[Interim Results Announcement](index=1&type=section&id=Announcement%20Header) [Basic Company Information](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E4%BF%A1%E6%81%AF) International Business Digital Technology Limited (Stock Code: 1782) announced its unaudited interim results for the six months ended June 30, 2025, on August 22, 2025, with the report reviewed by the audit committee and management, complying with accounting standards and listing rules - Company Name: **International Business Digital Technology Limited**[2](index=2&type=chunk) - Stock Code: **1782**[2](index=2&type=chunk) - Reporting Period: Six months ended June 30, 2025[2](index=2&type=chunk) - Report Nature: Unaudited Interim Condensed Consolidated Financial Statements[2](index=2&type=chunk) - Review Status: Reviewed by the company's audit committee and management, complying with applicable accounting standards and listing rules[3](index=3&type=chunk) [Corporate Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) [Board of Directors and Committees](index=4&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%8F%8A%E5%A7%94%E5%93%A1%E6%9C%83) The company's board comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - Executive Director: **Mr. Shi Zhimin** (Chief Executive Officer and Chairman)[9](index=9&type=chunk) - Non-Executive Director: **Mr. Guan Haiqing**[9](index=9&type=chunk) - Independent Non-Executive Directors: **Mr. Yang Min** (Audit Committee Chairman), **Mr. Hu Jianjun** (Remuneration Committee Chairman), **Ms. Ru Tingting** (Nomination Committee Chairman)[9](index=9&type=chunk) [Principal Offices and Advisors](index=4&type=section&id=%E4%B8%BB%E8%A6%81%E8%BE%A6%E4%BA%8B%E8%99%95%E5%8F%8A%E9%A1%A7%E5%95%8F) The company maintains a registered office in the Cayman Islands, principal places of business in Mainland China and Hong Kong, with Ernst & Young as independent auditor and Li & Partners as legal advisor - Independent Auditor: **Ernst & Young**[9](index=9&type=chunk) - Registered Office: **Cayman Islands**[9](index=9&type=chunk) - Principal Place of Business in Mainland China: Haidian District, Beijing[10](index=10&type=chunk) - Principal Place of Business in Hong Kong: Queen's Road East, Wanchai, Hong Kong[10](index=10&type=chunk) - Legal Advisor: **Li & Partners**[10](index=10&type=chunk) - Principal Bankers: **Industrial and Commercial Bank of China**, **China Merchants Bank** (Mainland China), **Standard Chartered Bank**, **CITIC Bank International** (Hong Kong)[10](index=10&type=chunk) [Financial Highlights](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) [Key Financial Indicators](index=6&type=section&id=%E9%97%9C%E9%8D%B5%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99) For the six months ended June 30, 2025, the company reported slight revenue growth, narrowed losses, and a significant increase in gross profit margin, while current and debt-to-equity ratios saw minor changes Financial Summary for the Six Months Ended June 30 | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 42,337 | 42,101 | | Loss for the Period | (33,382) | (39,033) | | Net Loss Attributable to Owners of the Parent | (33,382) | (38,545) | | Loss Per Share (RMB cents) | (4.36) | (5.06) | | Gross Profit Margin | 50% | 42.4% | | Net Loss Margin | -78.8% | -92.7% | Financial Position Summary as of June 30 | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 81,117 | 77,321 | | Total Assets | 216,717 | 208,808 | | Total Liabilities | 49,581 | 44,256 | | Total Equity | 167,136 | 164,552 | | Current Ratio | 4.2 | 4.7 | | Quick Ratio | 3.9 | 4.4 | | Debt-to-Equity Ratio | 6.0% | 6.1% | [Management Discussion and Analysis](index=7&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Review and Outlook](index=7&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E8%88%87%E5%B1%95%E6%9C%9B) As a pioneer in China's digital technology, the Group is actively developing new Central Bank Digital Currency (CBDC) network system business, while continuing to provide Application Performance Management (APM) products and solutions to telecom operators and large enterprises, integrating AI into APM for intelligent O&M and vertical industry applications - The Group is a pioneer in China's digital technology sector, possessing core digital and information technologies with extensive experience in software development[14](index=14&type=chunk) - Management Strategy: Building upon existing businesses, exploring broader development opportunities by leveraging technological advantages[14](index=14&type=chunk) - Two Major Business Segments: 1) Developing new **Central Bank Digital Currency (CBDC)** network system business; 2) Providing **Application Performance Management (APM)** products and service solutions to Chinese telecom operators and large enterprises[14](index=14&type=chunk) - **CBDC** Business: Providing integrated systems including software development, technical services, and hardware sales, with plans for global expansion and ongoing discussions with various national treasuries, central banks, and commercial banks for cooperation[14](index=14&type=chunk)[16](index=16&type=chunk) - **APM** Business: Includes overall **APM** system solutions, software development services, technical services, embedded hardware, and standard **APM** software sales[15](index=15&type=chunk) - 2025 **APM** Development Focus: Concentrating on **AI+Network Intelligence (AIOps)** to empower operators, achieving fault prediction and network optimization; actively promoting AI integration with vertical industries such as **smart video**, **smart energy**, **smart transportation**, and **intelligent manufacturing**[17](index=17&type=chunk)[18](index=18&type=chunk) [Financial Review](index=9&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) Current period revenue slightly increased by 0.6% to RMB42.3 million, primarily driven by growth in overall APM system solutions, despite a decline in software development and technical services revenue. Gross profit margin significantly improved to 50.0%, and net loss narrowed to RMB33.4 million, mainly due to cost control and efficiency improvements, though other income and gains decreased due to reduced exchange gains, interest, and government grants Revenue Changes (Six Months Ended June 30) | Revenue Category | 2025 (RMB millions) | 2024 (RMB millions) | Change (RMB millions) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Overall APM System Solutions | 19.5 | 16.2 | +3.3 | +20.2% | | Software Development Services | 18.4 | 19.9 | -1.5 | -7.3% | | Technical Services | 4.1 | 5.8 | -1.7 | -29.2% | | Sales of Embedded Hardware and Standard APM Software | 0.3 | 0.2 | +0.1 | +53.0% | | **Total Revenue** | **42.3** | **42.1** | **+0.2** | **+0.6%** | Gross Profit and Gross Profit Margin Changes (Six Months Ended June 30) | Indicator | 2025 (RMB millions) | 2024 (RMB millions) | Change Rate | | :--- | :--- | :--- | :--- | | Gross Profit | 21.2 | 17.9 | +18.5% | | Gross Profit Margin | 50.0% | 42.4% | +7.6 percentage points | - The increase in gross profit margin reflects cost reduction achievements from shortening project cycles and accelerating project delivery[24](index=24&type=chunk) Other Income and Gains Changes (Six Months Ended June 30) | Indicator | 2025 (RMB millions) | 2024 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Total Other Income and Gains | 0.9 | 4.3 | Decrease | | Net Exchange (Loss)/Gain | (0.4) | 0.5 | Turned from gain to loss |

[Financial Summary](index=1&type=section&id=Financial%20Summary) The group's financial performance for the six months ended June 30, 2025, showed a significant decline in revenue and a shift from profit to loss Financial Summary for the Six Months Ended June 30, 2025 | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 249,838 | 332,923 | -25.0% | | Gross Profit | 51,096 | 87,481 | -41.6% | | (Loss)/Profit Attributable to Owners of the Company | (40,978) | 3,426 | -1,296.1% | | Basic and Diluted (Loss)/Earnings Per Share (HK cents) | (5.9) | 0.5 | - | [Interim Results](index=1&type=section&id=Interim%20Results) The interim results reflect a significant decline in profitability and asset values, with a shift from profit to loss for the period [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The group recorded a loss of HKD 42,415 thousand for the period, a significant reversal from the prior year's profit, driven by revenue decline and increased expenses Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 249,838 | 332,923 | -25.0% | | Cost of Sales | (198,742) | (245,442) | -19.0% | | Gross Profit | 51,096 | 87,481 | -41.6% | | Other Income and Net Gains and Losses | (6,831) | 3,683 | -285.5% | | Distribution Expenses | (18,384) | (19,596) | -6.2% | | Administrative Expenses | (65,408) | (59,642) | +9.7% | | (Loss)/Profit Before Income Tax | (42,661) | 7,651 | -657.5% | | (Loss)/Profit for the Period | (42,415) | 2,092 | -2127.8% | | (Loss)/Profit Attributable to Owners of the Company | (40,978) | 3,426 | -1296.1% | | Basic and Diluted (Loss)/Earnings Per Share (HK cents) | (5.9) | 0.5 | - | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets decreased, with significant reductions in non-current and current assets, while current liabilities increased, leading to a decline in net assets Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Non-current Assets | 255,180 | 282,670 | -9.7% | | Current Assets | 490,917 | 497,619 | -1.3% | | **Liabilities** | | | | | Current Liabilities | 210,848 | 172,078 | +22.5% | | Non-current Liabilities | 18,499 | 23,185 | -20.3% | | **Equity** | | | | | Net Assets | 516,750 | 585,026 | -11.6% | | Total Equity | 516,750 | 585,026 | -11.6% | - Financial assets at fair value through profit or loss significantly decreased from **HKD 29,469 thousand** on December 31, 2024, to **HKD 23 thousand** on June 30, 2025[6](index=6&type=chunk)[15](index=15&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide essential details on the group's operations, accounting policies, segment information, and financial position for the interim period [1. General Information](index=6&type=section&id=1.%20General%20Information) The company is an investment holding company primarily engaged in trading, retail, wholesale, and distribution of kitchenware and household products, with no significant operational changes during the period - The company's principal activities are investment holding, with its major subsidiaries engaged in the trading, retail, wholesale, and distribution of kitchenware and household products, and raw material trading[8](index=8&type=chunk) - There were no significant changes in the group's operations during the period[8](index=8&type=chunk) - The company's ultimate holding company is City Concord Limited, controlled by Dr. Wong Siu Wah (Chairman and Chief Executive Officer)[9](index=9&type=chunk) [2. Basis of Preparation](index=6&type=section&id=2.%20Basis%20of%20Preparation) The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and Appendix 16 of the Listing Rules, providing explanations for significant changes since the 2024 annual report - The condensed consolidated interim financial statements are prepared in accordance with Appendix 16 of the Listing Rules and Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the HKICPA[10](index=10&type=chunk) - The statements are unaudited but have been reviewed by the Company's Audit Committee[12](index=12&type=chunk) - The condensed consolidated interim financial statements are presented in Hong Kong Dollars, the Company's functional currency, with all values rounded to the nearest thousand[12](index=12&type=chunk) [3. Adoption of Hong Kong Financial Reporting Standards](index=7&type=section&id=3.%20Adoption%20of%20Hong%20Kong%20Financial%20Reporting%20Standards) The group adopted the HKAS 21 amendment 'Lack of Exchangeability' during the interim period, which had no material impact on the reported amounts or disclosures - The group has adopted the amendment to Hong Kong Accounting Standard 21 'Lack of Exchangeability' issued by the HKICPA for the first time during the interim period[13](index=13&type=chunk) - The application of an amendment to a Hong Kong Financial Reporting Standard during the interim period had no material impact on the amounts reported and/or disclosures contained in the condensed consolidated interim financial statements[13](index=13&type=chunk) [4. Segment Information](index=7&type=section&id=4.%20Segment%20Information) The group operates in kitchenware and household products trading and raw materials trading, with the former experiencing a significant decline in revenue and a shift to loss, while the latter saw growth [4. (i) Operating Segment Information](index=7&type=section&id=4.%20%28i%29%20Operating%20Segment%20Information) The kitchenware and household products segment saw a 31.0% revenue decrease and a shift from profit to loss, while the raw materials trading segment experienced 69.1% revenue growth and a 264.5% increase in segment results - The group has two business components: (i) trading of kitchenware and household products, including drinkware, tools and gadgets, bakeware and accessories, and food preparation products; and (ii) trading of raw materials, primarily plastics and silicone[14](index=14&type=chunk) Operating Segment Revenue and Results | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | **Kitchenware and Household Products Trading** | | | | | Revenue | 216,115 | 312,985 | -31.0% | | Segment Results | (45,428) | 9,582 | -574.1% | | **Raw Materials Trading** | | | | | Revenue | 33,723 | 19,938 | +69.1% | | Segment Results | 4,393 | 1,208 | +264.5% | | **Total** | | | | | Revenue | 249,838 | 332,923 | -25.0% | | Segment Results | (41,035) | 10,790 | -480.3% | Other Segment Information | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Fair Value Loss on Investment Properties | (16,900) | (4,000) | | Depreciation of Property, Plant and Equipment | (13,257) | (9,093) | | Net Fair Value Gains on Financial Assets/Liabilities at Fair Value Through Profit or Loss | 5,686 | 2,717 | [4. (ii) Disaggregation of Revenue and Geographical Segment Information](index=9&type=section&id=4.%20%28ii%29%20Disaggregation%20of%20Revenue%20and%20Geographical%20Segment%20Information) Revenue from external customers showed a significant 47.5% decrease in the US market but a 13.7% increase in the Asian market, with Hong Kong being the primary operational location for non-current assets Revenue by Geographical Region | Region | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | United States | 94,925 | 181,110 | -47.5% | | Asia | 97,520 | 85,766 | +13.7% | | Europe | 42,381 | 53,859 | -21.3% | | Canada | 12,146 | 9,972 | +21.8% | | Other Locations | 2,866 | 2,216 | +29.3% | | **Total** | 249,838 | 332,923 | -25.0% | - Asian revenue primarily includes revenue from Mainland China and Hong Kong, increasing from **HKD 73,665 thousand** in the prior period to **HKD 83,835 thousand** in the current period[18](index=18&type=chunk) - As of June 30, 2025, and December 31, 2024, over **85%** of the group's non-current assets (excluding financial instruments and deferred tax assets) were physically located in Hong Kong[19](index=19&type=chunk) [4. (iii) Information about Major Customers](index=10&type=section&id=4.%20%28iii%29%20Information%20about%20Major%20Customers) For the six months ended June 30, 2025, three major customers contributed over 10% of the group's revenue, all from the kitchenware and household products trading segment Major Customer Revenue Contribution | Customer | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Company A | 38,195 | 74,917 | | Company B | 33,746 | 35,105 | | Company C | 36,565 | Not Applicable | - Revenue from these three customers (two for the six months ended June 30, 2024) was entirely derived from the segment engaged in trading kitchenware and household products[21](index=21&type=chunk) [5. Revenue](index=10&type=section&id=5.%20Revenue) The group's revenue primarily stems from the sale of kitchenware and household products (HKD 216,115 thousand) and raw materials (HKD 33,723 thousand) for the six months ended June 30, 2025 Revenue Composition | Revenue Source | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Sale of Kitchenware and Household Products | 216,115 | 312,985 | | Sale of Raw Materials | 33,723 | 19,938 | | **Total** | 249,838 | 332,923 | - Revenue from the sale of kitchenware and household products and raw materials is recognized when control of the goods has been transferred to the customer, the customer has sufficient control over the goods, and the group has no unfulfilled obligations that could affect the customer's acceptance of the goods[20](index=20&type=chunk) [6. Other Income and Net Gains and Losses](index=11&type=section&id=6.%20Other%20Income%20and%20Net%20Gains%20and%20Losses) Net other income and gains/losses shifted to a loss of HKD 6,831 thousand for the six months ended June 30, 2025, primarily due to a significant increase in fair value losses on investment properties Composition of Other Income and Net Gains and Losses | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Bank Interest Income | 645 | 1,434 | | Dividend Income from Listed Equity Securities | 1,778 | – | | Rental Income | 1,311 | 1,561 | | Recoveries from Customers | 194 | – | | Government Grants | 89 | 1,469 | | Net Fair Value Gains on Financial Assets/Liabilities at Fair Value Through Profit or Loss | 5,686 | 2,717 | | Fair Value Loss on Investment Properties | (16,900) | (4,000) | | Others | 366 | 502 | | **Total** | (6,831) | 3,683 | - Fair value losses on investment properties increased from **HKD 4,000 thousand** in the prior period to **HKD 16,900 thousand** in the current period[22](index=22&type=chunk) [7. Finance Costs](index=11&type=section&id=7.%20Finance%20Costs) Finance costs decreased by 7.2% to HKD 3,374 thousand for the six months ended June 30, 2025, mainly due to reduced interest expenses on bank borrowings Composition of Finance Costs | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Interest expenses on financial liabilities measured at amortized cost: | | | | Bank Borrowings | 1,605 | 2,058 | | Bank Overdrafts | 746 | 384 | | Lease Liabilities | 1,023 | 1,195 | | **Total** | 3,374 | 3,637 | - The decrease in finance costs was primarily attributable to reduced interest expenses on bank borrowings[23](index=23&type=chunk) [8. Loss/Profit Before Income Tax](index=12&type=section&id=8.%20Loss%2FProfit%20Before%20Income%20Tax) The group reported a loss before income tax of HKD 42,661 thousand for the six months ended June 30, 2025, a reversal from the prior year's profit, influenced by inventory costs, depreciation, and employee benefits Factors Affecting Loss/Profit Before Income Tax | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Cost of Inventories Recognized as Expense | 190,812 | 233,612 | | Provision for Impairment Loss on Trade Receivables | 223 | 191 | | Depreciation of Property, Plant and Equipment | 13,257 | 9,093 | | Research Expenses | 15 | 108 | | Short-term Lease Expenses | 1,504 | 650 | | Low-value Lease Expenses | 78 | 107 | | Total Employee Benefit Expenses (including Directors' Emoluments) | 31,014 | 31,251 | | Net Exchange Gains/(Losses) | 1,039 | (662) | - Depreciation of property, plant and equipment increased from **HKD 9,093 thousand** in the prior period to **HKD 13,257 thousand** in the current period[24](index=24&type=chunk) - Net exchange gains shifted from a loss of **HKD 662 thousand** in the prior period to a gain of **HKD 1,039 thousand** in the current period[24](index=24&type=chunk) [9. Income Tax (Credit)/Expense](index=12&type=section&id=9.%20Income%20Tax%20%28Credit%29%2FExpense) The group recorded an income tax credit of HKD 246 thousand for the six months ended June 30, 2025, compared to an expense in the prior year, mainly due to increased deferred tax credit and reduced current tax Composition of Income Tax (Credit)/Expense | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Tax attributable to the group's operations comprises: | | | | Current Tax - Hong Kong Profits Tax | 1,639 | 4,577 | | Current Tax - Income Tax Outside Hong Kong | 32 | 417 | | Current Tax - Withholding Tax Outside Hong Kong | – | 1,832 | | (Under)/Over Provision in Prior Years - Hong Kong Profits Tax | (3) | 18 | | Deferred Tax - Credit for the Period | (1,914) | (1,285) | | **Income Tax (Credit)/Expense** | (246) | 5,559 | - Hong Kong profits tax is provided at a rate of **16.5%** on estimated assessable profits for the year, with certain qualifying entities subject to an **8.25%** tax rate on the first **HKD 2,000,000** of assessable profits; Mainland China corporate income tax is calculated at **25%**[25](index=25&type=chunk) - No US income tax was provided for the six months ended June 30, 2025, as there were no assessable profits derived from the US[26](index=26&type=chunk) [10. Loss/Earnings Per Share](index=13&type=section&id=10.%20Loss%2FEarnings%20Per%20Share) Basic and diluted loss per share was 5.9 HK cents for the six months ended June 30, 2025, a reversal from the prior year's earnings, primarily due to the loss attributable to owners of the company [Basic Loss/Earnings Per Share](index=13&type=section&id=Basic%20Loss%2FEarnings%20Per%20Share) Basic loss per share was 5.9 HK cents, calculated based on a loss attributable to owners of HKD 40,978 thousand and a weighted average of 700,000,000 ordinary shares outstanding Basic Loss/Earnings Per Share | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | (Loss)/Profit Attributable to Owners of the Company | (HKD 40,978,000) | HKD 3,426,000 | | Weighted Average Number of Ordinary Shares Outstanding | 700,000,000 shares | 700,000,000 shares | | Basic (Loss)/Earnings Per Share | (5.9 HK cents) | 0.5 HK cents | [Diluted Loss/Earnings Per Share](index=13&type=section&id=Diluted%20Loss%2FEarnings%20Per%20Share) Diluted loss/earnings per share is the same as basic loss/earnings per share, as there were no outstanding potential dilutive ordinary shares during the periods - Diluted loss/earnings per share is the same as basic loss/earnings per share because there were no outstanding potential dilutive ordinary shares for the six months ended June 30, 2025, and 2024[29](index=29&type=chunk) [11. Dividends](index=13&type=section&id=11.%20Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2025, though a final dividend of 4.0 HK cents per share (totaling HKD 28,000 thousand) for the previous fiscal year was approved - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[30](index=30&type=chunk) Dividend Payment Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Final dividend approved and payable for the previous financial year | 28,000 (4.0 HK cents per share) | 14,000 (2.0 HK cents per share) | [12. Property, Plant and Equipment](index=14&type=section&id=12.%20Property%2C%20Plant%20and%20Equipment) The group acquired property, plant and equipment totaling approximately HKD 107 thousand for the six months ended June 30, 2025, a significant decrease from the prior year, and has pledged leased land and buildings as collateral for bank financing - For the six months ended June 30, 2025, the group acquired property, plant and equipment at a total cost of approximately **HKD 107 thousand**, compared to approximately **HKD 341 thousand** for the six months ended June 30, 2024[31](index=31&type=chunk) - As of June 30, 2025, the group had pledged leased land and buildings with a total carrying amount of approximately **HKD 14,300 thousand** as collateral for general bank financing granted to the group[31](index=31&type=chunk) [13. Inventories](index=14&type=section&id=13.%20Inventories) Total inventories decreased to HKD 82,940 thousand as of June 30, 2025, from HKD 90,708 thousand at December 31, 2024, primarily due to a reduction in raw materials Inventory Composition | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Goods Held for Resale | 33,810 | 34,446 | | Raw Materials | 49,130 | 56,262 | | **Total** | 82,940 | 90,708 | [14. Trade Receivables](index=14&type=section&id=14.%20Trade%20Receivables) Net trade receivables decreased to HKD 169,405 thousand as of June 30, 2025, from HKD 198,169 thousand at December 31, 2024, with a significant increase in receivables over 90 days Trade Receivables and Impairment Provision | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Trade Receivables | 173,312 | 201,853 | | Less: Provision for Impairment Loss | (3,907) | (3,684) | | **Net** | 169,405 | 198,169 | Aging Analysis of Trade Receivables | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 Days | 47,506 | 51,874 | | 31 to 60 Days | 43,793 | 82,467 | | 61 to 90 Days | 15,969 | 51,614 | | Over 90 Days | 62,137 | 12,214 | | **Total** | 169,405 | 198,169 | - Trade receivables over **90 days** significantly increased from **HKD 12,214 thousand** on December 31, 2024, to **HKD 62,137 thousand** on June 30, 2025[33](index=33&type=chunk) [15. Financial Assets/Liabilities at Fair Value Through Profit or Loss](index=15&type=section&id=15.%20Financial%20Assets%2FLiabilities%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) Financial assets at fair value through profit or loss significantly decreased to HKD 23 thousand (primarily derivative financial instruments) as of June 30, 2025, from HKD 29,469 thousand (primarily listed equity securities) at year-end 2024, with a notable reduction in financial liabilities Financial Assets/Liabilities at Fair Value Through Profit or Loss | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss: | | | | - Listed Equity Securities | – | 29,469 | | - Derivative Financial Instruments | 23 | – | | Financial liabilities at fair value through profit or loss: | | | | - Derivative Financial Instruments | (148) | (2,519) | | **Net** | (125) | 26,950 | - Derivative financial instruments refer to USD-denominated forward foreign exchange contracts, with a notional amount decreasing from **RMB 59,000,000** on December 31, 2024, to **RMB 6,000,000** on June 30, 2025[34](index=34&type=chunk) [16. Trade Payables](index=16&type=section&id=16.%20Trade%20Payables) Trade payables decreased to HKD 33,857 thousand as of June 30, 2025, from HKD 39,918 thousand at December 31, 2024, with credit terms generally ranging from 0 to 90 days Aging Analysis of Trade Payables | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 90 Days | 33,154 | 38,590 | | 91 to 180 Days | 703 | 1,197 | | 181 to 365 Days | – | 64 | | Over 365 Days | – | 67 | | **Total** | 33,857 | 39,918 | - The directors of the company believe that the carrying amounts of trade payables approximate their fair values[36](index=36&type=chunk) [17. Share Capital](index=16&type=section&id=17.%20Share%20Capital) As of June 30, 2025, the company's authorized share capital remained at HKD 100,000 thousand (10,000,000 thousand shares), and issued and fully paid share capital at HKD 7,000 thousand (700,000 thousand shares), consistent with December 31, 2024 Share Capital Structure | Item | June 30, 2025 (thousand shares) | June 30, 2025 (HKD thousands) | December 31, 2024 (thousand shares) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Shares of HKD 0.01 par value each | 10,000,000 | 100,000 | 10,000,000 | 100,000 | | Issued and Fully Paid: Shares of HKD 0.01 par value each | 700,000 | 7,000 | 700,000 | 7,000 | [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the group's business and financial performance for the period, outlining future strategies, human resources, and liquidity management in a challenging global environment [Business Review](index=17&type=section&id=Business%20Review) The first half of 2025 saw continued global market volatility, influenced by tightening monetary policies, geopolitical tensions, and uncertain US tariff policies, suppressing consumer spending in the North American mid-to-high-end retail market - In the first half of 2025, global market conditions and the operating environment remained volatile and uncertain, primarily due to tightening monetary policies worldwide and ongoing geopolitical tensions[38](index=38&type=chunk) - Uncertainty and repeated extensions of US tariff policies further disrupted trade flows and suppressed profit margins[38](index=38&type=chunk) - Consumer spending habits in the mid-to-high-end priced houseware and drinkware retail markets in North America were also suppressed[38](index=38&type=chunk) [Financial Review](index=17&type=section&id=Financial%20Review) The group's financial performance significantly deteriorated in the first half of 2025, shifting from profit to loss due to substantial revenue decline, narrower gross margins, fair value losses on investment properties, and increased operating costs [Revenue (Financial Review)](index=17&type=section&id=Revenue%20%28Financial%20Review%29) Revenue for the six months ended June 30, 2025, significantly decreased by 25.0% to HKD 249.8 million, primarily attributed to the uncertain outlook of US tariff policies Revenue Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | 249.8 | 332.9 | -25.0% | - This decrease in revenue was primarily due to the uncertain outlook of US tariff and expansion policies[39](index=39&type=chunk) [Gross Profit and Gross Margin](index=17&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit decreased by 41.6% to HKD 51.1 million, and gross margin declined by 5.8 percentage points to 20.5% for the six months ended June 30, 2025, mainly due to reduced revenue and suppressed consumer spending Gross Profit and Gross Margin Comparison | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | | Gross Profit | 51.1 million HKD | 87.5 million HKD | -41.6% | | Gross Margin | 20.5% | 26.3% | -5.8 percentage points | - The decline in gross margin was primarily attributable to suppressed customer consumption during the period[40](index=40&type=chunk) [Other Income and Net Gains and Losses (Financial Review)](index=17&type=section&id=Other%20Income%20and%20Net%20Gains%20and%20Losses%20%28Financial%20Review%29) Other income and net gains and losses decreased by 285.5% to a loss of HKD 6.8 million for the six months ended June 30, 2025, mainly due to fair value losses on investment properties Other Income and Net Gains and Losses Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Other Income and Net Gains and Losses | (6.8) | 3.7 | -285.5% | - The decrease was primarily due to fair value losses on investment properties, affected by the unfavorable conditions in the industrial and commercial real estate market[41](index=41&type=chunk) [Distribution Expenses](index=17&type=section&id=Distribution%20Expenses) Distribution expenses decreased by 6.2% to HKD 18.4 million for the six months ended June 30, 2025, primarily due to a corresponding reduction in marketing expenses and transportation costs with declining revenue Distribution Expenses Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Distribution Expenses | 18.4 | 19.6 | -6.2% | - This decrease was primarily attributable to a corresponding reduction in marketing expenses and transportation costs with the group's declining revenue[42](index=42&type=chunk) [Administrative Expenses](index=18&type=section&id=Administrative%20Expenses) Administrative expenses increased by 9.7% to HKD 65.4 million for the six months ended June 30, 2025, mainly due to depreciation and other operating costs incurred after the advanced manufacturing center commenced nano-fiber production Administrative Expenses Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 65.4 | 59.6 | +9.7% | - This increase was primarily due to depreciation and other operating costs incurred after the group's advanced manufacturing center in Tseung Kwan O Industrial Estate commenced nano-fiber production operations[43](index=43&type=chunk) [Finance Costs (Financial Review)](index=18&type=section&id=Finance%20Costs%20%28Financial%20Review%29) Finance costs decreased by 7.2% to HKD 3.4 million for the six months ended June 30, 2025, primarily due to a reduction in bank borrowing interest rates Finance Costs Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Finance Costs | 3.4 | 3.6 | -7.2% | - The decrease in finance costs was primarily attributable to a reduction in bank borrowing interest rates[44](index=44&type=chunk) [Loss/Profit Attributable to Owners of the Company](index=18&type=section&id=Loss%2FProfit%20Attributable%20to%20Owners%20of%20the%20Company) The company reported a loss attributable to owners of HKD 41.0 million for the six months ended June 30, 2025, a significant reversal from the prior year's profit, driven by reduced revenue, fair value losses on investment properties, and increased operating expenses Loss/Profit Attributable to Owners of the Company Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | (Loss)/Profit Attributable to Owners of the Company | (41.0) | 3.4 | -1296.1% | - The shift from profit to loss was primarily due to reduced revenue resulting from the uncertain outlook of US tariff and expansion policies, as well as continuous fair value losses on investment properties during the period[45](index=45&type=chunk) - Additionally, depreciation and other operating expenses increased as the group's advanced manufacturing center in Tseung Kwan O Industrial Estate commenced nano-fiber production operations[45](index=45&type=chunk) [Future Strategies](index=18&type=section&id=Future%20Strategies) The group is strategically adjusting by enhancing product lines through innovative design and technology upgrades, expanding its proprietary product portfolio, and entering new markets to offset demand slowdowns and capitalize on Asia-Pacific growth opportunities - The group is undergoing strategic adjustments, strengthening its product lines through innovative design and technological upgrades, expanding its proprietary product portfolio, and entering new markets[46](index=46&type=chunk) - This transformation helps offset the slowdown in demand caused by ongoing geopolitical tensions for brand owners, while focusing on growth opportunities in the Asia-Pacific market[46](index=46&type=chunk) - The first commercial launch of the nano-enhanced product line is planned for the fourth quarter of 2025, with these innovative technologies expected to significantly enhance the drinkware business[47](index=47&type=chunk) - The group anticipates these strategic initiatives will begin to positively impact performance in 2026[48](index=48&type=chunk) [Employees and Remuneration Policy](index=19&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the group's employee count decreased to 151, with a slight reduction in total staff costs, as it aims to streamline its organizational structure and retain talent through competitive remuneration Employee Count and Costs | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Employee Count | 151 persons | 163 persons | -7.36% | | Total Staff Costs (HKD millions) | 31.0 | 31.3 | -0.96% | - The group will continue to streamline its organizational structure through natural attrition and workflow re-engineering to enhance operational efficiency[49](index=49&type=chunk) - The group offers competitive remuneration packages, including salaries, medical insurance, discretionary bonuses, and participates in MPF schemes for Hong Kong employees and state-operated retirement benefit schemes for Mainland China employees[49](index=49&type=chunk) [Significant Investments Held and Future Plans for Material Investments in Capital Assets](index=19&type=section&id=Significant%20Investments%20Held%20and%20Future%20Plans%20for%20Material%20Investments%20in%20Capital%20Assets) As of June 30, 2025, the group held no significant investments other than investment properties and financial assets at fair value through profit or loss as disclosed in the condensed consolidated statement of financial position - As of June 30, 2025, no significant investments were held other than investment properties and financial assets at fair value through profit or loss as disclosed in the condensed consolidated statement of financial position[51](index=51&type=chunk) [Material Acquisitions and Disposals of Subsidiaries and Associates](index=19&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Associates) For the six months ended June 30, 2025, the group did not undertake any material acquisitions or disposals of subsidiaries and associates - For the six months ended June 30, 2025, the group did not undertake any material acquisitions or disposals of subsidiaries and associates[52](index=52&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=19&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) The group manages its capital structure to ensure going concern and maximize shareholder returns, with increased cash and bank balances, higher bank borrowings, and an elevated gearing ratio, while maintaining ample bank financing facilities [Cash and Bank Balances and Borrowings](index=20&type=section&id=Cash%20and%20Bank%20Balances%20and%20Borrowings) Cash and bank balances increased to HKD 183.0 million as of June 30, 2025, primarily denominated in USD, RMB, and HKD, while bank borrowings rose to HKD 115.3 million and bank overdrafts significantly decreased Cash and Borrowings Situation | Metric | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 183.0 | 116.7 | +56.8% | | Bank Borrowings | 115.3 | 68.1 | +69.3% | | Bank Overdrafts | 1.0 | 28.6 | -96.5% | - For the six months ended June 30, 2025, the annual interest rates for both bank borrowings and bank overdrafts decreased[54](index=54&type=chunk) [Cash Flow](index=20&type=section&id=Cash%20Flow) Operating activities generated HKD 51.2 million in cash for the six months ended June 30, 2025, a significant improvement from the prior year's cash used, primarily due to large customer orders received near period-end, while net cash from investing activities decreased and net cash from financing activities increased Cash Flow Comparison | Cash Flow Type | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | | :--- | :--- | :--- | | Cash from/(used in) Operating Activities | 51.2 (Generated) | (24.5) (Used) | | Net Cash from Investing Activities | 2.1 | 7.6 | | Net Cash Inflow/(Outflow) from Financing Activities | 39.3 (Inflow) | (26.6) (Outflow) | - Cash generated from operating activities was primarily attributable to large customer orders received by the group near the end of the period[55](index=55&type=chunk) - The decrease in net cash from investing activities was mainly due to reduced purchases of property, plant and equipment during the period[56](index=56&type=chunk) - The increase in net cash inflow from financing activities was due to an increase in bank borrowings during the period[56](index=56&type=chunk) [Gearing Ratio](index=20&type=section&id=Gearing%20Ratio) The group's gearing ratio, calculated as total borrowings divided by total equity, increased to 28.4% as of June 30, 2025, from 22.5% at December 31, 2024 Gearing Ratio Comparison | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gearing Ratio (including lease liabilities) | 28.4% | 22.5% | | Gearing Ratio (excluding lease liabilities) | 23.3% | 17.2% | [Bank Facilities](index=20&type=section&id=Bank%20Facilities) As of June 30, 2025, the group had total bank facilities of HKD 430.9 million, with HKD 116.3 million utilized, representing a utilization rate of 27.0%, indicating ample available financing Bank Facilities Situation | Metric | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Total Bank Facilities | 430.9 | 430.9 | | Utilized Amount | 116.3 | 96.7 | | Utilization Rate | 27.0% | 22.4% | - Due to financial support from banks and a low utilization rate, the group has reserved ample financing facilities for future drawdown[58](index=58&type=chunk) [Exposure to Foreign Exchange Risk](index=21&type=section&id=Exposure%20to%20Foreign%20Exchange%20Risk) The group is primarily exposed to foreign exchange risk in USD and RMB, as revenue is mainly USD-denominated while cost of sales is in HKD and RMB, and manages this risk primarily through forward foreign exchange contracts - The group's revenue is primarily denominated in USD, while its cost of sales is mainly denominated in HKD and RMB, thus exposing it primarily to foreign exchange risk in USD and RMB[59](index=59&type=chunk) - The group primarily uses forward foreign exchange contracts to hedge foreign exchange risk in its ordinary course of business[59](index=59&type=chunk) [Pledge of Assets](index=21&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the group had pledged leased land and buildings, investment properties, and pledged bank deposits totaling approximately HKD 14.3 million, HKD 92.9 million, and HKD 20.7 million respectively, as collateral for general bank financing Pledged Assets Situation | Asset Type | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Leased Land and Buildings | 14.3 | 14.5 | | Investment Properties | 92.9 | 109.8 | | Pledged Bank Deposits | 20.7 | 20.5 | [Contingent Liabilities](index=21&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the group had no significant contingent liabilities - As of June 30, 2025, the group had no significant contingent liabilities (December 31, 2024: nil)[61](index=61&type=chunk) [Capital Commitments](index=21&type=section&id=Capital%20Commitments) As of June 30, 2025, the group's capital commitments amounted to approximately HKD 2.0 million, primarily for the purchase and addition of property, plant and equipment, consistent with the prior year-end Capital Commitments | Item | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Purchase and Addition of Property, Plant and Equipment | 2.0 | 2.0 | [Corporate Governance and Other Information](index=21&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the company's commitment to corporate governance, compliance with trading standards, audit committee functions, dividend policy, and information dissemination practices [Corporate Governance Code](index=21&type=section&id=Corporate%20Governance%20Code) The company adheres to the Corporate Governance Code, with the exception of the combined roles of Chairman and CEO, which the Board believes ensures consistent leadership and effective strategic planning - The company has adopted the code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules[63](index=63&type=chunk) - The company has complied with the Corporate Governance Code, except for code provision C.2.1, which stipulates that the roles of chairman and chief executive of a listed issuer should be separate and not performed by the same individual[63](index=63&type=chunk) - The Board believes that the benefits of combining the roles of Chairman and Chief Executive Officer ensure consistent leadership direction within the group, enabling more effective and swift overall strategic planning[64](index=64&type=chunk) [Model Code for Securities Transactions by Directors](index=22&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The directors have adopted the Model Code for Securities Transactions by Directors of Listed Issuers and confirmed full compliance with its required standards during the period - The directors have adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules as the code of conduct for directors' dealings in the company's securities[65](index=65&type=chunk) - Following specific enquiries with all directors, all directors have confirmed their full compliance with the required standards of dealing set out in the Model Code during the period and up to the date of this announcement[65](index=65&type=chunk) [Audit Committee](index=22&type=section&id=Audit%20Committee) The Audit Committee, established in accordance with Listing Rule 3.21, is responsible for reviewing and overseeing the group's financial reporting, risk management, and internal controls, and has reviewed the interim financial statements - The company's Audit Committee was established in accordance with Listing Rule 3.21 and is responsible for reviewing and overseeing the group's financial reporting process, risk management, and internal controls[66](index=66&type=chunk) - The Audit Committee has reviewed the company's unaudited condensed interim financial statements for the six months ended June 30, 2025, and the accounting principles and practices adopted[66](index=66&type=chunk) [Interim Dividend](index=22&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[67](index=67&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=22&type=section&id=Purchase%20%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended June 30, 2025 - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[68](index=68&type=chunk) [Publication of Information on the HKEX and Company Website](index=23&type=section&id=Publication%20of%20Information%20on%20the%20HKEX%20and%20Company%20Website) This results announcement is published on the HKEX and company websites, and the interim report for the six months ended June 30, 2025, will be dispatched to shareholders and posted on these websites in due course - This results announcement is published on the HKEX website www.hkexnews.hk and the company's website www.kingsflair.com.hk[69](index=69&type=chunk) - The company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and posted on the respective websites of the HKEX and the company in due course[69](index=69&type=chunk)

[Company Overview](index=1&type=section&id=Company%20Overview) [Performance Summary](index=1&type=section&id=Performance%20Summary) Revenue grew 17.5% to RMB 1,045.1 million, but significant declines in gross profit and net profit drove margins and earnings per share lower Performance Summary for the Six Months Ended June 30, 2025 | Indicator | 2025 (RMB Million) | 2024 (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,045.1 | 889.6 | +17.5% | | Gross Profit | 160.2 | 181.6 | -11.8% | | Gross Profit Margin | 15.3% | 20.4% | -5.1pp | | Profit for the Year | 24.4 | 47.0 | -48.1% | | Net Profit Margin | 2.3% | 5.3% | -3.0pp | | Profit for the Year Attributable to Owners of the Company | 22.6 | 45.3 | -50.1% | | Basic Earnings Per Share (RMB Yuan) | 0.15 | 0.31 | -51.6% | | Cash and Cash Equivalents | 585.9 | 883.0 | -33.6% | | GFA Under Management (Million sq.m.) | 47.4 | 43.5 | +9.0% | [Corporate Information](index=6&type=section&id=Corporate%20Information) The company was established in China in 2020, listed on the Hong Kong Stock Exchange in 2021, and primarily provides property management services in China - The company was established in China on December 22, 2020, and its H-shares were listed on the Main Board of the Hong Kong Stock Exchange on November 10, 2021[8](index=8&type=chunk) - The Group is primarily engaged in providing property management and related services in China[9](index=9&type=chunk) [Basis of Preparation and Accounting Policies](index=6&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim financial report is prepared under IAS 34, reviewed by KPMG, and includes an amendment to IAS 21 with no material impact - The interim financial report is prepared in accordance with the Listing Rules of the Hong Kong Stock Exchange and International Accounting Standard 34 "Interim Financial Reporting"[10](index=10&type=chunk) - The report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[11](index=11&type=chunk) - An amendment to IAS 21 was adopted during the period, but it had no significant impact on this report as there were no transactions involving non-convertible foreign currencies[12](index=12&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Revenue grew 17.5%, but faster cost growth, market competition, and impairment losses led to a 48.1% decline in profit for the period Abridged Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Six Months Ended June 30, 2025 | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,045,087 | 889,622 | +17.5% | | Operating Costs | (884,899) | (708,033) | +25.0% | | Gross Profit | 160,188 | 181,589 | -11.8% | | Other (Expenses)/Income | (13,242) | 401 | -3400% | | Administrative Expenses | (81,283) | (84,714) | -4.0% | | Operating Profit | 25,589 | 58,216 | -56.0% | | Profit Before Tax | 32,979 | 62,167 | -47.0% | | Profit for the Period | 24,403 | 46,973 | -48.1% | | Profit Attributable to Equity Shareholders of the Company | 22,624 | 45,293 | -50.1% | | Basic Earnings Per Share (RMB Yuan) | 0.15 | 0.31 | -51.6% | [Revenue and Operating Costs](index=2&type=section&id=Revenue%20and%20Operating%20Costs) - Total revenue **increased by 17.5%** year-on-year to RMB 1,045.1 million, mainly due to expanded GFA under management and an increase in projects[4](index=4&type=chunk)[55](index=55&type=chunk) - Operating costs **grew by 25.0%** year-on-year to RMB 884.9 million, outpacing revenue growth primarily due to increased subcontracting costs from expanded GFA[4](index=4&type=chunk)[56](index=56&type=chunk) [Gross Profit and Gross Margin](index=2&type=section&id=Gross%20Profit%20and%20Gross%20Margin) - Gross profit **decreased by 11.8%** year-on-year to RMB 160.2 million, with the gross margin falling from 20.4% to **15.3%**[4](index=4&type=chunk)[57](index=57&type=chunk) - The decline in gross margin was mainly due to intense industry competition, which required increased upfront and quality maintenance investments in property management projects to gain market share[57](index=57&type=chunk) [Other Expenses and Income](index=8&type=section&id=Other%20Expenses%20and%20Income) - Other (expenses)/income shifted from an income of RMB 0.4 million in the same period of 2024 to an expense of RMB 13.2 million, a **decrease of approximately 3,400%**[20](index=20&type=chunk)[59](index=59&type=chunk) - The change was primarily due to fair value losses on investment properties and impairment losses on modular housing equipment[20](index=20&type=chunk)[59](index=59&type=chunk) [Operating Profit and Profit Before Tax](index=2&type=section&id=Operating%20Profit%20and%20Profit%20Before%20Tax) - Operating profit **decreased by 56.0%** year-on-year to RMB 25.6 million, and profit before tax **decreased by 47.0%** to RMB 33.0 million[4](index=4&type=chunk) [Income Tax and Profit for the Period](index=2&type=section&id=Income%20Tax%20and%20Profit%20for%20the%20Period) - Profit for the period **decreased by 48.1%** year-on-year to RMB 24.4 million, while profit attributable to equity shareholders **decreased by 50.1%** to RMB 22.6 million[5](index=5&type=chunk)[60](index=60&type=chunk) - The net profit margin fell to **2.3%**, mainly due to increased upfront and quality maintenance investments in property management projects and impairment losses on equipment from lower rental prices for modular housing[60](index=60&type=chunk) - Income tax expense was RMB 8.6 million, a decrease from RMB 15.2 million in the prior-year period, primarily due to lower profits[4](index=4&type=chunk)[25](index=25&type=chunk) [Earnings Per Share](index=3&type=section&id=Earnings%20Per%20Share) - Basic earnings per share **decreased to RMB 0.15** from RMB 0.31 in the same period of 2024[5](index=5&type=chunk)[25](index=25&type=chunk) - Diluted earnings per share were the same as basic earnings per share, as the Group had no dilutive potential ordinary shares[25](index=25&type=chunk) [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) Total assets slightly decreased, cash and cash equivalents reduced, but the debt-to-asset ratio improved, while total equity saw a minor decline due to fair value changes in other financial assets Abridged Consolidated Statement of Financial Position as of June 30, 2025 | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 446,271 | 451,948 | -1.3% | | Current Assets | 1,996,073 | 2,089,496 | -4.5% | | Current Liabilities | 1,430,667 | 1,517,166 | -5.7% | | Net Current Assets | 565,406 | 572,330 | -1.2% | | Total Assets less Current Liabilities | 1,011,677 | 1,024,278 | -1.2% | | Non-current Liabilities | 118,376 | 124,772 | -5.1% | | Net Assets | 893,301 | 899,506 | -0.7% | | Total Equity | 893,301 | 899,506 | -0.7% | | Cash and Cash Equivalents | 585,935 | 883,012 | -33.6% | | Debt-to-Asset Ratio | 63.4% | 64.6% | -1.2pp | [Assets](index=4&type=section&id=Assets) - Non-current assets decreased slightly, mainly due to fair value losses on investment properties and impairment of property, plant and equipment[6](index=6&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - Current assets **decreased by 4.5%**, primarily due to the allocation of some idle funds to time deposits with maturities over three months, as well as payments of prior-year dividends and supplier accounts[6](index=6&type=chunk)[61](index=61&type=chunk) [Liabilities](index=4&type=section&id=Liabilities) - Current liabilities **decreased by 5.7%** and non-current liabilities **decreased by 5.1%**, resulting in a decline in total liabilities[6](index=6&type=chunk)[7](index=7&type=chunk) - The debt-to-asset ratio improved from 64.6% as of December 31, 2024, to **63.4%**, indicating a slight improvement in financial leverage[61](index=61&type=chunk) [Equity](index=5&type=section&id=Equity) - Total equity **decreased slightly by 0.7%** to RMB 893.3 million, mainly affected by fair value changes in other financial assets[7](index=7&type=chunk)[61](index=61&type=chunk) [Business Review and Operational Analysis](index=7&type=section&id=Business%20Review%20and%20Operational%20Analysis) [Overall Business Performance](index=14&type=section&id=Overall%20Business%20Performance) Total revenue grew 17.5%, driven by growth across all three segments, with property management services remaining the primary contributor Revenue Breakdown by Business Segment for the Six Months Ended June 30, 2025 | Business Segment | 2025 (RMB Thousand) | Revenue Share (%) | 2024 (RMB Thousand) | Revenue Share (%) | Growth Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 745,627 | 71.3 | 615,433 | 69.2 | 21.2 | | Value-added Services to Non-property Owners | 122,836 | 11.8 | 106,083 | 11.9 | 15.8 | | Community Value-added Services | 176,624 | 16.9 | 168,106 | 18.9 | 5.1 | | Total | 1,045,087 | 100.0 | 889,622 | 100.0 | 17.5 | - The Group's total revenue **grew by 17.5%** year-on-year to RMB 1,045.1 million, driven by all three business segments[55](index=55&type=chunk) [Property Management Services](index=14&type=section&id=Property%20Management%20Services) Revenue from property management services grew 21.2% to RMB 745.6 million, driven by an expanded GFA of 47.4 million sq.m. and third-party market expansion - Revenue from property management services **grew by 21.2%** year-on-year to RMB 745.6 million, accounting for approximately **71.3% of total revenue**[34](index=34&type=chunk)[53](index=53&type=chunk) - GFA under management increased to **47.4 million sq.m.**, with GFA from third-party projects growing by **19.8%** to 24.9 million sq.m[35](index=35&type=chunk) - Newly signed GFA was approximately **2.6 million sq.m.**, a year-on-year increase of 5.6%; 28 new comprehensive property management projects were added, with third-party projects accounting for **89.3%**[36](index=36&type=chunk) [Revenue and GFA Under Management](index=14&type=section&id=Revenue%20and%20GFA%20Under%20Management) Details of GFA Under Management and Number of Projects for Property Management Services as of June 30, 2025 | Project Source | 2025 GFA (Thousand sq.m.) | 2025 Share (%) | 2025 No. of Projects | 2024 GFA (Thousand sq.m.) | 2024 Share (%) | 2024 No. of Projects | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Beijing Urban Construction Group and its JVs or associates | 22,478 | 47.5 | 140 | 22,677 | 52.2 | 144 | | Third Parties | 24,887 | 52.5 | 149 | 20,778 | 47.8 | 123 | | Total | 47,365 | 100.0 | 289 | 43,455 | 100.0 | 267 | - Revenue from non-residential property management services **grew significantly by 32.3%** to RMB 441.8 million, accounting for **59.2% of total property management service revenue**, indicating effective portfolio adjustment[37](index=37&type=chunk)[38](index=38&type=chunk) [Market Expansion and Project Types](index=15&type=section&id=Market%20Expansion%20and%20Project%20Types) - Newly acquired projects featured more high-quality large-scale projects, a leading position in administrative office properties, steady progress in university and research institute business, rapid expansion in rail transit projects, and the first-time expansion into the new museum property sector[37](index=37&type=chunk) Revenue, GFA, and Number of Projects for Property Management Services by Property Type as of June 30, 2025 | Property Type | 2025 Revenue (RMB Thousand) | 2025 Revenue Share (%) | 2025 GFA (Thousand sq.m.) | 2025 GFA Share (%) | 2025 No. of Projects | 2024 Revenue (RMB Thousand) | 2024 Revenue Share (%) | 2024 GFA (Thousand sq.m.) | 2024 GFA Share (%) | 2024 No. of Projects | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Residential Properties | 303,865 | 40.8 | 28,333 | 59.8 | 158 | 281,562 | 45.8 | 27,675 | 63.7 | 156 | | Non-residential Properties | 441,762 | 59.2 | 19,032 | 40.2 | 131 | 333,871 | 54.2 | 15,780 | 36.3 | 111 | | Total | 745,627 | 100.0 | 47,365 | 100.0 | 289 | 615,433 | 100.0 | 43,455 | 100.0 | 267 | [Service Quality and Operational Management](index=16&type=section&id=Service%20Quality%20and%20Operational%20Management) - The Group adhered to a "people-oriented" approach to enhance service quality, revised inspection standards for various property types, upgraded university service standards, and introduced a tiered service model for university property staffing[39](index=39&type=chunk) - In 2025, the Group's brand value achieved breakthrough growth, rising to **16th place** in the China Property Service Top 100 ranking and receiving over 20 awards[39](index=39&type=chunk) - In operational management, the company strengthened its project pre-planning mechanism, implemented lean management, and continued efforts in accounts receivable collection and governance of loss-making or inefficient projects[40](index=40&type=chunk) [Digitalization](index=17&type=section&id=Digitalization) - The overall plan for the company's digital platform construction was completed, integrating the "Jia Xiang Hui" platform with the finance-business integration platform, and adding modules such as visitor appointments and delivery personnel identity registration[40](index=40&type=chunk) - A "400 + online" dual-dimensional satisfaction survey system was established, and a smart dormitory management system was launched in school projects, enriching personalized application scenarios[40](index=40&type=chunk) [Value-added Services to Non-property Owners](index=17&type=section&id=Value-added%20Services%20to%20Non-property%20Owners) Revenue from these services grew 15.8% to RMB 122.8 million, driven by engineering, sales office, and other services, though tenant and construction site services declined - Revenue from value-added services to non-property owners **grew by 15.8%** year-on-year to RMB 122.8 million, accounting for approximately **11.8% of total revenue**[41](index=41&type=chunk)[44](index=44&type=chunk)[53](index=53&type=chunk) [Service Types and Revenue](index=17&type=section&id=Service%20Types%20and%20Revenue) Revenue Breakdown for Value-added Services to Non-property Owners for the Six Months Ended June 30, 2025 | Service Type | 2025 Revenue (RMB Thousand) | 2025 Revenue Share (%) | 2024 Revenue (RMB Thousand) | 2024 Revenue Share (%) | | :--- | :--- | :--- | :--- | :--- | | Engineering, Operation and Maintenance Services | 43,577 | 35.5 | 35,047 | 33.0 | | Tenant Sourcing and Management Services | 16,754 | 13.6 | 26,772 | 25.2 | | Sales Office and Showroom Management and Delivery Services | 26,383 | 21.5 | 17,894 | 16.9 | | Construction Site Property and Modular Housing Leasing Services | 7,498 | 6.1 | 11,134 | 10.5 | | Other Services | 28,624 | 23.3 | 15,236 | 14.4 | | Total | 122,836 | 100.0 | 106,083 | 100.0 | [Engineering, Operation and Maintenance Services](index=18&type=section&id=Engineering,%20Operation%20and%20Maintenance%20Services) - Revenue from engineering, operation and maintenance services **grew by 24.3%** year-on-year to RMB 43.6 million, mainly benefiting from a continuous increase in IFM service projects and new client acquisition[44](index=44&type=chunk) - The Group secured 7 new clients from government, corporate, university, and hospital sectors, and explored IFM and energy management to reduce building energy consumption and carbon emissions through technology[44](index=44&type=chunk) [Tenant Sourcing and Management Services](index=18&type=section&id=Tenant%20Sourcing%20and%20Management%20Services) - Revenue from tenant sourcing and management services was RMB 16.8 million, accounting for approximately **13.6% of revenue** from value-added services to non-property owners[45](index=45&type=chunk) - Amid low vacancy rates in the office market, the company increased customer stickiness through diversified marketing initiatives and enhanced services[45](index=45&type=chunk) [Sales Office and Showroom Management and Delivery Services](index=18&type=section&id=Sales%20Office%20and%20Showroom%20Management%20and%20Delivery%20Services) - Revenue from sales office and showroom management and delivery services **grew by 47.4%** year-on-year to RMB 26.4 million, mainly due to service extensions and new project acquisitions[45](index=45&type=chunk) - Services covered 30 projects across multiple regions including Beijing, Hebei, Sichuan, Chongqing, and Hainan, demonstrating strengthening market expansion and service capabilities[45](index=45&type=chunk) [Construction Site Property and Modular Housing Leasing Services](index=19&type=section&id=Construction%20Site%20Property%20and%20Modular%20Housing%20Leasing%20Services) - Revenue from construction site property and modular housing leasing services **decreased by 32.7%** year-on-year to RMB 7.5 million, mainly due to the completion of key projects and a decline in market rents for modular housing[46](index=46&type=chunk) - The company is focusing on service innovation, strengthening market penetration, and seeking to utilize existing modular housing to build and operate "Builders' Homes" projects to increase revenue[46](index=46&type=chunk) [Other Value-added Services to Non-property Owners](index=19&type=section&id=Other%20Value-added%20Services%20to%20Non-property%20Owners) - Other non-property owner services revenue achieved **significant growth of 87.9%** to RMB 28.6 million, primarily driven by specialized cleaning and landscaping engineering services, particularly for metro projects[46](index=46&type=chunk) [Community Value-added Services](index=19&type=section&id=Community%20Value-added%20Services) Revenue grew 5.1% to RMB 176.6 million, driven by the promotion of livelihood-related businesses and exploration of community facility renewal services - Revenue from community value-added services **grew by 5.1%** year-on-year to RMB 176.6 million, accounting for approximately **16.9% of total revenue**[47](index=47&type=chunk)[49](index=49&type=chunk)[53](index=53&type=chunk) - The growth was mainly due to the company's increased promotion of livelihood-related businesses within community value-added services and the gradual exploration of community facility and equipment renewal services[49](index=49&type=chunk) [Service Types and Revenue](index=19&type=section&id=Service%20Types%20and%20Revenue) Revenue Breakdown for Community Value-added Services for the Six Months Ended June 30, 2025 | Service Type | 2025 Revenue (RMB Thousand) | 2025 Revenue Share (%) | 2024 Revenue (RMB Thousand) | 2024 Revenue Share (%) | | :--- | :--- | :--- | :--- | :--- | | Heating Services | 76,625 | 43.4 | 75,824 | 45.1 | | Catering Services | 37,965 | 21.5 | 42,122 | 25.1 | | Car Park Operation Services | 35,476 | 20.1 | 32,017 | 19.0 | | Other Services | 26,558 | 15.0 | 18,143 | 10.8 | | Total | 176,624 | 100.0 | 168,106 | 100.0 | [Heating Services](index=20&type=section&id=Heating%20Services) - Revenue from heating services **grew by 1.1%** year-on-year to RMB 76.6 million, accounting for approximately **43.4% of community value-added services**[49](index=49&type=chunk) - The Group provided heating operation services for 36 projects, with a total heating area of nearly **4.73 million sq.m.**, covering over 38,000 households[49](index=49&type=chunk) - The company continued to improve heating equipment upgrades and renovations, using technology for energy saving and emission reduction, and exploring intelligent variable frequency heating management[49](index=49&type=chunk) [Catering Services](index=20&type=section&id=Catering%20Services) - Revenue from catering services **decreased by 9.9%** year-on-year to RMB 38.0 million, mainly affected by changes in client budgets and demand[50](index=50&type=chunk) - The Group signed 2 new group catering projects and continued to provide catering services to ByteDance Group, enhancing its professional capabilities and market competitiveness[50](index=50&type=chunk) [Car Park Operation Services and Other Community Value-added Services](index=21&type=section&id=Car%20Park%20Operation%20Services%20and%20Other%20Community%20Value-added%20Services) - Revenue from car park operation services and other community value-added services **grew by 23.7%** to RMB 62.0 million[51](index=51&type=chunk) - The growth was mainly driven by the promotion of livelihood-related businesses, existing home improvement services (revenue of nearly RMB 6.0 million), and exploration of community renewal businesses (revenue of nearly RMB 4.0 million)[51](index=51&type=chunk) - The Group is actively exploring entry into the community elderly care service sector to meet customer needs and achieve business growth[51](index=51&type=chunk) [Financial Position and Liquidity](index=23&type=section&id=Financial%20Position%20and%20Liquidity) [Current Assets and Capital Structure](index=23&type=section&id=Current%20Assets%20and%20Capital%20Structure) The Group maintains a sound financial position, though cash decreased due to fund allocation to time deposits, dividend payments, and industry payment cycles - Current assets were approximately RMB 1,996.1 million, a **decrease of 4.5%** from December 31, 2024[61](index=61&type=chunk) - Cash and cash equivalents were approximately RMB 585.9 million, a **decrease of 33.6%** from December 31, 2024[61](index=61&type=chunk) - The decrease in cash was mainly due to the allocation of some idle funds to time deposits with maturities over three months, payment of prior-year dividends and supplier accounts, and the industry practice of customers paying property fees in the second half of the year[61](index=61&type=chunk) [Property, Plant and Equipment and Right-of-use Assets](index=23&type=section&id=Property,%20Plant%20and%20Equipment%20and%20Right-of-use%20Assets) These assets decreased by RMB 14.6 million, primarily due to increased depreciation and an impairment loss recognized on modular housing equipment - Property, plant and equipment and right-of-use assets were approximately RMB 185.2 million, a **decrease of RMB 14.6 million** from December 31, 2024[62](index=62&type=chunk) - The decrease was mainly due to increased depreciation and an impairment loss recognized on modular housing equipment[62](index=62&type=chunk) [Investment Properties](index=24&type=section&id=Investment%20Properties) Investment properties decreased by RMB 1.9 million, primarily attributable to fair value changes in investment real estate properties - Investment properties were approximately RMB 105.6 million, a **decrease of RMB 1.9 million** from December 31, 2024[63](index=63&type=chunk) - The decrease was mainly attributable to fair value changes in investment real estate properties[63](index=63&type=chunk) [Trade and Other Receivables and Prepayments](index=11&type=section&id=Trade%20and%20Other%20Receivables%20and%20Prepayments) These balances increased by RMB 103.9 million, mainly due to industry payment cycles and increased bid deposits and utility advances from market expansion - Trade and other receivables and prepayments were approximately RMB 901.5 million, an **increase of RMB 103.9 million** from December 31, 2024[27](index=27&type=chunk)[64](index=64&type=chunk) - The increase was mainly due to the industry practice of customers paying property fees in the second half of the year, leading to higher trade receivables[64](index=64&type=chunk) - The increase in other receivables was primarily due to higher bid deposits from market expansion and increased advances for water, electricity, and gas fees from business growth[64](index=64&type=chunk) Details of Trade and Other Receivables and Prepayments as of June 30, 2025 | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Trade Receivables (net of provision) | 822,607 | 699,608 | | Amounts due from related parties | 14,075 | 16,018 | | Interest Receivable | 3,338 | 2,400 | | Deposits | 23,433 | 18,865 | | Other Receivables (net of provision) | 10,189 | 9,357 | | Prepayments | 13,888 | 38,175 | | Deductible VAT input tax | 14,971 | 14,166 | | **Total** | **901,493** | **797,560** | [Trade and Other Payables](index=12&type=section&id=Trade%20and%20Other%20Payables) These balances decreased by RMB 34.2 million, mainly due to payments made to suppliers during the reporting period - Trade and other payables were approximately RMB 1,013.6 million, a **decrease of RMB 34.2 million** from December 31, 2024[29](index=29&type=chunk)[65](index=65&type=chunk) - The decrease was mainly due to payments made to suppliers during the reporting period[65](index=65&type=chunk) Details of Trade and Other Payables as of June 30, 2025 | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Trade Payables | 591,821 | 600,963 | | Amounts due to related parties | 10,243 | 8,064 | | Accrued wages and other benefits | 23,069 | 20,071 | | Other taxes and charges payable | 45,105 | 52,393 | | Deposits | 57,433 | 62,875 | | Receipts in advance | 86,894 | 80,017 | | Housing maintenance funds payable | 131,273 | 156,376 | | Other payables and accrued expenses | 67,797 | 67,067 | | **Total** | **1,013,635** | **1,047,826** | [Capital Expenditure](index=24&type=section&id=Capital%20Expenditure) Capital expenditure decreased by 39.0% year-on-year to RMB 6.9 million, mainly due to reduced payments for modular housing purchases - Capital expenditure was approximately RMB 6.9 million, a **decrease of 39.0%** from RMB 11.3 million in the same period of 2024[66](index=66&type=chunk) - The decrease was mainly due to reduced payments for modular housing purchases; capital expenditure in the current period was primarily for office equipment[66](index=66&type=chunk) [Borrowings and Pledge of Assets](index=24&type=section&id=Borrowings%20and%20Pledge%20of%20Assets) As of the end of the reporting period, the Group had no borrowings or bank loans and had not pledged any assets, indicating a sound financial structure - As of the end of the reporting period, the Group had **no borrowings or bank loans**[67](index=67&type=chunk) - As of the end of the reporting period, the Group had **not pledged any assets**[68](index=68&type=chunk) [Other Important Information](index=25&type=section&id=Other%20Important%20Information) [Material Investments, Acquisitions and Disposals, and Future Plans](index=25&type=section&id=Material%20Investments,%20Acquisitions%20and%20Disposals,%20and%20Future%20Plans) The Group had no material investments, acquisitions, or disposals during the period and will continue to seek new business development opportunities - During the reporting period, the Group had **no material investments, acquisitions, or disposals**[69](index=69&type=chunk) - The Board has not approved other material investments or acquisitions or disposals of material capital assets but will continue to seek new opportunities for business development[69](index=69&type=chunk) [Use of Proceeds from Listing](index=25&type=section&id=Use%20of%20Proceeds%20from%20Listing) Net proceeds of approximately HK$246.91 million from the H-share listing have been utilized as planned, with the remainder held in interest-bearing deposits - The net proceeds from the listing were approximately **HK$246.91 million**[70](index=70&type=chunk) - As of December 16, 2024, the Board approved a change in the proposed use of approximately HK$151.73 million of unutilized proceeds[70](index=70&type=chunk) - As of the end of the reporting period, the proceeds have been used as planned, and the unused portion has been placed as interest-bearing deposits in domestic fundraising bank accounts[70](index=70&type=chunk) Details on the Use of Proceeds from Listing as of June 30, 2025 | Original Planned Use | Original Planned Amount (HK$ Million) | Unutilized Proceeds as of Dec 31, 2024 (HK$ Million) | Revised Use | Actual Amount Used for the Six Months Ended June 30, 2025 (HK$ Million) | Unutilized Proceeds as of June 30, 2025 (HK$ Million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Strategic investments and acquisitions | 148.15 | 91.04 | Strategic investments and acquisitions | 17.40 | 73.64 | | Enhancing digital and intelligent management systems | 24.69 | 15.17 | Enhancing digital and intelligent management systems | 1.25 | 13.92 | | Expanding value-added services | 12.35 | 7.59 | Expanding value-added services | 0.63 | 6.96 | | Working capital and general corporate purposes | 61.73 | 37.93 | Working capital and general corporate purposes | 3.48 | 34.45 | | **Total** | **246.91** | **151.73** | **Total** | **22.76** | **128.97** | [Contingent Liabilities and Foreign Exchange Risk](index=27&type=section&id=Contingent%20Liabilities%20and%20Foreign%20Exchange%20Risk) The Group had no significant contingent liabilities and does not expect significant foreign exchange risk as its operations are primarily conducted in RMB - As of the end of the reporting period, the Group had **no significant contingent liabilities**[72](index=72&type=chunk) - The Group conducts its business in RMB and does not expect to face significant risks related to exchange rate fluctuations; it currently does not employ a foreign exchange hedging policy[73](index=73&type=chunk) [Events After the Reporting Period](index=27&type=section&id=Events%20After%20the%20Reporting%20Period) No significant events that could materially affect the Group's operational and financial performance have occurred since the end of the reporting period - Other than disclosed in this announcement, no significant events that could materially affect the Group's operational and financial performance occurred between the end of the reporting period and the date of this announcement[74](index=74&type=chunk) [Employees and Remuneration Policy](index=27&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 1,869 employees and maintains a competitive, performance-oriented remuneration plan with comprehensive benefits - As of June 30, 2025, the Group had **1,869 employees** (December 31, 2024: 1,871)[75](index=75&type=chunk) - The company has established a market-based, competitive, and performance-oriented remuneration plan, providing comprehensive benefits such as pensions and medical insurance[75](index=75&type=chunk) - The company emphasizes recruiting outstanding talent, providing continuous training programs and career development opportunities to build teams of executives, project managers, and professional talents[75](index=75&type=chunk) [Corporate Governance and Securities Transactions](index=27&type=section&id=Corporate%20Governance%20and%20Securities%20Transactions) The company has adopted and complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors as set out in the Listing Rules - The company has adopted and complied with the Corporate Governance Code contained in Appendix C1 of the Listing Rules of the Stock Exchange[76](index=76&type=chunk) - The company has adopted and complied with the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix C3 of the Listing Rules, and all directors have confirmed compliance[77](index=77&type=chunk) [Review of Accounts and Dividend](index=28&type=section&id=Review%20of%20Accounts%20and%20Dividend) The Audit Committee has reviewed the unaudited interim results, and the Board does not recommend the payment of an interim dividend for the period - The Audit Committee has reviewed the unaudited interim results for the six months ended June 30, 2025, and considers them to be in compliance with applicable accounting standards[80](index=80&type=chunk) - The Board of Directors **does not recommend the payment of an interim dividend** for the six months ended June 30, 2025[81](index=81&type=chunk) [Publication of Interim Results](index=28&type=section&id=Publication%20of%20Interim%20Results) The interim results announcement is available on the company's and the Stock Exchange's websites, with the interim report to be dispatched to shareholders in due course - The interim results announcement has been published on the company's website (www.bcjps.com) and the Stock Exchange's website (www.hkexnews.hk)[82](index=82&type=chunk) - The interim report will be dispatched to the company's shareholders and published on the aforementioned websites in due course[82](index=82&type=chunk)

