[Interim Results Overview](index=1&type=section&id=Interim_Results_Overview) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=Condensed_Consolidated_Statement_of_Profit_or_Loss_and_Other_Comprehensive_Income) The company recorded a net loss of US$1,708 thousand in the first half of 2025, a reversal from a net profit of US$1,278 thousand in the prior year, primarily due to decreased shipping service revenue and a significant increase in cost of sales Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | Total Revenue | 4,381 | 5,070 | | Total Cost of Sales | (5,207) | (2,966) | | Other Income | 308 | 502 | | Administrative Expenses | (1,180) | (1,010) | | Profit (Loss) Before Tax | (1,708) | 1,278 | | Profit (Loss) for the Period Attributable to Owners of the Company | (1,708) | 1,278 | | Total Comprehensive Income (Expense) for the Period Attributable to Owners of the Company | (1,665) | 1,278 | | Basic Earnings (Loss) Per Share Attributable to Owners of the Company (US cents) | (0.16) | 0.12 | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed_Consolidated_Statement_of_Financial_Position) As of June 30, 2025, the company's total assets slightly decreased to US$59,555 thousand, with a significant increase in current liabilities leading to a reduction in net current assets and total equity Condensed Consolidated Statement of Financial Position (As at June 30) | Indicator | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 40,952 | 40,147 | | Current Assets | 18,603 | 19,660 | | Total Assets | 59,555 | 59,807 | | **Liabilities and Equity** | | | | Current Liabilities | 2,287 | 1,003 | | Net Current Assets | 16,316 | 18,657 | | Total Equity | 57,139 | 58,804 | | Non-current Liabilities | 129 | – | | Total Liabilities and Equity | 59,555 | 59,807 | [Notes to the Condensed Consolidated Financial Statements](index=5&type=section&id=Notes_to_the_Condensed_Consolidated_Financial_Statements) [1. General Information](index=5&type=section&id=1.%20General%20Information) This section provides fundamental company details, including its Bermuda registration, primary business locations, dual listing on HKEX and SGX, and the presentation currency of its financial statements in US dollars - The company is incorporated in Bermuda, with its primary listing on the Main Board of the Stock Exchange of Hong Kong and a secondary listing on the Main Board of the Singapore Exchange[7](index=7&type=chunk) - The condensed consolidated financial statements are presented in US dollars, which is the company's functional currency[7](index=7&type=chunk) [2. Principal Accounting Policies](index=5&type=section&id=2.%20Principal%20Accounting%20Policies) The condensed consolidated financial statements are prepared in accordance with IAS 34 and HKEX Listing Rules, on a historical cost basis, with no significant impact from new IFRS amendments applied this period - The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the applicable disclosure requirements of Appendix D2 to the Hong Kong Listing Rules[8](index=8&type=chunk) - The application of amendments to International Financial Reporting Standards during this interim period did not have a significant impact on the Group's financial position and performance for the current and prior periods[10](index=10&type=chunk) [3. Revenue Analysis](index=6&type=section&id=3.%20Revenue%20Analysis) Total revenue for the first half of 2025 was US$4,381 thousand, a 14% year-on-year decrease, with shipping service revenue falling to US$3,830 thousand from US$5,070 thousand, and new trading revenue of US$551 thousand Revenue Breakdown (For the six months ended June 30) | Revenue Source | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | Shipping Service Revenue | 3,830 | 4,391 | | Trading Revenue | 551 | – | | Rental Income | – | 679 | | Total Revenue from Contracts with Customers | 4,381 | 5,070 | [4. Segment Information](index=7&type=section&id=4.%20Segment%20Information) Operating segments were reclassified into shipping services and trading, with the shipping services segment reporting a loss of US$749 thousand, while the trading segment recorded a profit of US$13 thousand - During this interim period, the Group's operating and reportable segments were re-evaluated and reclassified into shipping services and trading[13](index=13&type=chunk) Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (US$ thousand) | 2025 Results (US$ thousand) | 2024 Revenue (US$ thousand) | 2024 Results (US$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Shipping Services | 3,830 | (749) | 5,070 | 2,170 | | Trading | 551 | 13 | – | – | | **Total** | **4,381** | **(736)** | **5,070** | **2,170** | | Profit (Loss) Before Tax | | (1,708) | | 1,278 | [5. Other Income](index=8&type=section&id=5.%20Other%20Income) Total other income decreased to US$308 thousand from US$502 thousand in the prior year, primarily due to a reduction in bank interest income Other Income (For the six months ended June 30) | Item | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | Bank Interest Income | 182 | 385 | | Other Income | 126 | 117 | | **Total** | **308** | **502** | [6. Components of Profit (Loss) Before Tax](index=9&type=section&id=6.%20Profit%20%28Loss%29%20Before%20Tax) The loss before tax was primarily influenced by increased employee benefit expenses, crew expenses, depreciation of property, plant and equipment, and a decrease in bank interest income Key Items Affecting Profit (Loss) Before Tax (For the six months ended June 30) | Item | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | Employee Benefit Expenses | 666 | 417 | | Crew Expenses | 1,458 | 961 | | Depreciation of Property, Plant and Equipment | 1,353 | 992 | | Depreciation of Right-of-Use Assets | 67 | 49 | | Bank Interest Income | (182) | (385) | [7. Income Tax Expense](index=9&type=section&id=7.%20Income%20Tax%20Expense) The company incurred no income tax expense for the six months ended June 30, 2025, or 2024 - No assessable profits arose in Hong Kong, and no taxes were incurred in other jurisdictions for the six months ended June 30, 2025, and 2024[19](index=19&type=chunk) [8. Earnings (Loss) Per Share](index=9&type=section&id=8.%20Earnings%20%28Loss%29%20Per%20Share) Basic earnings per share shifted from a profit of 0.12 US cents in the prior year to a basic loss of 0.16 US cents due to the loss incurred during the period Earnings (Loss) Per Share (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit (Loss) for the Period Attributable to Owners of the Company (US$ thousand) | (1,708) | 1,278 | | Weighted Average Number of Ordinary Shares in Issue (thousand shares) | 1,097,704 | 1,097,704 | | Basic Earnings (Loss) Per Share (US cents) | (0.16) | 0.12 | [9. Dividend Policy](index=10&type=section&id=9.%20Dividends) The Board of Directors decided not to declare an interim dividend for this interim period, consistent with the prior year - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (June 30, 2024: nil)[21](index=21&type=chunk)[25](index=25&type=chunk) [10. Property, Plant and Equipment](index=10&type=section&id=10.%20Property%2C%20Plant%20and%20Equipment) Additions to property, plant and equipment significantly increased to US$1,862 thousand in the first half of 2025, compared to US$2 thousand in the prior year - Additions to property, plant and equipment amounted to **US$1,862 thousand** for the six months ended June 30, 2025 (June 30, 2024: US$2 thousand)[22](index=22&type=chunk) [11. Trade Receivables](index=10&type=section&id=11.%20Trade%20Receivables) Trade receivables from shipping services are all within 30 days of invoice date, not overdue or impaired, and have been fully settled - Trade receivables from shipping services are aged within 30 days from the invoice date, are neither overdue nor impaired, and have been fully settled[23](index=23&type=chunk) [12. Other Receivables and Prepayments](index=10&type=section&id=12.%20Other%20Receivables%20and%20Prepayments) Total other receivables and prepayments increased from US$722 thousand as of December 31, 2024, to US$988 thousand as of June 30, 2025 Other Receivables and Prepayments (As at June 30) | Item | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | Other Receivables | 711 | 558 | | Prepayments for Operating Expenses and Other Deposits | 277 | 154 | | Account Balance with Brokers | – | 10 | | **Total** | **988** | **722** | [13. Deposits Received, Other Payables and Accrued Charges](index=10&type=section&id=13.%20Deposits%20Received%2C%20Other%20Payables%20and%20Accrued%20Charges) Total deposits received, other payables, and accrued charges significantly increased from US$775 thousand as of December 31, 2024, to US$2,033 thousand as of June 30, 2025, mainly due to a provision for dry-docking costs Deposits Received, Other Payables and Accrued Charges (As at June 30) | Item | 2025 (US$ thousand) | 2024 (US$ thousand) | | :--- | :--- | :--- | | Accrued Operating Expenses and Other Payables | 618 | 625 | | Provision for Dry-docking Costs | 1,415 | – | | Deposits Received from Ship Charterers | – | 150 | | **Total** | **2,033** | **775** | [Business Review and Outlook](index=11&type=section&id=Business_Review_and_Outlook) [Business Review Overview](index=11&type=section&id=Business_Review_Overview) In the first half of 2025, the Group's main businesses were shipping and trading, with shipping under pressure from tariff wars and geopolitical events, leading to a 14% year-on-year revenue decrease to US$4,381 thousand and a net loss of US$1,708 thousand - In the first half of 2025, the Group recorded revenue of **US$4,381 thousand**, a **14% year-on-year decrease** (2024: US$5,070 thousand)[26](index=26&type=chunk) - A loss attributable to owners of the company of **US$1,708 thousand** was recorded, compared to a profit of US$1,278 thousand in the prior year[26](index=26&type=chunk) - Basic loss per share for the period was **0.16 US cents** (2024: basic earnings per share of 0.12 US cents)[26](index=26&type=chunk) - The shipping business market faced immense pressure, with supramax dry bulk vessel charter rates plummeting by **34.1% year-on-year**[26](index=26&type=chunk) - To mitigate the cyclical impact on the shipping business, the Group strategically relaunched its trading business[26](index=26&type=chunk) [Shipping Business Performance](index=11&type=section&id=Shipping_Business_Performance) The dry bulk fleet, comprising three supramax vessels, experienced a significant reduction in shipping service revenue due to a 34.1% year-on-year drop in the BSI 58 index and the 'Heroic' vessel being out of service for dry-docking repairs - The Group's dry bulk fleet consists of **three supramax vessels** with a total carrying capacity of approximately **171,000 DWT**[27](index=27&type=chunk) - The average BSI 58 for the first half of 2025 was **US$9,202 per day**, a decrease of **US$4,773** year-on-year, reaching a five-year historical low[27](index=27&type=chunk) - The vessel 'Heroic' was out of service for dry-docking repairs, reducing operating revenue by approximately **US$300 thousand**[27](index=27&type=chunk) [Trading Business Expansion](index=11&type=section&id=Trading_Business_Expansion) Leveraging the new controlling shareholder's experience and network, the Group expanded into coal trading in the first half of 2025, generating sales revenue of US$551 thousand and a profit of US$13 thousand from 5,200 tons of coal sold - The Group expanded its business into coal trading in the first half of 2025, recording sales revenue of **US$551 thousand** (2024: nil) and a profit of **US$13 thousand** (2024: nil)[28](index=28&type=chunk) - In the first half of 2025, the Group achieved coal sales of **5,200 tons** (2024: nil)[28](index=28&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=12&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2025, both current and quick assets decreased, and the current ratio fell from 19.6 to 8.1, remaining strong despite increased current liabilities due to dry-docking provisions, while equity attributable to owners decreased due to the period's loss - As of June 30, 2025, the Group had current assets of **US$18,603 thousand** (December 31, 2024: US$19,660 thousand)[29](index=29&type=chunk) - Quick assets totaled **US$13,910 thousand** (December 31, 2024: US$18,938 thousand)[29](index=29&type=chunk) - The current ratio was approximately **8.1** (December 31, 2024: 19.6), with the decrease primarily due to the provision for dry-docking costs during the review period[29](index=29&type=chunk) - Equity attributable to owners of the company was **US$57,139 thousand**, a decrease of **US$1,665 thousand** from the end of last year, mainly due to the Group incurring a loss of US$1,708 thousand[29](index=29&type=chunk) - The Group's bank interest income decreased by **53%** to **US$182 thousand** (2024: US$385 thousand), primarily due to a general reduction in bank deposit interest rates[30](index=30&type=chunk) [Outlook and Future Strategies](index=12&type=section&id=Outlook_and_Future_Strategies) Management maintains cautious optimism for the medium-to-long-term shipping business outlook, expecting strong short-term demand, and plans to leverage new shareholder resources to diversify into logistics and trading in China, Mongolia, and Belt and Road countries, while seeking fleet expansion, cost reduction, and M&A opportunities - Management remains cautiously optimistic about the medium-to-long-term outlook for the shipping business, expecting strong shipping demand in the short term[31](index=31&type=chunk) - The Group will expand its logistics and trading businesses in mainland China, Mongolia, and other Belt and Road countries, aiming to cultivate new business growth points within the year to achieve business diversification[31](index=31&type=chunk) - Future strategies include opportunistically expanding the fleet, enhancing professional fleet management, implementing cost reduction and efficiency improvement measures, and seeking investment or merger and acquisition opportunities[32](index=32&type=chunk) [Corporate Governance and Other Information](index=13&type=section&id=Corporate_Governance_and_Other_Information) [Changes in Directors' Information](index=13&type=section&id=Changes_in_Directors%27_Information) Independent Non-executive Director Mr. Zhu Gaoming resigned from CIFI Holdings and joined Fosun International as a Senior Assistant and Senior Expert in Financial Management on August 4, 2025 - Independent Non-executive Director Mr. Zhu Gaoming resigned from his positions as Vice President and President of Overseas Business at CIFI Holdings (Group) Co Ltd in July 2025[33](index=33&type=chunk) - Mr. Zhu Gaoming joined Fosun International Limited as a Senior Assistant and Senior Expert in Financial Management on August 4, 2025[33](index=33&type=chunk) [Corporate Governance and Securities Dealing Code](index=13&type=section&id=Corporate_Governance_and_Securities_Dealing_Code) The company complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the HKEX Listing Rules during the reporting period, and all directors confirmed compliance with the adopted Securities Dealing Code - The company complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 to the Hong Kong Listing Rules for the six months ended June 30, 2025[34](index=34&type=chunk) - All directors confirmed their compliance with the required standards of the Securities Dealing Code throughout the six months ended June 30, 2025[35](index=35&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=13&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended June 30, 2025 - 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[36](index=36&type=chunk) [Completion of Voluntary Conditional General Cash Offer](index=14&type=section&id=Completion_of_Voluntary_Conditional_General_Cash_Offer) Huajian Limited completed its voluntary conditional general cash offer for the company on February 18, 2025, becoming the direct and ultimate controlling company with approximately 51.81% of the issued share capital - The voluntary conditional general cash offer was completed on **February 18, 2025**[37](index=37&type=chunk) - Following the completion of the general offer, Huajian Limited became the direct and ultimate controlling company, holding **568,768,963 shares**, representing approximately **51.81%** of the company's issued share capital[37](index=37&type=chunk) [Audit Committee Review](index=14&type=section&id=Audit_Committee_Review) The interim financial statements, though unaudited, have been reviewed by the Audit Committee and approved by the Board of Directors - The company's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, have been reviewed by the Audit Committee and formally approved by the Board of Directors upon the Audit Committee's recommendation[38](index=38&type=chunk) [Forward-Looking Statements and Board Information](index=14&type=section&id=Forward-Looking_Statements_and_Board_Information) This interim results announcement contains forward-looking statements regarding the Group's financial condition, results, and business, which involve known and unknown risks and uncertainties, and concludes with a list of Board members - This interim results announcement contains forward-looking statements regarding the Group's financial condition, results, and business, which involve known and unknown risks and uncertainties[39](index=39&type=chunk) - The Board of Directors includes three Executive Directors (Ms. Liu Sainan, Mr. Hu Yingxia, Ms. Li Chunyang) and three Independent Non-executive Directors (Mr. Zhu Gaoming, Mr. Qiu Yiyong, Mr. Tang Banghao)[39](index=39&type=chunk)

[Financial Highlights](index=1&type=section&id=財務摘要) [Overview of Financial Highlights](index=1&type=section&id=財務摘要概覽) Bafook Holdings Limited reported interim results for the six months ended June 30, 2025, with revenue decreasing by 22.0% to RMB190,271 thousands, loss for the period narrowing to (RMB36,167) thousands, and adjusted loss significantly narrowing by 42.3% 2025 H1 Key Financial Data | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 190,271 | 243,952 | -22.0% | | Adjusted Loss for the Period | (15,419) | (26,700) | -42.3% | | Convertible Bond Interest | (20,748) | (19,869) | +4.4% | | Loss for the Period | (36,167) | (46,569) | -22.3% | | Loss Per Share (RMB cents) — Basic and Diluted | (2.08) | (2.86) | -27.3% | - Adjusted loss for the period, a non-GAAP financial measure calculated by excluding convertible bond interest from loss for the period, significantly narrowed by **42.3%** year-on-year, indicating improved operating loss after removing non-operating items[3](index=3&type=chunk)[4](index=4&type=chunk) [Interim Results Review](index=2&type=section&id=中期業績回顧) [Performance Overview](index=2&type=section&id=業績概覽) In H1 2025, the Group's system sales (including associates) remained stable at RMB1,716 million with 1,131 stores, but self-operated and franchised restaurant system sales and reported revenue declined due to industry slowdown and weak consumption 2025 H1 Operating Overview | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Group System Sales | 1,716 | 1,716 | 0.0% | | Group's Own Brands' Self-operated and Franchised Restaurants System Sales | 274 | 325 | -13.6% | | Financial Statement Revenue | 190 | 244 | -22.0% | | Total Number of Stores (as of June 30) | 1,131 | 1,131 | 0.0% | - The catering industry experienced an overall slowdown, intensified market consolidation, and consumer focus on price and differentiated products, compounded by sustained weak consumption and price wars on delivery platforms, leading to pressure on corporate profitability[5](index=5&type=chunk) [Brand Operations and Innovation](index=2&type=section&id=品牌運營與創新) Key brands 'Hehegu' and 'Xinladao' actively responded to market challenges through platform optimization, new product launches, brand innovation, and asset-light expansion, while associate brands 'Yujian Xiaomian' and 'Baozai Huang' enhanced market position with competitive pricing and enhanced experiences - "Hehegu" Chinese fast food leveraged the concentrated surge in delivery platforms, strengthening its freshly cooked advantage and launching new products to counter market impact in Beijing[6](index=6&type=chunk) - "Xinladao" fish hotpot implemented brand innovation, piloted new models, enhanced product upgrades by introducing fresh-cut ingredients and multiple hotpot items, and pursued asset-light expansion through joint ventures and store renovations[6](index=6&type=chunk) - Associate brand "Yujian Xiaomian" strengthened competitiveness with **price advantages**, diverse products, and multi-period operations, also expanding into the Hong Kong market; "Baozai Huang" has over **200 stores** nationwide, innovating with a communal hotpot model to enhance dining experience[6](index=6&type=chunk) [Ecosystem Platform Development](index=3&type=section&id=生態鏈平台發展) Bafook Holdings continues to leverage its 'Co-creation Camp' platform to integrate ecosystem and industry resources, aiming to diversify revenue, strengthen collaborations, and drive innovation - The Group integrates its ecosystem and industry resources through the "Co-creation Camp" platform to broaden revenue streams, strengthen industry cooperation, and drive enterprise innovation and development[7](index=7&type=chunk) [Management Discussion and Analysis](index=3&type=section&id=管理層討論與分析) [Revenue](index=3&type=section&id=收入) Total Group revenue decreased by 22.0% to RMB190.3 million, with restaurant operations and delivery revenue declining due to market competition and fewer stores, while food ingredient sales grew by 4.9% Revenue Composition and Changes | Revenue Source | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Group and its Associates System Revenue | 1,716 | 1,715 | +0.1% | Stable | | Group's Own Brands' Self-operated and Franchised Restaurants System Sales | 274 | 325 | -13.6% | Decrease | | Group Revenue | 190.3 | 244.0 | -22.0% | Intense market competition | | Restaurant Operations Revenue | 71.7 | 116.2 | -38.3% | Intense market competition | | Delivery Business Revenue | 73.6 | 84.9 | -13.3% | Decrease in number of stores | | Sales of Food Ingredients Revenue | 45.0 | 42.9 | +4.9% | Increase | [Cost and Expense Analysis](index=3&type=section&id=成本與費用分析) During the period, major costs and expenses decreased in absolute terms, notably employee benefits and property rental, driven by fewer self-operated stores and cost control, though some expense ratios increased due to lower revenue [Raw Materials and Changes in Inventories of Finished Goods](index=3&type=section&id=製成品之所用原材料及存貨變動) Raw materials and inventory changes decreased by 16.3% to RMB83.5 million, but their percentage of revenue rose from 40.9% to 43.9% due to lower revenue | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Percentage of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Raw Materials and Changes in Inventories of Finished Goods | 83.5 | 99.8 | -16.3% | 43.9% vs 40.9% | [Online Platform Service and Delivery Fees](index=3&type=section&id=線上平台服務費及配送費) Online platform service and delivery fees decreased by 16.8% to RMB13.4 million, primarily due to reduced delivery revenue | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Online Platform Service and Delivery Fees | 13.4 | 16.1 | -16.8% | [Employee Benefit Expenses](index=3&type=section&id=僱員福利開支) Employee benefit expenses significantly decreased by 27.7% to RMB55.1 million, mainly due to fewer self-operated stores, reduced staff hours, and cost control, with its revenue percentage also declining | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Percentage of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Employee Benefit Expenses | 55.1 | 76.2 | -27.7% | 29.0% vs 31.2% | [Depreciation of Right-of-Use Assets](index=4&type=section&id=使用權資產折舊) Depreciation of right-of-use assets decreased by 18.4% to RMB24.8 million, but its percentage of revenue slightly increased from 12.5% to 13.0% due to lower revenue and fewer self-operated stores | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Percentage of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Depreciation of Right-of-Use Assets | 24.8 | 30.4 | -18.4% | 13.0% vs 12.5% | [Depreciation and Amortization of Other Assets](index=4&type=section&id=其他資產折舊及攤銷) Depreciation and amortization of other assets decreased by 24.7% to RMB6.7 million, with its percentage of revenue remaining stable between 3.5% and 3.6% | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Percentage of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Depreciation and Amortization of Other Assets | 6.7 | 8.9 | -24.7% | 3.5% vs 3.6% | [Property Rental and Related Expenses](index=4&type=section&id=物業租金及其他相關開支) Property rental and related expenses significantly decreased by 43.9% to RMB4.6 million, primarily due to store closures and relocation to lower-rent sites, with its revenue percentage also decreasing | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Percentage of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Property Rental and Related Expenses | 4.6 | 8.2 | -43.9% | 2.4% vs 3.4% | [Other Expenses](index=4&type=section&id=其他開支) Other expenses decreased by 17.8% to RMB18.5 million, mainly due to reduced routine maintenance, but its percentage of revenue slightly increased from 9.2% to 9.7% due to lower revenue | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | Percentage of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Other Expenses | 18.5 | 22.5 | -17.8% | 9.7% vs 9.2% | [Share of Profits / (Losses) of Associates](index=4&type=section&id=應佔聯營公司溢利%2F%28虧損%29) Share of profits from associates turned from a loss of RMB5.8 million in H1 2024 to a profit of RMB5.9 million in H1 2025, driven by strong-performing brands Share of Profits / (Losses) of Associates | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Share of Profits / (Losses) of Associates | 5.9 (Profit) | (5.8) (Loss) | Turnaround from loss to profit | [Net Finance Costs](index=4&type=section&id=財務費用淨額) Net finance costs slightly increased from RMB23.9 million in H1 2024 to RMB24.3 million in H1 2025, primarily due to higher convertible bond interest Net Finance Costs | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net Finance Costs | 24.3 | 23.9 | +1.7% | [Income Tax Expense](index=5&type=section&id=所得稅費用) Income tax expense slightly increased from RMB0.5 million in H1 2024 to RMB0.6 million in H1 2025 Income Tax Expense | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Income Tax Expense | 0.6 | 0.5 | +20.0% | [Loss for the Period](index=5&type=section&id=期內虧損) The Group's loss for the period narrowed by 22.3% to RMB36.2 million, primarily due to reduced operating losses and increased profits from associates Loss for the Period | Indicator | 2025 H1 (RMB millions) | 2024 H1 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the Period | (36.2) | (46.6) | -22.3% | [Non-GAAP Financial Measures](index=5&type=section&id=非公認會計準則財務計量) [Adjusted Loss for the Period](index=5&type=section&id=期內經調整虧損) The Group presents adjusted loss for the period as a non-GAAP financial measure, excluding convertible bond interest to reflect core operating performance, with H1 2025 adjusted loss narrowing by 42.3% to RMB15.4 million Reconciliation of Loss for the Period to Adjusted Loss for the Period | Indicator | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the Period | (36,167) | (46,569) | -22.3% | | Convertible Bond Interest | 20,748 | 19,869 | +4.4% | | Adjusted Loss for the Period | (15,419) | (26,700) | -42.3% | - This non-GAAP financial measure has limitations as an analytical tool and should be considered a supplement to, not a substitute for, financial performance analysis prepared in accordance with Hong Kong Financial Reporting Standards, and may not be comparable to similarly titled measures presented by other companies[4](index=4&type=chunk)[20](index=20&type=chunk) [Future Outlook](index=7&type=section&id=未來前景) [Future Development Strategy](index=7&type=section&id=未來發展戰略) Despite intense industry competition, the Group remains confident in its long-term growth potential, focusing on enhancing brand value, optimizing self-operated businesses, leveraging brand capitalization, and exploring diverse investment models for value creation and shareholder returns - The Group will continue to develop its core capabilities to achieve value creation and shareholder returns, despite intense competition in the catering industry, maintaining a firm belief in long-term growth potential[28](index=28&type=chunk) - Strategic deployments include enhancing brand enterprise value and optimizing the performance of self-operated businesses to contribute to Group profits[29](index=29&type=chunk) - Leveraging the capitalization process of high-quality brands to achieve value enhancement and cash inflow[29](index=29&type=chunk) - Exploring diversified investment empowerment models, including store investments, to expand business growth points[28](index=28&type=chunk) [Condensed Consolidated Interim Statement of Comprehensive Income](index=8&type=section&id=中期簡明綜合全面收益表) [Analysis of Comprehensive Income](index=8&type=section&id=綜合全面收益分析) For the six months ended June 30, 2025, the Group's loss for the period narrowed to RMB36,167 thousands from RMB46,569 thousands, driven by a 22.0% revenue decrease, reduced other income and expenses, and a shift to profit from associates Summary of Condensed Consolidated Interim Statement of Comprehensive Income | Indicator | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 190,271 | 243,952 | -22.0% | | Other Income | 5,513 | 10,290 | -46.4% | | Raw Materials and Changes in Inventories of Finished Goods | (83,533) | (99,802) | -16.3% | | Online Platform Service and Delivery Fees | (13,403) | (16,079) | -16.8% | | Employee Benefit Expenses | (55,144) | (76,163) | -27.7% | | Depreciation of Right-of-Use Assets | (24,826) | (30,444) | -18.4% | | Depreciation and Amortization of Other Assets | (6,660) | (8,869) | -24.7% | | Property Rental and Related Expenses | (4,578) | (8,181) | -43.9% | | Other Expenses | (18,491) | (22,464) | -17.8% | | Share of Profits / (Losses) of Associates | 5,914 | (5,793) | Turnaround from loss to profit | | Loss Before Tax | (35,569) | (46,119) | -22.9% | | Loss for the Period | (36,167) | (46,569) | -22.3% | | Loss Per Share (RMB cents) Attributable to Equity Holders of the Company | (2.08) | (2.86) | -27.3% | - Other comprehensive income for the period turned from a loss of RMB3,195 thousands in H1 2024 to a gain of **RMB6,153 thousands** in H1 2025, primarily due to exchange differences arising from the translation of overseas operations[32](index=32&type=chunk) [Condensed Consolidated Interim Statement of Financial Position](index=10&type=section&id=中期簡明綜合資產負債表) [Analysis of Financial Position](index=10&type=section&id=綜合資產負債分析) As of June 30, 2025, total Group assets decreased to RMB772,973 thousands, with reduced right-of-use assets and associate investments, while total current liabilities reached RMB911,689 thousands, primarily convertible bonds, and total deficit expanded to RMB250,191 thousands Summary of Condensed Consolidated Interim Statement of Financial Position | Indicator | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total Non-Current Assets | 610,750 | 648,936 | -5.9% | | Total Current Assets | 162,223 | 152,746 | +6.2% | | Total Assets | 772,973 | 801,682 | -3.6% | | **Liabilities** | | | | | Total Current Liabilities | 911,689 | 897,680 | +1.6% | | Total Non-Current Liabilities | 111,475 | 124,179 | -10.3% | | Total Liabilities | 1,023,164 | 1,021,859 | +0.1% | | **Equity** | | | | | Deficit Attributable to Equity Holders of the Company | (276,475) | (249,626) | +10.8% (Deficit expanded) | | Non-Controlling Interests | 26,284 | 29,449 | -10.8% | | Total Deficit | (250,191) | (220,177) | +13.6% (Deficit expanded) | - As of June 30, 2025, right-of-use assets amounted to **RMB69.3 million**, a decrease from RMB95.3 million as of December 31, 2024[21](index=21&type=chunk)[33](index=33&type=chunk) - As of June 30, 2025, inventories amounted to **RMB18.0 million**, a decrease from RMB23.3 million as of December 31, 2024, with inventory turnover days slightly increasing from 43 to **45 days**[22](index=22&type=chunk)[33](index=33&type=chunk) - As of June 30, 2025, total lease liabilities were **RMB80.0 million**, a **22.9% decrease** from RMB103.8 million as of December 31, 2024, primarily due to rental payments for existing leases and the closure of some stores in H1[27](index=27&type=chunk)[34](index=34&type=chunk) [Notes to the Condensed Consolidated Interim Financial Information](index=12&type=section&id=簡明綜合中期財務資料附註) [Basis of Preparation](index=12&type=section&id=編製基準) The condensed consolidated interim financial information is prepared under HKAS 34 and Listing Rules Appendix D2 on a going concern basis, despite current liabilities exceeding current assets by RMB749,466 thousands, as convertible bond maturity extension ensures sufficient funds for the next 12 months - The condensed consolidated interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[35](index=35&type=chunk) - As