index=14&type=section&id=4.3.2%20Gross%20Profit%20Margin) The overall gross profit margin for the reporting period was approximately 21.0%, a year-on-year decrease of 11.3%, but an improvement from 16.8% at the end of 2024; gross profit margins for both clean energy EPC and curtain walls and green buildings businesses significantly declined - The overall gross profit margin for the reporting period was approximately **21.0%**, a year-on-year decrease of **11.3%** compared to 2024, but an improvement from **16.8%** at the end of 2024[36](index=36&type=chunk)[26](index=26&type=chunk) Segment Gross Profit Margin Overview | Segment | For the Six Months Ended 2025年6月30日 (%) | For the Year Ended 2024年12月31日 (%) | For the Six Months Ended 2024年6月30日 (%) | | :--- | :--- | :--- | :--- | | Clean Energy EPC | 5.0 | 4.8 | 20.7 | | Curtain Walls and Green Buildings | 3.4 | 0.6 | 7.7 | | Subtotal for Construction Contracts | 4.7 | 4.1 | 15.5 | | Electricity Sales | 56.0 | 56.0 | 56.0 | | Product Sales | 37.9 | 28.1 | 34.2 | | Others | 34.0 | 67.0 | 50.4 | [Other Income and Gains](index=15&type=section&id=4.3.3%20Other%20Income%20and%20Gains) Total other income and gains increased by RMB 20.41 million or 66.2% during the reporting period, primarily due to compensation for design consulting fees, increased rental income from properties, and gains from reduced bond interest rates - Other income and gains increased by **RMB 20.41 million** or **66.2%** compared to the same period last year[38](index=38&type=chunk) - The main reasons include compensation for design consulting fees, increased rental income from properties, and gains from reduced bond interest rates[38](index=38&type=chunk) [Distribution Expenses](index=15&type=section&id=4.3.4%20Distribution%20Expenses) Distribution expenses increased by RMB 0.963 million or 4.7% compared to the same period last year, mainly due to increased business expenses resulting from intensified domestic and international market expansion efforts - Distribution expenses increased by **RMB 0.963 million** or **4.7%** compared to the same period last year[39](index=39&type=chunk) - The main reason was increased business expenses due to intensified domestic and international market expansion efforts[39](index=39&type=chunk) [Administrative Expenses](index=15&type=section&id=4.3.5%20Administrative%20Expenses) Administrative expenses decreased by RMB 6.58 million or 4.7% compared to the same period last year, primarily attributable to the improvement of human resource and remuneration systems, and strengthened control over travel and office expenses - Administrative expenses decreased by **RMB 6.58 million** or **4.7%** compared to the same period last year[40](index=40&type=chunk) - Primarily attributable to the improvement of human resource and remuneration systems, and strengthened control over travel and office expenses[40](index=40&type=chunk) [Liquidity and Financial Resources](index=15&type=section&id=4.3.6%20Liquidity%20and%20Financial%20Resources) The company's funds primarily originate from project contracts, product and electricity sales revenue, bank and other borrowings, bond issuance, and advances from Shuifa Group; as of the end of the reporting period, outstanding bank and other loans amounted to approximately RMB 6.482 billion, and outstanding bonds were approximately RMB 1.518 billion - Principal funding sources include receivables from project contracts, product sales and electricity sales revenue, bank and other borrowings, bond issuance, and advances from Shuifa Group[41](index=41&type=chunk) - As of June 30, 2025, outstanding bank and other loans amounted to approximately **RMB 6.482 billion**[41](index=41&type=chunk) - As of June 30, 2025, outstanding bonds amounted to approximately **RMB 1.518 billion**[41](index=41&type=chunk) [Capital Expenditure](index=15&type=section&id=4.3.7%20Capital%20Expenditure) Capital expenditure for the reporting period was RMB 285 million, primarily for the construction of self-owned power stations, an increase from the same period last year - Capital expenditure for the reporting period was **RMB 285 million**, primarily for the construction of self-owned power stations, including large-scale photovoltaic power stations such as Hubei Gucheng[42](index=42&type=chunk) - This represents an increase from capital expenditure of **RMB 218 million** in the same period of 2024[42](index=42&type=chunk) [Bonds, Bank and Other Borrowings](index=15&type=section&id=4.3.8%20Bonds,%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, the company's bonds, bank, and other borrowings totaled RMB 8 billion, with 75.4% being interest-bearing liabilities with a maturity of over three years - As of June 30, 2025, bonds, bank, and other borrowings totaled **RMB 8 billion**[43](index=43&type=chunk) Loan Maturity Structure | Maturity | Percentage (%) | | :--- | :--- | | Within one year | 10.4 | | One to three years (inclusive) | 14.2 | | Over three years | 75.4 | Loan Categories and Interest Rate Ranges | Category | Amount (RMB billions) | Interest Rate Range | | :--- | :--- | :--- | | Bonds | 1.518 | 3.45%–3.80% | | Bank Borrowings | 2.400 | 2.80%–4.85% | | Finance Leases | 4.082 | 3.60%–6.37% | | **Total** | **8.000** | | [Contingent Liabilities](index=16&type=section&id=4.3.9%20Contingent%20Liabilities) As of June 30, 2025, the company had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[45](index=45&type=chunk) [Significant Investments, Acquisitions and Disposals](index=16&type=section&id=4.3.10%20Significant%20Investments,%20Acquisitions%20and%20Disposals) During the reporting period, the company disposed of a 48% equity interest (19.2% effective interest) in Shuifa Clean Energy Co., Ltd. to Xinxing New Energy (Guangdong) Investment Co., Ltd.; other than this, there were no other significant mergers, acquisitions, or investments - Disposed of **48%** equity interest (**19.2%** effective interest) in Shuifa Clean Energy Co., Ltd. to Xinxing New Energy (Guangdong) Investment Co., Ltd[46](index=46&type=chunk) - No other significant acquisitions or disposals of subsidiaries, associates, and jointly controlled entities were undertaken, nor were any significant investments held during the reporting period[46](index=46&type=chunk) [Foreign Currency Risk](index=16&type=section&id=4.3.11%20Foreign%20Currency%20Risk) The company's principal operations are located in mainland China, with most transactions conducted in RMB, resulting in limited foreign currency risk; the company will continue to monitor its foreign exchange position and use hedging instruments to manage risks when necessary - The Group's principal operations are located in mainland China, with most transactions conducted in RMB, resulting in limited foreign exchange risk[47](index=47&type=chunk) - The Group will continue to monitor its foreign exchange position and use hedging instruments to manage foreign exchange risk when necessary[47](index=47&type=chunk) [Growth Strategies](index=16&type=section&id=V.%20Growth%20Strategies) This section outlines the company's strategic initiatives for future growth, focusing on asset optimization, cost reduction, and market expansion across its key business segments [Optimizing Asset Structure and Enhancing Gross Profit Margin](index=16&type=section&id=5.1%20Optimizing%20Asset%20Structure%20and%20Enhancing%20Gross%20Profit%20Margin) The company will focus on its core clean energy business, strategically deploying high-return, low-risk quality energy projects through efficient regional and technological combinations; it will optimize EPC costs through lean operations, strengthen electricity market trading capabilities, and improve power station operation and maintenance quality to enhance gross profit margins; concurrently, it will strictly control the quality of new projects and regularly dispose of inefficient or non-performing assets to optimize its asset structure - Focus on the core clean energy business, advance the construction of existing projects, and strategically deploy high-return, low-risk quality energy projects through efficient regional and technological combinations[48](index=48&type=chunk)[49](index=49&type=chunk) - Drive EPC cost optimization through lean operations, strengthen electricity market trading capabilities, and promote high-quality power station operation and maintenance to enhance gross profit margins[49](index=49&type=chunk) - Strictly control the quality of new projects, establish and improve a full-process control mechanism, and regularly clear or revitalize inefficient or non-performing assets[50](index=50&type=chunk) - In the first half, newly grid-connected installed capacity was **281 MWp**, with an estimated full-year grid-connected capacity of **577 MWp**[50](index=50&type=chunk) - In the first half, asset disposals saved **RMB 12.7 million** in expenses and recovered **RMB 9.56 million** in funds, with an estimated full-year recovery of nearly **RMB 40 million**[50](index=50&type=chunk) [Reducing Finance Costs](index=17&type=section&id=5.2%20Reducing%20Finance%20Costs) The company continuously reduces finance costs and optimizes its debt structure through measures such as covering short-term debt with long-term debt and replacing high-cost funds with low-cost funds; in the first half, it successfully issued RMB 100 million in Panda bonds, with the interest rate reduced to 3.45%; it plans to issue RMB 1 billion in 3-year interbank market bonds in the second half, expected to save approximately RMB 17 million to 22 million in finance costs annually - Continuously reduce finance costs and optimize debt structure by covering short-term debt with long-term debt and replacing high-cost funds with low-cost funds[51](index=51&type=chunk) - In the first half, successfully issued **RMB 100 million** in Panda bonds, with the interest rate reduced from **4.5%** in 2022 to **3.45%**, and the issuance period extended to three years[51](index=51&type=chunk) - Plans to issue **RMB 1 billion** in 3-year interbank market bonds in the second half, expected to save approximately **RMB 17 million to 22 million** in finance costs annually[51](index=51&type=chunk) - In the first half, the Group's finance costs decreased by **40 basis points**, and financial expenses decreased by **RMB 39.76 million**[51](index=51&type=chunk) [Clean Energy Sector](index=18&type=section&id=5.3%20Clean%20Energy%20Sector) The company will leverage its 'technology customization + local deep cultivation' dual-engine approach to accelerate its global renewable energy footprint, including penetrating the high-end Japanese market, expanding its business presence in Africa, and actively seeking breakthroughs in Central Asian markets to build a multi-country green energy network - Leverage the "technology customization + local deep cultivation" dual-engine approach to accelerate global renewable energy deployment[52](index=52&type=chunk) - Plans to customize and develop small-scale photovoltaic systems and new pure energy storage power stations to meet Japan's energy transition demands[52](index=52&type=chunk) - Actively expand its business footprint in the African market, strengthening energy market development efforts in South Africa and Kenya[52](index=52&type=chunk) - Actively seek breakthroughs in Central Asian markets, collaborating with Kyrgyzstan to promote clean energy development[52](index=52&type=chunk) [Green Building Sector](index=18&type=section&id=5.4%20Green%20Building%20Sector) The company will leverage its expertise in overseas curtain walls to focus on 'Belt and Road' countries and emerging markets in Southeast Asia, the Middle East, and Africa, deepening localized cooperation models to further enhance its brand influence in the international construction sector - Utilize its extensive experience and brand influence in overseas curtain walls to focus on "Belt and Road" countries and emerging markets in Southeast Asia, the Middle East, and Africa[53](index=53&type=chunk) - Deepen localized cooperation models, with overseas curtain wall business gradually expanding from long-term cultivated markets like Hong Kong, Australia, Singapore, and Malaysia to other countries[53](index=53&type=chunk) - During the reporting period, successfully bid for and signed a contract for the government office building curtain wall project in Angola[53](index=53&type=chunk) [New Materials Business – Upgrade and Transformation](index=18&type=section&id=5.5%20New%20Materials%20Business%20–%20Upgrade%20and%20Transformation) The new materials segment will adhere to a 'quality first' strategy, empowering industrial upgrading with technology, comprehensively expanding into the automotive dimming film business and entering international markets, gradually transitioning from architectural film business to automotive film business - The new materials segment will adhere to a "quality first" strategy, empowering industrial upgrading with technology[54](index=54&type=chunk) - Comprehensively expand into the automotive dimming film business and enter international markets, gradually transitioning from architectural film business to automotive film business[54](index=54&type=chunk) - The business model will shift towards automotive glass manufacturers such as Fuyao and Saint-Gobain[54](index=54&type=chunk) [Technology Empowerment](index=18&type=section&id=5.6%20Technology%20Empowerment) The company obtained 3 invention patents in new materials, holding a total of 109 valid patents, with some key technical indicators demonstrating international leadership; in the future, it will continue to promote the deep integration of technological innovation and industrial upgrading, accelerating its expansion into high-value-added new materials, focusing on advanced products such as automotive dimming films, high-performance shading black PDLC films, and electrochromic films - Obtained **3** invention patents in new materials during the reporting period, now holding a total of **109** valid patents[55](index=55&type=chunk) - The front and post-etching processes for etched partitioned dimming products are industry-leading; black PDLC automotive dimming film offers shading and heat insulation performance, addressing side-view haze issues[55](index=55&type=chunk) - Successfully passed CNAS laboratory testing qualification certification and IATF 16949 system transfer audit[55](index=55&type=chunk) - In the second half, it will accelerate its expansion into high-value-added new materials, focusing on advanced products such as automotive dimming films, high-performance shading black PDLC films, and electrochromic films[56](index=56&type=chunk) [Other Information](index=19&type=section&id=VI.