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) This report presents the unaudited interim condensed consolidated financial statements and management's discussion and analysis for the six months ended June 30, 2025 [Disclaimer](index=1&type=section&id=Disclaimer) HKEX and HKSE are not responsible for the content's accuracy or completeness and disclaim liability for any losses incurred from reliance on this announcement - HKEX is not responsible for the content, accuracy, or completeness of this announcement, and disclaims liability for any losses[1](index=1&type=chunk) [Company Information](index=1&type=section&id=Company%20Information) China Boton Group Company Limited's Board approved the unaudited interim condensed consolidated financial statements for the six months ended June 30, 2025, reviewed by the Audit Committee - China Boton Group Company Limited (Stock Code: 3318) Board approved the unaudited interim condensed consolidated financial statements for the six months ended June 30, 2025[2](index=2&type=chunk) - The interim financial statements have been reviewed by the Company's Audit Committee[2](index=2&type=chunk) [Unaudited Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents China Boton Group's unaudited interim condensed consolidated financial statements for the six months ended June 30, 2025, including the balance sheet, income statement, and comprehensive income statement [Interim Condensed Consolidated Balance Sheet](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2025, the Group's total assets slightly increased, driven by non-current asset growth, while current assets decreased; total liabilities and equity remained relatively stable Interim Condensed Consolidated Balance Sheet (RMB thousands) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | **Assets** | | | | Non-current assets | 4,590,960 | 4,434,214 | | Current assets | 1,719,706 | 1,863,711 | | **Total Assets** | **6,310,666** | **6,297,925** | | **Equity** | | | | Attributable to owners of the Company | 3,133,854 | 3,140,955 | | Non-controlling interests | 277,609 | 268,323 | | **Total Equity** | **3,411,463** | **3,409,278** | | **Liabilities** | | | | Non-current liabilities | 1,246,529 | 1,071,645 | | Current liabilities | 1,652,674 | 1,817,002 | | **Total Liabilities** | **2,899,203** | **2,888,647** | - Non-current assets increased, primarily driven by growth in property, plant, and equipment[3](index=3&type=chunk) - Current assets decreased, mainly due to reductions in inventories, trade and other receivables, and cash and cash equivalents[3](index=3&type=chunk) [Interim Condensed Consolidated Income Statement](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Income%20Statement) For the six months ended June 30, 2025, the Group's revenue and gross profit significantly declined, leading to a substantial decrease in profit for the period and a loss attributable to owners Interim Condensed Consolidated Income Statement (RMB thousands) | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 637,753 | 750,975 | | Cost of sales | (438,894) | (445,344) | | Gross profit | 198,859 | 305,631 | | Operating profit | 33,725 | 109,237 | | Profit before income tax | 10,840 | 81,230 | | Profit for the period | 8,707 | 62,682 | | Attributable to owners of the Company | (8,119) | 44,332 | | Basic and diluted (loss)/earnings per share (RMB) | (0.01) | 0.04 | - Revenue decreased by **15.1% year-on-year**, and gross profit decreased by **34.9% year-on-year**[5](index=5&type=chunk) - Profit for the period significantly decreased by **86.1% year-on-year**, with profit attributable to owners of the Company turning into a loss[5](index=5&type=chunk) [Interim Condensed Consolidated Statement of Comprehensive Income](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's total comprehensive income significantly decreased, mainly due to reduced profit for the period and changes in currency translation differences, resulting in a loss attributable to owners Interim Condensed Consolidated Statement of Comprehensive Income (RMB thousands) | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the period | 8,707 | 62,682 | | Currency translation differences | 2,604 | (3,292) | | Total comprehensive income for the period | 11,311 | 59,390 | | Attributable to owners of the Company | (4,875) | 42,461 | - Total comprehensive income for the period decreased by **80.9% year-on-year**, with the portion attributable to owners of the Company turning into a loss[7](index=7&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the interim condensed consolidated financial statements, covering company information, accounting policies, financial risk management, key estimates, segment information, and specific balance sheet and income statement items [General Information](index=6&type=section&id=General%20Information) China Boton Group, established in Cayman Islands in 2005 and listed on HKEX, primarily produces and sells flavors, fragrances, and e-cigarette products in China and Asia, with interim financial information presented in RMB - The Group's principal business involves the production and sale of flavors, fragrances, and e-cigarette products[8](index=8&type=chunk) - The Company was incorporated in the Cayman Islands on March 9, 2005, and listed on the Hong Kong Stock Exchange on December 9, 2005[8](index=8&type=chunk)[9](index=9&type=chunk) - The interim financial information is presented in **RMB** and was approved for issue by the Board on August 22, 2025[10](index=10&type=chunk)[11](index=11&type=chunk) [Basis of Preparation and Changes in Accounting Policies](index=6&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) The interim financial statements are prepared in accordance with HKAS 34 and should be read with the annual financial statements; new and revised standards adopted have no material impact - The interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA[13](index=13&type=chunk) - The adoption of new and revised standards by the Group had no material impact on the financial performance and position for the current and prior periods[14](index=14&type=chunk) - Standards issued but not yet effective are not expected to have a significant impact on the entity in current or future reporting periods[15](index=15&type=chunk) [Financial Risk Management](index=7&type=section&id=Financial%20Risk%20Management) The Group faces market risks (exchange rate, interest rate), credit risk, and liquidity risk, with full details available in the annual financial statements - The Group is exposed to market risks (foreign exchange, fair value interest rate, cash flow interest rate), credit risk, and liquidity risk[16](index=16&type=chunk) - The interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2024, for complete financial risk management information[16](index=16&type=chunk) [Critical Accounting Estimates and Judgments](index=7&type=section&id=Critical%20Accounting%20Estimates%20and%20Judgments) Preparing interim financial statements involves management judgments, estimates, and assumptions, which may differ from actual results, with significant judgments consistent with the prior annual consolidated financial statements - The preparation of interim financial statements requires management to make judgments, estimates, and assumptions, and actual results may differ[17](index=17&type=chunk) - The significant judgments made during this period are consistent with those applied in the consolidated financial statements for the year ended December 31, 2024[17](index=17&type=chunk) [Revenue and Segment Information](index=8&type=section&id=Revenue%20and%20Segment%20Information) The Group operates in five segments: flavor enhancers, food flavors, daily use flavors, e-cigarette products, and investment properties; total revenue decreased year-on-year, primarily due to a significant decline in flavor enhancers - The Group's business is divided into five segments: flavor enhancers, food flavors, daily use flavors, e-cigarette products, and investment properties[18](index=18&type=chunk) Segment Revenue (RMB thousands) | Segment | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Flavor enhancers | 179,463 | 308,057 | -41.7% | | Food flavors | 93,051 | 90,286 | +3.1% | | Daily use flavors | 73,115 | 69,567 | +5.0% | | E-cigarette products | 267,233 | 256,132 | +4.3% | | Investment properties | 24,891 | 26,933 | -7.6% | | **Total** | **637,753** | **750,975** | **-15.1%** | - The flavor enhancers segment's operating profit turned from profit to loss, and the e-cigarette products segment's loss widened[20](index=20&type=chunk)[22](index=22&type=chunk) [Property, Plant and Equipment and Intangible Assets](index=10&type=section&id=Property%2C%20Plant%20and%20Equipment%20and%20Intangible%20Assets) As of June 30, 2025, the Group's net book value of property, plant, and equipment increased, while intangible assets slightly decreased, with a significant increase in additions to property, plant, and equipment during the period Property, Plant and Equipment and Intangible Assets (RMB thousands) | Indicator | June 30, 2025 (RMB thousands) | January 1, 2024 (RMB thousands) | | :--- | :--- | :--- | | Net book value of property, plant and equipment at period end | 2,164,053 | 1,528,866 | | Net book value of intangible assets at period end | 1,597,156 | 1,721,629 | | Additions to property, plant and equipment (current period) | 204,622 | 72,496 | - Additions to property, plant, and equipment for the six months ended June 30, 2025, amounted to **RMB 204,622 thousands**, significantly higher than **RMB 72,496 thousands** in the same period last year[23](index=23&type=chunk) [Leases](index=10&type=section&id=Leases) As of June 30, 2025, both right-of-use assets and lease liabilities increased, along with higher depreciation and interest expenses for right-of-use assets during the period Lease Information (RMB thousands) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Right-of-use assets | 156,771 | 152,934 | | Lease liabilities | 15,356 | 9,879 | Lease Expenses (RMB thousands) | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Depreciation expense for right-of-use assets | 5,630 | 4,227 | | Interest expense | 445 | 195 | - Lease liabilities (current and non-current) increased from **RMB 9,879 thousands** as of December 31, 2024, to **RMB 15,356 thousands** as of June 30, 2025[24](index=24&type=chunk) [Trade and Other Receivables](index=11&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, both net trade receivables and other receivables decreased, primarily due to a reduction in trade receivables, particularly those less than three months old Trade and Other Receivables (RMB thousands) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables – net | 385,511 | 466,841 | | Other receivables – net | 489,653 | 473,222 | | **Total** | **875,808** | **938,946** | Aging Analysis of Trade Receivables (RMB thousands) | Aging of Trade Receivables | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Less than three months | 208,247 | 300,331 | | Over three months but not over one year | 153,163 | 149,314 | | Over one year | 267,746 | 265,288 | - Net trade receivables decreased from **RMB 466,841 thousands** to **RMB 385,511 thousands**, mainly due to a reduction in trade receivables aged less than three months[26](index=26&type=chunk)[27](index=27&type=chunk) - Trade bills are due within six months[27](index=27&type=chunk) [Share Capital](index=12&type=section&id=Share%20Capital) As of June 30, 2025, the Company's issued and fully paid ordinary share capital remained unchanged, with 1,080,512 thousand shares outstanding Share Capital (RMB thousands) | Indicator | June 30, 2025 (thousand shares) | Share Capital (RMB thousands) | Share Premium (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Issued ordinary shares | 1,080,512 | 101,522 | 1,292,432 | 1,393,954 | - The share capital structure remained unchanged from January 1, 2024, to June 30, 2025[29](index=29&type=chunk) [Shares Held Under Share Award Scheme](index=12&type=section&id=Shares%20Held%20Under%20Share%20Award%20Scheme) The Company adopted a share award scheme on December 11, 2023, to reward employees; as of June 30, 2025, 500,000 shares held by the trustee remained unawarded, with no shares awarded during the period - The Company adopted a share award scheme on December 11, 2023, to reward employees or service providers who have contributed to the Company and its subsidiaries[30](index=30&type=chunk) - No shares were awarded under the share award scheme for the six months ended June 30, 2025[30](index=30&type=chunk) - As of June 30, 2025, the trustee held **500,000 shares** that had not yet been awarded[30](index=30&type=chunk) [Trade and Other Payables](index=13&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables significantly decreased, primarily due to reductions in trade payables, accrued wages, and other payables Trade and Other Payables (RMB thousands) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 292,667 | 432,587 | | Payables for consolidated businesses | 150,000 | 150,000 | | Accrued wages | 14,720 | 44,447 | | Other taxes payable | 27,543 | 35,136 | | Amount due to a related party | 27,470 | — | | **Total** | **629,461** | **807,141** | Aging Analysis of Trade Payables (RMB thousands) | Aging of Trade Payables | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Less than three months | 133,881 | 290,632 | - Total trade payables decreased from **RMB 432,587 thousands** to **RMB 292,667 thousands**, with the largest decrease in trade payables aged less than three months[31](index=31&type=chunk)[32](index=32&type=chunk) - A new amount due to a related party of **RMB 27,470 thousands** is unsecured, repayable on demand, and interest-free[31](index=31&type=chunk)[32](index=32&type=chunk) [Borrowings](index=14&type=section&id=Borrowings) As of June 30, 2025, the Group's total borrowings increased, mainly driven by the growth in non-current secured bank borrowings, primarily denominated in RMB and collateralized by various assets and guarantees Borrowings (RMB thousands) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current borrowings | 1,133,013 | 955,904 | | Current borrowings | 906,648 | 894,086 | | **Total Borrowings** | **2,039,661** | **1,849,990** | Borrowings by Currency (RMB thousands) | Borrowing Currency | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | RMB | 1,804,455 | 1,605,911 | | HKD | 235,206 | 244,079 | - Total borrowings increased by **RMB 189,671 thousands**, with non-current borrowings increasing by **RMB 177,109 thousands**[33](index=33&type=chunk) - Bank borrowings are secured by property, plant and machinery, investment properties, bank deposits, land use rights, 100% equity interest in Shenzhen Boton, personal guarantees from the Chairman, and corporate guarantees[38](index=38&type=chunk) [Revenue Details](index=15&type=section&id=Revenue%20Details) The Group's revenue primarily derives from goods sales and rental income; for the six months ended June 30, 2025, both sources experienced a decline Revenue by Source (RMB thousands) | Revenue Source | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Sales of goods | 612,862 | 724,042 | | Rental income | 24,891 | 26,933 | | **Total Revenue** | **637,753** | **750,975** | - Revenue from sales of goods decreased by **15.3% year-on-year**, and rental income decreased by **7.6% year-on-year**[36](index=36&type=chunk) [Other Income](index=15&type=section&id=Other%20Income) For the six months ended June 30, 2025, the Group's other income decreased year-on-year, mainly due to a reduction in government grants and other miscellaneous income Other Income (RMB thousands) | Income Source | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Government grants | 1,239 | 1,306 | | Others | 221 | 938 | | **Total** | **1,460** | **2,244** | - Other income decreased by **34.9% year-on-year**[37](index=37&type=chunk) [Other Gains - Net](index=16&type=section&id=Other%20Gains%20-%20Net) For the six months ended June 30, 2025, the Group's other gains – net significantly decreased, primarily due to a reduction in other gains Other Gains - Net (RMB thousands) | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Fair value loss on investment properties | (400) | (400) | | Others | 583 | 2,938 | | **Total** | **183** | **2,538** | - Other gains – net decreased by **92.8% year-on-year**[39](index=39&type=chunk) [Expenses by Nature](index=16&type=section&id=Expenses%20by%20Nature) For the six months ended June 30, 2025, total expenses decreased, mainly due to lower raw materials and consumables used, employee benefit expenses, and consulting fees, despite a significant increase in advertising expenses Expenses by Nature (RMB thousands) | Expense Item | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Depreciation and amortization | 58,207 | 56,326 | | Employee benefit expenses | 91,466 | 96,929 | | Raw materials and consumables used | 348,588 | 405,999 | | Advertising expenses | 6,951 | 2,448 | | Consulting fees | 15,583 | 24,107 | | **Total Expenses** | **610,050** | **637,468** | - Raw materials and consumables used decreased by **14.2% year-on-year**, and employee benefit expenses decreased by **5.6% year-on-year**[40](index=40&type=chunk) - Advertising expenses significantly increased by **183.9% year-on-year**[40](index=40&type=chunk) [Finance Income and Costs](index=17&type=section&id=Finance%20Income%20and%20Costs) For the six months ended June 30, 2025, the Group's net finance income and costs both decreased, primarily due to reduced interest income, increased exchange gains, and changes in capitalized amounts Finance Income and Costs (RMB thousands) | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Finance income – interest income | 621 | 2,306 | | Finance costs – interest expense | (34,879) | (34,456) | | Finance costs – exchange gains | 3,582 | 737 | | Finance costs – net | (22,885) | (28,007) | - Interest income decreased by **73.1% year-on-year**, while exchange gains significantly increased by **385.8% year-on-year**[42](index=42&type=chunk) - Net finance costs decreased by **18.3% year-on-year**[42](index=42&type=chunk) [Income Tax Expense](index=17&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, the Group's income tax expense significantly decreased, mainly due to lower current and deferred income taxes, with some high-tech subsidiaries enjoying a preferential tax rate of 15% Income Tax Expense (RMB thousands) | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Current income tax | 10,570 | 31,464 | | Deferred income tax | (8,437) | (12,916) | | **Total** | **2,133** | **18,548** | - Income tax expense significantly decreased by **88.5% year-on-year**[43](index=43&type=chunk) - Certain Chinese subsidiaries, as high-tech enterprises, enjoy a preferential tax rate of **15%**[43](index=43&type=chunk) [Earnings Per Share](index=18&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, profit attributable to owners of the Company turned into a loss, resulting in basic and diluted earnings per share shifting from profit to loss Earnings Per Share | Indicator | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company (RMB thousands) | (8,119) | 44,332 | | Weighted average number of ordinary shares outstanding (thousand shares) | 1,080,012 | 1,080,493 | | Basic (loss)/earnings per share (RMB per share) | (0.01) | 0.04 | - Basic and diluted earnings per share turned from a profit of **RMB 0.04** in the prior period to a loss of **RMB 0.01** per share in the current period[45](index=45&type=chunk) - Diluted earnings per share are the same as basic earnings per share, as there were no potential dilutive effects in the current or prior periods[46](index=46&type=chunk) [Dividends](index=18&type=section&id=Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board does not recommend an interim dividend for the six months ended June 30, 2025[47](index=47&type=chunk) [Contingent Liabilities (Financial Notes)](index=18&type=section&id=Contingent%20Liabilities%20%28Financial%20Notes%29) As of June 30, 2025, the Company is involved in a legal dispute regarding the outstanding consideration of RMB 150,000,000 for the Kimree acquisition, with the outcome currently not reasonably estimable - The Company is involved in a legal dispute with one of the vendors of the Kimree acquisition, concerning outstanding consideration of **RMB 150,000,000**[48](index=48&type=chunk) - This outstanding consideration has been accrued and included in "Trade and other payables"[48](index=48&type=chunk) - The case is still in its early stages, and management cannot reasonably estimate the outcome[48](index=48&type=chunk) [Commitments](index=19&type=section&id=Commitments) As of June 30, 2025, the Group's capital commitments significantly decreased, while short-term lease-related commitments slightly declined Commitments (RMB thousands) | Commitment Type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Contracted but not provided for property, plant and equipment | 21,724 | 188,898 | | Short-term lease-related commitments (within one year) | 174 | 412 | - Capital commitments for property, plant, and equipment significantly decreased from **RMB 188,898 thousands** to **RMB 21,724 thousands**[49](index=49&type=chunk) [Related Party Transactions](index=19&type=section&id=Related%20Party%20Transactions) For the six months ended June 30, 2025, the Group did not enter into any significant related party transactions, consistent with the prior year - No significant related party transactions were entered into for the six months ended June 30, 2025[51](index=51&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business performance, financial position, market challenges, and future outlook for the reporting period, highlighting significant declines in revenue and net profit due to business downturns and economic uncertainties [Principal Activities of the Group](index=20&type=section&id=Principal%20Activities%20of%20the%20Group) The Group primarily designs and manufactures high-quality e-cigarette products and produces, trades, and sells extracts, flavors, and fragrances globally across various industries - The Group's core businesses include e-cigarette products (disposable, rechargeable, and accessories) and flavor and fragrance products (flavor enhancers, food flavors, daily use flavors)[52](index=52&type=chunk) - E-cigarette products are primarily sold to tobacco companies, independent e-cigarette manufacturers, and customers under various brands[52](index=52&type=chunk) - Flavor products are sold to industries such as tobacco, beverages, and daily food, while fragrance products are sold to beauty products, perfumes, and soaps[52](index=52&type=chunk) [Business Review](index=20&type=section&id=Business%20Review) The reporting period saw a complex global economy, international trade disruptions, and shifting consumption patterns, leading to challenges like rising production costs and regulatory tightening, which the Group addressed through cost control and automation - The global economy is complex, with international trade severely impacted by prolonged wars and geopolitical tensions, affecting consumption patterns[53](index=53&type=chunk) - E-cigarette product production costs increased, labor costs rose, and tariff uncertainties hindered overseas expansion[53](index=53&type=chunk) - The Group's total revenue decreased by **15.1% year-on-year** to **RMB 637.8 million**, gross profit decreased by **34.9% year-on-year** to **RMB 198.9 million**, and net profit for the period significantly decreased by **86.1% year-on-year** to **RMB 8.7 million**[53](index=53&type=chunk) [Segment Revenue Breakdown](index=21&type=section&id=Segment%20Revenue%20Breakdown) For the six months ended June 30, 2025, flavor enhancers revenue significantly declined by 41.7%, while food flavors, daily use flavors, and e-cigarette products saw slight increases, and investment property revenue decreased marginally Segment Revenue Breakdown (RMB millions) | Segment | 2025 Revenue (RMB millions) | % of Total Revenue | 2024 Revenue (RMB millions) | % of Total Revenue | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Flavor enhancers | 179.5 | 28.1% | 308.1 | 41.0% | -41.7% | | Food flavors | 93.1 | 14.6% | 90.3 | 12.0% | +3.1% | | Daily use flavors | 73.1 | 11.5% | 69.6 | 9.3% | +5.0% | | E-cigarette products | 267.2 | 41.9% | 256.1 | 34.1% | +4.3% | | Investment properties | 24.9 | 3.9% | 26.9 | 3.6% | -7.4% | | **Total** | **637.8** | **100.0%** | **751.0** | **100.0%** | **-15.1%** | - The **41.7% significant decrease** in flavor enhancers revenue was the primary reason for the overall revenue decline[54](index=54&type=chunk) - E-cigarette products became the largest revenue contributing segment, accounting for **41.9%**[54](index=54&type=chunk) [Flavor Enhancers Business Review](index=21&type=section&id=Flavor%20Enhancers%20Business%20Review) Flavor enhancers revenue significantly decreased by 41.7% due to intense competition, rising raw material costs, stricter regulations, and changing consumer demand, leading to higher production costs and lower profit margins - Flavor enhancers revenue was approximately **RMB 179.5 million**, a significant **41.7% year-on-year decrease**[56](index=56&type=chunk) - Challenges include intense industry competition, increased costs of natural raw materials, stricter government safety regulations, and changing consumer demand[56](index=56&type=chunk) - The Group will allocate resources to improve product quality, competitiveness, and diversify overseas markets[56](index=56&type=chunk) [Food Flavors Business Review](index=21&type=section&id=Food%20Flavors%20Business%20Review) Food flavors revenue slightly increased by 3.1% to approximately RMB 93.1 million, as the Group maintained stable income in a competitive market by continuously developing new flavors - Food flavors revenue was approximately **RMB 93.1 million**, a slight **3.1% year-on-year increase**[57](index=57&type=chunk) - The Group maintained stable revenue in a competitive market by developing new flavors[57](index=57&type=chunk) [Daily Use Flavors Business Review](index=22&type=section&id=Daily%20Use%20Flavors%20Business%20Review) Daily use flavors revenue increased by 5.0% to approximately RMB 73.1 million, driven by the acquisition of new customers and continued support from long-term partners - Daily use flavors revenue was approximately **RMB 73.1 million**, a **5.0% year-on-year increase**[58](index=58&type=chunk) - Revenue growth is attributed to an increase in new customers and continued support from long-term cooperative clients[58](index=58&type=chunk) [E-cigarette Products Business Review](index=22&type=section&id=E-cigarette%20Products%20Business%20Review) E-cigarette product revenue slightly increased by 4.3% to approximately RMB 267.2 million, benefiting from diversified local customers and an extensive marketing network, with management anticipating improved business in the second half through collaborations - E-cigarette product revenue was approximately **RMB 267.2 million**, a slight **4.3% year-on-year increase**[59](index=59&type=chunk) - Revenue growth benefited from diversified local customers and an extensive marketing network[59](index=59&type=chunk) - Management is negotiating collaborations with major companies, expecting enhanced synergies and improved business in the second half of the year[59](index=59&type=chunk) [Investment Properties Business Review](index=22&type=section&id=Investment%20Properties%20Business%20Review) Investment property revenue decreased by 7.4% to approximately RMB 24.9 million, primarily due to lease terminations by some tenants amid a challenging property market in Shenzhen, China - Investment property revenue was approximately **RMB 24.9 million**, a **7.4% year-on-year decrease**[60](index=60&type=chunk) - The revenue reduction is due to the challenging property market in Shenzhen, leading to lease terminations by some tenants[60](index=60&type=chunk) [Gross Profit Analysis](index=22&type=section&id=Gross%20Profit%20Analysis) For the six months ended June 30, 2025, the Group's gross profit was approximately RMB 198.9 million, a significant 34.9% year-on-year decrease Gross Profit (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | % Change | | :--- | :--- | :--- | :--- | | Gross profit | 198.9 | 305.6 | -34.9% | - Gross profit significantly decreased by **34.9%**, reflecting declining revenue and challenges in cost control[61](index=61&type=chunk) [Net Profit for the Period Analysis](index=22&type=section&id=Net%20Profit%20for%20the%20Period%20Analysis) The Group's net profit for the period was approximately RMB 8.7 million, a substantial 86.1% year-on-year decrease, with the net profit margin falling to approximately 1.4% Net Profit for the Period (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | % Change | | :--- | :--- | :--- | :--- | | Net profit for the period | 8.7 | 62.7 | -86.1% | | Net profit margin | 1.4% | 8.3% | -6.9 percentage points | - Net profit significantly decreased by **86.1%**, and the net profit margin dropped from **8.3% to 1.4%**[62](index=62&type=chunk) [Other Income Analysis](index=22&type=section&id=Other%20Income%20Analysis) For the six months ended June 30, 2025, other income was RMB 1.5 million, a 34.9% year-on-year decrease, mainly due to reduced auxiliary business income not classified under principal segments Other Income (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | % Change | | :--- | :--- | :--- | :--- | | Other income | 1.5 | 2.2 | -34.9% | - Other income decreased by **34.9%**, primarily due to a reduction in other auxiliary business income[63](index=63&type=chunk) [Other Gains - Net Analysis](index=23&type=section&id=Other%20Gains%20-%20Net%20Analysis) For the six months ended June 30, 2025, other gains – net were approximately RMB 0.2 million, a significant decrease from RMB 2.5 million in the prior year, mainly due to the absence of gains from derecognition of Chinese subsidiaries Other Gains - Net (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | | :--- | :--- | :--- | | Other gains – net | 0.2 | 2.5 | - Other gains – net significantly decreased, mainly due to the absence of gains from the derecognition of Chinese subsidiaries in the current period[64](index=64&type=chunk) [Expenses Analysis](index=23&type=section&id=Expenses%20Analysis) Selling and marketing expenses increased by 5.5% year-on-year due to higher advertising costs, while administrative expenses decreased by 13.2% due to lower employee benefits, consulting, and office expenses Expenses (RMB millions) | Expense Item | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | % Change | | :--- | :--- | :--- | :--- | | Selling and marketing expenses | 24.9 | 23.6 | +5.5% | | Administrative expenses | 146.3 | 168.5 | -13.2% | - Selling and marketing expenses as a percentage of total revenue increased from **3.1% to 3.9%**[65](index=65&type=chunk) - The reduction in administrative expenses is primarily due to decreases in employee benefit expenses, consulting fees, and office expenses[65](index=65&type=chunk) [Net Finance Costs Analysis](index=23&type=section&id=Net%20Finance%20Costs%20Analysis) For the six months ended June 30, 2025, net finance costs were approximately RMB 22.9 million, an 18.3% year-on-year decrease, primarily attributable to lower loan interest rates on borrowings Net Finance Costs (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | % Change | | :--- | :--- | :--- | :--- | | Net finance costs | 22.9 | 28.0 | -18.3% | - Net finance costs decreased primarily due to lower loan interest rates on borrowings[66](index=66&type=chunk) [Corporate Culture](index=23&type=section&id=Corporate%20Culture) The Group upholds its "Four New and Five Hearts" corporate culture, with core values of "high technology, high quality, high starting point, and high standards," aiming to enhance competitiveness and embark on internationalization - The Group's corporate culture embodies "Four New" (new brand, new culture, new strength, new image) and "Five Hearts" (attentiveness, dedication, meticulousness, sincerity, care)[67](index=67&type=chunk) - Core values are "high technology, high quality, high starting point, and high standards," aiming to enhance competitiveness and embark on an international journey[67](index=67&type=chunk) [Business Outlook](index=24&type=section&id=Business%20Outlook) The Group anticipates a slow global economic recovery in the second half of 2025, driven by emerging economies, and plans to actively regain domestic market share, accelerate globalization, and capture high-value-added markets through technological cooperation and production enhancements, while committing to green economy and sustainability - The global economy is expected to recover slowly and unevenly in the second half of 2025, with growth driven by emerging economies such as India and Southeast Asia[68](index=68&type=chunk) - The Group will actively regain domestic market share, accelerate globalization, and drive existing business growth in overseas markets through localization and technological cooperation[68](index=68&type=chunk) - The Group is committed to long-term goals such as green economy, carbon reduction, and enhancing resilience to maintain sustainable development[68](index=68&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) As of June 30, 2025, the Group's net current assets and current ratio improved, but the gearing ratio increased, while maintaining a prudent financial management approach Financial Ratios (RMB millions) | Indicator | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | | :--- | :--- | :--- | | Net current assets | 67.0 | 46.7 | | Current ratio | 1.04 | 1.03 | | Gearing ratio | 59.8% | 54.3% | - Net current assets increased, primarily due to a reduction in trade and other payables[69](index=69&type=chunk) - The gearing ratio (total borrowings divided by total equity) increased from **54.3% to 59.8%**[70](index=70&type=chunk) [Funding](index=25&type=section&id=Funding) The Group can finance acquisitions through bank borrowings or equity fundraising and is confident in achieving its operational and expansion plans with funds generated from business operations - The Group can obtain financing for its acquisitions through bank borrowings or equity fundraising[71](index=71&type=chunk) - The Group is confident in having sufficient funds to achieve its