of June 30, 2025, the Group's current liabilities exceeded its current assets by **RMB749,466 thousands**[36](index=36&type=chunk) - The original maturity date of the convertible bonds has been extended by **25 months** to **December 23, 2027**, through a supplemental deed, with the repayment dates for all accrued interest being similarly deferred[36](index=36&type=chunk) - Based on the extension arrangement and the Group's ability to generate net cash inflows from its future operating and investing activities, the directors believe the Group has sufficient funds to meet its debt obligations for the next 12 months, thus preparing the financial information on a going concern basis[37](index=37&type=chunk) [Principal Accounting Policies](index=12&type=section&id=主要會計政策) The condensed consolidated interim financial information is prepared on a historical cost basis, except for fair value financial assets, with HKAS 21 (Revised) 'Lack of Exchangeability' having no material impact, and IFRS 18 expected to broadly affect future financial statement presentation and disclosure - The condensed consolidated interim financial information is prepared on a historical cost basis, except for financial assets at fair value through profit or loss, which are measured at fair value[38](index=38&type=chunk) - The Group first applied Hong Kong Accounting Standard 21 (Revised) "Lack of Exchangeability" from January 1, 2025, but this revision is not relevant to the Group and is not expected to have a material impact[38](index=38&type=chunk)[39](index=39&type=chunk) - Hong Kong Financial Reporting Standard 18 "Presentation and Disclosure in Financial Statements" will be effective from January 1, 2027, and is expected to have certain pervasive impacts on the presentation and disclosure of the Group's financial statements[41](index=41&type=chunk) [Revenue and Segment Information](index=13&type=section&id=收入及分部資料) Operating segment information is not presented as key operating decisions are based on overall Group performance; revenue details show declines in restaurant operations and delivery, slight growth in food ingredient sales, with China as the primary market and no single external customer accounting for over 10% of revenue - The key operating decision-makers focus on the overall operating performance of the Group, thus no operating segment information is presented[42](index=42&type=chunk) Revenue Details from Customer Contracts | Revenue Source | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Restaurant Operations | 71,696 | 116,163 | -38.3% | | Delivery Business | 73,567 | 84,865 | -13.3% | | Sales of Food Ingredients | 45,008 | 42,924 | +4.9% | | Total | 190,271 | 243,952 | -22.0% | - The Group's primary market is China, with sales to overseas customers contributing less than **10%** of revenue, and no single external customer's transaction revenue accounting for **10% or more** of the Group's total revenue[43](index=43&type=chunk)[44](index=44&type=chunk) [Other Income](index=14&type=section&id=其他收入) Other income decreased by 46.4% to RMB5,513 thousands, primarily due to reduced franchise and management service income, alongside a significant drop in government grants Other Income Details | Other Income Source | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Franchise Income | 3,561 | 7,703 | -53.8% | | Government Grants | — | 220 | -100.0% | | Investment Income from Wealth Management Products | 169 | 79 | +113.9% | | Management Service Income | 1,066 | 1,733 | -38.5% | | Loan Interest Income | 162 | 159 | +1.9% | | Others | 555 | 396 | +40.2% | | Total | 5,513 | 10,290 | -46.4% | - Government grants primarily consist of tax refunds obtained under relevant tax policies and amortization of deferred government grants related to assets[45](index=45&type=chunk) - Management service income mainly includes service fees received by the Group for providing commercial, management, and administrative support services[46](index=46&type=chunk) [Other Expenses](index=14&type=section&id=其他開支) Total other expenses decreased by 17.8% to RMB18,491 thousands, mainly due to reductions in routine maintenance, advertising and marketing, and business development expenses Other Expenses Details | Other Expense Item | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Routine Maintenance Expenses | 4,006 | 7,419 | -46.0% | | Advertising and Marketing Expenses | 2,387 | 2,952 | -19.2% | | Business Development Expenses | 2,951 | 3,940 | -25.0% | | Professional Service Fees | 2,409 | 2,427 | -0.7% | | Auditor's Remuneration — Audit Services | 900 | 900 | 0.0% | | Other Expenses | 5,838 | 4,826 | +21.0% | | Total Other Expenses | 18,491 | 22,464 | -17.8% | [Income Tax Expense (Notes)](index=15&type=section&id=所得稅費用) Income tax expense increased from RMB450 thousands in H1 2024 to RMB598 thousands in H1 2025, primarily due to higher withholding tax on dividends from associates Income Tax Expense Details | Income Tax Item | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Current Income Tax | 421 | 50 | +742.0% | | Deferred Tax | 177 | 400 | -55.8% | | Total | 598 | 450 | +32.9% | - Hong Kong profits tax operates under a two-tiered system, with eligible entities taxed at **8.25%** on the first HKD2 million of profits and **16.5%** on the remainder; Chinese subsidiaries are subject to a corporate income tax rate of **25%**[50](index=50&type=chunk)[51](index=51&type=chunk) - In H1 2025, a **10% withholding tax** of **RMB379 thousands** was incurred on dividends received from Chinese associates[48](index=48&type=chunk)[52](index=52&type=chunk) [Loss for the Period (Notes)](index=16&type=section&id=期內虧損_附註) The Group's loss for the period is stated after deducting total depreciation and amortization of RMB31,486 thousands and total property rental and related expenses of RMB4,578 thousands Items Deducted/Included in Loss for the Period | Deducted/Included Item | 2025 H1 (RMB thousands) | 2024 H1 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Depreciation and Amortization | 31,486 | 39,313 | -19.9% | | Total Property Rental and Related Expenses | 4,578 | 8,181 | -43.9% | | Auditor's Remuneration — Audit Services | 900 | 900 | 0.0% | [Dividends](index=16&type=section&id=股息) The Board has resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[54](index=54&type=chunk) [Loss Per Share](index=16&type=section&id=每股虧損) Basic and diluted loss per share both narrowed to RMB(2.08) cents from RMB(2.86) cents, with no assumption of issuing potentially dilutive ordinary shares due to their anti-dilutive effect Loss Per Share | Indicator | 2025 H1 (RMB cents) | 2024 H1 (RMB cents) | Change (%) | | :--- | :--- | :--- | :--- | | Basic Loss Per Share | (2.08) | (2.86) | -27.3% | | Diluted Loss Per Share | (2.08) | (2.86) | -27.3% | - Basic loss per share is calculated based on the loss for the period attributable to equity holders of the Company of **RMB32,859 thousands** and the weighted average number of ordinary shares in issue of **1,578,664,000 shares** during the period[55](index=55&type=chunk) - In calculating diluted loss per share, no potentially dilutive ordinary shares were assumed to be issued as they had an anti-dilutive effect, which would reduce the loss per share[55](index=55&type=chunk) [Trade and Other Receivables](index=17&type=section&id=應收貿易及其他款項) As of June 30, 2025, net trade and other receivables slightly decreased to RMB60,719 thousands, with trade receivables increasing and other receivables decreasing Net Trade and Other Receivables | Indicator | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Trade and Other Receivables | 60,719 | 62,321 | -2.6% | | Net Trade Receivables (Current) | 9,461 | 7,720 | +22.6% | | Net Other Receivables (Current) | 46,458 | 45,489 | +2.1% | | Net Other Receivables (Non-Current) | 4,800 | 9,112 | -47.3% | - The aging analysis of trade receivables at the end of the reporting period by invoice date shows **RMB5,061 thousands** within 6 months and **RMB6,094 thousands** between 6 months and 1 year[56](index=56&type=chunk) [Trade and Other Payables](index=18&type=section&id=應付貿易及其他款項) As of June 30, 2025, total trade and other payables slightly decreased to RMB114,603 thousands, with trade payables reducing and turnover days improving from 79 to 76 Trade and Other Payables | Indicator | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Payables | 33,680 | 36,649 | -8.1% | | Other Payables and Accruals | 80,923 | 79,633 | +1.6% | | Total | 114,603 | 116,282 | -1.4% | - Trade payables turnover days decreased from **79 days** for the year ended December 31, 2024, to **76 days** for the six months ended June 30, 2025[24](index=24&type=chunk) [Borrowings](index=18&type=section&id=借款) As of June 30, 2025, total Group borrowings increased by 81.4% to RMB37,839 thousands, primarily due to a significant rise in related party borrowings, with the weighted average annual interest rate increasing from 5.16% to 5.58% Borrowings Composition and Changes | Borrowing Type | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Secured Bank Borrowings | 2,600 | 1,600 | +62.5% | | Unsecured and Unguaranteed Bank Borrowings | 10,000 | 10,000 | 0.0% | | Borrowings from Related Parties | 25,239 | 9,260 | +172.6% | | Total Borrowings | 37,839 | 20,860 | +81.4% | - As of June 30, 2025, the weighted average annual interest rate for borrowings was **5.58%**, higher than **5.16%** as of December 31, 2024[58](index=58&type=chunk) - As of June 30, 2025, bank borrowings of **RMB2,600 thousands** were guaranteed by a third party[58](index=58&type=chunk) [Convertible Bonds](index=19&type=section&id=可換股債券) As of June 30, 2025, total convertible bonds and related interest increased to RMB658,482 thousands due to accrued interest and exchange rate changes; though fully classified as current liabilities, their maturity has been extended to December 23, 2027 Changes in Convertible Bond Components | Indicator | 2025 June 30 (RMB thousands) | 2024 Dec 31 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Convertible Bonds and Related Interest | 658,482 | 647,780 | +1.6% | - According to Note 1, as the original maturity date of these convertible bonds falls within 12 months from the respective statement of financial position dates, their entire carrying amount is presented as current liabilities as of June 30, 2025, and December 31, 2024[58](index=58&type=chunk) - In H1 2025, convertible bond interest expense amounted to **RMB20,748 thousands**, calculated using the effective interest method[60](index=60&type=chunk) [Events After Reporting Period](index=20&type=section&id=結算日後事項) Subsequent to the reporting period, a wholly-owned subsidiary signed an agreement on July 31, 2025, to dispose of a 1.71% equity interest in Guangzhou Yujian Xiaomian Catering Co., Ltd. for RMB48,000 thousands, expecting a pre-tax gain of approximately RMB42,000 thousands - A wholly-owned subsidiary of the Group signed an agreement to dispose of a **1.71%** equity interest in Guangzhou Yujian Xiaomian Catering Co., Ltd. for a total consideration of **RMB48,000 thousands**[61](index=61&type=chunk) - This equity disposal is expected to generate a pre-tax gain of approximately **RMB42,000 thousands**[61](index=61&type=chunk) [Review](index=20&type=section&id=審閱) The condensed consolidated interim financial information has not been audited by the company's auditor but has been reviewed by the audit committee - The condensed consolidated interim financial information is unaudited but has been reviewed by the Company's Audit Committee[62](index=62&type=chunk) [Other Information](index=21&type=section&id=其他資料) [Interim Dividends](index=21&type=section&id=中期股息) The Board has resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[63](index=63&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=21&type=section&id=流動資金%2C%20財務資源及資本結構) As of June 30, 2025, the Group's total deficit expanded to RMB250.2 million, with current liabilities significantly exceeding current assets, resulting in a current ratio of 0.18; however, the Board believes sufficient funds exist for the next 12 months due to convertible bond extension and future cash flow generation Overview of Liquidity and Capital Structure | Indicator | 2025 June 30 (RMB millions) | 2024 Dec 31 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Total Deficit | 250.2 | 220.2 | Expanded | | Current Assets | 162.2 | 152.7 | Increased | | Current Liabilities | 911.7 | 897.7 | Increased | | Current Ratio | 0.18 | 0.17 | Slightly increased | | Outstanding Borrowings | 37.8 | 20.9 | Increased | | Cash and Cash Equivalents | 24.3 | 21.3 | Increased | | Net Cash to Equity Ratio | 0.054 | -0.002 | Improved | | Outstanding Convertible Bonds | 658.5 | 647.8 | Increased | - The Group's liquidity primarily depends on its ability to maintain sufficient operating cash inflows and secure adequate financing to repay maturing debts[64](index=64&type=chunk) - Considering the convertible bond extension arrangement and the Group's ability to generate net cash inflows from its future operating and investing activities, the directors believe the Company has sufficient funds to meet its debt obligations and capital expenditure requirements for the next 12 months[65](index=65&type=chunk) [Capital Commitments](index=21&type=section&id=資本承擔) As of June 30, 2025, the Group had no significant capital commitments for property, plant, and equipment contracted but not provided for in the consolidated financial statements - As of June 30, 2025, the Group had no capital expenditure contracted but not provided for in the consolidated financial statements regarding property, plant, and equipment[66](index=66&type=chunk) [Material Investments](index=22&type=section&id=重大投資) The Group holds significant investments in 'Yujian Xiaomian' and 'Tianshuilai,' both exceeding 5% of total assets, with 'Yujian Xiaomian' rapidly expanding its noodle restaurant network and 'Tianshuilai' operating over 200 'Baozai Huang' stores, aiming to enhance investment returns through a multi-brand matrix and internal controls - The Group's material investments include Guangzhou Yujian Xiaomian Catering Co., Ltd. ("Yujian Xiaomian") and Tianshuilai (Beijing) Catering Trade Management Co., Ltd. ("Tianshuilai"), with the carrying values of these investments each exceeding **5%** of the Group's total assets[67](index=67&type=chunk) Overview of Material Investments (as of June 30, 2025) | Investment Project | Equity Interest | Carrying Value Accounted for by Equity Method (RMB millions) | Carrying Value as % of Group's Total Assets | | :--- | :--- | :--- | :--- | | "Yujian Xiaomian" | 17.16% | 61.1 | 7.9% | | "Tianshuilai" | 25.03% | 52.4 | 6.8% | - "Yujian Xiaomian"'s store network rapidly expanded from **170 stores** as of December 31, 2022, to **360 stores** as of December 31, 2024[69](index=69&type=chunk) - "Tianshuilai" operates the "Baozai Huang" brand, with over **200 stores** nationwide as of December 31, 2024, primarily self-operated[70](index=70&type=chunk) - The Group has established a multi-brand investment matrix based on cross-regional, cross-industry, and diversified business formats, aiming to enhance investment returns and achieve value appreciation[70](index=70&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=23&type=section&id=重大收購及出售附屬公司%2C%20聯營公司及合資公司) For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[71](index=71&type=chunk) [Future Plans for Material Investments and Capital Assets](index=23&type=section&id=重大投資及資本資產的未來計劃) As of the announcement date, the Group currently has no definite plans for material investments and capital assets - As of the announcement date, the Group currently has no definite plans for material investments and capital assets[72](index=72&type=chunk) [Pledge of Assets](index=23&type=section&id=資產抵押) As of June 30, 2025, the Group had no pledge of assets - As of June 30, 2025, the Group had no pledge of assets[73](index=73&type=chunk) [Contingent Liabilities](index=23&type=section&id=或然負債) As of June 30, 2025, the Group had no material contingent liabilities - As of June 30, 2025, the Group had no material contingent liabilities[74](index=74&type=chunk) [Gearing Ratio](index=23&type=section&id=資產負債比率) As of June 30, 2025, the Group's gearing ratio increased to 159% from 152% as of December 31, 2024, reflecting a relatively higher debt level Gearing Ratio | Indicator | 2025 June 30 | 2024 Dec 31 | Change | | :--- | :--- | :--- | :--- | | Gearing Ratio | 159% | 152% | Increased | - The gearing ratio is calculated as net debt divided by total capital, where net debt includes total borrowings (comprising current and non-current borrowings and convertible bonds) less cash and cash equivalents[75](index=75&type=chunk) [Foreign Exchange Risk](index=23&type=section&id=外匯風險) The Group's operations are primarily conducted in HKD and RMB, exposing it to foreign exchange risk from transactions denominated in other currencies, with no forward contracts entered into during the period to hedge this risk - The Group's operations are primarily conducted in Hong Kong Dollars and Renminbi, and transactions denominated in currencies other than Hong Kong Dollars and Renminbi are subject to foreign exchange risk[76](index=76&type=chunk) - For the six months ended June 30, 2025, the Group did not enter into any forward contracts to hedge its foreign exchange risk[76](index=76&type=chunk) [Human Resources](index=23&type=section&id=人力資源) As of June 30, 2025, the Group's headcount decreased to approximately 1,303 from 1,582, maintaining good employee relations, providing training, benefits, and incentive schemes, with remuneration based on performance, experience and market conditions Employee Headcount | Indicator | 2025 June 30 | 2024 Dec 31 | Change | | :--- | :--- | :--- | :--- | | Employee Headcount | 1,303 | 1,582 | Decreased | - The Group maintains good employee relations and provides adequate training, competitive benefits, and incentive schemes for its employees[77](index=77&type=chunk) - Employee remuneration is determined based on their performance, professional experience, and prevailing market conditions, including salaries and performance-based bonuses[77](index=77&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=24&type=section&id=購買%2C%20出售或贖回本公司之上市證券) 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 - 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[78](index=78&type=chunk) [Compliance with Corporate Governance Code](index=24&type=section&id=遵守企業管治守則) For the six months ended June 30, 2025, the Company complied with the effective code provisions in Part 2 of the Corporate Governance Code set out in Appendix C1 to the Listing Rules - For the six months ended June 30, 2025, the Company complied with the effective code provisions in Part 2 of the Corporate Governance Code set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[79](index=79&type=chunk) [Standard Code for Directors' Securities Transactions](index=24&type=section&id=董事進行證券交易須遵守的標準守則) The Company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers in Appendix C3 of the Listing Rules, and all directors confirmed compliance during the reporting period - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules as the code for all securities transactions by directors and relevant employees of the Company[80](index=80&type=chunk) - The Company has made specific enquiries to all directors, and all directors confirmed their compliance with the Standard Code throughout the six months ended June 30, 2025[80](index=80&type=chunk) [Events After the Reporting Period (Balance Sheet Date)](index=24&type=section&id=資產負債表日後事項) Except for the convertible bond extension disclosed in Note 1, no material events occurred after June 30, 2025, up to the announcement date - Except for the matters disclosed in Note 14 to the Company's condensed consolidated financial results, no material events occurred after June 30, 2025, up to the date of this announcement[81](index=81&type=chunk) [Audit Committee](index=24&type=section&id=審核委員會) The Group's unaudited interim results for the six months ended June 30, 2025, were reviewed by the Audit Committee, including all independent non-executive directors, discussing accounting principles, internal controls, and financial reporting matters, though not audited by the company's auditor - The Group's unaudited interim results for the six months ended June 30, 2025, have not been reviewed by the Company's auditor but have been reviewed by the Company's Audit Committee, which includes all independent non-executive directors of the Company[82](index=82&type=chunk) - The Company's Audit Committee also reviewed the accounting principles and practices adopted by the Group and discussed matters relating to internal controls and financial reporting with management[82](index=82&type=chunk) [Interim Report](index=25&type=section&id=中期報告) This announcement has been published on the websites of The Stock Exchange of Hong Kong Limited and the Company, with the interim report for the six months ended June 30, 2025, to be dispatched to shareholders and available online in due course - This results announcement has been published on the websites of The Stock Exchange of Hong Kong Limited and the Company[83](index=83&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be dispatched to the Company's shareholders in due course and will be available for review on the websites of The Stock Exchange of Hong Kong Limited and the Company[83](index=83&type=chunk) [Board of Directors](index=25&type=section&id=董事會) As of the announcement date, the Board comprises three executive directors (Mr. Zhao Linghuan, Mr. Wang Xiaolong, and Mr. Jing Shen) and three independent non-executive directors (Mr. Leung Kwai Kei, Mr. Law Wai Yan, and Ms. Zhuo Ping) - As of the date of this announcement, the Board comprises three executive directors (Mr. Zhao Linghuan, Mr. Wang Xiaolong, and Mr. Jing Shen) and three independent non-executive directors (Mr. Leung Kwai Kei, Mr. Law Wai Yan, and Ms. Zhuo Ping)[85](index=85&type=chunk)

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) [Important Notice and Dividend Declaration](index=1&type=section&id=Important%20Notice%20and%20Dividend%20Declaration) Huazhu Group Limited announced its unaudited financial results for the second quarter and interim period ended June 30, 2025, and declared an ordinary cash dividend totaling approximately US$250 million for the first half of 2025 - The Company has provided this earnings announcement as an interim report to shareholders for the six months ended June 30, 2025, in accordance with Rule 13.48(1) of the HKEX Listing Rules[3](index=3&type=chunk) H1 2025 Cash Dividend Declaration | Metric | Amount/Date | | :--- | :--- | | Dividend Per Ordinary Share | US$0.081 | | Dividend Per ADS | US$0.81 | | Total Dividend Amount | Approx. US$250 million | | Record Date | Close of Business on September 9, 2025 | | Ordinary Share Payment Date | On or around September 19, 2025 | | ADS Payment Date | On or around September 26, 2025 | [Q2 and Interim 2025 Performance Highlights](index=3&type=section&id=Q2%20and%20Interim%202025%20Performance%20Highlights) Huazhu Group achieved robust financial and operational growth in Q2 2025, with year-over-year increases in hotel turnover and revenue, significant improvements in net income and EBITDA, and continued hotel network expansion under its asset-light strategy Q2 2025 Key Financial and Operational Metrics | Metric | Q2 2025 | YoY Growth | | :--- | :--- | :--- | | Hotels in Operation | 12,137 | | | Hotel Turnover | **RMB 26.9 billion** | **15.0%** | | Revenue | **RMB 6.4 billion (US$897 million)** | **4.5%** | | Manachised and Franchised Revenue | **RMB 2.9 billion (US$400 million)** | **22.8%** | | Net Income Attributable to Huazhu Group Limited | **RMB 1.5 billion (US$215 million)** | **44.7% (vs. Q2 2024)** | | EBITDA (Non-GAAP) | **RMB 2.5 billion (US$344 million)** | **31.6% (vs. Q2 2024)** | | Adjusted EBITDA (Non-GAAP) | **RMB 2.3 billion (US$317 million)** | **15.0% (vs. Q2 2024)** | - Legacy-Huazhu segment revenue increased by **5.7%** year-over-year to **RMB 5.1 billion**, while Legacy-DH segment revenue remained largely flat year-over-year at **RMB 1.3 billion**[7](index=7&type=chunk) - For the first half of 2025, the Board declared a cash dividend totaling approximately **US$250 million**, or **US$0.081** per ordinary share[7](index=7&type=chunk) [Q3 2025 Performance Guidance](index=4&type=section&id=Q3%202025%20Performance%20Guidance) Huazhu Group anticipates mid-to-low single-digit revenue growth for Q3 2025, with manachised and franchised revenue expected to maintain strong growth momentum Q3 2025 Revenue Guidance | Metric | Growth Range (vs. Q3 2024) | | :--- | :--- | | Total Revenue | **2% to 6%** | | Total Revenue (Excluding DH) | **4% to 8%** | | Manachised and Franchised Revenue | **20% to 24%** | [Operating Performance Analysis](index=4&type=section&id=Operating%20Performance%20Analysis) [Hotel Network Overview](index=4&type=section&id=Hotel%20Network%20Overview) As of June 30, 2025, Huazhu Group operated over 12,000 hotels and nearly 1.2 million rooms globally, with almost 3,000 hotels in the pipeline, primarily within its Legacy-Huazhu business Hotel Network Overview as of June 30, 2025 | Metric | Count | | :--- | :--- | | Global Hotels in Operation | 12,137 | | Global Rooms in Operation | 1,184,915 | | Hotels in Pipeline | 2,947 | | Legacy-Huazhu Hotels in Operation | 12,016 | | Legacy-DH Hotels in Operation | 121 | - In Q2 2025, Legacy-Huazhu business opened **595** hotels (**594** of which were manachised and franchised hotels) and closed a total of **143** hotels[9](index=9&type=chunk)[53](index=53&type=chunk) [Legacy-Huazhu Operating Performance](index=4&type=section&id=Legacy-Huazhu%20Operating%20Performance) Legacy-Huazhu continued its hotel network expansion in Q2 2025, but experienced slight year-over-year declines in ADR, occupancy rate, and RevPAR, with same-store performance also showing a decrease Legacy-Huazhu Hotel and Room Count (as of June 30, 2025) | Metric | Count | | :--- | :--- | | Hotels in Operation | 12,016 | | Leased and Owned Hotels | 547 | | Manachised and Franchised Hotels | 11,469 | | Rooms in Operation | 1,159,086 | | Hotels in Pipeline | 2,925 | Legacy-Huazhu Q2 2025 Key Operating Metrics | Metric (RMB) | Q2 2024 | Q1 2025 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | ADR | 296 | 272 | 290 | **-1.9%** | | Occupancy Rate | 82.6% | 76.2% | 81.0% | **-1.6 percentage points** | | Blended RevPAR | 244 | 208 | 235 | **-3.8%** | Legacy-Huazhu Mature Hotel Same-Store Performance (Q2 2025) | Metric | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Same-Store RevPAR | RMB 253 | RMB 233 | **-7.9%** | | Same-Store ADR | RMB 300 | RMB 287 | **-4.6%** | | Same-Store Occupancy Rate | 84.1% | 81.1% | **-2.9 percentage points** | [Legacy-DH Operating Performance](index=5&type=section&id=Legacy-DH%20Operating%20Performance) Legacy-DH achieved significant RevPAR growth in Q2 2025, primarily driven by an increase in occupancy rate, despite a stable ADR Legacy-DH Hotel and Room Count (as of June 30, 2025) | Metric | Count | | :--- | :--- | | Hotels in Operation | 121 | | Leased Hotels | 65 | | Manachised and Franchised Hotels | 56 | | Rooms in Operation | 25,829 | | Hotels in Pipeline | 22 | Legacy-DH Q2 2025 Key Operating Metrics | Metric (EUR) | Q2 2024 | Q1 2025 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | ADR | 120 | 107 | 120 | **-0.1%** | | Occupancy Rate | 68.3% | 61.1% | 73.9% | **+5.6 percentage points** | | Blended RevPAR | 82 | 65 | 88 | **+8.1%** | [CEO Commentary](index=5&type=section&id=CEO%20Commentary) CEO Jin Hui highlighted strong operating profit growth driven by the asset-light strategy and network expansion, expressing optimism for the long-term growth of China's travel and hospitality industry while remaining cautious about short-term macroeconomic uncertainties - The Company opened **595** hotels in Q2, on track to achieve its full-year 2025 target of opening a total of **2,300** hotels[12](index=12&type=chunk) - Despite macroeconomic uncertainties, increased supply, and weak business travel demand, the Company remains optimistic about the long-term growth of China's travel and hospitality industry[12](index=12&type=chunk) - Legacy-DH segment achieved an **8.1%** year-over-year increase in blended RevPAR in Q2 2025, primarily driven by a **5.6 percentage point** increase in occupancy rate[12](index=12&type=chunk) [Financial Performance Analysis](index=6&type=section&id=Financial%20Performance%20Analysis) [Revenue Analysis](index=6&type=section&id=Revenue%20Analysis) Huazhu Group's total revenue grew by **4.5%** year-over-year in Q2 2025, primarily driven by the strong expansion of its manachised and franchised hotel network, with this business model's revenue contribution continuously increasing Total Revenue Overview (RMB in millions) | Revenue Source | Q2 2024 | Q1 2025 | Q2 2025 | H1 2024 | H1 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Leased and Owned Hotels | 3,681 | 2,789 | 3,401 | 6,780 | 6,190 | | Manachised and Franchised Hotels | 2,334 | 2,499 | 2,865 | 4,397 | 5,364 | | Other | 133 | 107 | 160 | 249 | 267 | | **Total Revenue** | **6,148** | **5,395** | **6,426** | **11,426** | **11,821** | - Total revenue for Q2 2025 was **RMB 6.4 billion (US$897 million)**, a **4.5%** year-over-year increase. Legacy-Huazhu segment revenue grew **5.7%** year-over-year to **RMB 5.1 billion**, while Legacy-DH segment revenue remained largely flat year-over-year at **RMB 1.3 billion**[13](index=13&type=chunk)[51](index=51&type=chunk) - Total revenue for H1 2025 was **RMB 11.8 billion (US$1.7 billion)**, a **3.5%** increase compared to H1 2024. Legacy-Huazhu revenue increased by **5.6%** year-over-year, while Legacy-DH revenue decreased by **4.9%** year-over-year[14](index=14&type=chunk)[52](index=52&type=chunk) [Leased and Owned Hotel Revenue](index=6&type=section&id=Leased%20and%20Owned%20Hotel%20Revenue) Leased and owned hotel revenue decreased year-over-year in both Q2 and H1 2025, reflecting the company's ongoing strategy to reduce this business model Leased and Owned Hotel Revenue (RMB in millions) | Period | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 3,681 | 3,401 | **-7.6%** | | Legacy-Huazhu | 2,395 | 2,130 | **-11.1%** | | Legacy-DH | 1,286 | 1,271 | **-1.2%** | - Revenue from leased and owned hotels for H1 2025 was **RMB 6.2 billion (US$864 million)**, a year-over-year decrease of **8.7%**[14](index=14&type=chunk) [Manachised and Franchised Hotel Revenue](index=6&type=section&id=Manachised%20and%20Franchised%20Hotel%20Revenue) Manachised and franchised hotel revenue achieved strong growth in both Q2 and H1 2025, becoming the primary driver of the company's revenue increase, with its revenue contribution significantly rising Manachised and Franchised Hotel Revenue (RMB in millions) | Period | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2,334 | 2,865 | **+22.8%** | | Legacy-Huazhu | 2,305 | 2,829 | **+22.7%** | | Legacy-DH | 32 | 41 | **+28.1%** | - Revenue from manachised and franchised hotels for H1 2025 was **RMB 5.4 billion (US$749 million)**, a **22.0%** year-over-year increase, accounting for **45.4%** of total revenue (compared to **38.5%** in H1 2024)[16](index=16&type=chunk) [Other Revenue](index=7&type=section&id=Other%20Revenue) Other revenue increased in both Q2 and H1 2025, primarily from businesses such as IT products and services, procurement platforms, and Huazhu Mall Other Revenue (RMB in millions) | Period | Q2 2024 | Q2 2025 | H1 2024 | H1 2025 | | :--- | :--- | :--- | :--- | :--- | | Amount | 133 | 160 | 249 | 267 | [Operating Costs and Expenses Analysis](index=7&type=section&id=Operating%20Costs%20and%20Expenses%20Analysis) In Q2 2025, Huazhu Group's total operating costs and expenses slightly increased year-over-year, but hotel operating costs as a percentage of revenue decreased due to the asset-light strategy, leading to double-digit operating profit growth Total Operating Costs and Expenses (RMB in millions) | Expense Type | Q2 2024 | Q1 2025 | Q2 2025 | H1 2024 | H1 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Hotel Operating Costs | (3,731) | (3,604) | (3,752) | (7,296) | (7,356) | | Other Operating Costs | (6) | (11) | (11) | (15) | (22) | | Selling and Marketing Expenses | (317) | (243) | (309) | (577) | (552) | | General and Administrative Expenses | (602) | (512) | (660) | (1,111) | (1,172) | | Pre-opening Expenses | (19) | (3) | (12) | (27) | (15) | | **Total Operating Costs and Expenses** | **(4,675)** | **(4,373)** | **(4,744)** | **(9,026)** | **(9,117)** | [Hotel Operating Costs](index=7&type=section&id=Hotel%20Operating%20Costs) Hotel operating costs in Q2 2025 slightly increased by **0.6%** year-over-year, but as a percentage of revenue, they decreased by **2.3 percentage points** year-over-year due to the implementation of the asset-light strategy - Hotel operating costs for Q2 2025 were **RMB 3.8 billion (US$523 million)**, a slight year-over-year increase of **0.6%**[17](index=17&type=chunk) - As the Company continues to execute its asset-light strategy, hotel operating costs as a percentage of revenue decreased by **2.3 percentage points** year-over-year[17](index=17&type=chunk) - Hotel operating costs for H1 2025 were **RMB 7.4 billion (US$1.0 billion)**, largely flat compared to **RMB 7.3 billion** in H1 2024[18](index=18&type=chunk) [Selling, General and Administrative Expenses](index=8&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Selling, general and administrative expenses increased by **5.4%** year-over-year in Q2 2025, primarily due to higher share-based compensation, but would have decreased by **1.0%** year-over-year excluding share-based compensation Selling, General and Administrative Expenses (RMB in millions) | Period | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | SG&A | 919 (317+602) | 969 (309+660) | **+5.4%** | | Excluding Share-based Compensation | | | **-1.0%** | - Selling, general and administrative expenses for H1 2025 were **RMB 1.7 billion (US$241 million)**, compared to **RMB 1.7 billion** in H1 2024[19](index=19&type=chunk) [Operating Profit](index=8&type=section&id=Operating%20Profit) Operating profit increased by **13.7%** year-over-year in Q2 2025, with the operating profit margin rising to **27.8%**, primarily due to the increased revenue contribution from manachised and franchised businesses Operating Profit (RMB in millions) | Period | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Operating Profit | 1,572 | 1,787 | **+13.7%** | | Legacy-Huazhu | | | **+11.7%** | | Legacy-DH | | | **+52.7%** | - Operating profit margin (defined as operating profit as a percentage of revenue) for Q2 2025 was **27.8%**, an improvement from **25.6%** in Q2 2024[20](index=20&type=chunk) - Operating profit for H1 2025 was **RMB 2.9 billion (US$400 million)**, with an operating profit margin of **24.3%**, compared to **22.5%** in H1 2024[19](index=19&type=chunk)[21](index=21&type=chunk) [Net Income and EBITDA](index=9&type=section&id=Net%20Income%20and%20EBITDA) Huazhu Group's net income attributable to the company and EBITDA (Non-GAAP) both achieved substantial growth in Q2 2025, reflecting a significant improvement in the company's profitability Net Income and EBITDA Overview (RMB in millions) | Metric | Q2 2024 | Q1 2025 | Q2 2025 | H1 2024 | H1 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Huazhu Group Limited | 1,067 | 894 | 1,544 | 1,726 | 2,438 | | EBITDA (Non-GAAP) | 1,853 | 1,615 | 2,465 | 3,162 | 4,080 | | Adjusted EBITDA (Non-GAAP) | 2,040 | 1,496 | 2,270 | 3,461 | 3,766 | [Income Tax Expense](index=9&type=section&id=Income%20Tax%20Expense) Income tax expense increased year-over-year in Q2 2025, primarily due to higher profit and increased withholding tax on dividend distribution Income Tax Expense (RMB in millions) | Period | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Income Tax Expense | 423 | 565 | **+33.6%** | | H1 2025 | 702 | 942 | **+34.2%** | [Net Income Attributable to Huazhu Group Limited](index=9&type=section&id=Net%20Income%20Attributable%20to%20Huazhu%20Group%20Limited) Net income attributable to Huazhu Group Limited surged by **44.7%** year-over-year in Q2 2025, primarily driven by net income growth from Legacy-Huazhu Net Income Attributable to Huazhu Group Limited (RMB in millions) | Period | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Net Income | 1,067 | 1,544 | **+44.7%** | | Legacy-Huazhu Net Income | | | **+40.9%** | - Net income attributable to Huazhu Group Limited for H1 2025 was **RMB 2.4 billion (US$340 million)**, compared to **RMB 1.7 billion** in H1 2024[22](index=22&type=chunk) [EBITDA (Non-GAAP)](index=9&type=section&id=EBITDA%20(Non-GAAP)) EBITDA (Non-GAAP) reached **RMB 2.5 billion** in Q2 2025, showing significant year-over-year growth and reflecting the strong profitability of the company's core business EBITDA (Non-GAAP) (RMB in millions) | Period | Q2 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | | EBITDA | 1,853 | 1,615 | 2,465 | - EBITDA (Non-GAAP) for H1 2025 was **RMB 4.1 billion (US$569 million)**, compared to **RMB 3.2 billion** in H1 2024[22](index=22&type=chunk) [Adjusted EBITDA (Non-GAAP)](index=9&type=section&id=Adjusted%20EBITDA%20(Non-GAAP)) Adjusted EBITDA (Non-GAAP) for Q2 2025 was **RMB 2.3 billion**, with both Legacy-Huazhu and Legacy-DH segments achieving growth, indicating strong performance across all business units Adjusted EBITDA (Non-GAAP) (RMB in millions) | Metric | Q2 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | | Total Adjusted EBITDA | 2,040 | 1,496 | 2,270 | | Legacy-Huazhu | 1,907 | 1,573 | 2,090 | | Legacy-DH | 133 | (77) | 180 | - Adjusted EBITDA (Non-GAAP) for H1 2025 was **RMB 3.8 billion (US$525 million)**, compared to **RMB 3.5 billion** in H1 2024[24](index=24&type=chunk) [Financial Position and Cash Flow](index=9&type=section&id=Financial%20Position%20and%20Cash%20Flow) [Balance Sheet Overview](index=10&type=section&id=Balance%20Sheet%20Overview) As of June 30, 2025, Huazhu Group's total assets and liabilities both increased, with ample cash and cash equivalents and a healthy net cash balance Balance Sheet Key Data (as of June 30, 2025) | Metric | Amount (RMB in millions) | | :--- | :--- | | Total Assets | 64,779 | | Total Liabilities | 52,486 | | Total Shareholders' Equity Attributable to Huazhu Group Limited | 12,153 | | Cash and Cash Equivalents | 10,145 | | Restricted Cash | 370 | | Total Debt | 7,410 (Short-term Debt 6,633 + Long-term Debt 777) | | Net Cash Balance | 3,100 (Cash and Cash Equivalents 10,145 + Restricted Cash 370 - Total Debt 7,410) | [Cash Flow](index=9&type=section&id=Cash%20Flow) In Q2 2025, Huazhu Group reported strong cash inflow from operating activities, positive cash inflow from investing activities, and cash outflow from financing activities primarily due to dividend payments and debt repayments Cash Flow Overview (RMB in millions) | Cash Flow Type | Q2 2024 | Q1 2025 | Q2 2025 | H1 2024 | H1 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 2,235 | 580 | 2,659 | 3,121 | 3,239 | | Net Cash from Investing Activities | 346 | 757 | 239 | 694 | 996 | | Net Cash from Financing Activities | (1,105) | (628) | (709) | (3,363) | (1,337) | - Operating cash inflow for Q2 2025 was **RMB 2.7 billion (US$371 million)**, investing cash inflow was **RMB 239 million (US$34 million)**, and financing cash outflow was **RMB 709 million (US$100 million)**[24](index=24&type=chunk) - Operating cash inflow for H1 2025 was **RMB 3.2 billion (US$452 million)**, investing cash inflow was **RMB 996 million (US$139 million)**, and financing cash outflow was **RMB 1.3 billion (US$187 million)**[24](index=24&type=chunk) [Company Information and Accounting Principles](index=10&type=section&id=Company%20Information%20and%20Accounting%20Principles) [Conference Call Information](index=10&type=section&id=Conference%20Call%20Information) Huazhu Group will host a conference call on August 20, 2025, to discuss its results, with webcast and replay services available - The conference call will commence at **8:00 AM U.S. Eastern Time (8:00 PM Hong Kong Time)** on **August 20, 2025**[29](index=29&type=chunk) - All participants are required to pre-register before the call, and a webcast and replay will be available on the company's website for twelve months[29](index=29&type=chunk) [Use and Limitations of Non-GAAP Financial Measures](index=11&type=section&id=Use%20and%20Limitations%20of%20Non-GAAP%20Financial%20Measures) Huazhu Group utilizes non-GAAP financial measures like EBITDA and Adjusted EBITDA to provide a more comparable assessment of operating performance, while acknowledging their limitations and emphasizing the need for comprehensive evaluation alongside GAAP data - Non-GAAP measures (such as EBITDA and Adjusted EBITDA) provide meaningful supplemental information by excluding share-based compensation expenses, fair value changes, net foreign exchange gains/losses, and gains/losses from disposal of investments[30](index=30&type=chunk) - The Company believes EBITDA is a useful financial metric for evaluating operating and financial performance before reflecting investment and financing transactions and income tax impacts, and is widely used by other companies in the hospitality industry[31](index=31&type=chunk) - Limitations of non-GAAP measures include their failure to reflect important items such as depreciation and amortization, income tax, and interest expense, and they may not be fully comparable to those of other companies[32](index=32&type=chunk)[33](index=33&type=chunk) [About Huazhu Group Limited](index=12&type=section&id=About%20Huazhu%20Group%20Limited) Huazhu Group is a major player in the global hospitality industry, boasting a diversified brand portfolio and an asset-light business model, committed to expanding its hotel network worldwide - As of June 30, 2025, Huazhu operated **12,137** hotels with **1,184,915** rooms in operation across **19** countries[34](index=34&type=chunk) - Huazhu's brands include Hanting Hotel, Ji Hotel, Orange Hotel, Steigenberger, and it holds master franchise rights for Mercure, Ibis, and Ibis Styles in Greater China[34](index=34&type=chunk) - Huazhu's business model includes leased and owned (**8%** of hotel rooms) and manachised and franchised (**92%** of hotel rooms), with uniform standards and platforms applied across all hotels[35](index=35&type=chunk) [Reconciliation of US GAAP to IFRS](index=27&type=section&id=Reconciliation%20of%20US%20GAAP%20to%20IFRS) This report provides a reconciliation between financial statements prepared under US GAAP and IFRS, detailing significant impacts arising from accounting treatment differences such as convertible preferred notes, share-based compensation, leases, investment classification, and asset impairment - The reconciliation has been reviewed by Deloitte Touche Tohmatsu in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) issued by the Hong Kong Institute of Certified Public Accountants[60](index=60&type=chunk) - Key differences include the classification of convertible preferred notes (liability under US GAAP vs. financial liability at fair value through profit or loss under IFRS), recognition methods for share-based compensation expenses (straight-line vs. accelerated method), and lease accounting treatment (changes in index or rate, right-of-use asset amortization, intermediate lessor classification)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - Measurement of investments in debt and equity securities (at cost less impairment under US GAAP vs. at fair value through profit or loss under IFRS) and long-lived asset impairment test methods (two-step vs. one-step approach) are also significant factors contributing to the differences[70](index=70&type=chunk)[74](index=74&type=chunk)

[Introduction and Company Information](index=1&type=section&id=Introduction%20and%20Company%20Information) This section provides an overview of the company's regulatory context and key information regarding its board of directors [Regulatory Disclaimer](index=1&type=section&id=Regulatory%20Disclaimer) This document's content is regulated by the Hong Kong Securities and Futures Commission, which is not responsible for its accuracy or completeness, nor does it bear any loss arising from reliance on its content - The Hong Kong SFC regulates this document but is not responsible for its accuracy or completeness, nor does it bear any losses[1](index=1&type=chunk) [Company and Board Information](index=1&type=section&id=Company%20and%20Board%20Information) Hong Kong Exchanges and Clearing Limited (HKEX) published its condensed consolidated financial statements for the six months ended June 30, 2025, with a Board comprising 12 independent non-executive directors and one executive director (Group Chief Executive) - HKEX published its condensed consolidated financial statements for the six months ended June 30, 2025[2](index=2&type=chunk) - The Board of Directors consists of **12 independent non-executive directors** and **one executive director** (Group Chief Executive)[3](index=3&type=chunk) [Condensed Consolidated Income Statement](index=2&type=section&id=Condensed%20Consolidated%20Income%20Statement) This section presents the Group's financial performance, highlighting significant revenue and profit growth, alongside increased operating and tax expenses [Income Statement Summary](index=2&type=section&id=Income%20Statement%20Summary) For the six months ended June 30, 2025, HKEX's revenue and other income significantly increased, with profit for the period substantially rising year-on-year, driven by growth in transaction and trading system usage fees, clearing and settlement fees, and net investment income, while operating expenses and tax expenses (due to minimum top-up tax) also increased - Revenue and other income increased by **32.5%** from HKD **10,621 million** in 2024 to HKD **14,076 million** in 2025[4](index=4&type=chunk) - Profit for the period increased by **38.4%** from HKD **6,186 million** in 2024 to HKD **8,562 million** in 2025[4](index=4&type=chunk) - Taxation increased by **109.1%** from HKD **766 million** in 2024 to HKD **1,602 million** in 2025, primarily due to the Hong Kong minimum top-up tax[4](index=4&type=chunk) Key Financial Data from Condensed Consolidated Income Statement | Metric | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 11,034 | 8,062 | 36.9% | | Net investment income | 2,875 | 2,521 | 14.0% | | Revenue and other income | 14,076 | 10,621 | 32.5% | | Transaction-related expenses | (164) | (166) | -1.2% | | Operating expenses | (2,973) | (2,794) | 6.4% | | EBITDA | 10,939 | 7,661 | 42.8% | | Operating profit | 10,196 | 6,963 | 46.4% | | Profit before tax | 10,164 | 6,952 | 46.2% | | Taxation | (1,602) | (766) | 109.1% | | Profit for the period | 8,562 | 6,186 | 38.4% | | Profit attributable to HKEX shareholders | 8,519 | 6,125 | 39.1% | | Basic earnings per share (HKD) | 6.74 | 4.84 | 39.2% | | Diluted earnings per share (HKD) | 6.72 | 4.83 | 39.1% | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This section details the Group's total comprehensive income, reflecting strong profit growth and a positive shift in other comprehensive income components [Comprehensive Income Overview](index=3&type=section&id=Comprehensive%20Income%20Overview) For the six months ended June 30, 2025, the Group's total comprehensive income significantly increased, primarily due to a substantial rise in profit for the period and a shift from loss to positive gain in other comprehensive income, notably from currency translation differences of overseas subsidiaries and fair value changes of financial assets measured at fair value - Profit for the period increased by **38.4%** from HKD **6,186 million** in 2024 to HKD **8,562 million** in 2025[5](index=5&type=chunk) - Other comprehensive income shifted from a loss of HKD **7 million** in 2024 to a gain of HKD **483 million** in 2025[5](index=5&type=chunk) - Total comprehensive income increased by **46.4%** from HKD **6,179 million** in 2024 to HKD **9,045 million** in 2025[5](index=5&type=chunk) Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Profit for the period | 8,562 | 6,186 | 38.4% | | Other comprehensive income | 483 | (7) | Significant growth | | - Currency translation differences of overseas subsidiaries | 198 | (18) | Significant growth | | - Cash flow hedges (net of tax) | 70 | (3) | Significant growth | | - Financial assets measured at fair value through other comprehensive income: fair value changes (net of tax) | 199 | 14 | 1321.4% | | Total comprehensive income | 9,045 | 6,179 | 46.4% | | Total comprehensive income attributable to HKEX shareholders | 9,000 | 6,119 | 47.1% | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section outlines the Group's financial position, showing growth in total assets, liabilities, and equity, reflecting a strengthened financial foundation [Financial Position Overview](index=4&type=section&id=Financial%20Position%20Overview) As of June 30, 2025, the Group's total assets and liabilities both increased, with significant rises in cash and cash equivalents, financial assets measured at amortized cost, and liabilities such as margin deposits from participants, while total equity also grew steadily, reflecting the company's continuously strengthening financial foundation - Total assets increased by **11.3%** from HKD **381,629 million** as of December 31, 2024, to HKD **424,872 million** as of June 30, 2025[6](index=6&type=chunk) - Total liabilities increased by **12.3%** from HKD **327,222 million** as of December 31, 2024, to HKD **367,421 million** as of June 30, 2025[6](index=6&type=chunk) - Total equity increased by **5.6%** from HKD **54,407 million** as of December 31, 2024, to HKD **57,451 million** as of June 30, 2025[6](index=6&type=chunk) Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | 173,897 | 134,365 | 29.4% | | Financial assets measured at fair value through profit or loss | 2,842 | 7,558 | -62.4% | | Financial assets measured at fair value through other comprehensive income | 44,117 | 50,704 | -12.9% | | Financial assets measured at amortized cost | 68,662 | 43,610 | 57.4% | | Derivative financial instruments (assets) | 58,848 | 67,747 | -13.0% | | Accounts receivable, prepayments and deposits | 51,681 | 54,497 | -5.2% | | Goodwill and other intangible assets | 19,939 | 19,605 | 1.7% | | Property, plant and equipment | 1,651 | 1,504 | 9.8% | | Right-of-use assets | 2,529 | 1,174 | 115.4% | | **Total assets** | **424,872** | **381,629** | **11.3%** | | **Liabilities** | | | | | Derivative financial instruments (liabilities) | 58,920 | 67,863 | -13.1% | | Margin deposits from participants, Mainland China securities and clearing margins, and cash collateral | 234,508 | 188,857 | 24.2% | | Accounts payable, accruals and other liabilities | 39,561 | 37,584 | 5.3% | | Current tax liabilities | 2,003 | 1,321 | 51.6% | | Participants' contributions to clearing house funds | 28,631 | 27,124 | 5.6% | | Lease liabilities | 873 | 1,294 | -32.6% | | **Total liabilities** | **367,421** | **327,222** | **12.3%** | | **Equity** | | | | | Equity attributable to HKEX shareholders | 56,910 | 53,852 | 5.7% | | Non-controlling interests | 541 | 555 | -2.6% | | **Total equity** | **57,451** | **54,407** | **5.6%** | [Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the changes in the Group's equity, detailing the impact of profit, other comprehensive income, and dividend distributions [Equity Changes H1 2025](index=5&type=section&id=Equity%20Changes%20H1%202025) As of June 30, 2025, equity attributable to HKEX shareholders increased from HKD **53,852 million** at the beginning of the year to HKD **56,910 million**, primarily driven by profit for the period and total comprehensive income, despite the distribution of the second interim dividend for 2024 - Equity attributable to HKEX shareholders increased from HKD **53,852 million** as of January 1, 2025, to HKD **56,910 million** as of June 30, 2025[7](index=7&type=chunk) - Profit for the period was HKD **8,519 million**, and other comprehensive income was HKD **481 million**[7](index=7&type=chunk) - A second interim dividend of HKD **6,193 million** for 2024 was distributed[7](index=7&type=chunk) Overview of Equity Changes H1 2025 | Metric | January 1, 2025 (HKD Million) | June 30, 2025 (HKD Million) | Change (HKD Million) | | :--- | :--- | :--- | :--- | | Equity attributable to HKEX shareholders | 53,852 | 56,910 | 3,058 | | Non-controlling interests | 555 | 541 | (14) | | **Total equity** | **54,407** | **57,451** | **3,044** | | **Key changes:** | | | | | Profit for the period | - | 8,519 | 8,519 | | Other comprehensive income | - | 481 | 481 | | Second interim dividend for 2024 | - | (6,193) | (6,193) | | Share-based employee compensation benefits | - | 190 | 190 | [Equity Changes H1 2024](index=6&type=section&id=Equity%20Changes%20H1%202024) As of June 30, 2024, equity attributable to HKEX shareholders increased from HKD **51,344 million** at the beginning of the year to HKD **52,708 million**, primarily due to profit for the period, partially offset by the distributed second interim dividend for 2023 - Equity attributable to HKEX shareholders increased from HKD **51,344 million** as of January 1, 2024, to HKD **52,708 million** as of June 30, 2024[8](index=8&type=chunk) - Profit for the period was HKD **6,125 million**, and other comprehensive income/(loss) was a loss of HKD **6 million**[8](index=8&type=chunk) - A second interim dividend of HKD **4,944 million** for 2023 was distributed[8](index=8&type=chunk) Overview of Equity Changes H1 2024 | Metric | January 1, 2024 (HKD Million) | June 30, 2024 (HKD Million) | Change (HKD Million) | | :--- | :--- | :--- | :--- | | Equity attributable to HKEX shareholders | 51,344 | 52,708 | 1,364 | | Non-controlling interests | 452 | 512 | 60 | | **Total equity** | **51,796** | **53,220** | **1,424** | | **Key changes:** | | | | | Profit for the period | - | 6,125 | 6,125 | | Other comprehensive income/(loss) | - | (6) | (6) | | Second interim dividend for 2023 | - | (4,944) | (4,944) | | Share-based employee compensation benefits | - | 206 | 206 | [Condensed Consolidated Cash Flow Statement](index=7&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) This section presents the Group's cash flow activities, showing significant growth in operating cash flow, a shift to net outflow from investing activities, and increased financing outflows for dividends [Cash Flow Overview](index=7&type=section&id=Cash%20Flow%20Overview) For the six months ended June 30, 2025, the Group's net cash inflow from operating activities significantly increased, net cash outflow from investing activities was primarily impacted by the acquisition of HKEX headquarters property, and net cash outflow from financing activities was mainly for dividend payments, resulting in a notable increase in cash and cash equivalents at period-end - Net cash inflow from operating activities increased by **152.7%** from HKD **5,697 million** in 2024 to HKD **14,399 million** in 2025[9](index=9&type=chunk) - Net cash (outflow)/inflow from investing activities shifted from an inflow of HKD **3,572 million** in 2024 to an outflow of HKD **3,457 million** in 2025, primarily due to the payment of HKD **2,559 million** for the acquisition of HKEX headquarters property[9](index=9&type=chunk) - Net cash outflow from financing activities increased by **25.0%** from HKD **5,141 million** in 2024 to HKD **6,427 million** in 2025, mainly for dividend payments of HKD **6,169 million** to HKEX shareholders[9](index=9&type=chunk) Key Data from Condensed Consolidated Cash Flow Statement | Metric | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net cash inflow from operating activities (non-HKFRS measure) | 10,069 | 5,852 | 72.1% | | Net cash inflow from operating activities | 14,399 | 5,697 | 152.7% | | Net cash (outflow)/inflow from investing activities | (3,457) | 3,572 | Significant change | | - Payments for acquisition of HKEX headquarters property | (2,559) | - | N/A | | Net cash outflow from financing activities | (6,427) | (5,141) | 25.0% | | - Dividends paid to HKEX shareholders | (6,169) | (4,923) | 25.3% | | Net increase in cash and cash equivalents | 4,515 | 4,128 | 9.4% | | Cash and cash equivalents at June 30 | 18,470 | 13,334 | 38.5% | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes on the Group's financial statements, covering accounting policies, segment performance, and specific financial items [Note 1 Basis of Preparation](index=8&type=section&id=Note%201%20Basis%20of%20Preparation) These condensed consolidated financial statements are prepared in accordance with HKAS 34 and should be read in conjunction with the 2024 annual consolidated financial statements, with financial information for the year ended December 31, 2024, derived from the statutory annual consolidated financial statements and an unqualified auditor's report - These financial statements are prepared in accordance with HKAS 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants[10](index=10&type=chunk) - Financial information for the year ended December 31, 2024, is derived from the statutory annual consolidated financial statements, and the auditor's report was unqualified[10](index=10&type=chunk) [Note 2 Accounting Policies](index=8&type=section&id=Note%202%20Accounting%20Policies) The accounting policies adopted in these financial statements are consistent with those in the 2024 annual consolidated financial statements; new/amended HKFRS accounting standards (e.g., HKFRS 19, HKFRS 7, and HKFRS 9 amendments) are not expected to have a significant impact on the Group, but the impact of HKFRS 18 adoption, particularly on income statement structure and management performance indicator disclosures, is still being assessed - The accounting policies used in preparing these condensed consolidated financial statements are consistent with those in the 2024 annual consolidated financial statements[11](index=11&type=chunk) - Amendments to HKFRS 19, HKFRS 7, and HKFRS 9, along with annual improvements to HKFRS accounting standards, are not expected to have any significant impact on the Group[12](index=12&type=chunk) - HKFRS 18 will replace HKAS 1, introducing new requirements to enhance comparability and transparency of financial performance, with no impact on profit attributable to Group shareholders, and the Group is still assessing its impact on the income statement structure and disclosure of management performance indicators[13](index=13&type=chunk) [Note 3 Operating Segments](index=10&type=section&id=Note%203%20Operating%20Segments) The Group classifies its business into four operating segments—Cash, Equity Securities and Financial Derivatives, Commodities, and Data and Connectivity—based on internal management reports reviewed by the chief operating decision maker, with EBITDA used to assess segment performance; in H1 2025, all segments achieved revenue growth, with the Cash segment contributing the most to EBITDA - The Group's operating segments include: Cash, Equity Securities and Financial Derivatives, Commodities, and Data and Connectivity[14](index=14&type=chunk)[15](index=15&type=chunk) - The chief operating decision maker assesses the performance of each operating segment based on its EBITDA[16](index=16&type=chunk) H1 2025 Segment Revenue and EBITDA Performance | Segment | Revenue (HKD Million) | Revenue Share (%) | EBITDA (HKD Million) | EBITDA Share (%) | | :--- | :--- | :--- | :--- | :--- | | Cash | 6,502 | 58.9% | 6,063 | 55.4% | | Equity Securities and Financial Derivatives | 2,010 | 18.2% | 2,932 | 26.8% | | Commodities | 1,411 | 12.8% | 797 | 7.3% | | Data and Connectivity | 1,103 | 10.0% | 895 | 8.2% | | Corporate Items | 8 | 0.1% | 252 | 2.3% | | **Group Total** | **11,034** | **100%** | **10,939** | **100%** | H1 2025 Segment Revenue and EBITDA YoY Change | Segment | 2025 Revenue (HKD Million) | 2024 Revenue (HKD Million) | Revenue YoY Change (%) | 2025 EBITDA (HKD Million) | 2024 EBITDA (HKD Million) | EBITDA YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash | 6,502 | 4,005 | 62.3% | 6,063 | 3,505 | 73.0% | | Equity Securities and Financial Derivatives | 2,010 | 1,704 | 18.0% | 2,932 | 2,494 | 17.6% | | Commodities | 1,411 | 1,299 | 8.6% | 797 | 816 | -2.3% | | Data and Connectivity | 1,103 | 1,045 | 5.6% | 895 | 840 | 6.5% | | Corporate Items | 8 | 9 | -11.1% | 252 | 6 | Significant growth | [Note 4 Transaction and Trading System Usage Fees](index=12&type=section&id=Note%204%20Transaction%20and%20Trading%20System%20Usage%20Fees) For the six months ended June 30, 2025, total transaction and trading system usage fees significantly increased, primarily driven by a substantial rise in equity securities transaction fees traded on SEHK and through Stock Connect, with derivative warrants, callable bull/bear contracts, and warrants also showing significant growth - Total transaction and trading system usage fees increased by **49.1%** from HKD **3,290 million** in 2024 to HKD **4,906 million** in 2025[18](index=18&type=chunk) - Transaction fees for equity securities traded on SEHK and through Stock Connect increased by **99.6%** from HKD **1,424 million** in 2024 to HKD **2,842 million** in 2025[18](index=18&type=chunk) Composition of Transaction and Trading System Usage Fees | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Equity securities traded on SEHK and through Stock Connect | 2,842 | 1,424 | 99.6% | | Derivative warrants, callable bull/bear contracts and warrants traded on SEHK | 307 | 187 | 64.2% | | Futures and options contracts traded on SEHK and HKFE | 991 | 954 | 3.9% | | Commodity contracts traded on LME and Qianhai Mercantile Exchange | 766 | 725 | 5.7% | | **Total** | **4,906** | **3,290** | **49.1%** | [Note 5 Net Investment Income](index=12&type=section&id=Note%205%20Net%20Investment%20Income) For the six months ended June 30, 2025, net investment income increased, primarily due to higher total interest income from financial assets measured at amortized cost and financial assets measured at fair value through other comprehensive income, which offset net foreign exchange swap losses - Net investment income increased by **14.0%** from HKD **2,521 million** in 2024 to HKD **2,875 million** in 2025[19](index=19&type=chunk) - Total interest income from financial assets measured at amortized cost was HKD **3,605 million** (2024: HKD **4,800 million**), and total interest income from financial assets measured at fair value through other comprehensive income was HKD **1,125 million** (2024: HKD **613 million**)[19](index=19&type=chunk) - Net foreign exchange swap losses were HKD **89 million** (2024: HKD **81 million**), offset by interest income from higher-yielding deposits[19](index=19&type=chunk) Composition of Net Investment Income | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total interest income from financial assets measured at amortized cost | 3,605 | 4,800 | -24.9% | | Total interest income from financial assets measured at fair value through other comprehensive income | 1,125 | 613 | 83.5% | | Interest returned to participants | (2,121) | (3,015) | -29.7% | | **Net interest income** | **2,609** | **2,398** | **8.8%** | | Net gains/(losses) from financial assets measured at fair value through other comprehensive income | 72 | - | N/A | | Net gains/(losses) from financial assets mandatorily measured at fair value and derivative financial instruments | 122 | 120 | 1.7% | | Other exchange differences | 72 | 3 | 2300.0% | | **Net investment income** | **2,875** | **2,521** | **14.0%** | [Note 6 Transaction Related Expenses](index=13&type=section&id=Note%206%20Transaction%20Related%20Expenses) Transaction-related expenses, including license fees, bank charges, and other costs directly varying with trading and settlement activities, slightly decreased this period - Transaction-related expenses include license fees, bank charges, and other costs directly varying with trading and settlement activities[20](index=20&type=chunk) - For the six months ended June 30, 2025, transaction-related expenses were HKD **164 million**, slightly lower than HKD **166 million** in 2024[4](index=4&type=chunk) [Note 7 Employee Costs and Related Expenses](index=13&type=section&id=Note%207%20Employee%20Costs%20and%20Related%20Expenses) For the six months ended June 30, 2025, employee costs and related expenses slightly increased, primarily driven by growth in salaries and other short-term employee benefits and termination benefits, while share-based employee compensation benefits decreased - Total employee costs and related expenses increased by **0.8%** from HKD **1,937 million** in 2024 to HKD **1,952 million** in 2025[21](index=21&type=chunk) - Salaries and other short-term employee benefits increased from HKD **1,592 million** in 2024 to HKD **1,604 million** in 2025, while share-based employee compensation benefits decreased from HKD **206 million** to HKD **190 million**[21](index=21&type=chunk) Composition of Employee Costs and Related Expenses | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Salaries and other short-term employee benefits | 1,604 | 1,592 | 0.8% | | Share-based employee compensation benefits under HKEX Share Award Scheme | 190 | 206 | -7.8% | | Termination benefits | 32 | 18 | 77.8% | | Retirement benefit expenses | 126 | 121 | 4.1% | | **Total** | **1,952** | **1,937** | **0.8%** | [Note 8 Finance Costs](index=13&type=section&id=Note%208%20Finance%20Costs) For the six months ended June 30, 2025, finance costs decreased, primarily due to a reduction in interest on lease liabilities and negative interest on JPY deposits - Total finance costs decreased by **17.0%** from HKD **59 million** in 2024 to HKD **49 million** in 2025[22](index=22&type=chunk) - Interest on lease liabilities decreased from HKD **28 million** in 2024 to HKD **22 million** in 2025, and negative interest on JPY deposits decreased from HKD **3 million** to HKD **0 million**[22](index=22&type=chunk) Composition of Finance Costs | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Interest