%20Other%20Information) This section provides additional information regarding events after the reporting period, employee and remuneration policies, corporate governance, and other relevant disclosures [Events After Reporting Period](index=19&type=section&id=6.1%20Events%20After%20Reporting%20Period) There were no significant events after the reporting period - There were no significant events after the reporting period for the Group[57](index=57&type=chunk) [Employees and Remuneration Policy](index=19&type=section&id=6.2%20Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the company's total number of employees was 1,012, a decrease from the end of 2024; remuneration policies are consistent with local market practices, including salaries, provident funds, medical insurance, and performance-related bonuses, with potential grants of share options and share awards; in the first half, the company optimized human resource allocation through integration, organizational streamlining, and objective employee management - As of June 30, 2025, the Group's total number of employees was **1,012** (December 31, 2024: **1,072**)[58](index=58&type=chunk) - Remuneration policies are consistent with local market practices where operations are located, including salaries, provident funds, medical insurance, and performance-related bonuses[58](index=58&type=chunk) - Share options and share awards may also be granted to eligible employees and personnel[58](index=58&type=chunk) - In the first half, human resource allocation was optimized through the integration and merger of directly managed enterprises, streamlining internal organization, and objective employee management[58](index=58&type=chunk) [Dividends](index=19&type=section&id=6.3%20Dividends) The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2025, but will consider future dividend payments in accordance with the dividend policy - The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2025 (for the six months ended June 30, 2024: nil)[59](index=59&type=chunk) - The Group values shareholder returns and will consider dividend payments in due course in accordance with its dividend policy[59](index=59&type=chunk) [Corporate Governance](index=19&type=section&id=6.4%20Corporate%20Governance) The company has adopted and complied with the Corporate Governance Code set out in Appendix C1 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited - The company has adopted and complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited during the reporting period and up to the date of this announcement[60](index=60&type=chunk) [Standard Code for Securities Transactions by Directors](index=20&type=section&id=6.5%20Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules, and all Directors confirmed compliance with the code throughout the reporting period - The company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[61](index=61&type=chunk) - All Directors confirmed that they have complied with the required standards set out in the Standard Code and its code of conduct for Directors' securities transactions throughout the reporting period[61](index=61&type=chunk) [Audit Committee](index=20&type=section&id=6.6%20Audit%20Committee) The company has established an Audit Committee, comprising three independent non-executive directors, with Mr. Yi Yongfa as Chairman; its primary responsibilities include overseeing the financial reporting process and internal control procedures, and it has reviewed the Group's unaudited interim condensed financial information and interim results - The company has established an Audit Committee in compliance with Rules 3.21 to 3.23 and paragraph D.3 of Appendix C1 of the Listing Rules[62](index=62&type=chunk) - The Audit Committee comprises three independent non-executive directors, with Mr. Yi Yongfa as Chairman[62](index=62&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim condensed financial information and interim results for the reporting period[62](index=62&type=chunk) [Purchase, Sale and Redemption of the Company's Listed Securities](index=20&type=section&id=6.7%20Purchase,%20Sale%20and%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the reporting period[63](index=63&type=chunk) [Publication of Results Announcement](index=20&type=section&id=6.8%20Publication%20of%20Results%20Announcement) This interim results announcement is available on the HKEX website and the company's website; the interim report will be dispatched to shareholders and published on the respective websites in due course - This interim results announcement is available on the HKEX website http://www.hkexnews.hk and the company's website www.sfsyenergy.com[64](index=64&type=chunk) - The company's 2025 interim report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the company's and HKEX websites in due course[64](index=64&type=chunk) [Board of Directors Members](index=21&type=section&id=6.9%20Board%20of%20Directors%20Members) As of the announcement date, the Board of Directors comprises three executive directors, two non-executive directors, and three independent non-executive directors - Executive Directors: Mr. Zhou Guangyan (Vice Chairman and Acting Chairman), Mr. Guo Peidong, and Mr. Chen Fushan[65](index=65&type=chunk) - Non-executive Directors: Ms. Wang Suhui and Mr. Hu Xiao[65](index=65&type=chunk) - Independent Non-executive Directors: Mr. Xiao Chuangying, Mr. Yi Yongfa, and Dr. Tan Hongwei[65](index=65&type=chunk)

Important Notice [Report Overview and Responsibility Statement](index=1&type=section&id=1%2E1%20报告概览与责任声明) The semi-annual performance announcement summarizes the full report, with management guaranteeing its content and the financial report being unaudited but reviewed by the audit committee - This semi-annual performance announcement is a summary of the full semi-annual report; investors should carefully read the full report for a comprehensive understanding of the company's operations, financial position, and future development plans[3](index=3&type=chunk) - The company's Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report, with no false statements, misleading representations, or material omissions, and assume legal responsibility[3](index=3&type=chunk) - The financial report in this semi-annual report is unaudited but has been reviewed by the company's Board of Directors' Audit and Compliance Management Committee[3](index=3&type=chunk) Company Overview [Company Profile](index=2&type=section&id=2%2E1%20公司简介) Maanshan Iron & Steel Company Limited is listed on both Shanghai and Hong Kong stock exchanges, with disclosed contact information for its company secretary Company Stock Information | Stock Type | Listing Exchange | Stock Abbreviation | Stock Code | | :--- | :--- | :--- | :--- | | A-share | Shanghai Stock Exchange | Maanshan Steel | 600808 | | H-share | The Stock Exchange of Hong Kong Limited | Maanshan Iron & Steel | 00323 | [Key Accounting Data and Financial Indicators](index=2&type=section&id=2%2E2%20公司主要会计数据和财务指标) As of June 30, 2025, total assets increased by **4.25%** year-on-year, and net assets attributable to shareholders increased by **2.77%**, with revenue decreasing by **11.47%** but a turnaround to profit for total profit and net profit attributable to shareholders Key Accounting Data and Financial Indicators (Consolidated Statements) | Indicator | Current Period End/Current Period (RMB) | Previous Year End/Same Period Last Year (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | **Balance Sheet:** | | | | | Total Assets | 82,322,514,611 | 78,962,973,613 | 4.25 | | Net Assets Attributable to Shareholders of Listed Company | 23,901,475,700 | 23,257,460,660 | 2.77 | | **Income Statement:** | | | | | Operating Revenue | 38,075,533,544 | 43,007,478,790 | -11.47 | | Total Profit | 117,712,960 | -1,190,806,469 | Not applicable | | Net Profit Attributable to Shareholders of Listed Company | -74,780,316 | -1,144,779,937 | Not applicable | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-recurring Gains and Losses) | -108,239,155 | -1,236,755,384 | Not applicable | | **Cash Flow Statement:** | | | | | Net Cash Flow from Operating Activities | 940,725,426 | 1,227,796,059 | -23.38 | | **Other Indicators:** | | | | | Weighted Average Return on Net Assets (%) | -0.32 | -4.21 | Increased by 3.89 percentage points | | Basic Earnings Per Share (RMB/share) | -0.01 | -0.148 | Not applicable | [Top 10 Shareholders' Holdings](index=3&type=section&id=2%2E3%20前10名股东持股情况表) As of the end of the reporting period, Maanshan Iron & Steel (Group) Holding Co., Ltd. was the largest shareholder with a **48.35%** stake, and Hong Kong Securities Clearing Company (Nominees) Limited was the second largest with **22.25%** Top 10 Shareholders' Holdings | Shareholder Name | Shareholder Nature | Holding Percentage (%) | Number of Shares Held | | :--- | :--- | :--- | :--- | | Maanshan Iron & Steel (Group) Holding Co., Ltd. | State-owned Legal Person | 48.35 | 3,733,677,149 | | Hong Kong Securities Clearing Company (Nominees) Limited | Overseas Legal Person | 22.25 | 1,718,234,495 | | Central Huijin Asset Management Co., Ltd. | State-owned Legal Person | 1.80 | 139,172,300 | | Beijing Guoxing Property Management Co., Ltd. | Domestic Non-state-owned Legal Person | 0.61 | 46,997,901 | | Hong Kong Securities Clearing Company Limited | Overseas Legal Person | 0.50 | 38,661,246 | | Agricultural Bank of China Co., Ltd. - CSI 500 ETF | Other | 0.46 | 35,505,426 | | Shenzhen Qianhai Daoming Investment Management Co., Ltd. - Daoming No. 1 Private Securities Investment Fund | Other | 0.19 | 14,554,600 | | Huang Hairong | Domestic Natural Person | 0.15 | 11,477,081 | | Hong Zhenbo | Domestic Natural Person | 0.15 | 11,267,400 | | Guosen Securities Co., Ltd. | State-owned Legal Person | 0.14 | 11,088,800 | - Maanshan Iron & Steel (Group) Holding Co., Ltd. has no associated relationship with other aforementioned shareholders, nor are they acting in concert; the company is unaware of any associated relationships or concerted actions among other aforementioned shareholders[15](index=15&type=chunk) - Hong Kong Securities Clearing Company (Nominees) Limited holds **1,718,234,495 H-shares** of the company, representing shares held by multiple clients, including **358,950,000 H-shares** held on behalf of Baosteel Hong Kong Investment Co., Ltd[15](index=15&type=chunk) [Changes in Controlling Shareholder or Actual Controller](index=4&type=section&id=2%2E4%20控股股东或实际控制人变更情况) No changes occurred in the company's controlling shareholder or actual controller during the reporting period - No changes occurred in the company's controlling shareholder or actual controller during the reporting period[15](index=15&type=chunk) [Corporate Bonds](index=4&type=section&id=2%2E5%20公司债券情况) During the reporting period, the company had no outstanding or overdue corporate bonds - During the reporting period, the company had no outstanding or overdue corporate bonds[16](index=16&type=chunk) Management Discussion and Analysis [Key Operating Performance](index=4&type=section&id=3%2E1%20主要经营情况) In H1 2025, the company navigated market challenges and implemented strategic initiatives, resulting in a **RMB 1.07 billion** year-on-year profit increase for shareholders - In the first half of 2025, the company strictly implemented China Baowu's strategic deployment of "new stage, new strategy, new model," adhered to "four modernizations" and "four advantages," and actively responded to severe market challenges by focusing on enhancing value creation capabilities[17](index=17&type=chunk) - Through deep promotion of cost accounting, strengthened integrated synergy, continuous deepening of reform and innovation, and solid advancement of "three reductions and three enhancements" initiatives, the overall production and operation trend improved, and deepening reforms achieved phased progress[17](index=17&type=chunk) 2025 H1 Key Production Data | Product | Output (ten thousand tons) | | :--- | :--- | | Pig Iron | 936 | | Crude Steel | 1,035 | | Steel Products | 963 | 2025 H1 Key Financial Data | Indicator | Amount (RMB) | | :--- | :--- | | Operating Revenue | 38.076 billion | | Net Profit Attributable to Shareholders of Listed Company | -0.075 billion | | Year-on-year Profit Increase | 1.07 billion | [Focusing on Value Creation, Significant Achievements in Internal Cost Reduction and Efficiency Improvement](index=4&type=section&id=3%2E1%2E1%20聚焦价值创造，内部降本增效成效显著) The company achieved significant internal cost reduction and efficiency improvement through adjusting procurement strategies, increasing orders for key products, optimizing production and maintenance models, and strengthening quality control, resulting in a **RMB 91** per ton steel cost reduction in H1 - The procurement side actively adjusted procurement strategies, adopting slow procurement, small batches, and multiple deliveries to reduce procurement costs, with the average port spot price for iron ore outperforming the index by **$4.58/ton** cumulatively[18](index=18&type=chunk)[19](index=19&type=chunk) - In the fuel sector, the coking coal procurement cost for January-June was **RMB 1,267/ton**, **RMB 10.67/ton** lower than the industry average, improving its industry ranking by **2 places** compared to last year[19](index=19&type=chunk) - The marketing side increased orders for key products, with actual settlement of **2.769 million tons** of key products in H1, achieving **52.9%** of the target, and key product ratio and direct supply ratio reaching **35%** and **73.4%** respectively, up **5.0** and **8.5 percentage points** year-on-year[19](index=19&type=chunk) - The manufacturing side optimized production and maintenance models, with Maanshan Iron & Steel Co., Ltd.'s **10 production lines** setting **20 new monthly production records** and **19 production lines** setting **43 new daily production records**[19](index=19&type=chunk) - Quality control was strengthened, with the post-steel product scrap rate decreasing by **1.14 percentage points** and the spot occurrence rate decreasing by **0.66 percentage points** by the end of June compared to the previous year[19](index=19&type=chunk) - During the reporting period, internal cost reduction and efficiency improvement through procurement and manufacturing resulted in a **RMB 91** per ton steel cost reduction[19](index=19&type=chunk) [Focusing on Product Management, Product Structure Adjustment Progressing as Planned](index=5&type=section&id=3%2E1%2E2%20聚焦产品经营，产品结构调整如期推进) The company made progress in product premiumization, key project construction, and international development, with key steel product settlement volume growing by **22%** and new product sales per ton exceeding gross profit increasing by **39%** - In terms of product premiumization, key steel product settlement reached **2.77 million tons**, a **22%** year-on-year increase; sales of new products reached **867,000 tons**, with an excess gross profit per ton increasing by **39%** year-on-year[20](index=20&type=chunk) - The first **2200MPa** hot-formed steel passed Xiaomi Auto material