operational and expansion plans[71](index=71&type=chunk) [Capital Structure](index=25&type=section&id=Capital%20Structure) During the reporting period, the Company's share capital consisted of ordinary shares, with the total number of issued shares remaining at 1,080,512,146 - The Company's share capital consists of ordinary shares, with the total number of issued shares remaining at **1,080,512,146**[72](index=72&type=chunk) [Foreign Exchange and Interest Rate Risk](index=25&type=section&id=Foreign%20Exchange%20and%20Interest%20Rate%20Risk) For the six months ended June 30, 2025, the Group recorded a net foreign exchange gain of approximately RMB 3.6 million; its primary business is RMB-denominated, with some transactions and borrowings in USD and HKD, and interest rate risk is not hedged but deemed insignificant Foreign Exchange Net Gain (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | | :--- | :--- | :--- | | Foreign exchange net gain | 3.6 | 0.7 | - Net foreign exchange gain significantly increased year-on-year; the primary business is denominated in **RMB**, with some transactions and borrowings in **USD** and **HKD**[73](index=73&type=chunk) - The Group does not hedge interest rate risk, and the Board believes it will not have a significant impact[73](index=73&type=chunk) [Pledged Assets of the Group](index=25&type=section&id=Pledged%20Assets%20of%20the%20Group) As of June 30, 2025, the Group pledged equity interests in certain subsidiaries, properties in Shenzhen and Huizhou, land use rights, bank deposits, and Hong Kong properties as collateral for borrowings - Pledged assets include equity interests in certain subsidiaries, various buildings, warehouses, investment properties, land use rights in Shenzhen and Huizhou, bank deposits, and Hong Kong properties[74](index=74&type=chunk) - Chairman Mr. Wang Mingfan provided personal guarantees[38](index=38&type=chunk) [Capital Expenditure](index=25&type=section&id=Capital%20Expenditure) For the six months ended June 30, 2025, the Group's investments in fixed assets and construction in progress significantly increased, while capital commitments substantially decreased, all funded by internal and financing sources Capital Expenditure (RMB millions) | Indicator | Six months ended June 30, 2025 (RMB millions) | Six months ended June 30, 2024 (RMB millions) | | :--- | :--- | :--- | | Investment in fixed assets and construction in progress | 241.6 | 75.3 | | Capital commitments for fixed assets | 21.7 | 188.9 | - Investments in fixed assets and construction in progress significantly increased by **220.8% year-on-year**[75](index=75&type=chunk) - Capital commitments for fixed assets significantly decreased from **RMB 188.9 million** to **RMB 21.7 million**[75](index=75&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board does not recommend an interim dividend for the six months ended June 30, 2025[76](index=76&type=chunk) [Employees and Remuneration Policy](index=26&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 1,112 employees globally, offering competitive remuneration, retirement plans, share option schemes, and benefits, with performance-based bonuses, adhering to social security and provident fund regulations Employee Information | Indicator | June 30, 2025 | 2024 | | :--- | :--- | :--- | | Number of employees | 1,112 | 1,259 | - The number of employees decreased by **11.7% year-on-year**[77](index=77&type=chunk) - The Group offers comprehensive and competitive remuneration, retirement plans, share option schemes, and benefits, with discretionary bonuses based on performance[77](index=77&type=chunk) [Significant Investments](index=26&type=section&id=Significant%20Investments) For the six months ended June 30, 2025, the Group made a significant investment in a construction project on land in Huizhou, China, with a planned investment of approximately RMB 400 million to expand its e-cigarette products segment - The Group made a significant investment in a construction project located in Zhongkai High-tech Zone, Huizhou, China[78](index=78&type=chunk) - A planned investment of approximately **RMB 400 million** in fixed assets on this land aims to expand the e-cigarette products segment[78](index=78&type=chunk) [Contingent Liabilities (Management Discussion)](index=26&type=section&id=Contingent%20Liabilities%20%28Management%20Discussion%29) As of June 30, 2025, the Group had no significant contingent liabilities other than the legal dispute involving the vendor of the Kimree acquisition - The Group has no significant contingent liabilities, except for the legal dispute involving the vendor of the Kimree acquisition[79](index=79&type=chunk) [Land Resumption in Shenzhen](index=26&type=section&id=Land%20Resumption%20in%20Shenzhen) Shenzhen Boton Flavors & Fragrances Co., Ltd. received a letter from Shenzhen Nanshan government regarding the proposed acquisition of its land for a high-speed rail hub; compensation has been offered, and preliminary discussions suggest no significant operational impact - Shenzhen Boton Flavors & Fragrances Co., Ltd. received a letter from Shenzhen Nanshan government regarding the proposed acquisition of its land in Shenzhen for a high-speed rail hub construction[80](index=80&type=chunk) - Relevant departments have provided compensation proposals, but detailed information is not yet available[80](index=80&type=chunk)[81](index=81&type=chunk) - Preliminary discussions indicate that the land resumption (if implemented) will not have a significant impact on Shenzhen Boton's operations[81](index=81&type=chunk) [Legal Proceedings Against Vendor of an Acquisition](index=27&type=section&id=Legal%20Proceedings%20Against%20Vendor%20of%20an%20Acquisition) As of June 30, 2025, the Group is involved in four legal proceedings against the vendors of the Kimree acquisition, including claims for breach of non-compete clauses, fiduciary duties, and misrepresentation, with outcomes remaining uncertain - The Group is involved in **four legal proceedings** against the vendors of the Kimree acquisition, including Mr. Liu Qiuming and Mr. Xiang Zhiyong[82](index=82&type=chunk) - The lawsuits include claims for breach of non-compete clauses, breach of fiduciary duties, and misrepresentation regarding the terms of the acquisition agreement[82](index=82&type=chunk)[83](index=83&type=chunk) - Some cases are still ongoing, with uncertain outcomes, and the Company is seeking legal advice on whether the relevant claims are time-barred[82](index=82&type=chunk)[83](index=83&type=chunk) [Supplemental Agreement - Profit Guarantee Extension](index=28&type=section&id=Supplemental%20Agreement%20-%20Profit%20Guarantee%20Extension) The Group signed a supplemental agreement extending the profit guarantee arrangement for the sale of certain equity interests in Boton Flavors & Fragrances Co., Ltd. until March 31, 2026, requiring a minimum 5% net profit growth, which constitutes a discloseable connected transaction - The Group signed a supplemental agreement extending the profit guarantee arrangement for Boton Flavors & Fragrances Group until **March 31, 2026**[85](index=85&type=chunk) - The new guarantee requires Boton Flavors & Fragrances Group's net profit to grow by no less than **5%** from January 1, 2025, to March 31, 2026[85](index=85&type=chunk) - This supplemental agreement constitutes a connected transaction and is subject to reporting and announcement requirements under the Listing Rules[85](index=85&type=chunk) [Other Information](index=29&type=section&id=Other%20Information) This section covers information on the Company's listed securities transactions, the operations of its Audit, Remuneration, and Nomination Committees, corporate governance practices, and the publication arrangements for the interim results report [Purchase, Sale or Redemption of Listed Securities](index=29&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period[86](index=86&type=chunk) [Audit Committee](index=29&type=section&id=Audit%20Committee) The Audit Committee, comprising four independent non-executive directors, reviews and oversees the Group's financial reporting, risk management, and internal control systems, and has reviewed the unaudited interim condensed consolidated financial statements - The Audit Committee comprises **four independent non-executive directors**, with Mr. Wu Guanyun as Chairman[87](index=87&type=chunk) - The Committee's responsibilities include reviewing and overseeing the Group's financial reporting process, risk management, and internal control systems[87](index=87&type=chunk) - The Committee has reviewed the Group's unaudited interim condensed consolidated financial statements for the six months ended June 30, 2025[87](index=87&type=chunk) [Remuneration Committee](index=29&type=section&id=Remuneration%20Committee) The Remuneration Committee, consisting of four independent non-executive directors and one executive director, is responsible for considering and approving remuneration arrangements for the Group's senior employees, including salaries, bonuses, and long-term incentive plans - The Remuneration Committee comprises **four independent non-executive directors** (Chairman Mr. Wu Guanyun) and **one executive director** (Mr. Wang Mingfan)[88](index=88&type=chunk) - The Committee aims to consider and approve remuneration arrangements for the Group's senior employees, including terms for salaries, bonus schemes, and other long-term incentive plans[88](index=88&type=chunk) [Nomination Committee](index=29&type=section&id=Nomination%20Committee) The Nomination Committee, composed of four independent non-executive directors and two executive directors, reviews the Board's structure, size, and diversity, and makes recommendations on director appointments and succession planning - The Nomination Committee comprises **four independent non-executive directors** (Chairman Mr. Liang Weimin) and **two executive directors** (Mr. Wang Mingfan and Ms. Wang Xinyi)[89](index=89&type=chunk) - The Committee's responsibilities include reviewing the Board's structure, size, and diversity, and making recommendations to the Board on director appointments and succession planning[89](index=89&type=chunk) [Corporate Governance](index=29&type=section&id=Corporate%20Governance) The Company's Board is committed to maintaining high corporate governance standards for transparency and stakeholder protection, complying with all Code Provisions of Appendix C1 of the Listing Rules, except for the separation of Chairman and CEO roles - The Company is committed to maintaining good corporate governance standards to enhance corporate transparency and protect stakeholders' interests[90](index=90&type=chunk) - During the reporting period, the Company complied with all Code Provisions of Appendix C1 of the Listing Rules' Corporate Governance Code, except for Code Provision C.2.1[90](index=90&type=chunk) - Mr. Wang Mingfan serves concurrently as the Company's Executive Director, Chief Executive Officer, and Chairman, with the Board believing the current structure provides strong and continuous leadership[91](index=91&type=chunk) [Standard Code for Securities Transactions by Directors](index=30&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance during the reporting period - The Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as its code of conduct for directors' securities transactions[92](index=92&type=chunk) - All directors confirmed compliance with the required standards set out in the Standard Code during the reporting period[92](index=92&type=chunk) [Publication of Interim Results and Interim Report](index=30&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This results announcement has been published on the HKEX and Company websites, and the 2025 interim report will be dispatched to shareholders and published on these websites in due course - This results announcement has been published on the HKEX website (www.hkexnews.hk) and the Company's website (www.boton.com.hk)[93](index=93&type=chunk) - The 2025 interim report will be dispatched to shareholders and published on the aforementioned websites in due course[93](index=93&type=chunk) [Board of Directors Composition](index=30&type=section&id=Board%20of%20Directors%20Composition) As of the announcement date, the Board comprises three executive directors, one non-executive director, and four independent non-executive directors - As of the announcement date, the Executive Directors are Mr. Wang Mingfan, Mr. Li Qinglong, and Ms. Wang Xinyi[95](index=95&type=chunk) - The Non-executive Director is Ms. Yin Shuzhen[95](index=95&type=chunk) - The Independent Non-executive Directors are Mr. Wu Guanyun, Mr. Liang Weimin, Mr. Zhou Xiaoxiong, and Mr. Qiu Haobo[95](index=95&type=chunk)

[Announcement Information](index=1&type=section&id=Announcement%20Information) This announcement details Asia Energy Logistics Group's unaudited interim results for the six months ended June 30, 2025 [Cover and Company Information](index=1&type=section&id=Cover%20and%20Company%20Information) This section provides essential company details and confirms the nature of the interim results announcement - Company Name: **Asia Energy Logistics Group Limited** (Stock Code: **351**)[2](index=2&type=chunk) - This announcement is for the unaudited consolidated results for the six months ended June 30, 2025[2](index=2&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the Group's financial performance and position for the interim period [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Revenue from continuing operations grew 29.5%, while the loss for the period significantly narrowed by 59.1% to HKD 14,685 thousand Condensed Consolidated Statement of Comprehensive Income Key Data (HKD thousands) | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue (Continuing Operations) | 29,615 | 22,869 | +29.5% | | Gross Profit (Continuing Operations) | 3,259 | 2,436 | +33.8% | | Other Income (Continuing Operations) | 1,608 | 363 | +343.0% | | Employee Costs | (5,348) | (14,530) | -63.2% | | Loss Before Tax from Continuing Operations | (14,685) | (35,898) | -59.1% | | Loss for the Period (Continuing Operations) | (14,685) | (35,898) | -59.1% | | Profit for the Period (Discontinued Operations) | – | 13,686 | -100.0% | | Total Loss for the Period | (14,685) | (22,212) | -33.9% | | Loss for the Period Attributable to Owners of the Company | (14,685) | (21,684) | -32.3% | | Basic and Diluted Loss Per Share (Continuing Operations) | (0.74) HK cents | (1.77) HK cents | -58.2% | | Basic and Diluted Earnings Per Share (Discontinued Operations) | – | 0.69 HK cents | -100.0% | | Total Basic and Diluted Loss Per Share | (0.74) HK cents | (1.08) HK cents | -31.5% | - Revenue from continuing operations primarily derived from chartering income, telecommunication services income, and e-commerce trading income[3](index=3&type=chunk) - Employee costs significantly decreased by **63.2%**, a major reason for the narrowed loss for the period[3](index=3&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets and equity decreased, yet net current assets remained robust, indicating healthy liquidity and leverage ratios Condensed Consolidated Statement of Financial Position Key Data (HKD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 68,573 | 73,447 | -6.7% | | Current Assets | 89,294 | 99,248 | -10.0% | | Current Liabilities | 10,097 | 8,711 | +15.9% | | Net Current Assets | 79,197 | 90,537 | -12.5% | | Total Assets Less Current Liabilities | 147,770 | 163,984 | -9.9% | | Net Assets | 147,770 | 162,229 | -8.8% | | Total Equity | 147,770 | 162,229 | -8.8% | - Trade and other receivables decreased from **HKD 15,651 thousand** to **HKD 6,317 thousand**, a **59.6%** decrease[5](index=5&type=chunk) - Bank balances and cash slightly increased from **HKD 62,772 thousand** to **HKD 67,709 thousand**[5](index=5&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=5&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements [Basis of Preparation](index=5&type=section&id=Basis%20of%20Preparation) The interim financial statements adhere to HKAS 34 and Listing Rules, requiring careful judgment and estimates - Financial statements prepared in accordance with **HKAS 34 Interim Financial Reporting** and the **Listing Rules**[6](index=6&type=chunk) - Preparation requires judgments, estimates, and assumptions affecting policy application and reported amounts of assets, liabilities, income, and expenses[6](index=6&type=chunk) - The 2024 annual financial statements were filed with the Registrar of Companies in Hong Kong, and the auditor's report was unqualified[6](index=6&type=chunk) [Adoption of New/Revised Hong Kong Financial Reporting Standards](index=6&type=section&id=Adoption%20of%20New%2FRevised%20Hong%20Kong%20Financial%20Reporting%20Standards) New/revised HKFRS standards effective January 1, 2025, were adopted with no material impact on the interim financial statements - The Group first adopted new/revised Hong Kong Financial Reporting Standards accounting standards effective **January 1, 2025**[7](index=7&type=chunk)[8](index=8&type=chunk) - The adoption of HKAS 21 (Amendment) "Lack of Exchangeability" had no significant impact on the financial statements[9](index=9&type=chunk) [Revenue](index=6&type=section&id=Revenue) Continuing operations revenue increased 29.5%, driven by telecommunication services and new e-commerce trading, despite a decline in chartering income Revenue from Continuing Operations Breakdown (HKD thousands) | Revenue Source | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Chartering Income | 14,786 | 20,432 | -27.6% | | Telecommunication Services Income | 8,877 | 2,437 | +264.2% | | E-commerce Trading Income | 5,952 | – | New | | **Total Revenue (Continuing Operations)** | **29,615** | **22,869** | **+29.5%** | - Telecommunication services income significantly increased by **264.2%**, and e-commerce trading business is a new revenue source for the period[10](index=10&type=chunk) [Other Income](index=7&type=section&id=Other%20Income) Other income surged 343% year-on-year, primarily due to a substantial increase in bank interest income Other Income Breakdown (HKD thousands) | Revenue Source | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Bank Interest Income | 1,207 | 56 | +2055.4% | | Net Exchange Gain | 8 | 61 | -86.9% | | Reimbursement from Charterers | 134 | 74 | +81.1% | | Miscellaneous Income | 259 | 172 | +50.6% | | **Total Other Income** | **1,608** | **363** | **+343.0%** | - Bank interest income surged from **HKD 56 thousand** to **HKD 1,207 thousand**, the main driver of other income growth[11](index=11&type=chunk) [Segment Information](index=7&type=section&id=Segment%20Information) The Group's continuing operations span shipping, telecom, and e-commerce, with telecom and e-commerce showing significant revenue growth - The Group's reportable segments include continuing operations (shipping and logistics, telecommunication-related business, e-commerce trading) and discontinued operations[12](index=12&type=chunk)[13](index=13&type=chunk) - Segment results refer to the results from each reportable segment, excluding the allocation of corporate income and expenses[14](index=14&type=chunk) [Continuing Operations](index=8&type=section&id=Continuing%20Operations) Telecom and e-commerce revenues grew substantially, while shipping and logistics revenue decreased but improved gross profit, leading to an overall segment profit Continuing Operations Segment Revenue and Profit (Six Months Ended June 30, 2025, HKD thousands) | Segment | External Customer Segment Revenue | Segment (Loss) Profit | | :--- | :--- | :--- | | Telecommunication-Related Business | 8,877 | (1,140) | | Shipping and Logistics | 14,786 | 1,329 | | E-commerce Trading Business | 5,952 | 12 | | **Total** | **29,615** | **201** | - Shipping and logistics segment revenue decreased year-on-year, but segment profit turned from loss to profit, mainly due to cost control[15](index=15&type=chunk)[16](index=16&type=chunk) - Telecommunication-related business revenue significantly increased but still recorded a segment loss of **HKD 1,140 thousand**[15](index=15&type=chunk) [Discontinued Operations](index=9&type=section&id=Discontinued%20Operations) Discontinued operations in H1 2024 primarily reflect revenue and profit from the sale of a vessel in the shipping and logistics segment Discontinued Operations Segment Revenue and Profit (Six Months Ended June 30, 2024, HKD thousands) | Segment | External Customer Segment Revenue | Segment Profit | | :--- | :--- | :--- | | Shipping and Logistics (Discontinued) | 24,779 | 13,686 | - On May 23, 2024, the company agreed to sell a vessel (M/V Clipper Panorama), which constituted discontinued operations[13](index=13&type=chunk) [Geographical Information](index=10&type=section&id=Geographical%20Information) Non-current assets are concentrated in Hong Kong and China, with all telecom and e-commerce revenue originating from China Geographical Distribution of Non-Current Assets (HKD thousands) | Region | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Hong Kong | 4,213 | 7,207 | | China | 25 | 50 | - Revenue from telecommunication-related business and e-commerce trading business is entirely from China[19](index=19&type=chunk) - Shipping and logistics services, due to their multinational operations, do not present geographical segment revenue[18](index=18&type=chunk) [Major Customers](index=10&type=section&id=Major%20Customers) In H1 2025, three customers each contributed over 10% of group revenue across shipping, telecom, and e-commerce segments Major Customers Contributing 10% or More of Group Revenue (HKD thousands) | Customer | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | | Customer A | Shipping and Logistics | 14,786 | Not Applicable | | Customer B | Telecommunication-Related Business | 6,120 | Not Applicable | | Customer C | E-commerce Trading Business | 5,952 | Not Applicable | | Customer D | Shipping and Logistics (Continuing Operations) | Not Applicable | 20,432 | | Customer D | Shipping and Logistics (Discontinued Operations) | Not Applicable | 24,779 | - In H1 2025, Customers A, B, and C became major customers, while major customer D's revenue share in H1 2024 was below **10%** in H1 2025[20](index=20&type=chunk)[21](index=21&type=chunk) [Finance Costs](index=11&type=section&id=Finance%20Costs) Finance costs from continuing operations decreased by 54.4% year-on-year, mainly due to reduced interest on lease liabilities Finance Costs Breakdown (HKD thousands) | Cost Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Interest on Other Borrowings | – | 30 | -100.0% | | Interest on Lease Liabilities | 119 | 233 | -48.9% | | **Total Finance Costs** | **119** | **263** | **-54.7%** | - Interest on lease liabilities decreased from **HKD 233 thousand** to **HKD 119 thousand**, the main reason for the decline in finance costs[22](index=22&type=chunk) [Loss Before Tax from Continuing Operations](index=12&type=section&id=Loss%20Before%20Tax%20from%20Continuing%20Operations) Loss before tax significantly narrowed, primarily due to reduced employee costs, depreciation, and asset write-offs Major Deductions for Loss Before Tax from Continuing Operations (HKD thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 2,892 | 2,457 | +17.7% | | Depreciation of Right-of-Use Assets | 1,488 | 2,985 | -50.1% | | Employee Costs | 5,348 | 14,530 | -63.2% | | Write-off of Other Receivables | 1,241 | – | New | | Write-off of Intangible Assets | 1,000 | – | New | - Employee costs significantly decreased by **63.2%**, a key factor in narrowing the loss[23](index=23&type=chunk) - This period saw new write-offs of other receivables of **HKD 1,241 thousand** and intangible assets of **HKD 1,000 thousand**[23](index=23&type=chunk) [Income Tax](index=13&type=section&id=Income%20Tax) No income tax provision was made due to the absence of estimated taxable profit for the Group entities during the reporting period - Hong Kong profits tax rate is **16.5%**, and China corporate income tax rate is **25%**[24](index=24&type=chunk) - No income tax provision was made as the Group entities had no estimated taxable profit or incurred tax losses during the reporting period[24](index=24&type=chunk) [(Loss) Earnings Per Share](index=13&type=section&id=(Loss)%20Earnings%20Per%20Share) Basic and diluted loss per share from continuing operations significantly narrowed by 58.2%, with no earnings from discontinued operations (Loss) Earnings Per Share (HK cents) | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Continuing Operations | (0.74) | (1.77) | -58.2% | | Discontinued Operations | – | 0.69 | -100.0% | | **Total** | **(0.74)** | **(1.08)** | **-31.5%** | - Basic and diluted loss per share were consistent for the six months ended June 30, 2025, and 2024, as there were no potential dilutive ordinary shares[25](index=25&type=chunk) [Dividends](index=14&type=section&id=Dividends) The company neither paid nor declared any dividends during the reporting period, and the Board does not recommend any - The company neither paid nor declared dividends for the six months ended June 30, 2025, and 2024[26](index=26&type=chunk) - The directors do not recommend the payment of any dividends for the six months ended June 30, 2025, and 2024[27](index=27&type=chunk) [Trade and Other Receivables](index=14&type=section&id=Trade%20and%20Other%20Receivables) Total trade and other receivables decreased 59.6%, mainly due to a substantial reduction in other receivables from a regulated securities broker Trade and Other Receivables Breakdown (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Receivables from Services Income | 3,090 | 407 | +659.2% | | Other Receivables | 3,470 | 4,383 | -20.8% | | Deposits for Vessel Operations | – | 354 | -100.0% | | Other Receivables from a Regulated Securities Broker | – | 9,903 | -100.0% | | Prepayments | 89 | 936 | -90.5% | | Less: Loss Allowance for Other Receivables | (1,337) | (1,337) | 0.0% | | **Total** | **6,317** | **15,651** | **-59.6%** | - Other receivables from a regulated securities broker decreased from **HKD 9,903 thousand** to zero, the main reason for the decline in total receivables[28](index=28&type=chunk) - All trade receivables have an aging within **30 to 90 days**[29](index=29&type=chunk) - Other receivables of **HKD 1,337 thousand** were overdue for more than **240 days** and bear interest at **10% per annum**[30](index=30&type=chunk) [Trade and Other Payables](index=15&type=section&id=Trade%20and%20Other%20Payables) Total trade and other payables increased by 24.1% year-on-year, primarily driven by a significant rise in trade payables Trade and Other Payables Breakdown (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Trade Payables | 3,756 | 701 | +435.8% | | Accrued Expenses and Other Payables | 2,043 | 3,770 | -45.8% | | Receipts in Advance | 838 | 878 | -4.5% | | **Total** | **6,637** | **5,349** | **+24.1%** | - Trade payables significantly increased from **HKD 701 thousand** to **HKD 3,756 thousand**[31](index=31&type=chunk) - The credit period for trade payables is generally within **90 days**, with all aging within **30 days**[32](index=32&type=chunk) [Share Capital](index=16&type=section&id=Share%20Capital) The total number of issued shares remained unchanged at 1,994,975,244 shares as of June 30, 2025 - As of June 30, 2025, the total number of issued shares was **1,994,975,244**, the same as December 31, 2024[33](index=33&type=chunk)[34](index=34&type=chunk) [Related Party Transactions and Balances](index=16&type=section&id=Related%20Party%20Transactions%20and%20Balances) Remuneration for key management personnel decreased, and consulting fees payable to a related entity were reduced to zero Key Management Personnel Remuneration (HKD thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Salaries and Other Benefits | 2,491 | 2,847 | -12.5% | | Contributions to Defined Contribution Retirement Plans | 18 | 18 | 0.0% | | **Total** | **2,509** | **2,865** | **-12.5%** | - Consulting fees payable to Ascent Financial Public Relations Limited decreased from **HKD 300 thousand** in the prior year to zero[36](index=36&type=chunk) - Disclosed related party transactions constitute connected transactions exempt from reporting, announcement, and independent shareholders' approval requirements under the Listing Rules[36](index=36&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business performance, financial position, and future outlook across its operating segments [Business Review](index=17&type=section&id=Business%20Review) The Group's core businesses are shipping, telecom, and e-commerce, with significant growth in telecom and e-commerce, and a completed vessel sale - The Group's main businesses include shipping and logistics, telecommunication-related business in China, and e-commerce trading business[37](index=37&type=chunk) [Continuing Operations](index=17&type=section&id=Continuing%20Operations%20(Business%20Review)) Shipping and logistics revenue declined but gross profit improved, while telecom and e-commerce businesses saw substantial revenue growth [Shipping and Logistics](index=17&type=section&id=Shipping%20and%20Logistics) Revenue decreased by 28%, but gross profit increased by 34% due to higher vessel utilization and cost control measures - Shipping and logistics business revenue was approximately **HKD 14,786 thousand**, a year-on-year decrease of approximately **28%**[39](index=39&type=chunk) - Gross profit was approximately **HKD 3,335 thousand**, a year-on-year increase of approximately **34%**, mainly due to higher vessel utilization, reduced dry-docking losses in 2024, and decreased repair and maintenance[39](index=39&type=chunk) - The Group currently operates one dry bulk vessel with a total capacity of approximately **32,000 DWT**, fully utilized during the reporting period[38](index=38&type=chunk)[39](index=39&type=chunk) [Telecommunication-Related Business](index=17&type=section&id=Telecommunication-Related%20Business) Revenue surged by 264% from new client acquisition, though gross loss increased due to lower profit margins - Telecommunication-related business revenue was approximately **HKD 8,877 thousand**, a year-on-year increase of approximately **264%**, mainly due to new client development in H1 2025[40](index=40&type=chunk) - Gross loss was approximately **HKD 88 thousand**, a year-on-year increase of approximately **69%**, mainly due to lower profit margins for certain customers[40](index=40&type=chunk) [E-commerce Trading Business](index=18&type=section&id=E-commerce%20Trading%20Business) This new business, launched in Q4 2024, generated HKD 5,952 thousand in revenue and HKD 12 thousand in gross profit - The Group commenced e-commerce trading business in China in **Q4 2024**[41](index=41&type=chunk) - Revenue of approximately **HKD 5,952 thousand** and gross profit of approximately **HKD 12 thousand** were recorded during the reporting period[41](index=41&type=chunk) [Discontinued Operations](index=18&type=section&id=Discontinued%20Operations%20(Business%20Review)) This section details the sale of a vessel in May 2024, with related results accounted for as discontinued operations - The Group agreed to sell a vessel on May 23, 2024, for a consideration of **USD 9,500,000** (approximately **HKD 74,100,000**)[42](index=42&type=chunk) - The sale was completed in August 2024, and the related results were accounted for as discontinued operations[42](index=42&type=chunk) [Prospects](index=18&type=section&id=Prospects) The Group navigates market challenges in shipping and telecom, while aiming for competitiveness in e-commerce and seeking synergistic investments - The Group will continue to seek suitable investment opportunities that generate synergy with existing businesses and contribute positively[45](index=45&type=chunk) [Shipping and Logistics](index=18&type=section&id=Shipping%20and%20Logistics%20(Prospects)) The dry bulk market faces geopolitical and tariff challenges, prompting vessel repositioning and cost reduction efforts - The dry bulk shipping market faces challenges and opportunities from new US tariffs and geopolitical dynamics[43](index=43&type=chunk) - The Group has repositioned its vessel to the East Coast of the Atlantic and implemented measures to reduce operating costs[43](index=43&type=chunk) [Telecommunication-Related Business](index=19&type=section&id=Telecommunication-Related%20Business%20(Prospects)) Traditional SMS services face challenges from market shifts and regulatory changes, necessitating cautious expansion and new client acquisition - Traditional SMS business faces significant challenges due to changes in customer operating environment and recent regulatory changes[44](index=44&type=chunk) - The Group will cautiously promote business development and cooperation while expanding new customer segments[44](index=44&type=chunk) [E-commerce Trading Business](index=19&type=section&id=E-commerce%20Trading%20Business%20(Prospects)) Facing intense competition in China, the company plans to maintain competitiveness through innovation, product quality, and strategic investments - The Chinese e-commerce market is increasingly competitive, with evolving marketing models[45](index=45&type=chunk) - The company believes it can maintain market competitiveness through continuous innovation and maintaining product quality[45](index=45&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) Continuing operations revenue increased 29%, and the loss significantly narrowed by 59% due to reduced costs and absence of financial asset sale losses - Revenue from continuing operations was approximately **HKD 29,615 thousand**, a year-on-year increase of approximately **29%**[46](index=46&type=chunk) - Loss from continuing operations was approximately **HKD 14,685 thousand**, a year-on-year decrease of approximately **59%**[46](index=46&type=chunk) - The reduction in loss was mainly attributable to decreased employee costs and other operating expenses, and no loss from the sale of financial assets at fair value through profit or loss this period[46](index=46&type=chunk) - Basic and diluted loss per share from continuing operations was **0.74 HK cents**, and zero for discontinued operations[47](index=47&type=chunk) [Financial Resources, Liquidity, and Gearing Ratio](index=20&type=section&id=Financial%20Resources%2C%20Liquidity%2C%20and%20Gearing%20Ratio) Cash and bank balances increased, while total equity and net current assets decreased, maintaining healthy liquidity and gearing ratios Key Financial Resources Indicators (HKD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 67,709 | 62,772 | +7.9% | | Total Equity Attributable to Owners of the Company | 147,770 | 162,229 | -8.9% | | Net Current Assets | 79,197 | 90,537 | -12.5% | | Current Ratio | 884% | 1,139% | -22.4% | | Gearing Ratio | 7% | 6% | +16.7% | - Total number of issued shares was **1,994,975,244**[48](index=48&type=chunk) [Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries, and Future Plans for Material Investments or Capital Assets](index=20&type=section&id=Significant%20Investments%20Held%2C%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20and%20Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) The Group holds a portfolio of listed investments, completed a vessel sale, and has no current plans for other material investments - Financial assets at fair value through profit or loss include a portfolio of listed equity and convertible bond investments with a fair value of approximately **HKD 15,268 thousand**, representing approximately **10%** of total assets[49](index=49&type=chunk) - The Group will closely monitor capital market performance and adopt the most appropriate strategy[49](index=49&type=chunk) - The vessel sale was completed in **August 2024**[51](index=51&type=chunk) - As of the date of this announcement, the Board has not approved any plans for material investments or additional capital assets[51](index=51&type=chunk) [Pledges of Assets and Contingent Liabilities](index=21&type=section&id=Pledges%20of%20Assets%20and%20Contingent%20Liabilities) As of June 30, 2025, the Group reported no pledges of assets or contingent liabilities - As of June 30, 2025, the Group had no pledges of assets[52](index=52&type=chunk) - As of June 30, 2025, the Group had no contingent liabilities[52](index=52&type=chunk) [Capital Commitments](index=21&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no capital commitments - As of June 30, 2025, the Group had no capital commitments[53](index=53&type=chunk) [Exchange Rate Fluctuation Risk](index=21&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group considers its foreign exchange risk to be very low and therefore does not use hedging instruments - The Group's assets, liabilities, and transactions are primarily denominated in the functional currencies of its business operations, facing very low risk of foreign exchange rate fluctuations[54](index=54&type=chunk) - Therefore, the Group does not use hedging instruments or other hedging methods[54](index=54&type=chunk) [Employees and Remuneration Policies](index=22&type=section&id=Employees%20and%20Remuneration%20Policies) The Group had 19 full-time employees, with significantly reduced employee costs, and remuneration is based on market practice and duties - As of June 30, 2025, the Group had **19** full-time employees, the same as December 31, 2024[55](index=55&type=chunk) - Employee costs for the reporting period were approximately **HKD 5,348 thousand**, a significant year-on-year decrease of **63.2%**[55](index=55&type=chunk) - Remuneration is determined based on duties, work experience, and market practice, with share option and retirement benefit schemes in place[55](index=55&type=chunk) - As of June 30, 2025, there were no outstanding share options granted under the 2018 Share Option Scheme[55](index=55&type=chunk) [Corporate Governance](index=22&type=section&id=Corporate%20Governance) The company upholds high corporate governance standards, complying with the code despite a long-vacant CEO position [Compliance with Corporate Governance Code](index=22&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company adheres to the Corporate Governance Code, with the CEO's duties handled by other executive directors since 2009 - The company has consistently complied with the Corporate Governance Code, except for the CEO position being vacant since **March 2009**[56](index=56&type=chunk) - The CEO's duties are performed by other executive directors, and the Board believes this has no significant impact on the Group's operations[56](index=56&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers](index=23&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors%20of%20Listed%20Issuers) All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period - All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the review period[57](index=57&type=chunk) [Sufficient Public Float](index=23&type=section&id=Sufficient%20Public%20Float) The company maintained a sufficient public float as of June 30, 2025, and up to the announcement date - The company maintained a sufficient public float[58](index=58&type=chunk) [Review of Interim Results](index=23&type=section&id=Review%20of%20Interim%20Results) The Audit Committee reviewed the Group's unaudited consolidated interim results for H1 2025 without expressing any disagreements - The Group's unaudited consolidated interim results for the six months ended June 30, 2025, have been reviewed by the Audit Committee with no disagreements expressed[59](index=59&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=23&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries engaged in purchasing, selling, or redeeming any listed securities during the review period - During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[60](index=60&type=chunk) [Publication of Interim Results and Interim Report](index=23&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This announcement is available on HKEXnews and the company website, with the interim report to follow for shareholders - This announcement has been published on the HKEXnews website (http://www.hkexnews.hk) and the company's website (https://www.aelg.com.hk)[61](index=61&type=chunk) - The interim report will be dispatched to the company's shareholders and uploaded to the aforementioned websites in due course[61](index=61&type=chunk) [Glossary](index=24&type=section&id=Glossary) This section defines key terms used throughout the report, including company specifics and regulatory references [Glossary](index=24&type=section&id=Glossary%20(sub-section)) This sub-section provides definitions for key terms, company names, and relevant financial and regulatory standards used in the report - Provides definitions for key terms used in the report, such as "2018 Share Option Scheme", "Audit Committee", "Corporate Governance Code"[62](index=62&type=chunk)[63](index=63&type=chunk) - Clarifies that "the Company" refers to Asia Energy Logistics Group Limited, and "the Group" refers to the Company and its subsidiaries[62](index=62&type=chunk) - The report date is **August 22, 2025**, and lists the Board of Directors[64](index=64&type=chunk)