on borrowings | 2 | 2 | 0.0% | | Interest on lease liabilities | 22 | 28 | -21.4% | | Bank facility commitment fees | 25 | 26 | -3.8% | | Negative interest on JPY deposits | - | 3 | -100.0% | | **Total** | **49** | **59** | **-17.0%** | [Note 9 Taxation](index=14&type=section&id=Note%209%20Taxation) For the six months ended June 30, 2025, tax expenses significantly increased, primarily due to the recognition of Hong Kong minimum top-up tax, leading to a substantial rise in Hong Kong profits tax and total current tax; the Group is objecting to additional tax assessment notices regarding offshore profit exemption for Stock Connect transactions - Total tax expenses increased by **109.1%** from HKD **766 million** in 2024 to HKD **1,602 million** in 2025[23](index=23&type=chunk) - Hong Kong minimum top-up tax was HKD **363 million** (2024: zero), as the effective tax rate for Hong Kong entities was below 15%[23](index=23&type=chunk) - The Group is objecting to additional tax assessment notices issued by the Hong Kong Inland Revenue Department regarding offshore profit exemption for Stock Connect transactions[24](index=24&type=chunk) Composition of Tax Expenses | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Hong Kong profits tax | 1,047 | 611 | 71.4% | | Hong Kong minimum top-up tax | 363 | - | N/A | | Taxation outside Hong Kong | 174 | 179 | -2.8% | | **Total current tax** | **1,584** | **790** | **100.5%** | | Deferred tax | 18 | (24) | Significant change | | **Tax expenses** | **1,602** | **766** | **109.1%** | [Note 10 Earnings Per Share](index=15&type=section&id=Note%2010%20Earnings%20Per%20Share) For the six months ended June 30, 2025, both basic and diluted earnings per share significantly increased, reflecting strong performance in profit attributable to shareholders - Basic earnings per share increased by **39.2%** from HKD **4.84** in 2024 to HKD **6.74** in 2025[25](index=25&type=chunk) - Diluted earnings per share increased by **39.1%** from HKD **4.83** in 2024 to HKD **6.72** in 2025[26](index=26&type=chunk) Earnings Per Share Data | Metric | As of June 30, 2025 | As of June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Profit attributable to shareholders (HKD Million) | 8,519 | 6,125 | 39.1% | | Weighted average number of shares outstanding less shares held for share award scheme (thousand shares) | 1,263,911 | 1,264,558 | -0.1% | | **Basic earnings per share (HKD)** | **6.74** | **4.84** | **39.2%** | | Weighted average number of shares for diluted earnings per share (thousand shares) | 1,267,621 | 1,267,742 | -0.01% | | **Diluted earnings per share (HKD)** | **6.72** | **4.83** | **39.1%** | [Note 11 Dividends](index=15&type=section&id=Note%2011%20Dividends) As of June 30, 2025, declared interim dividends significantly increased, reflecting the company's enhanced profitability - Interim dividend declared as of June 30 was HKD **6.00** per share (2024: HKD **4.36** per share), totaling HKD **7,607 million** (2024: HKD **5,528 million**), an increase of **37.6%**[27](index=27&type=chunk) Interim Dividend Declaration | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Interim dividend declared as of June 30 | 7,607 | 5,528 | 37.6% | | Less: Dividends on shares held for share award scheme as of June 30 | (24) | (15) | 60.0% | | **Total** | **7,583** | **5,513** | **37.6%** | [Note 12 Financial Assets](index=16&type=section&id=Note%2012%20Financial%20Assets) As of June 30, 2025, the Group's total financial assets significantly increased, primarily driven by higher cash and cash equivalents for margins and corporate funds, as well as financial assets measured at amortized cost; financial assets are held for specific purposes, and some cannot be used to fund other Group activities - Total financial assets increased by **14.6%** from HKD **303,984 million** as of December 31, 2024, to HKD **348,366 million** as of June 30, 2025[28](index=28&type=chunk) - Financial assets for margins increased by **31.1%** from HKD **168,455 million** as of December 31, 2024, to HKD **220,792 million** as of June 30, 2025[28](index=28&type=chunk) - Certain cash and cash equivalents (e.g., margins, clearing house funds, A-share cash) are held for specific purposes and cannot be used to fund other Group activities[29](index=29&type=chunk) Composition of Financial Assets | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 173,897 | 134,365 | 29.4% | | Financial assets measured at fair value through profit or loss | 2,842 | 7,558 | -62.4% | | Financial assets measured at fair value through other comprehensive income | 44,117 | 50,704 | -12.9% | | Financial assets measured at amortized cost | 68,662 | 43,610 | 57.4% | | Derivative financial instruments | 58,848 | 67,747 | -13.0% | | **Total** | **348,366** | **303,984** | **14.6%** | [Note 13 Derivative Financial Instruments](index=18&type=section&id=Note%2013%20Derivative%20Financial%20Instruments) As of June 30, 2025, the Group's derivative financial assets and liabilities primarily consisted of base and ferrous metal futures and options contracts cleared by LME Clear, with their fair values decreasing; the Group uses forward foreign exchange contracts and foreign exchange swaps for cash flow hedging and optimizing foreign currency cash flows - Total derivative financial assets decreased by **13.0%** from HKD **67,747 million** as of December 31, 2024, to HKD **58,848 million** as of June 30, 2025[30](index=30&type=chunk) - Total derivative financial liabilities decreased by **13.1%** from HKD **67,863 million** as of December 31, 2024, to HKD **58,920 million** as of June 30, 2025[30](index=30&type=chunk) - The fair value of base and ferrous metal futures and options contracts cleared by LME Clear was HKD **58,781 million** for both assets and liabilities (December 31, 2024: HKD **67,629 million**)[30](index=30&type=chunk) Overview of Derivative Financial Instruments | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | **Derivative Financial Assets** | | | | | Base and ferrous metal futures and options contracts cleared through LME Clear | 58,781 | 67,629 | -13.0% | | Forward foreign exchange contracts | 37 | - | N/A | | Foreign exchange swaps | 30 | 118 | -74.6% | | **Total (Assets)** | **58,848** | **67,747** | **-13.0%** | | **Derivative Financial Liabilities** | | | | | Base and ferrous metal futures and options contracts cleared through LME Clear | 58,781 | 67,629 | -13.0% | | Forward foreign exchange contracts | - | 60 | -100.0% | | Foreign exchange swaps | 139 | 174 | -20.2% | | **Total (Liabilities)** | **58,920** | **67,863** | **-13.1%** | [Note 14 Accounts Receivable, Prepayments and Deposits](index=19&type=section&id=Note%2014%20Accounts%20Receivable%2C%20Prepayments%20and%20Deposits) As of June 30, 2025, total accounts receivable, prepayments, and deposits slightly decreased, primarily due to a reduction in settlement reserve funds and clearing margins held by ChinaClear, though accounts receivable for continuous net settlement and prepayments for the acquisition of HKEX headquarters property increased - Total accounts receivable, prepayments, and deposits decreased by **5.2%** from HKD **54,497 million** as of December 31, 2024, to HKD **51,681 million** as of June 30, 2025[33](index=33&type=chunk) - Settlement reserve funds and clearing margins held by ChinaClear decreased from HKD **19,814 million** as of December 31, 2024, to HKD **13,312 million** as of June 30, 2025[33](index=33&type=chunk) - Prepayments for the acquisition of HKEX headquarters property were HKD **754 million** (December 31, 2024: zero)[33](index=33&type=chunk) Composition of Accounts Receivable, Prepayments and Deposits | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Accounts receivable for continuous net settlement | 33,840 | 31,813 | 6.4% | | Transaction levies, stamp duty and fees receivable | 1,619 | 1,083 | 49.5% | | Settlement reserve funds and clearing margins held by ChinaClear | 13,312 | 19,814 | -32.8% | | Inter-CCP margins held by Shanghai Clearing House | 502 | 828 | -39.4% | | Prepayments for acquisition of HKEX headquarters property | 754 | - | N/A | | Other accounts receivable, prepayments and deposits | 1,061 | 959 | 10.6% | | **Total** | **51,681** | **54,497** | **-5.2%** | [Note 15 Acquisition of HKEX Headquarters Property](index=19&type=section&id=Note%2015%20Acquisition%20of%20HKEX%20Headquarters%20Property) In April 2025, the Group agreed to acquire the HKEX headquarters property for HKD **6.3 billion**, obtaining partial possession and recognizing right-of-use assets and property, plant, and equipment; this transaction resulted in a lease modification and a one-off gain of HKD **76 million** - The Group agreed to acquire the HKEX headquarters property for a total consideration of HKD **6.3 billion**[34](index=34&type=chunk) - As of June 30, 2025, partial possession of the property was obtained, and HKD **1.718 billion** in land lease right-of-use assets, HKD **34 million** in property right-of-use assets, and HKD **53 million** in leasehold improvements (property, plant, and equipment) were recognized[34](index=34&type=chunk) - A one-off gain of HKD **76 million** from lease modification was recognized and included in miscellaneous income[34](index=34&type=chunk) [Note 16 Right-of-Use Assets](index=20&type=section&id=Note%2016%20Right-of-Use%20Assets) As of June 30, 2025, total right-of-use assets significantly increased, primarily due to the recognition of substantial land lease and property right-of-use assets from the acquisition of HKEX headquarters property, partially offset by lease modifications and depreciation - Total right-of-use assets increased by **115.4%** from HKD **1,174 million** as of January 1, 2025, to HKD **2,529 million** as of June 30, 2025[36](index=36&type=chunk) - The acquisition of HKEX headquarters property resulted in an increase of HKD **1,718 million** in land lease right-of-use assets and HKD **34 million** in property right-of-use assets[36](index=36&type=chunk) Changes in Right-of-Use Assets | Category | January 1, 2025 (HKD Million) | Additions (HKD Million) | Lease Modifications (HKD Million) | Depreciation (HKD Million) | June 30, 2025 (HKD Million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Land leases | 15 | 1,718 | - | (1) | 1,732 | | Properties | 1,124 | 34 | (298) | (116) | 765 | | Information technology facilities | 31 | 4 | - | (6) | 29 | | Equipment and motor vehicles | 4 | - | - | (1) | 3 | | **Total** | **1,174** | **1,756** | **(298)** | **(124)** | **2,529** | [Note 17 Margins, Mainland China Securities and Clearing Margins, and Cash Collateral from Participants](index=20&type=section&id=Note%2017%20Margins%2C%20Mainland%20China%20Securities%20and%20Clearing%20Margins%2C%20and%20Cash%20Collateral%20from%20Participants) As of June 30, 2025, total margin deposits, Mainland China securities and clearing margins, and cash collateral from participants significantly increased, primarily driven by substantial growth in margin deposits from Futures Clearing Corporation and SEHK Options Clearing House - Total increased by **24.2%** from HKD **188,857 million** as of December 31, 2024, to HKD **234,508 million** as of June 30, 2025[36](index=36&type=chunk) - Margin deposits from Futures Clearing Corporation clearing participants increased by **70.8%** from HKD **60,030 million** as of December 31, 2024, to HKD **102,513 million** as of June 30, 2025[36](index=36&type=chunk) - Margin deposits from SEHK Options Clearing House clearing participants increased by **93.3%** from HKD **16,906 million** as of December 31, 2024, to HKD **32,684 million** as of June 30, 2025[36](index=36&type=chunk) Composition of Margins and Cash Collateral from Participants | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Margin deposits from Futures Clearing Corporation clearing participants | 102,513 | 60,030 | 70.8% | | Margin deposits, Mainland China securities and clearing margins, and cash collateral from HKSCC clearing participants | 23,498 | 29,679 | -20.9% | | Margin deposits from LME Clear clearing participants | 62,264 | 65,788 | -5.4% | | Margin deposits from OTC Clearing clearing participants | 13,258 | 15,699 | -15.5% | | Inter-CCP margins provided by Shanghai Clearing House to OTC Clearing | 291 | 755 | -61.4% | | Margin deposits from SEHK Options Clearing House clearing participants | 32,684 | 16,906 | 93.3% | | **Total** | **234,508** | **188,857** | **24.2%** | [Note 18 Accounts Payable, Accruals and Other Liabilities](index=21&type=section&id=Note%2018%20Accounts%20Payable%2C%20Accruals%20and%20Other%20Liabilities) The Group's accounts payable, accruals, and other liabilities primarily consist of accounts payable for continuous net settlement, with most due within two days after the trade date - Accounts payable for continuous net settlement accounted for **87%** of total accounts payable, accruals, and other liabilities (December 31, 2024: **90%**)[37](index=37&type=chunk) - Most accounts payable, accruals, and other liabilities are due within three months[37](index=37&type=chunk) [Note 19 Clearing House Funds](index=21&type=section&id=Note%2019%20Clearing%20House%20Funds) As of June 30, 2025, total clearing house funds increased, primarily driven by higher cash contributions from clearing participants, with the OTC Clearing Interest Rate and Foreign Exchange Guarantee Fund showing significant growth - Total clearing house funds increased by **5.8%** from HKD **28,714 million** as of December 31, 2024, to HKD **30,378 million** as of June 30, 2025[38](index=38&type=chunk) - Cash contributions from clearing participants increased from HKD **27,124 million** as of December 31, 2024, to HKD **28,631 million** as of June 30, 2025[38](index=38&type=chunk) - The OTC Clearing Interest Rate and Foreign Exchange Guarantee Fund increased by **39.0%** from HKD **6,056 million** as of December 31, 2024, to HKD **8,413 million** as of June 30, 2025[38](index=38&type=chunk) Composition of Clearing House Funds | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash contributions from clearing participants | 28,631 | 27,124 | 5.6% | | Contributions to OTC Clearing Interest Rate and Foreign Exchange Guarantee Resources | 156 | 156 | 0.0% | | Clearing house fund reserves | 1,591 | 1,434 | 10.9% | | **Total** | **30,378** | **28,714** | **5.8%** | | **Comprising Funds:** | | | | | Futures Clearing Corporation Reserve Fund | 4,541 | 6,074 | -25.3% | | HKSCC Guarantee Fund | 6,399 | 6,382 | 0.3% | | LME Clear Reserve Fund | 8,736 | 8,728 | 0.1% | | OTC Clearing Interest Rate and Foreign Exchange Guarantee Fund | 8,413 | 6,056 | 39.0% | | OTC Clearing Interest Rate and Foreign Exchange Guarantee Resources | 193 | 191 | 1.0% | | SEHK Options Clearing House Reserve Fund | 2,096 | 1,283 | 63.4% | [Note 20 Borrowings](index=22&type=section&id=Note%2020%20Borrowings) As of June 30, 2025, total borrowings decreased, primarily due to dividend payments by OTC Clearing to non-controlling interests, resulting in a corresponding reduction in the put option amount - Total borrowings decreased by **12.6%** from HKD **452 million** as of December 31, 2024, to HKD **395 million** as of June 30, 2025[39](index=39&type=chunk) - OTC Clearing paid dividends of HKD **59 million** to non-controlling interests, resulting in a corresponding reduction in the put option amount[39](index=39&type=chunk) Composition of Borrowings | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Put option granted to non-controlling interests | 395 | 452 | -12.6% | | - Non-current liabilities | 52 | 70 | -25.7% | | - Current liabilities | 343 | 382 | -10.2% | [Note 21 Share Capital and Shares Held for Share Award Scheme](index=22&type=section&id=Note%2021%20Share%20Capital%20and%20Shares%20Held%20for%20Share%20Award%20Scheme) As of June 30, 2025, issued share capital remained stable, while the number of shares held for the share award scheme slightly decreased, reflecting the combined impact of share grants and share purchases - Issued and fully paid ordinary share capital was HKD **31,955 million**, consistent with December 31, 2024[40](index=40&type=chunk) - Shares held for the share award scheme decreased from HKD **1,125 million** as of December 31, 2024, to HKD **1,122 million** as of June 30, 2025[40](index=40&type=chunk) - For the six months ended June 30, 2025, the share award scheme purchased **53,767** HKEX shares from the open market for a total of HKD **19 million**, and granted **63,479** HKEX shares at a total cost of HKD **22 million**[40](index=40&type=chunk) Share Capital and Shares Held for Share Award Scheme | Category | January 1, 2025 (HKD Million) | June 30, 2025 (HKD Million) | Change (HKD Million) | | :--- | :--- | :--- | :--- | | Share capital | 31,955 | 31,955 | 0 | | Shares held for share award scheme | (1,125) | (1,122) | 3 | | **Total** | **30,830** | **30,833** | **3** | [Note 22 Employee Share Arrangements](index=23&type=section&id=Note%2022%20Employee%20Share%20Arrangements) The Group uses a share award scheme as an employee benefit, granting shares to employees; for the six months ended June 30, 2025, over **1.44 million** shares were awarded, with some being re-granted forfeited or unallocated shares - The Group uses a share award scheme as an employee benefit, granting shares to Group employees (including executive directors)[41](index=41&type=chunk) - For the six months ended June 30, 2025, a total of **1,441,003** shares were awarded under the employee share award scheme (March 7, 2025), with an average fair value of HKD **301.44** per share[41](index=41&type=chunk) - Of these, **37,239** shares were re-granted forfeited or unallocated shares, and **74,543** shares were awarded to the HKEX Group Chief Executive[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 23 Set-Aside Reserves](index=23&type=section&id=Note%2023%20Set-Aside%20Reserves) As of June 30, 2025, total set-aside reserves increased, primarily driven by growth in clearing house fund reserves - Total set-aside reserves increased by **10.8%** from HKD **1,451 million** as of December 31, 2024, to HKD **1,608 million** as of June 30, 2025[43](index=43&type=chunk) - Clearing house fund reserves increased from HKD **1,434 million** as of December 31, 2024, to HKD **1,591 million** as of June 30, 2025[43](index=43&type=chunk)[44](index=44&type=chunk) Composition of Set-Aside Reserves | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Clearing house fund reserves | 1,591 | 1,434 | 10.9% | | China statutory reserves | 17 | 17 | 0.0% | | **Total** | **1,608** | **1,451** | **10.8%** | [Note 24 Notes to the Condensed Consolidated Cash Flow Statement](index=24&type=section&id=Note%2024%20Notes%20to%20the%20Condensed%20Consolidated%20Cash%20Flow%20Statement) This note provides a reconciliation of profit before tax to net cash inflow from operating activities and an analysis of changes in financing liabilities; the significant increase in net cash inflow from operating activities reflects the strong cash-generating capability of core businesses - Net cash inflow from operating activities (non-HKFRS measure) increased by **72.1%** from HKD **5,852 million** in 2024 to HKD **10,069 million** in 2025[45](index=45&type=chunk) - The reconciliation of profit before tax to net cash inflow from operating activities shows that the net increase in margin financial assets and liabilities had a significant impact on cash flow[45](index=45&type=chunk) Reconciliation of Net Cash Inflow from Operating Activities | Adjustment Item | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | | :--- | :--- | :--- | | Profit before tax | 10,164 | 6,952 | | Net interest income | (2,609) | (2,398) | | Finance costs | 49 | 59 | | Depreciation and amortisation | 743 | 698 | | Net increase in margin financial assets | (45,517) | (15,877) | | Net increase in margin financial liabilities | 45,651 | 15,882 | | (Increase)/decrease in accounts receivable, prepayments and deposits | (2,542) | 7,898 | | Increase/(decrease) in other liabilities | 1,774 | (2,022) | | **Net cash inflow from operating activities** | **9,135** | **4,990** | | Interest received on short-term debt securities, time deposits and cash and cash equivalents | 3,844 | 4,763 | | Interest paid to participants | (2,121) | (3,015) | | Income tax paid | (753) | (805) | | **Net cash inflow from operating activities (non-HKFRS measure)** | **10,069** | **5,852** | Reconciliation of Financing Liabilities | Category | Borrowings (H1 2025) (HKD Million) | Borrowings (H1 2024) (HKD Million) | Lease Liabilities (H1 2025) (HKD Million) | Lease Liabilities (H1 2024) (HKD Million) | | :--- | :--- | :--- | :--- | :--- | | As of January 1 | 452 | 447 | 1,294 | 1,604 | | Additions to leases | - | - | 24 | 120 | | Lease modifications/revaluations | - | - | (324) | (181) | | Cash flow (payments) | (59) | - | (155) | (158) | | As of June 30 | 395 | 449 | 873 | 1,412 | [Note 25 Capital Expenditure and Commitments](index=25&type=section&id=Note%2025%20Capital%20Expenditure%20and%20Commitments) For the six months ended June 30, 2025, the Group's capital expenditure significantly increased, primarily due to the acquisition of HKEX headquarters property; future capital expenditure commitments also substantially grew, mainly concentrated on headquarters property, property, plant, and equipment, and intangible assets - For the six months ended June 30, 2025, the Group's capital expenditure was HKD **2.657 billion** (2024: HKD **612 million**), with HKD **1.805 billion** used for the acquisition of HKEX headquarters property[47](index=47&type=chunk) - As of June 30, 2025, contracted but unprovided capital expenditure commitments were HKD **4,201 million** (December 31, 2024: HKD **222 million**), primarily including HKD **4,009 million** for the HKEX headquarters property[47](index=47&type=chunk) Capital Expenditure Commitments | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | **Contracted but unprovided:** | | | | | - HKEX headquarters property | 4,009 | - | N/A | | - Other property, plant and equipment | 16 | 26 | -38.5% | | - Intangible assets | 176 | 196 | -10.2% | | **Approved but not contracted:** | | | | | - Property, plant and equipment | 980 | 662 | 48.0% | | - Intangible assets | 651 | 818 | -20.4% | | **Total** | **5,832** | **1,702** | **242.7%** | [Note 26 Contingent Liabilities](index=26&type=section&id=Note%2026%20Contingent%20Liabilities) As of June 30, 2025, the Group has several contingent liabilities, including potential requirements by the SFC to replenish compensation funds, indemnity undertakings to the Collector of Stamp Revenue, and commitments for HKSCC's winding-up liabilities - May be required by the SFC to replenish the Unified Exchange Compensation Fund, involving an amount not exceeding HKD **71 million**[49](index=49&type=chunk) - Undertaking to indemnify the Collector of Stamp Revenue for underpaid stamp duty by participants, with a maximum total liability of HKD **104 million**[49](index=49&type=chunk) - Commitment to bear HKSCC's winding-up liabilities and costs, limited to HKD **50 million**[49](index=49&type=chunk) [Note 27 Significant Related Party Transactions](index=26&type=section&id=Note%2027%20Significant%20Related%20Party%20Transactions) This note discloses key management personnel compensation; for the six months ended June 30, 2025, total key management personnel compensation decreased, primarily due to a reduction in share-based employee compensation benefits - Total key management personnel compensation decreased by **10.1%** from HKD **179 million** in 2024 to HKD **161 million** in 2025[48](index=48&type=chunk) - Share-based employee compensation benefits decreased from HKD **87 million** in 2024 to HKD **55 million** in 2025[48](index=48&type=chunk) Key Management Personnel Compensation | Category | As of June 30, 2025 (HKD Million) | As of June 30, 2024 (HKD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Salaries and other short-term employee benefits | 100 | 87 | 14.9% | | Share-based employee compensation benefits | 55 | 87 | -36.8% | | Retirement benefit expenses | 6 | 5 | 20.0% | | **Total** | **161** | **179** | **-10.1%** | [Note 28 Assets Charged](index=27&type=section&id=Note%2028%20Assets%20Charged) LME Clear receives securities and gold as non-cash collateral from clearing participants and holds securities as collateral for overnight tri-party reverse repurchase agreements; these non-cash collaterals are not recorded in the Group's condensed consolidated statement of financial position, but some have been re-pledged to investment agents, custodians, and banks - The fair value of non-cash collateral received by LME Clear totaled USD **2.702 billion** (HKD **21.211 billion**), used for margins submitted by clearing participants[50](index=50&type=chunk) - LME Clear holds securities as collateral for overnight tri-party reverse repurchase agreements, with a fair value of USD **7.311 billion** (HKD **57.391 billion**)[51](index=51&type=chunk) - These non-cash collaterals are not recorded in the Group's condensed consolidated statement of financial position[52](index=52&type=chunk) [Note 29 Capital Management](index=27&type=section&id=Note%2029%20Capital%20Management) As of June 30, 2025, the Group allocated HKD **4 billion** from shareholders' funds to support the risk management systems of its clearing houses, with HKD **2.16 billion** injected as capital into HKSCC, SEHK Options Clearing House, and Futures Clearing Corporation - The Group allocated HKD **4 billion** (December 31, 2024: HKD **4 billion**) from shareholders' funds to support the risk management systems of its clearing houses[53](index=53&type=chunk) - Of this, HKD **2.16 billion** (December 31, 2024: HKD **2.16 billion**) was injected as capital into HKSCC, SEHK Options Clearing House, and Futures Clearing Corporation[53](index=53&type=chunk) [Note 30 Fair Value of Financial Assets and Liabilities](index=28&type=section&id=Note%2030%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) This note discloses the classification of financial assets and liabilities measured at fair value and details the valuation methods for Level 3 investments (e.g., equity interests in Fusion Bank, Huakong Qingjiao, Guangzhou Futures Exchange); the carrying amounts of short-term financial assets and liabilities approximate their fair values - Financial assets and liabilities are classified by fair value hierarchy levels (Level 1, 2, 3), with Level 1 using quoted prices in active markets, Level 2 using observable market data, and Level 3 using unobservable data[54](index=54&type=chunk)[56](index=56&type=chunk) - The Group holds unlisted equity interests in Fusion Bank Limited, Huakong Qingjiao Information Technology (Beijing) Co., Ltd., and Guangzhou Futures Exchange, which are classified as Level 3 investments[57](index=57&type=chunk)[58](index=58&type=chunk) - The total fair value of Level 3 investments was HKD **334 million** (December 31, 2024: HKD **329 million**), estimated using market approach[58](index=58&type=chunk) Financial Assets and Liabilities Measured at Fair Value | Category | June 30, 2025 (HKD Million) | December 31, 2024 (HKD Million) | | :--- | :--- | :--- | | **Financial Assets** | | | | Financial assets measured at fair value (Total) | 47,359 | 58,262 | | Derivative financial instruments (Total) | 58,848 | 67,747 | | **Total (Assets)** | **106,207** | **126,009** | | **Financial Liabilities** | | | | Derivative financial instruments (Total) | 58,920 | 67,863 | | **Total (Liabilities)** | **58,920** | **67,863** | Fair Value of Financial Assets and Liabilities Not Measured at Fair Value | Category | June 30, 2025 (Carrying Amount) (HKD Million) | June 30, 2025 (Fair Value) (HKD Million) | December 31, 2024 (Carrying Amount) (HKD Million) | December 31, 2024 (Fair Value) (HKD Million) | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Financial assets measured at amortized cost: Debt securities due after one year | 1,411 | 1,459 | 1,439 | 1,443 | | Financial assets measured at amortized cost: Other financial assets due after one year | 78 | 65 | 89 | 67 | | **Liabilities** | | | | | | Borrowings: Put option granted to non-controlling interests | 395 | 402 | 452 | 455 | | Financial guarantee provided to Collector of Stamp Revenue | 20 | 43 | 20 | 35 |