certification and secured small-batch orders[20](index=20&type=chunk) - Progress was made in the localization of high-speed rail wheels, with Fuxing EMU self-developed wheelsets ready for mass installation, and CR400 Fuxing EMU self-developed wheels entering the China Railway Group supplier list and receiving orders[20](index=20&type=chunk) - For key project construction, the cold rolling **6** galvanized line project and the South Area section steel modification project's **3** continuous caster are expected to be substantially completed by year-end[20](index=20&type=chunk) - In international development, new markets such as Southeast Asia were developed, with cumulative exports reaching **554,000 tons** in H1, of which wheel exports exceeded **90,000 units**, accounting for approximately **45%** of wheelset product operating revenue; H-beam exports reached **357,000 tons**, a **5%** sequential increase[20](index=20&type=chunk) [Focusing on Institutional Breakthroughs, Internal and External Reforms Adding Vitality to Development](index=5&type=section&id=3%2E1%2E3%20聚焦机制突破，内外部改革增添发展活力) The company implemented internal institutional reforms, establishing a blast furnace operation technical committee and a production-sales-research operation center, and separating steelmaking and rolling operations to enhance efficiency, while externally introducing Baosteel Co., Ltd. as a strategic investor with a **49%** stake in Maanshan Iron & Steel Co., Ltd. - Internal reform: Established a blast furnace operation technical committee, setting up **5 teams** per blast furnace, implementing incentive mechanisms to promote long-term stable and smooth blast furnace operation, and reducing hot metal costs[21](index=21&type=chunk) - Internal reform: Established a production-sales-research operation center, clarifying product management responsibilities and promoting deep improvements in product quality and operations[21](index=21&type=chunk) - Internal reform: Separated steelmaking and rolling to strengthen efficient production synergy and continuously improve production efficiency[21](index=21&type=chunk)[22](index=22&type=chunk) - External reform: Injected main steel assets into Maanshan Iron & Steel Co., Ltd., introducing Baosteel Co., Ltd. as a strategic investor with a **49%** stake, creating favorable conditions for deep synergistic development with Baosteel Co., Ltd[22](index=22&type=chunk) [Focusing on Synergistic Development, Initial Results from Collaboration with Baosteel Co., Ltd.](index=6&type=section&id=3%2E1%2E4%20聚焦协同发展，与宝钢股份协同效果初现) Maanshan Iron & Steel Co., Ltd. and Baosteel Co., Ltd. launched **172 synergistic support projects** across procurement, production, marketing, and long/special steel, achieving good results and enabling Maanshan Iron & Steel Co., Ltd. to achieve monthly profitability since its independent operation in March - Maanshan Iron & Steel Co., Ltd. and Baosteel Co., Ltd. launched **172 synergistic support projects**, covering procurement, production operations, R&D, long/special steel, and functional support[23](index=23&type=chunk) - Synergistic effects were significant, enabling Maanshan Iron & Steel Co., Ltd. to achieve monthly profitability since its independent operation in March[23](index=23&type=chunk) - Procurement synergy achieved cost reduction of **RMB 77.07 million**; production operation synergy optimized tundish pouring operations, reducing residual steel in tundishes; marketing synergy focused on product structure optimization and core users, with automotive plates alone creating **RMB 3.17 million** in synergistic value[23](index=23&type=chunk) - Long/special steel synergy guided the control of active oxygen during steelmaking and optimized deoxidation processes for molten steel and slag surface, reducing product cracking rate from **10%** to **0.5%** and increasing product orders[23](index=23&type=chunk) [Focusing on Differentiated Competition, Significant Performance Improvement at Changjiang Steel](index=6&type=section&id=3%2E1%2E5%20聚焦差异化竞争，长江钢铁绩效改善明显) Changjiang Steel fully implemented its "low cost, differentiated, high efficiency, fast pace" operating policy, significantly improving its operating performance with a **26%** reduction in hot metal cost and an **18.62 percentage point** increase in self-generated electricity ratio - Changjiang Steel fully implemented its "low cost, differentiated, high efficiency, fast pace" operating policy, significantly improving its operating performance[24](index=24&type=chunk) Changjiang Steel Performance Improvement (Year-on-year) | Indicator | Change | | :--- | :--- | | Hot Metal Cost | Decreased by 26% | | Self-generated Electricity Ratio | Increased by 18.62 percentage points | | Purchased Electricity Cost per Ton of Steel | Decreased by 22.97% | [Outlook and Tasks for the Second Half](index=6&type=section&id=3%2E2%20下半年形势与任务) The company anticipates steel demand to strengthen in H2, with steel prices potentially following a V-shaped trend and raw material prices fluctuating downwards, while focusing on value creation, cost accounting, benchmarking, synergy, and product structure adjustment to strive for no annual loss - In the second half, steel demand is expected to shift from weak to strong, supply from strong to weak, and steel prices may follow a V-shaped trend for the full year; raw material supply will increase while demand decreases, and prices may fluctuate downwards[25](index=25&type=chunk) - The external environment faces national development and reform commission's crude steel output reduction control; internal issues include insufficient production stability and low capacity utilization rates of production lines[25](index=25&type=chunk) - The company will actively respond to the severe situation, focus on value creation, deepen cost accounting, comprehensively benchmark and identify gaps, strengthen synergistic value creation, increase product structure adjustment, strive to improve the profit per ton of steel percentile, and aim to achieve no annual loss[25](index=25&type=chunk) [Ensuring Stable and Smooth Production](index=7&type=section&id=3%2E2%2E1%20抓好生产稳定顺行) The company will adhere to the principle that "production stability is the biggest cost reduction," enhancing production stability by stabilizing blast furnace operations, improving steel rolling line efficiency, actively securing orders, strengthening equipment precision management, and promoting economic energy operation - Fully stabilize blast furnace production, ensuring Maanshan Iron & Steel Co., Ltd.'s hot metal daily output firmly maintains a **42,500-ton** platform[26](index=26&type=chunk) - Improve steel rolling line efficiency, promote intensive production, orderly shut down long product small bar lines, modify long product large bar lines, and exit long product Zone 1 converters, reducing iron-to-steel ratio, increasing hot delivery ratio, and lowering iron and steel material consumption[26](index=26&type=chunk) - Actively secure orders, produce based on sales, strengthen synergy with Baosteel's marketing system, closely monitor key users, and conduct joint marketing and R&D[26](index=26&type=chunk) - Reduce accident rates, strengthen equipment precision management, optimize maintenance models, enhance point inspection management, and strengthen accident prevention and equipment status management[26](index=26&type=chunk) - Promote economic energy operation, effectively leveraging the energy working group's role to ensure supply, improve efficiency, and reduce losses[26](index=26&type=chunk) [Comprehensively Deepening Benchmarking and Gap Analysis](index=7&type=section&id=3%2E2%2E2%20全面深化对标找差) The company will adhere to the principle of "costs falling as market prices fall," focusing on cost and quality element management, benchmarking against advanced steel enterprises to drive full-element cost reduction and full-process quality improvement, enhancing cost competitiveness across all processes - Adhere to "costs falling as market prices fall," focusing on cost and quality element management[27](index=27&type=chunk) - Benchmark against advanced steel enterprises to drive full-element cost reduction and full-process quality improvement, synergistically enhancing cost competitiveness across all processes[27](index=27&type=chunk) - With "cost elements and quality elements" management as the main line, promote hot metal cost reduction to control the bottom line, tackle purchase-sale price differences to ensure profitability, manage daily costs for execution, and close the loop on incentives and constraints to improve efficiency[27](index=27&type=chunk) [Closely Monitoring Both Procurement and Sales Markets](index=7&type=section&id=3%2E2%2E3%20紧盯购销两头市场) The marketing side will adjust structure, increase exports, and optimize channels, aiming for **37%** key product ratio and **7.8%** export ratio, while the procurement side will strengthen slow procurement, multiple batches, and small batch strategies to outperform the market - Marketing side: Accelerate the shift of plate and strip products towards "cold series, high strength, coated, new energy," strengthen section steel, optimize special steel, and push the key product ratio to **37%**[28](index=28&type=chunk) - Marketing side: Increase the direct supply ratio of cold series plates, further enhancing direct sales to end-users; consolidate and raise the proximity ratio to **89%**[28](index=28&type=chunk) - Marketing side: Strengthen synergistic sales, utilize Baosteel's global marketing network for section steel sales; increase efforts in developing overseas end-customers, pushing the export ratio to **7.8%**[28](index=28&type=chunk) - Procurement side: Strengthen slow procurement, multiple batches, small batches; expand supplier scope, increase bidding, and fully leverage centralized procurement[28](index=28&type=chunk) - Procurement side: Strengthen the matching of demand and resources, increase the use of cost-effective resources such as scrap steel, iron ore, and coal, flexibly respond to changes in market coal and long-term contract coal price differences, dynamically adjust the proportion of long-term contract coal; operate agilely, outperform the market, seize market rhythms, and ensure imported iron ore procurement outperforms the index[28](index=28&type=chunk) [Strengthening Support for Technological Innovation](index=8&type=section&id=3%2E2%2E4%20做实科技创新支撑) The company will focus on product differentiation, consolidate and enhance key product categories, accelerate the mass application of **400 km/h** high-speed rail wheelsets, strengthen R&D for automotive steel, and conduct core research on on-site process technology and green low-carbon metallurgical technology - Product management: Focus on product differentiation, consolidate and enhance key product categories, and improve market competitiveness[29](index=29&type=chunk) - Structural adjustment: Accelerate the mass application of **400 km/h** high-speed rail wheelsets, maintaining a leading edge in wheelsets; focus on long product and special steel reforms, continuously strengthening R&D, production, and sales of section steel and special steel products[29](index=29&type=chunk) - Core research: Conduct research on on-site process technology, process platform technology, green low-carbon metallurgical technology, and applied basic technologies[29](index=29&type=chunk) - Industrial extension: Accelerate the transformation from materials to parts, from performance to function, and from products to services[29](index=29&type=chunk) [Promoting "Three Reductions and Three Enhancements"](index=8&type=section&id=3%2E2%2E5%20推进“三压减三提升”) The company will reduce ineffective assets, liabilities, and the scale of "two funds" (accounts receivable and inventory), while increasing overall labor productivity, the proportion of bidding and direct procurement, and the direct supply ratio, to optimize asset-liability structure and enhance market competitiveness - Reduce ineffective assets: Increase efforts in disposing of low-efficiency and ineffective assets[30](index=30&type=chunk) - Reduce liabilities and the scale of "two funds": Focus on the core tasks of "reducing liabilities, controlling two funds, and activating capital" to promote asset-liability structure optimization and full-cycle capital management[30](index=30&type=chunk) - Enhance overall labor productivity: Conduct comprehensive human resource benchmarking, optimize human resource allocation models, promote internal labor substitution, and continuously improve personnel efficiency[30](index=30&type=chunk) - Increase bidding and direct procurement ratios: Bid whenever possible, eliminate hidden barriers, and increase the bidding ratio; streamline source suppliers, reduce intermediate links, and increase the direct procurement ratio[30](index=30&type=chunk) - Increase direct supply ratio: Further strengthen channel construction, deepen strategic cooperation with key users, closely engage with regional markets to expand small and medium-sized end-customers, and further increase direct sales to end-users[30](index=30&type=chunk) [Financial Position and Exchange Rate Risk](index=8&type=section&id=3%2E3%20财务状况及汇率风险) As of the end of the reporting period, all company borrowings were in RMB, totaling **RMB 22.108 billion**, with fixed-rate borrowings accounting for **RMB 16.987 billion**, and the asset-liability ratio decreased by **4.91 percentage points** to **60.49%** Borrowing Structure | Borrowing Type | Amount (billion RMB) | | :--- | :--- | | Total Borrowings | 22.108 | | Short-term Borrowings | 13.181 | | Long-term Borrowings | 5.607 | | Long-term Borrowings Due Within One Year | 3.320 | | Fixed-rate Borrowings | 16.987 | | Floating-rate Borrowings | 5.121 | - As of the end of the reporting period, the Group's asset-liability ratio was **60.49%**, a decrease of **4.91 percentage points** compared to the end of 2024[31](index=31&type=chunk) - The company actively responded to exchange rate and interest rate fluctuation risks caused by divergent global monetary policies, operating under the principles of "cost locking, tool locking, exposure locking, and cash flow locking" to comprehensively deepen refined cross-border capital management[32](index=32&type=chunk) - In Q2 2025, new cross-border business models were introduced, directly opening RMB electronic spot letters of credit to mining companies totaling **RMB 331 million**, and handling cross-border RMB forward letter of credit business of **RMB 168 million**, thereby mitigating exchange rate fluctuation risks through RMB settlement[32](index=32&type=chunk) [Internal Control and Risk Management](index=9&type=section&id=3%2E4%20内部监控及风险管理) The company implements an internal audit system and has established a comprehensive internal control system covering all aspects of production and operation management, focusing on