[Report Overview](index=1&type=section&id=Report%20Overview) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The Group reported a 32.63% year-over-year decrease in total operating revenue and a 102.20% increase in net loss attributable to equity holders, with loss per share reaching RMB0.10 Financial Highlights for H1 2025 | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 65,985 | 97,937 | -32.63 | | Net Loss Attributable to Equity Holders of the Company | 19,047 | 9,420 | +102.20 | | Loss Per Share (RMB) | 0.10 | 0.05 | +100.00 | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statement](index=2&type=section&id=Consolidated%20Income%20Statement) The Group's H1 2025 total operating revenue decreased by 32.63% to RMB65,985 thousand, with operating and net losses significantly expanding year-over-year Key Consolidated Income Statement Data (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Operating Revenue | 65,985 | 97,937 | | Total Operating Costs | 96,287 | 117,668 | | Operating Profit | (20,736) | (11,260) | | Net Profit | (20,275) | (11,300) | | Net Profit Attributable to Equity Holders of the Company | (19,047) | (9,420) | | Net Other Comprehensive Income After Tax | 34,248 | 138 | | Total Comprehensive Income | 13,973 | (11,162) | | Basic Earnings Per Share (RMB) | (0.10) | (0.05) | [Consolidated Balance Sheet](index=4&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, total assets reached RMB721,635 thousand, with non-current assets increasing due to investment properties, and both total liabilities and equity rising Key Consolidated Balance Sheet Data (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Current Assets | 269,225 | 294,314 | | Total Non-current Assets | 452,410 | 418,439 | | Total Assets | 721,635 | 712,753 | | Total Current Liabilities | 65,712 | 63,118 | | Total Non-current Liabilities | 706 | 706 | | Total Liabilities | 66,418 | 63,824 | | Total Equity Attributable to Equity Holders of the Company | 653,049 | 637,736 | | Total Equity | 655,217 | 648,929 | | Total Liabilities and Equity | 721,635 | 712,753 | [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Financial%20Statements) [Basis of Preparation and Going Concern](index=6&type=section&id=Basis%20of%20Preparation%20and%20Going%20Concern) Financial statements are prepared under PRC Accounting Standards, CSRC, and HKEX regulations on a going concern basis, with no significant doubts identified - Financial statements are prepared in accordance with PRC Accounting Standards for Business Enterprises, CSRC's No. 15 Rules on Information Disclosure by Companies Issuing Securities to the Public, and the HKEX Listing Rules and Hong Kong Companies Ordinance[13](index=13&type=chunk) - The Group assessed its ability to continue as a going concern for 12 months from June 30, 2025, and found no material uncertainties that cast significant doubt on its going concern ability[14](index=14&type=chunk) [Total Operating Revenue, Operating Costs, and Gross Profit](index=7&type=section&id=Total%20Operating%20Revenue%2C%20Operating%20Costs%2C%20and%20Gross%20Profit) H1 2025 total operating revenue decreased by 32.63% to RMB65,985 thousand, driven by main business decline, while gross profit turned to a loss of RMB(6,403) thousand Total Operating Revenue, Operating Costs, and Gross Profit (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Main Business Revenue | 62,607 | 93,443 | | Other Business Revenue | 3,378 | 4,494 | | Total Operating Revenue | 65,985 | 97,937 | | Main Business Costs | 72,383 | 92,925 | | Other Business Costs | 5 | 141 | | Total Operating Costs | 72,388 | 93,066 | | Gross Profit | (6,403) | 4,871 | Main Business Revenue and Costs by Segment (For the six months ended June 30) | Item | 2025 Operating Revenue (RMB thousands) | 2025 Operating Costs (RMB thousands) | 2024 Operating Revenue (RMB thousands) | 2024 Operating Costs (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Advertising | 46,038 | 54,105 | 51,808 | 52,021 | | Printing | — | — | 2 | 1 | | Printing-related Material Trading | 8,654 | 9,745 | 29,905 | 28,711 | | Other | 7,915 | 8,533 | 11,728 | 12,192 | | Total | 62,607 | 72,383 | 93,443 | 92,925 | - In H1 2025, operating revenue from the top five customers totaled **RMB18,536 thousand**, accounting for **28.09%** of business revenue[18](index=18&type=chunk) [Taxes and Surcharges](index=8&type=section&id=Taxes%20and%20Surcharges) H1 2025 taxes and surcharges decreased by 17.78% to RMB846 thousand, mainly due to lower property tax, cultural development fees, and urban construction tax Taxes and Surcharges (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Property Tax | 512 | 633 | | Cultural Development Fees | 211 | 245 | | Urban Construction Tax | 52 | 58 | | Education Surcharge | 30 | 24 | | Local Education Surcharge | 20 | 17 | | Other | 21 | 52 | | Total | 846 | 1,029 | [Finance Costs](index=8&type=section&id=Finance%20Costs) H1 2025 finance costs were negative RMB493 thousand, an absolute decrease of 25.08% year-over-year, primarily driven by reduced interest income Finance Costs (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest Expense | 64 | 90 | | Less: Interest Income | 573 | 785 | | Exchange Gains/Losses | (2) | — | | Add: Handling Fees and Other Expenses | 18 | 37 | | Total | (493) | (658) | [Investment Income](index=8&type=section&id=Investment%20Income) H1 2025 investment income decreased by 19.04% to RMB8,989 thousand, primarily from other equity instrument investments, contrasting with higher disposal gains in the prior year Investment Income (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Share of Profit from Associates | — | (1,377) | | Investment Income from Disposal of Financial Assets Measured at Fair Value Through Profit or Loss | (131) | 12,441 | | Investment Income from Other Equity Instrument Investments Held | 8,842 | 39 | | Other Investment Income | 278 | — | | Total | 8,989 | 11,103 | [Gains from Changes in Fair Value and Credit Impairment Losses](index=9&type=section&id=Gains%20from%20Changes%20in%20Fair%20Value%20and%20Credit%20Impairment%20Losses) H1 2025 saw fair value gains of RMB2,320 thousand, a significant improvement, while credit impairment losses were RMB(1,783) thousand, primarily from bad debts Gains from Changes in Fair Value (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Fair Value Changes of Financial Assets Held for Trading | 2,320 | (5,563) | | Total | 2,320 | (5,563) | Credit Impairment Losses (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Bad Debt Losses | (1,783) | 2,893 | | Total | (1,783) | 2,893 | [Non-operating Income and Expenses](index=9&type=section&id=Non-operating%20Income%20and%20Expenses) H1 2025 non-operating income significantly increased to RMB380 thousand, primarily from other income, while non-operating expenses substantially decreased to RMB4 thousand Non-operating Income (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Gains on Disposal of Fixed Assets | — | 5 | | Other | 380 | 8 | | Total | 380 | 13 | Non-operating Expenses (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Other | 4 | 38 | | Total | 4 | 38 | [Income Tax Expense](index=10&type=section&id=Income%20Tax%20Expense) H1 2025 income tax expense was negative RMB85 thousand, a 666.67% decrease, primarily due to a reversal by subsidiary Jingjian Media from tax reconciliation Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Income Tax Expense | (85) | 15 | | Total | (85) | 15 | - The Group was not required to provide for Hong Kong profits tax during the period as no profits arose in Hong Kong[24](index=24&type=chunk) [Other Comprehensive Income](index=11&type=section&id=Other%20Comprehensive%20Income) H1 2025 net other comprehensive income after tax significantly increased to RMB34,248 thousand, primarily driven by a RMB34,183 thousand gain from investment property fair value changes Other Comprehensive Income (As of June 30) | Item | Balance as of January 1, 2025 (RMB thousands) | Amount Incurred Before Tax for the Year (RMB thousands) | Attributable to Parent Company After Tax (RMB thousands) | Attributable to Non-controlling Interests After Tax (RMB thousands) | Balance as of June 30, 2025 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Other Comprehensive Income Not to be Reclassified to Profit or Loss | 230,487 | — | — | — | 230,487 | | Of which: Fair Value Changes of Other Equity Instrument Investments | 230,487 | — | — | — | 230,487 | | Other Comprehensive Income to be Reclassified to Profit or Loss | 751 | 34,248 | 34,222 | 26 | 34,973 | | Of which: Fair Value Changes of Investment Properties | — | 34,183 | 34,183 | — | 34,183 | | Exchange Differences on Translation of Foreign Currency Financial Statements | 201 | 65 | 39 | 26 | 240 | | Total Other Comprehensive Income | 231,238 | 34,248 | 34,222 | 26 | 265,460 | [Earnings Per Share and Dividends](index=11&type=section&id=Earnings%20Per%20Share%20and%20Dividends) H1 2025 basic and diluted loss per share expanded to RMB0.10, and the Board does not recommend an interim dividend Earnings Per Share (For the six months ended June 30) | Item | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Net Profit Attributable to Equity Holders of the Company for the Half Year | (19,047) | (9,420) | | Weighted Average Number of Ordinary Shares Issued (thousands) | 197,310 | 197,310 | | Basic Earnings Per Share | (0.10) | (0.05) | | Diluted Earnings Per Share | (0.10) | (0.05) | - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[27](index=27&type=chunk) [Details of Current Assets](index=12&type=section&id=Details%20of%20Current%20Assets) As of June 30, 2025, total current assets were RMB269,225 thousand, with cash decreasing, financial assets held for trading increasing, and mixed movements in receivables and prepayments Key Current Asset Items (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Cash and Bank Balances | 41,463 | 81,523 | | Financial Assets Held for Trading | 127,388 | 114,270 | | Net Accounts Receivable | 39,897 | 28,235 | | Net Prepayments | 9,390 | 6,061 | | Net Other Receivables | 22,366 | 28,712 | | Inventories | 52 | 5,282 | | Other Current Assets | 28,669 | 29,595 | - Financial assets held for trading primarily consist of broker asset management products, totaling **RMB127,388 thousand**, an **11.48% increase** from the end of 2024[28](index=28&type=chunk) - Net accounts receivable amounted to **RMB39,897 thousand**, with the 0-90 day aging period accounting for the largest proportion, and the top five entities representing **49.84%** of total accounts receivable[28](index=28&type=chunk) - Net other receivables were **RMB22,366 thousand**, including **RMB8,842 thousand** in dividends receivable; other receivables by nature include related party balances, external entity balances, deposits, and guarantees[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) [Details of Non-current Assets](index=15&type=section&id=Details%20of%20Non-current%20Assets) As of June 30, 2025, total non-current assets increased to RMB452,410 thousand, driven by investment properties' fair value gains, while long-term equity investments were written down to zero Key Non-current Asset Items (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Other Equity Instrument Investments | 341,253 | 341,253 | | Investment Properties | 95,743 | 53,633 | | Fixed Assets | 1,219 | 1,432 | | Right-of-use Assets | 695 | 1,390 | | Intangible Assets | 8,298 | 16,450 | | Long-term Prepayments | 5,202 | 4,281 | | Other Non-current Assets | — | — | - Long-term equity investments, including those in associates like Beijing Leisure Fashion Advertising Co., Ltd., have been written down to **zero** under the equity method[37](index=37&type=chunk) - Investment properties' fair value was **RMB95,743 thousand**, a **78.51% increase** from the end of 2024, mainly due to the conversion of some self-owned properties to investment properties measured at fair value, resulting in an appraisal gain of **RMB34,183 thousand**[41](index=41&type=chunk) - Among other non-current assets, a prepayment of **RMB24,000 thousand** for the film project "Oriental Football King" has been fully impaired, as the project has not yet been released[44](index=44&type=chunk) [Details of Current Liabilities](index=19&type=section&id=Details%20of%20Current%20Liabilities) As of June 30, 2025, total current liabilities slightly increased to RMB65,712 thousand, with notes payable and contract liabilities rising, while other payables decreased Key Current Liability Items (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Notes Payable | 7,552 | 1,365 | | Accounts Payable | 17,125 | 21,184 | | Contract Liabilities | 14,653 | 9,674 | | Payroll Payable | 6,250 | 6,981 | | Taxes Payable | 971 | 1,528 | | Other Payables | 17,469 | 18,006 | | Non-current Liabilities Due Within One Year | 750 | 1,106 | | Other Current Liabilities | 942 | 3,274 | - Accounts payable amounted to **RMB17,125 thousand**, with the 0-90 day aging period accounting for the largest proportion at **RMB8,293 thousand**[45](index=45&type=chunk) - Other payables were **RMB17,469 thousand**, mainly comprising intercompany balances, deposits and guarantees, and collections/payments on behalf of others[45](index=45&type=chunk) [Details of Non-current Liabilities](index=5&type=section&id=Details%20of%20Non-current%20Liabilities) As of June 30, 2025, total non-current liabilities remained at RMB706 thousand, entirely consisting of deferred income tax liabilities Key Non-current Liability Items (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Deferred Income Tax Liabilities | 706 | 706 | | Total Non-current Liabilities | 706 | 706 | [Details of Equity](index=5&type=section&id=Details%20of%20Equity) As of June 30, 2025, total equity increased to RMB655,217 thousand, driven by higher other comprehensive income, despite a decrease in retained earnings due to expanded losses Key Equity Items (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Share Capital | 197,310 | 197,310 | | Capital Reserve | 919,114 | 918,976 | | Other Comprehensive Income | 265,460 | 231,238 | | Surplus Reserve | 130,931 | 130,931 | | Retained Earnings | (859,766) | (840,719) | | Total Equity Attributable to Equity Holders of the Company | 653,049 | 637,736 | | Non-controlling Interests | 2,168 | 11,193 | | Total Equity | 655,217 | 648,929 | [Interests in Other Entities](index=20&type=section&id=Interests%20in%20Other%20Entities) The Group holds interests in other entities through other equity instrument investments in Beiyang Publishing and Beijing Keyin Media, and financial assets held for trading in Capital Securities [Interests in Other Equity Instrument Investments](index=20&type=section&id=Interests%20in%20Other%20Equity%20Instrument%20Investments) The Group holds significant equity stakes in Beiyang Publishing (2.43%, RMB264,379 thousand) and Beijing Keyin Media (16.00%, RMB36,444 thousand) for investment returns Basic Information of Companies Related to Other Equity Instrument Investments (As of June 30) | Company Name | Shareholding (%) | Fair Value (RMB thousands) | % of Total Assets | | :--- | :--- | :--- | :--- | | Beiyang Publishing & Media Co., Ltd. | 2.43 | 264,379 | 36.64 | | Beijing Keyin Media Culture Co., Ltd. | 16.00 | 36,444 | 5.05 | | Beijing Youth Daily New Media Co., Ltd. | 5.00 | 3,577 | 0.50 | | Beijing International Advertising Media Group Co., Ltd. | 11.44 | 36,853 | 5.11 | - Investments in Beiyang Media and Keyin Media are primarily based on their sound operating conditions and capital operation plans, aiming for better investment returns[47](index=47&type=chunk) [Interests in Financial Assets Held for Trading](index=21&type=section&id=Interests%20in%20Financial%20Assets%20Held%20for%20Trading) The Group's idle funds managed by Capital Securities in fixed-income products had a fair value of RMB127,388 thousand, recognizing RMB2,739 thousand in unrealized gains Basic Information of Financial Assets Held for Trading (As of June 30) | Counterparty Name | Product Type | Investment Cost (RMB thousands) | Unrealized Gains and Losses for the six months ended June 30 (RMB thousands) | Fair Value (RMB thousands) | % of Total Assets | | :--- | :--- | :--- | :--- | :--- | :--- | | Capital Securities | Fixed-income Wealth Management Products | 118,390 | 2,739 | 127,388 | 17.65 | - The Company will continue to entrust Capital Securities with managing idle funds, provided it does not affect daily operating liquidity and is authorized by the shareholders' meeting[49](index=49&type=chunk) [Group Business Review](index=22&type=section&id=Group%20Business%20Review) [Overall Operating Performance and Market Environment](index=22&type=section&id=Overall%20Operating%20Performance%20and%20Market%20Environment) H1 2025 total operating revenue decreased by 32.63% to RMB65,985 thousand, with net loss attributable to equity holders increasing by 102.20% due to revenue decline, higher expenses, and credit losses amid a challenging market - H1 2025 total operating revenue was **RMB65,985 thousand**, a **32.63% decrease** from H1 2024[51](index=51&type=chunk) - Net loss attributable to equity holders of the Company was **RMB19,047 thousand**, a **102.20% increase** from H1 2024[51](index=51&type=chunk) - The increase in net loss was primarily due to: (1) decreased operating revenue; (2) increased administrative expenses from personnel restructuring for new business development and transformation; (3) increased credit impairment losses affected by accounts receivable collection[51](index=51&type=chunk) - Operating revenue from traditional business segments generally decreased, with the printing and related material trading business contraction leading to a **RMB21,253 thousand** decline in operating revenue[51](index=51&type=chunk) - Despite market challenges, the Company continued to expand its outdoor advertising and Beijing City Cultural Annual Pass businesses, contributing to operating revenue growth[51](index=51&type=chunk) - The global economy experienced uneven recovery due to geopolitical conflicts and inflationary pressures; the domestic economy faced dual pressures of demand contraction and structural adjustment, leading to slower advertising market growth and digital transformation challenges for traditional advertising[50](index=50&type=chunk) [Strategic Initiatives and Operational Optimization](index=23&type=section&id=Strategic%20Initiatives%20and%20Operational%20Optimization) H1 2025 focused on strategic transformation, optimizing governance, fostering growth drivers, and enhancing asset structure through top-level design, business layout, and brand building [Optimizing Governance System and Enhancing Operational Efficiency](index=23&type=section&id=Optimizing%20Governance%20System%20and%20Enhancing%20Operational%20Efficiency) The Group optimized its governance by re-electing the Board, enhancing the Supervisory Board, advancing strategic planning, building a risk management system, and improving OA and state-owned asset management - Completed the re-election of the Company's new Board of Directors, resulting in a more professional and diversified board composition[52](index=52&type=chunk) - Carried out reforms to the Supervisory Board, optimizing the corporate governance structure[52](index=52&type=chunk) - Advanced the '15th Five-Year' strategic plan, strengthening top-level design[52](index=52&type=chunk) - Established a comprehensive system-wide risk management framework, enhancing risk prevention and control[52](index=52&type=chunk) - Enhanced the intelligence of the OA office system, optimizing financial and business process management systems[52](index=52&type=chunk) - Formulated and revised company policies, improving the state-owned asset management system[52](index=52&type=chunk) [Optimizing Business Layout and Fostering Growth Drivers](index=23&type=section&id=Optimizing%20Business%20Layout%20and%20Fostering%20Growth%20Drivers) The Group transformed advertising with metro media upgrades and interactive projects, expanded cultural tourism integration with events like KOD, developed youth education programs, and innovated new media operations and government activities - Accelerated advertising business transformation and innovation, completing media upgrades at Beijing Metro Line 4 Xidan Station and developing 'Metro Station' creative interactive scene advertising projects[53](index=53&type=chunk)[54](index=54&type=chunk) - Meticulously built its own media matrix, deeply cultivating vertical account operations in elderly care, automotive, and real estate, integrating short video and live streaming content marketing formats[53](index=53&type=chunk)[54](index=54&type=chunk) - Actively integrated capital cultural tourism resources, deeply expanding cultural, sports, and tourism integration businesses, including organizing the 2025 KOD World Street Dance Competition and forming a strategic partnership with 'The Color Run'[53](index=53&type=chunk)[54](index=54&type=chunk) - Strengthened Beijing City Cultural Annual Pass product development and channel expansion, collaborating with **over 40 central and state-owned enterprises** in H1 2025[53](index=53&type=chunk)[54](index=54&type=chunk) - Focused on youth quality education, providing diversified science popularization study tours and camp education practical services, completing **16 group camp reception projects** and cumulatively hosting **10,421 person-days**[53](index=53&type=chunk)[54](index=54&type=chunk) - Focused on new media operations and government event businesses, innovatively incubating the 'Beijing Community Culture Festival' brand, promoting commercial operation of community spaces, and implementing **15 'Beiqing Community HUI' projects**[53](index=53&type=chunk)[54](index=54&type=chunk) [Optimizing Asset Structure and Strengthening Internal Control Empowerment](index=24&type=section&id=Optimizing%20Asset%20Structure%20and%20Strengthening%20Internal%20Control%20Empowerment) The Group revitalized idle assets, generating RMB2,320 thousand from fund management and RMB2,246 thousand from property rentals, while accelerating the divestment of 6 inefficient enterprises and liquidating paper inventory - Entrusted Capital Securities Co., Ltd. with idle fund management, realizing fair value change gains of **RMB2,320 thousand**[55](index=55&type=chunk) - Generated rental income of **RMB2,246 thousand** by leasing idle office properties and bartered properties[55](index=55&type=chunk) - Accelerated the cleanup of inefficient assets, systematically advancing the divestment of **6 inefficient enterprises**, with **1 already deregistered**[55](index=55&type=chunk) - Expedited the liquidation sale of paper inventory, accelerating the mitigation of trade business risks[55](index=55&type=chunk) [Details of Advertising Business](index=25&type=section&id=Details%20of%20Advertising%20Business) [Market Environment and Business Performance](index=25&type=section&id=Market%20Environment%20and%20Business%20Performance) H1 2025 saw China's advertising market grow with digital dominance, while the Group's advertising revenue decreased by 11.14% to RMB46,038 thousand, offset by growth in outdoor advertising and annual pass services - China's advertising market size continued to grow, with digital advertising's share steadily increasing, and traditional media accelerating its digital and interactive transformation[56](index=56&type=chunk) - The outdoor advertising market showed structural adjustments, with overall spending trending downwards, but digital media advertising, such as subway electronic screens, experienced counter-trend growth[56](index=56&type=chunk) - In H1 2025, the Group's advertising revenue was **RMB46,038 thousand**, an **11.14% decrease** from H1 2024[57](index=57&type=chunk) - Outdoor advertising business revenue was **RMB13,482 thousand**, a **12.56% increase** from H1 2024[57](index=57&type=chunk) - Annual pass business generated new revenue of **RMB3,256 thousand**[57](index=57&type=chunk) [Core Initiatives and Business Breakthroughs](index=25&type=section&id=Core%20Initiatives%20and%20Business%20Breakthroughs) The Group achieved advertising breakthroughs through innovation, content, and channel empowerment, building a differentiated outdoor advertising system, a refined media matrix, and diversified annual pass brand [Innovation Empowerment, Differentiated Outdoor Advertising Product System Construction](index=25&type=section&id=Innovation%20Empowerment%2C%20Differentiated%20Outdoor%20Advertising%20Product%20System%20Construction) The Group upgraded Beijing Metro Line 4 Xidan Station media with large lightboxes and LED screens, developing 'Metro Station' interactive advertising projects and partnering with major brands - Completed media upgrades at Beijing Metro Line 4 Xidan Station, introducing oversized lightboxes and high-definition LED electronic screens[57](index=57&type=chunk)[58](index=58&type=chunk) - Developed the 'Metro Station' project, conducting creative interactive scene activities such as product displays and experiences in subway station halls[57](index=57&type=chunk)[58](index=58&type=chunk) [Content Empowerment, Meticulously Building Own Media Matrix](index=26&type=section&id=Content%20Empowerment%2C%20Meticulously%20Building%20Own%20Media%20Matrix) The Group enhanced its new media matrix with short videos and live streaming, generating RMB2,955 thousand in H1 2025, and successfully grew vertical accounts like 'Qingche Tan' and 'Elderly Care New Frontline' - H1 2025 account operating revenue reached **RMB2,955 thousand**[59](index=59&type=chunk) - 'Qingche Tan' meticulously categorized content sections, including hot topic tracking, cloud car reviews, and engaging test drives[59](index=59&type=chunk) - 'Elderly Care New Frontline' deeply cultivated live streaming services, conducting themed activities for elderly care institutions, driving fan growth and sales conversion[59](index=59&type=chunk) - 'Sister Yu's Property Review' focused on the real estate vertical, interpreting market trends, reviewing properties, and analyzing policies, achieving widespread dissemination[59](index=59&type=chunk) [Channel Empowerment, Diversified Deep Cultivation of Annual Pass Business Brand](index=26&type=section&id=Channel%20Empowerment%2C%20Diversified%20Deep%20Cultivation%20of%20Annual%20Pass%20Business%20Brand) The Group expanded annual pass channels, collaborating with over 40 state-owned enterprises, and upgraded its mini-program to enhance user experience and operational efficiency - Expanded the core sales network to central and state-owned enterprise unions, collaborating with **over 40 enterprises** on annual pass projects[60](index=60&type=chunk) - Advanced annual pass mini-program upgrades, completing backend management system reconstruction and user interface optimization, and launching new features like a scenic spot verification system[60](index=60&type=chunk) [Performance of Major Subsidiaries](index=27&type=section&id=Performance%20of%20Major%20Subsidiaries) [Beiqing Innovation Culture](index=27&type=section&id=Beiqing%20Innovation%20Culture) Beiqing Innovation Culture, a wholly-owned subsidiary, completed 16 youth camp projects, hosting 10,421 person-days, expanded projects, and developed curricula, with one project selected for a Hong Kong youth study tour collection - In H1 2025, completed **16 group camp reception projects** for study tours, social practices, and enterprise/public institution training, cumulatively hosting **10,421 person-days**[61](index=61&type=chunk) - Successfully expanded **8 Beijing school projects** and **5 provincial client projects**[61](index=61&type=chunk) - The 'National Science and Technology Innovation Development System Study Tour – Beijing' project was successfully selected for the '2025 Hong Kong Youth Study Tour to Mainland China Collection of Excellent Projects'[61](index=61&type=chunk) [Beiqing Community Media](index=27&type=section&id=Beiqing%20Community%20Media) Beiqing Community Media transformed into a government integrated media service, covering nine Beijing districts with nearly 50 new media accounts, acquired 16 new clients, implemented 15 'Beiqing Community HUI' projects, and incubated the 'Beijing Community Culture Festival' brand - Beiqing Community Media has transformed from a traditional newspaper business model to one primarily focused on government integrated media services[62](index=62&type=chunk) - Government affairs business covers **nine districts** in Beijing, including Changping, Shunyi, Miyun, Fangshan, Dongcheng, Xicheng, Shijingshan, Haidian, Chaoyang, and the Sub-center, and publishes 'Beiqing Community News'[62](index=62&type=chunk) - Operates nearly **50 new media accounts** on platforms such as WeChat, Weibo, Douyin, Kuaishou, Xiaohongshu, Toutiao, and NetEase, and is present on news apps like People's Daily, Beijing Daily, and Beijing Time[62](index=62&type=chunk)[63](index=63&type=chunk) - Successfully acquired **16 new clients** in H1 2025[63](index=63&type=chunk) - Implemented **15 'Beiqing Community HUI' projects** in communities, such as Tongniu Film Industrial Park and Beijing Agricultural Guarantee Township Service Station, established a brand marketing center, and innovatively incubated the 'Beijing Community Culture Festival' brand[63](index=63&type=chunk) [Jingjian Media](index=28&type=section&id=Jingjian%20Media) Jingjian Media, a wholly-owned subsidiary, optimized its business, acquired 8 new government and state-owned enterprise clients, and monetized its 'Qingcheng 0819' self-media video account - Successfully acquired **8 new clients**, including government agencies and state-owned enterprise groups[64](index=64&type=chunk) - Operated the self-media video account 'Qingcheng 0819', publishing **35 episodes** of content and achieving commercial monetization[64](index=64&type=chunk) [Outlook and Future Plans](index=28&type=section&id=Outlook%20and%20Future%20Plans) H2 2025 strategy focuses on transformational development, optimizing business layout, and growing core businesses, including advertising, cultural tourism integration, leveraging Capital Group's platform, and enhancing asset management and risk control - In H2 2025, the Group will strategically focus on transformational development, accelerating business layout adjustments, and concentrating on developing cornerstone and cultivation-type core businesses to improve quality and efficiency, building core competitive advantages[65](index=65&type=chunk) - Comprehensively build an advertising operating system: strengthen innovation in subway outdoor advertising models, promote integration of subway media resources and product development; solidify full-service advertising capabilities; deeply cultivate advertising content operations, accelerating the development and commercialization of proprietary new media products[65](index=65&type=chunk)[66](index=66&type=chunk) - Deeply expand cultural, sports, and tourism integration: focus on implementing high-quality cultural and sports event IPs, such as successfully hosting the internationally renowned KOD World Street Dance Competition; continuously explore Beijing City Cultural Annual Pass channel resources and product models[65](index=65&type=chunk)[66](index=66&type=chunk) - Continuously leverage Capital Group's cultural and sports industry market expansion platform function: explore new business models like 'video + government affairs' and 'cultural tourism + consumption,' strengthen commercial operation of community cultural spaces, implement 'Beijing Community Culture Festival' activities; build a distinctive brand for youth study tours[65](index=65&type=chunk)[66](index=66&type=chunk) - Persistently deepen management: focus on optimizing asset structure and internal risk control, optimize organizational and talent structures, comprehensively strengthen institutional and informatization construction, driving improved management efficiency[65](index=65&type=chunk)[66](index=66&type=chunk) [Analysis of Financial Position and Operating Results](index=29&type=section&id=Analysis%20of%20Financial%20Position%20and%20Operating%20Results) [Total Operating Revenue](index=29&type=section&id=Total%20Operating%20Revenue) H1 2025 total operating revenue decreased by 32.63% to RMB65,985 thousand, primarily due to declines in printing, Beiqing Community Media advertising, and Beiqing Innovation Culture study tour revenue Total Operating Revenue by Segment (For the six months ended June 30) | Segment | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Advertising Revenue (including New Media Operations Revenue) | 46,038 | 51,808 | -11.14 | | Printing Revenue | 0 | 2 | -100.00 | | Printing-related Material Trading Revenue | 8,654 | 29,905 | -71.06 | | Other Revenue (including Study Tour Revenue) | 11,293 | 16,222 | -30.38 | | Total | 65,985 | 97,937 | -32.63 | - Key factors for the overall year-over-year decrease in operating revenue include: contraction of printing and printing-related material trading businesses, lower advertising revenue from subsidiary Beiqing Community Media, and reduced study tour