[Condensed Consolidated Performance](index=1&type=section&id=Condensed%20Consolidated%20Performance) [Condensed Consolidated Statement of Profit or Loss](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group's revenue decreased by 2.9% year-on-year to HK$487,743 thousand, with profit for the period at HK$12,183 thousand, a slight decrease of 4.0% from the same period last year. Gross profit remained largely stable, but operating profit and profit before tax both decreased | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 487,743 | 502,149 | (14,406) | -2.9% | | Cost of sales | (350,604) | (364,755) | 14,151 | -3.9% | | Gross profit | 137,139 | 137,394 | (255) | -0.2% | | Other income | 19,097 | 28,779 | (9,682) | -33.6% | | Operating profit | 21,023 | 26,364 | (5,341) | -20.2% | | Profit before tax | 15,015 | 16,904 | (1,889) | -11.2% | | Profit for the period | 12,183 | 12,688 | (505) | -4.0% | | Basic earnings per share | 0.2 HK cents | 0.2 HK cents | 0 | 0% | [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group recorded total comprehensive income of HK$77,690 thousand, primarily benefiting from a significant positive change in exchange differences on translation of foreign operations, reversing the comprehensive loss from the same period last year | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Profit for the period | 12,183 | 12,688 | (505) | | Exchange differences on translation of foreign operations | 65,507 | (35,578) | 101,085 | | Total comprehensive income / (loss) for the period | 77,690 | (22,890) | 100,580 | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets and net assets both increased. Non-current assets rose, current assets slightly decreased, but current liabilities significantly reduced, leading to improvements in net current assets and total assets less current liabilities | Metric | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total non-current assets | 1,154,660 | 1,114,755 | 39,905 | 3.6% | | Total current assets | 1,332,296 | 1,355,562 | (23,266) | -1.7% | | Total current liabilities | 421,882 | 484,051 | (62,169) | -12.8% | | Net current assets | 910,414 | 871,511 | 38,903 | 4.5% | | Total assets less current liabilities | 2,065,074 | 1,986,266 | 78,808 | 4.0% | | Total non-current liabilities | 39,028 | 38,348 | 680 | 1.8% | | Net assets | 2,026,046 | 1,947,918 | 78,128 | 4.0% | | Total equity | 2,026,046 | 1,947,918 | 78,128 | 4.0% | [Condensed Consolidated Statement of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash flow from operating activities significantly increased, cash outflow from investing activities substantially decreased, while financing activities shifted from net inflow to net outflow, primarily due to repayment of bank loans | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 70,583 | 23,174 | 47,409 | | Net cash used in investing activities | (52,333) | (254,278) | 201,945 | | Net cash (used in) / generated from financing activities | (97,644) | 110,065 | (207,709) | | Net decrease in cash and cash equivalents | (79,394) | (121,039) | 41,645 | | Cash and cash equivalents at end of period | 439,269 | 556,885 | (117,616) | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity attributable to owners of the Company amounted to HK$1,858,604 thousand, an increase from the beginning of the year, primarily driven by profit for the period and positive exchange differences on translation of foreign operations | Metric | January 1, 2025 (HK$ thousand) | June 30, 2025 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the Company | 1,794,395 | 1,858,604 | 64,209 | | Non-controlling interests | 153,523 | 167,442 | 13,919 | | Total equity | 1,947,918 | 2,026,046 | 78,128 | - Profit for the period was **HK$2,205 thousand**, and exchange differences on translation of foreign operations amounted to **HK$61,566 thousand**, jointly driving equity growth[8](index=8&type=chunk) [Notes to the Condensed Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements) [1. Company Information](index=7&type=section&id=1.%20Company%20Information) International Precision Group Limited was incorporated in the Cayman Islands in 2002 and listed on the Hong Kong Stock Exchange in 2004, primarily manufacturing and selling precision metal parts for automotive, hydraulic, and electronic equipment - The Company was incorporated in the Cayman Islands on July 10, 2002, and listed on the Main Board of the Hong Kong Stock Exchange on November 1, 2004[9](index=9&type=chunk) - Its principal business involves the manufacturing and sale of precision metal parts for automotive components, hydraulic equipment parts, and electronic equipment parts[9](index=9&type=chunk) [2. Basis of Preparation](index=7&type=section&id=2.%20Basis%20of%20Preparation) The unaudited condensed consolidated financial statements are prepared in accordance with HKAS 34 and Appendix D2 of the Listing Rules, using the historical cost convention, presented in Hong Kong dollars, with all values rounded to the nearest thousand - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[10](index=10&type=chunk) - The statements are prepared on the historical cost basis, except for derivative financial instruments which are measured at fair value, and are presented in Hong Kong dollars[10](index=10&type=chunk) [3. Significant Accounting Policies](index=7&type=section&id=3.%20Significant%20Accounting%20Policies) The accounting policies adopted in this interim period are consistent with those of the previous year, with the initial adoption of HKFRS amendments issued by the HKICPA, which had no significant impact on financial position or performance - The accounting policies are consistent with those adopted in the annual financial statements for the year ended December 31, 2024[11](index=11&type=chunk) - The Group has initially adopted amendments to HKAS 21 (Amendment) Lack of Exchangeability and other amendments, which had no significant impact on the financial position and performance for the current and prior periods[11](index=11&type=chunk) [4. Operating Segment Information](index=8&type=section&id=4.%20Operating%20Segment%20Information) The Group is organized into six reportable segments based on customer location: Thailand, Malaysia, Mainland China/Macau/Hong Kong, North America, Europe, and other countries. Segment performance is primarily assessed by monitoring revenue and gross profit, with assets and liabilities reported periodically - The Group manages its business by coordinating departments based on customer location, divided into six reportable segments: Thailand, Malaysia, Mainland China, Macau and Hong Kong, North America, Europe, and other countries[12](index=12&type=chunk)[14](index=14&type=chunk) - Segment performance is primarily assessed based on revenue and gross profit, with segment assets and liabilities reported periodically to senior management[13](index=13&type=chunk) Revenue and Gross Profit by Geographical Region (HK$ thousand) | Region | 2025 H1 Revenue | 2025 H1 Gross Profit | 2024 H1 Revenue | 2024 H1 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Thailand | 2,405 | 676 | 9,562 | 2,616 | | Malaysia | 12,441 | 3,498 | 14,068 | 3,849 | | Mainland China, Macau and Hong Kong | 291,649 | 82,003 | 275,248 | 75,311 | | North America | 95,630 | 26,888 | 102,037 | 27,919 | | Europe | 66,862 | 18,800 | 86,503 | 23,668 | | Other countries | 18,756 | 5,274 | 14,731 | 4,031 | | **Total** | **487,743** | **137,139** | **502,149** | **137,394** | [5. Revenue and Other Income and Gains](index=10&type=section&id=5.%20Revenue%20and%20Other%20Income%20and%20Gains) The Group's revenue primarily derives from the sale of hydraulic equipment and automotive parts, with total revenue for H1 2025 at HK$487,743 thousand, a 2.9% year-on-year decrease. Total other income and gains were HK$19,097 thousand, a reduction from the prior period, mainly due to decreased exchange differences and bank interest income - Revenue represents the net invoiced value of goods sold during the period, after deducting returns and trade discounts[17](index=17&type=chunk) Revenue Composition (HK$ thousand) | Revenue Category | 2025 H1 | 2024 H1 | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of automotive parts | 216,366 | 226,890 | (10,524) | -4.6% | | Sales of hydraulic equipment parts | 254,322 | 251,685 | 2,637 | 1.0% | | Sales of electronic parts | 12,143 | 14,327 | (2,184) | -15.2% | | Others | 4,912 | 9,247 | (4,335) | -46.9% | | **Total Revenue** | **487,743** | **502,149** | **(14,406)** | **-2.9%** | Other Income and Gains (HK$ thousand) | Category | 2025 H1 | 2024 H1 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Bank interest income | 1,976 | 4,671 | (2,695) | | Government grants | 5,902 | 6,278 | (376) | | Dividend income | 2,223 | 2,522 | (299) | | Rental income | 4,776 | 5,266 | (490) | | Others | 3,836 | 2,577 | 1,259 | | Gain on disposal of property, plant and equipment | – | 231 | (231) | | Gain on disposal of financial assets at fair value through profit or loss | 384 | – | 384 | | Net exchange differences | – | 7,234 | (7,234) | | **Total** | **19,097** | **28,779** | **(9,682)** | [6. Finance Costs](index=11&type=section&id=6.%20Finance%20Costs) For the six months ended June 30, 2025, the Group's finance costs significantly decreased by 38.9% to HK$5,360 thousand, primarily due to reduced bank loan interest and financial arrangement fees | Category | 2025 H1 (HK$ thousand) | 2024 H1 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest on bank loans | 5,056 | 8,174 | (3,118) | -38.1% | | Financial arrangement fees | 256 | 510 | (254) | -49.8% | | Interest on lease liabilities | 48 | 93 | (45) | -48.4% | | **Total** | **5,360** | **8,777** | **(3,417)** | **-38.9%** | [7. Profit Before Tax](index=11&type=section&id=7.%20Profit%20Before%20Tax) The Group's profit before tax is stated after deducting various expenses, including cost of inventories sold, depreciation, amortization, share option expenses, and auditor's remuneration. Notably, a net exchange difference loss was recorded this period, compared to a gain in the prior period | Item | 2025 H1 (HK$ thousand) | 2024 H1 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Cost of inventories sold | 350,604 | 364,755 | (14,151) | | Depreciation of property, plant and equipment | 46,334 | 39,334 | 7,000 | | Depreciation of right-of-use assets | 464 | 863 | (399) | | Amortisation | 5,239 | 5,073 | 166 | | Equity-settled share option expenses | 438 | – | 438 | | Auditor's remuneration | 1,320 | 1,236 | 84 | | Net exchange differences | 4,914 | (7,234) | 12,148 | | Loss / (gain) on disposal of property, plant and equipment | 772 | (231) | 1,003 | [8. Income Tax](index=12&type=section&id=8.%20Income%20Tax) For the six months ended June 30, 2025, the Group's income tax expense was HK$2,832 thousand, a decrease from the prior period, primarily due to the recognition of deferred tax assets - Hong Kong Profits Tax is provided at a rate of **16.5%**, with other regions calculated at their respective prevailing local tax rates[21](index=21&type=chunk) | Category | 2025 H1 (HK$ thousand) | 2024 H1 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Current | 4,151 | 4,216 | (65) | | Deferred | (1,319) | – | (1,319) | | **Total** | **2,832** | **4,216** | **(1,384)** | [9. Earnings Per Share](index=12&type=section&id=9.%20Earnings%20Per%20Share) For the six months ended June 30, 2025, both basic and diluted earnings per share remained at **0.2 HK cents**, consistent with the prior period, despite a slight decrease in profit attributable to equity holders of the Company | Metric | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Profit attributable to equity holders of the Company (HK$ thousand) | 2,205 | 2,378 | | Weighted average number of ordinary shares in issue (thousand shares) | 1,052,254 | 1,052,254 | | Basic earnings per share (HK cents) | 0.2 | 0.2 | | Diluted earnings per share (HK cents) | 0.2 | 0.2 | [10. Interim Dividend Per Share](index=13&type=section&id=10.%20Interim%20Dividend%20Per%20Share) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the same period last year - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil per ordinary share)[25](index=25&type=chunk) [11. Property, Plant and Equipment](index=13&type=section&id=11.%20Property,%20Plant%20and%20Equipment) As of June 30, 2025, the net book value of property, plant and equipment was HK$1,012,201 thousand, an increase from December 31, 2024, primarily due to additions and exchange adjustments during the period Net Book Value of Property, Plant and Equipment (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | **Total** | **1,012,201** | **973,341** | **38,860** | - Additions to property, plant and equipment amounted to **HK$63,042 thousand** during the period, with exchange adjustments of **HK$96,485 thousand**[26](index=26&type=chunk) [12. Inventories](index=14&type=section&id=12.%20Inventories) As of June 30, 2025, the Group's total inventories amounted to HK$327,693 thousand, a slight increase from December 31, 2024, primarily reflecting growth in work-in-progress and finished goods inventories | Inventory Category | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Raw materials | 83,579 | 97,580 | (14,001) | | Consumables | 18,293 | 16,321 | 1,972 | | Work-in-progress | 86,698 | 70,298 | 16,400 | | Finished goods | 139,123 | 134,722 | 4,401 | | **Total** | **327,693** | **318,921** | **8,772** | [13. Trade Receivables](index=14&type=section&id=13.%20Trade%20Receivables) As of June 30, 2025, total trade receivables amounted to HK$404,617 thousand, an increase from December 31, 2024. The Group grants customers credit terms of 60 to 120 days and maintains strict control over overdue balances - The Group's trade terms with customers are primarily on an open account basis, with credit periods generally ranging from **60 to 120 days**[28](index=28&type=chunk) Ageing Analysis of Trade Receivables (HK$ thousand) | Ageing | June 30, 2025 | December 31, 2024 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Within 1 month | 217,981 | 175,321 | 42,660 | | 1 to 2 months | 72,156 | 71,405 | 751 | | 2 to 3 months | 52,212 | 51,043 | 1,169 | | 3 to 4 months | 34,483 | 35,049 | (566) | | 4 to 12 months | 24,943 | 37,450 | (12,507) | | Over 1 year | 2,842 | – | 2,842 | | **Total** | **404,617** | **370,268** | **34,349** | [14. Cash and Bank Balances](index=15&type=section&id=14.%20Cash%20and%20Bank%20Balances) As of June 30, 2025, cash and bank balances amounted to HK$439,269 thousand, a decrease from December 31, 2024, primarily due to a reduction in pledged and restricted deposits | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Bank deposits, bank and cash in hand | 458,232 | 549,893 | (91,661) | | Less: Pledged and restricted deposits | (18,963) | (34,733) | 15,770 | | **Cash and cash equivalents** | **439,269** | **515,160** | **(75,891)** | [15. Trade Payables](index=15&type=section&id=15.%20Trade%20Payables) As of June 30, 2025, total trade payables amounted to HK$106,366 thousand, a slight increase from December 31, 2024 | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Within 1 month | 59,541 | 64,756 | (5,215) | | 1 to 2 months | 23,190 | 21,781 | 1,409 | | 2 to 3 months | 12,812 | 6,312 | 6,500 | | Over 3 months | 10,823 | 12,311 | (1,488) | | **Total** | **106,366** | **105,160** | **1,206** | [16. Share Capital](index=15&type=section&id=16.%20Share%20Capital) As of June 30, 2025, the Group's authorized share capital and issued and fully paid share capital remained unchanged at HK$200,000 thousand and HK$105,225 thousand, respectively | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Authorized share capital | 200,000 | 200,000 | | Issued and fully paid share capital | 105,225 | 105,225 | - There were no changes in the issued and fully paid share capital for the six months ended June 30, 2025, and for the year ended December 31, 2024[30](index=30&type=chunk) [17. Bank and Other Borrowings](index=16&type=section&id=17.%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, total bank and other borrowings amounted to HK$205,776 thousand, a significant decrease from December 31, 2024, primarily due to the repayment of secured bank loans | Loan Category | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Bank loans – secured | – | 110,000 | (110,000) | | Bank loans – secured with a repayment on demand clause | 199,486 | 171,541 | 27,945 | | Bank loans – unsecured | – | 4,242 | (4,242) | | Other loans – non-controlling shareholders | 6,290 | 5,981 | 309 | | **Total** | **205,776** | **291,764** | **(85,988)** | Bank Loan Maturity Profile (HK$ thousand) | Maturity Period | June 30, 2025 | December 31, 2024 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Within 1 year or on demand | 44,645 | 128,040 | (83,395) | | In the second year | 16,626 | 15,863 | 763 | | In the third to fifth year | 80,234 | 52,835 | 27,399 | | Over 5 years | 57,981 | 89,045 | (31,064) | | **Total** | **199,486** | **285,783** | **(86,300)** | [18. Capital Commitments](index=17&type=section&id=18.%20Capital%20Commitments) As of June 30, 2025, the Group's total contracted but unprovided capital commitments amounted to HK$10,690 thousand, a decrease from December 31, 2024, primarily reflecting reduced commitments for buildings and plant and machinery | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Plant and machinery | 1,474 | 3,299 | (1,825) | | Buildings | 9,216 | 15,321 | (6,105) | | **Total** | **10,690** | **18,620** | **(7,930)** | [19. Related Party Transactions](index=17&type=section&id=19.%20Related%20Party%20Transactions) As of June 30, 2025, total remuneration paid to key management personnel amounted to HK$5,674 thousand, a decrease from the same period last year | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Short-term employee benefits | 5,434 | 6,299 | (865) | | Post-employment benefits | 240 | 222 | 18 | | **Total remuneration paid to key management personnel** | **5,674** | **6,521** | **(847)** | [Chairman's Report](index=18&type=section&id=Chairman's%20Report) [Business Review](index=18&type=section&id=Business%20Review) Amidst a complex international economic environment, the Group's H1 2025 sales slightly decreased by 2.9% to HK$487,743 thousand. Sales of hydraulic equipment parts grew by 1.0%, while automotive and electronic equipment parts businesses declined. The Group is addressing challenges through cost control and the commencement of production at its Thailand factory - Affected by the US tariff war, the Russia-Ukraine conflict, and domestic industry 'involution', the Group's overall revenue remained relatively stable, with H1 sales recorded at **HK$487,743 thousand**, a year-on-year decrease of **2.9%**[35](index=35&type=chunk) - Sales of hydraulic equipment parts business were **HK$254,322 thousand**, a year-on-year increase of **1.0%**, primarily achieved through price reductions to maintain volume and expansion into the agricultural machinery sector[36](index=36&type=chunk) - Sales of automotive parts business were **HK$216,366 thousand**, a year-on-year decrease of **4.6%**, negatively impacted by both US tariff policies and increased penetration of new energy vehicles. Some parts have been transferred to the Thailand factory for production[37](index=37&type=chunk) - Sales of electronic equipment parts business were **HK$12,143 thousand**, a year-on-year decrease of **15.2%**, largely maintaining last year's level[37](index=37&type=chunk) - Through cost optimization measures such as lean projects, enhanced automation, and optimized supply chain management, the Group maintained its gross profit margin at **28.1%** (prior period: **27.4%**)[38](index=38&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) Despite a 2.9% decrease in total sales, the gross profit margin was maintained at 28.1% through cost control and automation. The reduction in other income was mainly due to lower exchange gains from a weaker US dollar and decreased bank interest income. Administrative expenses increased due to a non-wholly owned subsidiary's closure and exchange losses, but finance costs significantly decreased by 38.9% due to bank loan repayments. Net profit for the period slightly declined by 4.0% - Total sales decreased by **2.9%** year-on-year to **HK$487,743 thousand**, but the gross profit margin was maintained at **28.1%** (prior period: **27.4%**), with gross profit at **HK$137,139 thousand**[39](index=39&type=chunk) - Total other income amounted to **HK$19,097 thousand**, a year-on-year decrease, primarily due to unrealized exchange gains from a weaker US dollar (prior period exchange gain: **HK$7,234 thousand**) and a **HK$2,695 thousand** reduction in bank interest income[39](index=39&type=chunk) - Administrative expenses and other expenses were **HK$91,251 thousand**, a year-on-year increase of **6.5%**, mainly due to **HK$2,200 thousand** compensation from the closure of a non-wholly owned subsidiary and **HK$4,914 thousand** exchange losses from a weaker US dollar, partially offset by **HK$851 thousand** savings in utilities[40](index=40&type=chunk) - Research and development expenses were **HK$29,875 thousand**, a slight decrease, but continuous investment is maintained to preserve market competitiveness[41](index=41&type=chunk) - Finance costs were **HK$5,360 thousand**, a year-on-year decrease of **38.9%**, primarily due to the use of internal funds to repay bank loans[41](index=41&type=chunk) - Net profit for the period was **HK$12,183 thousand**, a year-on-year decrease of **4.0%**[41](index=41&type=chunk) [Pledge of the Group's Assets](index=21&type=section&id=Pledge%20of%20the%20Group's%20Assets) The Group reduced total bank and other borrowings by HK$85,988 thousand by repaying high-cost bank loans with internal funds. Some loans are secured by subsidiary equity and properties, with certain deposits restricted for loan repayment or letter of guarantee issuance - Total bank and other borrowings amounted to **HK$205,776 thousand**, a decrease of **HK$85,988 thousand** from the end of last year, primarily due to the use of internal funds to repay high-cost bank loans[42](index=42&type=chunk) - Loans are guaranteed by the Company and its subsidiaries, and secured by equity interests in subsidiaries and properties[42](index=42&type=chunk) - As of June 30, 2025, no deposits were pledged to secure general working capital (December 31, 2024: **HK$20,000 thousand**)[43](index=43&type=chunk) - Deposits of **HK$16,660 thousand** were restricted solely for loan repayment purposes[43](index=43&type=chunk) [Liquidity, Financial Resources and Financial Ratios](index=22&type=section&id=Liquidity,%20Financial%20Resources%20and%20Financial%20Ratios) The Group's net cash flow from operating activities significantly increased to HK$70,583 thousand, primarily benefiting from improved working capital management and the release of restricted funds. Cash outflow from investing activities substantially decreased, while net cash outflow from financing activities was mainly used for repaying high-cost bank loans. Overall net cash increased - Net cash generated from operating activities was **HK$70,583 thousand**, a year-on-year increase of **HK$47,409 thousand**, primarily due to improved working capital management and reduced restricted funds releasing liquidity[44](index=44&type=chunk) - Net cash outflow from investing activities was **HK$52,333 thousand**, a year-on-year decrease of **HK$201,945 thousand**, mainly due to significant acquisition expenditures in the prior period[45](index=45&type=chunk) - Net cash outflow from financing activities was **HK$97,644 thousand**, primarily due to the use of internal funds to repay high-cost bank loans[45](index=45&type=chunk) - As of June 30, 2025, the Group's net cash was **HK$233,493 thousand**, an increase of **HK$10,097 thousand** from December 31, 2024[45](index=45&type=chunk) [Currency Risk and Management](index=23&type=section&id=Currency%20Risk%20and%20Management) The Group faces foreign currency exchange rate fluctuation risks, particularly the negative impact of RMB appreciation on profitability, as revenue is primarily settled in USD, EUR, and RMB, while expenses are settled in JPY, RMB, THB, and HKD. Management continuously assesses and implements measures to mitigate these risks - The Group is exposed to foreign currency exchange rate fluctuation risks, with revenue primarily settled in USD, EUR, and RMB, while expenses are settled in JPY, RMB, THB, and HKD[46](index=46&type=chunk) - RMB appreciation would have a negative impact on the Group's profitability[46](index=46&type=chunk) - Management continuously assesses foreign exchange risks and takes measures to mitigate them when necessary[46](index=46&type=chunk) [Human Resources](index=23&type=section&id=Human%20Resources) The Group is committed to talent pipeline development and employee safety training, with a share option scheme and retirement benefit plans in place. As of June 30, 2025, the total number of employees was **2,138**, a year-on-year decrease of **119** employees - The Company formulates a talent pipeline reserve list and development plans to ensure an ample supply of core talent[47](index=47&type=chunk) - To protect employees, the Company enhances production safety awareness and training, strengthening employees' understanding of risk points on production lines[47](index=47&type=chunk) - A share option scheme is in place to encourage and reward contributions from selected participants, and a Mandatory Provident Fund Scheme and local retirement benefit plans are established for employees[47](index=47&type=chunk) - As of June 30, 2025, the total number of employees was **2,138**, a decrease of **119** employees from the same period last year[47](index=47&type=chunk) [Outlook](index=24&type=section&id=Outlook) Facing a complex international economic environment and tariff policies, the Group will mitigate operational risks by expanding domestic sales and shifting US customer orders to its Thailand production base. The second half will focus on sales breakthroughs, developing new regional markets (e.g., Eastern Europe and Southeast Asia), accelerating new product R&D and mass production, and recruiting key talent to enhance production processes and R&D capabilities - To reduce reliance on overseas sales markets, the Group will expand its domestic sales market by launching new products; sales in the China region have increased from **55%** in the prior period to **60%** in the current period[48](index=48&type=chunk) - To mitigate tariff risks, the Group continues to gradually transfer US customer orders to its Thailand production base while expanding into Southeast Asian markets[48](index=48&type=chunk) - The primary task for the second half is sales breakthroughs, developing new regional markets (e.g., Eastern Europe and Southeast Asia), actively seeking new projects, accelerating new product sample progress, and achieving mass production[48](index=48&type=chunk) - The Group will drive future development through R&D, iterating and upgrading products, optimizing functions, and recruiting key talent to enhance production processes and R&D capabilities[48](index=48&type=chunk) [Additional Information](index=25&type=section&id=Additional%20Information) [Purchase, Redemption or Sale of the Company's Listed Securities](index=25&type=section&id=Purchase,%20Redemption%20or%20Sale%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities, and the Company held no treasury shares - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on the Stock Exchange[51](index=51&type=chunk) - As of June 30, 2025, the Company did not hold any treasury shares[51](index=51&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the same period last year - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (2024: nil)[52](index=52&type=chunk) [Standard Code for Securities Transactions](index=25&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The Company has adopted its own code of conduct no less exacting than the Listing Rules' Standard Code, and established written guidelines for employees. All Directors confirmed compliance with the code, with no non-compliance by relevant employees identified - The Company has adopted its own code of conduct no less exacting than the Standard Code set out in Appendix C3 of the Listing Rules, and has established written guidelines for employees[53](index=53&type=chunk) - All Directors confirmed compliance with their own code and the Standard Code throughout the six months ended June 30, 2025[53](index=53&type=chunk) - The Company is not aware of any non-compliance by relevant employees with the written guidelines for employees[53](index=53&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Events%20After%20the%20Reporting%20Period) Save as disclosed in this announcement, there have been no significant events after June 30, 2025, and up to the date of this announcement - There have been no significant events after June 30, 2025, and up to the date of this announcement[54](index=54&type=chunk) [Corporate Governance](index=26&type=section&id=Corporate%20Governance) The Company is committed to maintaining high corporate governance standards and has adopted the Corporate Governance Code in Appendix C1 Part 2 of the Listing Rules. Despite the Chairman and CEO roles being combined and independent non-executive directors missing a general meeting, the Board believes this structure benefits shareholders overall - The Company has adopted the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules and considers that it has complied with the code during the review period[55](index=55&type=chunk) - The roles of Chairman and Chief Executive Officer are combined and held by Mr. Zeng Guangsheng, which the Board believes provides strong and consistent leadership, benefiting shareholders as a whole[56](index=56&type=chunk) - Non-executive Director Mr. Chen Kuangguo and Independent Non-executive Director Mr. Yang Rusheng were unable to attend the Annual General Meeting held on May 16, 2025, due to other work commitments, constituting a deviation from Corporate Governance Code Provision C.1.5[56](index=56&type=chunk) - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed matters relating to risk management, internal control, and financial reporting procedures[55](index=55&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=27&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement has been published on the Stock Exchange's website and the Company's website. The interim report will be dispatched to shareholders and published on the websites in due course - This interim results announcement has been published on the website of the Stock Exchange (www.hkexnews.hk) and the Company's website (http://www.ipegroup.com)[57](index=57&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the aforementioned websites in due course[57](index=57&type=chunk) [Board of Directors](index=27&type=section&id=Board%20of%20Directors) As of the date of this announcement, the Board of Directors comprises seven directors, including two executive directors (Mr. Zeng Guangsheng, also Chairman and CEO; Mr. Wu Kaiping), two non-executive directors (Ms. Zeng Jing; Mr. Chen Kuangguo), and three independent non-executive directors (Mr. Yang Rusheng; Mr. Zhang Zhenyu; Mr. Zhu Jianbiao) - The Board of Directors consists of seven directors: Mr. Zeng Guangsheng (Chairman and Chief Executive Officer), Mr. Wu Kaiping (Executive Director), Ms. Zeng Jing, Mr. Chen Kuangguo (Non-executive Directors), Mr. Yang Rusheng, Mr. Zhang Zhenyu, and Mr. Zhu Jianbiao (Independent Non-executive Directors)[58](index=58&type=chunk)

[Chairman's Report](index=1&type=section&id=Chairman's%20Report) [Interim Results and Dividends](index=1&type=section&id=Interim%20Results%20and%20Dividends) The Group's underlying profit attributable to shareholders decreased by 44% to HK$3.048 billion, primarily due to one-off gains in the prior period, with an interim dividend of HK$0.50 per share declared | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Underlying Profit Attributable to Shareholders | 3,048 | 5,441 | -44% | | Reported Profit Attributable to Shareholders | 2,908 | 3,174 | -8% | | Basic Earnings Per Share (HK$) | 0.63 | 1.12 | -43.75% | | Reported Earnings Per Share (HK$) | 0.60 | 0.66 | -9.09% | | Interim Dividend Per Share (HK$) | 0.50 | 0.50 | 0% | - The decrease in underlying profit was primarily due to attributable gains of approximately **HK$2.503 billion** in the prior period from government land resumption in new development areas and the disposal of a controlling interest in an investment property in North Point ("The Point") [2](index=2&type=chunk) - Fair value loss on completed investment properties and investment properties under development significantly reduced to **HK$140 million**, a substantial decrease from **HK$2.267 billion** in the prior period [2](index=2&type=chunk) [Suspension of Share Registration](index=1&type=section&id=Suspension%20of%20Share%20Registration) Share registration will be suspended from September 5 to September 8, 2025, to determine eligibility for the interim dividend, which will be paid on September 17, 2025 - Share registration will be suspended from **September 5 to September 8, 2025**, and the interim dividend will be paid on **September 17, 2025** [4](index=4&type=chunk) [Business Review](index=2&type=section&id=Business%20Review) [Hong Kong](index=2&type=section&id=Hong%20Kong) Hong Kong operations benefited from government policies and interest rate adjustments, improving the property market, while rental properties maintained stable occupancy and construction achieved industry recognition - The Hong Kong SAR Government's proactive measures to attract tourists and talent, develop an international education hub, coupled with stamp duty reductions and lower HKD bank interest rates, are favorable for the local property market [5](index=5&type=chunk) [Property Sales (Hong Kong)](index=2&type=section&id=Property%20Sales%20(Hong%20Kong)) Hong Kong property development revenue decreased by 22% to HK$3.812 billion, with pre-tax profit significantly lower due to prior period land resumption gains, though new projects achieved strong sales | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Attributable Hong Kong Property Development Revenue | 3,812 | 4,887 | -22% | | Attributable Hong Kong Property Development Pre-tax Profit | 310 | 1,499 | -79.3% | | Attributable Contracted Sales (Total) | 6,298 | N/A | N/A | | Unrecognized Attributable Contracted Sales (Total) | 10,424 | N/A | N/A | - The decrease in profit was primarily due to an attributable pre-tax gain of approximately **HK$1.055 billion** in the prior period from government land resumption in new development areas [5](index=5&type=chunk) - Several urban residential projects were launched, including "Belgravia Place" Phase 2 in Cheung Sha Wan, "The Southside" in Ma Tau Kok, and "Miami Quay" Phase 2 in Kai Tak, with "The Southside" achieving strong sales, selling all **181** residential units on its launch day [6](index=6&type=chunk) [Property Development (Hong Kong)](index=3&type=section&id=Property%20Development%20(Hong%20Kong)) The Group successfully completed a land exchange application in Hung Shui Kiu/Ha Tsuen, with substantial urban redevelopment projects planned for sale or lease in 2025 H2 and beyond, maintaining a robust development pipeline | Location | Development Type | Site Area (sq ft) | Group's Interest (%) | Estimated Attributable Floor Area (sq ft) | Attributable Land Premium (HK$ million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Hung Shui Kiu/Ha Tsuen New Development Area Zone 34B | Commercial/Residential | 178,718 | 50.00 | 580,828 | 931.36 | - Approximately **1.2 million sq ft** of attributable floor area from urban old building redevelopment projects has been allocated for sale in **2025 H2** [7](index=7&type=chunk) | Category | Number of Projects | Remaining Attributable Saleable/Floor Area (million sq ft) | | :--- | :--- | :--- | | Remaining unsold units from major launched development projects | 26 | 1.3 | | Projects planned for launch in 2025 H2 | 10 | 1.5 | | Urban old building redevelopment projects (all property rights acquired or reached compulsory sale threshold) | Multiple | 1.7 | | Central New Waterfront Site 3 | 1 | 1.6 | | Yau Tong Bay Project | 1 | 0.9 | | Hung Shui Kiu/Ha Tsuen New Development Area Zone 34B | 1 | 0.6 | | Other properties for development/under development | Multiple | 4.3 | | **Total** | **N/A** | **11.9** | [Land Bank](index=11&type=section&id=Land%20Bank) As of June 30, 2025, the Group held approximately 22.9 million sq ft of attributable land bank in Hong Kong, including 11.9 million sq ft for sale/development and 11.0 million sq ft of completed investment properties, actively participating in new development areas | Land Bank Category | Attributable Floor Area (million sq ft) | | :--- | :--- | | Properties for sale/development/under development | 10.6 | | Remaining saleable floor area from major launched projects | 1.3 | | Completed rental properties (including hotels) | 11.0 | | **Total** | **22.9** | - Urban old building redevelopment projects are expected to provide approximately **1.7 million sq ft** of attributable floor area for sale or lease in **2026 or later** [18](index=18&type=chunk) | New Territories Land Bank Region | Attributable Land Area (million sq ft) | | :--- | :--- | | Yuen Long District | 25.8 | | North District | 12.1 | | Tai Po District | 3.4 | | Tuen Mun District and Others | 0.6 | | **Total** | **41.9** | - The Group owns approximately **6.1 million sq ft** of attributable land in San Tin, "Northern Metropolis", of which approximately **0.334 million sq ft** will be resumed by the government [22](index=22&type=chunk) - An additional approximately **0.187 million sq ft** of the Group's land will be