high-risk areas such as procurement, operations, finance, and subsidiary management to effectively identify and control risks - The company implements an internal audit system, with an audit department responsible for internal audit supervision of the company's financial revenues, expenditures, and economic activities[33](index=33&type=chunk) - An internal control system has been established covering the entire production and operation management process, including internal environment, risk assessment, social responsibility, information and communication, internal supervision, human resources, capital management, procurement, asset management, sales, R&D, engineering projects, guarantee business, outsourcing, financial reporting, comprehensive budgeting, contract management, and information systems[33](index=33&type=chunk) - On March 28, 2025, the Board of Directors reviewed the 2024 Internal Control Evaluation Report, confirming that the company maintained effective internal controls in all material aspects for the year 2024, in accordance with the enterprise internal control standards system and relevant regulations[34](index=34&type=chunk) - On March 28, 2025, the Board of Directors reviewed the 2024 Comprehensive Risk Management and Internal Control Work Report and the 2025 Work Plan, confirming that the control measures taken by the company in 2024 for risks such as production safety, bulk raw material price fluctuations, exchange rate and interest rate fluctuations, cash flow control, environmental protection, and total energy consumption control were appropriate, and all risks were under control[35](index=35&type=chunk) [Operating Results](index=10&type=section&id=3%2E5%20经营成果) The company's operating revenue decreased by **11.47%** year-on-year, primarily due to weak downstream demand and lower average steel prices, while operating costs decreased by **14.69%** due to cost reduction measures and lower raw material prices, leading to a significant improvement in total profit and net profit Key Operating Results (Consolidated Statements) | Item | Current Period (RMB) | Same Period Last Year (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 38,075,533,544 | 43,007,478,790 | -11.47 | | Operating Costs | 36,244,525,052 | 42,484,454,227 | -14.69 | | Selling Expenses | 137,798,991 | 144,367,917 | -4.55 | | Administrative Expenses | 437,312,708 | 434,826,631 | 0.57 | | R&D Expenses | 549,322,312 | 509,627,618 | 7.79 | | Financial Expenses | 245,618,668 | 316,659,664 | -22.43 | | Net Cash Flow from Operating Activities | 940,725,426 | 1,227,796,059 | -23.38 | | Net Cash Flow from Investing Activities | -1,619,631,859 | -703,896,902 | Not applicable | | Net Cash Flow from Financing Activities | 2,297,776,926 | 329,780,103 | 596.76 | | Other Income | 219,162,236 | 133,118,240 | 64.64 | | Investment Income | 13,557,382 | 84,287,590 | -83.92 | | Credit Impairment (Loss)/Profit | -9,568,661 | 16,310,120 | -158.67 | | Gains on Disposal of Assets | 11,386,204 | 73,529,933 | -84.51 | | Operating Profit/(Loss) | 112,596,584 | -1,182,027,063 | Not applicable | | Non-operating Income | 17,953,725 | 733,269 | 2,348.45 | | Non-operating Expenses | 12,837,349 | 9,512,675 | 34.95 | | Total Profit/(Loss) | 117,712,960 | -1,190,806,469 | Not applicable | | Income Tax Expense | 77,493,175 | 121,089,148 | -36.00 | | Net Profit/(Loss) | 40,219,785 | -1,311,895,617 | Not applicable | | Net Loss Attributable to Parent Company Shareholders | -74,780,316 | -1,144,779,937 | Not applicable | | Minority Interests | 115,000,101 | -167,115,680 | Not applicable | - Operating revenue decreased by **11.47%**, primarily due to the continuous weak demand in downstream industries, leading to a year-on-year decrease in the average price of steel products in the current period[38](index=38&type=chunk) - Operating costs decreased by **14.69%**, primarily due to the company's continuous promotion of cost reduction and efficiency improvement across all processes, coupled with a year-on-year decrease in prices of raw materials such as iron ore and coking coal in the current period[38](index=38&type=chunk) - Net cash inflow from financing activities increased by **596.76%**, mainly because Baosteel Co., Ltd. acquired a **35.42%** equity stake in Maanshan Iron & Steel Co., Ltd. held by Maanshan Iron & Steel Co., Ltd. for **RMB 5.139 billion** in the current period, and the first installment of **RMB 2.57 billion** has been received[39](index=39&type=chunk) - Operating profit, total profit, net profit, and net loss attributable to parent company shareholders improved year-on-year, mainly due to a better purchase-sale price difference in the current period, and the company's efforts to continuously improve operating performance through cost accounting, full-element cost reduction, and full-process quality improvement[40](index=40&type=chunk) Matters Related to Financial Reports [Changes in Accounting Policies, Estimates, and Methods](index=12&type=section&id=4%2E1%20会计政策、会计估计和核算方法变更情况) There were no changes in the Group's accounting policies, accounting estimates, and accounting methods compared to the previous accounting period - There were no changes in the Group's accounting policies, accounting estimates, and accounting methods compared to the previous accounting period[43](index=43&type=chunk) [Correction of Material Accounting Errors](index=12&type=section&id=4%2E2%20重大会计差错更正情况) No material accounting errors requiring retrospective restatement occurred during the reporting period - No material accounting errors requiring retrospective restatement occurred during the reporting period[43](index=43&type=chunk) [Changes in Consolidation Scope of Financial Statements](index=12&type=section&id=4%2E3%20财务报表合并范围变动) Anhui Changjiang Steel Trading Hefei Co., Ltd. was absorbed and merged by its parent company, Anhui Changjiang Steel, and is no longer included in the consolidation scope; otherwise, there were no changes compared to the previous year's financial report - Anhui Changjiang Steel Trading Hefei Co., Ltd. was absorbed and merged by the company's subsidiary, Anhui Changjiang Steel, on January 27, 2025, and is no longer included in the consolidation scope[41](index=41&type=chunk) - Other than this, there were no changes in the consolidation scope of the financial statements compared to the previous year's financial report[41](index=41&type=chunk) Other Matters [Work of the Audit Committee](index=12&type=section&id=5%2E1%20审计委员会工作情况) The company's Audit Committee, composed of four independent directors, has reviewed the 2025 semi-annual performance - The company's Audit Committee is composed of independent directors Ms Zeng Xiangfei, Mr Guan Bingchun, Mr He Anrui, and Mr Qiu Shengtao[42](index=42&type=chunk) - The Audit Committee has reviewed the 2025 semi-annual performance[42](index=42&type=chunk) [Material Events Affecting the Group After the Reporting Period](index=13&type=section&id=5%2E2%20报告期后影响本集团的重大事项) After the reporting period, the company's shareholders' meeting approved a supplementary agreement for the 2025-2027 product purchase and sales agreement with China Baowu Steel Group Corporation Limited, and Mr Zhang Wenxiang resigned as director, general manager, and CFO, with Mr Chen Guorong appointed as deputy general manager and CFO - On July 30, 2025, the company's shareholders' meeting reviewed and approved the supplementary agreement for the 2025–2027 product purchase and sales agreement between the company and China Baowu Steel Group Corporation Limited[44](index=44&type=chunk) - On August 15, 2025, Mr Zhang Wenxiang resigned as the company's director, general manager, and chief financial officer, and the Board of Directors appointed Mr Chen Guorong as deputy general manager and chief financial officer[44](index=44&type=chunk) [Purchase, Sale, and Redemption of Listed Shares](index=13&type=section&id=5%2E3%20购买、出售及赎回上市股份) During the reporting period, neither the company nor its subsidiaries redeemed, purchased, or resold any listed shares - During the reporting period, the company did not redeem its listed shares, nor did the company or its subsidiaries purchase or resell any of the company's listed shares[45](index=45&type=chunk) [Pre-emptive Rights](index=13&type=section&id=5%2E4%20优先购股权) Neither Chinese law nor the company's articles of association require existing shareholders to have pre-emptive rights to purchase new shares in proportion to their holdings when the company issues new shares - Neither Chinese law nor the company's articles of association stipulate that existing shareholders must have pre-emptive rights to purchase new shares in proportion to their holdings when the company issues new shares[46](index=46&type=chunk) [Corporate Governance Code](index=13&type=section&id=5%2E5%20企業管治守則) During the reporting period, the company complied with all code provisions of Appendix C1 – Corporate Governance Code of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited - During the reporting period, the company complied with all code provisions of Appendix C1 – Corporate Governance Code of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[47](index=47&type=chunk) [Standard Securities Dealing Code for Directors of Listed Issuers](index=13&type=section&id=5%2E6%20上市发行人董事进行证券交易的标准守则) During the reporting period, all company directors complied with the provisions of Appendix C3 – Standard Securities Dealing Code for Directors of Listed Issuers of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, with no deviations found - During the reporting period, all company directors complied with the provisions of Appendix C3 – Standard Securities Dealing Code for Directors of Listed Issuers of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, with no deviations found[48](index=48&type=chunk) [Shareholder Rights](index=13&type=section&id=5%2E7%20股东权利) Shareholders holding **10%** or more of the total voting shares have the right to convene an extraordinary general meeting, and eligible shareholders can submit new proposals in writing or send inquiries to the Board of Directors - Shareholders holding **10%** or more (inclusive of **10%**) of the total voting shares of the company, individually or collectively, have the right to convene an extraordinary general meeting in accordance with the company's Articles of Association[49](index=49&type=chunk) - Shareholders meeting the requirements of Article **58** of the Articles of Association have the right to submit new proposals to the company in writing in accordance with that article[49](index=49&type=chunk) - Shareholders can submit inquiries and express opinions to the company's Board of Directors by writing to the company (located at No **8**, Jiuhua West Road, Maanshan City, Anhui Province, China)[49](index=49&type=chunk) Consolidated and Company Financial Statements [Consolidated and Company Balance Sheets](index=14&type=section&id=合并及公司资产负债表) As of June 30, 2025, the company's consolidated total assets were **RMB 82.323 billion**, a **4.25%** increase from the end of 2024, with current liabilities exceeding current assets by approximately **RMB 18.381 billion**, yet the Board believes the company has sufficient working capital for continuous operation Consolidated Balance Sheet Key Data | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | **Assets:** | | | | Total Current Assets | 24,543,559,513 | 19,472,010,226 | | Total Non-current Assets | 57,778,955,098 | 59,490,963,387 | | Total Assets | 82,322,514,611 | 78,962,973,613 | | **Liabilities:** | | | | Total Current Liabilities | 42,924,120,705 | 44,845,617,126 | | Total Non-current Liabilities | 6,873,814,332 | 6,796,304,286 | | Total Liabilities | 49,797,935,037 | 51,641,921,412 | | **Shareholders' Equity:** | | | | Total Equity Attributable to Parent Company Shareholders | 23,901,475,700 | 23,257,460,660 | | Minority Interests | 8,623,103,874 | 4,063,591,541 | | Total Shareholders' Equity | 32,524,579,574 | 27,321,052,201 | - As of June 30, 2025, the Group's current liabilities exceeded current assets by approximately **RMB 18,380,561,192**[66](index=66&type=chunk) - The company's Board of Directors, considering the Group's available funding sources, including unused bank credit lines of **RMB 50.1 billion**, and expected net cash inflows from operating activities over the next **12 months**, believes the Group has sufficient working capital to continue as a going concern[66](index=66&type=chunk) [Consolidated and Company Income Statements](index=17&type=section&id=合并及公司利润表) For the six months ended June 30, 2025, the company's consolidated operating revenue was **RMB 38.076 billion**, a **11.47%** year-on-year decrease, with net profit turning from a loss of **RMB 1.312 billion** in the prior year to a profit of **RMB 40.22 million** Consolidated Income Statement Key Data | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Operating Revenue | 38,075,533,544 | 43,007,478,790 | | Operating Costs | 36,244,525,052 | 42,484,454,227 | | Operating Profit/(Loss) | 112,596,584 | -1,182,027,063 | | Total Profit/(Loss) | 117,712,960 | -1,190,806,469 | | Net Profit/(Loss) | 40,219,785 | -1,311,895,617 | | Net Loss Attributable to Parent Company Shareholders | -74,780,316 | -1,144,779,937 | | Minority Interests | 115,000,101 | -167,115,680 | | Total Comprehensive Income | 36,005,034 | -1,331,838,029 | | Basic Earnings Per Share (cents/share) | -1.00 | -14.87 | | Diluted Earnings Per Share (cents/share) | -1.00 | -14.87 | [Consolidated Statement of Changes in Equity](index=20&type=section&id=合并股東權益變動表) As of June 30, 2025, the company's consolidated shareholders' equity totaled **RMB 32.525 billion**, an increase of **19.0%** from the beginning of the period, primarily due to total comprehensive income, share capital cancellation, increased capital reserves, and the appropriation and use of special reserves Consolidated Statement of Changes in Equity Key Data | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Beginning Balance | 27,321,052,201 | 32,279,541,351 | | Total Comprehensive Income | 36,005,034 | -1,331,838,029 | | Cancellation of Restricted Shares | -24,833,400 | - | | Increase in Capital Reserve | 700,938,635 | 2,672,806 | | Special Reserve Appropriated in Current Period | 46,530,115 | 34,223,654 | | Special Reserve Used in Current Period | -30,874,706 | -21,915,747 | | Ending Balance | 32,524,579,574 | 30,949,995,328 | [Consolidated Cash Flow Statement](index=22&type=section&id=合并现金流量表) For the six months ended June 30, 2025, net cash flow from operating activities was **RMB 941 million**, a **23.38%** year-on-year decrease, while net cash inflow from financing activities significantly increased by **596.76%** to **RMB 2.298 billion**, mainly due to the receipt of equity transfer payments from Baosteel Co., Ltd. Consolidated Cash Flow Statement Key Data | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 