revenue from Beiqing Innovation Culture, partially offset by growth in outdoor advertising and Beijing City Cultural Annual Pass businesses[68](index=68&type=chunk) [Operating Costs and Taxes and Surcharges](index=30&type=section&id=Operating%20Costs%20and%20Taxes%20and%20Surcharges) H1 2025 operating costs decreased by 22.22% to RMB72,388 thousand, driven by lower printing and study tour costs, while taxes and surcharges decreased by 17.78% to RMB846 thousand Operating Costs by Segment (For the six months ended June 30) | Segment | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Advertising Costs (including New Media Operations Costs) | 54,105 | 52,021 | +4.01 | | Printing Costs | 0 | 1 | -100.00 | | Printing-related Material Trading Costs | 9,745 | 28,711 | -66.06 | | Other Costs (including Study Tour Costs) | 8,538 | 12,333 | -30.77 | | Total | 72,388 | 93,066 | -22.22 | - Taxes and surcharges were **RMB846 thousand**, a **17.78% decrease** from H1 2024[69](index=69&type=chunk) - The overall decrease in operating costs was mainly due to the reduction in printing and related material trading businesses and lower study tour revenue from Beiqing Innovation Culture, partially offset by increased costs in outdoor advertising and Beijing City Cultural Annual Pass businesses[69](index=69&type=chunk) [Selling Expenses](index=30&type=section&id=Selling%20Expenses) H1 2025 selling expenses decreased by 46.09% to RMB3,724 thousand, primarily due to sales personnel restructuring at Beiqing Community Media Selling Expenses (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Selling Expenses | 3,724 | 6,908 | -46.09 | - The year-over-year decrease in selling expenses was mainly due to personnel restructuring in Beiqing Community Media's sales team[70](index=70&type=chunk) [Administrative Expenses](index=31&type=section&id=Administrative%20Expenses) H1 2025 administrative expenses increased by 14.43% to RMB19,822 thousand, driven by personnel restructuring for new businesses, higher labor and office costs, and increased intermediary fees Administrative Expenses (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 19,822 | 17,323 | +14.43 | - The year-over-year increase in administrative expenses was mainly due to personnel restructuring for new business development and transformation, increased labor and office expenses from providing employee meal benefits, and higher intermediary fees[71](index=71&type=chunk) [Finance Costs](index=31&type=section&id=Finance%20Costs) H1 2025 finance costs were negative RMB493 thousand, an absolute decrease of 25.08% year-over-year, primarily due to reduced interest income from time deposits Finance Costs (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs | (493) | (658) | -25.08 | - Interest income was **RMB573 thousand**, a **27.01% decrease** from H1 2024[72](index=72&type=chunk) - The year-over-year increase in finance costs was mainly due to reduced interest income from time deposits[72](index=72&type=chunk) [Share of Profit from Associates](index=31&type=section&id=Share%20of%20Profit%20from%20Associates) H1 2025 share of profit from associates was RMB0 thousand, an improvement from a prior year loss, as investments in associates were written down to zero Share of Profit from Associates (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Share of Profit from Associates | — | (1,377) | +1,377 | - Share of profit from associates for the current period was **zero** as investments in associates have been written down to zero under the equity method[73](index=73&type=chunk) [Operating Profit](index=31&type=section&id=Operating%20Profit) H1 2025 operating profit was a loss of RMB20,736 thousand, an 84.16% increase in loss year-over-year, driven by lower revenue, higher administrative expenses, and increased credit impairment losses Operating Profit (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Profit | (20,736) | (11,260) | +84.16 | - The increase in loss was mainly due to decreased operating revenue, increased administrative expenses, and higher credit impairment losses affected by accounts receivable collection[74](index=74&type=chunk) [Income Tax Expense](index=31&type=section&id=Income%20Tax%20Expense) H1 2025 income tax expense was negative RMB85 thousand, a 666.67% decrease, primarily due to a reversal by subsidiary Jingjian Media from tax reconciliation Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Income Tax Expense | (85) | 15 | -100 | - The Company's subsidiary, Jingjian Media, recorded a negative income tax expense for the current period due to a reversal based on income tax reconciliation results[75](index=75&type=chunk) [Net Profit/Loss Attributable to Equity Holders of the Company](index=32&type=section&id=Net%20Profit%2FLoss%20Attributable%20to%20Equity%20Holders%20of%20the%20Company) H1 2025 net loss attributable to equity holders increased by 102.20% to RMB19,047 thousand, driven by lower revenue, higher administrative expenses, and increased credit impairment losses Net Profit/Loss Attributable to Equity Holders of the Company (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Loss Attributable to Equity Holders of the Company | 19,047 | 9,420 | +102.20 | - The increase in net loss was mainly due to decreased operating revenue, increased administrative expenses, and higher credit impairment losses affected by accounts receivable collection[76](index=76&type=chunk) [Financial Resources and Liquidity](index=32&type=section&id=Financial%20Resources%20and%20Liquidity) As of June 30, 2025, current assets were RMB269,225 thousand and current liabilities RMB65,712 thousand, with cash decreasing, financial assets held for trading increasing, and total equity at RMB655,217 thousand Financial Resources and Liquidity (As of June 30) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Assets | 269,225 | 294,314 | | Cash and Bank Balances | 41,463 | 81,523 | | Financial Assets Held for Trading | 127,388 | 114,270 | | Non-current Assets | 452,410 | 418,439 | | Current Liabilities | 65,712 | 63,118 | | Non-current Liabilities | 706 | 706 | | Equity | 655,217 | 648,929 | - The Group's funds primarily originate from operating activities and deposit balances, mainly used for working capital and general recurring expenses[77](index=77&type=chunk) [Bank Borrowings, Overdrafts and Other Borrowings](index=32&type=section&id=Bank%20Borrowings%2C%20Overdrafts%20and%20Other%20Borrowings) As of June 30, 2025, the Group had no bank loans, overdrafts, or other borrowings - As of June 30, 2025, the Group had no bank loans, overdrafts, or other borrowings (December 31, 2024: nil)[78](index=78&type=chunk) [Capital and Debt Ratio](index=32&type=section&id=Capital%20and%20Debt%20Ratio) As of June 30, 2025, the Group's capital and debt ratio slightly increased to 10.14% from 9.84% at 2024 year-end Capital and Debt Ratio (As of June 30) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Capital and Debt Ratio | 10.14% | 9.84% | [Share Capital Structure and Major Shareholders](index=33&type=section&id=Share%20Capital%20Structure%20and%20Major%20Shareholders) [Share Capital Structure](index=33&type=section&id=Share%20Capital%20Structure) As of June 30, 2025, total share capital was 197,310,000 shares, with domestic shares at 72.18% and H shares at 27.82%, Beijing Youth Daily being the largest domestic shareholder at 63.27% Share Capital Structure (As of June 30) | Shareholder Category | Number of Shares | % of Total Share Capital | | :--- | :--- | :--- | | Domestic Shares (Subtotal) | 142,409,000 | 72.18 | | H Shares | 54,901,000 | 27.82 | | Total Share Capital | 197,310,000 | 100.00 | - Beijing Youth Daily holds **124,839,974 domestic shares**, accounting for **63.27%** of the total share capital[80](index=80&type=chunk) - LeEco Information Technology (Beijing) Co., Ltd. holds **19,533,000 H shares** of the Company, accounting for **9.90%** of the Company's total share capital[80](index=80&type=chunk) [Interests of Major Shareholders in Shares and Related Shares](index=34&type=section&id=Interests%20of%20Major%20Shareholders%20in%20Shares%20and%20Related%20Shares) As of June 30, 2025, Beijing Youth Daily is the largest shareholder with 63.27% domestic share interest, with Beijing Capital Group holding an interest via trusteeship, and LeEco holding 9.90% H share interest Interests of Major Shareholders in Shares and Related Shares (As of June 30) | Shareholder Name | Class of Shares | Nature of Interest | Number of Shares Interested | % of Total Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Beijing Youth Daily | Domestic Shares | Beneficial Owner | 124,839,974 | 63.27 | | Beijing Capital Group Co., Ltd. | Domestic Shares | Other | 124,839,974 | 63.27 | | Beijing Chengshang Culture Communication Co., Ltd. | Domestic Shares | Beneficial Owner | 7,367,000 | 3.73 | | Guofu Shangtong Information Technology Development Co., Ltd. | Domestic Shares | Interest of a Controlled Corporation | 7,367,000 | 3.73 | | LeEco Information Technology (Beijing) Co., Ltd. | H Shares | Beneficial Owner | 19,533,000 | 9.90 | | Founder Investment (HK) Ltd. | H Shares | Beneficial Owner | 4,939,000 | 2.50 | - Capital Group has been included in the scope of trusteeship for enterprises under Beijing Youth Daily since May 20, 2021, exercising the Company's investor/shareholder functions, thus holding an interest in shares held by Beijing Youth Daily[83](index=83&type=chunk) - The nature of the interest in **7,367,000 domestic shares** held by Beijing Chengshang Culture Communication Co., Ltd. has changed, being provided as security to parties other than qualified lenders[83](index=83&type=chunk) [Other Information](index=36&type=section&id=Other%20Information) [Capital Expenditure](index=36&type=section&id=Capital%20Expenditure) H1 2025 capital expenditure significantly increased to RMB2,124 thousand, with H2 spending anticipated for office equipment and intangible assets Capital Expenditure (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Capital Expenditure | 2,124 | 650 | - The Group anticipates H2 2025 capital expenditure will primarily include office equipment and intangible asset expenses consistent with its business strategy[85](index=85&type=chunk) [Contingent Liabilities and Pledged Assets](index=36&type=section&id=Contingent%20Liabilities%20and%20Pledged%20Assets) As of June 30, 2025, the Group had no contingent liabilities or pledged assets - As of June 30, 2025, the Group had no contingent liabilities or pledged assets[86](index=86&type=chunk) [Foreign Exchange Risk](index=36&type=section&id=Foreign%20Exchange%20Risk) The Group's functional currency is RMB, with limited foreign exchange risk from foreign currency payables, having minimal impact on cash flow or liquidity - The Group uses RMB as its functional currency, with domestic operations primarily settled in RMB[87](index=87&type=chunk) - Certain payables are settled in foreign currencies (mainly USD and HKD), but foreign exchange fluctuations have a very limited impact on the Group's operating cash flows or liquidity[87](index=87&type=chunk) [Employees](index=36&type=section&id=Employees) As of June 30, 2025, the Group had 346 employees, an increase due to a new subsidiary and restructuring, with total payroll of RMB41,055 thousand and active employee training - As of June 30, 2025, the Group had **346 employees** (June 30, 2024: 310 employees), an increase from the prior year, mainly due to the addition of a new subsidiary and personnel restructuring for normal business needs[88](index=88&type=chunk) - During the reporting period, the Group paid total payroll expenses of approximately **RMB41,055 thousand**[88](index=88&type=chunk) - The Group conducted various employee training programs, including financial management, related party transactions and inside information management, legal and compliance management, archives management, outdoor advertising operations, and information technology and office applications[88](index=88&type=chunk) [Directors' and Chief Executive's Interests](index=37&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests) As of June 30, 2025, no directors or chief executive held disclosable interests or short positions in the Company's or its associated corporations' shares or debentures - As of June 30, 2025, none of the Company's directors or chief executive had any interests or short positions in the shares, underlying shares, or debentures of the Company or any of its associated corporations that were required to be notified to the Company and the HKEX under Part XV of the Securities and Futures Ordinance[89](index=89&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=37&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities, and no treasury shares were held as of June 30, 2025 - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[90](index=90&type=chunk) - As of June 30, 2025, the Company held no treasury shares[90](index=90&type=chunk) [Significant Investments](index=37&type=section&id=Significant%20Investments) The Company's asset management plan with Capital Securities and investments in Beiyang Media and Keyin Media each exceed 5% of total assets; no other significant investments or acquisition plans exist - The Company's single asset management contract entrusted to Capital Securities was approved by shareholders for a three-year extension until June 16, 2026, with this investment accounting for **over 5%** of the Group's total assets[91](index=91&type=chunk) - The Company's investments in Beiyang Media and Keyin Media each account for **over 5%** of the Group's total assets[92](index=92&type=chunk) - Except as disclosed in this announcement, as of June 30, 2025, the Group had no significant investments or plans for significant investments or asset acquisitions[92](index=92&type=chunk) [Significant Acquisitions and Disposals of Assets](index=38&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Assets) During the reporting period, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures - During the reporting period, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures[93](index=93&type=chunk) [Changes in the Group's Performance After December 31, 2024](index=38&type=section&id=Changes%20in%20the%20Group%27s%20Performance%20After%20December%2031%2C%202024) Except as disclosed, no material changes in the Company's current information compared to its most recently published annual report - Except as disclosed in this announcement, there have been no material changes in the Company's current information regarding matters listed in paragraph 32 of Appendix D2 to the Listing Rules compared to that disclosed in its most recently published annual report[94](index=94&type=chunk) [Compliance with Laws and Regulations and Corporate Governance Code](index=38&type=section&id=Compliance%20with%20Laws%20and%20Regulations%20and%20Corporate%20Governance%20Code) During the reporting period, the Company complied with all material laws, regulations, and the Corporate Governance Code provisions of the Listing Rules - During the reporting period, the Company complied with laws and regulations materially affecting the Group and the code provisions set out in Appendix C1 'Corporate Governance Code' of the Listing Rules[95](index=95&type=chunk) [Compliance with Model Code](index=38&type=section&id=Compliance%20with%20Model%20Code) The Company adopted the Model Code for directors' and supervisors' securities transactions, with all confirming compliance during the reporting period - The Company adopted the Model Code set out in Appendix C3 of the Listing Rules for securities transactions by directors and supervisors[96](index=96&type=chunk) - All directors and supervisors confirmed compliance with the standards stipulated in the Model Code during the reporting period[96](index=96&type=chunk) [Audit Committee](index=38&type=section&id=Audit%20Committee) The Audit Committee, established per Listing Rules, reviewed the Group's H1 2025 unaudited interim results and internal controls, raising no objections - The Company established an Audit Committee in accordance with the Listing Rules to review, supervise, and adjust the Group's financial reporting process and internal controls[97](index=97&type=chunk) - The Audit Committee comprises one non-executive director and two independent non-executive directors[97](index=97&type=chunk) - The Company's Audit Committee reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and raised no objections[98](index=98&type=chunk) [Distributable Reserves](index=39&type=section&id=Distributable%20Reserves) As of June 30, 2025, accumulated losses were RMB708,276 thousand, with a surplus reserve of RMB130,931 thousand available to offset losses upon shareholder approval Distributable Reserves (As of June 30) | Item | Amount (RMB thousands) | | :--- | :--- | | Accumulated Losses | 708,276 | | Surplus Reserve | 130,931 | - According to the Company's Articles of Association, the surplus reserve can be used to offset the Company's losses upon approval by the Company's general meeting of shareholders[100](index=100&type=chunk) [Interim Dividend](index=39&type=section&id=Interim%20Dividend) The Board does not recommend any interim dividend for the six months ended June 30, 2025 - The Board does not recommend the distribution of any interim dividend for the six months ended June 30, 2025[101](index=101&type=chunk) [Disclosure of Information on HKEX and Company Website](index=39&type=section&id=Disclosure%20of%20Information%20on%20HKEX%20and%20Company%20Website) The Company's H1 2025 interim report will be published on the HKEXnews website and the Company's website - The Company's interim report for the six months ended June 30, 2025, will be published on the HKEXnews website (http://www.hkexnews.hk) and the Company's website (http://www.bjmedia.com.cn)[102](index=102&type=chunk)

[Interim Results Overview](index=1&type=section&id=Summary) The Group reported significant revenue growth for H1 2025, but net profit attributable to shareholders substantially decreased due to prior period's non-recurring investment income, with no interim dividend recommended. Key Financial Data for H1 2025 | Metric | H1 2025 (RMB) | H1 2024 (RMB) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 797,520,300 | 604,627,900 | ↑ 31.90% | | Net Profit Attributable to Company Shareholders | 12,163,700 | 170,134,900 | ↓ 92.85% | | Earnings Per Share | 0.0152 | 0.2132 | ↓ 92.86% | - The Board recommends **no interim dividend** for the six months ended June 30, 2025[6](index=6&type=chunk) [Unaudited Consolidated Income Statement](index=2&type=section&id=Unaudited%20Consolidated%20Income%20Statement) For the six months ended June 30, 2025, the Group's total operating revenue increased by 31.90% to RMB 798 million, but operating profit and net profit significantly declined due to substantial investment income in the prior period. Key Data from Consolidated Income Statement | Metric | H1 2025 (RMB) | H1 2024 (RMB) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 797,520,309.74 | 604,627,930.88 | ↑ 31.90% | | Operating Profit | 4,780,695.87 | 165,774,690.70 | ↓ 97.12% | | Total Profit | 12,035,094.29 | 168,956,114.25 | ↓ 92.87% | | Net Profit | 11,961,246.60 | 169,351,108.77 | ↓ 92.94% | | Net Profit Attributable to Company Shareholders | 12,163,676.06 | 170,134,914.07 | ↓ 92.85% | | Basic Earnings Per Share | 0.0152 | 0.2132 | ↓ 92.86% | - Investment income significantly decreased from **RMB 282,091,477.58** in H1 2024 to **RMB (96,433.34)** in H1 2025, primarily causing the substantial decline in total profit and net profit[7](index=7&type=chunk) [Unaudited Consolidated Balance Sheet](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheet) As of June 30, 2025, the Group's total assets were RMB 2.33 billion, a slight decrease from year-end 2024, with net current assets turning negative, indicating increased short-term liquidity pressure. Key Data from Consolidated Balance Sheet | Metric | June 30, 2025 (RMB) | December 31, 2024 (RMB) | Change Rate | | :--- | :--- | :--- | :--- | | Total Assets | 2,326,666,376.46 | 2,420,182,877.14 | ↓ 3.86% | | Total Liabilities | 1,822,515,973.81 | 1,928,288,812.05 | ↓ 5.49% | | Total Shareholders' Equity | 504,150,402.65 | 491,894,065.09 | ↑ 2.49% | | Total Current Assets | 1,666,724,088.44 | 1,935,407,894.38 | ↓ 13.88% | | Total Current Liabilities | 1,811,208,948.93 | 1,916,905,267.36 | ↓ 5.41% | | Net Current Assets | (144,484,860.49) | 18,502,627.02 | Changed from positive to negative | - Cash and cash equivalents increased by approximately **76.48%** from **RMB 86,788,890.12** at year-end 2024 to **RMB 153,155,876.51** as of June 30, 2025[8](index=8&type=chunk) - Other receivables significantly decreased by approximately **45.11%** from **RMB 1,177,001,129.72** at year-end 2024 to **RMB 646,067,597.02** as of June 30, 2025[8](index=8&type=chunk) [Unaudited Consolidated Statement of Changes in Equity](index=5&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity attributable to parent company shareholders increased to RMB 505 million, primarily influenced by the total comprehensive income for the period. Key Data from Statement of Changes in Equity | Metric | June 30, 2025 (RMB) | January 1, 2024 (RMB) | | :--- | :--- | :--- | | Total Equity Attributable to Parent Company Shareholders | 504,502,010.47 | 491,894,065.09 | | Retained Earnings | (1,457,415,218.66) | (1,469,578,894.72) | | Non-controlling Interests | (351,607.82) | (375,432.98) | - Total comprehensive income attributable to company shareholders for H1 2025 was **RMB 12,232,512.40**, a significant decrease from **RMB 170,033,113.14** in H1 2024[7](index=7&type=chunk) [Notes to the Unaudited Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Financial%20Statements) This section details the basis of financial statement preparation, key accounting policies, revenue and expense breakdowns, major balance sheet item changes, segment information, contingent liabilities, and capital commitments. [1. General Information](index=7&type=section&id=1.%20General%20Information) The Company is a limited liability company incorporated in China, listed on the HKEX and SZSE, primarily engaged in the design, R&D, manufacturing, sales, and export of energy equipment products. - The Company's shares are listed on the Main Board of the Stock Exchange of Hong Kong and the Main Board of the Shenzhen Stock Exchange in mainland China[12](index=12&type=chunk) - The Group is primarily engaged in the design, R&D, processing, manufacturing, sales services, and export trade of energy equipment products[13](index=13&type=chunk) - Main products include petroleum drilling and extraction machinery, oil and gas transportation equipment, oil and gas exploitation equipment, and castings and forgings[13](index=13&type=chunk) [2. Basis of Preparation of Financial Statements](index=7&type=section&id=2.%20Basis%20of%20Preparation%20of%20Financial%20Statements) The Group's financial statements are prepared in accordance with Chinese Accounting Standards, CSRC disclosure rules, and HK Company Ordinance and Listing Rules, with no changes in accounting policies for the current period. - Financial statements are prepared in accordance with "Enterprise Accounting Standards", CSRC "Information Disclosure Rules for Companies Issuing Securities No. 15", and the Hong Kong "Companies Ordinance" and "Listing Rules"[14](index=14&type=chunk) - There were **no changes** in the accounting policies adopted for the preparation of these financial statements during the period[15](index=15&type=chunk) [3. Total Operating Revenue](index=7&type=section&id=3.%20Total%20Operating%20Revenue) For the six months ended June 30, 2025, the Group's total operating revenue was RMB 797.52 million, a 31.90% increase year-on-year, with pipe products being the largest contributor and primary growth driver. Operating Revenue by Product Category | Product Category | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Pipe Products | 755,173,945.20 | 542,742,258.39 | | Castings and Forgings | - | 5,724,946.04 | | Three-Pump Equipment | 13,830,858.84 | 14,317,014.33 | | Petroleum Machinery Parts | 12,976.43 | 1,061,486.64 | | Others | 28,502,529.27 | 40,782,225.48 | | Total | 797,520,309.74 | 604,627,930.88 | - In H1 2025, pipe products accounted for **94.7%** of total operating revenue, serving as the primary source of income[17](index=17&type=chunk) [4. Segment Information](index=8&type=section&id=4.%20Segment%20Information) The Group's operations are divided into four reportable segments: pipe products, three-pump equipment, petroleum machinery parts, and others, with pipe products contributing most revenue and operating profit in H1 2025, and domestic market revenue exceeding overseas markets. [4.1 Basis for Determining Reportable Segments and Accounting Policies](index=8&type=section&id=4.1%20Basis%20for%20Determining%20Reportable%20Segments%20and%20Accounting%20Policies) The Group's operating segments are defined as pipe products, three-pump equipment, petroleum machinery parts, and others, with segment reporting information consistent with financial statement accounting and measurement bases. - The Group's operating activities are divided into four reportable segments: pipe products, three-pump equipment, petroleum machinery parts, and others[18](index=18&type=chunk) - Segment reporting information is disclosed based on the accounting policies and measurement standards used for reporting to management, consistent with the accounting and measurement bases used for preparing the financial statements[19](index=19&type=chunk) [4.2 Segment Reporting Information – For the Six Months Ended June 30, 2025](index=8&type=section&id=4.2%20Segment%20Reporting%20Information%20%E2%80%93%20For%20the%20Six%20Months%20Ended%20June%2030%2C%202025) H1 2025 Segment Operating Revenue and Profit | Segment | Operating Revenue (RMB) | Operating Profit (RMB) | | :--- | :--- | :--- | | Pipe Products | 755,173,945.20 | 66,137,657.81 | | Three-Pump Equipment | 13,830,858.84 | 1,564,042.12 | | Petroleum Machinery Parts | 12,976.43 | 8,759.49 | | Others | 28,502,529.27 | 1,398,204.92 | | Total | 797,520,309.74 | 72,097,715.14 | [4.3 Segment Reporting Information – For the Six Months Ended June 30, 2024](index=9&type=section&id=4.3%20Segment%20Reporting%20Information%20%E2%80%93%20For%20the%20Six%20Months%20Ended%20June%2030%2C%202024) H1 2024 Segment Operating Revenue and Profit | Segment | Operating Revenue (RMB) | Operating Profit (RMB) | | :--- | :--- | :--- | | Pipe Products | 542,742,258.39 | (4,645,965.03) | | Castings and Forgings | 5,724,946.04 | (467,629.28) | | Three-Pump Equipment | 14,317,014.33 | 2,000,936.18 | | Petroleum Machinery Parts | 1,061,486.64 | 381,704.12 | | Others | 40,782,225.48 | (85,769.83) | | Total | 604,627,930.88 | (3,557,993.16) | [4.4 External Transaction Revenue by Source Location](index=9&type=section&id=4.4%20External%20Transaction%20Revenue%20by%20Source%20Location) External Transaction Revenue by Source Location | Source Location | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Domestic | 540,724,609.12 | 372,373,974.21 | | Other Countries | 256,795,700.62 | 232,253,956.67 | | Total | 797,520,309.74 | 604,627,930.88 | - All of the Group's assets are sourced from China[22](index=22&type=chunk) [5. Finance Costs](index=10&type=section&id=5.%20Finance%20Costs) For the six months ended June 30, 2025, finance costs increased to RMB 43.06 million year-on-year, primarily driven by interest expenses, with a positive exchange difference. Details of Finance Costs | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Interest Expense | 45,322,629.95 | 46,674,510.32 | | Less: Interest Income | (799,536.45) | (568,696.72) | | Exchange Difference | (1,650,660.89) | (4,960,535.36) | | Others | 191,378.13 | 175,362.55 | | Total | 43,063,810.74 | 41,320,640.79 | [6. Credit Impairment Losses](index=10&type=section&id=6.%20Credit%20Impairment%20Losses) For the six months ended June 30, 2025, the Group recorded credit impairment losses of RMB 2.99 million, compared to a gain in the prior period, mainly due to increased bad debt losses on accounts receivable. Details of Credit Impairment Losses | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Total Bad Debt Losses | 2,989,050.80 | (741,269.32) | | Of which: Accounts Receivable | 2,678,442.15 | 656,707.39 | | Notes Receivable | 70,143.82 | 652,545.51 | | Other Receivables | 240,464.83 | (2,050,522.22) | [7. Asset Impairment Losses](index=10&type=section&id=7.%20Asset%20Impairment%20Losses) For the six months ended June 30, 2025, the Group recorded asset impairment losses of RMB 0.12 million, compared to an asset impairment gain in the prior period, primarily due to inventory write-downs. Details of Asset Impairment Losses | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Inventory Write-down Losses and Contract Performance Cost Impairment Losses | 116,035.70 | (8,955,173.29) | | Total | 116,035.70 | (8,955,173.29) | [8. Gains on Disposal of Assets](index=10&type=section&id=8.%20Gains%20on%20Disposal%20of%20Assets) For the six months ended June 30, 2025, the Group's gains on disposal of assets significantly increased to RMB 4.11 million year-on-year, primarily from the disposal of fixed assets. Details of Gains on Disposal of Assets | Source | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Gains on Disposal of Fixed Assets | 4,114,238.28 | 163,084.71 | | Total | 4,114,238.28 | 163,084.71 | [9. Other Income](index=11&type=section&id=9.%20Other%20Income) For the six months ended June 30, 2025, the Group's other income significantly decreased to RMB 1.37 million year-on-year, mainly due to a reduction in VAT additional deduction. Details of Other Income | Source | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | VAT Additional Deduction | 1,361,627.77 | 6,448,846.81 | | Others | 7,048.36 | 106,235.78 | | Total | 1,368,676.13 | 6,555,082.59 | [10. Non-operating Income](index=11&type=section&id=10.%20Non-operating%20Income) For the six months ended June 30, 2025, the Group's non-operating income significantly increased to RMB 8.41 million year-on-year, primarily attributable to litigation compensation. Details of Non-operating Income | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Litigation Compensation | 7,486,346.36 | - | | Others | 925,006.93 | 3,592,336.79 | | Total | 8,411,353.29 | 3,592,336.79 | [11. Total Profit](index=11&type=section&id=11.%20Total%20Profit) This section lists key expense items affecting total profit, including employee costs, intangible asset amortization, inventory costs, fixed asset depreciation, and R&D costs, comparing H1 2025 and H1 2024 data. Key Expense Items Affecting Total Profit | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Employee Costs | 60,462,868.03 | 75,260,101.72 | | Intangible Asset Amortization | 3,125,808.42 | 5,189,174.26 | | Cost of Inventories Recognized as Expense | 693,580,969.61 | 548,882,498.25 | | Depreciation of Fixed Assets | 28,178,102.30 | 72,915,950.48 | | Research and Development Costs | 10,221,955.21 | 10,750,438.75 | [12. Income Tax Expense](index=12&type=section&id=12.%20Income%20Tax%20Expense) For the six months ended June 30, 2025, the Group's income tax expense was RMB 0.07 million, compared to an income tax benefit in the prior period, with the Company applying a 15% Chinese income tax rate as a high-tech enterprise. Details of Income Tax Expense | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Current Income Tax Expense | 73,847.69 | 62,936.72 | | Deferred Income Tax Expense | - | (457,931.24) | | Total | 73,847.69 | (394,994.52) | - The Company is classified as a high-tech enterprise and is subject to a Chinese enterprise income tax rate of **15%**[30](index=30&type=chunk) - Subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of **16.5%**[31](index=31&type=chunk) [13. Earnings Per Share](index=12&type=section&id=13.%20Earnings%20Per%20Share) For the six months ended June 30, 2025, basic earnings per share significantly decreased to RMB 0.0152 from RMB 0.2132 in the prior period. Earnings Per Share Data | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Net Profit Attributable to Parent Company Shareholders | 12,163,676.06 | 170,134,914.07 | | Basic Earnings Per Share | 0.0152 | 0.2132 | | Diluted Earnings Per Share | Not applicable | Not applicable | [14. Dividends](index=12&type=section&id=14.%20Dividends) The Board recommends no interim dividend for the six months ended June 30, 2025, consistent with the prior period. - The Board recommends **no interim dividend** for the six months ended June 30, 2025 (2024: nil)[33](index=33&type=chunk) [15. Accounts Receivable](index=13&type=section&id=15.%20Accounts%20Receivable) As of June 30, 2025, net accounts receivable increased to RMB 318 million from year-end 2024, with most receivables aged within one year. Net Accounts Receivable and Aging Analysis | Item | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Gross Accounts Receivable | 361,729,290.97 | 266,677,142.16 | | Less: Provision for Bad Debts | 43,672,284.58 | 46,350,726.73 | | Total (Net) | 318,057,006.39 | 220,326,415.43 | | Aging within 1 year | 321,081,364.46 | 221,427,518.61 | - Domestic general pipe customers typically pay before shipment, while domestic oil casing customers usually pay **3–6 months** after invoicing and settlement; export business primarily involves cash payments, with most oil casing customers paying in advance[34](index=34&type=chunk) [16. Accounts Payable](index=13&type=section&id=16.%20Accounts%20Payable) As of June 30, 2025, total accounts payable slightly increased to RMB 304 million from year-end 2024, with most payables aged within one year. Accounts Payable Aging Analysis | Aging | June 30, 2025 (RMB) | December 31, 2024 (RMB) | | :--- | :--- | :--- | | Within 1 year | 249,026,100.98 | 228,402,199.71 | | 1–2 years | 12,206,802.68 | 20,662,282.33 | | 2–3 years | 11,187,530.51 | 11,163,851.48 | | Over 3 years | 31,709,927.34 | 33,979,545.16 | | Total | 304,130,361.51 | 294,207,878.68 | [17. Capital Commitments](index=14&type=section&id=17.%20Capital%20Commitments) As of June 30, 2025, the Group had no contracted but unrecognised commitments for the acquisition or construction of long-term assets in its financial statements. - As of June 30, 2025, the Group had **no contracted but unrecognised commitments** for the acquisition or construction of long-term assets in its financial statements[37](index=37&type=chunk) [18. Contingent Liabilities](index=14&type=section&id=18.