resumed by the government for the construction of the Northern Link main line, with expected cash compensation totaling approximately **HK$540 million** [23](index=23&type=chunk) [Rental Properties (Hong Kong)](index=14&type=section&id=Rental%20Properties%20(Hong%20Kong)) Hong Kong's attributable gross rental income slightly increased to HK$3.411 billion, but pre-tax net rental income decreased by 1% to HK$2.483 billion, with major rental properties maintaining an average occupancy rate of 93% | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Attributable Gross Rental Income | 3,411 | 3,396 | +0.4% | | Attributable Pre-tax Net Rental Income | 2,483 | 2,512 | -1% | | IFC Attributable Gross Rental Income | 803 | 819 | -2% | | Major Rental Properties Average Occupancy Rate | 93% | N/A | N/A | | Category | Attributable Floor Area (million sq ft) | Percentage (%) | | :--- | :--- | :--- | | Shopping Malls or Retail Shops | 5.7 | 54 | | Offices | 4.2 | 40 | | Industrial | 0.2 | 2 | | Residential and Serviced Apartments | 0.4 | 4 | | **Total** | **10.5** | **100** | [Retail Property Portfolio](index=15&type=section&id=Retail%20Property%20Portfolio) Despite economic uncertainties and changing consumption patterns, the Group's retail property portfolio maintained high occupancy rates, successfully attracting footfall and stimulating consumption through tenant mix adjustments and marketing strategies - The Group's retail property portfolio maintained high overall occupancy rates, successfully attracting a large number of family customers by introducing specialty restaurants, lifestyle stores, and beauty brands, and organizing various marketing activities [26](index=26&type=chunk) - MCP (Metro City Plaza) and Maritime Square won "Best Shopping Mall Creative – Hong Kong" and "Best Regional Shopping Mall – Hong Kong" awards, respectively [26](index=26&type=chunk) - Leasing interest for the podium malls of two large urban redevelopment projects in Tai Kok Tsui and Hung Hom was strong, expected to further enhance the Group's rental income [27](index=27&type=chunk) [Office Property Portfolio](index=16&type=section&id=Office%20Property%20Portfolio) Despite weak office leasing demand in Hong Kong, the Group's premium office property portfolio performed stably, with major properties maintaining 90% or higher occupancy, and "The Henderson" and a new Central waterfront project securing significant leases - Overall occupancy rates for IFC in Central, AIA Central in North Point, and the Kowloon East office portfolio remained at approximately **90% or above** [28](index=28&type=chunk) - "The Henderson" achieved an occupancy rate of approximately **80%**, attracting premium tenants such as Christie's, Audemars Piguet, and Carlyle, thereby solidifying the Group's recurring income base [29](index=29&type=chunk) - Phase 1 of the Central New Waterfront flagship project secured a lease with quantitative trading firm "Jane Street Asia Limited" for over **223,000 sq ft**, setting a decades-long record for office leasing in Central's core business district [30](index=30&type=chunk) [Construction](index=17&type=section&id=Construction) The Group received "Developer of the Year – Hong Kong" and "Luxury Residential Development of the Year – Hong Kong" awards, with several residential projects achieving five-star ratings and four development projects completed during the period - The Group won "Developer of the Year – Hong Kong" and "Luxury Residential Development of the Year – Hong Kong" at the **2025 Asia Property Awards** [31](index=31&type=chunk) - "Baker Circle • Euston" in Hung Hom and "Square Mile" in Mong Kok were both rated five-star residential estates by the Hong Kong Institute of Surveyors [31](index=31&type=chunk) | Project Name and Location | Development Type | Group's Interest (%) | Attributable Floor Area (sq ft) | | :--- | :--- | :--- | :--- | | Belgravia Place Phase 1 (Cheung Sha Wan) | Commercial/Residential | 100.00 | 293,566 | | The Horizon (Cheung Sha Wan) | Residential | 100.00 | 171,664 | | Square Mile (Mong Kok) | Commercial/Residential | 100.00 | 88,367 | | The Forest (Tai Po) | Commercial/Residential | 100.00 | 49,077 | | **Total** | **N/A** | **N/A** | **602,674** | [Property Management (Hong Kong)](index=18&type=section&id=Property%20Management%20(Hong%20Kong)) The Group's property management companies manage over 85,000 residential and industrial/commercial units, 10 million sq ft of retail and office space, and 20,000 parking spaces, maintaining industry leadership with integrated management systems and community engagement - The Group's property management member companies manage over **85,000** residential and industrial/commercial units, **10 million sq ft** of retail and office space, and **20,000** parking spaces [33](index=33&type=chunk) - Integrated management systems compliant with **ISO 9001, ISO 10002, ISO 14001, and ISO 45001** have been adopted, earning recognitions such as the "Hong Kong Service Award for Excellence" and "Q-Mark Service Scheme" [33](index=33&type=chunk) - The "Year of Vitality" theme promoted public awareness of physical and mental well-being, organizing various sports, music, and environmental activities in collaboration with charitable organizations [33](index=33&type=chunk) [Mainland China](index=19&type=section&id=Mainland%20China) Mainland China's real estate market operated steadily with government support, strong performance in tier-one cities, and the Group's property sales and rental income impacted by reduced project completions and market pressures [Real Estate Market Overview](index=19&type=section&id=Real%20Estate%20Market%20Overview) In H1 2025, local governments introduced pro-housing policies and financial easing measures, boosting demand and market confidence, leading to a stable overall market with resilient tier-one cities and easing inventory pressure in tier-two cities - Local governments introduced pro-housing policies and financial easing measures, effectively boosting demand, reducing homebuyer costs, and enhancing market confidence [34](index=34&type=chunk) - The central government's implementation of new residential policies injected new impetus into real estate development, ensuring overall market stability [34](index=34&type=chunk) - Tier-one cities showed greater resilience, while tier-two cities experienced a deep consolidation, gradually easing inventory pressure [34](index=34&type=chunk) [Completed Development Projects](index=19&type=section&id=Completed%20Development%20Projects) The Group completed four development projects in Mainland China during the period, totaling 1.04 million sq ft of attributable floor area, including office and commercial projects in Shanghai and residential/commercial projects in Chengdu, Chongqing, and Tianjin | Project Name | Use | Group's Interest (%) | Attributable Floor Area (million sq ft) | | :--- | :--- | :--- | :--- | | Shanghai "The Metropolis Commercial Center" | Office and Commercial | 51 | 0.42 | | Chengdu "River & Mountain Mansion" Phase 2 | Residential | 50 | 0.28 | | Chongqing "Platinum Central" Phase 2 | Residential | 50 | 0.08 | | Tianjin "Metropolitan Riverfront" Phase 2 | Residential and Commercial | 50 | 0.26 | | **Total** | **N/A** | **N/A** | **1.04** | [Property Investment](index=20&type=section&id=Property%20Investment) The Group concentrated resources on leasing major property investment projects like Guangzhou "The Metropolis" and Shanghai "The West Bund Center", achieving over 80% occupancy, with new completions expected to boost future recurring income - Guangzhou "The Metropolis" two Grade A office towers and Shanghai "The Metropolis Plaza" both achieved over **80% occupancy** by the end of June 2025 [36](index=36&type=chunk) - The newly completed Shanghai "The Metropolis Commercial Center" and the nearing completion Shenzhen "Cloud Tower" in Nanshan District are expected to increase rental income [36](index=36&type=chunk) [Property Development (Mainland China)](index=20&type=section&id=Property%20Development%20(Mainland%20China)) The Group continues to explore development opportunities in tier-one and key tier-two cities, holding approximately 9.54 million sq ft of attributable land bank across 14 cities, with about 65% designated for residential development - As of the end of June 2025, in addition to approximately **2.3 million sq ft** of attributable inventory, the Group held developable land bank totaling approximately **9.54 million sq ft** of attributable floor area across **14 cities** [37](index=37&type=chunk) | Land Bank Use | Group's Estimated Attributable Developable Floor Area (million sq ft) | Percentage (%) | | :--- | :--- | :--- | | Residential | 6.19 | 65 | | Office | 1.68 | 18 | | Commercial | 1.37 | 14 | | Other | 0.30 | 3 | | **Total** | **9.54** | **100** | [Property Sales (Mainland China)](index=22&type=section&id=Property%20Sales%20(Mainland%20China)) Attributable Mainland property development revenue decreased by 16% to RMB2.177 billion (HK$2.361 billion) due to fewer completed pre-sold residential properties, resulting in a pre-tax loss of RMB100 million (HK$108 million) | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Attributable Mainland Property Development Revenue | 2,177 | 2,590 | -16% | | Attributable Pre-tax Loss | 100 | 25 | +300% | | Attributable Contracted Sales (Total) | 1,135 | 1,830 | -38% | | Attributable Sales Floor Area (10,000 sq ft) | 90 | 114 | -21% | - Unrecognized attributable contracted sales totaled approximately **HK$2.275 billion**, of which approximately **HK$621 million** is expected to be recognized in **2025 H2** upon property completion and delivery to buyers [40](index=40&type=chunk) [Rental Properties (Mainland China)](index=22&type=section&id=Rental%20Properties%20(Mainland%20China)) The Group's attributable completed rental property portfolio in Mainland China expanded to approximately 13.4 million sq ft, but gross rental income decreased by 10% (RMB terms) and attributable gross rental income by 12% to HK$922 million due to economic uncertainties and competition | Category | Attributable Floor Area (million sq ft) | Percentage (%) | | :--- | :--- | :--- | | Office | 9.5 | 71 | | Commercial | 3.9 | 29 | | **Total** | **13.4** | **100** | | Region | Attributable Floor Area (million sq ft) | Percentage (%) | | :--- | :--- | :--- | | Beijing | 2.2 | 16 | | Shanghai | 7.2 | 54 | | Guangzhou | 2.6 | 19 | | Other | 1.4 | 11 | | **Total** | **13.4** | **100** | | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Rental Income (RMB terms) | N/A | N/A | -10% | | Attributable Gross Rental Income (HK$ terms) | 922 | 1,047 | -12% | | Attributable Pre-tax Net Rental Income (HK$ terms) | 661 | 764 | -13% | - Beijing "World Financial Centre" occupancy rate declined to **60%**, while Shanghai "Henderson Metropolitan" office occupancy was **97%** and retail **93%** [42](index=42&type=chunk) - Shanghai "The West Bund Center" leasing interest was strong, with occupancy rate increasing to over **60%** [43](index=43&type=chunk) [Property Management (Mainland China)](index=24&type=section&id=Property%20Management%20(Mainland%20China)) Shanghai Star Property Management manages approximately 14 million sq ft of projects in Mainland China, holding multiple ISO certifications and receiving numerous awards for sustainable development and professional management - Shanghai Star Property Management manages approximately **14 million sq ft** of projects in Mainland China, including **5,600** parking spaces [45](index=45&type=chunk) - Star Property has obtained management standard certifications compliant with **ISO 9001, ISO 14001, ISO 45001, ISO 10002, and ISO 50001** [45](index=45&type=chunk) - Star Property received the **WELL Health-Safety Leader Award** and was recognized as a "Top 10 China Office Property Service Provider 2025" and "Leading China Property ESG Sustainable Development Enterprise 2025" [46](index=46&type=chunk) [Henderson Land Development Company Limited](index=25&type=section&id=Henderson%20Land%20Development%20Company%20Limited) Henderson Land Development's attributable loss narrowed to HK$41 million in H1 2025, operating through Citistore and Unicorn department stores/supermarkets, with member loyalty programs integrated into H•COINS | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Attributable Loss to Shareholders | 41 | 69 | -40.58% | | Citistore Self-operated Goods Sales Revenue | 128 | 145 | -11.72% | | Citistore Total Commission Income | 138 | 155 | -11% | | Citistore After-tax Loss | 7 | 11 | -36.36% | | Unicorn Total Sales | 582 | 588 | -1% | | Unicorn After-tax Loss | 30 | 53 | -43.39% | - Henderson Land Development primarily operates through **five "Citistore" department stores**, **one "C-Life" homeware store**, and **two "APITA" or "UNY" department stores** and **two "UNY" supermarkets** [47](index=47&type=chunk) - The "CU APP" member loyalty program has been integrated with the Company's "H•COINS" member loyalty program, providing a more convenient shopping experience for **860,000 members** [47](index=47&type=chunk) [Overall Performance (HLD)](index=25&type=section&id=Overall%20Performance%20(HLD)) Henderson Land Development's attributable loss for H1 2025 narrowed to HK$41 million, an improvement from HK$69 million in the prior period | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Attributable Loss to Shareholders | 41 | 69 | -40.58% | [Citistore](index=25&type=section&id=Citistore) Citistore's total sales, including self-operated and consignment goods, decreased by 13%, with self-operated goods revenue down 12% to HK$128 million, and a narrowed after-tax loss of HK$7 million | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Sales | N/A | N/A | -13% | | Self-operated Goods Sales Revenue | 128 | 145 | -11.72% | | Gross Profit Margin | 32% | N/A | N/A | | Total Commission Income | 138 | 155 | -11% | | After-tax Loss | 7 | 11 | -36.36% | [Unicorn](index=25&type=section&id=Unicorn) Unicorn's total sales, including self-operated and consignment goods, slightly decreased by 1% to HK$582 million, with an after-tax loss of HK$30 million, a reduction from the prior period | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Sales | 582 | 588 | -1% | | After-tax Loss | 30 | 53 | -43.39% | [Outlook (HLD)](index=25&type=section&id=Outlook%20(HLD)) Henderson Land Development will continue strict cost control and operational streamlining while expanding its loyalty program and leveraging technology to improve operations in a challenging environment - Henderson Land Development will continue to implement strict cost control, carefully reviewing all expenses and streamlining operational processes [49](index=49&type=chunk) - Efforts will focus on expanding the member base of its loyalty program and utilizing technology to understand customer needs, with the aim of improving operations [49](index=49&type=chunk) [Miramar Hotel and Investment Company, Limited](index=26&type=section&id=Miramar%20Hotel%20and%20Investment%20Company%2C%20Limited) Miramar's revenue decreased by 7.6% to HK$1.295 billion, and attributable profit by 13.7% to HK$322.1 million, with underlying profit also down, while hotel occupancy was affected by upgrades, and rental income remained stable | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,295 | 1,402 | -7.6% | | Profit Attributable to Shareholders | 322.1 | 373.3 | -13.7% | | Underlying Profit Attributable to Shareholders | 341.8 | 397.9 | -14.1% | [Overall Performance (Miramar)](index=26&type=section&id=Overall%20Performance%20(Miramar)) Miramar's revenue for H1 2025 decreased by 7.6% to HK$1.295 billion, with attributable profit down 13.7% to HK$322.1 million, and underlying profit (excluding fair value changes) decreasing by 14.1% to HK$341.8 million | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,295 | 1,402 | -7.6% | | Profit Attributable to Shareholders | 322.1 | 373.3 | -13.7% | | Underlying Profit Attributable to Shareholders | 341.8 | 397.9 | -14.1% | [Hotel and Serviced Apartment Business](index=26&type=section&id=Hotel%20and%20Serviced%20Apartment%20Business) Hotel and serviced apartment total revenue decreased by 5.7% to HK$280 million, and EBITDA by 29.0% to HK$53.5 million, with occupancy rates slightly down due to major IoT upgrade works at The Mira Hong Kong | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 280 | 297 | -5.7% | | EBITDA | 53.5 | 75.3 | -29.0% | | The Mira Hong Kong Average Occupancy Rate | 90.3% | 91.6% | -1.3% | | Hotel ICON Average Occupancy Rate | 92.9% | 94.6% | -1.7% | - The Mira Hong Kong underwent extensive smart IoT facility upgrade works starting in June, affecting approximately **10%** of room availability monthly [51](index=51&type=chunk) - The Mira Hong Kong and Hotel ICON both received the internationally renowned Muslim travel indicator "CrescentRating" **5-level Muslim-friendly hotel certification** [51](index=51&type=chunk) [Rental Business](index=26&type=section&id=Rental%20Business) Rental business revenue decreased by 3.9% to HK$385.5 million, and EBITDA by 5.2% to HK$322.8 million, with a fair value reduction of HK$14.7 million for investment properties, while office and retail occupancy rates remained above 90% | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 385.5 | 401.1 | -3.9% | | EBITDA | 322.8 | 340.5 | -5.2% | | Total Investment Property Fair Value Decrease | 14.7 | N/A | N/A | | Office and Retail Average Occupancy Rate | >90% | N/A | N/A | - Miramar continuously optimized its asset management strategy, meticulously adjusting the tenant mix to significantly increase the proportion of semi-retail tenants in office properties to nearly **60%** [52](index=52&type=chunk) [Food and Beverage Business](index=26&type=section&id=Food%20and%20Beverage%20Business) Food and beverage total revenue decreased by 2.4% to HK$139.4 million, with an EBITDA loss of HK$2.8 million, which turned into a profit of HK$3.8 million after excluding a one-off provision for restaurant closures | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 139.4 | 142.8 | -2.4% | | EBITDA Loss | 2.8 | N/A | N/A | | EBITDA Excluding One-off Loss Provision | 3.8 | N/A | N/A | - "The Masterpiece" became Hong Kong's first high-end Chinese restaurant to receive "Halal-Friendly" certification and was awarded one diamond by the **Black Pearl Restaurant Guide 2025** [53](index=53&type=chunk) [Travel Business](index=26&type=section&id=Travel%20Business) Travel business revenue decreased by 12.4% to HK$490.5 million, and EBITDA by 61.6% to HK$15.4 million, primarily due to weak local economy, exchange rate fluctuations, and geopolitical factors dampening travel demand | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 490.5 | 560 | -12.4% | | EBITDA | 15.4 | 40 | -61.6% | - The weak local economy, coupled with exchange rate volatility and geopolitical safety factors, further suppressed travel demand, especially for long-haul and high-end travel products [54](index=54&type=chunk) [The Hong Kong and China Gas Company Limited](index=27&type=section&id=The%20Hong%20Kong%20and%20China%20Gas%20Company%20Limited) Hong Kong and China Gas reported HK$27.514 billion in revenue, with a 3% increase in after-tax operating profit to HK$3.996 billion, but a 3% decrease in attributable profit to HK$2.964 billion, while actively expanding gas sources and new energy businesses | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 27,514 | N/A | N/A | | After-tax Operating Profit | 3,996 | 3,880 | +3% | | Profit Attributable to Shareholders | 2,964 | 3,055 | -3% | | Core Profit Excluding Borrowing Exchange Gains/Losses | N/A | N/A | +4% | | Towngas Smart Energy Core Profit | 719 | 705 | +2% | [Overall Performance (Towngas)](index=27&type=section&id=Overall%20Performance%20(Towngas)) Hong Kong and China Gas's H1 2025 revenue reached HK$27.514 billion, with after-tax operating profit up 3% to HK$3.996 billion, but attributable profit decreased by 3% to HK$2.964 billion, though core business profit increased by 4% excluding exchange losses | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 27,514 | N/A | N/A | | After-tax Operating Profit | 3,996 | 3,880 | +3% | | Profit Attributable to Shareholders | 2,964 | 3,055 | -3% | | Core Profit Excluding Borrowing Exchange Gains/Losses | N/A | N/A | +4% | | Towngas Smart Energy Core Profit | 719 | 705 | +2% | [Utilities Business](index=27&type=section&id=Utilities%20Business) [Hong Kong Utilities Business](index=27&type=section&id=Hong%20Kong%20Utilities%20Business) Hong Kong gas sales remained largely flat, with over 5,000 new customers, and the company actively promoted gas-fired dehumidification and combined heat and power systems for energy saving and carbon reduction - Hong Kong gas sales were **14.935 billion MJ**, largely flat year-on-year; the customer base increased by over **5,000** to approximately **2.04 million** [56](index=56&type=chunk) - Actively promoting the application of gas-fired dehumidification and combined heat and power systems, with the North District Hospital expansion project introducing a "cold, heat, and power trigeneration" system, expected to save users **HK$5 million** in energy costs and reduce **3,900 tons** of carbon emissions annually [56](index=56&type=chunk) [Mainland China Utilities Business](index=27&type=section&id=Mainland%20China%20Utilities%20Business) Mainland China's city gas sales remained stable with 980,000 new customers and an 8% increase in gas price spread to RMB0.54 per cubic meter, while "Gas+" businesses expanded and water/environmental profits grew - City gas customer base increased by **980,000** in H1, with gas price spread increasing by **8%** to **RMB0.54 per cubic meter** [57](index=57&type=chunk) - Developed **75** new large industrial and commercial customers, adding an annual gas consumption scale of **240 million cubic meters**, and achieved over **20%** energy savings for users in dyeing industry direct-fired heat exchange retrofits [57](index=57&type=chunk) - Focused on expanding "Gas+" businesses, including energy-saving retrofits for industrial and commercial customers, energy management for public institutions, and integrated energy solutions for industrial parks [57](index=57&type=chunk) - Water and environmental businesses achieved profit growth due to increased sales volume and cost optimization [57](index=57&type=chunk)[58](index=58&type=chunk) [Gas Source Business](index=28&type=section&id=Gas%20Source%20Business) Hong Kong and China Gas's Gas Source segment secured long-term international LNG agreements totaling 1.5 million tons annually from 2027, reducing procurement costs, and the Jintan gas storage facility in Changzhou, Jiangsu, entered a multi-reservoir operation phase - The Gas Source segment optimizes benefits for Towngas city gas enterprises through a "unified negotiation, separate signing" approach, where Hong Kong and China Gas directly negotiates gas supply and pricing with upstream suppliers [59](index=59&type=chunk) - Long-term international LNG agreements for a total of **1.5 million tons** annually have been secured, to be implemented progressively from **2027**, with the first batch of contracts for approximately **0.5 million tons** [59](index=59&type=chunk) - The Jintan gas storage facility in Changzhou, Jiangsu, has entered a new phase of multi-reservoir synchronized operation, enhancing overall emergency supply and market peak shaving efficiency [59](index=59&type=chunk) [Growth Businesses](index=28&type=section&id=Growth%20Businesses) The Group actively developed renewable energy, sustainable aviation fuel (SAF), green methanol, and hydrogen businesses, achieving significant growth in solar power generation, securing SAF supply agreements, expanding green methanol production, and launching hydrogen energy projects [Renewable Energy Business](index=28&type=section&id=Renewable%20Energy%20Business) As of June 30, 2025, 128 zero-carbon smart industrial parks were established across 24 provincial regions, with distributed solar PV capacity reaching 2.6 GW and solar power sales increasing by 44% to 1.18 billion kWh - **128** zero-carbon smart industrial parks have been established across **24** provincial regions nationwide; industrial and commercial distributed PV installed capacity reached **2.6 GW** [60](index=60&type=chunk) | Indicator | 2025 H1 | YoY Change (%) | | :--- | :--- | :--- | | Solar Power Sales | 1.18 billion kWh | +44% | | Power Trading Settlement Volume | 3.64 billion kWh | +14% | - Actively developing "Energy as a Service" (EaaS) to build an integrated "PV + storage + power sales" carbon reduction business model [60](index=60&type=chunk) - Successfully issued "Zero-Carbon Smart Phase 2" asset-backed special plan (quasi-REIT) products, raising approximately **RMB470 million**, with further issuance planned for H2 [61](index=61&type=chunk) [Sustainable Aviation Fuel](index=28&type=section&id=Sustainable%20Aviation%20Fuel) EcoCeres, a strategic shareholder incubated by Hong Kong and China Gas, secured a multi-year SAF supply agreement with British Airways, aiming to reduce approximately 400,000 tons of carbon emissions, with a new Malaysian plant expected to commence production this year - EcoCeres, Inc., a strategic shareholder incubated by Hong Kong and China Gas, signed a multi-year Sustainable Aviation Fuel (SAF) supply agreement with British Airways, which will help reduce approximately **400,000 tons** of carbon emissions [62](index=62&type=chunk) - EcoCeres' new plant in Malaysia is expected to commence production this year, with an annual total capacity exceeding **400,000 tons** [62](index=62&type=chunk) [Green Methanol](index=29&type=section&id=Green%20Methanol) Green methanol products gained market recognition and orders, with full-year sales projected at 20,000 tons, and a new investment platform, VENEX, established with Foshan Gas to expand production capacity in Inner Mongolia and plan a new plant in Foshan - Green methanol products successfully certified and widely recognized by the market, with the business entering a growth phase, securing numerous orders, and full-year sales projected to reach **20,000 tons** [63](index=63&type=chunk) - Completed the establishment of a new investment platform, VENEX, with Foshan Gas Group Co., Ltd., injecting the Inner Mongolia Ordos green methanol plant into VENEX to expand capacity [63](index=63&type=chunk) - Plans to build a new plant in Foshan, Guangdong-Hong Kong-Macao Greater Bay Area, with Phase 1 capacity of **200,000 tons**, expected to commence production in **2027** [63](index=63&type=chunk) [Hydrogen Energy](index=29&type=section&id=Hydrogen%20Energy) Hong Kong's hydrogen energy initiatives include the first public EV hydrogen charging project and hydrogen power generation for the National Games, with the first green hydrogen project at Tseung Kwan O landfill expected to produce 330 kg of green hydrogen daily by 2026 - Hong Kong's first public EV automatic hydrogen charging project has launched and will provide hydrogen power for the **15th National Games golf event venue** [64](index=64&type=chunk) - Hong Kong's first green hydrogen project at the Tseung Kwan O landfill expansion is expected to be completed and operational in **2026**, producing **330 kg of green hydrogen daily** [64](index=64&type=chunk) [Extended Businesses](index=29&type=section&id=Extended%20Businesses) Towngas Smart Energy completed its first round of strategic financing of US$45 million, supporting national expansion and AI-driven digital platform upgrades, while smart kitchen sales grew 25% and comprehensive home insurance sales reached 50% of insurance business - Towngas Smart Energy completed its first round of strategic financing of **US$45 million** in H1, which will support its rapid national scale development, enhance product and service capabilities, and fully apply AI technology to upgrade IoT and other digital platform capabilities [65](index=65&type=chunk) - Smart kitchen business sales increased by **25%** year-on-year in H1; comprehensive home insurance sales accounted for **50%** of insurance business sales [65](index=65&type=chunk) [Outlook (Towngas)](index=29&type=section&id=Outlook%20(Towngas)) Full-year Hong Kong gas sales are expected to remain flat, while Mainland China's city gas pipeline network is maturing, allowing for a lighter asset development model, with growth businesses driving future development - Full-year Hong Kong gas sales are expected to remain largely flat [65](index=65&type=chunk) - Mainland China's city gas pipeline network development is maturing, allowing for reduced capital investment and continued development under a lighter asset model [65](index=65&type=chunk) - The future strategy and goal are to maintain steady progress in utilities and leverage growth businesses as new development drivers [65](index=65&type=chunk) [Hong Kong Ferry (Holdings) Company Limited](index=30&type=section&id=Hong%20Kong%20Ferry%20(Holdings)%20Company%20Limited) Hong Kong Ferry's underlying profit decreased by 19% to HK$69 million, but attributable profit increased by 36% to HK$122 million, with stable property development and investment, increased ferry losses due to engine damage but approved fare hikes, and growing medical and beauty services | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Underlying Profit | 69 | 85 | -19% | | Profit Attributable to Shareholders | 122 | 90 | +36% | [Overall Performance (HK Ferry)](index=30&type=section&id=Overall%20Performance%20(HK%20Ferry)) Hong Kong Ferry's underlying profit for H1 2025 decreased by approximately 19% to HK$69 million, while attributable profit, including fair value changes in investment properties, increased by approximately 36% to HK$122 million | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Underlying Profit | 69 | 85 | -19% | | Profit Attributable to Shareholders | 122 | 90 | +36% | [Property Development and Investment Business](index=30&type=section&id=Property%20Development%20and%20Investment%20Business) Gross rental income from shops and malls decreased by 5% to HK$60 million, with major shop occupancy rates ranging from 80% to 100%, and the company acquired new retail properties in Tsuen Wan for investment | Indicator | 2025 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | | Gross Rental Income from Shops and Malls | 60 | -5% | | "The Avenue" Shop Occupancy Rate | 100% | N/A | | "The Reach" Shop Occupancy Rate | 95% | N/A | | "The Apex" Shop Occupancy Rate | 91% | N/A | | "The Peak Plaza" Occupancy Rate | 87% | N/A | | "The Harbourfront Plaza" Occupancy Rate | 80% | N/A | - Approval was obtained from the Urban Renewal Authority to convert the residential portion of "The Horizon" for youth hostel use, with market-rate rent collection commencing at the end of June this year [67](index=67&type=chunk) - In August 2025, multiple shops in Zone A, G/F of "Tai Hung Fai (Tsuen Wan) Centre" in Tsuen Wan were acquired for **HK$260 million**, with an annualized gross rental yield of approximately **5.6%**, intended for investment [67](index=67&type=chunk) [Ferry, Shipyard and Related Businesses](index=30&type=section&id=Ferry%2C%20Shipyard%20and%20Related%20Businesses) Ferry, shipyard, and related businesses recorded a loss of HK$12.5 million, an increase of HK$9.5 million, primarily due to reduced revenue from "Bauhinia Victoria Harbour Cruise" caused by a damaged ferry engine, though fare increases are expected to mitigate future losses | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | Change (HK$ million) | | :--- | :--- | :--- | :--- | | Loss | 12.5 | 3 | +9.5 | - The increased loss was primarily due to reduced revenue from the "Bauhinia Victoria Harbour Cruise" business as one ferry underwent engine replacement in H1 [68](index=68&type=chunk) - A fare increase for the North Point to Kwun Tong dangerous goods vehicle ferry service was successfully approved by the Transport Department, with new fares effective **April 12, 2025**, expected to reduce losses in H2 [68](index=68&type=chunk) [Medical, Health and Beauty Services](index=30&type=section&id=Medical%2C%20Health%20and%20Beauty%20Services) Medical, health, and beauty services continued to be profitable, with specialized services at H Zentre performing well, a new physiotherapy center planned, and AMOUR Medical Beauty Centre's revenue increasing by 26% to HK$22 million - Specialized services in cardiology, surgery, orthopedics, plastic surgery, and urology are provided at H Zentre in Tsim Sha Tsui, with steady performance and continued profitability [69](index=69&type=chunk) - AMOUR Medical Beauty Centre's revenue was **HK$22 million**, an increase of **26%** compared to the prior period [69](index=69&type=chunk) - While health and beauty businesses did not record net profit, overall EBITDA was positive during the review period [69](index=69&type=chunk) [Sunshine Real Estate Investment Trust](index=31&type=section&id=Sunshine%20Real%20Estate%20Investment%20Trust) Sunshine REIT's revenue decreased by 4.8% to HK$391.2 million, and net property income by 5.4% to HK$307.4 million, resulting in an after-tax loss of HK$172.2 million