940,725,426 | 1,227,796,059 | | Net Cash Flow from Investing Activities | -1,619,631,859 | -703,896,902 | | Net Cash Flow from Financing Activities | 2,297,776,926 | 329,780,103 | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | 8,636,839 | -2,149,341 | | Net Increase in Cash and Cash Equivalents | 1,627,507,332 | 851,529,919 | | Cash and Cash Equivalents at End of Period | 5,314,623,729 | 5,280,124,127 | - Net cash inflow from financing activities increased by **596.76%**, mainly because Baosteel Co., Ltd. acquired a **35.42%** equity stake in Maanshan Iron & Steel Co., Ltd. held by Maanshan Iron & Steel Co., Ltd. for **RMB 5.139 billion** in the current period, and the first installment of **RMB 2.57 billion** has been received[39](index=39&type=chunk) Notes to Financial Statements [Significant Accounting Policies](index=25&type=section&id=1%2E%20重要会计政策) These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises issued by the Ministry of Finance, presented on a going concern basis, and measured at historical cost, except for certain financial instruments - These financial statements are prepared in accordance with the Accounting Standards for Business Enterprises – Basic Standards and subsequent specific accounting standards, application guidelines, interpretations, and other relevant regulations (collectively referred to as "Enterprise Accounting Standards") issued and revised by the Ministry of Finance[65](index=65&type=chunk) - These financial statements are presented on a going concern basis; the company's Board of Directors believes the Group has sufficient working capital to continue as a going concern for a foreseeable future period of not less than **12 months** from the end of the reporting period[66](index=66&type=chunk) - In preparing these financial statements, all items are measured at historical cost, except for certain financial instruments[67](index=67&type=chunk) [Scope of Consolidation for Consolidated Financial Statements](index=26&type=section&id=2%2E%20合并财务报表的合并范围) Anhui Changjiang Steel Trading Hefei Co., Ltd. was absorbed and merged by the company's subsidiary, Anhui Changjiang Steel, and is no longer included in the consolidation scope - Anhui Changjiang Steel Trading Hefei Co., Ltd. was absorbed and merged by the company's subsidiary, Anhui Changjiang Steel, on January 27, 2025, and is no longer included in the consolidation scope[69](index=69&type=chunk) [Segment Reporting](index=26&type=section&id=3%2E%20分部报告) The Group's business is internally reported, resources allocated, and performance evaluated as a whole, primarily focusing on the production and sale of steel products and by-products, with steel product sales revenue of **RMB 33.62 billion** in H1 and **93.06%** of total revenue from mainland China - The Group focuses on the production and sale of steel products and by-products[70](index=70&type=chunk) External Main Business Revenue (by Product and Service) | Product Category | For the Six Months Ended June 30, 2025 (RMB) | | :--- | :--- | | Steel Product Sales | 33,619,563,472 | | Steel Billet and Pig Iron Sales | 1,917,491,289 | | Other | 2,538,478,783 | | **Total** | **38,075,533,544** | External Main Business Revenue (by Geographical Information) | Region | For the Six Months Ended June 30, 2025 (RMB) | | :--- | :--- | | Mainland China | 35,432,194,574 | | Overseas and Hong Kong | 2,643,338,970 | | **Total** | **38,075,533,544** | - The Group does not rely on a single customer, and revenue from any single customer does not exceed **10%** of total revenue[72](index=72&type=chunk) [Accounts Receivable](index=28&type=section&id=4%2E%20應收賬款) As of June 30, 2025, the book value of the company's accounts receivable was **RMB 1.67 billion**, with the highest proportion being within **1 year** of age, and no actual write-offs of bad debt provisions or derecognition due to financial asset transfers occurred in the current period Accounts Receivable Aging Analysis | Aging | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Within 1 year | 1,649,390,045 | 1,759,620,406 | | 1 to 2 years | 105,228,714 | 132,286,416 | | 2 to 3 years | 132,054,820 | 64,863,225 | | Over 3 years | 29,658,012 | 15,325,306 | | **Subtotal** | **1,916,331,591** | **1,972,095,353** | | Less: Provision for Bad Debts | 246,146,811 | 218,270,897 | | **Total** | **1,670,184,780** | **1,753,824,456** | - As of June 30, 2025, the Group had no actual write-offs of bad debt provisions for accounts receivable[74](index=74&type=chunk) - As of June 30, 2025, and December 31, 2024, there were no accounts receivable balances that were derecognized by the Group due to the transfer of financial assets[75](index=75&type=chunk) [Receivables Financing](index=28&type=section&id=5%2E%20應收款項融資) As of June 30, 2025, the company's receivables financing primarily consisted of bank acceptance bills totaling **RMB 2.585 billion**, a significant increase from the end of 2024, with **RMB 15.491 billion** of notes receivable derecognized due to discounting to financial institutions in the current period Receivables Financing Composition | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Bank Acceptance Bills | 2,585,459,712 | 1,382,456,994 | - As of June 30, 2025, the Group derecognized notes receivable amounting to **RMB 15,490,720,777** (2024: **RMB 12,733,067,788**) due to discounting to financial institutions, and recognized discounting expenses of **RMB 25,621,413** (2024: **RMB 2,173,662**)[78](index=78&type=chunk) [Prepayments](index=29&type=section&id=6%2E%20預付賬款) As of June 30, 2025, the company's total prepayments amounted to **RMB 416 million**, with **97%** of the balance having an aging period of less than **1 year** Prepayments Aging Analysis | Aging | Book Balance as of June 30, 2025 (RMB) | Percentage (%) | | :--- | :--- | :--- | | Within 1 year | 402,098,775 | 97 | | 1 to 2 years | 12,419,435 | 3 | | 2 to 3 years | 1,076,697 | – | | **Total** | **415,594,907** | **100** | [Notes Payable](index=30&type=section&id=7%2E%20應付票據) As of June 30, 2025, the company's notes payable primarily consisted of bank acceptance bills totaling **RMB 10.225 billion**, with no overdue notes payable Notes Payable Composition | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Bank Acceptance Bills | 10,225,214,715 | 10,051,474,326 | - As of June 30, 2025, the Group had no overdue notes payable[81](index=81&type=chunk) [Accounts Payable](index=30&type=section&id=8%2E%20應付賬款) As of June 30, 2025, the company's total accounts payable amounted to **RMB 8.644 billion**, with the highest proportion being within **1 year** of age Accounts Payable Aging Analysis | Aging | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Within 1 year | 8,612,215,704 | 10,408,069,219 | | 1 to 2 years | 15,504,689 | 177,175,303 | | 2 to 3 years | 1,238,227 | 35,015,927 | | Over 3 years | 15,192,220 | 53,412,429 | | **Total** | **8,644,150,840** | **10,673,672,878** | [Dividends](index=30&type=section&id=9%2E%20股息) The Board of Directors does not recommend the payment of any dividends for the year ended June 30, 2025 - The Board of Directors does not recommend the payment of any dividends for the year ended June 30, 2025[83](index=83&type=chunk) [Operating Revenue and Costs](index=31&type=section&id=10%2E%20營業收入及成本) For the six months ended June 30, 2025, the company's main business revenue was **RMB 36.639 billion**, and other business revenue was **RMB 1.436 billion**, with revenue primarily recognized at a point in time, and **RMB 4.123 billion** of revenue recognized from contract liabilities' opening balance Operating Revenue and Costs Composition | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | **Revenue** | | | | Main Business | 36,639,298,472 | 41,629,746,736 | | Other Business | 1,436,235,072 | 1,377,732,054 | | **Total Revenue** | **38,075,533,544** | **43,007,478,790** | | **Costs** | | | | Main Business | 34,798,921,762 | 41,164,732,434 | | Other Business | 1,445,603,290 | 1,319,721,793 | | **Total Costs** | **36,244,525,052** | **42,484,454,227** | Revenue Recognition Timing from Contracts with Customers | Recognition Timing | For the Six Months Ended June 30, 2025 (RMB) | | :--- | :--- | | Revenue recognized at a point in time | 38,031,454,822 | | Revenue recognized over a period of time | 40,352,781 | - Revenue recognized in the current year included in the opening balance of contract liabilities was **RMB 4,123,176,032**[87](index=87&type=chunk) [Financial Expenses](index=33&type=section&id=11%2E%20財務費用) For the six months ended June 30, 2025, the company's financial expenses were **RMB 246 million**, a **22.43%** year-on-year decrease, primarily comprising interest expenses of **RMB 286 million** and exchange gains/losses of **RMB 18.75 million** Financial Expenses Composition | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Interest Expense | 285,555,450 | 312,774,907 | | Less: Interest Income | 66,937,989 | 45,988,335 | | Less: Capitalized Interest | – | 702,361 | | Exchange Gains and Losses | 18,748,612 | 41,563,728 | | Other | 8,252,595 | 9,011,725 | | **Total** | **245,618,668** | **316,659,664** | [Gains on Disposal of Assets](index=33&type=section&id=12%2E%20資產處置收益) For the six months ended June 30, 2025, the company's gains on disposal of assets were **RMB 11.39 million**, a **84.51%** year-on-year decrease, primarily from the disposal of fixed and intangible assets Gains on Disposal of Assets Composition | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Gains on Disposal of Fixed Assets | 4,245,809 | 57,901,418 | | Gains on Disposal of Intangible Assets | 7,140,395 | 15,628,515 | | **Total** | **11,386,204** | **73,529,933** | [Non-operating Income](index=33&type=section&id=13%2E%20營業外收入) For the six months ended June 30, 2025, the company's non-operating income was **RMB 17.95 million**, a significant year-on-year increase of **2,348.45%**, primarily due to the write-off of certain unpayable amounts in the current period Non-operating Income Composition | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Other | 17,953,725 | 733,269 | - Non-operating income increased by **2,348.45%**, mainly due to the write-off of certain unpayable amounts by the company in the current period[40](index=40&type=chunk) [Non-operating Expenses](index=34&type=section&id=14%2E%20營業外支出) For the six months ended June 30, 2025, the company's non-operating expenses were **RMB 12.84 million**, a **34.95%** year-on-year increase, primarily composed of fixed asset disposal losses and other expenses Non-operating Expenses Composition | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Fixed Asset Disposal Losses | 8,823,155 | 876,676 | | Fines and Penalties | – | 2,144,476 | | Public Welfare Donations | – | 187,150 | | Other | 4,014,194 | 6,304,373 | | **Total** | **12,837,349** | **9,512,675** | - Non-operating expenses increased by **34.95%**, mainly due to a year-on-year increase in the company's fixed asset disposal losses in the current period[40](index=40&type=chunk) [Income Tax Expense](index=34&type=section&id=15%2E%20所得稅費用) For the six months ended June 30, 2025, the company's income tax expense was **RMB 77.49 million**, a **36.00%** year-on-year decrease, primarily comprising current income tax expense in mainland China and deferred income tax expense, with differences mainly due to subsidiaries' varying tax rates and unrecognized deductible temporary differences Income Tax Expense Composition | Item | For the Six Months Ended June 30, 2025 (RMB) | For the Six Months Ended June 30, 2024 (RMB) | | :--- | :--- | :--- | | Current Income Tax Expense in Mainland China | 55,725,004 | 90,571,090 | | Current Income Tax Expense in Hong Kong | 345 | -165 | | Current Income Tax Expense Overseas | 12,488,032 | 14,357,070 | | Deferred Income Tax Expense | 9,279,794 | 16,161,153 | | **Total** | **77,493,175** | **121,089,148** | - Income tax expense decreased by **36.00%**, mainly due to a year-on-year decrease in income tax expense for Maanshan Transportation Materials and Cihu Processing[40](index=40&type=chunk) - The difference between income tax expense and total profit is mainly affected by the different tax rates applicable to subsidiaries (**-RMB 33.65 million**) and the impact of deductible temporary differences for which deferred income tax assets were not recognized in the current period (**RMB 141 million**)[92](index=92&type=chunk) [Earnings Per Share](index=36&type=section&id=16%2E%20每股收益) For the six months ended June 30, 2025, the company's basic and diluted earnings per share were both **-RMB 0.01/share**, a significant improvement from **-RMB 0.15/share** in the prior year, with diluted EPS being the same as basic EPS due to the anti-dilutive nature of potential ordinary shares Earnings Per Share | Indicator | For the Six Months Ended June 30, 2025 (RMB/share) | For the Six Months Ended June 30, 2024 (RMB/share) | | :--- | :--- | :--- | | Basic Earnings Per Share (Continuing Operations) | -0.01 | -0.15 | | Diluted Earnings Per Share (Continuing Operations) | -0.01 | -0.15 | - Basic earnings per share are calculated by dividing the net profit attributable to the company's ordinary shareholders for the current period by the weighted average number of ordinary shares outstanding[93](index=93&type=chunk) - As a net loss occurred in the current period, potential ordinary shares are anti-dilutive, thus diluted earnings per share are the same as basic earnings per share[94](index=94&type=chunk) [Contingencies](index=37&type=section&id=17%2E%20或有事項) The company has a contingency related to income tax differences from previous years, specifically the 2007 corporate income tax rate adjustment, for which no provision or adjustment has been made due to uncertainty in the tax authority's decision and inability to reliably estimate the final outcome - The company is one of the nine companies mentioned in the State Administration of Taxation's "Notice on Issues Concerning the Collection and Administration of Corporate Income Tax for Nine Overseas Listed Companies Including Shanghai Petrochemical Company Limited" in 2007, and applied a preferential tax rate of **15%** in previous years[95](index=95&type=chunk)[96](index=96&type=chunk) - The company adjusted its 2007 corporate income tax rate from the original **15%** to **33%** but did not pay the income tax differences from previous years[96](index=96&type=chunk) - The company's directors believe that it is currently uncertain whether the competent tax authority will pursue the collection of income tax differences from previous years, and the final outcome cannot be reliably estimated, thus no provision or adjustment has been made for potential income tax differences from previous years[96](index=96&type=chunk) [Events After the Balance Sheet Date](index=38&type=section&id=18%2E%20資產負債表日後事項) As of the approval date of these financial statements, the Group has no significant events after the balance sheet date that require disclosure - As of the approval date of these financial statements, the Group has no significant events after the balance sheet date that require disclosure[97](index=97&type=chunk)