%20Contingent%20Liabilities) The Company has accrued a provision of RMB 4.96 million for litigation matters, with the case currently under trial. - The Company has accrued a provision for litigation matters of **RMB 4,960,700**[38](index=38&type=chunk) - The litigation case is currently **under trial**[38](index=38&type=chunk) [Business and Financial Review and Outlook](index=15&type=section&id=Business%20and%20Financial%20Review%20and%20Outlook) This chapter reviews the Group's H1 2025 operating performance and business model, analyzes factors affecting profit changes, discusses industry trends, policy support, and future outlook, and discloses other significant matters. [Interim Results](index=15&type=section&id=Interim%20Results) The Group's H1 2025 operating revenue increased by 31.90% year-on-year, but net profit attributable to listed company shareholders significantly decreased due to non-recurring investment income from subsidiary equity disposal in the prior period, with operating performance turning profitable after excluding non-recurring items. - H1 2025 operating revenue was approximately **RMB 797.52 million**, an increase of **31.90%** compared to the same period last year[39](index=39&type=chunk) - Net profit attributable to listed company shareholders was approximately **RMB 12.16 million**, a significant decrease from **RMB 170.13 million** in the same period last year[39](index=39&type=chunk) - The decrease in net profit was primarily due to the impact of **non-recurring investment income** from the disposal of equity in two subsidiaries in the prior year[42](index=42&type=chunk) - During the reporting period, the company had **sufficient product orders**, significantly increased production and sales volumes year-on-year, increased operating revenue, improved capacity utilization, and significantly increased product gross profit margin; operating performance, excluding non-recurring gains and losses, **turned profitable**[42](index=42&type=chunk) [Business Review](index=15&type=section&id=Business%20Review) The Company primarily engages in R&D, manufacturing, sales, and export of energy equipment, with pipe products accounting for nearly 95% of revenue, operating on a "production-to-order" model with mature procurement and sales networks, achieving significant growth in orders, sales, and gross margin, and effective cost control. - The Company's main products are pipe products such as oil pipes and casing, accounting for nearly **95%** of the Company's operating revenue[40](index=40&type=chunk) - The Company's production and operation model is "production-to-order"[41](index=41&type=chunk) - The Company possesses a relatively **mature sales network**, with dedicated sales and import/export teams responsible for domestic and international market research, development, product sales, and after-sales service[41](index=41&type=chunk) [Significant Events After Reporting Period](index=16&type=section&id=Significant%20Events%20After%20Reporting%20Period) The Group had no significant events after the reporting period. - The Group had **no significant events** after the reporting period[43](index=43&type=chunk) [Future Outlook](index=16&type=section&id=Future%20Outlook) The energy equipment industry is influenced by global economic growth, oil and gas prices, and exploration expenditures; sustained high international crude oil prices and China's energy security policies are expected to boost domestic oil and gas exploration and production, creating a favorable environment for the Company. - Global economic growth rates, trends in oil and natural gas prices and consumption demand, global oil exploration and development expenditures, and the scale of oil and gas extraction are **decisive factors** affecting the prosperity of the industry in which the Company operates[44](index=44&type=chunk) - In recent years, international crude oil prices have remained relatively high, driving a continuous recovery in capital expenditure by oil and gas companies, increasing demand for oil and gas equipment and services, and a sustained rebound in industry prosperity[44](index=44&type=chunk) - The National Energy Administration's "2025 Energy Work Guidance Opinions" propose maintaining crude oil output above **200 million tons**, rapid growth in natural gas output, continuous increase in oil and gas reserves, and strengthening oil and gas exploration and development[45](index=45&type=chunk) [Major Investments Held](index=16&type=section&id=Major%20Investments%20Held) For the six months ended June 30, 2025, the Group held no major investments. - For the six months ended June 30, 2025, the Group held **no major investments**[46](index=46&type=chunk) [Major Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures](index=16&type=section&id=Major%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%2C%20and%20Joint%20Ventures) For the six months ended June 30, 2025, the Group did not undertake any major acquisitions or disposals of subsidiaries, associates, or joint ventures. - For the six months ended June 30, 2025, the Group did **not undertake any major acquisitions or disposals** of subsidiaries, associates, or joint ventures[47](index=47&type=chunk) [Future Plans for Major Investments or Capital Assets](index=17&type=section&id=Future%20Plans%20for%20Major%20Investments%20or%20Capital%20Assets) As of June 30, 2025, the Group had no future plans for major investments or capital assets. - As of June 30, 2025, the Group had **no future plans** for major investments or capital assets[48](index=48&type=chunk) [Foreign Exchange Risk](index=17&type=section&id=Foreign%20Exchange%20Risk) The Group's income is settled in RMB and USD, while expenses are settled in HKD, RMB, and USD; no foreign currency hedging policy is currently adopted, but significant long-term changes in RMB exchange rates against USD and HKD could impact performance and financial position. - The Group's income is settled in **RMB and USD**, while expenses are settled in **HKD, RMB, and USD**[49](index=49&type=chunk) - The Group currently **does not adopt a foreign currency hedging policy**[49](index=49&type=chunk) - Long-term or significant changes in the exchange rates of RMB against USD and RMB against HKD may **impact the Group's performance and financial position**[49](index=49&type=chunk) [Corporate Governance](index=17&type=section&id=Corporate%20Governance) The Company is committed to good corporate governance, complying with all code provisions of the Corporate Governance Code in Appendix C1 of the HKEX Listing Rules; the Audit Committee reviewed the interim results, and the Board confirmed compliance with the Model Code for Securities Transactions by Directors. - The Company has adopted and consistently complied with **all code provisions** of the Corporate Governance Code as set out in Appendix C1 of the HKEX Listing Rules[50](index=50&type=chunk) - The Audit Committee has reviewed the **unaudited interim results and financial statements** for the six months ended June 30, 2025[51](index=51&type=chunk) - All Directors have confirmed full compliance with the **Model Code for Securities Transactions by Directors of Listed Issuers** throughout the six months ended June 30, 2025[52](index=52&type=chunk) [Repurchase, Sale or Redemption of the Group's Listed Securities](index=17&type=section&id=Repurchase%2C%20Sale%20or%20Redemption%20of%20the%20Group%27s%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries repurchased, sold, or redeemed any of the Company's listed securities. - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries **repurchased, sold, or redeemed** any of the Company's listed securities[53](index=53&type=chunk) [Publication of Results Announcement and Interim Report](index=18&type=section&id=Publication%20of%20Results%20Announcement%20and%20Interim%20Report) This announcement has been published on the HKEX and the Company's website, and the interim report will be dispatched to shareholders and available for download from the Company and HKEX websites in due course. - This announcement has been published on the **HKEX website and the Company's website**[55](index=55&type=chunk) - The interim report for the six months ended June 30, 2025, will be dispatched to the Company's shareholders and available for download from the Company's website (http://www.molonggroup.com) and the HKEX website in due course[55](index=55&type=chunk) [Board of Directors](index=18&type=section&id=Board%20of%20Directors) As of the date of this announcement, the Company's Board of Directors comprises executive directors, non-executive directors, and independent non-executive directors. - The Company's Board of Directors comprises **Executive Directors** Mr. Han Gaogui, Mr. Yuan Rui, Mr. Wang Tao, and Mr. Song Guangjie[56](index=56&type=chunk) - **Non-executive Directors** are Mr. Huang Bingde and Ms. Zhang Min[56](index=56&type=chunk) - **Independent Non-executive Directors** are Mr. Zhang Zhenquan, Mr. Dong Shaohua, and Mr. Zhang Binggang[56](index=56&type=chunk)

[Interim Results Summary](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E6%91%98%E8%A6%81) [Overview of Financial Performance](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE%E6%A6%82%E8%A6%BD) Weili Holdings Limited, for the six months ended June 30, 2025, achieved gross profit growth and returned to profitability with positive basic earnings per share, despite a decrease in revenue, through effective cost control and operational efficiency improvements, while no interim dividend was declared | Metric | Six Months Ended June 30, 2025 (RMB million) | Six Months Ended June 30, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 45.8 | 57.1 | -19.7% | | Gross Profit | 6.7 | 5.0 | +34.0% | | Profit/(Loss) Attributable to Shareholders | 1.0 (Profit) | (2.3) (Loss) | Returned to Profitability | | Basic Earnings/(Loss) Per Share | 0.1 cent (Profit) | (0.3) cent (Loss) | Turned Positive | | Interim Dividend | None | None | No Change | [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the company's revenue decreased by 19.7% year-on-year to RMB 45.8 million, but gross profit increased by 34.0% to RMB 6.7 million due to effective cost of sales control, successfully returning to profitability with RMB 1.0 million profit attributable to shareholders, compared to a loss of RMB 2.3 million in the prior period | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 45,844 | 57,061 | | Cost of Sales | (39,109) | (52,034) | | Gross Profit | 6,735 | 5,027 | | Operating Profit/(Loss) | 1,124 | (3,273) | | Profit/(Loss) for the Period | 1,020 | (2,263) | | Profit/(Loss) Attributable to Shareholders | 1,020 | (2,263) | | Basic Earnings/(Loss) Per Share | 0.1 cent | (0.3) cent | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the company's total comprehensive profit for the period was RMB 1.02 million, consistent with profit for the period, indicating no other comprehensive income items, compared to a total comprehensive loss of RMB 2.263 million in the prior period | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit/(Loss) for the Period | 1,020 | (2,263) | | Other Comprehensive Income | – | – | | Total Comprehensive Profit/(Loss) for the Period | 1,020 | (2,263) | | Profit/(Loss) Attributable to Shareholders | 1,020 | (2,263) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the company's total assets slightly decreased to RMB 258.673 million, but net current assets increased. Total equity attributable to shareholders rose to RMB 211.74 million, while total liabilities decreased | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **ASSETS** | | | | Non-current Assets | 42,860 | 45,158 | | Current Assets | 215,813 | 216,589 | | Total Assets | 258,673 | 261,747 | | **EQUITY** | | | | Total Equity | 211,740 | 210,720 | | **LIABILITIES** | | | | Non-current Liabilities | 1,520 | 1,542 | | Current Liabilities | 45,413 | 49,485 | | Total Liabilities | 46,933 | 51,027 | | Total Equity and Liabilities | 258,673 | 261,747 | | Net Current Assets | 170,400 | 167,104 | [Notes to the Interim Condensed Consolidated Financial Information](index=6&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99%E9%99%84%E8%A8%BB) [General Information](index=6&type=section&id=%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) Weili Holdings Limited was incorporated in the Cayman Islands on April 21, 2021, primarily engaged in manufacturing and selling cigarette packaging paper in China. The company's shares have been listed on the Main Board of the Hong Kong Stock Exchange since June 30, 2022, and the interim financial information is presented in RMB and is unaudited - The company was incorporated in the Cayman Islands on **April 21, 2021**, primarily engaged in the manufacturing and sale of cigarette packaging paper in China[12](index=12&type=chunk) - The company's shares have been listed on the Main Board of the Hong Kong Stock Exchange since **June 30, 2022**[12](index=12&type=chunk) - This interim financial information is presented in **RMB** and is **unaudited**[12](index=12&type=chunk)[13](index=13&type=chunk) [Basis of Preparation](index=6&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 and should be read in conjunction with the 2024 annual consolidated financial statements. Revisions to Hong Kong Financial Reporting Standards were first applied in this period but had no significant impact on financial position or performance - The interim financial information is prepared in accordance with **Hong Kong Accounting Standard 34 'Interim Financial Reporting'**[14](index=14&type=chunk) - Revisions to Hong Kong Financial Reporting Standards were first applied in this interim period but had **no significant impact** on the Group's financial position and performance[15](index=15&type=chunk) [Revenue and Segment Information](index=7&type=section&id=%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The company primarily manufactures and sells cigarette packaging paper, with management viewing the business as a single segment. For the six months ended June 30, 2025, revenue mainly derived from the sale of cigarette packaging paper and raw materials, with processing service income being a smaller component. All revenue originated from external customers in China, with significant changes in the proportion of total revenue contributed by Customer 1 and Customer 2 - The Group is primarily engaged in the manufacturing and sale of cigarette packaging paper, and management considers the business as a **single segment**[16](index=16&type=chunk) Revenue by Source | Source of Revenue | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Sale of cigarette packaging paper and raw materials | 45,451 | 57,055 | | Processing service income | 393 | 6 | | **Total Revenue** | **45,844** | **57,061** | Revenue by Customer | Customer | 2025 % of Total Revenue | 2024 % of Total Revenue | | :--- | :--- | :--- | | Customer 1 | 47% | 19% | | Customer 2 | 16% | 41% | [Expenses by Nature](index=8&type=section&id=%E6%8C%89%E6%80%A7%E8%B3%AA%E5%8A%83%E5%88%86%E7%9A%84%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, the company's total expenses decreased to RMB 47.991 million from RMB 61.858 million in the prior period, primarily due to a significant reduction in the cost of raw materials and goods used | Expense Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw materials and goods used | 36,013 | 49,310 | | Staff costs | 4,773 | 5,557 | | Depreciation of property, plant and equipment and right-of-use assets | 1,905 | 1,543 | | Travel and entertainment expenses | 1,327 | 891 | | Professional service fees | 975 | 1,022 | | Freight charges | 725 | 1,166 | | Miscellaneous expenses | 145 | 358 | | **Total** | **47,991** | **61,858** | [Income Tax Expense/(Credit)](index=8&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF%2F%28%E6%8A%B5%E5%85%8D%29) For the six months ended June 30, 2025, the company recorded an income tax expense of RMB 0.381 million, compared to an income tax credit of RMB 0.849 million in the prior period, primarily due to a shift from loss to profit. The company's Chinese subsidiaries, as high-tech enterprises, enjoy a preferential income tax rate of 15% and a 200% super deduction for R&D expenses | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current income tax — China current tax | – | (351) | | Deferred income tax | 381 | (498) | | **Income Tax Expense/(Credit)** | **381** | **(849)** | - Entities registered in the Cayman Islands and British Virgin Islands are **exempt from local taxation**[21](index=21&type=chunk) - Hong Kong subsidiaries made **no provision for Hong Kong profits tax** due to no estimated assessable profits[22](index=22&type=chunk) - Chinese subsidiaries, as high-tech enterprises, enjoy a **preferential income tax rate of 15%** and can deduct **200% of qualified R&D expenses** as tax-deductible expenses[23](index=23&type=chunk) [Cayman Islands and British Virgin Islands Profits Tax](index=8&type=section&id=%E9%96%8B%E6%9B%BC%E7%BE%A4%E5%B3%B6%E5%8F%8A%E8%8B%B1%E5%B1%AC%E8%99%95%E5%A5%B3%E7%BE%A4%E5%B3%B6%E5%88%A9%E5%BE%97%E7%A8%85) The company and its British Virgin Islands subsidiaries, as exempted companies, are not subject to taxation in the Cayman Islands and British Virgin Islands - The Company and its subsidiaries incorporated in the British Virgin Islands are **exempted companies** and are not subject to Cayman Islands and British Virgin Islands taxation[21](index=21&type=chunk) [Hong Kong Profits Tax](index=9&type=section&id=%E9%A6%99%E6%B8%AF%E5%88%A9%E5%BE%97%E7%A8%85) Hong Kong-incorporated subsidiaries are subject to profits tax at a rate of 16.5%, but no provision was made due to no estimated assessable profits during the reporting period - Hong Kong subsidiaries are subject to profits tax at a rate of **16.5%**, but no provision was made due to **no estimated assessable profits**[22](index=22&type=chunk) [PRC Enterprise Income Tax](index=9&type=section&id=%E4%B8%AD%E5%9C%8B%E4%BC%81%E6%A5%AD%E6%89%80%E5%BE%97%E7%A8%85) Chinese subsidiaries, as high-tech enterprises, enjoy a preferential income tax rate of 15% and can deduct 200% of qualified R&D expenses as tax-deductible expenses - Chinese subsidiaries are approved as high-tech enterprises, enjoying a **preferential income tax rate of 15%**[23](index=23&type=chunk) - Enterprises engaged in R&D activities are entitled to claim **200% of qualified R&D expenses** as tax-deductible expenses (super deduction)[23](index=23&type=chunk) [Earnings/(Loss) Per Share](index=9&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9%2F%28%E虧損%29) For the six months ended June 30, 2025, the company achieved basic earnings per share of RMB 0.1 cent, turning around from a basic loss per share of RMB 0.3 cent in the prior period. Diluted earnings per share were the same as basic earnings per share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Shareholders (RMB thousand) | 1,020 | (2,263) | | Weighted average number of ordinary shares (thousand shares) | 800,000 | 800,000 | | Basic Earnings/(Loss) Per Share (RMB) | 0.1 cent | (0.3) cent | - Diluted earnings/(loss) per share for the six months ended June 30, 2025 and 2024 were **identical to basic earnings/(loss) per share**[26](index=26&type=chunk) [Basic](index=9&type=section&id=%E5%9F%BA%E6%9C%AC) Basic earnings per share is calculated by dividing the profit attributable to the company's shareholders for the period by the weighted average number of ordinary shares in issue, which was RMB 0.1 cent for the current period - Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to the company's shareholders for the period by the **weighted average number of ordinary shares in issue**[24](index=24&type=chunk) [Diluted](index=9&type=section&id=%E6%94%A4%E8%96%84) Diluted earnings/(loss) per share for the six months ended June 30, 2025 and 2024 were identical to basic earnings/(loss) per share, indicating no potential dilutive ordinary shares - Diluted earnings/(loss) per share for the six months ended June 30, 2025 and 2024 were **identical to basic earnings/(loss) per share**[26](index=26&type=chunk) [Dividends](index=10&type=section&id=%E8%82%A1%E6%81%AF) The Board has resolved not to recommend the declaration of an interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Company did not declare any interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: **nil**)[27](index=27&type=chunk) [Trade Receivables](index=10&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, net trade receivables significantly decreased to RMB 67.325 million from RMB 104.249 million as of December 31, 2024. The credit period generally ranges from 60 to 180 days, and the aging analysis shows a decrease in receivables across all terms Trade Receivables - Net | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 71,513 | 111,282 | | Less: Loss allowance | (4,188) | (7,033) | | **Trade receivables — net** | **67,325** | **104,249** | - The credit period for trade receivables generally ranges from **60 to 180 days** from the invoice date[28](index=28&type=chunk) Aging Analysis of Trade Receivables | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 30 days | 21,744 | 29,245 | | 31 to 90 days | 9,256 | 15,255 | | 91 to 180 days | 5,671 | 30,409 | | 181 days to 1 year | 17,758 | 15,530 | | Over 1 year | 17,084 | 20,843 | | **Total** | **71,513** | **111,282** | [Bills Receivable](index=11&type=section&id=%E6%87%89%E6%94%B6%E7%A5%A8%E6%93%9A) As of June 30, 2025, bills receivable amounted to RMB 8.942 million, a decrease from RMB 10.722 million as of December 31, 2024. No bills receivable measured at fair value through other comprehensive income were pledged as collateral at the end of the period Bills Receivable | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bills receivable | 8,942 | 10,722 | - As of June 30, 2025, the Group had **no bills receivable measured at fair value through other comprehensive income pledged** to secure the Group's bills payable (December 31, 2024: RMB 3,000,000)[30](index=30&type=chunk) [Trade and Other Payables](index=11&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade and other payables slightly decreased to RMB 45.403 million from RMB 47.485 million as of December 31, 2024, with a reduction in trade payables and an increase in bills payable Trade and Other Payables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 27,404 | 32,067 | | Bills payable | 15,600 | 9,694 | | Accrued staff welfare | 986 | 1,460 | | Other accrued expenses | 1,106 | 3,864 | | Refund liabilities | 261 | 215 | | Other taxes payable other than income tax liabilities | 46 | 185 | | **Total** | **45,403** | **47,485** | - Aging analysis of trade payables shows a **significant increase in payables within 30 days**, while payables from 91 to 180 days and over 1 year decreased[31](index=31&type=chunk) - As of June 30, 2025, bills payable were **secured by the Group's bank deposits, buildings, and land use rights**[32](index=32&type=chunk) [Share Capital](index=12&type=section&id=%E8%82%A1%E6%9C%AC) As of June 30, 2025, and December 31, 2024, the company's authorized ordinary share capital remained unchanged at 10,000,000 thousand shares, with 800,000 thousand shares issued and share capital of RMB 6.842 million Share Capital | Item | Number of Shares (thousand shares) | Amount (RMB thousand) | | :--- | :--- | :--- | | Authorized ordinary shares | 10,000,000 | 100,000 (HKD) | | Issued shares | 800,000 | 6,842 | [Management Discussion and Analysis](index=13&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) [Business Review and Future Outlook](index=13&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E8%88%87%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B) Weili Holdings, a Chinese cigarette packaging paper manufacturer, primarily supplies customized products to manufacturers in Hubei and Henan. During the reporting period, despite a temporary decrease in orders from key customers leading to lower revenue, gross profit increased and the company returned to profitability through cost control and operational efficiency improvements. The company anticipates order recovery in the second half of 2025 and is optimistic about the future prospects of the mid-to-high-end cigarette packaging paper market - The Group is a **Chinese cigarette packaging paper manufacturer** with R&D capabilities to supply customized products, primarily serving customers in Hubei and Henan provinces[34](index=34&type=chunk) - During the reporting period, certain key customers temporarily reduced orders for transfer paper and composite paper, but **gross profit margin improved** and **impairment losses were reversed** due to reduced trade receivables balances, ultimately achieving a **turnaround from loss to profit** through effective operational cost control and efficiency improvements[35](index=35&type=chunk) - Directors anticipate the sales decrease is temporary, with orders expected to **recover in the second half of 2025**, and are optimistic about the cigarette packaging paper industry's prospects driven by the shift towards mid-to-high-end products and increased consumer purchasing power[35](index=35&type=chunk)[36](index=36&type=chunk) [Financial Performance Analysis](index=14&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE%E5%88%86%E6%9E%90) This section details the changes in financial metrics and their primary drivers during the reporting period. Revenue declined mainly due to reduced orders from key customers, but effective cost of sales control and operational efficiency improvements led to significant growth in gross profit and gross margin, ultimately achieving a return to profitability. Selling expenses increased due to market expansion, administrative expenses decreased due to lower staff and professional consultant costs, and financial asset loss allowances were reversed due to reduced trade receivables [Revenue](index=14&type=section&id=%E6%94%B6%E7%9B%8A) The Group's overall revenue decreased by 19.7% from approximately RMB 57.1 million in the prior period of 2024 to approximately RMB 45.8 million in the reporting period, primarily due to a temporary reduction in orders from key customers - Revenue decreased by approximately **19.7% to RMB 45.8 million** (2024 prior period: RMB 57.1 million)[37](index=37&type=chunk) - The primary reason was a temporary reduction in orders for transfer paper and composite paper products from certain key customers, with directors expecting orders to **recover in the second half of 2025**[37](index=37&type=chunk) [Cost of Sales](index=14&type=section&id=%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC) Cost of sales decreased by 24.8% from approximately RMB 52.0 million in the prior period of 2024 to approximately RMB 39.1 million in the reporting period, primarily due to the combined effect of reduced revenue and effective operating cost control measures - Cost of sales decreased by approximately **24.8% to RMB 39.1 million** (2024 prior period: RMB 52.0 million)[38](index=38&type=chunk) - Primarily due to a **19.7% decrease in revenue** and the Group's **effective operating cost control measures**[38](index=38&type=chunk) [Gross Profit and Gross Profit Margin](index=14&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Gross profit increased by 34.0% from approximately RMB 5.0 million in the prior period of 2024 to approximately RMB 6.7 million in the reporting period. Gross profit margin rose from approximately 8.8% to 14.7%, primarily benefiting from effective operating cost control measures and improved operational efficiency - Gross profit increased by approximately **34.0% to RMB 6.7 million** (2024 prior period: RMB 5.0 million)[39](index=39&type=chunk) - Gross profit margin increased from approximately **8.8% to 14.7%**, primarily due to **effective operating cost control measures** and **improved operational efficiency**[39](index=39&type=chunk) [Selling Expenses](index=14&type=section&id=%E9%8A%B7%E5%94%AE%E9%96%8B%E6%94%AF) Selling expenses increased by 9.1% from approximately RMB 2.5 million in the prior period of 2024 to approximately RMB 2.7 million in the reporting period, primarily due to increased market development and sales costs to expand the customer base in Henan and Hubei - Selling expenses increased by approximately **9.1% to RMB 2.7 million** (2024 prior period: RMB 2.5 million)[40](index=40&type=chunk) - Primarily due to increased market development and sales costs to **expand the customer base in Henan and Hubei** and enhance sales volume[40](index=40&type=chunk) [Administrative Expenses](index=15&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) Administrative expenses decreased from approximately RMB 7.3 million in the prior period of 2024 to approximately RMB 6.1 million in the reporting period, primarily due to lower staff costs and professional consultant fees - Administrative expenses decreased to **RMB 6.1 million** (2024 prior period: RMB 7.3 million)[41](index=41&type=chunk) - Primarily due to a **decrease in staff costs and professional consultant fees** during the reporting period[41](index=41&type=chunk) [Reversal of Loss Allowance for Financial Assets](index=15&type=section&id=%E9%87%91%E8%9E%8D%E8%B3%87%E7%94%A2%E虧損%E6%92%A5%E5%82%99%E4%B9%8B%E6%92%A5%E5%9B%9E) The reversal of loss allowance for financial assets increased from approximately RMB 0.9 million in the prior period of 2024 to approximately RMB 2.7 million in the reporting period, primarily due to a decrease in outstanding trade receivables - Reversal of loss allowance for financial assets increased to **RMB 2.7 million** (2024 prior period: RMB 0.9 million)[42](index=42&type=chunk) - Primarily due to a **decrease in the outstanding amount of trade receivables** as of June 30, 2025[42](index=42&type=chunk) [Other Income](index=15&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income remained stable at approximately RMB 0.4 million during the reporting period, primarily from income-related government grants - Other income remained **stable at approximately RMB 0.4 million**[43](index=43&type=chunk) - Primarily derived from **income-related government grants**[43](index=43&type=chunk) [Other Gains — Net](index=15&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%20%E2%80%94%20%E6%B7%A8%E9%A1%8D) Other gains — net decreased from approximately RMB 0.2 million in the prior period of 2024 to approximately RMB 0.1 million in the reporting period, primarily due to the combined effect of increased exchange losses and decreased non-operating income - Other gains — net decreased to **RMB 0.1 million** (2024 prior period: RMB 0.2 million)[44](index=44&type=chunk) - Primarily due to the combined effect of **increased exchange losses and decreased non-operating income**[44](index=44&type=chunk) [Finance Income — Net](index=15&type=section&id=%E8%9E%8D%E8%B3%87%E6%94%B6%E5%85%A5%20%E2%80%94%20%E6%B7%A8%E9%A1%8D) Finance income — net increased from approximately RMB 0.2 million in the prior period of 2024 to approximately RMB 0.3 million in the reporting period, primarily due to a decrease in bank borrowing interest expenses - Finance income — net increased to **RMB 0.3 million** (2024 prior period: RMB 0.2 million)[45](index=45&type=chunk) - Primarily due to a **decrease in bank borrowing interest expenses** during the reporting period[45](index=45&type=chunk) [Income Tax (Expense)/Credit](index=16&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%EF%BC%88%E9%96%8B%E6%94%AF%EF%BC%89%E2%88%95%E6%8A%B5%E5%85%8D) During the reporting period, the company recorded a profit before income tax of approximately RMB 1.4 million, compared to a loss of approximately RMB 3.1 million in the prior period, primarily benefiting from increased gross profit due to cost control measures. Income tax shifted from a credit in the prior period to an expense in the current period, reflecting improved profitability - Profit before income tax of approximately **RMB 1.4 million** was recorded during the reporting period, compared to a loss of approximately RMB 3.1 million in the 2024 prior period[46](index=46&type=chunk) - Income tax shifted from a **credit of approximately RMB 0.8 million** in the 2024 prior period to an **expense of approximately RMB 0.4 million** in the reporting period, primarily due to a change from a loss before income tax to a profit before income tax[46](index=46&type=chunk) [Profit/(Loss) and Total Comprehensive Income/(Loss)](index=16&type=section&id=%E6%BA%A2%E5%88%A9%E2%88%95%EF%BC%88%E虧損%EF%BC%89%E5%8F%8A%E5%85%A8%E9%9D%A2%E6%94%B6%E5%85%A5%E2%88%95%EF%BC%88%E虧損%EF%BC%89%E7%B8%BD%E9%A1%8D) The Group recorded a profit and total comprehensive income of approximately RMB 1.0 million during the reporting period, a significant improvement from a loss and total comprehensive loss of approximately RMB 2.3 million in the prior period, primarily attributable to reduced cost of sales, increased gross profit due to cost control measures, and the reversal of impairment losses from decreased trade receivables balances - Profit and total comprehensive income of approximately **RMB 1.0 million** was recorded during the reporting period, compared to a loss and total comprehensive loss of approximately RMB 2.3 million in the 2024 prior period[47](index=47&type=chunk) - This change was primarily due to **reduced cost of sales** from cost control measures, leading to **increased gross profit**, and the **reversal of impairment losses** due to decreased trade receivables balances[47](index=47&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=16&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E8%B3%87%E6%9C%AC%E7%B5%90%E6%A7%8B) The Group's capital structure has remained unchanged since the listing date. As of June 30, 2025, cash and cash equivalents increased to approximately RMB 64.5 million, and bank borrowings significantly decreased to RMB 10 thousand. The gearing ratio substantially declined to approximately 0.0%, indicating a robust financial position - The Group's **capital structure remained unchanged** from the listing date to the date of this announcement[48](index=48&type=chunk) Liquidity and Gearing | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Cash and cash equivalents | 64.5 | 53.2 | | Bank borrowings | 0.01 | 2.0 | | Gearing ratio | 0.0% | 0.9% | - As of June 30, 2025, the Group had **no unutilized bank loans**[48](index=48&type=chunk) [Treasury Policy](index=17&type=section&id=%E5%BA%AB%E5%8B%99%E6%94%BF%E7%AD%96) The Group implements strict internal control policies to manage investment activities, ensuring investments aim to preserve capital and liquidity, and are conducted under the review and approval of the Board and management team. The company adopts a prudent approach to selecting investment products and assesses whether sufficient working capital remains after investment - The Group has implemented a series of internal control policies and regulations for investments to ensure they are for the purpose of **preserving capital and liquidity**[50](index=50&type=chunk) - The finance department manages investment activities, with strategies and decisions subject to **review and approval by the Board and management team**[50](index=50&type=chunk) - The Group adopts a **prudent approach to selecting investment products** and assesses whether **sufficient working capital remains** after investment[50](index=50&type=chunk) [Foreign Exchange Risk](index=17&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The Group primarily transacts in RMB but holds some Hong Kong dollar listing proceeds, exposing it to foreign exchange risk. The Board believes there was no significant foreign exchange risk during the reporting period, and no foreign exchange hedging was undertaken - The Group primarily transacts in **RMB** but holds certain listing proceeds in **HKD**, exposing it to foreign exchange risk[51](index=51&type=chunk) - The Board believes there was **no significant foreign exchange risk** for the Group during the reporting period, and **no foreign exchange hedging** was undertaken[51](index=51&type=chunk) [Capital Expenditure](index=17&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF) During the reporting period, the Group incurred capital expenditure of approximately RMB 2.1 million for the purchase of machinery, an increase compared to the prior period - During the reporting period, the Group incurred capital expenditure of approximately **RMB 2.1 million** for the purchase of machinery[52](index=52&type=chunk) - In the prior period, approximately RMB 0.6 million was incurred for machinery purchases and approximately RMB 0.4 million for electronic and other equipment purchases[52](index=52&type=chunk) [Capital Commitments and Contingent Liabilities](index=18&type=section&id=%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94%E5%8F%8A%E6%88%96%E6%9C%89%E8%B2%A0%E5%82%B5) As of June 30, 2025, and December 31, 2024, the Group had no capital commitments or significant contingent liabilities - As of June 30, 2025, and December 31, 2024, the Group had **no capital commitments**[53](index=53&type=chunk) - As of June 30, 2025, and December 31, 2024, the Group had **no significant contingent liabilities**[54](index=54&type=chunk) [Significant Acquisitions or Disposals and Future Investment Plans](index=18&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E6%88%96%E5%87%BA%E5%94%AE%E4%BA%8B%E9%A0%85%E5%8F%8A%E6%9C%AA%E4%BE%86%E6%8A%95%E8%B3%87%E8%A8%88%E5%8A%83) During the reporting period, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures. As of June 30, 2025, the Group had no future plans for significant investments or capital assets, other than those disclosed in the prospectus business plan - During the reporting period, the Group had **no significant acquisitions or disposals** of any subsidiaries, associates, or joint ventures[55](index=55&type=chunk) - Other than the business plans disclosed in the prospectus, as of June 30, 2025, the Group had **no future plans for significant investments or capital assets**[55](index=55&type=chunk) [Significant Investments Held](index=18&type=section&id=%E6%89%80%E6%8C%81%E6%9C%89%E7%9A%84%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) During the reporting period, the Group held no significant investments - During the reporting period, the Group **held no significant investments**[56](index=56&type=chunk) [Pledge of Assets](index=18&type=section&id=%E8%B3%87%E7%94%A2%E8%B3%AA%E6%8A%BC) As of June 30, 2025, buildings with a net book value of approximately RMB 6.4 million and leasehold land use rights of approximately RMB 2.8 million were pledged to secure bills payable. Restricted cash was also pledged as collateral for bank acceptance bills - As of June 30, 2025, buildings with a net book value of approximately **RMB 6.4 million** were pledged to secure the Group's bills payable (December 31, 2024: approximately RMB 9.9 million)[57](index=57&type=chunk) - As of June 30, 2025, leasehold land use rights with a net book value of approximately **RMB 2.8 million** were pledged as security for the Group's bills payable[57](index=57&type=chunk) - The Group's **restricted cash** refers to bank deposits pledged to banks for the issuance of bank acceptance bills to settle future payments to the Group's suppliers[58](index=58&type=chunk) [Interim Dividend](index=19&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board has resolved not to recommend the declaration of an interim dividend for the reporting period, consistent with the prior period - The Board has resolved **not to recommend the declaration of an interim dividend** for the reporting period (six months ended June 30, 2024: nil)[59](index=59&type=chunk) [Use of Proceeds](index=19&type=section&id=%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The net proceeds from