due to fair value impairment, though distributable income remained relatively stable | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 391.2 | 411 | -4.8% | | Property Operating Expenses | 83.8 | 86.1 | -2.7% | | Net Property Income | 307.4 | 325 | -5.4% | | Cost-to-Income Ratio | 21.4% | N/A | N/A | | Investment Property Fair Value Impairment | 314.3 | N/A | N/A | | After-tax Loss | 172.2 | (79.5) | N/A | | Distributable Income | 168.6 | 171.7 | -1.8% | | Cash Interest Expense | 91.5 | 106.3 | -14% | [Overall Performance (Sunshine REIT)](index=31&type=section&id=Overall%20Performance%20(Sunshine%20REIT)) Sunshine REIT's H1 2025 revenue decreased by 4.8% to HK$391.2 million, with net property income down 5.4% to HK$307.4 million, and an after-tax loss of HK$172.2 million after a HK$314.3 million fair value impairment on investment properties | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 391.2 | 411 | -4.8% | | Net Property Income | 307.4 | 325 | -5.4% | | Investment Property Fair Value Impairment | 314.3 | N/A | N/A | | After-tax Loss | 172.2 | (79.5) | N/A | | Distributable Income | 168.6 | 171.7 | -1.8% | | Cash Interest Expense | 91.5 | 106.3 | -14% | [Property Portfolio Performance](index=31&type=section&id=Property%20Portfolio%20Performance) Sunshine REIT's overall property portfolio occupancy rate decreased to 89.2% as of June 30, 2025, with negative rental reversions of 8.5% for offices and 7.1% for retail, while office passing rents slightly declined and retail remained stable | Indicator | 2025 June 30 | 2024 December 31 | Change | | :--- | :--- | :--- | :--- | | Overall Property Portfolio Occupancy Rate | 89.2% | 91.3% | -2.1% | | Office Occupancy Rate | 90.0% | 92.0% | -2.0% | | Retail Occupancy Rate | 87.6% | 90.1% | -2.5% | | Office Negative Rental Reversion | 8.5% | N/A | N/A | | Retail Negative Rental Reversion | 7.1% | N/A | N/A | | Overall Negative Rental Reversion | 7.7% | N/A | N/A | | Office Passing Rent (HK$ per sq ft) | HK$31.7 | HK$32.1 | -1.2% | | Retail Passing Rent (HK$ per sq ft) | HK$65.5 | HK$65.5 | 0% | [Outlook (Sunshine REIT)](index=31&type=section&id=Outlook%20(Sunshine%20REIT)) Hong Kong's commercial property market faces persistent challenges and negative rental reversion pressure, but refinancing for upcoming debt is progressing well, and potential lower financing costs may alleviate pressure on distributable income - Hong Kong's commercial property market continues to face severe headwinds, with negative rental reversion pressure expected to persist [72](index=72&type=chunk) - Refinancing arrangements for borrowings maturing within the next twelve months are progressing well, with favorable indicative pricing reflecting Sunshine REIT's financial strength [72](index=72&type=chunk) - Despite anticipated ongoing operational challenges, potentially lower financing costs may help alleviate pressure on distributable income [72](index=72&type=chunk) [Sustainability](index=33&type=section&id=Sustainability) The Group reaffirmed its "G.I.V.E." sustainability strategy, earning "Developer of the Year – Hong Kong" for the third consecutive year and multiple MIKE Awards, while actively engaging in youth empowerment and ESG challenges - The Group was again awarded "Developer of the Year – Hong Kong" for the **third consecutive year** [74](index=74&type=chunk) - Received the Global and Hong Kong "Most Innovative Knowledge Enterprise (MIKE) Award" for the **fifth time**, recognizing the Group's excellence in innovation [74](index=74&type=chunk) - Actively promoted youth empowerment programs through direct engagement with The Chinese University of Hong Kong, Hong Kong Baptist University, The Hong Kong Polytechnic University, and Chu Hai College of Higher Education, and sponsored ESG challenges [74](index=74&type=chunk) [Outlook (Group)](index=34&type=section&id=Outlook%20(Group)) Improved US-China trade talks and Hong Kong's talent policies are expected to support the property market, with the Group having ample land bank, 5,600 attributable residential units for sale in H2, and HK$12.699 billion in unrecognized property sales - Recent active discussions between the US and China on trade disputes have improved market sentiment [75](index=75&type=chunk) - The Hong Kong SAR Government's talent schemes and development of an international tertiary education hub will help boost housing demand, providing some support to the local property market [75](index=75&type=chunk) - The Group expects to have approximately **5,600** attributable residential units, or about **2.66 million sq ft** of attributable residential floor area, available for sale in Hong Kong in **2025 H2** [76](index=76&type=chunk) | Indicator | Amount (HK$ million) | | :--- | :--- | | Total Unrecognized Attributable Property Sales in Hong Kong and Mainland China | 12,699 | | Sales Amount Expected to be Recognized in 2025 H2 | 8,377 | - The Group currently holds **10.5 million sq ft** and **13.4 million sq ft** of attributable completed rental properties in Hong Kong and Mainland China, respectively [76](index=76&type=chunk) - The Hong Kong and China Gas Company Limited had over **45 million** city gas customers in Mainland China and Hong Kong by the end of June 2025, with its growth businesses expected to generate continuous revenue for the Group [77](index=77&type=chunk) [Group Finance](index=32&type=section&id=Group%20Finance) The Group maintains a robust financial position with stable net debt and gearing ratio, actively utilizing green financing, and possessing ample credit facilities and recurring income to support future development, while managing interest rate and exchange rate risks [Financial Overview](index=32&type=section&id=Financial%20Overview) The Group adheres to prudent financial management, with net debt of HK$67.415 billion and a gearing ratio of 21.1% as of June 30, 2025, and successfully issued HK$8 billion in 0.5% guaranteed convertible bonds in July 2025 | Indicator | 2025 June 30 (HK$ million) | 2024 December 31 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Net Debt | 67,415 | 67,989 | -0.84% | | Gearing Ratio | 21.1% | 21.1% | 0% | | Shareholder Loans | 73,923 | 66,215 | +11.64% | [Financial Resources and Liquidity](index=74&type=section&id=Financial%20Resources%20and%20Liquidity) As of June 30, 2025, the Group's total debt was HK$84.015 billion, with net debt of HK$67.415 billion and a gearing ratio of 21.1%, maintaining ample bank credit facilities and recurring income, while actively hedging interest rate and exchange rate risks | Indicator | 2025 June 30 (HK$ million) | 2024 December 31 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Debt | 84,015 | 85,908 | -2.2% | | Cash and Bank Balances | 16,600 | 17,919 | -7.36% | | Net Debt | 67,415 | 67,989 | -0.84% | | Shareholders' Equity | 320,138 | 322,147 | -0.62% | | Gearing Ratio | 21.1% | 21.1% | 0% | | Interest Coverage Ratio (times) | 1.56 | 2.13 | -26.8% | - As of June 30, 2025, the Group's overall effective annual borrowing interest rate was approximately **3.67%** (2024: approximately **4.50%**) [155](index=155&type=chunk) - **32%** of the Group's total debt (December 31, 2024: **37%**) was fixed-rate borrowings [161](index=161&type=chunk) - The Group entered into hedging arrangements with several counterparty banks, including interest rate swaps, cross-currency swaps, cross-currency interest rate swaps, and forward foreign exchange contracts, totaling **HK$16.018 billion**, representing **19%** of total debt [165](index=165&type=chunk) [Significant Acquisitions and Disposals](index=77&type=section&id=Significant%20Acquisitions%20and%20Disposals) There were no significant acquisitions or disposals during the review period, and a planned transaction to sell a new hotel site in Kimberley Road, Kowloon, to Miramar was terminated, with the Group proceeding to redevelop the property into a new hotel - There were no significant acquisitions or disposals by the Group during the review period [166](index=166&type=chunk) - The proposed transaction to sell the site at **16 Kimberley Road, Kowloon**, and its new hotel to Miramar was terminated due to the failure of Miramar's independent shareholders to pass an ordinary resolution [167](index=167&type=chunk) - The Group will proceed with the demolition of the existing building on the property and redevelop it into a new hotel according to approved building plans [167](index=167&type=chunk) [Resumption of Certain Land by HKSAR Government](index=77&type=section&id=Resumption%20of%20Certain%20Land%20by%20HKSAR%20Government) In H1 2025, the HKSAR Government resumed approximately 330,000 sq ft of the Group's developable leasehold land in Yuen Long South and Kam Tin for HK$353 million cash compensation, recognizing a pre-tax attributable gain of HK$240 million | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | | :--- | :--- | :--- | | Cash Compensation for Government Land Resumption | 353 | 1,860 | | Attributable Pre-tax Gain | 240 | 1,059 | - As of June 30, 2025, the Hong Kong SAR Government resumed approximately **330,000 sq ft** of the Group's developable leasehold land for sale located in Yuen Long South and Kam Tin, New Territories, Hong Kong [168](index=168&type=chunk) [Pledge of Assets](index=77&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, and December 31, 2024, the Group had not pledged any assets of its subsidiaries to any parties - As of **June 30, 2025**, and **December 31, 2024**, the Group had not pledged any assets of its subsidiaries to any parties [169](index=169&type=chunk) [Capital Commitments](index=78&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group's capital commitments decreased to HK$16.957 billion, with attributable capital commitments in joint ventures and certain associates also reduced to HK$3.993 billion | Indicator | 2025 June 30 (HK$ million) | 2024 December 31 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Group Capital Commitments | 16,957 | 19,030 | -10.89% | | Attributable Capital Commitments in Joint Ventures and Associates | 3,993 | 5,666 | -29.53% | [Contingent Liabilities](index=78&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group's contingent liabilities decreased to HK$12.835 billion, primarily comprising performance guarantees for subsidiaries and joint venture projects, guarantees for Mainland property buyers, and loan guarantees for Kai Tak and To Kwa Wan URA projects | Indicator | 2025 June 30 (HK$ million) | 2024 December 31 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Contingent Liabilities | 12,835 | 14,635 | -12.3% | - Primarily includes performance guarantees for subsidiary and joint venture projects (**HK$239 million**), guarantees for buyers of Mainland property units (**HK$2.523 billion**), and loan guarantees for joint ventures in the Kai Tak Development Area and To Kwa Wan URA projects [171](index=171&type=chunk) [Employees and Remuneration Policy](index=79&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 9,997 full-time employees, a slight increase, with total staff costs rising 4% to HK$1.594 billion, offering competitive remuneration and comprehensive benefits | Indicator | 2025 June 30 | 2024 December 31 | Change (%) | | :--- | :--- | :--- | :--- | | Number of Full-time Employees | 9,997 | 9,970 | +0.27% | | Total Staff Costs (HK$ million) | 1,594 | 1,533 | +4% | [Financial Statements](index=36&type=section&id=Financial%20Statements) [Consolidated Income Statement](index=36&type=section&id=Consolidated%20Income%20Statement) For H1 2025, the Group's revenue decreased by 19% to HK$9.552 billion, with operating profit (before fair value changes) down 34.6% to HK$2.304 billion, and attributable profit decreasing by 8% to HK$2.908 billion | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 9,552 | 11,762 | -19% | | Operating Profit Before Fair Value Changes | 2,304 | 3,518 | -34.6% | | Decrease in Fair Value of Investment Properties | (427) | (146) | +192.5% | | Operating Profit After Fair Value Changes | 1,877 | 3,372 | -44.3% | | Net Finance Costs | (933) | (579) | +61.1% | | Profit Before Tax | 2,562 | 4,271 | -40% | | Income Tax | 430 | (286) | N/A | | Profit for the Period | 2,992 | 3,985 | -24.9% | | Profit Attributable to Shareholders | 2,908 | 3,174 | -8% | | Basic Earnings Per Share (HK$) | 0.63 | 1.12 | -43.75% | | Reported Earnings Per Share (HK$) | 0.60 | 0.66 | -9.09% | [Consolidated Statement of Comprehensive Income](index=38&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) For H1 2025, profit for the period was HK$2.992 billion, with other comprehensive income of HK$1.409 billion, primarily from exchange differences and share of associates/joint ventures, leading to a 95.8% increase in attributable total comprehensive income to HK$4.293 billion | Indicator | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Profit for the Period | 2,992 | 3,985 | -24.9% | | Exchange Differences | 662 | (322) | N/A | | Share of Other Comprehensive Income of Associates and Joint Ventures | 903 | (686) | N/A | | Other Comprehensive Income for the Period | 1,409 | (977) | N/A | | Total Comprehensive Income for the Period | 4,401 | 3,008 | +46.3% | | Total Comprehensive Income Attributable to Shareholders | 4,293 | 2,192 | +95.8% | [Consolidated Statement of Financial Position](index=39&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total non-current assets were HK$417.917 billion, with total current assets of HK$114.654 billion, and total equity attributable to shareholders slightly decreased to HK$320.138 billion | Indicator | 2025 June 30 (HK$ million) | 2024 December 31 (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Investment Properties | 273,871 | 271,874 | +0.73% | | Interests in Associates | 50,669 | 50,564 | +0.21% | | Interests in Joint Ventures | 79,088 | 77,876 | +1.56% | | Total Non-current Assets | 417,917 | 412,247 | +1.38% | | Inventories | 84,234 | 85,608 | -1.61% | | Cash and Bank Balances | 16,600 | 17,919 | -7.36% | | Total Current Assets | 114,654 | 118,993 | -3.65% | | Trade and Other Payables | 24,464 | 26,811 | -8.75% | | Bank Borrowings (Current) | 8,672 | 8,001 | +8.39% | | Guaranteed Notes (Current) | 2,692 | 9,585 | -71.91% | | Total Current Liabilities | 37,251 | 45,811 | -18.69% | | Bank Borrowings (Non-current) | 61,292 | 54,626 | +12.2% | | Loans from Fellow Subsidiaries | 73,923 | 66,215 | +11.64% | | Total Non-current Liabilities | 156,591 | 144,852 | +8.1% | | Net Assets | 338,729 | 340,577 | -0.54% | | Total Equity Attributable to Shareholders | 320,138 | 322,147 | -0.62% | [Notes](index=41&type=section&id=Notes) The notes provide detailed financial information, including review of results, accounting policy changes, revenue breakdown, net other income, fair value changes of investment properties, pre-tax profit analysis, income tax, earnings per share, dividends, segment reporting, inventory, and receivables/payables [Review of Results and Basis of Preparation](index=41&type=section&id=Review%20of%20Results%20and%20Basis%20of%20Preparation) The unaudited condensed interim financial statements were reviewed by KPMG and the Audit Committee, prepared in accordance with Listing Rules and HKAS 34, applying consistent accounting policies with 2024, except for expected 2025 changes - The unaudited condensed interim financial statements were reviewed by KPMG in accordance with **HKSRS 2410** and by the Company's Audit Committee [86](index=86&type=chunk) - The condensed interim financial statements are prepared in accordance with applicable disclosure requirements of the **HKEX Listing Rules** and **HKAS 34 "Interim Financial Reporting"** issued by the Hong Kong Institute of Certified Public Accountants [87](index=87&type=chunk) [Changes in Accounting Policies](index=42&type=section&id=Changes%20in%20Accounting%20Policies) The Group applied amendments to HKAS 21 "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability", which had no material impact on financial performance or position, and did not early adopt any new standards or interpretations - The Group applied amendments to **HKAS 21 "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability"**, but this amendment did not have a material impact on the Group's financial performance or position [90](index=90&type=chunk) - The Group did not apply any new standards or interpretations that are not yet effective for the current accounting period [91](index=91&type=chunk) [Revenue](index=43&type=section&id=Revenue) Group revenue, primarily from property development, rental income, department stores, and hotels, totaled HK$9.552 billion in H1 2025, a 19% decrease, with HK$10.39 billion in unrecognized property sales contracts | Revenue Source | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Property Development (including property sales) | 4,008 | 4,943 | -19% | | Rental Income | 3,363 | 3,459 | -3% | | Department Store Business and Supermarket & Department Store Integrated Business | 745 | 778 | -4% | | Hotel Room Operations Business | 156 | 165 | -5% | | Other Businesses | 1,280 | 2,417 | -47% | | **Total** | **9,552** | **11,762** | **-19%** | - As of June 30, 2025, the cumulative total revenue expected to be recognized in the consolidated income statement in the future from sales contracts signed before property completion for properties in Hong Kong and Mainland China held by Group subsidiaries for development and sale, as well as sales contracts for completed properties awaiting transfer, amounted to **HK$10.39 billion** [94](index=94&type=chunk) [Net Other Income](index=44&type=section&id=Net%20Other%20Income) Net other income significantly decreased to HK$305 million from HK$1.035 billion in the prior period, mainly due to lower government land resumption gains (HK$240 million vs. HK$1.059 billion) and a net exchange gain of HK$84 million | Item | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | | :--- | :--- | :--- | | Net Gain on Disposal of Investment Properties | - | 94 | | Net Provision for Inventories | (69) | (25) | | Gain on Land Resumption | 240 | 1,059 | | Net Exchange Gain/(Loss) | 84 | (26) | | **Net Other Income** | **305** | **1,035** | - The significant decrease in net other income was primarily due to a reduction in land resumption gains from **HK$1.059 billion** in the prior period to **HK$240 million** in the current period [95](index=95&type=chunk) [Decrease in Fair Value of Investment Properties and Investment Properties Under Development](index=45&type=section&id=Decrease%20in%20Fair%20Value%20of%20Investment%20Properties%20and%20Investment%20Properties%20Under%20Development) The Group recorded a net fair value loss of HK$208 million on investment properties and investment properties under development (after non-controlling interests and deferred tax), a significant reduction from HK$665 million in the prior period, with total attributable net fair value loss of HK$132 million | Item | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | | :--- | :--- | :--- | | Net Fair Value Loss of Subsidiaries (after deferred tax and non-controlling interests) | (208) | (665) | | Attributable Net Fair Value Loss of Associates (after deferred tax) | (107) | (87) | | Attributable Net Fair Value Gain/(Loss) of Joint Ventures (after deferred tax) | 183 | (68) | | **Total Attributable Net Fair Value Loss of the Group** | **(132)** | **(820)** | - Valuation of completed investment properties is primarily based on the income capitalization approach, while investment properties under development are valued on a redevelopment basis [96](index=96&type=chunk) [Profit Before Tax](index=48&type=section&id=Profit%20Before%20Tax) For H1 2025, finance costs before capitalization were HK$2.833 billion, with capitalized finance costs of HK$1.628 billion, resulting in post-capitalization finance costs of HK$1.205 billion, while staff costs increased by 4% to HK$1.594 billion | Item | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Finance Costs (before capitalization) | 2,833 | 3,433 | -17.5% | | Less: Amount Capitalized | (1,628) | (2,613) | -37.7% | | Finance Costs (after capitalization) | 1,205 | 820 | +46.95% | | Staff Costs | 1,594 | 1,533 | +4% | | Depreciation and Amortization | 231 | 247 | -6.5% | - Borrowing costs were capitalized at a weighted average annual interest rate ranging from **3.08% to 4.40%** (2024: ranging from **3.36% to 6.01%**) [100](index=100&type=chunk) [Income Tax](index=50&type=section&id=Income%20Tax) Income tax for H1 2025 was a credit of HK$430 million, compared to an expense of HK$286 million in the prior period, comprising current tax provision of HK$315 million and deferred tax credit of HK$745 million | Item | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | | :--- | :--- | :--- | | Hong Kong Profits Tax Provision | 208 | 271 | | Overseas Tax Provision | 100 | 152 | | Land Appreciation Tax Provision/(Over-provision) | 7 | (29) | | Current Period Tax | 315 | 394 | | Deferred Tax | (745) | (108) | | **Income Tax (Credit)/Expense** | **(430)** | **286** | - Hong Kong profits tax provision is calculated at a rate of **16.5%** [102](index=102&type=chunk) - Properties in Mainland China are subject to Land Appreciation Tax at progressive rates from **30% to 60%** on the appreciation amount [102](index=102&type=chunk) [Earnings Per Share](index=51&type=section&id=Earnings%20Per%20Share) For H1 2025, basic earnings per share were HK$0.60, and underlying earnings per share were HK$0.63, with no dilutive potential ordinary shares, and underlying profit (excluding fair value changes) decreased by 44% to HK$3.048 billion | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Basic Earnings Per Share | HK$0.60 | HK$0.66 | | Underlying Earnings Per Share | HK$0.63 | HK$1.12 | | Underlying Profit Attributable to Shareholders (HK$ million) | 3,048 | 5,441 | - The decrease in underlying profit was primarily due to higher cumulative fair value gains from property sales and government land resumption gains in the prior period [104](index=104&type=chunk) [Dividends](index=52&type=section&id=Dividends) The Board declared an interim dividend of HK$0.50 per share, totaling HK$2.421 billion, consistent with the prior period, which was not recognized as a liability at the period-end | Dividend Type | 2025 H1 (HK$ million) | 2024 H1 (HK$ million) | | :--- | :--- | :--- | | Interim Dividend Declared After Period-end (HK$0.50 per share) | 2,421 | 2,421 | | Final Dividend for Previous Financial Year Approved and Paid in Current Interim Period (HK$1.30 per share) | 6,294 | 6,294 | - The interim dividend proposed after the end of the reporting period was not recognized as a liability at the end of the reporting period [106](index=106&type=chunk) [Segment Reporting](index=53&type=section&id=Segment%20Reporting) The Group manages its businesses across property development, property leasing, department stores, hotel operations, other businesses, and utilities/energy, with significant profit contributions from associates and joint ventures | Segment | 2025 H1 Revenue (HK$ million) | 2025 H1 Segment Results (HK$ million) | | :--- | :--- | :--- | | Property Development | 4,008 | 344 | | Property Leasing | 3,363 | 2,427 | | Department Store Business and Supermarket & Department Store Integrated Business | 745 | 29 | | Hotel Room Operations Business | 156 | 36 | | Other Businesses | 1,280 | (30) | | Uti

[Announcement Summary](index=1&type=section&id=%E6%91%98%E8%A6%81) [Key Financial Highlights](index=1&type=section&id=%E4%B8%BB%E8%A6%81%E8%B2%A1%E5%8B%99%E4%BA%AE%E9%BB%9E) Daphne International Holdings Limited demonstrated strong performance in the first half of 2025, with significant growth in revenue, operating profit, and profit attributable to owners of the Company, alongside an increase in basic earnings per share Key Financial Highlights for H1 2025 | Metric | H1 2025 (RMB million) | Change | | :--- | :--- | :--- | | Revenue | 198.3 | increased by 17% | | Operating profit | 70.5 | increased by 24% | | Profit attributable to owners of the Company | 64.7 | increased by 15% | | Basic EPS | RMB 0.033 | - | [Interim Results](index=2&type=section&id=%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE) [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) During the reporting period, the company achieved substantial year-on-year growth in revenue and gross profit, with significant improvements in operating profit and profit for the period, reflecting strong operational efficiency and profitability Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 198,297 | 168,796 | | Cost of sales | (92,184) | (83,027) | | Gross profit | 106,113 | 85,769 | | Other income | 27,114 | 24,948 | | Operating profit | 70,518 | 56,732 | | Profit for the period | 64,599 | 55,860 | | Profit attributable to owners of the Company | 64,685 | 56,055 | | Basic earnings per share | 0.033 | 0.028 | [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) The company's total comprehensive income for the period increased year-on-year, primarily driven by higher profit for the period, but partially offset by other comprehensive loss from exchange differences on translating foreign operations Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the period | 64,599 | 55,860 | | Exchange differences on translating foreign operations | (2,686) | 525 | | Total comprehensive income for the period | 61,913 | 56,385 | | Total comprehensive income attributable to owners of the Company | 61,999 | 56,580 | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) As of June 30, 2025, non-current assets slightly decreased, while other financial assets within current assets significantly increased, and cash and cash equivalents decreased. Both current and non-current liabilities declined, with steady growth in net assets and equity attributable to owners Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Metric | 2025年6月30日 (RMB thousand) | 2024年12月31日 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets | 384,098 | 392,887 | | Current assets | 535,551 | 538,285 | | Current liabilities | 120,370 | 156,934 | | Non-current liabilities | 11,478 | 11,995 | | Net assets | 787,801 | 762,243 | | Equity attributable to owners of the Company | 784,193 | 758,549 | - Other financial assets within current assets significantly increased from **RMB 30,477 thousand** as of December 31, 2024, to **RMB 133,819 thousand** as of June 30, 2025[7](index=7&type=chunk) - Cash and cash equivalents decreased from **RMB 476,170 thousand** as of December 31, 2024, to **RMB 376,643 thousand** as of June 30, 2025[7](index=7&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=5&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [1 General Information](index=5&type=section&id=1%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) Daphne International Holdings Limited and its subsidiaries primarily engage in the licensing, distribution, and sale of footwear products and accessories in Mainland China, with the company registered in the Cayman Islands and listed on the Hong Kong Stock Exchange - The Group primarily engages in the licensing, distribution, and sale of footwear products and accessories in Mainland China[8](index=8&type=chunk) - The Company is a limited company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited[8](index=8&type=chunk) [2 Basis of Preparation](index=5&type=section&id=2%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and have been reviewed by the audit committee and approved by the Board, with no significant impact from new or revised standards adopted during the period - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants[10](index=10&type=chunk) - This statement has been reviewed by the Company's Audit Committee and approved for issue by the Board of Directors on August 20, 2025[9](index=9&type=chunk) - The adoption of amendments to HKAS 21 and HKFRS 1 had no significant impact on the Group's operations or financial position[10](index=10&type=chunk) [3 Revenue and Segment Information](index=6&type=section&id=3%20%E7%87%9F%E6%A5%AD%E6%94%B6%E5%85%A5%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group operates a single reportable segment, primarily deriving revenue from licensing fees and sales of goods to customers in Mainland China - The Group has only one reportable segment, with revenue derived from customers located in Mainland China[12](index=12&type=chunk) Composition of Revenue (For the six months ended June 30) | Source of Revenue | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | License fee income | 85,153 | 68,575 | | Sales of goods | 113,144 | 100,221 | | **Total Revenue** | **198,297** | **168,796** | [4 Other Income](index=6&type=section&id=4%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) The Group's other income primarily consists of gross rental income and interest income, with government grants and other miscellaneous income contributing a smaller portion Composition of Other Income (For the six months ended June 30) | Source of Income | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Gross rental income | 20,941 | 19,281 | | Interest income | 5,487 | 4,703 | | Government grants | 9 | 553 | | Others | 677 | 411 | | **Total Other Income** | **27,114** | **24,948** | [5 Other (Losses)/Gains — Net](index=6&type=section&id=5%20%E5%85%B6%E4%BB%96(%E虧%E6%90%8D)%E2%88%95%E6%94%B6%E7%9B%8A%20%E2%80%94%20%E6%B7%A8%E9%A1%8D) The Group's other net losses were primarily impacted by exchange losses, partially offset by fair value gains on financial assets at fair value through profit or loss and gains on disposal of property, plant and equipment Other (Losses)/Gains — Net (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Fair value gain on financial assets at fair value through profit or loss | 230 | 158 | | Gain on disposal of property, plant and equipment | 6 | - | | Net exchange (loss)/gain | (874) | 545 | | **Net** | **(638)** | **703** | [6 Operating Profit](index=7&type=section&id=6%20%E7%B6%93%E7%87%9F%E7%9B%88%E5%88%A9) Operating profit is stated after deducting various expenses, with cost of inventories sold, employee benefit expenses, and marketing and promotion expenses being major components, and inventory provision significantly decreased year-on-year Operating Profit Deductions (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Auditor's remuneration | 1,003 | 1,083 | | Cost of inventories sold | 92,184 | 83,027 | | Depreciation of investment properties | 8,388 | 8,405 | | Depreciation of property, plant and equipment | 675 | 520 | | Depreciation of right-of-use assets | 1,551 | 2,149 | | Employee benefit expenses | 25,613 | 23,129 | | Marketing and promotion expenses | 11,117 | 5,241 | - Cost of inventories sold includes an inventory provision of **RMB 1,180,000** (2024: RMB 3,339,000), representing a significant year-on-year decrease[16](index=16&type=chunk) [7 Finance Costs](index=7&type=section&id=7%20%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC) Finance costs primarily consist of interest on lease liabilities, which decreased year-on-year during the reporting period Finance Costs (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on lease liabilities | 112 | 193 | [8 Income Tax Expense](index=7&type=section&id=8%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense significantly increased year-on-year, primarily due to tax charges from the utilization of deferred tax assets related to tax losses and the net impact of tax credits from the reversal of excess provisions for deferred income tax liabilities related to unremitted earnings in China Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current income tax – Mainland China | 660 | 732 | | Deferred income tax | 5,178 | - | | **Total Income Tax Expense** | **5,838** | **732** | - The increase in income tax expense was primarily due to tax charges arising from the utilization of deferred tax assets related to tax losses, and the net impact of tax credits from the reversal of excess provisions for deferred income tax liabilities related to unremitted earnings in China from the previous year[18](index=18&type=chunk) [9 Earnings Per Share](index=8&type=section&id=9%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Both basic and diluted earnings per share increased, with diluted earnings per share calculation considering the impact of share option exercises Earnings Per Share Calculation (For the six months ended June 30) | Metric | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic earnings per share | 0.033 | 0.028 | | Diluted earnings per share | 0.032 | 0.028 | - In the first half of 2025, the exercise of share options had a dilutive effect on earnings, with the adjusted weighted average number of shares being **2,028,219,774**[19](index=19&type=chunk) - In the corresponding period of 2024, share options had no dilutive effect as their exercise price was higher than the average market price of the Company's shares, resulting in identical basic and diluted earnings per share[20](index=20&type=chunk) [10 Dividends](index=8&type=section&id=10%20%E8%82%A1%E6%81%AF) The Board does not recommend an interim dividend for the first half of 2025, but the final