Corporate Information [Board of Directors and Committees](index=3&type=page&id=Board%20of%20Directors%20and%20Committees) The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by several committees to ensure robust corporate governance - Board members include executive directors such as Dr. CAO Hui (Chairman) and Mr. FENG, Ting (President), non-executive directors like Mr. WANG Haijun, and independent non-executive directors such as Ms. HUANG Siying[8](index=8&type=chunk) - The company has an Audit Committee (Chair: Ms. HUANG Siying), Nomination Committee (Chair: Dr. CAO Hui), Remuneration and Appraisal Committee (Chair: Dr. WANG Zhenbo), Independent Directors Committee (Chair: Dr. REN Shenggang), and Environmental, Social and Governance Committee (Chair: Dr. CAO Hui)[8](index=8&type=chunk) [Company Basic Information](index=3&type=page&id=Company%20Basic%20Information) REPT BATTERO Energy Co., Ltd. is a joint stock company incorporated in China with stock code 06662, headquartered in Wenzhou, Zhejiang, China, and a principal place of business in Hong Kong - Company Name: REPT BATTERO Energy Co., Ltd.[1](index=1&type=chunk)[3](index=3&type=chunk)[4](index=4&type=chunk) - Stock Code: **06662**[1](index=1&type=chunk)[4](index=4&type=chunk)[10](index=10&type=chunk) - Registered Office and Head Office in China: No. 205 Binhai 6th Road, Wenzhou Bay New Area, Longwan District, Wenzhou City, Zhejiang Province, China[10](index=10&type=chunk) - Principal Place of Business in Hong Kong: 40th Floor, Dah Sing Financial Centre, 248 Queen's Road East, Wan Chai, Hong Kong[10](index=10&type=chunk) Financial Highlights [Interim Financial Performance](index=5&type=page&id=Interim%20Financial%20Performance) For the six months ended June 30, 2025, the Group's revenue increased by **24.9%** to **RMB 9,491.1 million**, gross profit surged by **177.8%** to **RMB 829.4 million**, and loss for the period narrowed by **90.5%** to **RMB 62.7 million** Financial Highlights for the Six Months Ended June 30 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 9,491,110 | 7,596,665 | 24.9% | | Gross Profit | 829,354 | 298,495 | 177.8% | | Loss for the Period | (62,704) | (658,212) | (90.5)% | | Loss Per Share Attributable to Ordinary Equity Holders of the Parent (RMB) | (0.03) | (0.19) | (84.2)% | - The comparative consolidated financial information for 2024 has been restated to reflect a voluntary change in accounting policy and presentation for government grants[12](index=12&type=chunk)[13](index=13&type=chunk) Management Discussion and Analysis [Industry Overview](index=6&type=page&id=Industry%20Overview) In H1 2025, both global new energy vehicle and energy storage markets showed strong growth, with NEV sales and power battery installations rising, particularly in China, and global energy storage cell shipments doubling - Global new energy vehicle sales reached approximately **9.1 million units** in H1 2025, a **28% year-on-year increase**[14](index=14&type=chunk) - Global power battery installations totaled **401.3 GWh** in the first five months of 2025, growing by **38.5% year-on-year**[14](index=14&type=chunk) - In H1 2025, China's new energy vehicle production and sales increased by **41.4%** and **40.3%** respectively, with a penetration rate of **44.3%**[15](index=15&type=chunk) - Global energy storage cell shipments exceeded **250 GWh** in H1 2025, representing approximately **100% year-on-year growth**[18](index=18&type=chunk) - China's new energy storage installed capacity reached **94.91 GW/222 GWh** in H1 2025, with new capacity and energy increasing by approximately **35%** and **33%** year-on-year, respectively[18](index=18&type=chunk) [Business Review](index=7&type=page&id=Business%20Review) The Group primarily designs, develops, produces, and sells power and energy storage lithium-ion batteries, driven by technological innovation to provide NEV power and smart energy storage solutions. During the reporting period, total assets and net assets remained stable, revenue grew by **24.9%**, total lithium battery product sales increased by **100.2%**, with energy storage battery shipments ranking among the **top five globally** and user energy storage cell shipments **first globally** - Core business covers the design, R&D, production, and sales of power and energy storage lithium-ion battery cells, modules, battery packs, and system applications[20](index=20&type=chunk) - Key products include LFP and ternary material cells, power battery packs, battery management systems (for power batteries), and energy storage cells, standardized battery containers, battery clusters, and residential energy storage systems (for energy storage batteries)[21](index=21&type=chunk)[22](index=22&type=chunk) H1 2025 Performance Highlights | Metric | Amount/Quantity | Y-o-Y Change | | :--- | :--- | :--- | | Total Assets | RMB 38,892.5 million | 0.9% | | Net Assets | RMB 10,322.5 million | Basically flat | | Revenue | RMB 9,491.1 million | 24.9% | | Total Lithium Battery Product Sales Volume | 32.4 GWh | 100.2% | | Energy Storage Battery Shipments | 18.87 GWh | 119.3% | | Power Battery Shipments | 13.53 GWh | 78.5% | - Ranked among the **top five globally** in energy storage cell shipments and **first globally** in user energy storage cell shipments[23](index=23&type=chunk) - Ranked **seventh** among domestic LFP power battery companies in installed capacity, **eighth** in plug-in hybrid passenger vehicle installed capacity, and **sixth** in new energy commercial vehicle installed capacity[23](index=23&type=chunk) - In the new energy heavy truck sector, battery market share reached **7.5%**, and battery swap heavy truck battery market share was **18%**, growing by **809% year-on-year**, both ranking **second nationally**[26](index=26&type=chunk) - Passenger vehicle business maintains cooperation with leading domestic and international automakers, securing nominations for over ten mainstream PHEV and EREV models, with the **54Ah cell** becoming an industry benchmark[25](index=25&type=chunk) - Energy storage business is driven by large cell technology, with **Wentop® 392Ah cells** and **PowtrixTM 6.26MWh energy storage systems** achieving breakthroughs in both performance and safety, successfully entering overseas markets and signing procurement agreements for over **20 GWh** of energy storage cells[27](index=27&type=chunk) [Technological R&D Achievements](index=9&type=page&id=Technological%20R%26D%20Achievements) The Group continues to invest in R&D, developing multiple key technologies and achieving significant progress in power batteries, energy storage batteries, and system integration, including high-capacity cells, fast-charging hybrid cells, ultra-fast charging pure electric cells, low-altitude aircraft batteries, and various high-performance battery systems - Awarded **2,977 patents**, including **244 invention patents**, **2,667 utility model patents**, and **66 design patents**[28](index=28&type=chunk) - Developed **314/320Ah series energy storage cells**, utilizing "Wentop" technology to increase space utilization by **4%** and reduce AC internal resistance by over **10%**, achieving high energy density, efficiency, long cycle life, and safety[30](index=30&type=chunk) - Developed **392Ah and 587Ah cell products** to match next-generation **6.25MWh+ systems**, increasing mass energy density to **190 Wh/kg** and achieving a cycle life of over **10,000 times**[30](index=30&type=chunk) - Hybrid batteries completed fast-charging upgrades, launching multiple models to meet various range requirements, and preparing for mass production of the first Wentop power battery[31](index=31&type=chunk) - For pure electric batteries, promoted **4C-6C ultra-fast charging cell development**, increasing LFP power battery energy density to **195-200 Wh/kg**[31](index=31&type=chunk) - Developed high energy density cells (≥**310 Wh/kg**) for low-altitude aircraft and signed a strategic cooperation agreement with Yufeng Future[31](index=31&type=chunk) - In the passenger vehicle sector, the first CTP project with an aluminum alloy casing for export to a European OEM is expected to enter mass production in Q3 2025, introducing the GREEN CTP system for individual cell replacement, and a **4C fast-charging system** achieving **10%-80% charge in less than 10 minutes** in actual tests[34](index=34&type=chunk) - In energy storage, the **5MWh energy storage system** successfully passed large-scale fire and extreme environment tests, with expected shipments to reach **3 times** last year's volume[34](index=34&type=chunk) [Future Outlook](index=12&type=page&id=Future%20Outlook) The Group will continue to focus on technological and product innovation, particularly "Wentop" technology and semi-solid/solid-state battery R&D, to enhance cell integration efficiency, reduce costs, and achieve long range and high safety. Leveraging Tsingshan Group's industrial chain synergy, it will also actively pursue global expansion, establishing production facilities in Southeast Asia, Europe, and South America to meet global market demand - R&D focus includes: developing high-capacity **500~600Ah+ series next-generation energy storage cells** using "Wentop" technology, achieving a power breakthrough for **6MWh+ energy storage products**, and introducing BMS active balancing technology[35](index=35&type=chunk) - Plans to enhance the fast-charging capability of semi-solid-state cells and actively deploy next-generation high specific energy cells such as multi-electron reaction system cells and low-altitude flight batteries[35](index=35&type=chunk) - In-depth research into all-solid-state electrolyte materials, solid electrolyte reaction interface performance, and solid-state battery production processes, aiming to achieve a balance of long range, safety, and energy density in passenger vehicles[35](index=35&type=chunk) - Leveraging Tsingshan Group's industrial chain synergy to ensure the supply of critical raw materials and provide energy storage batteries and electric heavy truck power battery products to Tsingshan Group and its associates[37](index=37&type=chunk) - Committed to building a global industrial layout, with subsidiaries established in the US, Germany, and Southeast Asia, and plans to establish production facilities in Southeast Asia, Europe, and South America, with the first phase of the Indonesia battery manufacturing base planned for an annual capacity of **8 GWh**[38](index=38&type=chunk) - Developing lithium manganese iron phosphate batteries to achieve higher energy density, lower costs, and better low-temperature performance, while also offering enhanced safety[39](index=39&type=chunk) - Plans to continue R&D on recycling technologies, such as power battery residual energy testing and second-life solutions, to improve cost-effectiveness, safety, stability, and cycle life[39](index=39&type=chunk) [Operating Results and Analysis](index=14&type=page&id=Operating%20Results%20and%20Analysis) The Group's H1 2025 revenue grew by **24.9%**, primarily due to steady increases in power and energy storage battery product sales. Gross profit surged by **177.8%**, with gross margin rising to **8.7%**, reflecting economies of scale. Loss for the period narrowed significantly by **90.5%**, mainly due to the implementation of "cost reduction and efficiency improvement" strategies, refined R&D expense management, and reduced impairment losses Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Extract) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 9,491,110 | 7,596,665 | 24.9% | | Cost of Sales | (8,661,756) | (7,298,170) | 18.7% | | Gross Profit | 829,354 | 298,495 | 177.8% | | Other Income and Gains | 182,177 | 248,894 | (26.8)% | | Selling and Distribution Expenses | (273,218) | (224,285) | 21.8% | | Administrative Expenses | (238,036) | (297,852) | (20.1)% | | Research and Development Expenses | (355,863) | (403,599) | (11.8)% | | Net Impairment Losses on Financial and Contract Assets | (47,358) | (103,649) | (54.3)% | | Finance Costs | (154,348) | (170,413) | (9.4)% | | Loss Before Tax | (62,666) | (658,180) | (90.5)% | | Loss for the Period | (62,704) | (658,212) | (90.5)% | - Revenue growth primarily driven by the steady increase in sales volume of power and energy storage battery products[44](index=44&type=chunk) Revenue Breakdown by Product Application | Product Category | 2025 (RMB thousands) | 2024 (RMB thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Power Battery Products | 4,026,602 | 2,858,421 | 40.9% | | Energy Storage Battery Products | 5,082,620 | 3,207,787 | 58.4% | | Other Businesses | 381,888 | 1,530,457 | (75.0)% | | **Total** | **9,491,110** | **7,596,665** | **24.9%** | - Revenue from other businesses decreased by **75.0%**, mainly due to the uncertainty of tariff policies, leading overseas customers to postpone battery component orders[46](index=46&type=chunk) Gross Profit and Gross Margin Breakdown by Product Application | Product Category | 2025 Gross Profit (RMB thousands) | 2025 Gross Margin | 2024 Gross Profit (RMB thousands) | 2024 Gross Margin | Y-o-Y Change (Gross Profit) | | :--- | :--- | :--- | :--- | :--- | :--- | | Power and Energy Storage Battery Products | 777,704 | 8.5% | 158,824 | 2.6% | 389.7% | | Other Businesses | 51,650 | 13.5% | 139,671 | 9.1% | (63.0)% | | **Total** | **829,354** | **8.7%** | **298,495** | **3.9%** | **177.8%** | - Administrative expenses decreased by **20.1%**, primarily due to the successful implementation of the "cost reduction and efficiency improvement" strategy[53](index=53&type=chunk) - R&D expenses decreased by **11.8%**, mainly due to refined management of R&D expenditures, focusing on high-value projects[54](index=54&type=chunk) - Net impairment losses on financial and contract assets decreased by **54.3%**, primarily due to reduced impairment provisions for trade receivables[55](index=55&type=chunk) - Finance costs decreased by **9.4%**, mainly due to a reduction in interest rates for certain borrowings[57](index=57&type=chunk) [Liquidity and Funding Sources](index=19&type=page&id=Liquidity%20and%20Funding%20Sources) The Group primarily funds its operations through bank financing, equity capital, operating cash flows, and proceeds from the global offering. As of the reporting period end, cash and cash equivalents were **RMB 4,211.9 million**, interest-bearing bank and other borrowings were approximately **RMB 10,006.3 million**, and the gearing ratio was **73.5%** - The Group primarily funds its operations through bank financing, raised equity capital, cash generated from operating activities, and net proceeds from the