the listing were approximately HKD 90.3 million. As of June 30, 2025, approximately HKD 40.8 million had been utilized, primarily for acquiring printing and positioning slitting machines, and enhancing production capacity and efficiency. Approximately HKD 49.5 million remains unutilized, expected to be used for capacity enhancement, R&D, and marketing before December 31, 2025 - Net proceeds from the listing (after deducting related expenses) were approximately **HKD 90.3 million**[60](index=60&type=chunk) Use of Net Proceeds | Description | Intended Use of Proceeds (HKD million) | Amount Utilized as of June 30, 2025 (HKD million) | Amount Unutilized as of June 30, 2025 (HKD million) | Expected Timeline for Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | Enhance the Group's production capacity, efficiency, and expand product portfolio | 33.3 | 2.3 | 31.0 | Before December 31, 2025 | | Strengthen the Group's R&D capabilities | 17.6 | 1.1 | 16.5 | Before December 31, 2025 | | Improve the Group's ERP and infrastructure systems | 0.1 | 0.1 | – | Fully utilized | | Increase the Group's marketing efforts | 2.6 | 0.6 | 2.0 | Before December 31, 2025 | | Acquire printing and positioning slitting machines for producing colored cigarette packaging paper | 22.9 | 22.9 | – | Fully utilized | | Reserved for the Group's general working capital | 13.8 | 13.8 | – | Fully utilized | | **Total** | **90.3** | **40.8** | **49.5** | | - As of June 30, 2025, all net proceeds have been utilized in accordance with the prospectus disclosure and the company's announcement on October 27, 2023, regarding the acquisition of machinery and change in use of net proceeds[63](index=63&type=chunk) [Events After the Reporting Period](index=20&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) The temporary decrease in sales orders during the reporting period was primarily attributed to small-scale trial production, experimental testing, and initial verification for new customers, as well as a transitional period due to major customer product upgrades. The Board considers these impacts temporary and expects order volumes to recover with product generation completion and commercialization of new orders. There were no other significant events from the end of the reporting period to the date of this announcement - The temporary decrease in sales orders during the reporting period was primarily attributed to **small-scale trial production, experimental testing, and initial verification for new customers**, and a **transitional period due to major customer product upgrades**[64](index=64&type=chunk) - The Board considers these impacts **temporary** and expects order volumes to **recover in the foreseeable future**[64](index=64&type=chunk) - There were **no significant events** from the end of the reporting period to the date of this announcement[67](index=67&type=chunk) [Employees and Remuneration Policy](index=21&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group had 85 employees, a decrease from 109 in the prior period. Total staff costs amounted to approximately RMB 4.8 million. The company adjusts remuneration and promotions through annual appraisals and provides diverse on-the-job training. The company participates in defined contribution retirement schemes for its Chinese employees - As of June 30, 2025, the Group had **85 employees** (June 30, 2024: 109 employees)[65](index=65&type=chunk) - Total staff costs incurred by the Group during the reporting period were approximately **RMB 4.8 million** (2024 prior period: RMB 5.6 million)[65](index=65&type=chunk) - The company assesses employee performance through annual appraisals and provides **new employee induction training, on-the-job training, team-building training, and external training**[65](index=65&type=chunk) - The Group participates in various **defined contribution retirement schemes** for its Chinese employees in accordance with PRC regulations[66](index=66&type=chunk) [Other Information](index=21&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Corporate Governance Code](index=21&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The company is committed to maintaining high standards of corporate governance and has complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules - The Company has **complied with the applicable code provisions** of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[68](index=68&type=chunk) [Model Code for Securities Transactions](index=22&type=section&id=%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The company has adopted the Model Code set out in Appendix C3 to the Listing Rules as the required standard for directors' securities transactions and confirms that all directors complied with the code during the reporting period - The Company has adopted the **Model Code for Securities Transactions by Directors of Listed Issuers** set out in Appendix C3 to the Listing Rules[69](index=69&type=chunk) - All Directors confirmed compliance with the required standards set out in the Model Code for the six months ended June 30, 2025, and up to the date of this announcement[69](index=69&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=22&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) From the six months ended June 30, 2025, to the date of this announcement, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - From the six months ended June 30, 2025, to the date of this announcement, **neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities**[70](index=70&type=chunk) [Directors' Interests in Material Transactions, Arrangements or Contracts](index=22&type=section&id=%E8%91%A3%E4%BA%8B%E6%96%BC%E9%87%8D%E5%A4%A7%E4%BA%A4%E6%98%93%E3%80%81%E5%AE%89%E6%8E%92%E6%88%96%E5%90%88%E7%B4%84%E7%9A%84%E6%AC%8A%E7%9B%8A) As of June 30, 2025, or at any time during the reporting period, no material transactions, arrangements, or contracts related to the company's business existed in which a director or their connected entity had a direct or indirect material interest - As of June 30, 2025, or at any time during the six months ended June 30, 2025, **no material transactions, arrangements, or contracts** related to the Company's business existed in which a Director or a Director's connected entity had a direct or indirect material interest[71](index=71&type=chunk) [Directors' and Chief Executive's Interests in Shares of the Company and its Associated Corporations](index=22&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%85%B6%E7%9B%B8%E8%81%AF%E6%B3%95%E5%9C%98%E7%9A%84%E8%82%A1%E6%AC%8A%E6%AC%8A%E7%9B%8A) As of June 30, 2025, Executive Directors Mr. Chan Wai Chong and Mr. Yu Tianbing held 42.38% and 12.00% equity interests in the company, respectively, through controlled corporations. Other than these, no other directors or chief executives held disclosable equity interests Directors' and Chief Executive's Interests | Name of Director | Capacity/Nature of Interest | Number of Shares Held/Interested (L) | Percentage | | :--- | :--- | :--- | :--- | | Mr. Chan Wai Chong | Interest in controlled corporation | 339,040,000 | 42.38% | | Mr. Yu Tianbing | Interest in controlled corporation | 96,000,000 | 12.00% | - Mr. Chan Wai Chong holds shares through **City Ease Limited**, which is wholly owned by him, and Mr. Yu Tianbing holds shares through **Wing Ning Limited**, which is wholly owned by him[76](index=76&type=chunk) - Save as disclosed above, **no other Directors or chief executives held any interests or short positions** required to be disclosed under the Securities and Futures Ordinance[75](index=75&type=chunk) [Substantial Shareholders' Interests in Shares of the Company](index=24&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E6%AC%8A%E6%AC%8A%E7%9B%8A) As of June 30, 2025, substantial shareholders included City Ease Limited (wholly owned by Mr. Chan Wai Chong) and his spouse Ms. Liu Yuechu, each holding 42.38% interest; Kai Tung Limited holding 18.37% interest; and Wing Ning Limited (wholly owned by Mr. Yu Tianbing) and his spouse Ms. Zhou Huaqin, each holding 12.00% interest Substantial Shareholders' Interests | Name of Shareholder | Capacity/Nature of Interest | Number of Shares Held/Interested (L) | Percentage of Interest | | :--- | :--- | :--- | :--- | | City Ease Limited | Beneficial owner | 339,040,000 | 42.38% | | Ms. Liu Yuechu | Interest of spouse | 339,040,000 | 42.38% | | Kai Tung Limited | Beneficial owner | 146,960,000 | 18.37% | | Wing Ning Limited | Beneficial owner | 96,000,000 | 12.00% | | Ms. Zhou Huaqin | Interest of spouse | 96,000,000 | 12.00% | - City Ease Limited is **wholly owned by Mr. Chan Wai Chong**, and Ms. Liu Yuechu is Mr. Chan Wai Chong's spouse[78](index=78&type=chunk) - Wing Ning Limited is **wholly owned by Mr. Yu Tianbing**, and Ms. Zhou Huaqin is Mr. Yu Tianbing's spouse[78](index=78&type=chunk)[82](index=82&type=chunk) - Kai Tung Limited is held by Mr. Hu Haoran (Non-executive Director) and other shareholders, and neither he nor his close associates control one-third or more of the voting rights at Kai Tung's general meetings[78](index=78&type=chunk) [Share Option Scheme](index=25&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company adopted a share option scheme on June 2, 2022. As of June 30, 2025, the number of share options available for grant under the scheme was 80,000,000 shares, representing 10% of the issued shares. Since adoption, no share options have been granted, exercised, cancelled, or lapsed - The Company conditionally adopted a **share option scheme on June 2, 2022**[80](index=80&type=chunk) - As of June 30, 2025, the number of share options available for grant under the share option scheme was **80,000,000 shares**, representing **10% of the issued shares**[80](index=80&type=chunk) - Since the adoption of the share option scheme, **no share options have been granted, exercised, cancelled, or lapsed** under the scheme[80](index=80&type=chunk) [Management Contracts](index=25&type=section&id=%E7%AE%A1%E7%90%86%E5%90%88%E7%B4%84) During the reporting period, no management and administration contracts concerning the whole or any substantial part of the company's business were entered into or subsisted, other than service contracts with any director or any person employed full-time by the company - During the reporting period, **no management and administration contracts** concerning the whole or any substantial part of the Company's business were entered into or subsisted, other than service contracts with any Director or any person employed full-time by the Company[81](index=81&type=chunk) [Sufficiency of Public Float](index=26&type=section&id=%E8%B6%B3%E5%A4%A0%E5%85%AC%E7%9C%BE%E6%8C%81%E8%82%A1%E9%87%8F) Based on publicly available information and to the best of the Directors' knowledge, at least 25% of the company's total issued share capital was held by the public during the reporting period and up to the date of this announcement, meeting listing requirements - During the reporting period and up to the date of this announcement, at least **25% of the Company's total issued share capital was held by the public**[83](index=83&type=chunk) [Audit Committee](index=26&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The company established an Audit Committee on June 2, 2022, comprising three independent non-executive directors, chaired by Mr. Chan Yeung Tak. Its primary responsibilities include advising on external auditors, reviewing financial statements, and overseeing financial reporting, internal control, and risk management systems - The Company established an Audit Committee on **June 2, 2022**, comprising **three independent non-executive Directors**, chaired by **Mr. Chan Yeung Tak**[84](index=84&type=chunk) - The Audit Committee's primary responsibilities include recommending the appointment, reappointment, and removal of external auditors, reviewing financial statements and providing significant opinions on financial reporting, and overseeing the Company's financial reporting process, internal control, risk management systems, and audit procedures[84](index=84&type=chunk) [Review of Interim Financial Results by Audit Committee](index=26&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83%E5%AF%A9%E9%96%B1%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E6%A5%AD%E7%B8%BE) The Group's unaudited consolidated interim financial information for the six months ended June 30, 2025, and the accounting information contained in this announcement have been reviewed by the Audit Committee, which agreed with the accounting treatments adopted by the company and deemed them compliant with applicable accounting standards and requirements, and adequately disclosed - The Group's **unaudited consolidated interim financial information** for the six months ended June 30, 2025, and the accounting information contained in this announcement have been **reviewed by the Audit Committee**[85](index=85&type=chunk) - The Audit Committee agreed with the accounting treatments adopted by the Company and considered that the preparation of such accounting information complied with applicable accounting standards and requirements, as well as the Listing Rules, and was **adequately disclosed**[85](index=85&type=chunk) [Publication of Interim Results and Interim Report](index=26&type=section&id=%E5%88%8A%E7%99%BC%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) The interim results announcement has been published on the company's website and the Stock Exchange website. The interim report for the six months ended June 30, 2025, will be published in due course as required by the Listing Rules - The interim results announcement has been published on the Company's website **www.weiliholdings.com** and the Stock Exchange website **www.hkexnews.hk**[86](index=86&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be **published in due course** by the Company as required by the Listing Rules[86](index=86&type=chunk) [Acknowledgement](index=27&type=section&id=%E8%87%B4%E8%AC%9D) [Acknowledgement](index=27&type=section&id=%E8%87%B4%E8%AC%9D) The Board sincerely thanks the Group's management and all employees for their hard work and dedication, as well as shareholders, business partners, and other professionals for their support during the period. This announcement is issued by Mr. Chan Wai Chong, Chairman and Executive Director, on behalf of the Board - The Board thanks the Group's management and all employees for their **hard work and dedication**[87](index=87&type=chunk) - The Board also thanks shareholders, business partners, and other professionals for their **support during the period**[87](index=87&type=chunk) - This announcement is issued by **Mr. Chan Wai Chong, Chairman and Executive Director**, on behalf of the Board[87](index=87&type=chunk)

[Performance Summary](index=1&type=section&id=%E4%BA%8C%E9%9B%B6%E4%BA%8C%E4%BA%94%E5%B9%B4%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E6%91%98%E8%A6%81) The Group demonstrated resilience in core operations amidst a challenging market environment in the first half of 2025 - Property delivery: Approximately **15 thousand units** delivered, with over **285 thousand units** cumulatively since 2022[2](index=2&type=chunk) - Investment properties: Rental and related service income stable at approximately **RMB 786 million**[2](index=2&type=chunk) - Property management: Property management and other service income grew to approximately **RMB 3.375 billion**[2](index=2&type=chunk) - Debt management: Total outstanding debt decreased by approximately **RMB 4.4 billion** year-on-year[2](index=2&type=chunk) - Cash flow: Net cash generated from operating activities remained positive[2](index=2&type=chunk) [Financial Statements](index=2&type=section&id=Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) In H1 2025, Group revenue decreased by 39.2% to RMB 12.28 billion, with gross profit sharply down 63.7%, leading to a net loss of RMB 6.24 billion and basic loss per share of RMB 0.61 Condensed Consolidated Statement of Profit or Loss Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 12,281,324 | 20,206,011 | -39.2% | | Gross Profit | 983,152 | 2,708,108 | -63.7% | | Loss Before Tax | (6,119,764) | (3,453,242) | +77.2% | | Loss for the Period | (6,239,277) | (4,440,408) | +40.5% | | Loss Attributable to Equity Holders of the Company | (6,357,763) | (4,939,432) | +28.7% | | Basic Loss Per Share (RMB) | (0.61) | (0.47) | +29.8% | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) As of June 30, 2025, total assets declined to RMB 241.32 billion, with total liabilities at RMB 196.91 billion, resulting in a net current liability of RMB 8.83 billion, indicating increased short-term solvency pressure Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Period Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **241,319,850** | **256,168,485** | **-5.8%** | | Non-current Assets | 78,453,990 | 78,912,643 | -0.6% | | Current Assets | 162,865,860 | 177,255,842 | -8.1% | | **Total Liabilities** | **196,914,157** | **204,249,584** | **-3.6%** | | Current Liabilities | 171,694,418 | 176,299,544 | -2.6% | | Non-current Liabilities | 25,219,739 | 27,950,040 | -9.8% | | **Net Current Assets (Liabilities)** | **(8,828,558)** | **956,298** | **-** | | **Total Equity** | **44,405,693** | **51,918,901** | **-14.5%** | [Notes to the Financial Statements](index=6&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) [Basis of Preparation and Going Concern Risk](index=6&type=section&id=2.%20%E7%BC%96%E5%88%B6%E5%9F%BA%E5%87%86) Despite preparation on a going concern basis, significant uncertainties exist due to a RMB 6.36 billion loss and over RMB 57 billion in defaulted debts, with ongoing mitigation efforts uncertain - As of June 30, 2025, the Group faces severe financial challenges posing significant going concern uncertainty[10](index=10&type=chunk) - Operating performance: Net loss attributable to shareholders of approximately **RMB 6.36 billion** in H1[10](index=10&type=chunk) - Liquidity position: Net current liabilities reached **RMB 8.83 billion**[10](index=10&type=chunk) - Debt default: Unpaid principal and interest on bank borrowings, offshore senior notes, and convertible bonds totaled over **RMB 57 billion**, constituting default or cross-default[10](index=10&type=chunk) - To alleviate liquidity pressure, the Group has adopted several measures[11](index=11&type=chunk)[13](index=13&type=chunk) - Debt restructuring: Scheme of arrangement for offshore debt restructuring approved by the court[11](index=11&type=chunk) - Loan extension: Actively negotiating with domestic financial institutions for renewal and extension of existing borrowings[11](index=11&type=chunk) - Cost control: Implementing strict cost-cutting measures, reducing non-core businesses and expenses[13](index=13&type=chunk) - Asset disposal: Seeking opportunities to dispose of non-core assets to enhance cash position[13](index=13&type=chunk) [Segment Information](index=8&type=section&id=4.%20%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group's property sales revenue declined 49.9% to RMB 8.12 billion, resulting in a RMB 2.06 billion segment loss, while property management revenue grew 5.2% to RMB 3.38 billion, and property investment revenue remained stable Segment Revenue and (Loss)/Profit (For the six months ended June 30) | Segment | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | **Segment Revenue** | | | | | Property sales and other property related services | 8,119,887 | 16,208,285 | -49.9% | | Property investment | 786,050 | 788,703 | -0.3% | | Property management and other services | 3,375,387 | 3,209,023 | +5.2% | | **Total** | **12,281,324** | **20,206,011** | **-39.2%** | | **Segment (Loss)/Profit** | | | | | Property sales and other property related services | (2,057,775) | (747,984) | -175.1% | | Property investment | 466,199 | 462,689 | +0.8% | | Property management and other services | 591,220 | 669,279 | -11.7% | | **Total** | **(1,000,356)** | **383,984** | **-** | [Analysis of Key Profit and Loss Items](index=10&type=section&id=Key%20P%26L%20Items%20Analysis) Total finance costs decreased by 15.6%, but expensed finance costs increased by 5.2% to RMB 1.94 billion due to a significant reduction in capitalized amounts, while income tax expense sharply declined by 87.9% Finance Cost Analysis (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total interest expense on borrowings | 2,340,408 | 2,772,086 | | Less: Amount capitalized | (403,563) | (930,771) | | **Finance costs charged to profit or loss** | **1,936,845** | **1,841,315** | - Total income tax expense for the period was **RMB 119.5 million**, a significant decrease of **87.9%** from RMB 987.2 million in the prior year, primarily due to the expanded pre-tax loss[22](index=22&type=chunk) [Analysis of Key Balance Sheet Items](index=13&type=section&id=Key%20Balance%20Sheet%20Items%20Analysis) Net trade receivables increased to RMB 4.34 billion, with a rise in overdue amounts, while trade payables remained stable at RMB 26.49 billion, with a high proportion (45.6%) over one year old Trade Receivables Ageing Analysis (Net of loss allowance) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 60 days | 1,806,146 | 1,801,275 | | 61 to 180 days | 531,287 | 464,198 | | 181 to 365 days | 599,032 | 338,613 | | Over 1 year | 1,407,033 | 1,129,935 | | **Total** | **4,343,498** | **3,734,021** | Trade Payables Ageing Analysis | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 60 days | 11,395,928 | 10,927,385 | | 61 to 180 days | 1,428,366 | 1,020,088 | | 181 to 365 days | 1,599,048 | 2,194,751 | | Over 1 year | 12,066,948 | 12,624,045 | | **Total** | **26,490,290** | **26,766,269** | [Summary of Independent Review Report](index=16&type=section&id=%E7%8B%AC%E7%AB%8B%E5%AE%A1%E9%98%85%E6%8A%A5%E5%91%8A%E6%91%98%E8%A6%81) [Material Uncertainty Related to Going Concern](index=16&type=section&id=%E4%B8%8E%E6%8C%81%E7%BB%AD%E7%BB%8F%E8%90%A5%E6%9C%89%E5%85%B3%E7%9A%84%E9%87%8D%E5%A4%A7%E4%B8%8D%E7%A1%AE%E5%AE%9A%E5%9B%A0%E7%B4%A0) The independent auditor's review report highlights significant uncertainties regarding the Group's ability to continue as a going concern, citing substantial losses, net current liabilities, and widespread debt defaults - The independent auditor's review report emphasizes "Material Uncertainty Related to Going Concern," noting that the Group's financial condition, including substantial losses, net current liabilities, and debt defaults, indicates significant uncertainty that may cast substantial doubt on its ability to continue as a going concern[37](index=37&type=chunk)[38](index=38&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [Market Review and Outlook](index=16&type=section&id=%E4%BA%8C%E9%9B%B6%E4%BA%8C%E4%BA%94%E5%B9%B4%E4%B8%8A%E5%8D%8A%E5%B9%B4%E5%9B%9E%E9%A1%B5%E5%8F%8A%E4%B8%8B%E5%8D%8A%E5%B9%B4%E5%B1%95%E6%9C%9B) Management observes a structural stabilization in the H1 2025 China property market, with sales decline narrowing but recovery challenges persisting, expecting continued differentiation in H2 - Management's core market assessment[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Current market: Policy stimulus effects are weakening, market recovery faces challenges, new home inventory pressure is high, property prices are still bottoming out, and market segmentation is evident[39](index=39&type=chunk) - H2 Outlook: The market will continue its structural stabilization, with higher-tier cities showing more resilient sales, second-hand home transactions outperforming new homes, and high-quality residential properties remaining popular[41](index=41&type=chunk) - Corporate strategy: Property developers will highly focus investments on core cities and core locations, accelerating the transition to asset-light models like project management and commercial operations[42](index=42&type=chunk) [Business Review](index=18&type=section&id=Business%20Review) The Group's business performance diverged in H1 2025, with core property development sales halved, investment property income stable, and property management achieving robust 5.2% growth [Property Development](index=18&type=section&id=%E6%88%BF%E5%9C%B0%E4%BA%A7%E5%BC%80%E5%8F%91) In H1 2025, contract sales plummeted 50.0% to RMB 10.16 billion, with an average selling price of RMB 10,274/sqm, primarily in central-western regions and second-tier cities Contract Sales Performance (For the six months ended June 30, 2025) | Indicator | Amount | Year-on-year Change | | :--- | :--- | :--- | | Contract Sales Value | RMB 10.16 billion | -50.0% | | Contract Sales Area | 0.9893 million square meters | -40.3% | | Average Contract Sales Price | RMB 10,274/square meter | -16.2% (estimated) | - Geographically, the central-western region contributed **37.6%** of contract sales, with the Bohai Rim and Yangtze River Delta contributing **25.5%** and **24.4%** respectively[45](index=45&type=chunk) - By city tier, first and second-tier cities collectively accounted for **87.0%** of sales[45](index=45&type=chunk) - Recognized property sales revenue for the period was **RMB 7.86 billion**, a **50.4%** year-on-year decrease, with major delivery regions being the central-western and Yangtze River Delta[48](index=48&type=chunk) [Property Investment](index=21&type=section&id=%E6%88%BF%E5%9C%B0%E4%BA%A7%E6%8A%95%E8%B5%84) Investment property rental and other service income remained stable at approximately RMB 786 million in H1 2025, a slight 0.3% decrease, with 33 properties totaling 2.282 million sqm held - Investment property rental and other service income was **RMB 786 million**, a **0.3%** year-on-year decrease, with major income sources from core projects in Shanghai and Beijing[52](index=52&type=chunk) [Property Management](index=21&type=section&id=%E7%89%A9%E4%B8%9A%E7%AE%A1%E7%90%86) Property management and other service income achieved robust growth, increasing by 5.2% to approximately RMB 3.38 billion in H1 2025, providing a stable revenue stream - Property management and other service income increased by **5.2%** year-on-year to **RMB 3.375 billion**, primarily due to an increase in the number of properties under management[53](index=53&type=chunk) [Financial Review](index=22&type=section&id=Financial%20Review) The Group's financial position further deteriorated in H1 2025, with significant declines in revenue and gross profit, expanded net loss due to impairments, and increased leverage and liquidity risks [Revenue and Profit Analysis](index=22&type=section&id=Revenue%20and%20Profit%20Analysis) Total revenue decreased by 39.2% to RMB 12.28 billion, primarily due to reduced property sales, with gross margin falling to 8.0%, and significant impairment losses expanding the net loss to RMB 6.36 billion Breakdown of Recognized Revenue (For the six months ended June 30) | Revenue Category | 2025 (RMB thousand) | % of Total | 2024 (RMB thousand) | % of Total | Year-on-year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Property sales and other property related services | 8,119,887 | 66.1% | 16,208,285 | 80.2% | -49.9% | | Rental and other services | 786,050 | 6.4% | 788,703 | 3.9% | -0.3% | | Property management and other services | 3,375,387 | 27.5% | 3,209,023 | 15.9% | +5.2% | | **Total** | **12,281,324** | **100.0%** | **20,206,011** | **100.0%** | **-39.2%** | - Gross profit decreased by **63.7%** year-on-year to **RMB 983 million**, with gross margin declining from 13.4% to **8.0%**[58](index=58&type=chunk) - Net loss attributable to shareholders expanded to **RMB 6.36 billion**, compared to RMB 4.94 billion in the prior year[66](index=66&type=chunk) [Balance Sheet and Liquidity Analysis](index=25&type=section&id=Balance%20Sheet%20and%20Liquidity%20Analysis) Total debt decreased to RMB 84.2 billion, but cash was tight at RMB 10.16 billion (60% restricted), while net gearing ratio surged to 166.8% and current ratio dropped to 0.9x, indicating worsening liquidity and leverage - As of June 30, 2025, bank balances and cash were approximately **RMB 10.16 billion**, including **RMB 1.73 billion** in pledged deposits and **RMB 4.30 billion** in regulated account funds[72](index=72&type=chunk) - Total outstanding borrowings were approximately **RMB 84.21 billion**, a decrease from RMB 86.65 billion at the end of 2024[73](index=73&type=chunk) Key Financial Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Debt to Equity Ratio | 166.8% | 145.6% | | Debt to Asset Ratio | 34.9% | 33.8% | | Current Ratio | 0.9 times | 1.0 times | [Risk Management](index=26&type=section&id=Risk%20Management) The Group faces significant unhedged foreign currency risk from substantial foreign currency-denominated debts and interest rate risk from floating-rate borrowings - The Group is exposed to foreign currency risk, primarily from bank balances, borrowings, senior notes, and convertible bonds denominated in foreign currencies, with no foreign currency hedging arrangements in place[75](index=75&type=chunk) - The Group is exposed to market interest rate fluctuation risk related to interest-bearing bank and other borrowings and does not use derivative financial instruments to hedge interest rate risk[76](index=76&type=chunk) [Other Information](index=28&type=section&id=Other%20Information) [Dividends and Governance](index=28&type=section&id=%E8%82%A1%E6%81%AF%E5%8F%8A%E7%AE%A1%E6%B2%BB) The Board resolved not to declare an interim dividend for H1 2025 due to current financial conditions, while the company complied with corporate governance codes, and interim results were reviewed by auditors and the audit committee - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[80](index=80&type=chunk) - The Company complied with the Corporate Governance Code during the reporting period, and the interim financial statements were reviewed by the auditor and considered by the audit committee[81](index=81&type=chunk)[84](index=84&type=chunk)

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) [Unaudited Financial Results Summary](index=1&type=section&id=Unaudited%20Financial%20Results%20Summary) This announcement presents the unaudited interim results for the six months ended June 30, 2025, reviewed by the audit committee and independent auditor - **Raymond Industrial Limited** announced its unaudited interim results for the six months ended June 30, 2025[3](index=3&type=chunk) - The condensed consolidated financial statements have been reviewed by the company's **audit committee** and **independent auditor RSM Hong Kong**[3](index=3&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Income Statement](index=2&type=section&id=Condensed%20Consolidated%20Income%20Statement) The Group reported increased revenue and profit for the six months ended June 30, 2025, with higher basic earnings per share Condensed Consolidated Income Statement Key Data (For the 6 months ended June 30) | Metric | 2025 (thousand HKD) | 2024 (thousand HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 530,704 | 523,457 | +1.38% | | Cost of sales | (453,100) | (445,764) | +1.65% | | Gross profit | 77,604 | 77,693 | -0.11% | | Other income | 7,171 | 9,267 | -22.62% | | Other net gains | 11,601 | 6,542 | +77.33% | | Profit before tax | 36,520 | 29,510 | +23.75% | | Income tax expense | (4,015) | (2,689) | +49.31% | | Profit for the period attributable to owners of the Company | 32,505 | 26,821 | +21.19% | | Basic earnings per share (HK cents) | 6.48 | 5.35 | +21.12% | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Total comprehensive income attributable to owners decreased, due to prior year's property revaluation gains and current period's exchange differences Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (For the 6 months ended June 30) | Metric | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company | 32,505 | 26,821 | | Revaluation gain on property, plant and equipment transferred to investment properties | - | 32,797 | | Exchange differences arising from translating financial statements of overseas operations | 3,832 | (2,261) | | Other comprehensive income for the period, net of tax | 3,832 | 30,536 | | Total comprehensive income for the period attributable to owners of the Company | 36,337 | 57,357 | - Total comprehensive income for the first half of 2025 decreased, mainly because the prior year included **property revaluation gains**, while 2025 recorded **exchange differences from overseas operations**[6](index=6&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets slightly decreased to HKD 881,529 thousand, with net current assets of HKD 507,026 thousand and total equity of HKD 671,993 thousand Condensed Consolidated Statement of Financial Position Key Data (As of June 30, 2025) | Metric | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Non-current assets | 165,115 | 166,614 | (1,499) | | Current assets | 716,414 | 713,630 | 2,784 | | Current liabilities | 209,388 | 204,327 | 5,061 | | Net current assets | 507,026 | 509,303 | (2,277) | | Total assets less current liabilities | 672,141 | 675,917 | (3,776) | | Non-current liabilities | 148 | 155 | (7) | | Net assets | 671,993 | 675,762 | (3,769) | | Total equity | 671,993 | 675,762 | (3,769) | - Bank and cash balances decreased from **HKD 349,130 thousand** as of December 31, 2024, to **HKD 325,178 thousand** as of June 30, 2025[7](index=7&type=chunk) [Notes to Financial Statements](index=5&type=section&id=Notes%20to%20Financial%20Statements) [Basis of Preparation](index=5&type=section&id=Basis%20of%20Preparation) The condensed financial information is prepared in accordance with HKAS 34 "Interim Financial Reporting" and the HKEX Listing Rules, consistent with the accounting policies and methods used in the 2024 annual financial statements - The condensed financial information is prepared in accordance with **Hong Kong Accounting Standard 34** and the **HKEX Listing Rules**[8](index=8&type=chunk) - The accounting policies and methods of computation used in preparing the condensed financial statements are consistent with those adopted in the annual financial statements for the year ended December 31, 2024[9](index=9&type=chunk) [New and Revised HKFRS](index=5&type=section&id=New%20and%20Revised%20HKFRS) The Group adopted the amendment to HKAS 21 "Lack of Exchangeability" from January 1, 2025, with no impact on accounting policies, and is assessing the potential impact of HKFRS 18 "Presentation and Disclosure in Financial Statements" effective in 2027 - The Group first applied the amendment to **HKAS 21 "Lack of Exchangeability"** from January 1, 2025, without changing accounting policies or making retrospective adjustments[10](index=10&type=chunk) - **HKFRS 18 "Presentation and Disclosure in Financial Statements"**, effective January 1, 2027, is expected to significantly impact the statement of profit or loss structure, disclosure of management-defined performance measures, and disaggregation requirements[11](index=11&type=chunk) - Management is assessing the impact of **HKFRS 18** on the presentation and disclosures in the consolidated financial statements[12](index=12&type=chunk) [Fair Value Measurement](index=6&type=section&id=Fair%20Value%20Measurement) The carrying amounts of the Group's financial assets and liabilities approximate their fair values, with investment properties (Hong Kong office and warehouse) measured at Level 3 fair value using the income capitalization approach, remaining at HKD 32,800 thousand as of June 30, 2025 - The carrying amounts of the Group's financial assets and financial liabilities approximate their respective **fair values**[13](index=13&type=chunk) Investment Properties Fair Value Measurement (Level 3) | Description | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Investment properties (office and warehouse – Hong Kong) | 32,800 | 32,800 | - Investment properties are valued using the **income capitalization approach**, with key unobservable inputs including market yield (3.8%) and market monthly rent (HKD 5,769 - HKD 7,264/sq ft/month)[19](index=19&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) The Group primarily manufactures and sells household electrical appliances, with five reportable operating segments based on customer location; total segment revenue and profit increased in the first half of 2025, despite a decline in the Asia segment - The Group is principally engaged in the **manufacture and sale of household electrical appliances**, with production facilities located in China[20](index=20&type=chunk) - Reportable operating segments are categorized by customer location, including **Asia** (China, Korea, Japan), **Europe** (UK, Netherlands), **Latin America** (Mexico), **North America** (USA, Canada), and **Rest of the World** (Australia, Africa)[20](index=20&type=chunk)[21](index=21&type=chunk)[24](index=24&type=chunk) Reportable Segment Revenue (For the 6 months ended June 30) | Segment | 2025 (thousand HKD) | 2024 (thousand HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Asia | 132,127 | 155,322 | -14.93% | | Europe | 135,514 | 123,695 | +9.56% | | Latin America | 113,950 | 110,829 | +2.82% | | North America | 126,767 | 121,210 | +4.58% | | Rest of the World | 22,346 | 12,401 | +80.20% | | **Total** | **530