dividend for 2024, which was accrued or paid, increased compared to the previous year Dividends Accrued or Paid (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Final dividend for the year ended December 31, 2024 | 36,355 | 17,934 | - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[22](index=22&type=chunk) [11 Trade Receivables](index=9&type=section&id=11%20%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E8%B3%B4%E6%AC%BE) Net trade receivables decreased year-on-year, with a lower proportion of receivables within 30 days and an increased proportion of receivables over 60 days in the ageing analysis Net Trade Receivables and Ageing Analysis | Metric | 2025年6月30日 (RMB thousand) | 2024年12月31日 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables – net | 5,844 | 7,235 | | **Ageing analysis (net of loss allowance):** | | | | 0 to 30 days | 2,794 | 5,433 | | 31 to 60 days | 957 | 1,251 | | Over 60 days | 2,093 | 551 | - The Group generally grants credit terms of **30 to 60 days** to its trade customers[23](index=23&type=chunk) [12 Trade Payables](index=9&type=section&id=12%20%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E8%B3%B4%E6%AC%BE) Total trade payables slightly decreased year-on-year, with the majority of payables still falling within the 0 to 30 days ageing category Ageing Analysis of Trade Payables | Ageing | 2025年6月30日 (RMB thousand) | 2024年12月31日 (RMB thousand) | | :--- | :--- | :--- | | 0 to 30 days | 33,074 | 34,729 | | 31 to 60 days | 278 | 43 | | Over 60 days | 2,091 | 2,119 | | **Total Trade Payables** | **35,443** | **36,891** | [Management Discussion and Analysis](index=10&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](index=10&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) In H1 2025, despite global uncertainties, China's economy showed resilience with 5.3% GDP growth, and 'trade-in' policies boosted retail sales amid rational consumer behavior and rising e-commerce competition, prompting the Group to adopt a balanced strategy of brand licensing, wholesale, and direct retail to achieve steady revenue and operating profit growth [Macroeconomic and Market Environment](index=10&type=section&id=%E5%AE%8F%E8%A7%80%E7%B6%93%E6%BF%9F%E8%88%87%E5%B8%82%E5%A0%B4%E7%92%B0%E5%A2%83) In H1 2025, global geopolitical conflicts and market volatility created uncertainty, yet China's GDP grew by 5.3%, demonstrating economic resilience, while 'trade-in' policies boosted retail sales, but consumers shifted to rational spending, and e-commerce continued to grow amidst intensifying competition and the rise of content-driven platforms - In the first half of 2025, China's Gross Domestic Product (GDP) increased by **5.3%** year-on-year[25](index=25&type=chunk) - China's 'trade-in' policy for consumer goods boosted retail sales, with total retail sales of consumer goods increasing by **5.0%** year-on-year[25](index=25&type=chunk) - In the first half of 2025, national online retail sales reached **RMB 7.43 trillion**, representing an **8.5%** year-on-year increase[26](index=26&type=chunk) [Group Performance](index=10&type=section&id=%E9%9B%86%E5%9C%98%E8%A1%A8%E7%8F%BE) The Group implemented a robust and forward-looking strategy, balancing brand licensing, wholesale, and direct retail to strengthen its core 'Daphne' brand and cultivate 'Daphne.Lab', achieving steady growth in revenue and operating profit despite market challenges through optimized operations, enhanced brand licensing, and lean supply chain management - The Group adopted a dual-focus strategy, consolidating the industry-leading position of its core brand 'Daphne' while actively cultivating the 'Daphne.Lab' brand[27](index=27&type=chunk) - For the six months ended June 30, 2025, the Group's total revenue increased by **17%** year-on-year to approximately **RMB 198.3 million**, and operating profit increased by **24%** to approximately **RMB 70.5 million**[28](index=28&type=chunk) - Basic earnings per share were **RMB 0.033**, compared to **RMB 0.028** in the corresponding period of 2024[29](index=29&type=chunk) [Brand Licensing and Distribution Business](index=11&type=section&id=%E5%93%81%E7%89%8C%E6%8E%88%E6%AC%8A%E5%8F%8A%E5%88%86%E9%8A%B7%E6%A5%AD%E5%8B%99) The Group continues to strengthen the 'Daphne' brand's leading position in China's women's footwear industry through brand revitalization, celebrity endorsements, product innovation, and multi-channel marketing, enhancing brand image and market penetration, with significant growth in both license fee income and wholesale sales of goods, and continued expansion of online and offline store count - The 'Daphne' brand announced Chinese celebrity Victoria Song as its global brand ambassador in May 2025 and launched the 'Free Rebirth' fashion campaign[31](index=31&type=chunk) - The Group actively strengthened its brand licensing business, consolidating its influence on mainstream e-commerce platforms like Tmall and JD.com, while also achieving considerable growth on emerging channels such as Douyin and Pinduoduo[32](index=32&type=chunk) Brand Licensing and Distribution Business Revenue (For the six months ended June 30) | Source of Revenue | 2025 (RMB million) | 2024 (RMB million) | Year-on-year growth | | :--- | :--- | :--- | :--- | | License fee income | 85.2 | 68.6 | +24% | | Wholesale sales of goods | 102.7 | 91.5 | +12% | - As of June 30, 2025, the Group had **116** physical stores and **1,150** online stores, all operated by franchisees under the Group's licensing arrangements[33](index=33&type=chunk) [Retail Business](index=12&type=section&id=%E9%9B%B6%E5%94%AE%E6%A5%AD%E5%8B%99) The Group's avant-garde fashion brand 'Daphne.Lab' received acclaim for its unique aesthetics and brand image, enhancing brand awareness and e-commerce growth through collaborations with trendy artists, K-pop dance community events, and celebrity/influencer partnerships, while actively exploring offline retail models and continuously optimizing its supply chain for increased competitiveness - The 'Daphne.Lab' brand received widespread acclaim for its bold and avant-garde aesthetic style and distinct brand image, attracting attention and affection from numerous renowned Chinese and Korean celebrities and K-pop girl group members[34](index=34&type=chunk) - This spring, 'Daphne.Lab' collaborated with a trendy artist to launch the 'Slightly Floral Lollipop Generation 2' co-branded slippers, which received a positive market response[35](index=35&type=chunk) - Currently, the Group operates **2** directly-managed offline and **6** online 'Daphne.Lab' stores, continuously refining its offline strategy based on consumer trends and retail dynamics[36](index=36&type=chunk) - The Group continuously optimizes its supply chain processes to enhance overall efficiency and ensure stringent quality control, enabling a swift response to market demands[36](index=36&type=chunk) [Financial Review](index=13&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group achieved double-digit growth in revenue, operating profit, and profit attributable to owners in H1 2025, with improved operating profit margin and increased basic earnings per share; cash and cash equivalents decreased, but equity attributable to owners grew, and asset liquidity ratio and net debt ratio remained healthy, despite a significant increase in income tax expense [Financial Summary](index=13&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The Group achieved double-digit growth in revenue, operating profit, and profit attributable to owners in H1 2025, with improved operating profit margin and increased basic earnings per share; cash and cash equivalents decreased, but equity attributable to owners grew, and asset liquidity ratio and net debt ratio remained healthy Financial Summary (For the six months ended June 30) | Metric | 2025 (RMB million) | 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 198.3 | 168.8 | +17% | | Other income | 27.1 | 24.9 | +9% | | Operating profit | 70.5 | 56.7 | +24% | | Profit attributable to owners of the Company | 64.7 | 56.1 | +15% | | Operating profit margin (%) | 35.6 | 33.6 | +2.0 percentage points | | Net profit margin (%) | 32.6 | 33.2 | -0.6 percentage points | | Basic earnings per share (RMB) | 0.033 | 0.028 | +18% | | **Balance Sheet Metrics:** | | | | | Cash and cash equivalents (RMB million) | 376.6 | 476.2 | -21% | | Equity attributable to owners of the Company (RMB million) | 784.2 | 758.5 | +3% | | Current ratio (times) | 4.4 | 3.4 | +29% | | Net debt ratio (%) | Net cash | Net cash | N/A | [Revenue and Gross Profit](index=14&type=section&id=%E7%87%9F%E6%A5%AD%E6%94%B6%E5%85%A5%E5%8F%8A%E6%AF%9B%E5%88%A9) The Group's total revenue increased by 17% year-on-year, primarily driven by growth in license fee income, wholesale sales of goods, and retail business, with the gross profit margin for sales of goods improving to 18.5%, reflecting better cost and inventory control Composition of Revenue and Gross Profit (For the six months ended June 30) | Item | 2025 (RMB million) | 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | License fee income | 85.2 | 68.6 | +24% | | Sales of goods – wholesale | 102.7 | 91.5 | +12% | | Sales of goods – retail | 10.4 | 8.7 | +20% | | Total sales of goods | 113.1 | 100.2 | +13% | | Cost of sales | (92.2) | (83.0) | +11% | | Gross profit from sales of goods | 20.9 | 17.2 | +22% | | Gross profit margin from sales of goods | 18.5% | 17.2% | +1.3 percentage points | | Total revenue | 198.3 | 168.8 | +17% | | Total gross profit | 106.1 | 85.8 | +24% | - The increase in license fee income was primarily due to an overall increase in the number of footwear and other product categories licensed to online franchisees[40](index=40&type=chunk) - The improvement in gross profit margin from sales of goods was mainly due to better cost and inventory control[41](index=41&type=chunk) [Other Income](index=15&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income increased by 9% year-on-year, primarily benefiting from higher rental income from investment properties, partly due to the recovery of long-outstanding rents - For the six months ended June 30, 2025, the Group's other income was approximately **RMB 27.1 million** (2024: RMB 24.9 million), primarily comprising gross rental income from investment properties of approximately **RMB 20.9 million** (2024: RMB 19.3 million)[42](index=42&type=chunk) - The increase in gross rental income was mainly due to the recovery of long-outstanding rents from certain tenants[42](index=42&type=chunk) [Operating Expenses](index=15&type=section&id=%E7%B6%93%E7%87%9F%E9%96%8B%E6%94%AF) Overall operating expenses increased, primarily driven by higher marketing and promotion expenses and employee benefit expenses - During the review period, the Group's operating expenses were approximately **RMB 62.7 million**, compared to approximately **RMB 54.0 million** in the corresponding period of 2024[43](index=43&type=chunk) - The overall increase in operating expenses was primarily attributable to higher marketing and promotion expenses and employee benefit expenses[43](index=43&type=chunk) [Operating Profit](index=15&type=section&id=%E7%B6%93%E7%87%9F%E7%9B%88%E5%88%A9) The Group's operating profit increased by 24% year-on-year, reaching approximately RMB 70.5 million, demonstrating strong profitability - For the first half of 2025, the Group recorded an operating profit of approximately **RMB 70.5 million**, an increase of approximately **RMB 13.8 million** or **24%** compared to approximately **RMB 56.7 million** in the corresponding period of 2024[44](index=44&type=chunk) [Finance Costs](index=15&type=section&id=%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC) Finance costs primarily consisted of interest on lease liabilities, which decreased year-on-year during the reporting period - During the review period, interest on lease liabilities was approximately **RMB 0.1 million** (2024: RMB 0.2 million)[45](index=45&type=chunk) [Income Tax Expense](index=15&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense significantly increased, mainly due to the net impact of deferred tax asset utilization and the reversal of excess provisions for deferred income tax liabilities - For the six months ended June 30, 2025, the Group's income tax expense was approximately **RMB 5.8 million**, compared to approximately **RMB 0.7 million** in the corresponding period last year[46](index=46&type=chunk) - The increase in income tax expense was primarily due to tax charges arising from the utilization of deferred tax assets related to tax losses, and the net impact of tax credits from the reversal of excess provisions for deferred income tax liabilities related to unremitted earnings in China from the previous year[46](index=46&type=chunk) [Profit Attributable to Owners of the Company](index=15&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%B1%E6%87%89%E4%BD%B5%E7%9B%88%E5%88%A9) Profit attributable to owners of the Company increased by 15% year-on-year, with basic earnings per share rising to RMB 0.033 - For the six months ended June 30, 2025, profit attributable to owners of the Company was approximately **RMB 64.7 million** (2024: RMB 56.1 million), representing an increase of approximately **RMB 8.6 million** or **15%** compared to the corresponding period of 2024[47](index=47&type=chunk) - During the review period, basic earnings per share were **RMB 0.033** (2024: RMB 0.028)[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%E6%9E%B6%E6%A7%8B) As of June 30, 2025, cash and cash equivalents decreased primarily due to fixed deposit placements and dividend payments, but the Group maintained a net cash position and an improved current ratio, holding financial investments to optimize returns on surplus cash Net Change in Cash and Cash Equivalents (For the six months ended June 30) | Item | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Net cash inflow from operating activities | 38.5 | 45.9 | | Placement of fixed deposits with original maturity over three months | (102.6) | - | | Dividends paid to owners of the Company | (35.8) | (14.9) | | Net (decrease)/increase in cash and cash equivalents | (96.9) | 43.3 | - As of June 30, 2025, the Group's cash and cash equivalents were approximately **RMB 376.6 million** (as of December 31, 2024: RMB 476.2 million)[48](index=48&type=chunk) - The Group maintained a net cash position for its net debt ratio, and the current ratio further improved to **4.4 times** (as of December 31, 2024: 3.4 times)[50](index=50&type=chunk) [Foreign Exchange Risk Management](index=17&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The Group primarily faces foreign exchange risks related to HKD and USD, which are managed through regular review of net foreign exchange exposure, though no forward foreign exchange contracts were entered into for hedging during the reporting period - The Group is primarily exposed to foreign exchange risks related to HKD and USD[51](index=51&type=chunk) - For the six months ended June 30, 2025, the Group did not enter into any forward foreign exchange contracts for hedging foreign exchange risks[51](index=51&type=chunk) [Material Investments](index=17&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) As of June 30, 2025, the Group had no material investments - As of June 30, 2025, the Group had no material investments[52](index=52&type=chunk) [Future Plans for Material Investments and Capital Assets](index=17&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E4%B9%8B%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) As of June 30, 2025, the Group had no future plans for any material investments or capital assets - As of June 30, 2025, the Group had no future plans for any material investments or capital assets[53](index=53&type=chunk) [Pledged Assets](index=17&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of the end of the reporting period, the Group had no pledged or charged assets - As of June 30, 2025, and December 31, 2024, the Group had no pledged or charged assets[54](index=54&type=chunk) [Capital Expenditure and Commitments](index=17&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF%E5%8F%8A%E6%89%BF%E6%93%94) Capital expenditure during the reporting period primarily related to leasehold improvements and office equipment, decreasing compared to the prior year, with no material capital commitments - During the review period, the Group's capital expenditure was approximately **RMB 0.2 million** (2024: RMB 0.4 million), primarily for leasehold improvements and office equipment[55](index=55&type=chunk) - As of June 30, 2025, and December 31, 2024, the Group had no material capital commitments[55](index=55&type=chunk) [Contingent Liabilities](index=17&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of the end of the reporting period, the Group had no material contingent liabilities - As of June 30, 2025, and December 31, 2024, the Group had no material contingent liabilities[56](index=56&type=chunk) [Human Resources](index=17&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90) The Group's total employee count slightly increased, with employee benefit expenses growing by 11% year-on-year, mainly due to an increase in headcount, discretionary performance bonuses, and staff benefits and allowances, as the Group values talent and provides competitive compensation and benefits - As of June 30, 2025, the Group's total number of employees in Mainland China and Hong Kong was **113** (as of December 31, 2024: 109)[57](index=57&type=chunk) - During the review period, employee benefit expenses were approximately **RMB 25.6 million** (2024: RMB 23.1 million), representing an **11%** year-on-year increase[57](index=57&type=chunk) - The increase in employee benefit expenses was primarily due to an increase in headcount, discretionary performance bonuses, and staff benefits and allowances[57](index=57&type=chunk) [Outlook](index=18&type=section&id=%E5%B1%95%E6%9C%9B) Looking ahead to H2 2025, despite global economic complexities, China's long-term economic fundamentals remain robust, with the retail sector transitioning towards value-driven consumption, and the Group will continue to optimize its strategy, integrating brand licensing, direct retail, and wholesale businesses, strengthening the positioning of 'Daphne' and 'Daphne.Lab' brands, and advancing its omnichannel strategy for sustainable growth - The Group will continue to adopt a diversified business model, integrating brand licensing, direct retail, and wholesale businesses to enhance adaptability and long-term competitiveness[58](index=58&type=chunk) - The 'Daphne' brand plans to collaborate with a designer brand during Paris Fashion Week in October to launch the 'Cloud Soft' new collection and leverage its global brand ambassador for live stream promotions[59](index=59&type=chunk) - The 'Daphne.Lab' brand plans to hold a fashion show and launch a designer brand collaboration series at Shanghai Fashion Week in October to reinforce its avant-garde fashion image[59](index=59&type=chunk) - The Group will further advance its omnichannel strategy, continuously strengthening its presence on traditional and emerging e-commerce platforms, and expanding its offline retail network with a proactive yet prudent approach[60](index=60&type=chunk) [Other Information](index=19&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) [Purchase, Sale or Redemption of the Company's Shares](index=19&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%E8%82%A1%E4%BB%BD) During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's shares - 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 shares[61](index=61&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates or Joint Ventures](index=19&type=section&id=%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E3%80%81%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E6%88%96%E5%90%88%E8%B3%87%E4%BC%81%E6%A5%AD%E7%9A%84%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE) During the reporting period, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures[62](index=62&type=chunk) [Securities Transactions by Directors](index=19&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E4%B9%8B%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93) The company's directors confirmed compliance with the 'Model Code for Securities Transactions by Directors of Listed Issuers' during the reporting period, with no breaches by senior management or employees identified - Following specific enquiries made to all Directors, all Directors confirmed that they had complied with the requirements set out in the Model Code for the six months ended June 30, 2025[63](index=63&type=chunk) [Changes in Directors' Information](index=19&type=section&id=%E8%91%A3%E4%BA%8B%E8%B3%87%E6%96%99%E8%AE%8A%E5%8B%95) Effective June 19, 2025, Mr. Huang Shuncai resigned as an independent non-executive Director, and Ms. Xu Wenguan was appointed as an independent non-executive Director, Chairman of the Nomination Committee, and a member of the Audit and Remuneration Committees - Effective June 19, 2025, Mr. Huang Shuncai resigned as an independent non-executive Director[64](index=64&type=chunk) - Effective June 19, 2025, Ms. Xu Wenguan was appointed as an independent non-executive Director and the Chairman of the Nomination Committee, as well as a member of the Audit Committee and Remuneration Committee, respectively[64](index=64&type=chunk) [Compliance with Corporate Governance Code](index=19&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The company complied with all applicable code provisions of the Corporate Governance Code during the reporting period and will continue to strengthen its corporate governance practices - For the six months ended June 30, 2025, the Company complied with all applicable code provisions set out in the Corporate Governance Code[65](index=65&type=chunk) [Sufficient Public Float](index=19&type=section&id=%E8%B6%B3%E5%A4%A0%E5%85%AC%E7%9C%BE%E6%8C%81%E8%82%A1%E9%87%8F) As of the end of the reporting period and the announcement date, the company maintained a sufficient public float, representing over 25% of its total issued share capital - For the six months ended June 30, 2025, and up to the date of this announcement, the Company maintained a sufficient public float, representing over **25%** of its total issued share capital, in accordance with the Listing Rules[66](index=66&type=chunk) [Events After the Reporting Period](index=20&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E4%BB%A5%E5%BE%8C%E4%BA%8B%E9%A0%85) From the end of the reporting period to the date of this announcement, the Directors were not aware of any material events affecting the Group - From June 30, 2025, to the date of this announcement, the Directors were not aware of any material events affecting the Group[67](index=67&type=chunk) [Review of Condensed Consolidated Interim Financial Statements](index=20&type=section&id=%E5%AF%A9%E9%96%B1%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) The Audit Committee reviewed and confirmed that the condensed consolidated interim financial statements were prepared in accordance with applicable accounting standards - The Audit Committee reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, and considered them to be prepared in accordance with applicable accounting standards[68](index=68&type=chunk) [Publication of Interim Results and Interim Report](index=20&type=section&id=%E5%88%8A%E7%99%BB%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) This announcement has been published on the company's website and HKEXnews website, and the interim report will be dispatched to shareholders and published on the aforementioned websites in due course - This announcement has been published on the Company's website (www.daphneholdings.com) and the HKEXnews website (www.hkexnews.hk)[69](index=69&type=chunk) - The 2025 interim report, containing all information required by the Listing Rules, will be dispatched to the Company's shareholders and published on the aforementioned websites in due course[69](index=69&type=chunk)

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈的內容概不負責，對其準確性或 完整性亦不發表任何聲明，並明確表示，概不對因本公佈全部或任何部份內容而產生或因倚賴該等 內容而引致的任何損失承擔任何責任。 二零二五年中期業績公佈 董事局主席報告 中期業績及股息 集團截至二零二五年六月三十日止六個月，股東應佔(未經審核)虧損為港幣四千 一百萬元，對比去年同期錄得虧損港幣六千九百萬元。每股虧損為港幣1.3仙 (二零 二四年：港幣2.3仙)。 由於期內錄得虧損，董事局宣佈不派發中期股息(二零二四年：無)。 1 業務回顧 中央政府於去年年底恢復並擴展深圳居民赴港「一簽多行」個人遊簽注；加上啟德體 育園於本年三月啟用後，本港積極舉辦更多國際盛事及大型活動，吸引國內外旅客來 港消費。然而，港人熱衷北上消費娛樂，令本港零售業持續受壓。據政府統計處資料 顯示，本港零售業整體總銷貨價值於二零二五年上半年較去年同期下跌 3.3%，當中超 級市場（包括百貨公司內之超市部門）貨品之銷貨價值較去年同期輕微上升 0.6%。 集團業務主要透過以下兩家全資附屬公司營運： (i) Citistore (Hong Kong) Limited ...

[Performance Summary](index=2&type=section&id=Performance%20Summary) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management emphasizes Smart Cloud growth, non-online marketing revenue exceeding RMB 10 billion, and AI transformation in search and global Apollo Go expansion - CEO Robin Li noted that robust Smart Cloud growth mitigated short-term pressure on online marketing, while the company deepens AI transformation of Baidu Search and accelerates Apollo Go's global expansion[5](index=5&type=chunk) - CFO Herman Yu stated that Baidu Core non-online marketing revenue, driven by new AI areas, exceeded **RMB 10 billion** for the first time, growing **34% year-over-year**, leading to a more balanced and diversified revenue structure[5](index=5&type=chunk) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) Q2 2025 total revenue decreased 4% to RMB 32.7 billion, operating income fell 45%, and non-GAAP net income declined 35%, reflecting core profitability challenges Q2 2025 Group Financial Summary (Consolidated Statements) | Metric | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | 33,931 RMB Million | 32,713 RMB Million | -4% | | **Operating Income** | 5,944 RMB Million | 3,277 RMB Million | -45% | | **Operating Income (Non-GAAP)** | 7,500 RMB Million | 4,445 RMB Million | -41% | | **Net Income Attributable to Baidu** | 5,488 RMB Million | 7,322 RMB Million | +33% | | **Net Income Attributable to Baidu (Non-GAAP)** | 7,396 RMB Million | 4,795 RMB Million | -35% | | **Diluted Earnings Per ADS** | 15.01 RMB | 20.35 RMB | +36% | | **Diluted Earnings Per ADS (Non-GAAP)** | 21.02 RMB | 13.58 RMB | -35% | Q2 2025 Baidu Core Financial Summary | Metric | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | 26,687 RMB Million | 26,251 RMB Million | -2% | | **Operating Income** | 5,608 RMB Million | 3,322 RMB Million | -41% | | **Operating Income (Non-GAAP)** | 7,005 RMB Million | 4,385 RMB Million | -37% | | **Net Income Attributable to Baidu Core** | 5,462 RMB Million | 7,382 RMB Million | +35% | | **Net Income Attributable to Baidu Core (Non-GAAP)** | 7,290 RMB Million | 4,792 RMB Million | -34% | [Operational Highlights](index=3&type=section&id=Operational%20Highlights) Key operational advancements include Smart Cloud's market leadership, Apollo Go's rapid growth and global expansion, and Baidu App's MAU increase with AI-generated search content [Smart Cloud](index=3&type=section&id=Smart%20Cloud) Smart Cloud innovates with Wenxin 4.5 and MuseSteamer, maintaining its sixth consecutive year as China's top AI public cloud service provider - Open-sourced the latest and most advanced foundation model, **Wenxin 4.5 series**, and launched the proprietary video generation model **MuseSteamer**[10](index=10&type=chunk) - According to IDC, Baidu Smart Cloud ranked first in China's AI public cloud service market for the **sixth consecutive year**[10](index=10&type=chunk) [Mobile Ecosystem](index=4&type=section&id=Mobile%20Ecosystem) Mobile ecosystem's AI transformation accelerates, with 64% of search results containing AI-generated content and Baidu App MAU growing 5% to 735 million - As of July 2025, **64%** of mobile search result pages included AI-generated content, up from 35% in April[13](index=13&type=chunk) - In June 2025, Baidu App's Monthly Active Users reached **735 million**, a **5% year-over-year increase**[13](index=13&type=chunk) [Autonomous Driving (Apollo Go)](index=4&type=section&id=Autonomous%20Driving) Apollo Go experienced rapid growth, with fully autonomous driving orders up 148% and cumulative orders over 14 million, initiating global expansion via strategic partnerships - In Q2 2025, Apollo Go provided over **2.2 million** fully autonomous driving orders, a **148% year-over-year increase**[13](index=13&type=chunk) - Established strategic partnerships with Uber and Lyft, planning to deploy thousands of fully autonomous vehicles in Asia, the Middle East, and European markets[13](index=13&type=chunk) [Corporate Updates](index=3&type=section&id=Corporate%20Updates) The company continues its share repurchase program, with $677 million repurchased since Q1 2025, and cumulative repurchases under the 2023 program reaching $2.3 billion - Since Q1 2025, Baidu repurchased **$677 million** in shares, with cumulative repurchases under the 2023 share repurchase program reaching **$2.3 billion**[10](index=10&type=chunk) [Detailed Financial Results](index=4&type=section&id=Detailed%20Financial%20Results) [Income Statement Analysis](index=4&type=section&id=Income%20Statement%20Analysis) Total revenue decreased 4% to RMB 32.7 billion, primarily due to a 15% decline in online marketing revenue, despite strong non-online marketing growth, leading to a 45% drop in operating income to RMB 3.3 billion Q2 2025 Revenue Composition | Revenue Item | Amount (RMB Billion) | YoY Change | | :--- | :--- | :--- | | **Baidu Core Total Revenue** | 26.3 | -2% | | - Online Marketing Revenue | 16.2 | -15% | | - Non-Online Marketing Revenue | 10.0 | +34% | | **iQIYI Revenue** | 6.6 | -11% | | **Total Revenue** | **32.7** | **-4%** | Q2 2025 Costs and Expenses | Expense Item | Amount (RMB Billion) | YoY Change | Primary Reason | | :--- | :--- | :--- | :--- | | Cost of Revenues | 18.4 | +12% | Increased costs related to Smart Cloud business and content costs | | Selling, General and Administrative Expenses | 6.0 | +5% | Increased channel spending | | Research and Development Expenses | 5.1 | -13% | Decreased personnel-related expenses | - Total other income, net, was **RMB 4.9 billion**, a **531% year-over-year increase**, primarily due to increased fair value gains and share of earnings from long-term investments[14](index=14&type=chunk) [Balance Sheet and Cash Flow Analysis](index=5&type=section&id=Balance%20Sheet%20and%20Cash%20Flow%20Analysis) As of June 30, 2025, the company held **RMB 124.2 billion** in cash, cash equivalents, restricted cash, and short-term investments, with a net cash position of **RMB 155.1 billion**, indicating a robust financial standing; however, free cash flow for the quarter was negative **RMB 4.7 billion**, primarily due to increased investments in AI businesses Assets and Cash Flow Status (As of June 30, 2025) | Metric | Amount (RMB Billion) | | :--- | :--- | | Cash, Cash Equivalents, Restricted Cash, and Short-Term Investments | 124.2 | | Net Cash Position | 155.1 | | Free Cash Flow (Q2 2025) | -4.7 | - Negative free cash flow was primarily due to increased investments in AI businesses[16](index=16&type=chunk) [Segment Performance](index=13&type=section&id=Segment%20Performance) Baidu Core revenue slightly decreased 2% year-over-year to RMB 26.3 billion, with operating income down 41% to RMB 3.3 billion, and profit margin declining from 21% to 13%, while iQIYI revenue decreased 11% to RMB 6.6 billion, turning from profit to an operating loss of RMB 46 million Q2 2025 Segment Performance Comparison | Segment | Total Revenue (RMB Million) | YoY Change | Operating Income (Loss) (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | **Baidu Core** | 26,251 | -2% | 3,322 | -41% | | **iQIYI** | 6,628 | -11% | (46) | Switched from Profit to Loss | [Financial Statements](index=9&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Provides detailed consolidated revenue, cost, expense, profit, and earnings per share data for the three and six months ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024 [Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Illustrates cash inflows and outflows from operating, investing, and financing activities, presented by segment for Baidu (excluding iQIYI) and iQIYI [Appendix](index=7&type=section&id=Appendix) [Non-GAAP Reconciliation](index=16&type=section&id=Non-GAAP%20Reconciliation) Provides detailed reconciliation between GAAP operating income, net income, and earnings per share and Non-GAAP metrics, excluding the impact of share-based compensation, intangible asset amortization, and other items [U.S. GAAP to IFRS Reconciliation](index=18&type=section&id=U.S.%20GAAP%20to%20IFRS%20Reconciliation) To meet diverse regulatory requirements, this section details adjustments made to financial statement items under U.S. GAAP and IFRS due to accounting policy differences, such as debt instrument investments, operating leases, and convertible notes

Interim Report 中期報告 2025 Characteristics of GEM of The Stock Exchange of Hong Kong Limited ("Stock Exchange") 香港聯合交易所有限公司（「 聯交所」）GEM之特點 GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that t ...