global offering[61](index=61&type=chunk) Overview of Liquidity and Funding Sources | Metric | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 4,211.9 | 4,285.7 | | Interest-bearing Bank and Other Borrowings | 10,006.3 | 9,999.7 | | Net Assets | 10,322.5 | 10,322.5 | | Gearing Ratio | 73.5% | 73.2% | Net Cash Flows | Activity Type | H1 2025 (RMB millions) | H1 2024 (RMB millions) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 980.8 | 1,258.9 | | Net Cash Flows Used in Investing Activities | 935.2 | 1,242.1 | | Net Cash Flows Used in Financing Activities | 132.3 | 32.8 | - The Group is exposed to interest rate risk (primarily related to floating-rate bank borrowings) and foreign exchange risk, which are hedged through measures such as forward foreign exchange contracts[68](index=68&type=chunk) - Capital expenditure during the reporting period was approximately **RMB 1,060.7 million**, primarily for the purchase of property, plant and equipment[69](index=69&type=chunk) - As of the end of the reporting period, capital commitments amounted to **RMB 4,325.7 million**, related to contracted but unpaid plant construction projects[70](index=70&type=chunk) - Total pledged assets at the end of the reporting period were approximately **RMB 7,447.7 million**, an increase of **RMB 4,254.5 million** from the end of last year[72](index=72&type=chunk) Other Information and Corporate Governance [Corporate Governance and Compliance](index=22&type=page&id=Corporate%20Governance%20and%20Compliance) The company is committed to maintaining sound corporate governance, adopting and complying with the Corporate Governance Code in Appendix C1 of the Listing Rules throughout the reporting period, and ensuring all directors and supervisors adhere to the standard code for securities transactions - The company has adopted the Corporate Governance Code set out in Appendix C1 to the Listing Rules and has complied with the applicable code provisions throughout the reporting period[76](index=76&type=chunk)[77](index=77&type=chunk) - The company has established a "Management System for Directors, Supervisors, Senior Management, and Employees Holding and Trading Company Shares," and all directors and supervisors confirmed compliance with this code and standard code[78](index=78&type=chunk) [Interests of Directors, Supervisors and Chief Executive](index=22&type=page&id=Interests%20of%20Directors%2C%20Supervisors%20and%20Chief%20Executive) As of the reporting period end, certain directors, supervisors, and the chief executive held interests or short positions in the company's shares and its associated corporations, primarily through controlled corporate interests or spouse interests Interests of Directors, Supervisors and Chief Executive in the Company's Shares | Name | Nature of Interest/Capacity | Class of Shares | Number of Shares Held | Approximate % of H Shares Held | Approximate % of Total Issued Share Capital Held | | :--- | :--- | :--- | :--- | :--- | :--- | | Dr. CAO Hui | Controlled Corporation Interest | H Shares | 360,000,000 | 41.17% | 15.81% | | Mr. FENG, Ting | Controlled Corporation Interest | H Shares | 24,000,000 | 2.74% | 1.05% | | Ms. XIANG Yangyang | Spouse's Interest | H Shares | 24,000,000 | 2.74% | 1.05% | Interests of Directors, Supervisors and Chief Executive in Associated Corporations | Name | Name of Associated Corporation | Nature of Interest/Capacity | Amount of Registered Capital Held | Approximate % of Interest as at Reporting Period End | | :--- | :--- | :--- | :--- | :--- | | Dr. CAO Hui | Yongqing Technology | Beneficial Owner | RMB 5,800,000 | 1% | | Dr. WU Yanjun | Qingtuo Group Co., Ltd. | Beneficial Owner | RMB 4,400,000 | 0.5% | | Mr. HU Xiaodong | Yongqing Technology | Beneficial Owner | RMB 8,700,000 | 1.5% | | Mr. WANG Haijun | Zhejiang Yongtuo New Material Technology Co., Ltd. | Beneficial Owner | RMB 1,600,000 | 2% | | Mr. FENG, Ting | Shanghai Lanjun | Controlled Corporation Interest | RMB 200,000,000 | 20% | | Ms. XIANG Yangyang | Shanghai Lanjun | Spouse's Interest | RMB 200,000,000 | 20% | [Major Shareholders' Interests](index=25&type=page&id=Major%20Shareholders%27%20Interests) As of the reporting period end, the company's major shareholders, including Wenzhou Jingli, Yongqing Technology, Ruitu Energy, Shanghai Fuqin, Tsingshan Group, Shanghai Dingxin, and Mr. Xiang, held significant interests in the company's shares through direct or controlled corporate interests Major Shareholders' Interests in the Company's Shares | Name | Nature of Interest/Capacity | Class of Shares | Number of Shares Held | Approximate % of Relevant Class of Shares Held | Approximate % of Total Issued Share Capital Held | | :--- | :--- | :--- | :--- | :--- | :--- | | Wenzhou Jingli | Beneficial Owner | H Shares | 264,000,000 | 30.19% | 11.59% | | Yongqing Technology | Beneficial Owner/Controlled Corporation Interest | Domestic Unlisted Shares/H Shares | 1,089,419,482/264,000,000 | 77.68%/30.19% | 47.85%/11.59% | | Tsingshan Group | Controlled Corporation Interest | Domestic Unlisted Shares/H Shares | 1,089,419,482/264,000,000 | 77.68%/30.19% | 47.85%/11.59% | | Mr. Xiang | Controlled Corporation Interest | Domestic Unlisted Shares/H Shares | 1,089,419,482/264,000,000 | 77.68%/30.19% | 47.85%/11.59% | | Wenzhou Ruili | Beneficial Owner | H Shares | 96,000,000 | 10.98% | 4.22% | | Jiaxing SAIC Qirui Equity Investment Partnership (Limited Partnership) | Beneficial Owner | Domestic Unlisted Shares | 187,828,067 | 13.39% | 8.25% | [Employees and Remuneration](index=28&type=page&id=Employees%20and%20Remuneration) As of the reporting period end, the Group had **11,673 full-time employees** with staff costs of **RMB 1,040.2 million**. The company has a Remuneration and Appraisal Committee, incentivizes employees through share incentive schemes, and provides training to enhance skills - As of the end of the reporting period, the Group had **11,673 full-time employees**, with staff costs of **RMB 1,040.2 million**[93](index=93&type=chunk) - The company has a Remuneration and Appraisal Committee responsible for reviewing remuneration policies and the remuneration structure for directors and senior management members[93](index=93&type=chunk) - The company has adopted the **2021 and 2022 Share Incentive Schemes** and the **H Share Incentive Scheme** to incentivize employees[93](index=93&type=chunk) - The Group recruits employees through referrals, headhunters, recruitment websites, and campus recruitment, providing new hire training and continuous technical training[94](index=94&type=chunk) [Use of Proceeds from Global Offering](index=29&type=page&id=Use%20of%20Proceeds%20from%20Global%20Offering) The company raised net proceeds of approximately **HKD 2,013.1 million** from its global offering in December 2023. As of the reporting period end, approximately **HKD 992.1 million** has been used, primarily for capacity expansion and technological R&D. The expected timetable for the remaining net proceeds for capacity expansion has been adjusted to December 31, 2026 - Net proceeds from the global offering were approximately **HKD 2,013.1 million**[97](index=97&type=chunk) Use of Proceeds from Global Offering | Item | Approximate % of Total Net Proceeds | Net Proceeds from Global Offering (HKD millions) | Net Proceeds Unutilized as at June 30, 2025 (HKD millions) | Expected Timetable for Remaining Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | For expanding our production capacity | 80.0% | 1,610.5 | 907.7 | December 31, 2026 | | For core technology R&D in advanced lithium-ion batteries, advanced materials, and optimized production processes | 10.0% | 201.3 | 113.3 | December 31, 2025 | | For working capital and general corporate purposes | 10.0% | 201.3 | — | December 31, 2024 | | **Total** | **100.0%** | **2,013.1** | **1,021.0** | | - The expected timetable for the remaining net proceeds for capacity expansion has been adjusted from December 31, 2024, to **December 31, 2026**[98](index=98&type=chunk) [Interim Dividend](index=29&type=page&id=Interim%20Dividend) The Board resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2025 - The Board resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2025[99](index=99&type=chunk) [Audit Committee and Share Option Scheme](index=30&type=page&id=Audit%20Committee%20and%20Share%20Option%20Scheme) The Audit Committee reviewed the Group's unaudited interim condensed consolidated financial statements for the six months ended June 30, 2025, confirming compliance with accounting principles and disclosure requirements. The company has not adopted a share option scheme - The Audit Committee, comprising three independent non-executive directors and chaired by Ms. HUANG Siying, reviewed the interim condensed consolidated financial statements and confirmed their compliance[100](index=100&type=chunk) - The company has not adopted a share option scheme[101](index=101&type=chunk) [Changes in Biographical Details of Directors and Supervisors](index=30&type=page&id=Changes%20in%20Biographical%20Details%20of%20Directors%20and%20Supervisors) Since the 2024 annual report date, several directors and supervisors were re-elected or elected at the annual general meeting for a three-year term. Mr. YU Xinhua retired as a non-executive director - Dr. CAO Hui, Mr. HU Xiaodong, Dr. WU Yanjun, and Ms. HUANG Jiehua were re-elected as executive directors; Mr. FENG, Ting was elected as an executive director[102](index=102&type=chunk) - Mr. WANG Haijun, Ms. XIANG Yangyang, and Mr. WEI Yong were re-elected as non-executive directors; Ms. HUANG Siying, Dr. WANG Zhenbo, Dr. REN Shenggang, and Dr. Simon Chen were re-elected as independent non-executive directors[102](index=102&type=chunk) - Mr. YU Xinhua retired as a non-executive director at the annual general meeting[102](index=102&type=chunk) - Mr. QU Enci and Mr. FANG Yihui were re-elected as shareholder representative supervisors, and Ms. JIN Shanyan was re-elected as an employee representative supervisor, all for a three-year term[102](index=102&type=chunk)[103](index=103&type=chunk) Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Statement of Profit or Loss](index=31&type=page&id=Statement%20of%20Profit%20or%20Loss) This section presents the condensed consolidated statement of profit or loss for the six months ended June 30, 2025, showing key financial data such as revenue, cost of sales, gross profit, various expenses, and loss for the period, compared to the same period last year - Revenue was **RMB 9,491,110 thousand**, cost of sales was **RMB 8,661,756 thousand**, and gross profit was **RMB 829,354 thousand**[106](index=106&type=chunk) - Loss for the period was **RMB 62,704 thousand**, of which loss attributable to owners of the parent was **RMB 65,320 thousand**[106](index=106&type=chunk) [Statement of Other Comprehensive Income](index=32&type=page&id=Statement%20of%20Other%20Comprehensive%20Income) This section presents other comprehensive income for the six months ended June 30, 2025, primarily including exchange differences on translation of overseas operations, resulting in a total comprehensive loss of **RMB 63,288 thousand** for the period - Exchange differences on translation of overseas operations amounted to **RMB (584) thousand**[107](index=107&type=chunk) - Total comprehensive loss for the period was **RMB (63,288) thousand**, of which loss attributable to owners of the parent was **RMB (65,904) thousand**[107](index=107&type=chunk) - Basic and diluted loss per share attributable to ordinary equity holders of the parent was **RMB (0.03)**[107](index=107&type=chunk) Interim Condensed Consolidated Statement of Financial Position [Assets](index=33&type=page&id=Assets) As of June 30, 2025, the Group's total non-current assets were **RMB 19,247,433 thousand**, and total current assets were **RMB 19,645,058 thousand**, primarily comprising property, plant and equipment, inventories, trade receivables, and cash equivalents - Total non-current assets amounted to **RMB 19,247,433 thousand**, primarily including property, plant and equipment (**RMB 15,942,210 thousand**) and time deposits (**RMB 1,751,526 thousand**)[109](index=109&type=chunk) - Total current assets amounted to **RMB 19,645,058 thousand**, primarily including inventories (**RMB 3,581,971 thousand**), trade and bills receivables (**RMB 5,947,437 thousand**), and cash and cash equivalents (**RMB 4,211,859 thousand**)[109](index=109&type=chunk) [Liabilities and Equity](index=33&type=page&id=Liabilities%20and%20Equity) As of June 30, 2025, the Group's total current liabilities were **RMB 19,948,444 thousand**, and total non-current liabilities were **RMB 8,621,509 thousand**. Net assets amounted to **RMB 10,322,538 thousand**, with equity attributable to owners of the parent being **RMB 10,269,694 thousand** - Total current liabilities amounted to **RMB 19,948,444 thousand**, primarily including trade and bills payables (**RMB 12,297,616 thousand**) and interest-bearing bank and other borrowings (**RMB 3,464,913 thousand**)[109](index=109&type=chunk) - Total non-current liabilities amounted to **RMB 8,621,509 thousand**, primarily including interest-bearing bank and other borrowings (**RMB 6,541,396 thousand**) and deferred government grants (**RMB 1,319,621 thousand**)[110](index=110&type=chunk) - Net assets amounted to **RMB 10,322,538 thousand**, with equity attributable to owners of the parent being **RMB 10,269,694 thousand**[110](index=110&type=chunk) Interim Condensed Consolidated Statement of Changes in Equity [Changes in Equity](index=35&type=page&id=Changes%20in%20Equity) This section presents the consolidated changes in equity for the six months ended June 30, 2025, showing the impact of loss for the period, exchange differences, and share incentive scheme expenses on share capital, reserves, and accumulated losses, with total equity amounting to **RMB 10,322,538 thousand** - As of June 30, 2025, loss for the period resulted in an increase of **RMB 65,320 thousand** in accumulated losses attributable to owners of the parent[112](index=112&type=chunk) - Share incentive scheme expenses amounted to **RMB 63,630 thousand**, increasing the share incentive reserve[112](index=112&type=chunk) - As of June 30, 2025, total equity amounted to **RMB 10,322,538 thousand**[112](index=112&type=chunk) Interim Condensed Consolidated Statement of Cash Flows [Cash Flow Analysis](index=36&type=page&id=Cash%20Flow%20Analysis) This section provides the consolidated cash flow statement for the six months ended June 30, 2025, showing net cash flows from operating activities of **RMB 980,792 thousand**, net cash flows used in investing activities of **RMB 935,152 thousand**, and net cash flows used in financing activities of **RMB 132,344 thousand**, resulting in a net decrease of **RMB 86,704 thousand** in cash and cash equivalents - Net cash flows from operating activities were **RMB 980,792 thousand**, a decrease from **RMB 1,258,936 thousand** in the same period last year[114](index=114&type=chunk) - Net cash flows used in investing activities were **RMB 935,152 thousand**, primarily for the purchase of property, plant and equipment items[116](index=116&type=chunk) - Net cash flows used in financing activities were **RMB 132,344 thousand**, mainly due to the net effect of new bank loans and repayment of bank loans[116](index=116&type=chunk) - Cash and cash equivalents at the end of the period amounted to **RMB 4,211,859 thousand**, a decrease of **RMB 86,704 thousand** from the beginning of the period[116](index=116&type=chunk) Notes to the Interim Condensed Consolidated Financial Statements [Corporate Information and Basis of Preparation](index=38&type=page&id=Corporate%20Information%20and%20Basis%20of%20Preparation) REPT BATTERO Energy Co., Ltd. was established in China in October 2017, primarily engaged in R&D, manufacturing, and sales of lithium-ion battery products, and listed on the HKEX in December 2023. The interim condensed consolidated financial information is prepared in accordance with IAS 34 on a going concern basis - The company was established in China on **October 25, 2017**, primarily engaged in the R&D, manufacturing, and sales of lithium-ion battery products[117](index=117&type=chunk)[118](index=118&type=chunk) - The company was listed on the Main Board of The Stock Exchange of Hong Kong Limited on **December 18, 2023**[119](index=119&type=chunk) - The interim condensed consolidated financial information is prepared in accordance with **International Accounting Standard 34** on a going concern basis, considering long-term time deposits and available bank financing[120](index=120&type=chunk) [Changes in Accounting Policies and Disclosures](index=38&type=page&id=Changes%20in%20Accounting%20Policies%20and%20Disclosures) The accounting policies used for the interim condensed consolidated financial information are consistent with the annual consolidated financial statements, with the initial adoption of revised IFRS having no impact due to the Group's convertible transaction currency - The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the annual consolidated financial statements for the year ended **December 31, 2024**[121](index=121&type=chunk) - The Group first adopted the revised **International Accounting Standard 21 "Lack of Exchangeability"**, but as the currencies used for the Group's transactions are convertible, these amendments had no impact on the interim condensed consolidated financial information[122](index=122&type=chunk)[123](index=123&type=chunk) [Operating Segment Information](index=39&type=page&id=Operating%20Segment%20Information) For management purposes, the Group is organized as a single business unit encompassing power battery products, energy storage battery products, waste, battery components, and R&D services sales, thus presenting only one operating segment - The Group is organized into a single business unit, including power battery products, energy storage battery products, waste, battery components, and R&D services sales[124](index=124&type=chunk) - The Group has only one operating segment, and no further analysis of a single segment is presented[124](index=124&type=chunk) [Revenue, Other Income and Gains](index=39&type=page&id=Revenue%2C%20Other%20Income%20and%20Gains) The Group's total revenue for H1 2025 was **RMB 9,491,110 thousand**, primarily from customer contracts. Other income and gains were **RMB 182,177 thousand**, a decrease from the prior year, mainly due to lower bank interest income and VAT additional deductions Revenue Analysis | Source of Revenue | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue from contracts with customers | 9,485,653 | 7,592,003 | | Revenue from other sources | 5,457 | 4,662 | | **Total** | **9,491,110** | **7,596,665** | Classification of Revenue from Contracts with Customers | Product Category | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Sales of power battery products | 4,026,602 | 2,858,421 | | Sales of energy storage battery products | 5,082,620 | 3,207,787 | | Sales of battery components | 83,486 | 1,297,342 | | Sales of waste materials | 225,261 | 193,182 | | R&D services | 15,708 | 15,717 | | OEM processing services | 21,009 | – | | Others | 30,967 | 19,554 | | **Total** | **9,485,653** | **7,592,003** | Analysis of Other Income and Gains | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest income | 90,065 | 120,753 | | VAT additional deductions | 46,846 | 86,651 | | Net foreign exchange gains | 14,950 | 29,400 | | Fair value changes | 22,652 | 2,468 | | Others | 7,664 | 9,622 | | **Total** | **182,177** | **248,894** | [Loss Before Tax and Income Tax](index=41&type=page&id=Loss%20Before%20Tax%20and%20Income%20Tax) The Group's loss before tax for the six months ended June 30, 2025, was **RMB 62,666 thousand**. Income tax expense was **RMB 38 thousand**, primarily due to the company and entities like REPT Qingchuang enjoying a **15% preferential corporate income tax rate** as high-tech enterprises - Loss before tax was **RMB 62,666 thousand**[128](index=128&type=chunk) - The company, REPT Qingchuang, and Jiashan Lanjun, as high-tech enterprises, enjoy a **15% preferential corporate income tax rate**[129](index=129&type=chunk)[130](index=130&type=chunk) - Total tax expense for the period was **RMB 38 thousand**[131](index=131&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent and Dividends](index=43&type=page&id=Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent%20and%20Dividends) For the six months ended June 30, 2025, basic and diluted loss per share attributable to ordinary equity holders of the parent was **RMB 0.03**. The Board does not recommend any interim dividend - Basic and diluted loss per share attributable to ordinary equity holders of the parent was **RMB (0.03)**[132](index=132&type=chunk)[135](index=135&type=chunk) - The weighted average number of ordinary shares outstanding during the period was **2,276,874,000 shares**[135](index=135&type=chunk) - The Directors do not recommend the declaration of any interim dividend for the six months ended June 30, 2025[135](index=135&type=chunk) [Property, Plant and Equipment](index=43&type=page&id=Property%2C%20Plant%20and%20Equipment) As of June 30, 2025, approximately **RMB 7,447,702 thousand** of the Group's property, plant and equipment was pledged as collateral for bank borrowings. Asset purchases during the period amounted to **RMB 1,607,201 thousand** - As of June 30, 2025, property, plant and equipment with a net book value of approximately **RMB 7,447,702 thousand** were pledged as collateral for certain interest-bearing bank and other borrowings of the Group[136](index=136&type=chunk) - For the six months ended June 30, 2025, the Group purchased assets at a cost of **RMB 1,607,201 thousand**[136](index=136&type=chunk) [Trade and Bills Receivables](index=43&type=page&id=Trade%20and%20Bills%20Receivables) As of June 30, 2025, the net book value of trade and bills receivables was **RMB 5,947,437 thousand**, primarily denominated in RMB. Credit terms are generally one to three months, and all bills receivables are bank acceptance bills within six months, with some pledged Trade and Bills Receivables | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables | 4,581,179 | 4,170,843 | | Bills receivables | 1,904,361 | 1,799,759 | | Impairment | (538,103) | (479,734) | | **Net book value** | **5,947,437** | **5,490,868** | - Trade and bills receivables are primarily denominated in RMB (**RMB 5,776,102 thousand**)[137](index=137&type=chunk) - Credit terms generally range from one to three months, and all bills receivables are bank acceptance bills with an aging of less than six months[137](index=137&type=chunk)[138](index=138&type=chunk) - As of June 30, 2025, bills receivables of **RMB 667,880 thousand** were pledged to secure bank borrowings[138](index=138&type=chunk) Aging Analysis of Trade Receivables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 2,770,112 | 3,293,981 | | 3 to 6 months | 967,630 | 295,495 | | 6 to 12 months | 262,204 | 44,276 | | 1 to 2 years | 43,130 | 57,357 | | **Total** | **4,043,076** | **3,691,109** | [Trade and Bills Payables](index=45&type=page&id=Trade%20and%20Bills%20Payables) As of June 30, 2025, total trade and bills payables amounted to **RMB 12,297,616 thousand**, with the vast majority (**RMB 12,259,448 thousand**) due within one year Aging Analysis of Trade and Bills Payables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 12,259,448 | 12,047,542 | | 1 to 2 years | 38,168 | 11,038 | | **Total** | **12,297,616** | **12,058,580** | [Share Capital](index=45&type=page&id=Share%20Capital) As of June 30, 2025, the company's issued and fully paid ordinary share capital was **RMB 2,276,874 thousand**, consistent with December 31, 2024 - As of June 30, 2025, the issued and fully paid ordinary share capital was **RMB 2,276,874 thousand**[141](index=141&type=chunk) [Commitments](index=46&type=page&id=Commitments) As of June 30, 2025, the Group's contractual commitments primarily related to the purchase of property, plant and equipment, totaling **RMB 4,325,693 thousand** - As of June 30, 2025, the Group's contractual commitments amounted to **RMB 4,325,693 thousand**, primarily for the purchase of property, plant and equipment items[142](index=142&type=chunk) [Related Party Transactions](index=46&type=page&id=Related%20Party%20Transactions) The Group engages in significant transactions with multiple related parties, including sales to, and purchases of products/services from, related parties, as well as rental expenses, rental income, loans received, and interest expenses. Transaction prices are typically mutually agreed upon, considering prevailing market prices - The Group's related parties include controlling shareholder Yongqing Technology, Tsingshan Group, companies controlled or associated with Mr. XIANG Guangda, and companies controlled by SAIC Group, among others[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) Sales of Products to Related Parties | Related Party | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | SAIC-GM-Wuling | 864,576 | 775,226 | | Huangneng | 496,184 | 5,590 | | Nanjing Automobile Group | 234,549 | 35,035 | | Maitian Energy | 139,695 | 175,341 | | SAIC Power Zhengzhou | 105,988 | – | | Shanghai Qingruituo | 76,376 | – | | Huafu | 64,673 | 59,447 | | Qingtuo Nickel Industry | 56,603 | – | | **Total** | **2,063,770** | **1,844,994** | Purchases of Products/Services from Related Parties | Related Party | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Fuan Guolong Nanomaterials | 141,692 | 13,891 | | Maitian Energy | 94,175 | – | | Wenzhou Xinke | 17,437 | 6,194 | | Tsingshan Intelligent Manufacturing | 13,075 | – | | REPT Special Steel | 1,239 | 1,525 | | Liuzhou Saike | 455 | – | | Saike REPT | 412 | – | | Tsingshan Education | 43 | 165 | | **Total** | **268,528** | **57,245** | - Total rental expenses paid to related parties amounted to **RMB 2,103 thousand**, and total rental income from related parties amounted to **RMB 2,772 thousand**[149](index=149&type=chunk)[150](index=150&type=chunk) - Total key management personnel remuneration amounted to **RMB 20,280 thousand**, including salaries, allowances, performance bonuses, contributions to retirement benefit schemes, and share incentive expenses[151](index=151&type=chunk) [Fair Value and Fair Value Hierarchy of Financial Instruments](index=52&type=page&id=Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) The Group's fair value measurement of financial instruments is primarily categorized into three levels. Management assesses that the fair value of most short-term financial instruments approximates their carrying amounts. Listed equity investments are based on market quotations, while unlisted equity investments and wealth management products use valuation techniques to estimate fair value - Management believes that the fair values of short-term financial instruments such as cash and cash equivalents, trade and bills receivables approximate their carrying amounts[152](index=152&type=chunk) - The fair value of listed equity investments is derived from market quotations (Level 1)[153](index=153&type=chunk) - The fair value of unlisted equity investments designated at fair value through other comprehensive income is estimated using market valuation techniques (Level 3)[153](index=153&type=chunk) Assets Measured at Fair Value (June 30, 2025) | Item | Level 1 (RMB thousands) | Level 2 (RMB thousands) | Level 3 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Bills receivables | – | 167,237 | – | 167,237 | | Financial assets at fair value through profit or loss | 97,626 | 107,044 | 50,000 | 254,670 | | Equity investments designated at fair value through other comprehensive income | – | – | 10,540 | 10,540 | | **Total** | **97,626** | **274,281** | **60,540** | **432,447** | - For the six months ended June 30, 2025, there were no transfers between Level 1 and Level 2 fair value measurements, nor any transfers into or out of Level 3[157](index=157&type=chunk) [Restatement and Post-Reporting Period Events](index=55&type=page&id=Restatement%20and%20Post-Reporting%20Period%20Events) The 2024 comparative consolidated financial information has been restated to reflect changes in government grant accounting policy, with no material impact on loss for the period. As of the date of this interim report, no significant post-reporting period events have occurred for the Group - The 2024 comparative consolidated financial information has been restated to reflect a voluntary change in accounting policy and presentation for government grants, but it had no material impact on the loss for the six months ended **June 30, 2024**[158](index=158&type=chunk) - As of the date of this interim report, no significant post-reporting period events have occurred for the Group after the end of the reporting period[159](index=159&type=chunk) Definitions [Glossary of Terms](index=55&type=page&id=Glossary%20of%20Terms) This section provides definitions for key terms used in the interim report to ensure readers have a clear understanding of the report's content - This section includes definitions for terms such as Articles of Association, associates, Audit Committee, China, the Company, controlling shareholder, Directors, Domestic Unlisted Shares, Global Offering, the Group, H Shares, HKEX, Listing Rules, Model Code, Mr. Xiang, Nomination Committee, Prospectus, Remuneration and Appraisal Committee, RMB, Reporting Period, Ruitu Energy, SFO, Shanghai Dingxin, Shares, Shareholders, subsidiaries, Supervisors, Tsingshan Group, US, Wenzhou Jingli, Wenzhou Ruili, Yongqing Technology, and Zhejiang Tsingshan[161](index=161&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk)