[Company Information and Financial Summary](index=1&type=section&id=Company%20Information%20and%20Financial%20Summary) This section provides an overview of the company's identity and key financial performance and position highlights for the six months ended June 30, 2025 [Company Overview and Report Statement](index=1&type=section&id=Company%20Overview%20and%20Report%20Statement) This announcement by Qyuns Therapeutics Co., Ltd. presents the unaudited interim results for the six months ended June 30, 2025, reviewed by the audit committee and auditor - Company name: Qyuns Therapeutics Co., Ltd. (Jiangsu Qyuns Bio-pharmaceutical Co., Ltd.), stock code: **2509**[2](index=2&type=chunk) - Reporting period: Unaudited condensed consolidated results for the six months ended June 30, 2025[3](index=3&type=chunk) - Review status: The unaudited consolidated financial statements have been reviewed by the company's audit committee and auditor[3](index=3&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the six months ended June 30, 2025, the company's revenue significantly increased to RMB 206.49 million, gross profit substantially improved, and loss for the period narrowed considerably Operating Results for the Six Months Ended June 30 (RMB thousands) | Operating Results | 2025 (Unaudited) | 2024 (Unaudited) | | :---------------- | :----------------- | :----------------- | | Revenue | 206,486 | 44,919 | | Cost of Sales | (28,868) | (7,163) | | Gross Profit | 177,618 | 37,756 | | Net Other Income | 7,162 | 7,402 | | R&D Expenses | (151,394) | (145,226) | | Loss for the Period | (30,933) | (183,139) | | Loss Per Share - Basic and Diluted (RMB) | (0.13) | (0.79) | | Adjusted Loss for the Period | (5,221) | (132,501) | Financial Position as of June 30 (RMB thousands) | Financial Position | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :----------------- | :------------------------ | :------------------------ | | Cash and Cash Equivalents, Time Deposits, and Financial Assets at FVTPL | 558,897 | 556,127 | | Total Non-Current Assets | 453,091 | 367,152 | | Total Current Assets | 679,061 | 616,725 | | Total Non-Current Liabilities | 465,281 | 332,666 | | Total Current Liabilities | 451,042 | 430,161 | | Net Current Assets | 228,019 | 186,564 | | Total Equity | 215,829 | 221,050 | [Operating Performance Analysis](index=2&type=section&id=Operating%20Performance%20Analysis) This section analyzes the company's revenue, cost of sales, R&D expenses, and non-IFRS measures for the six months ended June 30, 2025 [Revenue](index=2&type=section&id=Revenue) For the six months ended June 30, 2025, the company's revenue significantly increased to RMB 206.49 million, primarily driven by licensing agreement income and CDMO and R&D service income Revenue Composition (RMB millions) | Revenue Source | 2025 H1 | | :----------------------------- | :------ | | Licensing Agreement Income | 180.77 | | CDMO Services and R&D Service Income | 22.00 | | **Total Revenue** | **206.49** | - Licensing agreement income primarily includes the upfront payment for QX030N overseas licensing, non-cash consideration for approximately **24.88% equity in Caldera Therapeutics, Inc.**, and the milestone payment for the first patient enrollment in QX004N Phase III[5](index=5&type=chunk) [Cost of Sales](index=2&type=section&id=Cost%20of%20Sales) For the six months ended June 30, 2025, cost of sales was RMB 28.87 million, mainly comprising CDMO service costs, QX004N R&D service and QX030N overseas licensing costs, and provisions for inventory write-downs and other contract costs - Cost of sales was **RMB 28.87 million**, primarily including CDMO service costs, QX004N R&D service and QX030N overseas licensing costs, as well as provisions for inventory write-downs and other contract costs[6](index=6&type=chunk) [Research and Development Expenses](index=2&type=section&id=Research%20and%20Development%20Expenses) For the six months ended June 30, 2025, R&D expenses increased by **4.25%** year-on-year to RMB 151.39 million, mainly due to increased clinical trial costs, partially offset by reduced equity-settled share-based payment amortization R&D Expense Changes (RMB millions) | Metric | 2025 H1 | 2024 H1 | Change | YoY Change | | :----------- | :------ | :------ | :----- | :--------- | | R&D Expenses | 151.39 | 145.23 | +6.16 | +4.25% | - The increase in R&D expenses was primarily due to an increase of **RMB 12.04 million** in clinical trial expenses as clinical trials progressed, while equity-settled share-based payment amortization decreased by **RMB 5.87 million**[7](index=7&type=chunk) [Non-IFRS Measures](index=2&type=section&id=Non-IFRS%20Measures) The company disclosed adjusted loss for the period as a non-IFRS measure, which excludes the impact of equity-settled share-based payment expenses to better reflect core operating performance Non-IFRS Measures (RMB thousands) | Metric | 2025 | 2024 | Change | YoY Change | | :--------------------------- | :--------- | :---------- | :------- | :--------- | | Loss for the Period | (30,933) | (183,139) | 152,206 | (83%) | | Add: Equity-settled share-based payment expenses | 25,712 | 50,638 | (24,926) | (49%) | | Adjusted Loss for the Period | (5,221) | (132,501) | 127,280 | (96%) | - Adjusted loss for the period excludes share-based compensation expenses, which management believes reflects core operating performance and aids in comparing core operating performance across periods and companies[8](index=8&type=chunk) [Business Overview and Product Pipeline](index=3&type=section&id=Business%20Overview%20and%20Product%20Pipeline) This section provides an overview of the company's focus on autoimmune and allergic diseases, its commercialized product, and the progress of its core product pipeline [Company Overview](index=3&type=section&id=Company%20Overview) Qyuns Therapeutics, established in 2015, is a biotechnology company focused on biological therapies for autoimmune and allergic diseases, covering dermatology, respiratory, gastroenterology, and rheumatology - The company was established in **2015**, focusing on biological therapies for autoimmune and allergic diseases, comprehensively covering dermatology, respiratory, gastroenterology, and rheumatology[9](index=9&type=chunk) - The company has one commercialized product, Xilexin® (the first ustekinumab biosimilar in China), and two core products, QX005N and QX002N, are progressing well, with key endpoint data expected by year-end or early next year, or BLA submission[10](index=10&type=chunk) - The company has efficiently developed a series of long-acting bispecific antibody products, aiming to address unmet needs, advance product iteration, and pursue global partnerships to accelerate its globalization strategy[11](index=11&type=chunk) [Core Products and Pipeline Progress](index=3&type=section&id=Core%20Products%20and%20Pipeline%20Progress) The company has one commercialized product, Xilexin®, and multiple core products in late-stage clinical development, including QX005N (IL-4Rα mAb) and QX002N (IL-17A mAb), as well as QX004N (IL-23p19 mAb) and QX008N (TSLP mAb) developed with partners [Xilexin® (QX001S)](index=7&type=section&id=Xilexin%C2%AE%20%28QX001S%29) Xilexin® is the first ustekinumab biosimilar approved in China, approved in October 2024, with a new indication for pediatric plaque psoriasis, and over **60,000 vials** shipped to Huadong Medicine - Xilexin® was approved by the NMPA in **October 2024**, becoming the first approved ustekinumab injection biosimilar in China and the company's first commercialized product[22](index=22&type=chunk) - On **March 3, 2025**, the supplementary application for Xilexin®'s new indication for pediatric plaque psoriasis was approved[23](index=23&type=chunk) - As of **June 30, 2025**, over **60,000 vials** have been shipped to Huadong Medicine[23](index=23&type=chunk) [QX005N / HDM3016](index=7&type=section&id=QX005N%20%2F%20HDM3016) QX005N is an IL-4Rα targeted monoclonal antibody with **7 IND approvals**, its Phase III clinical trial for PN has completed patient enrollment and was granted Breakthrough Therapy Designation, and its Phase III clinical trial for AD is nearing completion of enrollment - QX005N is an IL-4Rα targeted humanized monoclonal antibody, having obtained **7 IND approvals** for indications including AD, PN, CRSwNP, CSU, asthma, and COPD[24](index=24&type=chunk) - The Phase III clinical trial for QX005N in PN completed patient enrollment on **March 19, 2025**, and was included in the Breakthrough Therapy Designation (BTD) list by the CDE in **January 2024**[25](index=25&type=chunk) - The Phase III clinical trial for QX005N in AD is nearing completion of enrollment, and the Phase II clinical trial for CRSwNP was completed in **February 2025**[25](index=25&type=chunk)[26](index=26&type=chunk) - The company entered into a collaboration agreement with Huadong Medicine to co-develop QX005N, with Phase III clinical trial costs shared **50/50**[27](index=27&type=chunk) [QX002N](index=8&type=section&id=QX002N) QX002N is a high-affinity monoclonal antibody targeting IL-17A, its Phase III clinical trial for AS met its primary endpoint in February 2025, with BLA submission planned within the year - QX002N is a monoclonal antibody targeting IL-17A, which plays a key role in the pathogenesis of various autoimmune diseases[28](index=28&type=chunk) - Topline results for the QX002N Phase III clinical trial in AS were announced on **February 24, 2025**, meeting primary and key secondary endpoints, with ASAS40 response rates significantly higher than the placebo group[28](index=28&type=chunk) [QX004N / HS-20137](index=8&type=section&id=QX004N%20%2F%20HS-20137) QX004N is an IL-23p19 inhibitor for Ps and CD, with Phase I clinical data published and Phase II clinical data showing strong efficacy and good safety in moderate-to-severe plaque psoriasis patients - QX004N is an IL-23p19 inhibitor for the treatment of Ps and CD[29](index=29&type=chunk) - In **March 2025**, Hansoh Pharmaceutical disclosed that Phase II clinical data for QX004N showed strong efficacy and good safety in patients with moderate-to-severe plaque psoriasis[29](index=29&type=chunk) - The company entered into an exclusive out-licensing agreement with Hansoh (Shanghai) for the R&D, manufacturing, and commercialization of QX004N in the licensed territories, having received an upfront payment of **RMB 75.0 million** and Ps Phase III milestone and other payments of **RMB 58.0 million**[30](index=30&type=chunk) [QX008N / JKN24011](index=9&type=section&id=QX008N%20%2F%20JKN24011) QX008N is a humanized IgG1 monoclonal antibody targeting TSLP for moderate-to-severe asthma and COPD, with Health & Happiness (H&H) having completed patient enrollment for its COPD China Phase II clinical trial - QX008N is a humanized IgG1 monoclonal antibody targeting TSLP, for the treatment of moderate-to-severe asthma and moderate-to-severe COPD[31](index=31&type=chunk) - In **January 2024**, the company entered into a technology transfer agreement with Health & Happiness (H&H), granting H&H an exclusive license for the development, manufacturing, and commercialization of QX008N in mainland China, Hong Kong, and Macau[32](index=32&type=chunk) - Health & Happiness (H&H) is conducting a China Phase II clinical trial for QX008N in COPD and has completed patient enrollment[32](index=32&type=chunk) [QX013N](index=9&type=section&id=QX013N) QX013N is a humanized IgG1 monoclonal antibody targeting c-kit for CSU, the first c-kit targeted biological drug candidate in China, with its IND approval marking the completion of the company's four dermatology indications layout - QX013N is a humanized IgG1 monoclonal antibody targeting c-kit, indicated for the treatment of CSU[33](index=33&type=chunk) - QX013N is the first c-kit targeted biological drug candidate in China, and its IND approval marks the completion of the company's comprehensive layout in four dermatological indications (psoriasis, atopic dermatitis, prurigo nodularis, and chronic spontaneous urticaria)[33](index=33&type=chunk) - As of the date of this announcement, Phase Ia clinical trials have been completed[33](index=33&type=chunk) [Bispecific Antibody Products](index=9&type=section&id=Bispecific%20Antibody%20Products) The company is developing a series of long-acting bispecific antibodies for autoimmune diseases, aiming to enhance efficacy, optimize dosing intervals, and reduce costs, with several products planned for IND/CTN submission in 2025-2026 - The company is developing a series of long-acting bispecific antibodies for autoimmune diseases, aiming to enhance clinical efficacy, extend dosing intervals, and optimize convenience of use[34](index=34&type=chunk) - QX027N (respiratory and dermatology) is planned for IND submission in China and the US in **Q3 2025**[34](index=34&type=chunk) - QX030N is planned for CTN submission in Australia in **Q4 2025**, QX031N (respiratory) is planned for IND submission in China and the US in **Q4 2025**, and QX035N (respiratory and dermatology) is planned for IND submission in China and the US in **Q4 2026**[34](index=34&type=chunk) [Pipeline Progress (by Indication)](index=6&type=section&id=Pipeline%20Progress%20%28by%20Indication%29) The company's product pipeline covers dermatology, respiratory, gastroenterology, and rheumatology, with multiple products ranging from preclinical to Phase III and commercialized stages - The company's product pipeline covers multiple indications including dermatology (Ps, PN, AD, CSU), respiratory (Asthma, COPD, CRSwNP), gastroenterology (CD), and rheumatology (AS)[15](index=15&type=chunk)[17](index=17&type=chunk) - The commercialized product is Xilexin®, while core products QX005N and QX002N are in Phase III clinical trials, and QX004N and QX008N are also in Phase III or Phase II clinical trials[15](index=15&type=chunk)[17](index=17&type=chunk) [Expected Progress of Key Products](index=6&type=section&id=Expected%20Progress%20of%20Key%20Products) The company anticipates several key clinical milestones and BLA submissions/approvals from 2025 to 2027, including key endpoint data readouts, BLA submissions, and approvals for QX005N-PN, QX005N-AD, and QX002N - In **Q3 2025**, QX005N-PN Phase III key endpoint data readout; QX027N planned for IND submission in China and the US[19](index=19&type=chunk) - In **Q4 2025**, QX005N-AD Phase III key endpoint data readout; QX005N-PN planned for BLA submission; QX030N planned for CTN submission in Australia; QX031N planned for IND submission in China and the US[19](index=19&type=chunk) - In **2026**, QX005N-AD planned for BLA submission; QX002N planned for BLA submission; QX005N-PN and QX005N-AD expected for BLA approval[19](index=19&type=chunk) - In **2027**, QX002N expected for BLA approval[19](index=19&type=chunk) [R&D Strategy and Capabilities](index=10&type=section&id=R%26D%20Strategy%20and%20Capabilities) This section outlines the company's R&D achievements, integrated antibody drug development platform, and strategic focus areas for future product development [R&D Achievements and Platforms](index=10&type=section&id=R%26D%20Achievements%20and%20Platforms) R&D is the cornerstone of the company's sustained success, with one monoclonal antibody drug launched, three innovative monoclonal antibodies in Phase III clinical trials, and one innovative bispecific antibody licensed overseas - The company has one monoclonal antibody drug approved for launch, three innovative monoclonal antibody drugs in Phase III clinical research, and one innovative bispecific antibody drug licensed overseas[36](index=36&type=chunk) - The company has established an integrated antibody drug R&D platform, including high-throughput monoclonal antibody discovery, innovative bispecific antibody design and development, a comprehensive CMC development system, and a translational medicine research platform[36](index=36&type=chunk) [R&D Focus Areas](index=10&type=section&id=R%26D%20Focus%20Areas) The company's R&D focuses on respiratory diseases, inflammatory bowel disease (IBD), and dermatological diseases, aiming to develop superior long-term treatments, improve clinical remission rates, and explore new strategies for rapid symptom and lesion relief - Respiratory diseases: Develop superior long-term treatment products aimed at delaying, halting, or even reversing disease progression and maintaining long-term efficacy[37](index=37&type=chunk) - Inflammatory Bowel Disease (IBD): Develop innovative products that significantly improve clinical and endoscopic remission rates, addressing the unmet needs of patients treated with biologics[37](index=37&type=chunk) - Dermatological diseases (AD and CSU): Explore new treatment strategies to achieve rapid symptom and lesion relief, reduce recurrence risk, significantly extend recurrence-free periods, and develop next-generation drugs effective for refractory patients[38](index=38&type=chunk) - Bispecific antibody product development goals: Enhance efficacy, optimize dosing intervals, strengthen compliance, and reduce medication costs[38](index=38&type=chunk) [R&D Expense Details](index=11&type=section&id=R%26D%20Expense%20Details) For the six months ended June 30, 2025, the company's total R&D costs were RMB 151.39 million, with third-party contract costs accounting for the largest proportion, while staff costs and depreciation and amortization decreased R&D Cost Details (RMB thousands) | Item | 2025 | 2024 | | :------------------- | :---------- | :---------- | | Staff Costs | 26,826 | 40,683 | | Depreciation and Amortization | 4,987 | 10,921 | | Third-party Contract Costs | 106,209 | 79,636 | | Raw Materials and Consumables | 6,130 | 6,352 | | Others | 7,242 | 7,634 | | **Total** | **151,394** | **145,226** | - Third-party contract costs, a major component of R&D expenses, increased from **RMB 79.64 million** in 2024 to **RMB 106.21 million** in 2025[41](index=41&type=chunk) - Staff costs and depreciation and amortization both decreased in the first half of 2025[41](index=41&type=chunk) [Manufacturing and Commercialization](index=11&type=section&id=Manufacturing%20and%20Commercialization) This section details the company's production facilities, manufacturing capabilities, and strategic approach to commercializing its pharmaceutical products [Production Facilities and Capabilities](index=11&type=section&id=Production%20Facilities%20and%20Capabilities) The company's production facilities are built in strict accordance with cGMP standards, have obtained a drug manufacturing license, and passed NMPA's GMP compliance inspection - Production facilities are built in strict accordance with China, US, and EU cGMP standards and have obtained a drug manufacturing license[42](index=42&type=chunk) - In **November 2024**, the Saifu Si facility passed the NMPA's GMP compliance inspection for Xilexin® drug substance and drug product manufacturing[42](index=42&type=chunk) - The production base has a drug substance production line with an annual capacity of approximately **300kg** of therapeutic antibodies, and two drug product production lines (vial production line capacity of **18,000 vials/hour**, pre-filled syringe production line capacity of **9,000 syringes/hour**)[42](index=42&type=chunk) [Commercialization Strategy](index=12&type=section&id=Commercialization%20Strategy) The company plans to leverage strategic partners' physician resources and networks to establish connections with drug sales and distribution chain participants, laying the groundwork for the commercial launch of its candidate drugs - The company will continue to leverage strategic partners' physician resources and networks to establish connections with participants in the drug sales and distribution chain, laying the foundation for the commercial launch of its candidate drugs[43](index=43&type=chunk) - In the future, the company plans to start with indications where the patient population is relatively limited and concentrated in a few key hospitals, building a relatively small, specialized internal commercialization team for specific indications[43](index=43&type=chunk) [Intellectual Property](index=12&type=section&id=Intellectual%20Property) As of June 30, 2025, the company holds **50 patents** in China and **16 overseas patents**, with **47 patent applications** pending, and has registered **94 trademarks** and **21 domain names** - As of **June 30, 2025**, the company holds **50 patents** in China (**40 invention patents**, **10 utility model patents**) and **16 overseas patents**[44](index=44&type=chunk) - As of the same date, the company has **47 patent applications** pending approval in China and overseas[44](index=44&type=chunk) - Core product QX002N has **9 registered patents** and **1 pending patent application**, while QX005N has **8 registered patents** and **1 pending patent application**[44](index=44&type=chunk) - As of **June 30, 2025**, the company has registered **94 trademarks** in China and Hong Kong and owns the registration of **21 domain names** in China[44](index=44&type=chunk) [Employees and Remuneration](index=12&type=section&id=Employees%20and%20Remuneration) As of June 30, 2025, the Group had **337 employees**, all located in China, with remuneration packages including salaries, bonuses, and equity incentives determined by qualifications, experience, position, and performance - As of **June 30, 2025**, the Group had **337 employees**, all located in China[45](index=45&type=chunk) - Employee remuneration packages include salaries, bonuses, and equity incentives, determined based on qualifications, industry experience, position, and performance[45](index=45&type=chunk) - The company has adopted an employee share incentive scheme, and there were no significant labor disputes or recruitment difficulties during the reporting period[45](index=45&type=chunk) [Future Outlook](index=13&type=section&id=Future%20Outlook) The company plans to continuously stabilize its foundation, aiming for at least **5 products** to be approved and achieve substantial sales by 2030, while strategically expanding its bispecific antibody pipeline and global partnerships - Continuously stabilize the foundation, striving for at least **5 products** to be approved and achieve substantial sales by **2030**[47](index=47&type=chunk) - Advance the R&D of bispecific antibody candidates and strategically expand the pipeline to meet significant treatment needs in respiratory, IBD, and dermatological fields[47](index=47&type=chunk) - Continuously optimize the CMC quality management system, improve production efficiency, and enhance capacity utilization[47](index=47&type=chunk) - Engage in commercialization collaborations with renowned pharmaceutical companies, resolutely execute the globalization strategy, and further expand overseas partnerships[47](index=47&type=chunk) - Continuously recruit and develop talent[47](index=47&type=chunk) [Financial Position Analysis](index=26&type=section&id=Financial%20Position%20Analysis) This section provides a detailed analysis of the company's non-current assets, net current assets, inventories, receivables, payables, and contract liabilities as of June 30, 2025 [Non-Current Assets](index=26&type=section&id=Non-Current%20Assets) As of June 30, 2025, non-current assets increased to RMB 453.09 million, primarily due to the acquisition of approximately **24.88% equity in Caldera** under the QX030N overseas licensing agreement Non-Current Asset Changes (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--------------- | :------------ | :---------------- | :----- | | Non-Current Assets | 453.09 | 367.15 | +85.94 | - Primarily due to the acquisition of approximately **24.88% equity in Caldera** under the QX030N overseas licensing agreement, with an assessed fair value of approximately **RMB 96.79 million**[87](index=87&type=chunk) [Net Current Assets](index=26&type=section&id=Net%20Current%20Assets) As of June 30, 2025, net current assets increased to RMB 228.02 million, mainly driven by net cash inflows from non-current interest-bearing bank borrowings and upfront and milestone payments from QX030N and QX008N out-licensing transactions Net Current Asset Changes (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--------------- | :------------ | :---------------- | :----- | | Net Current Assets | 228.02 | 186.56 | +41.46 | - Primarily due to a net increase in cash inflow of **RMB 132.65 million** from non-current interest-bearing bank borrowings, and upfront and milestone payments of **RMB 74.04 million** received from QX030N and QX008N out-licensing transactions[88](index=88&type=chunk) [Inventories and Other Contract Costs](index=26&type=section&id=Inventories%20and%20Other%20Contract%20Costs) As of June 30, 2025, inventories and other contract costs increased to RMB 32.80 million, mainly due to increased capitalized contract costs driven by the growth of the CDMO business Inventories and Other Contract Costs Changes (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--------------------------- | :------------ | :---------------- | :----- | | Inventories and Other Contract Costs | 32.80 | 8.77 | +24.03 | - Primarily comprises Xilexin® inventories, raw materials, and contract costs for external CDMO services, with the increase mainly due to the growth of the developing CDMO business[89](index=89&type=chunk) [Trade and Other Receivables](index=26&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, trade and other receivables increased to RMB 87.36 million, primarily attributable to an increase of **RMB 58.00 million** in receivables from the QX004N out-licensing project Trade and Other Receivables Changes (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :------------------------- | :------------ | :---------------- | :----- | | Trade and Other Receivables | 87.36 | 51.82 | +35.54 | - Primarily attributable to receivables of **RMB 58.00 million** from the QX004N out-licensing project as of the end of June 2025[90](index=90&type=chunk) [Trade and Other Payables](index=26&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, trade and other payables increased to RMB 241.79 million, mainly due to an increase of approximately **RMB 30.00 million** in clinical trial payables as clinical trials progressed Trade and Other Payables Changes (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------- | :------------ | :---------------- | :----- | | Trade and Other Payables | 241.79 | 208.79 | +33.00 | - Primarily due to an increase of approximately **RMB 30.00 million** in clinical trial payables as clinical trials progressed[91](index=91&type=chunk) [Contract Liabilities](index=27&type=section&id=Contract%20Liabilities) As of June 30, 2025, contract liabilities were RMB 21.50 million, mainly representing upfront payments for the QX030N overseas licensing project that had not yet met revenue recognition conditions Contract Liabilities Changes (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------- | :------------ | :---------------- | :----- | | Contract Liabilities | 21.50 | 9.36 | +12.14 | - Primarily represents upfront payments for the QX030N overseas licensing project that had not yet met revenue recognition conditions, expected to be recognized as revenue upon fulfillment of delivery conditions[92](index=92&type=chunk) [Contingent Liabilities](index=27&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities - As of **June 30, 2025**, the Group had no material contingent liabilities[93](index=93&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's sources of funding, debt structure, key financial ratios, and asset pledges, providing insight into its financial stability and capital management [Sources of Funding](index=27&type=section&id=Sources%20of%20Funding) The company primarily relies on shareholder contributions, equity financing, upfront and milestone payments from out-licensing transactions, CDMO service income, and bank and other borrowings for its liquidity - Primary sources of liquidity include shareholder contributions, equity financing, upfront and milestone payments from out-licensing transactions, CDMO service income, and bank and other borrowings[94](index=94&type=chunk) - Future cash is expected from profit sharing and product supply of Xilexin®, debt financing, refinancing, milestone payments from QX030N, QX008N, and QX004N out-licensing transactions, and cost sharing for co-development of QX005N with Huadong Medicine[94](index=94&type=chunk) - As of **June 30, 2025**, the company had unutilized credit facilities of **RMB 180.73 million** available for working capital purposes[95](index=95&type=chunk) [Debt Structure](index=27&type=section&id=Debt%20Structure) As of June 30, 2025, the company's total interest-bearing borrowings were RMB 634.12 million, primarily comprising secured and unsecured bank loans, with an optimized loan structure showing a significant increase in the proportion of 2-3 year working capital loans Total Interest-Bearing Borrowings (RMB millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Total Interest-Bearing Borrowings | 634.12 | 525.70 | - Primarily includes secured bank loans for production facility construction and unsecured bank loans supporting operations[96](index=96&type=chunk) - As of **June 30, 2025**, the balance of 2-3 year working capital loans accounted for **74.9%** of the total working capital loan balance (December 31, 2024: **39.1%**), indicating an optimized loan structure[94](index=94&type=chunk) [Key Financial Ratios](index=27&type=section&id=Key%20Financial%20Ratios) As of June 30, 2025, the company's current ratio increased to **1.5**, and the debt-to-asset ratio rose to approximately **80.9%**, primarily due to increased utilization of working capital loans during the period [Current Ratio](index=27&type=section&id=Current%20Ratio) As of June 30, 2025, the current ratio increased from **1.4** as of December 31, 2024, to **1.5**, mainly due to an increase in receivables related to out-licensing agreements Current Ratio Changes | Metric | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :---------------- | | Current Ratio | 1.5 | 1.4 | - The increase in current ratio was primarily due to an increase of **RMB 35.49 million** in receivables related to out-licensing agreements as of June 30, 2025, compared to the end of 2024[97](index=97&type=chunk) [Debt-to-Asset Ratio](index=28&type=section&id=Debt-to-Asset%20Ratio) As of June 30, 2025, the debt-to-asset ratio was approximately **80.9%**, an increase from **77.5%** as of December 31, 2024, mainly due to increased utilization of working capital loans during the period Debt-to-Asset Ratio Changes | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Debt-to-Asset Ratio | 80.9% | 77.5% | - The increase in the debt-to-asset ratio was primarily due to increased utilization of working capital loans during the period[98](index=98&type=chunk) [Pledge of Assets](index=28&type=section&id=Pledge%20of%20Assets) The Group's land use rights and production facilities in Taizhou were pledged as collateral for secured long-term loans in July 2024 - The Group's land use rights and production facilities in Taizhou were pledged as collateral for the 2024 secured long-term loans in **July 2024**[99](index=99&type=chunk) [Risk Management](index=28&type=section&id=Risk%20Management) This section outlines the various market and financial risks faced by the Group, including interest rate risk, credit risk, liquidity risk, and foreign exchange risk, and the strategies employed to manage them [Market Risk](index=28&type=section&id=Market%20Risk) The Group is exposed to various market and other financial risks, including cash flow and fair value interest rate risk, credit risk, liquidity risk, and currency risk - The Group is exposed to cash flow and fair value interest rate risk, credit risk, liquidity risk, and currency risk[100](index=100&type=chunk) [Credit Risk](index=28&type=section&id=Credit%20Risk) Credit risk primarily arises from trade and other receivables, but credit risk for cash and cash equivalents and wealth management products is limited due to reputable bank or financial institution counterparties - Credit risk primarily arises from trade and other receivables[101](index=101&type=chunk) - Credit risk for cash and cash equivalents and wealth management products is limited, as counterparties are reputable banks or financial institutions[101](index=101&type=chunk) - As of **June 30, 2025**, approximately **99.95%** of total trade receivables were from the top five debtors[101](index=101&type=chunk) [Liquidity Risk](index=28&type=section&id=Liquidity%20Risk) The company manages liquidity risk by regularly monitoring liquidity needs, complying with loan covenants, and maintaining sufficient cash reserves, readily marketable securities, and committed credit facilities from major financial institutions - The company's policy is to regularly monitor liquidity needs and comply with loan covenants, ensuring sufficient cash reserves and readily marketable securities are maintained[102](index=102&type=chunk) - Sufficient committed credit facilities are obtained from major financial institutions to meet short-term and long-term liquidity needs[102](index=102&type=chunk) [Interest Rate Risk](index=29&type=section&id=Interest%20Rate%20Risk) Interest rate risk primarily stems from long-term borrowings, with floating-rate borrowings exposed to cash flow interest rate risk and fixed-rate borrowings to fair value interest rate risk - Interest rate risk primarily arises from long-term borrowings, with floating-rate borrowings exposed to cash flow interest rate risk and fixed-rate borrowings to fair value interest rate risk[103](index=103&type=chunk) - The company regularly reviews its interest rate risk management strategy based on prevailing market conditions and did not use any interest rate swaps to hedge interest rate risk during the reporting period[103](index=103&type=chunk) [Foreign Exchange Risk](index=29&type=section&id=Foreign%20Exchange%20Risk) Foreign exchange risk primarily arises from cash balances denominated in foreign currencies (USD and HKD) other than bank deposits - Foreign exchange risk primarily arises from cash balances denominated in foreign currencies (USD and HKD) other than bank deposits[104](index=104&type=chunk) - The Group has not undertaken any hedging transactions to manage potential foreign exchange fluctuations[104](index=104&type=chunk) [Material Investments, Acquisitions, and Disposals](index=29&type=section&id=Material%20Investments%2C%20Acquisitions%2C%20and%20Disposals) This section details the company's significant investment activities, including an equity investment in Caldera Therapeutics and investments in wealth management products [Equity Investment in Caldera Therapeutics](index=29&type=section&id=Equity%20Investment%20in%20Caldera%20Therapeutics) On April 23, 2025, the company entered into a global exclusive licensing agreement for QX030N with Caldera Therapeutics, Inc. and acquired approximately **24.88% equity in Caldera** - On **April 23, 2025**, the company entered into a global exclusive licensing agreement for QX030N with Caldera Therapeutics, Inc.[106](index=106&type=chunk) - Pursuant to the licensing agreement, the company received a non-refundable upfront payment of **USD 10,000,000** and approximately **24.88% equity in Caldera**[106](index=106&type=chunk) - As of **June 30, 2025**, the fair market value of Caldera's equity was assessed at **USD 13,521,314** (approximately **RMB 96,793,678.40**), representing over **5%** of the company's total assets[107](index=107&type=chunk) [Wealth Management Product Investments](index=30&type=section&id=Wealth%20Management%20Product%20Investments) During the reporting period, to effectively utilize idle funds, the company subscribed to and held low-risk principal-protected floating-rate wealth management products managed by national or regional commercial banks, totaling **RMB 140 million** - During the reporting period, the company subscribed to and held various wealth management products (primarily principal-protected floating-rate) managed by national commercial banks or local branches of regional commercial banks in Jiangsu Province[108](index=108&type=chunk) Material Wealth Management Product Investments (as of June 30, 2025) | Product Name | Subscribed Principal (RMB millions) | Product Type | Product Risk Level | | :--------------------------- | :-------------------------------- | :--------------------- | :----------------- | | Liduo Duo Company Stable Profit 25JG5700 | 60 | Principal-protected floating-rate | Low Risk | | Liduo Duo Company Stable Profit 25JG3094 | 80 | Principal-protected floating-rate | Low Risk | - The company's investment strategy is relatively cautious, investing only in low-risk wealth management products offered by major and reputable commercial banks, not for trading or speculative purposes in stocks[109](index=109&type=chunk) [Future Plans and Capital Assets](index=31&type=section&id=Future%20Plans%20and%20Capital%20Assets) Except as disclosed in the prospectus and this announcement, as of the date of this announcement, the Group has no other material investment and capital asset plans - Except as disclosed in the "Future Plans and Use of Proceeds" section of the prospectus and this announcement, as of the date of this announcement, the Group has no material investment and capital asset plans[112](index=112&type=chunk) [Subsidiaries, Associates, and Joint Ventures](index=31&type=section&id=Subsidiaries%2C%20Associates%2C%20and%20Joint%20Ventures) For the six months ended June 30, 2025, the Group did not undertake any material acquisitions or disposals of subsidiaries, associates, and joint ventures - For the six months ended **June 30, 2025**, the Group did not undertake any material acquisitions or disposals of subsidiaries, associates, and joint ventures[113](index=113&type=chunk) [Other Information](index=31&type=section&id=Other%20Information) This section covers various corporate governance and operational updates, including changes in directors' information, H share full circulation, amendments to articles of association, and the use of global offering proceeds [Changes in Directors' and Supervisors' Information](index=31&type=section&id=Changes%20in%20Directors%27%20and%20Supervisors%27%20Information) During the reporting period, there were no changes in the information of the company's directors and supervisors required to be disclosed under Rule 13.51B(1) of the Listing Rules - During the reporting period, there were no changes in the information of the company's directors and supervisors required to be disclosed under Rule 13.51B(1) of the Listing Rules[114](index=114&type=chunk) [H Share Full Circulation](index=31&type=section&id=H%20Share%20Full%20Circulation) The company completed the conversion and listing of **17,322,400 non-listed shares** into H shares on March 27, 2025, which commenced trading on the Stock Exchange on March 28, 2025 - The company completed the conversion of **17,322,400 non-listed shares** into H shares and their listing on **March 27, 2025**[115](index=115&type=chunk) - The converted H shares commenced trading on the Stock Exchange at **9:00 a.m. on March 28, 2025**[115](index=115&type=chunk) [Amendments to Articles of Association](index=31&type=section&id=Amendments%20to%20Articles%20of%20Association) The company proposed amendments to its Articles of Association on April 30, 2025, which were approved by a special resolution at the Annual General Meeting held on June 20, 2025 - The company proposed amendments to its Articles of Association on **April 30, 2025**, to comply with relevant laws and regulations[117](index=117&type=chunk) - The amendments to the Articles were approved by a special resolution at the company's Annual General Meeting held on **June 20, 2025**[118](index=118&type=chunk) [Purchase, Sale, or Redemption of Company Shares](index=32&type=section&id=Purchase%2C%20Sale%2C%20or%20Redemption%20of%20Company%20Shares) During the reporting period and up to the date of this announcement, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, nor did they hold any treasury shares - During the reporting period and up to the date of this announcement, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[119](index=119&type=chunk) - As of the date of this announcement, the company did not hold any treasury shares[120](index=120&type=chunk) [Standard Securities Dealing Code for Directors](index=32&type=section&id=Standard%20Securities%20Dealing%20Code%20for%20Directors) The company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules and confirmed compliance by all directors and supervisors during the reporting period - The company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as a code of conduct for directors and supervisors dealing in the company's securities[121](index=121&type=chunk) - All directors and supervisors confirmed compliance with the Standard Code throughout the reporting period, and the company found no instances of non-compliance[121](index=121&type=chunk) [Remuneration Policy](index=32&type=section&id=Remuneration%20Policy) The remuneration of directors, supervisors, and senior management is determined by the Board with reference to their duties, experience, individual performance, and time commitment, and can be adjusted based on the recommendations of the Remuneration and Appraisal Committee - The remuneration of directors, supervisors, and senior management is determined by the Board with reference to their respective duties, experience, individual performance, and time commitment[122](index=122&type=chunk) - The Remuneration and Appraisal Committee is responsible for reviewing the company's remuneration policy and the remuneration structure for directors, supervisors, and senior management[122](index=122&type=chunk) [Corporate Governance Practices](index=32&type=section&id=Corporate%20Governance%20Practices) The company is committed to achieving high standards of corporate governance and has adopted the principles and code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules - The company has adopted the principles and code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules as the basis for its corporate governance practices[123](index=123&type=chunk) - Mr. Qiu serves as both the Chairman of the Board and the General Manager (equivalent to CEO), which deviates from code provision C.2.1, but the Board believes this arrangement ensures consistent leadership and more effective and efficient overall strategic planning for the company[124](index=124&type=chunk) - The Board comprises experienced individuals with diverse backgrounds, including two non-executive directors and three independent non-executive directors, and Mr. Feng Zhiwei has been designated as the Lead Independent Non-Executive Director effective **August 15, 2025**[124](index=124&type=chunk) [Interim Dividend](index=33&type=section&id=Interim%20Dividend) The Board has resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board has resolved not to declare an interim dividend for the six months ended **June 30, 2025**[127](index=127&type=chunk) [Use of Proceeds from Global Offering](index=33&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The company's H shares were listed on March 20, 2024, with net proceeds from the global offering of approximately **HKD 163.3 million** - The company's H shares were listed on the Main Board of the Stock Exchange on **March 20, 2024**, with net proceeds from the global offering of approximately **HKD 163.3 million**[128](index=128&type=chunk) - As of **June 30, 2025**, the company had utilized **HKD 36.3 million** of the proceeds from the global offering[128](index=128&type=chunk) - The company intends to use the net proceeds in the same manner and proportions as set out in the "Future Plans and Use of Proceeds" section of the prospectus[128](index=128&type=chunk) [Events After the Reporting Period](index=34&type=section&id=Events%20After%20the%20Reporting%20Period) On July 4, 2025, the company entered into two subscription agreements with SPD Bank to subscribe for wealth management products with a principal amount of **RMB 120 million** - On **July 4, 2025**, the company entered into two subscription agreements with SPD Bank to subscribe for wealth management products with a principal amount of **RMB 120 million**, maturing on **October 9, 2025**[129](index=129&type=chunk) - The Board has designated Independent Non-Executive Director Mr. Feng Zhiwei to serve as the Lead Independent Non-Executive Director effective **August 15, 2025**[130](index=130&type=chunk) [Audit Committee and Review of Financial Statements](index=34&type=section&id=Audit%20Committee%20and%20Review%20of%20Financial%20Statements) The Audit Committee has reviewed the unaudited interim financial information for the six months ended June 30, 2025, confirming compliance with relevant accounting standards, rules, and regulations - The Audit Committee has reviewed the financial information for the six months ended **June 30, 2025**, contained in this announcement and is satisfied that it has been prepared in accordance with applicable accounting standards[133](index=133&type=chunk) - The Audit Committee comprises three members, with Mr. Feng Zhiwei serving as the Chairman of the Audit Committee[132](index=132&type=chunk) - External auditor KPMG has reviewed the unaudited condensed consolidated financial statements in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[133](index=133&type=chunk) [Publication of Interim Results and Interim Report](index=35&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This results announcement has been published on the Stock Exchange website and the company's website, with the interim report for the six months ended June 30, 2025, to be published in due course - This results announcement is published on the Stock Exchange website (http://www.hkexnews.hk) and the company's website (www.qyuns.net)[134](index=134&type=chunk) - The interim report for the six months ended **June 30, 2025** (containing all relevant information required by the Listing Rules) will be published in due course[134](index=134&type=chunk) [Consolidated Financial Statements](index=14&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, and condensed consolidated statement of cash flows for the reporting period [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=14&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue significantly grew to RMB 206.49 million, with gross profit of RMB 177.62 million, operating loss narrowed significantly to RMB 18.59 million, and loss for the period was RMB 30.93 million Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income (RMB thousands) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :----------------------- | :----------------- | :----------------- | | Revenue | 206,486 | 44,919 | | Cost of Sales | (28,868) | (7,163) | | Gross Profit | 177,618 | 37,756 | | Other Income | 7,162 | 7,402 | | R&D Expenses | (151,394) | (145,226) | | Operating Loss | (18,585) | (169,234) | | Loss for the Period | (30,933) | (183,139) | | Loss Per Share - Basic and Diluted (RMB) | (0.13) | (0.79) | - Revenue increased by **359.7%** year-on-year, and gross profit increased by **370.4%** year-on-year[48](index=48&type=chunk) - Loss for the period significantly narrowed by **83.1%** year-on-year[48](index=48&type=chunk) [Consolidated Statement of Financial Position](index=16&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were RMB 1,132.15 million, with non-current assets of RMB 453.09 million and current assets of RMB 679.06 million Summary of Consolidated Statement of Financial Position (RMB thousands) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :----------------------- | :------------------------ | :------------------------ | | Total Non-Current Assets | 453,091 | 367,152 | | Total Current Assets | 679,061 | 616,725 | | Total Current Liabilities | 451,042 | 430,161 | | Total Non-Current Liabilities | 465,281 | 332,666 | | Total Equity | 215,829 | 221,050 | - The increase in non-current assets was primarily due to equity investments designated at fair value through other comprehensive income (Caldera equity) of **RMB 96.79 million**[49](index=49&type=chunk) - Cash and cash equivalents increased to **RMB 499.32 million**, and time deposits increased to **RMB 39.50 million**[49](index=49&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was RMB (91.76) million, net cash from investing activities was RMB 137.73 million, and net cash from financing activities was RMB 95.81 million Summary of Condensed Consolidated Statement of Cash Flows (RMB thousands) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--------------------------- | :----------------- | :----------------- | | Net Cash Used in Operating Activities | (91,764) | (66,846) | | Net Cash From Investing Activities | 137,730 | 3,389 | | Net Cash From Financing Activities | 95,814 | 314,451 | | Net Increase in Cash and Cash Equivalents | 141,780 | 250,994 | | Cash and Cash Equivalents at End of Period | 499,324 | 468,436 | - Net cash from investing activities significantly increased, primarily reflecting cash inflows from out-licensing transactions[51](index=51&type=chunk) - Net cash from financing activities decreased year-on-year but remained positive, indicating continued financing support for the company[51](index=51&type=chunk) [Notes to the Financial Statements](index=18&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed notes to the interim financial report, covering the basis of preparation, changes in accounting policies, revenue classification, other income, loss before tax, income tax, and per-share loss [Basis of Preparation and Changes in Accounting Policies](index=18&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) This interim financial report is prepared in accordance with the Listing Rules of the Hong Kong Stock Exchange and International Accounting Standard 34, and has been authorized for issue - This interim financial report is prepared in accordance with the Listing Rules of the Hong Kong Stock Exchange and International Accounting Standard 34[52](index=52&type=chunk) - The interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[53](index=53&type=chunk) - The Group has applied International Accounting Standard 21 (Revised) in this accounting period, but it has no material impact on this interim report[55](index=55&type=chunk) [Revenue Classification and Geographical Information](index=19&type=section&id=Revenue%20Classification%20and%20Geographical%20Information) The Group's revenue primarily derives from intellectual property licensing, R&D services, and product sales, with revenue from customer contracts totaling RMB 206.49 million for the six months ended June 30, 2025 Revenue Classification (RMB thousands) | Revenue Type | 2025 | 2024 | | :--------------------------------- | :------ | :----- | | Licensing Agreement Income | 180,770 | 44,919 | | Income from Providing R&D and Other Services | 22,000 | – | | Product Sales | 3,716 | – | | **Total** | **206,486** | **44,919** | Revenue by Geographical Location (RMB thousands) | Region | 2025 | 2024 | | :----- | :------ | :----- | | China | 54,017 | 44,919 | | USA | 152,469 | – | | **Total** | **206,486** | **44,919** | - For resource allocation and performance assessment, the Group's management focuses on overall operating performance and does not provide separate operating segment information[60](index=60&type=chunk) [Other Income and Loss Before Tax](index=20&type=section&id=Other%20Income%20and%20Loss%20Before%20Tax) For the six months ended June 30, 2025, other income was RMB 7.16 million, primarily comprising bank deposit interest income and net realized and unrealized gains on financial assets at fair value through profit or loss Other Income (RMB thousands) | Item | 2025 | 2024 | | :----------------------------------------- | :---- | :---- | | Government Grants | 1,575 | 5,539 | | Bank Deposit Interest Income | 4,030 | 3,521 | | Net Realized and Unrealized Gains on Financial Assets at FVTPL | 1,557 | 2,188 | | Others | – | (3,846) | | **Total** | **7,162** | **7,402** | Finance Costs (RMB thousands) | Item | 2025 | 2024 | | :------------------- | :----- | :----- | | Interest on Interest-Bearing Borrowings | 10,507 | 13,912 | | Interest on Lease Liabilities | 30 | 30 | | Other Finance Costs | 1,848 | – | | **Total** | **12,385** | **13,942** | - Loss before tax was **RMB (30,970) thousand**, a significant reduction compared to the same period last year[48](index=48&type=chunk) [Income Tax and Loss Per Share](index=21&type=section&id=Income%20Tax%20and%20Loss%20Per%20Share) For the six months ended June 30, 2025, income tax was RMB (37) thousand, and basic and diluted loss per share was RMB (0.13), a significant decrease from the prior year Income Tax (RMB thousands) | Item | 2025 | 2024 | | :---------- | :--- | :--- | | Deferred Tax | (37) | (37) | | **Total** | **(37)** | **(37)** | - Basic loss per share is calculated by dividing the loss attributable to ordinary equity holders of the company of **RMB 28,333,000** by the weighted average number of ordinary shares outstanding during the period of **222,072,000 shares**[69](index=69&type=chunk) - Pursuant to the PRC Enterprise Income Tax Law, eligible R&D expenses incurred can be super-deducted by **100%** from taxable income for the year ended **December 31, 2025**[68](index=68&type=chunk) [Property, Plant and Equipment](index=21&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group acquired plant and equipment with a cost of **RMB 2,274,000** - For the six months ended **June 30, 2025**, the Group acquired plant and equipment with a cost of **RMB 2,274,000**[70](index=70&type=chunk) - Pursuant to borrowing arrangements, the Group's land use rights and production facilities in Taizhou were pledged as collateral in **August 2023**, with a carrying amount of **RMB 222,560,000** as of **June 30, 2025**[70](index=70&type=chunk) [Equity Investments Designated at Fair Value Through Other Comprehensive Income](index=22&type=section&id=Equity%20Investments%20Designated%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) As of June 30, 2025, the company recognized new unlisted equity investments of **RMB 96,794 thousand**, representing approximately **24.88% equity in Caldera Therapeutics, Inc.** received under the QX030N licensing agreement and measured at fair value Equity Investments (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Unlisted Equity Investments (at fair value) | 96,794 | – | - This investment represents approximately **24.88% equity in Caldera Therapeutics, Inc.** received under the QX030N licensing agreement and is designated at fair value through other comprehensive income as it is held for strategic purposes[71](index=71&type=chunk) [Inventories and Other Contract Costs](index=22&type=section&id=Inventories%20and%20Other%20Contract%20Costs) As of June 30, 2025, total inventories and other contract costs amounted to **RMB 32,800 thousand**, including inventories of **RMB 6,483 thousand** and other contract costs for fulfilling existing contracts of **RMB 26,317 thousand** Inventories and Other Contract Costs (RMB thousands) | Item | June 30, 2025 | | :--------------------------------- | :------------ | | Inventories | 6,483 | | Other Contract Costs for Fulfilling Existing Contracts | 26,317 | | **Total** | **32,800** | - For the six months ended **June 30, 2025**, **RMB 1,948 thousand** was recognized as a reduction in inventories and other contract costs, charged to "Cost of Sales"[72](index=72&type=chunk) [Trade and Other Receivables](index=23&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, total trade and other receivables amounted to **RMB 87,364 thousand**, of which trade receivables were **RMB 67,632 thousand** Trade and Other Receivables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Trade Receivables | 67,632 | 26,281 | | Prepayments | 18,196 | 24,520 | | Deposits | 563 | 424 | | Interest Receivable | 762 | 491 | | Other Receivables | 211 | 108 | | **Total** | **87,364** | **51,824** | - Trade receivables are generally due within **60 to 180 days** from the invoice date[73](index=73&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=23&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2025, financial assets at fair value through profit or loss amounted to **RMB 20,073 thousand**, primarily consisting of investments in wealth management products purchased from Bank of China Financial Assets at Fair Value Through Profit or Loss (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Wealth Management Products | 20,073 | 195,439 | - These financial assets include investments in wealth management products purchased from Bank of China[74](index=74&type=chunk) [Time Deposits and Cash and Cash Equivalents](index=23&type=section&id=Time%20Deposits%20and%20Cash%20and%20Cash%20Equivalents) As of June 30, 2025, time deposits amounted to **RMB 39,500 thousand**, and cash and cash equivalents amounted to **RMB 499,324 thousand**, totaling **RMB 538,824 thousand** Time Deposits and Cash and Cash Equivalents (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Time Deposits with Original Maturity Over Three Months | 39,500 | – | | Bank Balances | 291,706 | 197,110 | | Time Deposits with Original Maturity Within Three Months | 207,618 | 163,578 | | **Cash and Cash Equivalents** | **499,324** | **360,688** | [Trade and Other Payables](index=23&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables amounted to **RMB 241,790 thousand**, of which trade payables were **RMB 126,577 thousand** Trade and Other Payables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Trade Payables | 126,577 | 110,885 | | Accrued Salaries | 26,540 | 33,373 | | Payables for Purchase of Property, Plant and Equipment | 5,089 | 6,758 | | Accrued Listing Expenses | 478 | 3,290 | | Other Payables and Accrued Expenses | 83,106 | 54,488 | | **Total** | **241,790** | **208,794** | - Other payables and accrued expenses include **RMB 24,377 thousand** of QX005N clinical development expenses paid by Huadong Medicine on behalf of the company, recognized as a financial liability of the company under the QX005N agreement[76](index=76&type=chunk) [Interest-Bearing Borrowings](index=24&type=section&id=Interest-Bearing%20Borrowings) As of June 30, 2025, total interest-bearing borrowings amounted to **RMB 634,118 thousand**, including short-term bank loans, and current and non-current portions of long-term bank loans Interest-Bearing Borrowings (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Unsecured Short-Term Bank Loans | 104,583 | 179,483 | | Current Portion of Unsecured Long-Term Bank Loans | 53,954 | 3,291 | | Current Portion of Secured Long-Term Bank Loans | 27,808 | 27,808 | | **Within 1 Year or On Demand** | **186,345** | **210,582** | | Unsecured Long-Term Bank Loans | 258,068 | 111,700 | | Secured Long-Term Bank Loans | 189,705 | 203,420 | | **Non-Current** | **447,773** | **315,120** | | **Total** | **634,118** | **525,702** | - Unsecured short-term and long-term bank loans bear

香港聯合交易所有限公司（「聯交所」）GEM的特色 GEM的定位，乃為較於聯交所上市的其他公司帶有較高投資風險的中小型公司提供一個 上市的市場。有意投資者應了解投資於該等公司的潛在風險，並應經過審慎周詳考慮後 方作出投資決定。 由於GEM上市的公司一般為中小型公司，在GEM買賣的證券可能會承受較於主板買賣 的證券為高的市場波動風險，同時亦無法保證在GEM買賣的證券會有高流通量的市場。 香港交易及結算所有限公司及聯交所對本報告的內容概不負責，對其準確性或完整性亦 不發表任何聲明，並明確表示概不就因本報告全部或任何部分內容而產生或因依賴該等 內容而引致的任何損失承擔任何責任。 本報告載有遵照聯交所GEM證券上市規則（「GEM上市規則」）規定提供的詳情，旨在提 供有關德寶集團控股有限公司（「本公司」）及其附屬公司（統稱「本集團」）的資料，而本 公司董事（「董事」）願就本報告共同及個別承擔全部責任。董事經作出一切合理查詢後確 認，就彼等所深知及確信，本報告所載資料在各重大方面均屬準確及完整，並無誤導或 欺詐成分，亦無遺漏其他事項致使本報告內任何陳述或本報告產生誤導。 目 錄 2 公司資料 4 財務摘要 5 未經審核簡明 ...

[Performance Highlights](index=1&type=section&id=Performance%20Highlights) [Key Operating Data](index=1&type=section&id=Key%20Operating%20Data) For the six months ended June 30, 2025, the company's hog sales significantly increased, with commercial hog sales growing by 23.4% year-on-year and average selling prices slightly rising; poultry business saw yellow-feathered broiler sales increase by 7.2% year-on-year, but average selling prices decreased by 19.1% H1 2025 Key Product Sales and Average Selling Prices | Product | H1 2025 | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Hog Sales** | | | | | Commercial Hog Sales (head) | 4,843,040 | 3,925,495 | +23.4% | | Commercial Hog Average Price (CNY/head) | 2,032.7 | 1,964.1 | +3.5% | | **Poultry Sales** | | | | | Yellow-Feathered Broiler Sales (unit) | 42,703,302 | 39,839,536 | +7.2% | | Yellow-Feathered Broiler Average Price (CNY/unit) | 30.5 | 37.7 | -19.1% | [Key Financial Data](index=2&type=section&id=Key%20Financial%20Data) In H1 2025, the company's total revenue increased by 24.3% to **CNY 11.70 billion**; despite revenue growth, profit for the period decreased by 24.1% to **CNY 1.36 billion** due to a significant reduction in fair value gains on biological assets, yet profit before fair value adjustments of biological assets surged by 250.6%, reflecting strong core operational improvement H1 2025 Key Financial Indicators | Indicator | H1 2025 (CNY Thousand) | H1 2024 (CNY Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 11,695,381 | 9,407,081 | +24.3% | | Profit Before Tax | 1,360,479 | 1,791,714 | -24.1% | | Profit for the Period | 1,360,367 | 1,791,381 | -24.1% | | Profit Attributable to Equity Holders of the Company | 1,292,387 | 1,766,453 | -26.8% | | Earnings Per Share (CNY) | 3.32 | 4.54 | -26.9% | | Profit for the Period Before Fair Value Adjustments of Biological Assets | 1,273,072 | 363,125 | +250.6% | [Financial Statements](index=3&type=section&id=Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) During the reporting period, the company's revenue reached **CNY 11.70 billion**, a 24.3% year-on-year increase, with gross profit surging by 74.0% to **CNY 2.03 billion**; however, operating profit and profit for the period declined due to fair value gains on biological assets sharply decreasing from **CNY 1.43 billion** in the prior period to **CNY 0.087 billion** this year Consolidated Statement of Profit or Loss Summary | Item | H1 2025 (CNY Thousand) | H1 2024 (CNY Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 11,695,381 | 9,407,081 | +24.3% | | Cost of Sales | (9,666,196) | (8,241,133) | +17.3% | | **Gross Profit** | **2,029,185** | **1,165,948** | **+74.0%** | | Fair Value Change of Biological Assets | 87,295 | 1,428,256 | -93.9% | | Operating Profit | 1,518,391 | 2,015,268 | -24.7% | | **Profit for the Period** | **1,360,474** | **1,791,381** | **-24.1%** | [Consolidated Statement of Financial Position](index=5&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were **CNY 23.90 billion**, a 4.1% increase from end-2024; total liabilities were **CNY 14.31 billion**, a slight decrease; net assets grew by 11.7% to **CNY 9.59 billion** due to period profit, indicating an improved financial structure Consolidated Statement of Financial Position Summary | Item | June 30, 2025 (CNY Thousand) | December 31, 2024 (CNY Thousand) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **23,900,612** | **23,056,050** | **+3.7%** | | Current Assets | 12,221,274 | 11,765,263 | +3.9% | | Non-current Assets | 11,679,338 | 11,290,787 | +3.4% | | **Total Liabilities** | **14,306,777** | **14,470,709** | **-1.1%** | | Current Liabilities | 8,878,682 | 9,063,349 | -2.0% | | Non-current Liabilities | 5,428,095 | 5,407,360 | +0.4% | | **Net Assets** | **9,593,835** | **8,585,341** | **+11.7%** | [Management Discussion and Analysis](index=14&type=section&id=Management%20Discussion%20and%20Analysis) [Company Overview and Market Overview](index=14&type=section&id=Company%20Overview%20and%20Market%20Overview) The company is a leading livestock and poultry farming enterprise in China, with core businesses in hog and yellow-feathered broiler breeding and farming, adopting a vertically integrated business model; in H1 2025, the hog industry showed good profitability with macro-control expected to improve future supply-demand, while the poultry industry faced price declines due to weak consumption but anticipates demand improvement in H2 - The company's core business is hog and yellow-feathered broiler farming, utilizing a vertically integrated model covering feed production, breeding, farming, and sales, complemented by a 'family farm' expansion model[29](index=29&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Hog market: Since early 2025, hog prices have been above the cost line, with breeding sow inventory slightly above normal levels, and policy guidance is expected to improve the supply-demand landscape in 2026[34](index=34&type=chunk) - Poultry market: Industry concentration has increased, but during the reporting period, poultry meat prices declined due to weak consumer demand influenced by the macro economy, with performance expected to improve in H2 driven by holidays[35](index=35&type=chunk) [Operating Performance](index=16&type=section&id=Operating%20Performance) In H1 2025, the company's overall operating performance was strong, with revenue growing by 24.3% year-on-year and profit before fair value adjustments of biological assets surging by 250.6%; the hog segment was the primary growth driver with double-digit increases in both revenue and sales, while the poultry segment's revenue declined due to market price drops, and the ancillary products segment showed steady growth Revenue Performance by Business Segment | Business Segment | H1 2025 Revenue (CNY Million) | Y-o-Y Change | | :--- | :--- | :--- | | Hog Segment | 9,878.8 | +32.6% | | Poultry Segment | 1,335.5 | -13.5% | | Ancillary Products Segment | 481.1 | +16.1% | - Hog segment growth primarily benefited from advanced independent breeding systems, precise nutrition technology, efficient management, and disease prevention, demonstrating significant anti-cyclical capability[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - Poultry segment revenue decline was mainly due to a 20.9% year-on-year decrease in average selling price of yellow-feathered broilers caused by weak consumption in the catering industry, despite a 7.2% increase in sales volume[43](index=43&type=chunk) - The company empowers farmers through its innovative 'new-style family farm' model, which saw PSY (pigs weaned per sow per year) increase to **27 heads** during the reporting period, demonstrating industry-leading farming efficiency[42](index=42&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) The company's financial position significantly improved in H1 2025, with revenue growing by 24.3% and gross profit margin increasing from 12.4% to 17.4%, primarily due to reduced production costs; finance costs decreased by 32.3% due to lower interest rates and reduced borrowings, while liquidity and quick ratios improved, and the net debt-to-equity ratio substantially decreased from 26.2% to 15.1%, indicating enhanced solvency and a more robust financial structure - Overall gross profit margin increased from **12.4%** in the prior period to **17.4%**, primarily due to reduced production costs (especially feed and raw materials) and improved management efficiency[47](index=47&type=chunk) - Finance costs decreased by **32.3%** year-on-year, mainly due to lower bank borrowing interest rates and a reduction in total loans[52](index=52&type=chunk) Changes in Key Financial Ratios | Financial Ratio | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Current Ratio | 1.4 | 1.0 | | Quick Ratio | 1.3 | 0.9 | | Net Debt-to-Equity Ratio | 15.1% | 91.9% | - Net cash generated from operating activities was **CNY 1.74 billion**, a 15.0% year-on-year increase, indicating enhanced cash-generating capability from core operations[60](index=60&type=chunk) [Major Risks and Uncertainties](index=28&type=section&id=Major%20Risks%20and%20Uncertainties) The company faces major risks including epidemic diseases and market price fluctuations; it has implemented strict biosecurity protocols and disease eradication programs to mitigate epidemic risks, and uses enhanced operational capabilities, financial derivatives, and optimized feed cost control technologies to hedge against price volatility - One major risk is epidemic diseases, such as African Swine Fever and avian influenza; the company mitigates this risk through stringent biosecurity measures, immunization, and careful farm site selection[74](index=74&type=chunk)[75](index=75&type=chunk) - Another major risk is the cyclical price fluctuations of hog and poultry products ('hog cycle', 'chicken cycle') and feed raw material price volatility; the company addresses this through operational improvements, financial derivatives, and feed formulation adjustments[76](index=76&type=chunk) [Outlook](index=30&type=section&id=Outlook) In H2 2025, the company will continue to focus on efficiency improvement, cost reduction, and high-quality development; the hog segment will deepen its 'farmer-empowerment' model, the poultry segment anticipates increased market demand and will enhance farming efficiency, and the ancillary products segment will improve slaughtering business operational efficiency and expand markets; additionally, the company plans to utilize hog futures for risk hedging and continue investing in ESG initiatives - Hog Segment: Will continue to deepen the 'leading enterprise driving small and medium-sized farms' family farm model, focusing on the Southwest market to consolidate brand influence[77](index=77&type=chunk) - Poultry Segment: Anticipates increased demand in H2, will enhance farming efficiency, reduce costs, and strengthen distribution channels[77](index=77&type=chunk) - Ancillary Products Segment: Will enhance the profitability of its slaughtering business, focus on chilled and cured products, and build a high-quality food ecosystem[80](index=80&type=chunk) - Risk Management: Plans to effectively utilize hog futures hedging tools to mitigate operational risks[80](index=80&type=chunk) [Corporate Governance and Other Information](index=31&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Human Resources](index=27&type=section&id=Human%20Resources) As of June 30, 2025, the company had **10,904 employees**, with a scientific compensation system and full social security and housing provident fund contributions; during the reporting period, the company focused on talent development, adopting an 'internal growth primary, external recruitment supplementary' strategy, and conducted multi-dimensional training sessions totaling over **350,000 attendances** to support business growth - As of June 30, 2025, the total number of employees was **10,904**, an increase from **9,978** in the prior period[72](index=72&type=chunk) - Total remuneration during the reporting period was approximately **CNY 0.791 billion**, a 17.0% year-on-year increase[18](index=18&type=chunk)[79](index=79&type=chunk) - The company emphasizes talent development, with over **350,000 training attendances** during the reporting period, and introduced professional consulting teams to empower 'AI + systematic management transformation'[73](index=73&type=chunk) [Dividend Policy](index=13&type=section&id=Dividend%20Policy) The Board resolved not to declare any interim dividend for the six months ended June 30, 2025; however, the company paid a final dividend for the previous fiscal year (2024) totaling **CNY 0.35 billion** during the reporting period - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025[28](index=28&type=chunk)[82](index=82&type=chunk) - During the reporting period, the company approved and paid the final dividend for the previous fiscal year, totaling **CNY 0.35 billion**[28](index=28&type=chunk) [Use of Proceeds from Listing](index=32&type=section&id=Use%20of%20Proceeds%20from%20Listing) The company listed on December 6, 2023, with net proceeds from global offering of approximately **HKD 0.953 billion**; as of June 30, 2025, approximately **HKD 0.727 billion** has been utilized, primarily for expanding farming operations, developing food processing businesses, and repaying bank loans, with approximately **HKD 0.226 billion** remaining for planned use Use of Proceeds from Listing (As of June 30, 2025) | Purpose | Planned Amount (HKD Million) | Amount Utilized (HKD Million) | Amount Unutilized (HKD Million) | | :--- | :--- | :--- | :--- | | Expansion of Farming Business | 476.3 | 381.0 | 95.3 | | Development of Food Processing Business | 142.9 | 142.9 | 0 | | R&D Investment and Information Technology | 95.3 | 92.3 | 3.0 | | Repayment of Bank Loans | 47.6 | 47.6 | 0 | | Others | 190.6 | 63.3 | 127.3 | | **Total** | **952.5** | **727.1** | **225.6** |

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不 負 責，對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明，並 明 確 表 示，概 不 對 因 本 公 告 全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責 任。 Takbo Group Holdings Limited 承董事會命 德寶集團控股有限公司 執行董事兼行政總裁 柯 香 港，二 零 二 五 年 八 月 十 五 日 於 本 公 告 日 期，執 行 董 事 為 柯 枬 先 生、陳 凱 欣 女 士 及 柯 烜 先 生；及 獨 立 非 執 行 董 事 為 陳 聰 發 先 生、宋 治 強 先 生 及 許 夏 林 先 生。 本公告載有根據香港聯合交易所有限公司GEM上市規則規定須提供有關本公 司 資 料 的 詳 情，董 事 願 就 本 公 告 共 同 及 個 別 承 擔 全 部 責 任。董 事 在 作 出 一 切 合 理 查 詢 後 確 認，就 彼 等 所 深 知 及 確 信，本 公 告 所 載 資 料 在 各 重 大 方 面 屬 準 確 及 完 整，且 無 誤 導 或 欺 詐 成 分；及 並 無 遺 漏 任 ...

[Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) [Board Announcement](index=1&type=section&id=Board%20Announcement) The Board announces the Group's unaudited interim results for the six months ended June 30, 2025, with comparative figures - The company announced its unaudited condensed consolidated interim results for the six months ended June 30, 2025[3](index=3&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Unaudited Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Revenue grew 14.3% to $59,564 thousand, with profit for the period increasing significantly by 56.9% to $5,034 thousand **Key Financial Performance for the Six Months Ended June 30** | Metric | 2025 (USD thousands) | 2024 (USD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 59,564 | 52,107 | 14.3% | | Cost of sales | (41,872) | (36,668) | 14.2% | | Gross profit | 17,692 | 15,439 | 14.6% | | Profit before tax | 6,433 | 4,106 | 56.7% | | Income tax expense | (1,399) | (898) | 55.8% | | Profit for the period | 5,034 | 3,208 | 56.9% | | Basic earnings per share (US cents) | 0.99 | 0.63 | 57.1% | | Diluted earnings per share (US cents) | 0.99 | 0.63 | 57.1% | [Unaudited Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets slightly increased to $69,091 thousand, while net current assets and total equity grew, reflecting profit growth **Key Financial Position as of Period End** | Metric | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 69,091 | 68,491 | 0.9% | | Total non-current assets | 11,311 | 11,356 | -0.4% | | Total current assets | 57,780 | 57,135 | 1.1% | | Total current liabilities | 39,650 | 42,808 | -7.4% | | Net current assets | 18,130 | 14,327 | 26.5% | | Net assets | 28,896 | 25,173 | 14.8% | | Total equity | 28,896 | 25,173 | 14.8% | [Notes to the Unaudited Condensed Consolidated Financial Information](index=5&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Information) [1. Company and Group Information](index=5&type=section&id=1.%20Company%20and%20Group%20Information) The company is an investment holding company providing sensing and control solutions for smart home and consumer electronics markets - The company is an investment holding company, primarily engaged in providing sensing and control technology solutions for the smart home automation, consumer electronics, and set-top box markets[7](index=7&type=chunk) - The company's shares were listed on the Main Board of the Stock Exchange on November 14, 2019[8](index=8&type=chunk) [2. Basis of Preparation](index=5&type=section&id=2.%20Basis%20of%20Preparation) The interim financial information is prepared in accordance with IAS 34 and should be read with the 2024 annual financial statements - The financial information is prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting"[10](index=10&type=chunk) - Management's significant judgments in applying accounting policies and key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended December 31, 2024[10](index=10&type=chunk) [3. Changes in Accounting Policies and Disclosures](index=6&type=section&id=3.%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The Group's accounting policies are consistent with the previous year, except for new standards effective January 1, 2025 - The Group has adopted new standards and amendments effective for the accounting period beginning January 1, 2025[13](index=13&type=chunk) - The adoption of these new standards and amendments is not expected to have a significant impact on the Group's results or financial position for the current or prior years[13](index=13&type=chunk) [4. Operating Segment Information](index=6&type=section&id=4.%20Operating%20Segment%20Information) The Group operates as a single reportable segment, with revenue growth in Europe and Asia offsetting a decline in North America - The Group has only one reportable operating segment[15](index=15&type=chunk) [(a) External Customer Revenue](index=7&type=section&id=(a)%20External%20Customer%20Revenue) Revenue from Europe and Asia grew by 28.4% and 87.5% respectively, while North American revenue declined by 18.9% **Revenue from External Customers by Geographical Location** | Region | 2025 (USD thousands) | 2024 (USD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | North America | 17,605 | 21,713 | -18.9% | | Europe | 26,018 | 20,259 | 28.4% | | Asia | 12,868 | 6,864 | 87.5% | | Latin America | 3,073 | 3,271 | -6.1% | | **Total** | **59,564** | **52,107** | **14.3%** | [(b) Non-current Assets](index=7&type=section&id=(b)%20Non-current%20Assets) Total non-current assets were $2,215 thousand, primarily located in Asia, with a notable increase in European assets **Non-current Assets by Geographical Location** | Region | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | North America | 10 | 20 | | Europe | 201 | 82 | | Asia | 2,004 | 2,177 | | **Total** | **2,215** | **2,279** | [Information on Major Customers](index=7&type=section&id=Information%20on%20Major%20Customers) Two major customers each accounted for over 10% of total revenue, with income from both increasing during the period **Revenue from Major Customers** | Customer | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Customer 1 | 12,510 | 10,822 | | Customer 2 | 9,775 | 7,191 | [5. Revenue and Other Income](index=8&type=section&id=5.%20Revenue%20and%20Other%20Income) Revenue was primarily from sales of goods, with growth in both control and healthcare solutions, while other income was stable **Revenue Analysis** | Revenue Source | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Sales of goods - Control solutions | 47,742 | 43,995 | | Sales of goods - Healthcare solutions | 11,725 | 8,051 | | Patent income | 97 | 61 | | **Total revenue from contracts with customers** | **59,564** | **52,107** | - Revenue from the sale of goods is recognised when control of the goods is transferred, while patent income is recognised over time[21](index=21&type=chunk)[23](index=23&type=chunk) **Other Income Analysis** | Other Income Source | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Government grants | 28 | 32 | | Interest income | 26 | 15 | | Others | – | – | | **Total** | **47** | **54** | [6. Profit Before Tax](index=9&type=section&id=6.%20Profit%20Before%20Tax) Profit before tax was impacted by changes in inventory costs, reduced restructuring expenses, and increased employee benefits **Key Items Deducted from/Credited to Profit Before Tax** | Item | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Cost of inventories sold | 35,969 | 30,612 | | Provision for inventories | 88 | 459 | | Outsourcing costs | 4,881 | 4,617 | | Depreciation of property, plant and equipment | 587 | 679 | | Depreciation of right-of-use assets | 201 | 264 | | Restructuring and severance costs | 10 | 545 | | Employee benefit expenses (wages and salaries) | 5,344 | 5,080 | | Research and development expenses | 2,251 | 2,866 | [7. Finance Costs – Net](index=10&type=section&id=7.%20Finance%20Costs%20%E2%80%93%20Net) Net finance costs decreased to $211 thousand, mainly due to a significant reduction in interest on bank borrowings **Net Finance Costs Analysis** | Item | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Interest on bank borrowings | 113 | 567 | | Interest on lease liabilities | 19 | 12 | | Amortisation of loan arrangement, financing and legal fees | 79 | 33 | | Gain on modification of financial assets | – | (199) | | **Total** | **211** | **413** | - The decrease in net finance costs was primarily due to a reduction in interest on bank borrowings of approximately **$0.4 million**[65](index=65&type=chunk) [8. Income Tax](index=10&type=section&id=8.%20Income%20Tax) Total income tax expense increased due to higher profit before tax, despite a subsidiary benefiting from a lower preferential tax rate - Suzhou Ouqing Electronics Co, Ltd enjoyed a preferential income tax rate of **5% in 2025**, compared to 25% in 2024[28](index=28&type=chunk) **Major Components of Income Tax Expense** | Item | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Current tax – Singapore | 1,366 | 761 | | Current tax – United States | 39 | 96 | | Current tax – China and other regions | 33 | 141 | | Deferred tax (credit) | (7) | (101) | | **Total tax expense for the period** | **1,399** | **898** | [9. Earnings Per Share](index=11&type=section&id=9.%20Earnings%20Per%20Share) Basic and diluted earnings per share both increased to 0.99 US cents from 0.63 US cents in the prior period **Basis for Earnings Per Share Calculation** | Metric | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Profit attributable to owners of the Company | 5,034 | 3,208 | | Weighted average number of ordinary shares in issue | 506,650,000 | 506,650,000 | - Basic and diluted earnings per share were **0.99 US cents**, an increase of 57.1% from 0.63 US cents in the prior year period[4](index=4&type=chunk)[69](index=69&type=chunk) - Diluted earnings per share was the same as basic earnings per share as there were no potential dilutive ordinary shares outstanding[33](index=33&type=chunk) [10. Trade Receivables](index=12&type=section&id=10.%20Trade%20Receivables) Net trade receivables increased to $29,897 thousand, with the majority of balances aged within 90 days **Trade Receivables and Ageing Analysis** | Item | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | Trade receivables | 30,112 | 23,790 | | Impairment | (215) | (215) | | **Net amount** | **29,897** | **23,575** | | **Ageing analysis:** | | | | 0 to 90 days | 29,168 | 20,240 | | 91 to 180 days | 527 | 2,130 | | Over 180 days | 202 | 1,205 | - Trade receivables are non-interest-bearing and are generally on credit terms of 30 to 90 days[34](index=34&type=chunk) [11. Trade Payables](index=13&type=section&id=11.%20Trade%20Payables) Trade payables slightly increased to $29,721 thousand, with most balances settled within a 90-day credit period **Trade Payables and Ageing Analysis** | Item | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | Trade payables | 29,721 | 28,656 | | **Ageing analysis:** | | | | 0 to 90 days | 21,790 | 21,158 | | 91 to 180 days | 7,855 | 7,446 | | Over 180 days | 76 | 52 | - Trade payables are non-interest-bearing and are normally settled on 90-day credit terms[36](index=36&type=chunk) [12. Cash and Cash Equivalents](index=13&type=section&id=12.%20Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased to $14,473 thousand, with balances primarily denominated in USD, EUR, and GBP **Cash and Cash Equivalents** | Currency | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | USD | 9,442 | 11,204 | | EUR | 1,334 | 898 | | SGD | 212 | 888 | | RMB | 1,389 | 4,670 | | GBP | 1,708 | 1,475 | | BRL | 214 | 141 | | Others | 174 | 167 | | **Total** | **14,473** | **19,443** | - The Renminbi is not freely convertible but can be exchanged through authorised banks, with remittance subject to PRC foreign exchange controls[38](index=38&type=chunk) [13. Financial Assets Measured at Amortised Cost](index=14&type=section&id=13.%20Financial%20Assets%20Measured%20at%20Amortised%20Cost) The net balance of financial assets at amortised cost was zero, as the unlisted investment was fully impaired **Financial Assets at Amortised Cost** | Item | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | Unlisted investment | 3,437 | 3,437 | | Less: Loss allowance | (3,437) | (3,437) | | **Net amount** | **–** | **–** | - The investment, a principal-protected wealth management product, has experienced a significant increase in credit risk with uncertainty in redemption[39](index=39&type=chunk)[40](index=40&type=chunk) [14. Interest-bearing Bank Borrowings](index=14&type=section&id=14.%20Interest-bearing%20Bank%20Borrowings) The Group fully repaid its interest-bearing bank borrowings, reducing the balance from $6,171 thousand to zero **Interest-bearing Bank Borrowings** | Item | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | | :--- | :--- | :--- | | Loans from banks – secured | – | 6,171 | - Bank borrowings were fully repaid during the period; the prior year's balance was a secured loan at SOFR + 2.5%[41](index=41&type=chunk)[42](index=42&type=chunk) [15. Dividends](index=15&type=section&id=15.%20Dividends) No interim dividend was declared for the period, while the final dividend for FY2024 was approved for payment in August 2025 - No dividend was proposed for the six months ended June 30, 2025[89](index=89&type=chunk) - The proposed final dividend of **$1,267 thousand for FY2024** was approved and will be paid on or about August 22, 2025[45](index=45&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) [Overview](index=16&type=section&id=Overview) The Group is a leading home control solutions provider that has expanded into the healthcare sector under the new "Omni Devices" brand - The Group is a leading global provider of home control solutions with over **200 invention patents**[46](index=46&type=chunk)[48](index=48&type=chunk) - The brand was upgraded to **"Omni Devices"**, and the healthcare solutions segment's revenue contribution grew from 15.5% to **19.7%**[49](index=49&type=chunk) - The company was acquired by healthcare holding company Meta-Wisdom Tech Limited, which will accelerate healthcare solution development and the creation of a health monitoring ecosystem[50](index=50&type=chunk) [Business Review](index=17&type=section&id=Business%20Review) The Group's revenue increased by 14.3% to approximately $59.6 million, with net profit growing significantly by 56.3% - Revenue was approximately **$59.6 million**, a 14.3% increase from $52.1 million in the prior year period[52](index=52&type=chunk) - Net profit was approximately **$5.0 million**, a 56.3% increase from $3.2 million, mainly due to automation and optimised cost management[52](index=52&type=chunk) [Prospects and Outlook](index=17&type=section&id=Prospects%20and%20Outlook) The Group will focus on cost management, R&D, and developing AIoT-based healthcare solutions amid geopolitical and trade uncertainties - While global inflation is easing, geopolitical instability and trade policy changes create business uncertainty[53](index=53&type=chunk) - The Group will continue cost management measures, increase R&D investment, expand its sales team, and focus on the home healthcare sector[54](index=54&type=chunk) - It is committed to developing integrated AIoT solutions and platforms to promote healthy home environments and personal health management[54](index=54&type=chunk) [Revenue](index=18&type=section&id=Revenue_MDA) Revenue grew 14.3% to $59.6 million, driven by an $11.8 million increase in Asia and Europe, offsetting a $4.3 million decline elsewhere - Total revenue increased by **14.3% (approximately $7.5 million)**, primarily driven by an increase in revenue from Asia and Europe of approximately $11.8 million[55](index=55&type=chunk) **Revenue by Customer Geographical Location** | Region | 2025 (USD thousands) | 2024 (USD thousands) | Change (USD thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | North America | 17,605 | 21,713 | (4,108) | (18.9) | | Europe | 26,018 | 20,259 | 5,759 | 28.4 | | Asia | 12,868 | 6,864 | 6,004 | 87.5 | | Latin America | 3,073 | 3,271 | (198) | (6.1) | | **Total** | **59,564** | **52,107** | **7,457** | **14.3** | [Cost of Sales](index=18&type=section&id=Cost%20of%20Sales) Cost of sales was $41.9 million, representing 70.3% of total revenue, remaining stable compared to the prior period **Cost of Sales Breakdown** | Item | 2025 (USD thousands) | % of Total | 2024 (USD thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Component costs | 36,058 | 86.1 | 31,069 | 84.7 | | Outsourcing | 4,881 | 11.7 | 4,617 | 12.6 | | Recurring expenses | 933 | 2.2 | 982 | 2.7 | | **Total** | **41,872** | **100.0** | **36,668** | **100.0** | - The cost of sales as a percentage of total revenue slightly decreased from 70.4% to **70.3%**[57](index=57&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) Gross profit increased by $2.3 million to $17.7 million, primarily driven by higher revenue - Gross profit increased by approximately **$2.3 million to $17.7 million**, mainly due to the increase in revenue[60](index=60&type=chunk) [Other Income](index=19&type=section&id=Other%20Income_MDA) Other income remained stable at approximately $0.1 million compared to the same period last year - Other income was approximately **$0.1 million**, remaining at the same level as the prior year period[61](index=61&type=chunk) [Selling and Distribution Expenses](index=19&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased to $3.9 million, mainly due to higher salaries and distribution costs - Selling and distribution expenses increased by approximately **$0.3 million to $3.9 million**, mainly due to an increase in salaries and wages of approximately $0.2 million and distribution expenses of approximately $0.1 million[62](index=62&type=chunk) [Administrative Expenses](index=19&type=section&id=Administrative%20Expenses) Administrative expenses decreased slightly to $5.8 million, primarily due to a reduction in non-capitalised fixed assets - Administrative expenses decreased by approximately **$0.1 million to $5.8 million**, mainly due to a decrease in non-capitalised fixed assets[63](index=63&type=chunk) [Other Expenses](index=20&type=section&id=Other%20Expenses) Other expenses decreased to $1.4 million, driven by significantly lower restructuring costs and reduced exchange differences - Other expenses decreased by approximately **$0.1 million**, mainly due to a decrease in restructuring expenses of approximately $0.5 million and other factors, partially offset by an increase in legal expenses of $0.9 million[64](index=64&type=chunk) [Finance Costs – Net](index=20&type=section&id=Finance%20Costs%20%E2%80%93%20Net_MDA) Net finance costs decreased by approximately $0.2 million, primarily due to lower interest on bank loans - Net finance costs decreased by approximately **$0.2 million**, mainly due to a decrease in interest on bank loans of approximately $0.4 million[65](index=65&type=chunk) [Profit Before Tax](index=20&type=section&id=Profit%20Before%20Tax_MDA) Profit before tax increased to $6.4 million from $4.1 million, reflecting the combined effect of changes in income and expenses - Profit before tax was approximately **$6.4 million**, an increase from $4.1 million in the prior year period[66](index=66&type=chunk) [Income Tax Expense](index=20&type=section&id=Income%20Tax%20Expense) Income tax expense rose to $1.4 million from $0.9 million, primarily as a result of higher profit before tax - Income tax expense increased to approximately **$1.4 million**, mainly due to the increase in profit before tax[67](index=67&type=chunk) [Profit for the Period](index=20&type=section&id=Profit%20for%20the%20Period) Net profit after tax for the period was approximately $5.0 million, an increase of $1.8 million from the prior year - Net profit after tax was approximately **$5.0 million**, an increase of approximately $1.8 million from $3.2 million in the prior year period[68](index=68&type=chunk) [Earnings Per Share](index=20&type=section&id=Earnings%20Per%20Share_MDA) Basic and diluted earnings per share both increased to 0.99 US cents from 0.63 US cents in the prior period - Basic and diluted earnings per share were **0.99 US cents**, compared to 0.63 US cents in the prior year period[69](index=69&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) The Group maintained a solid financial position with cash and cash equivalents of approximately $14.5 million - Cash and cash equivalents were approximately **$14.5 million**[70](index=70&type=chunk) - The Board believes the Group's financial position is sound, with sufficient resources to support its operations and foreseeable capital expenditures[70](index=70&type=chunk) [Cash Flow](index=21&type=section&id=Cash%20Flow) The period saw a net cash decrease of $5.4 million, resulting from operating inflows offset by investing and financing outflows **Cash Flow Summary** | Item | 2025 (USD thousands) | 2024 (USD thousands) | | :--- | :--- | :--- | | Net cash from operating activities | 1,658 | 5,507 | | Net cash used in investing activities | (676) | (159) | | Net cash used in financing activities | (6,345) | (2,654) | | Net decrease/(increase) in cash and cash equivalents | (5,363) | 2,694 | | Cash and cash equivalents at end of period | 14,473 | 19,423 | [Net Cash from Operating Activities](index=21&type=section&id=Net%20Cash%20from%20Operating%20Activities) Net cash from operating activities was approximately $1.7 million, driven by cash generated from operations before working capital changes - Net cash from operating activities was approximately **$1.7 million**, primarily contributed by cash generated from operations before working capital changes of approximately $7.5 million[72](index=72&type=chunk) - This was positively impacted by a decrease in inventories and an increase in trade payables, but offset by an increase in trade receivables and income tax paid[72](index=72&type=chunk) [Net Cash Used in Investing Activities](index=22&type=section&id=Net%20Cash%20Used%20in%20Investing%20Activities) Net cash used in investing activities was approximately $0.7 million, mainly for the purchase of property, plant and equipment - Net cash used in investing activities was approximately **$0.7 million**, primarily attributable to the purchase of property, plant and equipment[73](index=73&type=chunk) [Net Cash Used in Financing Activities](index=22&type=section&id=Net%20Cash%20Used%20in%20Financing%20Activities) Net cash used in financing activities was approximately $6.3 million, primarily for the repayment of interest-bearing bank borrowings - Net cash used in financing activities was approximately **$6.3 million**, mainly attributable to the repayment of interest-bearing bank borrowings of approximately $6.3 million[74](index=74&type=chunk) [Net Current Assets](index=22&type=section&id=Net%20Current%20Assets) Net current assets increased by approximately $3.8 million to $18.1 million, driven by higher receivables and lower borrowings - Net current assets increased by approximately **$3.8 million to $18.1 million**[75](index=75&type=chunk) - The increase was mainly due to a rise in trade receivables of approximately $6.3 million and a decrease in interest-bearing loans of approximately $6.2 million[75](index=75&type=chunk) [Capital Expenditure](index=22&type=section&id=Capital%20Expenditure) Capital expenditure for the period was approximately $0.7 million, funded primarily by cash from operating activities - Capital expenditure for the period was approximately **$0.7 million** for the acquisition of property, plant and equipment[76](index=76&type=chunk) - Capital expenditure was mainly funded by cash generated from operating activities[76](index=76&type=chunk) [Capital and Investment Commitments](index=22&type=section&id=Capital%20and%20Investment%20Commitments) As of June 30, 2025, the Group had no significant capital and investment commitments contracted but not recognised - As of June 30, 2025, the Group did not have any significant capital and investment expenditures contracted but not recognised[77](index=77&type=chunk) [Bank Borrowings and Contingent Liabilities](index=22&type=section&id=Bank%20Borrowings%20and%20Contingent%20Liabilities) The Group had no short-term bank borrowings and no significant contingent liabilities as of June 30, 2025 [Bank Borrowings](index=22&type=section&id=Bank%20Borrowings) The Group's short-term bank borrowings were reduced to zero from $6.2 million in the previous year - As of June 30, 2025, the Group's short-term bank borrowings were approximately **zero** (2024: $6.2 million)[78](index=78&type=chunk) [Contingent Liabilities](index=23&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities and guarantees - As of June 30, 2025, the Group did not have any significant contingent liabilities and guarantees[79](index=79&type=chunk) [Gearing Ratio](index=23&type=section&id=Gearing%20Ratio) The gearing ratio decreased significantly to approximately 0.9% from 11.2% at the end of 2024, indicating lower financial leverage - The gearing ratio decreased from approximately **11.2%** as of December 31, 2024 to approximately **0.9%** as of June 30, 2025[80](index=80&type=chunk) [Future Plans for Material Investments and Capital Assets](index=23&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) As of June 30, 2025, the Group had no other plans for material investments or capital assets - As of June 30, 2025, the Group had no other plans for material investments or capital assets[81](index=81&type=chunk) [Material Investments, Acquisitions and Disposals of Subsidiaries and Associates](index=23&type=section&id=Material%20Investments,%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Associates) The Group made no material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures during the period - During the period, the Group held no other material investments and had no material acquisitions or disposals of subsidiaries, associates, and joint ventures[82](index=82&type=chunk) [Foreign Exchange Risk Management](index=23&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group manages foreign exchange risk through natural hedging and does not currently use derivative financial instruments - The Group's functional currency is the US dollar, with sales primarily denominated in USD and purchases in USD or RMB[83](index=83&type=chunk) - The Group has not entered into any hedging agreements for its exchange rate risk, as operating results are partially mitigated by a natural hedge[83](index=83&type=chunk) - Management will continue to monitor foreign exchange risk and take prudent measures to minimise currency conversion risks[83](index=83&type=chunk) [Other Information](index=24&type=section&id=Other%20Information) [Employees and Remuneration Policy](index=24&type=section&id=Employees%20and%20Remuneration%20Policy) The Group had 143 employees with total benefit expenses of approximately $6.5 million, utilizing a performance-based remuneration policy - As of June 30, 2025, the Group had **143 employees**, and employee benefit expenses were approximately **$6.5 million**[84](index=84&type=chunk) - The remuneration policy is based on individual performance, competence, market comparables, and Group performance, and is reviewed regularly to attract and retain talent[84](index=84&type=chunk) - All 5,016,337 awarded shares under the Share Award Scheme have been fully vested, with no new shares granted during the period[84](index=84&type=chunk) [Off-balance Sheet Commitments and Arrangements](index=25&type=section&id=Off-balance%20Sheet%20Commitments%20and%20Arrangements) As of the date of this announcement, the Group had not entered into any off-balance sheet transactions - As of the date of this announcement, the Group had not entered into any off-balance sheet transactions[85](index=85&type=chunk) [Use of Proceeds from Listing](index=25&type=section&id=Use%20of%20Proceeds%20from%20Listing) Of the $10.83 million net proceeds from the IPO, $8.11 million has been utilized, with the remainder allocated until late 2027 - The net proceeds from the initial public offering were approximately **HK$84.93 million (approximately US$10.83 million)**[86](index=86&type=chunk) **Use of Proceeds from Initial Public Offering** | Planned Use | Planned Use (USD millions) | Utilised as of June 30, 2025 (USD millions) | Unutilised as of June 30, 2025 (USD millions) | | :--- | :--- | :--- | :--- | | Repayment of bank borrowings | 2.69 | 2.69 | – | | Expansion of professional sales team | 1.76 | 1.37 | 0.39 | | Expansion of supply chain outside China | 0.84 | 0.84 | – | | Working capital and general corporate purposes | 0.70 | – | 2.33 | | Subscription for principal-protected wealth management products | 4.84 | 3.21 | – | | **Total** | **10.83** | **8.11** | **2.72** | - The unutilised proceeds from the IPO are expected to be fully used by December 31, 2027[87](index=87&type=chunk) [Interim Dividend](index=27&type=section&id=Interim%20Dividend) No dividend was proposed for the six months ended June 30, 2025 - No dividend was proposed for the six months ended June 30, 2025[89](index=89&type=chunk) [Post Balance Sheet Events](index=27&type=section&id=Post%20Balance%20Sheet%20Events) No significant events requiring disclosure or adjustment have occurred since the balance sheet date - As of the date of this announcement, no significant events affecting the Company and its subsidiaries that would require additional disclosure or adjustment have occurred[90](index=90&type=chunk) [Corporate Governance Code](index=27&type=section&id=Corporate%20Governance%20Code) The Group is committed to high standards of corporate governance and has complied with all applicable code provisions - The Group has adopted corporate governance policies no less exacting than the Corporate Governance Code and has complied with all applicable code provisions[91](index=91&type=chunk) - The Board will continue to review and improve corporate governance practices to enhance shareholder returns[92](index=92&type=chunk) [Review of Financial Information by Audit Committee](index=27&type=section&id=Review%20of%20Financial%20Information%20by%20Audit%20Committee) The Audit Committee has reviewed the Group's unaudited interim results and discussed financial reporting matters with management - The Audit Committee has reviewed the Group's interim results and discussed accounting principles, risk management, and internal controls with management[93](index=93&type=chunk) - The interim financial information has been reviewed by the Company's auditor in accordance with International Standard on Review Engagements 2410[93](index=93&type=chunk) [Purchase, Sale or Redemption of the Company’s Listed Securities](index=28&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company%E2%80%99s%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[94](index=94&type=chunk) [Publication of Interim Results and Despatch of Interim Report](index=28&type=section&id=Publication%20of%20Interim%20Results%20and%20Despatch%20of%20Interim%20Report) The interim results announcement is available on the websites of the Stock Exchange and the Company - The interim results announcement has been published on the websites of the Stock Exchange and the Company[95](index=95&type=chunk) - The interim report containing all information required by the Listing Rules will be published on the said websites in due course[95](index=95&type=chunk) [Definitions](index=28&type=section&id=Definitions) This section provides definitions for key terms used throughout the report, including company names, rules, and currency units - This section provides definitions for key terms used in the report, such as "the Company," "the Group," and "Listing Rules"[96](index=96&type=chunk)[97](index=97&type=chunk)[100](index=100&type=chunk) [Board of Directors](index=30&type=section&id=Board%20of%20Directors) The Board of Directors comprises two executive Directors, two non-executive Directors, and three independent non-executive Directors - The Board of Directors consists of two executive Directors, two non-executive Directors, and three independent non-executive Directors[99](index=99&type=chunk)

[Interim Results Summary](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E6%91%98%E8%A6%81) During the reporting period, Quzhi Group achieved significant growth in revenue and gross profit, successfully turning losses into profits, primarily driven by marketing services, with contributions from merchandise sales and other services Interim Results Summary (2025 vs 2024) | Metric | 2025 (RMB Thousand) | 2024 (RMB Thousand) | Year-on-year change (%) | | :--- | :--- | :--- | :--- | | Revenue | 676,189 | 515,117 | 31.3 | | - Marketing Services | 568,020 | 411,759 | 37.9 | | - Merchandise Sales | 83,219 | 78,449 | 6.1 | | - Other Services | 24,950 | 24,909 | 0.2 | | Gross Profit | 385,511 | 281,424 | 37.0 | | Profit/(Loss) for the Period | 128,363 | (1,846,245) | 107.0 | | EBITDA | 175,751 | (1,805,098) | 109.7 | [Management Discussion and Analysis](index=2&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) This section details Quzhi Group's operating performance, business segment performance, long-term strategy, financial position, and other significant matters for the first half of 2025, benefiting from macroeconomic support and AI strategy upgrades, achieving significant revenue and profit growth, and increasing AI technology investment and market expansion [Performance Review](index=2&type=section&id=%E6%A5%AD%E7%B8%BE%E5%9B%9E%E9%A1%A7) In the first half of 2025, China's economy grew steadily, driving strong marketing demand across various sectors, and Quzhi Group, as an AI interactive marketing leader, achieved rapid revenue and gross profit growth, turning losses into profits, primarily due to its innovative business model, service capabilities, and AI investments - China's economy experienced steady growth, with **GDP increasing by 5.3%** year-on-year, new energy vehicle sales growing over **40%**, and home appliance sales increasing over **30%**, stimulating strong marketing demand across industries[4](index=4&type=chunk) - The company's revenue reached **RMB 676.2 million**, a **31.3% year-on-year increase**, with gross profit rising to **RMB 385.5 million**, up **37.0% year-on-year**[4](index=4&type=chunk) - Profit for the period was **RMB 128.4 million**, turning losses into profits compared to a **loss of RMB 1,846.2 million** in the same period last year, primarily due to a **non-cash fair value loss of RMB 1,899.4 million** related to convertible redeemable preference shares in the first half of 2024[6](index=6&type=chunk) - The company's core strategy fully upgraded to "AI+Consumer Scenarios," aiming to reshape more consumption scenarios with AIoT, significantly increasing R&D investment to **RMB 77.8 million**, a **107.7% year-on-year increase**[5](index=5&type=chunk) [Business Segment Performance](index=3&type=section&id=%E6%A5%AD%E5%8B%99%E5%88%86%E9%83%A8%E8%A1%A8%E7%8F%BE) During the reporting period, marketing services revenue and gross profit both achieved rapid growth, with value-added marketing services performing particularly well, while merchandise sales revenue saw a slight increase, and lifestyle and innovative businesses (AI+Entertainment) made initial progress in the Middle East market [Marketing Services](index=3&type=section&id=%E7%87%9F%E9%8A%B7%E6%9C%8D%E5%8B%99) Marketing services revenue increased by **37.9%** year-on-year, with gross profit growing by **43.8%**, driven by significant growth in both standardized and high-margin value-added marketing services, attributed to a quality customer base, expanded service scope, AI technology innovation, and enhanced AI interactive terminal network efficiency - Marketing services revenue reached **RMB 568.0 million**, a **37.9% year-on-year increase**, with gross profit at **RMB 353.3 million**, up **43.8% year-on-year**[7](index=7&type=chunk) - Standardized marketing services revenue reached **RMB 483.2 million**, a **34.3% year-on-year increase**, while value-added marketing services revenue reached **RMB 84.9 million**, up **63.1% year-on-year**[7](index=7&type=chunk) - Average revenue per major client increased to **RMB 16.2 million**, a **52.2% year-on-year increase**[8](index=8&type=chunk) - The company significantly increased investment in AI interactive marketing and data product development, launching AI digital human shopping guide optimization, AI holographic marketing cabinets, and a marketing selling point database and pre-evaluation services for beverages and snacks[9](index=9&type=chunk)[10](index=10&type=chunk) - During the reporting period, registered software copyrights in China increased to **159 items**, with **34 new patent applications** submitted[11](index=11&type=chunk) - Optimizing the AI interactive terminal network layout and deploying an internal terminal operation large model significantly enhanced single-terminal marketing revenue contribution and operational efficiency[12](index=12&type=chunk) [Merchandise Sales](index=5&type=section&id=%E5%95%86%E5%93%81%E9%8A%B7%E5%94%AE) Merchandise sales revenue increased by **6.1%** year-on-year, primarily due to the expansion of the terminal network in high-potential cities and a more cost-effective pricing strategy to enhance consumer appeal - Merchandise sales revenue was **RMB 83.2 million**, a **6.1% year-on-year increase**[13](index=13&type=chunk) - Growth was driven by terminal network expansion in high-potential cities like Hangzhou, Chengdu, and Chongqing, and the adoption of more cost-effective merchandise pricing strategies[13](index=13&type=chunk) [Lifestyle and Innovative Businesses](index=5&type=section&id=%E7%94%9F%E6%B4%BB%E6%96%B9%E5%BC%8F%E5%8F%8A%E5%89%B5%E6%96%B0%E6%A5%AD%E5%8B%99) The company is focusing on "AI+Entertainment" as a key new scenario, aiming to create globally leading AI indoor entertainment spaces, with the Middle East market as the first stop, having established an overseas entertainment division and completed initial venue preparations - "AI+Entertainment" is a key new scenario, aiming to build globally leading AI indoor entertainment spaces, with the Middle East market as the initial expansion target[14](index=14&type=chunk) - An overseas entertainment division has been established, organizational structure completed, initial venues prepared, and local licenses obtained[14](index=14&type=chunk) [Other Services](index=6&type=section&id=%E5%85%B6%E4%BB%96%E6%9C%8D%E5%8B%99) Other services revenue remained largely stable, primarily comprising IT system development and software development services, as the company strategically reduced non-core projects to focus resources on enhancing core business technological innovation - Other services revenue was **RMB 25.0 million**, a **0.2% year-on-year increase**[15](index=15&type=chunk) - The company strategically focused on core businesses, reducing the undertaking of non-core IT system development and software development projects[15](index=15&type=chunk) [Long-term Strategy and Outlook](index=6&type=section&id=%E9%95%B7%E6%9C%9F%E7%AD%96%E7%95%A5%E5%8F%8A%E5%B1%95%E6%9C%9B) For the second half of 2025, the company will continue to advance its "AI+Consumer Scenarios" core strategy, increase investment in AI marketing, and deepen its focus on creating AI entertainment spaces, using the Middle East project to gain experience for global expansion, while also planning strategic business acquisitions and ecosystem integration for high-quality, scaled growth - Looking ahead to the second half of 2025, AI applications are expected to accelerate large-scale implementation, and the company will continue to advance its "AI+Consumer Scenarios" core strategy[16](index=16&type=chunk) - In the "AI+Marketing" sector, the company will continue to increase AI interaction investment, providing more innovative and efficient one-stop marketing solutions[16](index=16&type=chunk) - In the "AI+Entertainment" sector, the company will focus on creating globally leading AI indoor entertainment spaces, optimizing its business model based on the Middle East project to accumulate experience for global expansion[16](index=16&type=chunk) - Plans include strategic business acquisitions and ecosystem integration to deepen diversified layouts and expand business boundaries and value chain depth[17](index=17&type=chunk) [Financial Performance Analysis](index=7&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE%E5%88%86%E6%9E%90) This section analyzes Quzhi Group's financial performance during the reporting period, including revenue, costs, gross profit, expenses, and net profit, showing significant growth in revenue and gross profit, slower growth in cost of sales, decreased administrative expenses due to completed listing fees, and substantially increased R&D investment, ultimately turning losses into profits [Revenue](index=7&type=section&id=%E6%94%B6%E5%85%A5) During the reporting period, the company's total revenue increased by **31.3%** year-on-year, primarily driven by China's economic growth, supportive consumer market policies, innovative business models, deepened cooperation with quality clients, and enhanced efficiency of the AI interactive terminal network - Total revenue increased from **RMB 515.1 million** in the first half of 2024 to **RMB 676.2 million** in the first half of 2025, a **31.3% year-on-year increase**[18](index=18&type=chunk) - Key growth drivers include steady economic growth in China, supportive consumer market policies, innovative business models, expanded cooperation with quality brand clients, and enhanced efficiency of the AI interactive terminal network[18](index=18&type=chunk) Revenue and Gross Margin by Business Segment | Business Segment | 2025 Revenue (RMB Thousand) | 2025 Gross Margin (%) | 2025 % of Total Revenue | 2024 Revenue (RMB Thousand) | 2024 Gross Margin (%) | 2024 % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Marketing Services | 568,020 | 62.2 | 84.0 | 411,759 | 59.7 | 79.9 | | - Standardized Marketing Services | 483,157 | 57.2 | 71.5 | 359,712 | 55.8 | 69.8 | | - Value-added Marketing Services | 84,863 | 90.9 | 12.6 | 52,047 | 86.2 | 10.1 | | Merchandise Sales | 83,219 | 25.6 | 12.3 | 78,449 | 30.7 | 15.2 | | Other Services | 24,950 | 43.4 | 3.7 | 24,909 | 46.7 | 4.8 | | **Total** | **676,189** | **57.0** | **100.0** | **515,117** | **54.6** | **100.0** | - Marketing services revenue increased by **37.9%** year-on-year, with standardized marketing services growing by **34.3%** and value-added marketing services by **63.1%**[20](index=20&type=chunk) - Merchandise sales revenue increased by **6.1%** year-on-year[21](index=21&type=chunk) - Other services revenue increased by **0.2%** year-on-year[22](index=22&type=chunk) [Cost of Sales](index=9&type=section&id=%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC) Cost of sales increased by **24.4%** year-on-year, primarily due to higher information technology service fees from increased marketing services sales and increased cost of inventories sold from higher merchandise sales, with its growth rate remaining below revenue growth, supporting gross margin improvement - Cost of sales increased from **RMB 233.7 million** in the first half of 2024 to **RMB 290.7 million** in the first half of 2025, a **24.4% increase**[23](index=23&type=chunk) - Main reasons include increased information technology service fees (from **RMB 139.8 million** to **RMB 193.9 million**) and increased cost of inventories sold (from **RMB 53.6 million** to **RMB 60.7 million**)[23](index=23&type=chunk) - The growth rate of cost of sales was lower than that of revenue, reflecting efficient cost control[23](index=23&type=chunk) [Gross Profit and Gross Margin](index=9&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Gross profit increased by **37.0%** year-on-year, with gross margin improving from **54.6%** to **57.0%**, primarily driven by revenue growth and effective cost of sales control - Gross profit increased from **RMB 281.4 million** in the first half of 2024 to **RMB 385.5 million** in the first half of 2025, a **37.0% increase**[24](index=24&type=chunk) - Gross margin improved from **54.6%** in the first half of 2024 to **57.0%** in the first half of 2025[24](index=24&type=chunk) [Other Income and Gains](index=9&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) Other income and gains decreased by **17.2%** year-on-year, primarily due to a reduction in government grants received after the company's listing in 2024 - Other income decreased from **RMB 4.3 million** in the first half of 2024 to **RMB 3.5 million** in the first half of 2025, a **17.2% decrease**[25](index=25&type=chunk) - The decrease was primarily due to reduced government grants received after the company's listing in 2024[25](index=25&type=chunk) [Selling and Distribution Expenses](index=10&type=section&id=%E9%8A%B7%E5%94%AE%E5%8F%8A%E5%88%86%E9%8A%B7%E8%B2%BB%E7%94%A8) Selling and distribution expenses increased by **21.7%** year-on-year, with marketing and promotion expenses growing by **28.5%**, primarily aimed at enhancing brand awareness, expanding potential customer base, and scaling business operations - Selling and distribution expenses increased from **RMB 141.9 million** in the first half of 2024 to **RMB 172.7 million** in the first half of 2025, a **21.7% increase**[26](index=26&type=chunk) - Marketing and promotion expenses increased from **RMB 100.5 million** to **RMB 129.1 million**, a **28.5% increase**, primarily for online and offline marketing activities to enhance brand awareness and expand the customer base[26](index=26&type=chunk) [Administrative Expenses](index=10&type=section&id=%E7%AE%A1%E7%90%86%E8%B2%BB%E7%94%A8) Administrative expenses decreased by **31.3%** year-on-year, primarily because the one-off listing expenses related to the global offering incurred in the first half of 2024 had concluded - Administrative expenses decreased from **RMB 36.3 million** in the first half of 2024 to **RMB 24.9 million** in the first half of 2025, a **31.3% decrease**[27](index=27&type=chunk) - The decrease was primarily due to the conclusion of one-off listing expenses related to the global offering in the first half of 2024[27](index=27&type=chunk) [Finance Costs](index=10&type=section&id=%E8%B2%A1%E5%8B%99%E8%B2%BB%E7%94%A8) Finance costs increased by **RMB 5.5 million** year-on-year, primarily due to the company utilizing domestic loans to supplement its domestic business operational needs and optimize capital allocation efficiency - Finance costs increased from **RMB 4.0 million** in the first half of 2024 to **RMB 9.5 million** in the first half of 2025, an increase of **RMB 5.5 million**[28](index=28&type=chunk) - The increase was primarily due to supplementing domestic business operational needs through domestic loans to optimize capital allocation efficiency[28](index=28&type=chunk) [Research and Development Expenses](index=10&type=section&id=%E7%A0%94%E7%99%BC%E9%96%8B%E6%94%AF) Research and development expenses significantly increased by **107.7%** year-on-year, primarily due to intensified efforts in AI interactive marketing and data product development, yielding substantial technological achievements such as AI digital human shopping guide optimization, AI holographic marketing cabinets, and marketing selling point databases - Research and development expenses increased from **RMB 37.5 million** in the first half of 2024 to **RMB 77.8 million** in the first half of 2025, a **107.7% increase**[29](index=29&type=chunk) - The increase was primarily for intensifying AI interactive marketing and data product development, including AI digital human shopping guide optimization, AI holographic marketing cabinets, and marketing selling point databases and pre-evaluation services for beverages and snacks[29](index=29&type=chunk) [Other Expenses and Losses](index=11&type=section&id=%E5%85%B6%E4%BB%96%E8%B2%BB%E7%94%A8%E5%8F%8A%E8%99%A7%E7%B4%85) Other expenses for the first half of 2025 amounted to **RMB 3.8 million**, primarily comprising exchange losses arising from foreign currency fluctuations - Other expenses for the first half of 2025 were **RMB 3.8 million**, primarily exchange losses arising from foreign currency fluctuations[30](index=30&type=chunk) [Income Tax Expense](index=11&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense increased year-on-year, primarily due to higher profit before tax, with the company's effective tax rate of **8.7%** benefiting from preferential high-tech enterprise tax rates and super deduction for R&D expenses - Income tax expense increased from **RMB 9.2 million** in the first half of 2024 to **RMB 11.2 million** in the first half of 2025[31](index=31&type=chunk) - The increase was due to higher profit before tax, with an effective tax rate of **8.7%** in the first half of 2025[31](index=31&type=chunk) [Profit/(Loss) for the Period](index=11&type=section&id=%E6%9C%9F%E5%85%A7%E5%88%A9%E6%BD%A4%E2%88%95%EF%BC%88%E8%99%A7%E7%B4%85%EF%BC%89) The company achieved a profit of **RMB 128.4 million** in the first half of 2025, successfully turning losses into profits compared to a **loss of RMB 1,846.2 million** in the same period of 2024, primarily due to a one-off non-cash fair value loss in the prior period - Profit for the first half of 2025 was **RMB 128.4 million**, turning losses into profits compared to a **loss of RMB 1,846.2 million** in the first half of 2024[32](index=32&type=chunk) - The loss in the first half of 2024 was primarily due to a **non-cash one-off fair value loss of RMB 1,899.4 million** related to convertible redeemable preference shares[32](index=32&type=chunk) [Financial Position Analysis](index=12&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E5%88%86%E6%9E%90) This section analyzes the company's statement of financial position at the end of the reporting period, showing a robust financial position with ample cash and cash equivalents, decreased inventory turnover days, increased trade receivables and payables commensurate with business expansion, and capital expenditures primarily on AI interactive terminals [Inventories](index=12&type=section&id=%E5%AD%98%E8%B2%A8) Inventory balance slightly increased, but inventory turnover days significantly decreased, reflecting the company's improved lean inventory management - Inventory balance increased from **RMB 11.8 million** as of December 31, 2024, to **RMB 12.0 million** as of June 30, 2025[33](index=33&type=chunk) - Inventory turnover days decreased from **65.3 days** as of December 31, 2024, to **46.2 days** as of June 30, 2025[33](index=33&type=chunk) [Trade Receivables](index=12&type=section&id=%E8%B2%A3%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) Trade receivables slightly increased, consistent with business expansion, while trade receivables turnover days remained stable, with the company effectively managing credit risk through its credit control department - Trade receivables increased from **RMB 510.0 million** as of December 31, 2024, to **RMB 514.1 million** as of June 30, 2025[34](index=34&type=chunk) - Trade receivables turnover days remained stable at **172.3 days**[34](index=34&type=chunk) [Trade Payables](index=12&type=section&id=%E8%B2%A3%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) Trade payables significantly increased, primarily due to business expansion, growth in merchandise transaction volume, and increased R&D investment - Trade payables increased from **RMB 19.0 million** as of December 31, 2024, to **RMB 57.0 million** as of June 30, 2025[35](index=35&type=chunk) - The increase was primarily due to business expansion, growth in merchandise transaction volume, and increased R&D investment[35](index=35&type=chunk) [Prepayments, Deposits and Other Receivables - Current](index=12&type=section&id=%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85%E3%80%81%E6%8C%89%E9%87%91%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85%EF%BC%8D%E5%8D%B3%E6%9C%9F) Prepayments, deposits, and other current receivables decreased, primarily including prepayments to suppliers, rental deposits, and other receivables - Prepayments, deposits, and other current receivables decreased from **RMB 218.1 million** as of December 31, 2024, to **RMB 178.3 million** as of June 30, 2025[36](index=36&type=chunk) [Capital Expenditure](index=13&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF) Property, plant and equipment decreased, primarily due to the write-off and depreciation of AI interactive terminals offsetting new purchases, while right-of-use assets increased due to new lease agreements - Property, plant and equipment decreased from **RMB 134.6 million** as of December 31, 2024, to **RMB 113.1 million** as of June 30, 2025[37](index=37&type=chunk) - Right-of-use assets increased from **RMB 4.7 million** as of December 31, 2024, to **RMB 6.9 million** as of June 30, 2025[37](index=37&type=chunk) [Financial Position](index=13&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81) The company's financial position is robust, with a significant increase in cash and cash equivalents and a rise in bank borrowings to meet business operational needs and optimize capital allocation efficiency - Cash and cash equivalents increased from **RMB 892.0 million** as of December 31, 2024, to **RMB 1,141.2 million** as of June 30, 2025[38](index=38&type=chunk) - Bank borrowings increased from **RMB 426.8 million** as of December 31, 2024, to **RMB 544.7 million** as of June 30, 2025[38](index=38&type=chunk) [Gearing Ratio](index=13&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E7%8E%87) As of June 30, 2025, the company's gearing ratio slightly increased but remained at a low level - As of June 30, 2025, the gearing ratio was **29.4%**, higher than **25.7%** as of December 31, 2024[39](index=39&type=chunk) [Pledged Assets](index=13&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of the end of the reporting period, the company had no pledged assets - As of June 30, 2025, the Group had no pledged assets[40](index=40&type=chunk) [Contingent Liabilities](index=14&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of the end of the reporting period, the company had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[41](index=41&type=chunk) [Foreign Exchange Risk](index=14&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) The company primarily operates in China, with transactions settled in RMB, and management believes there is no significant foreign exchange risk exposure, nor has it hedged against foreign exchange fluctuations - The company primarily operates in China, with transactions settled in RMB, and management believes there is no significant foreign exchange risk exposure[42](index=42&type=chunk) - As of June 30, 2025, the company had not hedged against foreign exchange fluctuations[42](index=42&type=chunk) [Credit Risk](index=14&type=section&id=%E4%BF%A1%E7%94%A8%E9%A2%A8%E9%9A%AA) The company transacts with reputable third parties, managing credit risk through credit checks and continuous monitoring of receivables balances, with no significant bad debt risk - The company only transacts with approved, reputable third parties and has credit check procedures and continuous monitoring of receivables balances in place[43](index=43&type=chunk) - The risk of bad debts is not significant[43](index=43&type=chunk) [Other Significant Matters](index=14&type=section&id=%E5%85%B6%E4%BB%96%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A0%85) This section covers non-financial significant matters for the reporting period, including no major acquisitions or disposals, no major investment plans, employee numbers and remuneration policies, post-reporting period events, and the use of proceeds from the global offering [Major Acquisitions and Disposals](index=14&type=section&id=%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 company did not undertake any major acquisitions or disposals of subsidiaries, associates, or joint ventures - During the reporting period, the Group did not undertake any major acquisitions or disposals of subsidiaries, associates, or joint ventures[44](index=44&type=chunk) [Major Investments Held and Prospects](index=14&type=section&id=%E6%89%80%E6%8C%81%E7%9A%84%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E5%89%8D%E6%99%AF) As of the end

[Performance Highlights](index=1&type=section&id=%E4%B8%9A%E7%BB%A9%E4%BA%AE%E7%82%B9) [1. Proposed Spin-off and Separate Listing of Hanking Gold on the Main Board of the Stock Exchange](index=1&type=section&id=1%E3%80%81%E5%BB%BA%E8%AE%AE%E5%B0%86%E7%BD%95%E7%8E%8B%E9%BB%84%E9%87%91%E5%88%86%E6%8B%86%E5%B9%B6%E4%BA%8E%E8%81%94%E4%BA%A4%E6%89%80%E4%B8%BB%E6%9D%BF%E7%8B%AC%E7%AB%8B%E4%B8%8A%E5%B8%82) The company proposes to spin off and list Hanking Gold to create an independent capital platform for its gold business[2](index=2&type=chunk) - The proposed spin-off and separate listing of Hanking Gold on the Main Board of the Stock Exchange aims to build an independent capital platform for the gold mining business, promoting its development and enhancing shareholder value[2](index=2&type=chunk) - Hanking Gold owns the Mt Bundy Gold Project and the Cygnet Gold Project, with plans to become an internationally influential medium-sized gold producer, and the pre-feasibility study for the Cygnet Gold Project is nearing completion[2](index=2&type=chunk) [2. Stable Production and Operation with a Slight Decrease in Profit for the Period](index=1&type=section&id=2%E3%80%81%E7%94%9F%E4%BA%A7%E7%BB%8F%E8%90%A5%E7%A8%B3%E5%AE%9A%EF%BC%8C%E6%9C%9F%E5%86%85%E6%BA%A2%E5%88%A9%E5%B0%8F%E5%B9%85%E4%B8%8B%E9%99%8D) Stable production and sales volumes were offset by lower selling prices, resulting in higher revenue but a slight profit decline - Production and sales of iron concentrate and high-purity iron were higher than the same period last year and the budget, maintaining stable operations[3](index=3&type=chunk) - Influenced by overall market conditions, the average selling price per tonne for products was lower than the same period last year[3](index=3&type=chunk) Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 1,405,188 | 1,268,564 | +10.77% | | Profit for the Period | 104,537 | 106,658 | -1.99% | [3. High-Purity Iron Business Turns Profitable](index=2&type=section&id=3%E3%80%81%E9%AB%98%E7%BA%AF%E9%93%81%E4%B8%9A%E5%8A%A1%E6%89%AD%E4%BA%8F%E4%B8%BA%E7%9B%88) The high-purity iron business achieved a turnaround to profitability through enhanced end-to-end process management - The high-purity iron business improved management across the entire process from procurement, production, to sales, achieving a turnaround to profitability in line with strategic goals[4](index=4&type=chunk) Pre-tax Profit of High-Purity Iron Business | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Pre-tax Profit | 14,956 | (35,503) | [4. Newly Added 79.76 Million Tonnes of Resources at Shangma Iron Mine Included in the Mining License](index=2&type=section&id=4%E3%80%81%E4%B8%8A%E9%A9%AC%E9%93%81%E7%9F%BF%E6%96%B0%E5%A2%9E%E7%9A%847%2C976%E4%B8%87%E5%90%A8%E8%B5%84%E6%BA%90%E9%87%8F%E8%A2%AB%E7%BA%B3%E5%85%A5%E9%87%87%E7%9F%BF%E8%AE%B8%E5%8F%AF%E8%AF%81%E5%86%85) The Shangma Iron Mine's license was updated to include 79.76 million tonnes of new resources, elevating it to a large-scale mine - The Shangma Iron Mine obtained an updated mining license, expanding its area and incorporating approximately **79.76 million tonnes** of newly added iron ore resources[5](index=5&type=chunk) - The Shangma Iron Mine now has a total iron ore resource of approximately **110 million tonnes**, reaching the "large-scale iron mine" level and solidifying the foundation for the sustainable development of the Group's iron ore business[5](index=5&type=chunk) [Financial Summary](index=3&type=section&id=%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) - In H1 2025, the company's revenue **increased by 10.77%** YoY, but profit attributable to owners of the Company **decreased by 2.93%** YoY, with earnings per share at RMB 5.4 cents, and no interim dividend was declared for the period[6](index=6&type=chunk) Condensed Consolidated Results Summary for H1 2025 | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 1,405,188 | 1,268,564 | 10.77% | | Profit for the period attributable to owners of the Company | 104,318 | 107,467 | (2.93%) | | Earnings per share (RMB cents) | 5.4 | 5.6 | (3.57%) | | Interim dividend (HKD per share) | — | 0.02 | N/A | | Net Profit Margin | 7.44% | 8.41% | Decreased by 0.97 p.p. | | Return on Equity | 7.01% | 7.19% | Decreased by 0.18 p.p. | [I. Iron Ore Business](index=4&type=section&id=%E4%B8%80%E3%80%81%E9%93%81%E7%9F%BF%E4%B8%9A%E5%8A%A1) [1. Industry Overview](index=4&type=section&id=1%E3%80%81%E8%A1%8C%E4%B8%9A%E6%83%85%E5%86%B5) Iron ore prices fluctuated, falling 9.07% in H1 2025 due to shifting supply-demand dynamics and policy expectations - In H1 2025, iron ore prices rose first and then fell, with the 62% iron ore port cash price index at **US$92.39/tonne** as of June 30, a **decrease of 9.07%** from the beginning of the year[7](index=7&type=chunk) - Price fluctuations were affected by multiple factors including overseas mine shipments, steel mill profitability, dual increases in supply and demand, inventory accumulation, and policy expectations[7](index=7&type=chunk) - Looking ahead to H2 2025, international mine shipments are expected to grow steadily, while domestic crude steel control and seasonal declines in molten iron production may lead to a weaker price trend amid expectations of looser supply and falling demand[7](index=7&type=chunk) [2. Operating Performance](index=4&type=section&id=2%E3%80%81%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5) Increased sales volume was offset by a 15.50% price decline, leading to lower gross profit and margin for the iron ore business - The iron ore business implemented refined management based on a smart mining system, achieving an iron concentrate production of **518,000 tonnes** (**+1.57% YoY**) and sales of **521,000 tonnes** (**+2.36% YoY**)[8](index=8&type=chunk) - The cash operating cost per tonne of iron concentrate was **RMB 348**, an increase of only RMB 9 or 2.65% YoY, and a decrease of RMB 6 or 1.69% compared to the full year of 2024[9](index=9&type=chunk) Operating Performance Details of Iron Ore Business | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Production & Sales ('000 tonnes) | 518 (Prod), 521 (Sales) | 510 (Prod), 509 (Sales) | 1.57% (Prod), 2.36% (Sales) | | Average Selling Price (RMB/tonne) | 856 | 1,013 | (15.50%) | | Average Cost of Sales (RMB/tonne) | 339 | 375 | (9.60%) | | Revenue (RMB'000) | 447,978 | 515,444 | (13.09%) | | Gross Profit (RMB'000) | 271,398 | 324,607 | (16.39%) | | Gross Profit Margin | 60.58% | 62.98% | Decreased by 2.40 p.p. | Cash Operating Cost Breakdown per Tonne of Iron Concentrate | Cash Operating Cost Component (RMB/tonne of iron concentrate) | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Mining | 174 | 160 | 8.75% | | Beneficiation | 73 | 80 | (8.75%) | | Transportation | 22 | 13 | 69.23% | | Taxes and Fees | 51 | 61 | (16.39%) | | Mine Management Fee | 28 | 25 | 12.00% | | Total | 348 | 339 | 2.65% | [3. Resources and Reserves](index=6&type=section&id=3%E3%80%81%E8%B5%84%E6%BA%90%E9%87%8F%E5%8F%8A%E5%82%A8%E9%87%8F) The company expanded its resource base with a new discovery at Maogong and a significant license upgrade at Shangma Iron Mine - New iron ore resources were discovered within the existing pit of the Maogong Iron Mine, with estimated additional reserves of approximately **3.39 million tonnes**, acquired at a low cost, which will extend the mine's life and further enhance economic benefits[12](index=12&type=chunk) - The Shangma Iron Mine obtained an updated mining license, expanding its area and incorporating approximately **79.76 million tonnes** of newly added iron ore resources, bringing the total resource to about **110 million tonnes**, reaching the "large-scale iron mine" level[14](index=14&type=chunk) - As of the end of June 2025, there were no material changes in the Group's iron ore resources and reserves compared to the end of 2024[14](index=14&type=chunk) [II. High-Purity Iron Business](index=7&type=section&id=%E4%BA%8C%E3%80%81%E9%AB%98%E7%BA%AF%E9%93%81%E4%B8%9A%E5%8A%A1) [1. Industry Overview](index=7&type=section&id=1%E3%80%81%E8%A1%8C%E4%B8%9A%E6%83%85%E5%86%B5) China's wind power industry grew rapidly in H1 2025, with favorable policies expected to drive a new installation boom - In H1 2025, China's cumulative installed wind power capacity reached **570 million kW**, a **22.7% YoY increase**, while new installations grew **98.9% YoY** to **51.39 million kW**[15](index=15&type=chunk) - New wind power installations for the full year of 2025 are projected to be around **100 million kW**, with cumulative capacity reaching **640 million kW** by year-end[15](index=15&type=chunk) - Favorable policies are expected to trigger a new wave of installations from H2 2025 into the next year, likely boosting both demand and prices for wind power components[15](index=15&type=chunk) [2. Operating Performance](index=8&type=section&id=2%E3%80%81%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5) The high-purity iron business achieved a profit turnaround by increasing sales volume and significantly reducing costs - The high-purity iron business **turned profitable** in H1 2025, recording a pre-tax profit of **RMB 14,956 thousand** (compared to a pre-tax loss of RMB 35,503 thousand in H1 2024)[16](index=16&type=chunk) - Production and sales of high-purity iron reached **471,000 tonnes** (+15.44% YoY) and **473,000 tonnes** (+21.59% YoY) respectively, with wind power ductile iron accounting for about **93%** of total sales[16](index=16&type=chunk) - By actively exploring new alternative suppliers and adjusting raw material ratios, the average cost of sales was reduced to **RMB 2,494/tonne**, a **decrease of 18.26%** YoY[16](index=16&type=chunk) Operating Performance Details of High-Purity Iron Business | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Production & Sales ('000 tonnes) | 471 (Prod), 473 (Sales) | 408 (Prod), 389 (Sales) | 15.44% (Prod), 21.59% (Sales) | | Average Selling Price (RMB/tonne) | 2,685 | 3,131 | (14.24%) | | Average Cost of Sales (RMB/tonne) | 2,494 | 3,051 | (18.26%) | | Revenue (RMB'000) | 1,272,118 | 1,216,935 | 4.53% | | Gross Profit (RMB'000) | 92,792 | 30,865 | 200.64% | | Gross Profit Margin | 7.29% | 2.54% | Increased by 4.75 p.p. | [III. Australian Gold Mining Business](index=9&type=section&id=%E4%B8%89%E3%80%81%E6%BE%B3%E6%B4%B2%E9%87%91%E7%9F%BF%E4%B8%9A%E5%8A%A1) [1. Industry Overview](index=9&type=section&id=1%E3%80%81%E8%A1%8C%E4%B8%9A%E6%83%85%E5%86%B5) International gold prices surged in H1 2025 amid heightened safe-haven demand, with central banks expected to continue buying - In H1 2025, international gold prices rose sharply, with the London spot gold fixing price reaching **US$3,287.45/ounce** by June 30, an **increase of 24.31%** from the beginning of the year[19](index=19&type=chunk) - A World Gold Council survey shows that about **95%** of central banks expect to continue increasing gold holdings in the next 12 months, and nearly **43%** plan to increase their own reserves, providing long-term support for gold prices[19](index=19&type=chunk) [2. Operating Performance](index=9&type=section&id=2%E3%80%81%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5) The company proposes to spin off and list its Australian gold business, which is advancing two major projects - The company proposes to spin off Hanking Gold for a separate listing on the Main Board of the Stock Exchange by way of introduction to create an independent capital platform for its gold mining business[20](index=20&type=chunk) - The Mt Bundy Gold Project has JORC-compliant resources of approximately **3.01 million ounces** of gold and reserves of **1.64 million ounces**, with final feasibility studies completed and key approvals obtained[21](index=21&type=chunk) - The previous share sale agreement for the Mt Bundy Gold Project was terminated as the buyer failed to satisfy certain conditions precedent[21](index=21&type=chunk) - The Cygnet Gold Project has JORC-compliant resources of approximately **2.06 million ounces** of gold, with construction planned to start in Q2 2026 and commissioning by the end of 2027[22](index=22&type=chunk) Capital Expenditure of Gold Mining Business | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Capital Expenditure of Gold Mining Business | 66,021 | 16,318 | [3. Resources and Reserves](index=11&type=section&id=3%E3%80%81%E8%B5%84%E6%BA%90%E9%87%8F%E5%8F%8A%E5%82%A8%E9%87%8F) The Group's total gold resources increased to 5.07 million ounces following a resource update at the Cygnet project in July 2025 - As of the end of June 2025, there were no material changes in the Group's gold resources and reserves compared to the end of 2024[23](index=23&type=chunk) - On July 22, 2025, the resource of the Cygnet Gold Project **increased by 20% to 2.06 million ounces**, bringing the Group's total gold resources to **5.07 million ounces**[23](index=23&type=chunk) [Future Plans for Major Investments or Capital Assets](index=11&type=section&id=%E6%9C%AA%E6%9D%A5%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B5%84%E6%88%96%E8%B5%84%E6%9C%AC%E8%B5%84%E4%BA%A7%E8%AE%A1%E5%88%92) - As of June 30, 2025, other than those disclosed, the Group had no concrete plans for any material investments or acquisitions of capital assets[24](index=24&type=chunk) - The Group will actively explore investment opportunities in response to market changes to broaden its revenue base and enhance future financial performance and profitability[24](index=24&type=chunk) [Financial Review](index=11&type=section&id=%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%BE) [1. Revenue, Cost of Sales, and Gross Profit](index=11&type=section&id=1%E3%80%81%E6%94%B6%E5%85%A5%E3%80%81%E9%94%80%E5%94%AE%E6%88%90%E6%9C%AC%E3%80%81%E6%AF%9B%E5%88%A9) Group revenue grew 10.77% YoY driven by higher sales volumes, but gross profit margin declined to 25.67% - The Group's revenue for H1 2025 was **RMB 1,405,188 thousand**, an **increase of 10.77%** YoY, primarily due to increased sales volumes of high-purity iron and iron concentrate[25](index=25&type=chunk) Overview of Revenue, Cost of Sales, and Gross Profit | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 1,405,188 | 1,268,564 | +10.77% | | Cost of Sales | 1,044,411 | 921,590 | +13.33% | | Gross Profit | 360,777 | 346,974 | +3.98% | | Gross Profit Margin | 25.67% | 27.35% | Decreased by 1.68 p.p. | Revenue by Major Product | Product | H1 2025 Revenue (RMB'000) | H1 2024 Revenue (RMB'000) | | :--- | :--- | :--- | | Iron concentrate | 131,957 | 52,603 | | High-purity iron | 1,269,405 | 1,196,518 | | Others | 3,826 | 19,443 | | Total | 1,405,188 | 1,268,564 | [2. Other Income, Other Expenses, Other Gains and Losses, and Expected Credit Losses](index=13&type=section&id=2%E3%80%81%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E3%80%81%E5%85%B6%E4%BB%96%E5%BC%80%E6%94%AF%E3%80%81%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E4%BA%8F%E6%8D%9F%E3%80%81%E9%A2%84%E6%9C%9F%E4%BF%A1%E8%B4%B7%E4%BA%8F%E6%8D%9F) Other gains and losses shifted from a loss to a gain, primarily due to the absence of an impairment loss on an associate - The significant improvement in other gains and losses was mainly because the Group recognized an impairment of **RMB 5,976 thousand** on its interest in an associate company during the same period last year[28](index=28&type=chunk) Overview of Other Income, Expenses, Gains/Losses, and ECL | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Other income | 5,077 | 5,587 | -9.13% | | Other expenses | 409 | 200 | +104.5% | | Other gains or losses | 5,242 (gain) | (3,348) (loss) | +256.57% | | Impairment losses under ECL model | (5,964) | 5,442 (reversal) | +209.59% | [3. Distribution and Selling Expenses, Administrative Expenses](index=13&type=section&id=3%E3%80%81%E5%88%86%E9%94%80%E5%8F%8A%E9%94%80%E5%94%AE%E5%BC%80%E6%94%AF%E3%80%81%E8%A1%8C%E6%94%BF%E5%BC%80%E6%94%AF) Distribution and selling expenses rose by 24.43% due to increased sales volumes, while administrative expenses remained stable - The increase in distribution and selling expenses was mainly due to the increased sales volume of high-purity iron (**84,000 tonnes**) and iron concentrate (**12,000 tonnes**)[29](index=29&type=chunk) Overview of Distribution, Selling, and Administrative Expenses | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Distribution and selling expenses | 50,701 | 40,747 | +24.43% | | Administrative expenses | 101,450 | 101,101 | +0.35% | [4. Finance Costs, Income Tax Expense](index=14&type=section&id=4%E3%80%81%E8%9E%8D%E8%B5%84%E6%88%90%E6%9C%AC%E3%80%81%E6%89%80%E5%BE%97%E7%A8%8E%E5%BC%80%E6%94%AF) Finance costs and income tax expense both saw modest increases during the period - The increase in finance costs for the period was mainly due to higher interest expenses resulting from increased borrowings[30](index=30&type=chunk) Overview of Finance Costs and Income Tax Expense | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Finance costs | 37,154 | 35,892 | +3.52% | | Income tax expense | 70,424 | 67,394 | +4.50% | [5. Profit and Total Comprehensive Income for the Period](index=14&type=section&id=5%E3%80%81%E6%9C%9F%E5%86%85%E6%BA%A2%E5%88%A9%E4%B8%8E%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E6%80%BB%E9%A2%9D) Profit for the period slightly decreased, while total comprehensive income grew significantly due to foreign currency translation effects - The increase in total comprehensive income was mainly influenced by factors such as foreign currency translation[31](index=31&type=chunk) Overview of Profit and Total Comprehensive Income | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Profit for the period | 104,537 | 106,658 | -1.99% | | Total comprehensive income for the period | 127,974 | 97,790 | +30.87% | [6. Property, Plant and Equipment, Inventories, and Intangible Assets](index=14&type=section&id=6%E3%80%81%E7%89%A9%E4%B8%9A%E3%80%81%E5%8E%82%E6%88%BF%E5%8F%8A%E8%AE%BE%E5%A4%87%E3%80%81%E5%AD%98%E8%B4%A7%E3%80%81%E6%97%A0%E5%BD%A2%E8%B5%84%E4%BA%A7) Intangible assets increased significantly due to the reversal of assets held for sale and additional exploration expenditures - The decrease in inventories was mainly due to the combined effect of lower per-tonne costs and reduced inventory levels in the high-purity iron business[32](index=32&type=chunk) - The increase in intangible assets was primarily due to the reversal of assets previously reclassified as held for sale following the cancellation of the Primary Gold Pty Ltd disposal, as well as expenditures on mining rights, exploration, and feasibility studies for iron and gold mines during the period[32](index=32&type=chunk) Overview of Key Asset Changes | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Net value of property, plant and equipment | 617,818 | 654,085 | -5.54% | | Inventories | 183,419 | 261,314 | -29.81% | | Intangible assets | 647,570 | 279,655 | +131.56% | [7. Trade and Other Receivables, Trade and Other Payables](index=15&type=section&id=7%E3%80%81%E8%B4%B8%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9%E3%80%81%E8%B4%B8%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E4%BB%98%E6%AC%BE%E9%A1%B9) Trade receivables and bills receivable increased significantly, while trade and other payables decreased - The increase in trade receivables was mainly due to an increase in trade receivables from the high-purity iron segment[33](index=33&type=chunk) - The increase in bills receivable was mainly due to receiving more bills that have not yet been discounted or endorsed[33](index=33&type=chunk) Overview of Receivables Changes | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Trade receivables | 271,546 | 156,299 | +73.73% | | Other receivables | 67,680 | 66,332 | +2.03% | | Bills receivable | 463,204 | 286,076 | +61.92% | Overview of Payables Changes | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Trade payables | 184,925 | 195,391 | -5.36% | | Other payables | 112,109 | 129,160 | -13.20% | [8. Summary of Cash Flow Statement](index=16&type=section&id=8%E3%80%81%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8%E6%A6%82%E8%A6%81) The Group experienced a net cash outflow from operating activities, driven by changes in working capital and tax payments - Net cash outflow from operating activities was primarily due to profit before tax plus depreciation, amortization, and finance costs being offset by net changes in working capital and income tax paid[35](index=35&type=chunk) - Net cash outflow from investing activities mainly included payments for new plant and equipment to expand capacity and for technological upgrades, purchase of intangible assets, and net placement of pledged deposits for loans and bills[36](index=36&type=chunk) - Net cash inflow from financing activities was mainly from new bank loans, proceeds from discounting bills not fully derecognized, and proceeds from factoring trade receivables with full recourse to non-bank financial institutions[37](index=37&type=chunk) Condensed Consolidated Cash Flow Statement Summary | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Net cash flow from operating activities | (126,045) | 98,608 | | Net cash flow from investing activities | (342,580) | 10,146 | | Net cash flow from financing activities | 559,290 | (35,239) | | Net increase in cash and cash equivalents | 90,665 | 73,515 | | Cash and cash equivalents at end of period | 449,873 | 344,440 | [9. Cash and Borrowings](index=17&type=section&id=9%E3%80%81%E7%8E%B0%E9%87%91%E5%8F%8A%E5%80%9F%E6%AC%BE) The Group's available cash and acceptance bills increased by 58.63%, while net borrowings and bills payable rose by 16.51% Available Cash and Acceptance Bills | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Available cash and acceptance bills | 596,234 | 375,854 | +58.63% | | Cash and bank balances | 449,873 | 358,128 | +25.62% | | Acceptance bills (undiscounted and unendorsed) | 146,361 | 17,726 | +725.69% | Net Borrowings and Bills Payable | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Borrowings - due within one year | 1,041,347 | 895,857 | +16.24% | | Borrowings - due after one year | 58,000 | — | N/A | | Bills payable | 884,657 | 594,578 | +48.79% | | Net borrowings and bills payable | 941,491 | 808,091 | +16.51% | [10. Gearing Ratio](index=18&type=section&id=10%E3%80%81%E8%B4%9F%E5%80%BA%E6%AF%94%E7%8E%87) The Group's gearing ratios saw a slight increase as of June 30, 2025 Gearing Ratio Overview | Indicator | 30 June 2025 | 31 Dec 2024 | Change | | :--- | :--- | :--- | :--- | | Liabilities to total assets ratio | 62.03% | 59.87% | Increased by 2.16 p.p. | | Net gearing ratio | 31.94% | 31.21% | Increased by 0.73 p.p. | [11. Principal Risks](index=19&type=section&id=11%E3%80%81%E4%B8%BB%E8%A6%81%E9%A3%8E%E9%99%A9) The Group faces risks from commodity price volatility, national policy changes, interest rate fluctuations, and foreign currency movements - **Commodity price risk**: The Group's product prices are affected by international and domestic market prices and global supply and demand, which could materially impact revenue and consolidated income[42](index=42&type=chunk) - **National policy risk**: The Group has assets in China and Australia, and policy changes in these countries could have a significant impact on its operations[42](index=42&type=chunk) - **Interest rate risk**: The Group's fair value interest rate risk is mainly related to bank borrowings, which management will continuously monitor and consider hedging[42](index=42&type=chunk) - **Foreign currency risk**: The non-free convertibility of RMB and the impact of exchange rate fluctuations on AUD assets pose risks, which management will monitor and consider hedging[43](index=43&type=chunk) [12. Pledge of Assets, Contingent Liabilities](index=19&type=section&id=12%E3%80%81%E8%B5%84%E4%BA%A7%E6%8A%B5%E6%8A%BC%E3%80%81%E6%88%96%E7%84%B6%E8%B4%9F%E5%80%BA) Certain Group assets are pledged as security for bank borrowings and bills payable, with no significant contingent liabilities - Certain of the Group's bank borrowings and bills payable are secured by bank deposits, property, plant and equipment, mining rights, and right-of-use assets[44](index=44&type=chunk) - As at 30 June 2025, the Group had no significant contingent liabilities[45](index=45&type=chunk) Net Book Value of Pledged Assets | Pledged Asset Type | Net Book Value (RMB'000) | | :--- | :--- | | Bank deposits | 813,713 | | Acceptance bills | 171,800 | | Trade receivables | 55,729 | | Property, plant and equipment | 59,901 | | Mining rights | 54,544 | | Right-of-use assets | 13,245 | [13. Capital Commitments](index=20&type=section&id=13%E3%80%81%E8%B5%84%E6%9C%AC%E6%89%BF%E6%8B%85) Capital commitments decreased significantly, mainly comprising minor engineering expenditures for the iron ore and high-purity iron businesses - Capital commitments are mainly for miscellaneous engineering expenditures for the iron ore and high-purity iron businesses[46](index=46&type=chunk) Capital Commitments Overview | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | Change | | :--- | :--- | :--- | :--- | | Capital commitments | 3,277 | 41,544 | -92.11% | [14. Capital Expenditure](index=20&type=section&id=14%E3%80%81%E8%B5%84%E6%9C%AC%E6%94%AF%E5%87%BA) Capital expenditure increased by 26.34% YoY, primarily driven by spending on intangible assets - Expenditures in H1 2025 mainly included **RMB 8,632 thousand** for plant, machinery, and equipment; **RMB 66,217 thousand** for intangible assets; and **RMB 4,163 thousand** for additions to right-of-use assets[47](index=47&type=chunk) Capital Expenditure Overview | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change | | :--- | :--- | :--- | :--- | | Capital expenditure | 79,012 | 62,541 | +26.34% | [15. Material Investments Held](index=20&type=section&id=15%E3%80%81%E6%8C%81%E6%9C%89%E7%9A%84%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B5%84) As of June 30, 2025, the Group did not hold any material investments - As of 30 June 2025, the Group did not hold any material investments[48](index=48&type=chunk) [16. Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=20&type=section&id=16%E3%80%81%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B4%AD%E5%8F%8A%E5%87%BA%E5%94%AE%E9%99%84%E5%B1%9E%E5%85%AC%E5%8F%B8%E3%80%81%E8%81%94%E8%90%A5%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%90%88%E8%90%A5%E4%BC%81%E4%B8%9A) The Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures in H1 2025 - The Group had no material acquisitions or disposals of subsidiaries, associates and joint ventures during the first half of 2025[49](index=49&type=chunk) [17. Material Subsequent Events](index=20&type=section&id=17%E3%80%81%E9%87%8D%E5%A4%A7%E6%9C%9F%E5%90%8E%E4%BA%8B%E9%A1%B9) No other material events occurred after the reporting period, apart from the proposed spin-off and listing of the gold mining business - Other than the proposed spin-off and listing of the Group's gold mining business as disclosed on page 9 of this announcement, no other material events have occurred after the six months ended 30 June 2025[50](index=50&type=chunk) [18. Material Changes](index=20&type=section&id=18%E3%80%81%E9%87%8D%E5%A4%A7%E5%8F%98%E5%8A%A8) There have been no material changes in the Group's future business development since the 2024 annual report - Other than the proposed spin-off and listing of the Group's gold mining business as disclosed on page 9 of this announcement, there have been no material changes in the future development of the Group's business since the publication of the Company's 2024 annual report[51](index=51&type=chunk) [Other Information](index=21&type=section&id=%E5%85%B6%E4%BB%96) [Corporate Governance](index=21&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB) The company complied with the Corporate Governance Code, though the Chairman also serves as CEO - During the six months ended 30 June 2025, the Company has complied with the principles and all applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[52](index=52&type=chunk) - Mr Yang Jiyie, the Chairman of the Board, also serves as the CEO and President of the Company, which deviates from code provision C.2.1 of the CG Code, but the Company believes this arrangement provides strong and consistent leadership and enables more effective planning and execution of long-term business strategies[52](index=52&type=chunk) [Model Code for Securities Transactions by Directors of Listed Issuers](index=21&type=section&id=%E4%B8%8A%E5%B8%82%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E8%BF%9B%E8%A1%8C%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%88%99) The company adopted the Model Code, and all directors and relevant employees confirmed compliance during H1 2025 - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules and has formulated its own "Written Guidelines on Dealings in the Company's Securities by Directors and Relevant Employees"[53](index=53&type=chunk) - Upon specific enquiry made to all directors and relevant employees of the Company, all directors and relevant employees confirmed that they had complied with the requirements of the Model Code and the Company's guidelines during the six months ended 30 June 2025[53](index=53&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=22&type=section&id=%E8%B4%AD%E4%B9%B0%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B5%8E%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities in H1 2025 - During the six months ended 30 June 2025, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities[54](index=54&type=chunk) - As at 30 June 2025, the Company did not have any treasury shares[54](index=54&type=chunk) [Audit Committee](index=22&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The Audit Committee reviewed the 2025 interim results and found them to be properly prepared and disclosed - The Audit Committee consists of three independent non-executive directors and is primarily responsible for reviewing and supervising the Group's financial reporting, risk management and internal controls, and reviewing the accounting policies and practices adopted by the Company with management[55](index=55&type=chunk) - The Audit Committee has reviewed the unaudited interim results for 2025 and is of the opinion that such interim results have been prepared in accordance with the applicable accounting standards, rules and regulations and that appropriate disclosures have been made[55](index=55&type=chunk) [Interim Dividend](index=22&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board decided not to declare an interim dividend for 2025 to support the spin-off and listing of the Australian gold business - Despite the Group recording a net profit for the interim period of 2025, the Board has decided not to declare an interim dividend after careful consideration of the Company's overall financial arrangements and strategic direction[56](index=56&type=chunk) - The decision not to declare an interim dividend is intended to support the spin-off and listing of the Australian gold mining business, ensuring its smooth progress and safeguarding the long-term interests of shareholders[56](index=56&type=chunk) [Publication of Interim Results and Report](index=23&type=section&id=%E5%88%8A%E7%99%BB%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E5%8F%8A%E6%8A%A5%E5%91%8A) The results announcement and interim report will be published on the websites of the Hong Kong Stock Exchange and the company - This results announcement will be published on the website of the Hong Kong Stock Exchange at www.hkexnews.hk and on the Company's website at www.hankingmining.com[57](index=57&type=chunk) - The Company's 2025 Interim Report containing all the information required by the Listing Rules will be despatched to shareholders and published on the Company's website and the Hong Kong Stock Exchange's website in due course[57](index=57&type=chunk) [Acknowledgement](index=23&type=section&id=%E9%B8%A3%E8%B0%A2) The Board expresses its sincere gratitude to shareholders, management, employees, business partners, and customers for their support - The Board would like to express its sincere gratitude to the shareholders, management team, employees, business partners and customers for their strong support[58](index=58&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=24&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Revenue | 1,405,188 | 1,268,564 | | Cost of sales | (1,044,411) | (921,590) | | Gross profit | 360,777 | 346,974 | | Other income | 5,077 | 5,587 | | Other gains and losses | 5,242 | (3,348) | | Impairment losses under expected credit loss model | (5,964) | 5,442 | | Distribution and selling expenses | (50,701) | (40,747) | | Administrative expenses | (101,450) | (101,101) | | Research and development expenses | (68) | (59) | | Other expenses | (409) | (200) | | Share of results of associates | (389) | (2,604) | | Finance costs | (37,154) | (35,892) | | Profit before tax | 174,961 | 174,052 | | Income tax expense | (70,424) | (67,394) | | Profit for the period | 104,537 | 106,658 | | Other comprehensive income (expense) for the period | 23,437 | (8,868) | | Total comprehensive income for the period | 127,974 | 97,790 | | Profit for the period attributable to owners of the Company | 104,318 | 107,467 | | Basic and diluted earnings per share (RMB cents) | 5.4 | 5.6 | [Condensed Consolidated Statement of Financial Position](index=26&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) - As of June 30, 2025, the Group's total assets were **RMB 4,053,642 thousand**, total liabilities were **RMB 2,514,657 thousand**, and net assets were **RMB 1,538,985 thousand**[61](index=61&type=chunk)[62](index=62&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Intangible assets **increased significantly by 131.56%** to **RMB 647,570 thousand**, mainly due to the reversal of a cancelled disposal and mining exploration expenditures[32](index=32&type=chunk)[61](index=61&type=chunk) Condensed Consolidated Statement of Financial Position (Unaudited) | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, plant and equipment | 617,818 | 654,085 | | Goodwill | 209,132 | 209,132 | | Intangible assets | 647,570 | 279,655 | | Right-of-use assets | 191,343 | 194,559 | | Deferred tax assets | 82,256 | 212,949 | | **Current Assets** | | | | Inventories | 183,419 | 261,314 | | Trade and other receivables | 339,226 | 222,469 | | Receivables at FVTOCI | 463,204 | 286,076 | | Pledged bank deposits | 813,713 | 454,162 | | Cash and cash equivalents | 449,873 | 358,128 | | **Current Liabilities** | | | | Trade, bills and other payables | 1,181,691 | 914,987 | | Borrowings | 1,041,347 | 895,857 | | **Non-current Liabilities** | | | | Borrowings | 58,000 | — | | **Total Equity** | **1,538,985** | **1,441,602** | [Notes to the Condensed Consolidated Financial Statements](index=28&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) [1. Basis of Preparation](index=28&type=section&id=1.%20%E7%BC%96%E5%88%B6%E5%9F%BA%E6%BA%96) The financial statements were prepared on a going concern basis despite current liabilities exceeding current assets - The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[63](index=63&type=chunk) - In view of the Group's current liabilities exceeding its current assets by **RMB 157,479 thousand** as at 30 June 2025, the directors have given careful consideration to the Group's going concern[64](index=64&type=chunk) - The directors are confident that the Group will be successful in obtaining approval for its available conditional banking facilities and that the vast majority of its bank borrowings can be successfully renewed upon maturity, thus the condensed consolidated financial statements have been prepared on a going concern basis[64](index=64&type=chunk) [A. General Information](index=28&type=section&id=A.%20%E4%B8%80%E8%88%AC%E8%B5%84%E6%96%99) - The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[63](index=63&type=chunk) [B. Going Concern Assessment](index=28&type=section&id=B.%20%E6%8C%81%E7%BB%AD%E7%BB%8F%E8%90%A5%E8%AF%84%E4%BC%B0) - In view of the Group's current liabilities exceeding its current assets by **RMB 157,479 thousand** as at 30 June 2025, the directors have given careful consideration to the Group's going concern[64](index=64&type=chunk) - As at 30 June 2025, the Group had available conditional banking facilities of **RMB 887,190 thousand**, for which the directors are confident of obtaining approval[64](index=64&type=chunk) - After considering the above factors and other available financial resources, the directors are of the opinion that the Group has sufficient working capital to meet its present requirements for at least the next twelve months from the end of the reporting period, and therefore the condensed consolidated financial statements have been prepared on a going concern basis[64](index=64&type=chunk) [2. Significant Accounting Policies](index=29&type=section&id=2.%20%E9%87%8D%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96) The financial statements are prepared under the historical cost convention, with no material impact from new IFRS amendments - The condensed consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at fair values[65](index=65&type=chunk) - The application of the amendments to IFRSs in the current interim period has had no material effect on the financial position and performance of the Group for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements[66](index=66&type=chunk) [Application of amendments to IFRSs](index=29&type=section&id=%E5%BA%94%E7%94%A8%E5%9B%BD%E9%99%85%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A%E6%BA%96%E5%88%99%E4%BC%9A%E8%AE%A1%E6%BA%96%E5%88%99%E4%BF%AE%E8%AE%A2%E6%9C%AC) - In the current interim period, the Group has applied, for the first time, the following amendments to IFRSs issued by the IASB that are mandatorily effective for the annual period beginning on 1 January 2025 for the preparation of the Group's condensed consolidated financial statements: Amendments to IAS 21 Lack of Exchangeability[66](index=66&type=chunk) - The application of the amendments to IFRSs in the current interim period has had no material effect on the financial position and performance of the Group for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements[66](index=66&type=chunk) [3A. Revenue from Contracts with Customers](index=30&type=section&id=3A.%20%E4%BE%86%E8%87%AA%E5%AE%A2%E6%88%B7%E5%90%88%E7%BA%A6%E7%9A%84%E6%94%B6%E5%85%A5) The Group's revenue is primarily derived from the sale of iron concentrate and high-purity iron within Mainland China - All revenue from contracts with customers is derived from Mainland China[67](index=67&type=chunk) Disaggregation of Revenue from Contracts with Customers | Revenue Source | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Sales of iron concentrate | 131,957 | 52,603 | | Sales of high-purity iron | 1,269,405 | 1,196,518 | | Sales of construction materials | 177 | 995 | | Sales of raw and residual materials | 2,213 | 18,448 | | Iron ore processing services | 1,436 | — | | **Total** | **1,405,188** | **1,268,564** | [3B. Segment Information](index=31&type=section&id=3B.%20%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group operates three main segments: iron ore, high-purity iron, and gold mining, with the iron ore business being the most profitable - The Group is principally engaged in the exploration, mining, processing and sale of iron ores ("iron ore business") and the production and sale of high-purity iron ("high-purity iron business") in the PRC and the exploration of gold ores ("gold mining business") in Australia[68](index=68&type=chunk) - Other operating segments include the production and sale of construction materials (i.e. foamed ceramics)[70](index=70&type=chunk) [Segment revenue and results](index=31&type=section&id=%E5%88%86%E9%83%A8%E6%94%B6%E5%85%A5%E5%8F%8A%E4%B8%9A%E7%BB%A9) Segment Revenue (External Sales, RMB'000) | Segment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Iron ore business | 134,038 | 53,091 | | High-purity iron business | 1,270,973 | 1,214,291 | | Gold mining business | — | — | | Others | 177 | 1,182 | | **Total** | **1,405,188** | **1,268,564** | Segment Profit (Loss) (RMB'000) | Segment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Iron ore business | 172,142 | 235,248 | | High-purity iron business | 14,956 | (35,503) | | Gold mining business | (5,154) | (1,207) | | Others | (2,897) | (5,048) | | **Consolidated profit before tax** | **174,961** | **174,052** | [Segment assets and liabilities](index=32&type=section&id=%E5%88%86%E9%83%A8%E8%B5%84%E4%BA%A7%E5%8F%8A%E8%B4%9F%E5%80%BA) Segment Assets (RMB'000) | Segment | 30 June 2025 | 31 Dec 2024 | | :--- | :--- | :--- | | Iron ore business | 1,229,847 | 1,090,381 | | High-purity iron business | 1,984,183 | 1,657,039 | | Gold mining business | 516,480 | 560,234 | | **Total reportable segment assets** | **3,730,510** | **3,307,654** | | **Consolidated assets** | **4,053,642** | **3,591,948** | Segment Liabilities (RMB'000) | Segment | 30 June 2025 | 31 Dec 2024 | | :--- | :--- | :--- | | Iron ore business | 853,191 | 616,182 | | High-purity iron business | 1,598,325 | 1,352,664 | | Gold mining business | 22,414 | 141,938 | | **Total reportable segment liabilities** | **2,473,930** | **2,110,784** | | **Consolidated liabilities** | **2,514,657** | **2,150,346** | [4A. Other Income](index=33&type=section&id=4A.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income in H1 2025 primarily consisted of bank interest income Breakdown of Other Income (RMB'000) | Revenue Source | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Bank interest income | 4,450 | 4,382 | | Government grants | 27 | 605 | | Rental income | 600 | 600 | | **Total** | **5,077** | **5,587** | [4B. Other Gains and Losses](index=34&type=section&id=4B.%20%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E4%BA%8F%E6%8D%9F) The Group recorded other gains of RMB 5,242 thousand, a significant improvement from a loss in the prior year - The significant improvement in other gains or losses was mainly because the Group recognized an impairment of **RMB 5,976 thousand** on its interest in an associate company during the same period last year[76](index=76&type=chunk) Items of Other Gains and Losses (RMB'000) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Impairment loss on interest in an associate | — | (5,976) | | Fair value loss on financial assets at FVTPL | (37) | (698) | | Net foreign exchange gain | 1,150 | 1,891 | | Gain on disposal of property, plant and equipment | 1,546 | 918 | | Others | 2,583 | 517 | | **Total** | **5,242** | **(3,348)** | [5. Profit for the Period](index=34&type=section&id=5.%20%E6%9C%9F%E5%86%85%E6%BA%A2%E5%88%A9) The Group's profit for H1 2025 was RMB 104,537 thousand after accounting for depreciation, amortization, and staff costs - Profit for the period was **RMB 104,537 thousand**[59](index=59&type=chunk) Items Deducted from Profit for the Period (RMB'000) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total depreciation and amortisation | 74,958 | 79,248 | | - Capitalised in inventories | (64,090) | (66,209) | | Total staff costs | 104,687 | 99,247 | | - Capitalised in inventories | (46,383) | (40,212) | [6. Income Tax Expense](index=35&type=section&id=6.%20%E6%89%80%E5%BE%97%E7%A8%8E%E5%BC%80%E6%94%AF) The Group's income tax expense for H1 2025 was RMB 70,424 thousand, with a key subsidiary no longer renewing its preferential tax status - Fushun Hanking Aoniu Mining Co, Ltd was eligible for a preferential tax rate of 15% from 2022 to 2024, but management decided not to renew the "High and New Technology Enterprise" tax preferential qualification during the current interim period[79](index=79&type=chunk) Breakdown of Income Tax Expense (RMB'000) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | PRC Enterprise Income Tax (Current) | 47,452 | 65,773 | | Withholding tax | 3,575 | 3,578 | | Under-provision of EIT in prior years | 750 | 2,768 | | Deferred tax expense | 18,647 | (4,725) | | **Total income tax expense** | **70,424** | **67,394** | [7. Dividends](index=36&type=section&id=7.%20%E8%82%A1%E6%81%AF) A final dividend for 2024 was paid during the period, but no interim dividend for 2025 has been proposed - During the current interim period, a final dividend of HK$0.02 per share, totaling HK$39,200,000 (equivalent to RMB 35,851,000), was declared for the year ended 31 December 2024, of which RMB 35,131,000 has been paid to the owners of the Company[80](index=80&type=chunk) - No dividend was proposed during the interim period[80](index=80&type=chunk) [8. Earnings Per Share](index=36&type=section&id=8.%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Basic and diluted earnings per share for H1 2025 was RMB 5.4 cents, a slight decrease from the prior year - The Company did not repurchase any of its ordinary shares during both interim periods[81](index=81&type=chunk) Earnings Per Share Calculation Data | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company for the purpose of basic and diluted EPS | 104,318 | 107,467 | | Weighted average number of ordinary shares for the purpose of basic and diluted EPS | 1,920,461,000 | 1,920,461,000 | | **Basic and diluted earnings per share (RMB cents)** | **5.4** | **5.6** | [9. Trade and Other Receivables](index=37&type=section&id=9.%20%E8%B4%B8%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9) Trade receivables increased by 73.73%, mainly driven by the high-purity iron segment - The increase in trade receivables mainly includes third-party trade receivables of **RMB 57,000 thousand** factored to non-bank financial institutions, primarily from the high-purity iron segment[33](index=33&type=chunk) Overview of Trade and Other Receivables | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | | :--- | :--- | :--- | | Trade receivables | 271,546 | 156,299 | | Total other receivables | 67,680 | 66,332 | | **Total trade and other receivables** | **339,226** | **222,631** | Ageing Analysis of Trade Receivables (Net of Loss Allowance) | Ageing | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | | :--- | :--- | :--- | | - Within 7 days | 147,348 | 72,975 | | - 8 to 30 days | 27,625 | 2,266 | | - 31 to 60 days | 33,086 | 45,308 | | - 61 to 90 days | 18,780 | 14,545 | | - 91 days to 1 year | 44,707 | 21,205 | | **Total** | **271,546** | **156,299** | [10. Receivables at Fair Value through Other Comprehensive Income](index=39&type=section&id=10.%20%E6%8C%89%E5%85%AC%E5%B9%B3%E5%80%BC%E8%AE%A1%E5%85%A5%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E7%9A%84%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9) Receivables at FVTOCI, comprising bills receivable, increased by 61.92% from the end of 2024 - The Group's receivables at FVTOCI are bills receivable, all of which have a maturity of within 6 months[85](index=85&type=chunk) Receivables at FVTOCI (Bills Receivable) | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | | :--- | :--- | :--- | | Bills receivable | 463,204 | 286,076 | [10A. Transfers of Financial Assets](index=39&type=section&id=10A.%20%E8%BD%AC%E8%AE%A9%E9%87%91%E8%9E%8D%E8%B5%84%E4%BA%A7) The Group continues to recognize certain transferred financial assets as it has not transferred substantially all risks and rewards - The Group transfers financial assets to banks, suppliers or non-bank financial institutions by discounting/endorsing or factoring on a full recourse basis, and continues to recognise the full carrying amount of the receivables as it has not transferred substantially all the risks and rewards of the financial assets[86](index=86&type=chunk) - As at 30 June 2025, the Group had derecognised bills of **RMB 393,464 thousand** that were discounted to banks or endorsed to certain suppliers on a full recourse basis but had not yet matured[87](index=87&type=chunk) [10A.1 Transferred financial assets that are not derecognised in their entirety](index=39&type=section&id=10A.1%20%E5%B9%B6%E6%9C%AA%E5%AE%8C%E5%85%A8%E7%BB%88%E6%AD%A2%E7%A1%AE%E8%AE%A4%E7%9A%84%E5%B7%B2%E8%BD%AC%E8%AE%A9%E9%87%91%E8%9E%8D%E8%B5%84%E4%BA%A7) - The Group transfers financial assets to banks, suppliers or non-bank financial institutions by discounting/endorsing or factoring on a full recourse basis, and continues to recognise the full carrying amount of the receivables as it has not transferred substantially all the risks and rewards of the financial assets[86](index=86&type=chunk) Carrying Amount of Transferred Financial Assets (30 June 2025) | Type of Transferred Financial Asset | Carrying Amount (RMB'000) | | :--- | :--- | | Trade receivables factored to non-bank financial institutions with full recourse | 57,000 | | Bills discounted to banks that are not derecognised in their entirety | 171,800 | | Bills endorsed to suppliers that are not derecognised in their entirety | 145,043 | | **Total** | **373,843** | [10A.2 Transferred financial assets that are derecognised in their entirety but where the Group has continuing involvement](index=40&type=section&id=10A.2%20%E5%B7%B2%E5%AE%8C%E5%85%A8%E7%BB%88%E6%AD%A2%E7%A1%AE%E8%AE%A4%E4%BD%86%E7%BB%A7%E7%BB%AD%E6%B6%89%E5%85%A5%E7%9A%84%E5%B7%B2%E8%BD%AC%E8%AE%A9%E9%87%91%E8%9E%8D%E8%B5%84%E4%BA%A7) - As at 30 June 2025, the Group had derecognised bills of **RMB 393,464 thousand** that were discounted to banks or endorsed to certain suppliers on a full recourse basis but had not yet matured[87](index=87&type=chunk) - These bills were issued or guaranteed by reputable PRC banks with high credit ratings, posing minimal credit risk, but the Group has continuing involvement as the banks or suppliers have the right to request repayment if the bills are not honored at maturity[87](index=87&type=chunk) [11. Disposal Group Classified as Held for Sale](index=41&type=section&id=11.%20%E5%88%86%E7%B1%BB%E4%B8%BA%E6%8C%81%E4%BD%9C%E5%87%BA%E5%94%AE%E4%B9%8B%E5%87%BA%E5%94%AE%E9%9B%86%E5%9B%A2) The agreement to sell Primary Gold Pty Ltd was terminated, and its assets are no longer classified as held for sale - On 1 July 2024, HGM Resources Pty Ltd, a subsidiary of the Company, entered into a share sale agreement to dispose of its 100% equity interest in Primary Gold Pty Ltd and its wholly-owned subsidiary, Primary Minerals Pty Ltd (the "Disposal Group")[88](index=88&type=chunk) - On the sunset date (1 July 2025), the buyer failed to satisfy one of the key conditions, the Foreign Investment Review Board of Australia condition, leading the seller to terminate the share sale agreement on 2 July 2025[91](index=91&type=chunk) - Following the termination, the Company no longer classifies the relevant assets and liabilities of the then Disposal Group as "assets held for sale" in the interim financial statements[91](index=91&type=chunk) Assets and Liabilities Classified as Held for Sale as at 31 Dec 2024 (RMB'000) | Item | Amount | | :--- | :--- | | Property, plant and equipment | 13,791 | | Intangible assets | 313,643 | | Restricted deposits | 12,284 | | Other receivables | 162 | | Cash and cash equivalents | 1,817 | | **Total assets classified as held for sale** | **341,697** | | Provisions | 12,496 | | Deferred tax liabilities | 59,304 | | Trade and other payables | 4,142 | | **Total liabilities classified as held for sale** | **75,942** | [12. Trade, Bills and Other Payables](index=42&type=section&id=12.%20%E8%B4%B8%E6%98%93%E3%80%81%E5%BA%94%E4%BB%98%E7%A5%A8%E6%8D%AE%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E4%BB%98%E6%AC%BE%E9%A1%B9) Bills payable increased significantly by 48.79%, while trade and other payables decreased - Payment terms with suppliers are mainly on credit periods of 90 days and 15 days from the receipt of goods from suppliers of the iron ore business and high-purity iron business, respectively[92](index=92&type=chunk) Overview of Trade, Bills and Other Payables | Indicator | 30 June 2025 (RMB'000) | 31 Dec 2024 (RMB'000) | | :--- | :--- | :--- | | Trade payables | 184,925 | 195,391 | | Bills payable under bills financing arrangements | 884,657 | 594,578 | | Other payables | 112,109 | 129,160 | | **Total trade, bills and other payables** | **1,181,691** | **919,129** | Maturity of Bills Payable (RMB'000) | Maturity | 30 June 2025 | 31 Dec 2024 | | :--- | :--- | :--- | | Within 6 months | 824,657 | 594,578 | | 6 months to 1 year | 60,000 | — | | **Total** | **884,657** | **594,578** | [13. Borrowings](index=43&type=section&id=13.%20%E5%80%9F%E6%AC%BE) Total borrowings increased by 22.71% to RMB 1,099,347 thousand, with effective interest rates ranging from 3.45% to 8.60% - The effective interest rates on the Group's interest-bearing borrowings range from **3.45% to 8.60%**[97](index=97&type=chunk) - Borrowings are in various forms including secured and guaranteed, secured and unguaranteed, and unsecured and guaranteed, secured by assets of subsidiaries, bank deposits, receivables, and guaranteed by the controlling shareholder[97](index=97&type=chunk)[98](index=98&type=chunk) Borrowings Overview (RMB'000) | Indicator | 30 June 2025 | 31 Dec 2024 | Change | | :--- | :--- | :--- | :--- | | Bank loans | 1,042,347 | 846,257 | +23.17% | | Other loans | 57,000 | 49,600 | +14.92% | | **Total borrowings** | **1,099,347** | **895,857** | **+22.71%** | Carrying Amount of Borrowings Repayable (RMB'000) | Maturity | 30 June 2025 | 31 Dec 2024 | | :--- | :--- | :--- | | Within one year | 1,041,347 | 895,857 | | Over one year but not exceeding two years | 58,000 | — | | **Total** | **1,099,347** | **895,857** | [14. Share Capital](index=45&type=section&id=14.%20%E8%82%A1%E6%9C%AC) The company's share capital structure remained unchanged as of June 30, 2025 - As of 30 June 2025, the Company's share capital structure remained unchanged from 31 December 2024[100](index=100&type=chunk) Share Capital Details | Share Capital Type | Number of Shares | Share Capital (HKD'000) | Amount (RMB'000) | | :--- | :--- | :--- | :--- | | Authorised (Ordinary shares of HK$0.1 each) | 10,000,000,000 | N/A | N/A | | Issued and fully paid (Ordinary shares of HK$0.1 each) | 1,960,000,000 | 196,000 | 160,203 | [Definitions](index=46&type=section&id=%E9%87%8A%E4%B9%89) - This section provides definitions for key terms and abbreviations used in the report, including company names, subsidiaries, currency units, geographical areas, regulatory bodies, mine names, and relevant accounting and industry standards[101](index=101&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk)

[Company Overview and Financial Summary](index=1&type=section&id=Company%20Overview%20and%20Financial%20Summary) [Financial Summary](index=1&type=section&id=Financial%20Summary) For the six months ended June 30, 2025, NUI Environmental Group's revenue slightly decreased by 0.6% to HK$165.1 million, but net loss significantly narrowed by 43.0% to HK$13.51 million, with loss attributable to owners decreasing by 47.6% Key Financial Data Comparison for H1 2025 (HK$'000) | Metric | June 30, 2025 (Six Months) | June 30, 2024 (Six Months) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 165,119 | 166,070 | -0.6 | | Net Loss | (13,509) | (23,706) | -43.0 | | Loss Attributable to Owners of the Company | (10,619) | (20,248) | -47.6 | | Basic Loss Per Share (HK Cents) | (0.35) | (0.67) | -47.8 | Key Balance Sheet Data Comparison (HK$'000) | Metric | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 862,783 | 869,053 | -0.7 | | Cash and Cash Equivalents | 234,196 | 220,823 | +6.1 | | Bank Borrowings | 50,043 | 44,752 | +11.8 | - The Board resolved **not to declare any dividend** for the six months ended June 30, 2025[2](index=2&type=chunk) [General Information](index=6&type=section&id=General%20Information) These interim financial statements are presented in Hong Kong Dollars, which is the Company's functional currency, while Chinese subsidiaries use Renminbi as their functional currency - Financial statements are presented in **HKD**, with Chinese subsidiaries using **RMB** as their functional currency[8](index=8&type=chunk) [Basis of Preparation](index=6&type=section&id=Basis%20of%20Preparation) These interim financial statements are prepared in accordance with Appendix D2 of the Listing Rules and HKAS 34 "Interim Financial Reporting" issued by the HKICPA, approved by the Board on August 15, 2025 - The statements are prepared in accordance with the **Listing Rules** and **HKAS 34 'Interim Financial Reporting'**[9](index=9&type=chunk) [Changes in Accounting Policies](index=6&type=section&id=Changes%20in%20Accounting%20Policies) The Group applied amendments to HKAS 21 "Lack of Exchangeability," but with no non-exchangeable foreign currency transactions, there is no material impact on this interim financial report, and no other new standards were applied - Amendments to **HKAS 21 'Lack of Exchangeability'** were applied, but with no material impact[11](index=11&type=chunk) [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, Group revenue was HK$165.1 million, gross profit increased to HK$26.04 million, operating profit turned positive to HK$28 thousand, loss before tax narrowed to HK$7.75 million, and loss for the period was HK$13.51 million Key Data from Condensed Consolidated Statement of Profit or Loss (HK$'000) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Revenue | 165,119 | 166,070 | | Cost of Sales | (139,075) | (146,139) | | Gross Profit | 26,044 | 19,931 | | Operating Profit/(Loss) | 28 | (8,725) | | Loss Before Tax | (7,749) | (18,847) | | Loss for the Period | (13,509) | (23,706) | | Loss Attributable to Owners of the Company | (10,619) | (20,248) | | Basic and Diluted Loss Per Share (HK Cents) | (0.35) | (0.67) | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, loss for the period was HK$13.51 million, with other comprehensive income of HK$11.85 million, mainly due to positive exchange differences, leading to a significantly narrowed total comprehensive loss of HK$1.66 million Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (HK$'000) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Loss for the Period | (13,509) | (23,706) | | Exchange Differences on Translation of Financial Statements | 24,539 | (19,839) | | Changes in Fair Value of Equity Investments | (13,300) | 24,200 | | Other Comprehensive Income for the Period, Net of Income Tax | 11,849 | 2,811 | | Total Comprehensive Loss for the Period | (1,660) | (20,895) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets were HK$1.25 billion, with a slight decrease in non-current assets and an increase in current assets, while net current assets increased to HK$120 million, total liabilities increased to HK$294.2 million, and net assets slightly decreased Key Data from Condensed Consolidated Statement of Financial Position (HK$'000) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 872,570 | 893,426 | | Current Assets | 379,729 | 354,189 | | Total Assets | 1,252,299 | 1,247,615 | | Current Liabilities | 259,387 | 246,862 | | Non-current Liabilities | 34,825 | 36,303 | | Total Liabilities | 294,212 | 283,165 | | Net Assets | 958,087 | 964,450 | | Equity Attributable to Owners of the Company | 862,783 | 869,053 | [Business Review and Outlook](index=7&type=section&id=Business%20Review%20and%20Outlook) [Revenue and Segment Information](index=7&type=section&id=Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from hazardous waste incineration and landfill, industrial wastewater treatment, and factory facility leasing, with total revenue for H1 2025 at HK$165.1 million, a slight decrease of 0.6% year-on-year, and operations divided into three reportable segments - The Group's revenue primarily comes from **hazardous waste incineration and landfill services**, **industrial wastewater treatment and related services**, and **factory facility leasing income**[13](index=13&type=chunk) - The Group presents three reportable segments: (i) **industrial and medical waste environmental treatment and disposal services**; (ii) **eco-electroplating wastewater treatment and management services, utility support, and factory building leasing in eco-electroplating zones**; and (iii) **investment in plastic dyeing businesses**[16](index=16&type=chunk) - All of the Group's revenue and non-current assets are generated from and located in **China**[20](index=20&type=chunk) [Revenue Breakdown](index=7&type=section&id=Revenue%20Breakdown) In H1 2025, revenue from hazardous waste incineration and landfill services was HK$108.44 million, industrial wastewater treatment and related services was HK$43.60 million, and factory facility leasing income was HK$13.08 million Revenue from Contracts with Customers by Service Type (HK$'000) | Service Type | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Hazardous Waste Incineration and Landfill Services | 108,444 | 105,297 | | Industrial Wastewater Treatment and Related Support and Management Services | 43,596 | 46,282 | | **Total Revenue from Contracts with Customers** | **152,040** | **151,579** | | Factory Facility Leasing Income | 13,079 | 14,491 | | **Total Revenue** | **165,119** | **166,070** | [Segment Results, Assets, and Liabilities](index=9&type=section&id=Segment%20Results%2C%20Assets%2C%20and%20Liabilities) In H1 2025, the waste treatment segment recorded a loss of HK$17.16 million, the utility support and facilities segment recorded a profit of HK$13.73 million, and the plastic dyeing investment segment recorded a profit of HK$3.39 million, resulting in a total segment loss of HK$31 thousand Reportable Segment Results (HK$'000) | Operating Segment | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Environmental Treatment and Disposal of Waste | (17,156) | (27,403) | | Utility Support and Facilities | 13,732 | 12,677 | | Plastic Dyeing Investment | 3,393 | 3,425 | | **Subtotal of Reportable Segment Results** | **(31)** | **(11,301)** | | Unallocated Head Office and Corporate | (7,718) | (7,546) | | **Total (Loss Before Tax)** | **(7,749)** | **(18,847)** | Reportable Segment Assets and Liabilities (HK$'000) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Reportable Segment Assets | 1,225,003 | 1,220,984 | | Reportable Segment Liabilities | 286,716 | 280,315 | [Other Gains and Income](index=12&type=section&id=Other%20Gains%20and%20Income) In H1 2025, other gains primarily consisted of dividend income of HK$3.70 million, a slight year-on-year decrease, while other income was HK$2.83 million, down 20.5% year-on-year, mainly due to reduced service provider rebates, and net finance income was HK$0.35 million, a 62.2% year-on-year decrease Other Gains, Income, and Net Finance Income (HK$'000) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Other Gains (Dividend Income) | 3,704 | 3,745 | | Other Income | 2,833 | 3,564 | | Net Finance Income | 345 | 913 | - Other income decreased by **HK$731,000**, primarily due to reduced service provider rebates during the period[51](index=51&type=chunk) - Net finance income decreased by **HK$649,000**, mainly due to lower interest income from free cash deposits during the period[58](index=58&type=chunk) [Components of Loss Before Tax](index=13&type=section&id=Components%20of%20Loss%20Before%20Tax) Loss before tax for H1 2025 was deducted for depreciation, operating lease expenses, staff costs, and cost of sales, with total staff costs at HK$32.02 million and cost of sales at HK$139.08 million Items Deducted from Loss Before Tax (HK$'000) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 34,754 | 34,500 | | Depreciation of Right-of-Use Assets | 1,460 | 1,619 | | Operating Lease Expenses | 594 | 594 | | Other Operating Expenses | 2,695 | 3,031 | | Total Staff Costs | 32,024 | 38,398 | | Cost of Sales | 139,075 | 146,139 | [Income Tax](index=14&type=section&id=Income%20Tax) Income tax for H1 2025 was HK$5.76 million, an 18.5% year-on-year increase, mainly due to the payment of China dividend withholding tax, with China's corporate income tax rate at 25%, 15% for high-tech enterprises, and 5% for dividend withholding tax Income Tax Components (HK$'000) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Current Tax | 5,918 | 4,626 | | Deferred Tax | (158) | 233 | | **Total Income Tax** | **5,760** | **4,859** | - Income tax increased by **HK$901,000**, primarily due to the payment of **China dividend withholding tax** in H1 2025[62](index=62&type=chunk) - China's corporate income tax rate is **25%**, with **15%** for high-tech enterprises; dividends distributed by Chinese subsidiaries to Hong Kong holding companies are subject to a reduced **5% withholding tax rate**[23](index=23&type=chunk) [Loss Per Share and Dividends](index=15&type=section&id=Loss%20Per%20Share%20and%20Dividends) For H1 2025, both basic and diluted loss per share were HK$0.35 cents, a 47.8% year-on-year decrease, and the Board does not recommend an interim dividend Loss Per Share (HK Cents) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Basic Loss Per Share | (0.35) | (0.67) | | Diluted Loss Per Share | (0.35) | (0.67) | - The Directors do not recommend the payment of any **interim dividend** for the six months ended June 30, 2025[26](index=26&type=chunk) [Trade and Bills Receivables](index=15&type=section&id=Trade%20and%20Bills%20Receivables) As of June 30, 2025, total trade and bills receivables were HK$73.77 million, an 8.5% increase from end-2024, with credit loss allowance at HK$17.83 million, and ageing analysis showing the 0-30 day category as the largest Trade and Bills Receivables (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Trade Receivables | 60,611 | 63,639 | | Lease Receivables | 19,566 | 11,809 | | Bills Receivables | 11,424 | 10,194 | | Less: Allowance for Credit Losses | (17,832) | (17,669) | | **Total** | **73,769** | **67,973** | Ageing Analysis of Trade and Bills Receivables (HK$'000) | Ageing | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | 0 to 30 days | 36,506 | 35,782 | | 31 to 60 days | 16,026 | 9,449 | | 61 to 90 days | 6,982 | 6,511 | | 91 to 180 days | 8,335 | 6,761 | | 181 to 360 days | 3,493 | 2,271 | | Over one year | 2,427 | 7,199 | | **Total** | **73,769** | **67,973** | - The average credit period for industrial waste, wastewater, and sludge treatment service customers is **60 days**, while for medical waste disposal service customers, it extends to **180 days**[28](index=28&type=chunk) [Prepayments, Deposits, and Other Receivables](index=16&type=section&id=Prepayments%2C%20Deposits%2C%20and%20Other%20Receivables) As of June 30, 2025, total prepayments, deposits, and other receivables were HK$49.78 million, a 14.9% increase from end-2024, mainly including amounts due from a joint venture of HK$29.70 million and consideration receivable from the disposal of a subsidiary of HK$10.63 million Prepayments, Deposits, and Other Receivables (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Other Receivables | 379 | 327 | | Prepayments | 5,641 | 4,456 | | Dividends Receivable from Equity Investments | 3,426 | – | | Amounts Due from a Joint Venture | 29,699 | 28,213 | | Consideration Receivable from Disposal of a Subsidiary | 10,631 | 10,321 | | **Total** | **49,776** | **43,317** | - Amounts due from a joint venture are **unsecured** and bear interest at annual rates ranging from **3.20% to 4.05%**[29](index=29&type=chunk) [Trade and Bills Payables](index=17&type=section&id=Trade%20and%20Bills%20Payables) As of June 30, 2025, total trade and bills payables were HK$32.13 million, a 16.8% decrease from end-2024, with trade payables being interest-free and generally settled within 90 to 180 days Trade and Bills Payables (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Trade Payables | 25,338 | 33,612 | | Bills Payables | 6,795 | 5,001 | | **Total** | **32,133** | **38,613** | Ageing Analysis of Trade Payables (HK$'000) | Ageing | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | 0 to 30 days | 6,344 | 9,485 | | 31 to 60 days | 3,981 | 4,344 | | 61 to 90 days | 2,947 | 3,384 | | Over 90 days | 12,066 | 16,399 | | **Total** | **25,338** | **33,612** | [Accruals and Other Payables](index=18&type=section&id=Accruals%20and%20Other%20Payables) As of June 30, 2025, total accruals and other payables were HK$170.48 million, a 9.9% increase from end-2024, mainly comprising dividends payable to non-controlling interests of a subsidiary of HK$57.34 million and other payables of HK$55.43 million Accruals and Other Payables (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Salaries and Bonuses Payable | 4,224 | 5,893 | | Trade Payables for Acquisition of Property, Plant and Equipment | 22,356 | 19,999 | | Accrued Costs for Land Restoration and Soil Remediation | 26,281 | 25,514 | | Dividends Payable to Shareholders of the Company | 4,857 | – | | Dividends Payable to Non-controlling Interests of a Subsidiary | 57,336 | 57,336 | | Other Payables | 55,429 | 46,425 | | **Total** | **170,483** | **155,167** | - Dividends payable to non-controlling interests of a subsidiary primarily include amounts due to **Mr. Yin Yongxiang, Mr. Sun Jiaqing, and Mr. Liu Laigen**[31](index=31&type=chunk) [Industrial and Medical Waste Environmental Treatment and Disposal Services](index=21&type=section&id=Industrial%20and%20Medical%20Waste%20Environmental%20Treatment%20and%20Disposal%20Services) In H1 2025, the Group collected, treated, and disposed of approximately 81,145 tonnes of hazardous waste in Jiangsu Province, China, with total segment revenue of HK$108.44 million, a 3.0% year-on-year increase, and this segment recorded a pre-tax loss of HK$17.16 million, which narrowed from the prior year Industrial and Medical Waste Treatment Service Volume and Revenue (HK$'000) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Waste Collected and Disposed (Tonnes) | 81,145 | 45,591 | | Segment Revenue (HK$'000) | 108,444 | 105,297 | | Revenue from Hazardous Industrial Waste | 83,844 | 83,318 | | Revenue from Regulated Medical Waste | 18,560 | 17,521 | | Revenue from General Industrial Waste and Others | 6,040 | 4,458 | - The Group's share of profit from associate Zhenjiang New Area was approximately **HK$0.36 million**, net loss from Nanjing Tianyu was approximately **HK$4.02 million**, and net loss from joint venture Xinyu Rongkai was approximately **HK$4.46 million**[39](index=39&type=chunk) - This segment recorded a pre-tax loss of approximately **HK$17.16 million**, a reduction from **HK$27.40 million** in the same period of 2024[40](index=40&type=chunk) [Eco-Electroplating Zone Wastewater Treatment Services](index=24&type=section&id=Eco-Electroplating%20Zone%20Wastewater%20Treatment%20Services) In H1 2025, revenue from eco-electroplating zone services was HK$56.68 million, a 6.7% year-on-year decrease, while pre-tax segment profit margin improved to 24.2%, average utilization rate of factory buildings decreased to 80.1%, and average utilization rate of wastewater treatment volume remained at 22.0% Eco-Electroplating Zone Service Data (HK$'000) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Segment Revenue | 56,675 | 60,773 | | Pre-tax Segment Profit Margin | 24.2% | 20.9% | | Average Utilization Rate of Factory Buildings and Facilities | 80.1% | 86.2% | | Electroplating Wastewater Treated by Centralized Wastewater Treatment Plant (Tonnes) | 181,621 | 182,526 | | Average Utilization Rate of Wastewater Treatment Volume | 22.0% | 22.1% | - The eco-electroplating zone is owned, constructed, and operated by **Zhenjiang Huake Eco-Electroplating Technology Development Co. Ltd.**, a wholly-owned subsidiary of the Group[44](index=44&type=chunk) - As of June 30, 2025, **32 manufacturing customers** leased **22 factory buildings** within the zone[44](index=44&type=chunk) [Strategic Investment in Plastic Dyeing Businesses](index=25&type=section&id=Strategic%20Investment%20in%20Plastic%20Dyeing%20Businesses) The Group holds equity interests in three plastic dyeing manufacturing entities, with pre-tax profit margins for these investments ranging from 1.3% to 5.3% in H1 2025, and dividends of HK$3.70 million declared and expected to be distributed in Q4 of this year - The Group holds equity interests in three plastic dyeing manufacturing entities: **Suzhou Xinhua Mei, Danyang Xinhua Mei, and Qingdao Huamei**[45](index=45&type=chunk) Pre-tax Profit Margins of Plastic Dyeing Businesses | Company | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Suzhou Xinhua Mei | 1.3% | 2.6% | | Danyang Xinhua Mei | 1.7% | 2.7% | | Qingdao Huamei | 5.3% | 5.9% | - Dividends totaling approximately **HK$3.70 million** were declared for 2024 results, expected to be distributed in **Q4 of this year**[45](index=45&type=chunk) [Outlook](index=25&type=section&id=Outlook) Facing a weak hazardous waste treatment market and overcapacity, the Group will continue to optimize operations, enhance cost-effectiveness, improve service quality, and ensure timely renewal of operating permits, while actively exploring business restructuring and industrial upgrading to strengthen long-term competitiveness and uphold environmental commitments - The Group's hazardous waste treatment and incineration services market in Jiangsu Province continues to face **weakness**, with severe **industry overcapacity and pricing pressure**[46](index=46&type=chunk) - The Group will continue to drive **business optimization, enhance cost-effectiveness, and improve service quality**, ensuring timely renewal of hazardous waste operating permits for its subsidiaries and strategically adjusting incineration facilities to minimize downtime[46](index=46&type=chunk) - The Group will actively explore **business restructuring and industrial upgrading** to enhance long-term competitiveness and uphold its commitment to **environmental protection and sustainable development**[47](index=47&type=chunk) [Financial Review and Analysis](index=27&type=section&id=Financial%20Review%20and%20Analysis) [Financial Performance Overview](index=27&type=section&id=Financial%20Performance%20Overview) In H1 2025, total Group revenue slightly decreased by 0.6% to HK$165.1 million, but the average gross profit margin significantly improved by 31.7% to 15.8%, with loss for the period narrowing substantially by 43.0% to HK$13.51 million, and adjusted EBITDA increasing by 28.1% to HK$37.42 million Financial Performance Overview (HK$'000) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 165,119 | 166,070 | -0.6 | | Average Gross Profit Margin (%) | 15.8 | 12.0 | +31.7 | | Loss for the Period | (13,509) | (23,706) | -43.0 | | Loss Attributable to Owners of the Company | (10,619) | (20,248) | -47.6 | | Basic Loss Per Share (HK Cents) | (0.35) | (0.67) | -47.8 | | Adjusted EBITDA | 37,420 | 29,221 | +28.1 | [Analysis of Key Financial Metric Changes](index=28&type=section&id=Analysis%20of%20Key%20Financial%20Metric%20Changes) Revenue declined mainly due to lower utilization of the eco-electroplating zone, while gross margin improved from higher average unit prices for hazardous waste treatment and reduced direct costs, with operating expenses decreasing, impairment loss reversal for trade receivables reducing, finance income and costs decreasing, loss contribution from associates and joint ventures decreasing, and income tax increasing primarily due to China dividend withholding tax - Total business revenue decreased by **HK$951,000**, primarily due to lower utilization of factory buildings and facilities in the eco-electroplating zone[49](index=49&type=chunk) - Gross profit margin increased mainly due to higher **average unit treatment prices for hazardous waste services** and **reduced direct costs** in both operating segments[50](index=50&type=chunk)[56](index=56&type=chunk) - Distribution costs decreased by **HK$2.42 million**, primarily due to reduced market intermediary agency fees during the period[52](index=52&type=chunk) - Administrative expenses decreased by **HK$2.08 million**, primarily due to a reduction in staff headcount during the period[53](index=53&type=chunk) - Total reversal of impairment loss for trade receivables was **HK$278,000**, mainly due to improved debt recovery[57](index=57&type=chunk) - Losses from associates decreased by **HK$1.48 million**, primarily due to improved business performance of Nanjing Tianyu during the period[60](index=60&type=chunk) - Losses from joint venture Xinyu Rongkai decreased by **HK$1.44 million**, primarily due to lower operating costs during its temporary suspension period[61](index=61&type=chunk) - Adjusted EBITDA increased by **HK$8.20 million**, mainly due to the narrowed losses in core business segments during the period[63](index=63&type=chunk) [Operating Seasonality](index=30&type=section&id=Operating%20Seasonality) Demand for environmental hazardous waste treatment services in Jiangsu Province typically increases in the first half of the year, with hazardous waste treatment service revenue for the twelve months ended June 30, 2025, at approximately HK$227 million, 203,518 tonnes treated, and a pre-tax loss of approximately HK$26.03 million - Demand for environmental hazardous waste treatment and disposal services in Jiangsu Province generally **increases in the first half of the year**[65](index=65&type=chunk) [Capital Expenditure and Commitments](index=30&type=section&id=Capital%20Expenditure%20and%20Commitments) In H1 2025, the Group's capital expenditure was primarily for industrial wastewater and sludge treatment services in the eco-electroplating zone, amounting to approximately HK$15.36 million, with contracted but unprovided capital expenditure at HK$7.99 million and commitment to equity investments at HK$15.98 million as of the reporting period end Capital Expenditure (HK$'000) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Hazardous Waste Treatment Service Operating Segment | 568 | 1,220 | | Eco-Electroplating Zone Service Operating Segment | 15,362 | 10,515 | Capital Commitments (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Capital Expenditure for Property, Plant and Equipment | 7,999 | 19,198 | | Contribution to an Equity Investment | 15,976 | 15,915 | - Zhenjiang Xinyu's expansion plan has been **suspended since April 2023**, and alternative solutions are being sought[68](index=68&type=chunk) [Liquidity and Financial Resources](index=31&type=section&id=Liquidity%20and%20Financial%20Resources) The Group maintains a sound financial position, with equity attributable to owners of approximately HK$862.78 million and total consolidated assets of approximately HK$1.25 billion as of June 30, 2025, while cash and bank balances increased to HK$234.20 million, but available unutilized bank financing facilities decreased, with a current ratio of 1.46 times and a gearing ratio of 5.2% - Equity attributable to owners of the Company was approximately **HK$862.78 million**, and total consolidated assets were approximately **HK$1.25 billion**[69](index=69&type=chunk) Cash and Bank Balances and Bank Financing (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Cash and Bank Balances | 234,196 | 220,823 | | Available Unutilized Unsecured Bank Financing Facilities | 25,480 | 51,920 | Liquidity and Gearing Ratios | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Current Ratio | 1.46 times | 1.43 times | | Gearing Ratio | 5.2% | 4.6% | Interest-Bearing Borrowings (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Secured RMB Bank Borrowings | 21,920 | 21,280 | | Unsecured RMB Bank Borrowings | 28,123 | 23,472 | | **Total** | **50,043** | **44,752** | [Capital Structure](index=35&type=section&id=Capital%20Structure) As of June 30, 2025, there were no significant changes in the Company's capital structure compared to December 31, 2024 - The Company's capital structure as of **June 30, 2025**, showed no significant changes compared to **December 31, 2024**[75](index=75&type=chunk) [Significant Investments and Their Performance](index=35&type=section&id=Significant%20Investments%20and%20Their%20Performance) As of June 30, 2025, the Group's total fair value of equity investments in Suzhou Xinhua Mei, Danyang Xinhua Mei, and Qingdao Huamei was HK$85.10 million, a decrease from end-2024, with these investments representing 6.8% of the Group's total assets Fair Value of Significant Equity Investments (HK$'000) | Company | Group's Interest | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | :--- | | Suzhou Xinhua Mei | 18.62% | 9,500 | 12,600 | | Danyang Xinhua Mei | 24.50% | 6,200 | 10,300 | | Qingdao Huamei | 28.67% | 69,400 | 75,500 | | **Total** | | **85,100** | **98,400** | - As of June 30, 2025, the fair value of unlisted equity investments in Suzhou Xinhua Mei, Danyang Xinhua Mei, and Qingdao Huamei represented **0.8%, 0.5%, and 5.5%** of the Group's total assets, respectively[78](index=78&type=chunk) [Asset Impairment Testing](index=36&type=section&id=Asset%20Impairment%20Testing) As of June 30, 2025, the Group performed impairment tests on goodwill and its interests in associate Nanjing Tianyu and joint venture Xinyu Rongkai, concluding that no impairment losses were necessary - No impairment loss was deemed necessary for **goodwill** for the six months ended June 30, 2025[79](index=79&type=chunk) - The Group deemed no impairment loss necessary for its interest in **Nanjing Tianyu** for the six months ended June 30, 2025[80](index=80&type=chunk) - The Group deemed no impairment loss necessary for its interest in **Xinyu Rongkai** for the six months ended June 30, 2025[81](index=81&type=chunk) [Pledged Assets](index=37&type=section&id=Pledged%20Assets) As of June 30, 2025, the Group pledged property, plant and equipment, land use rights, and restricted bank deposits with a total carrying value of HK$55.51 million as collateral for bank credit Carrying Value of Pledged Assets (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Property, Plant and Equipment | 44,590 | 47,392 | | Land Use Rights | 7,394 | 7,266 | | Restricted Bank Deposits | 3,523 | 3,309 | | **Total** | **55,507** | **57,967** | Secured Liabilities (HK$'000) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Secured Bank Borrowings | 21,920 | 21,280 | | Bills Payable | 6,795 | 5,001 | | **Total** | **28,715** | **26,281** | [Risk Management and Corporate Governance](index=19&type=section&id=Risk%20Management%20and%20Corporate%20Governance) [Contingent Liabilities](index=19&type=section&id=Contingent%20Liabilities) The Group faces contingent liabilities including legal proceedings, bank loan guarantees for a joint venture, and environmental business permit renewals, with legal proceedings involving dividend disputes with non-controlling interests of a subsidiary, guarantees relating to overdue joint venture loans, and environmental operations requiring continuous validity of operating permits - Subsidiary NUET(JS) faces legal proceedings from two non-controlling shareholders demanding payment of approximately **HK$26.58 million (RMB22.48 million)** in accrued unpaid dividends and interest[32](index=32&type=chunk) - The Company provided a joint and several guarantee for a **RMB120 million** bank loan facility to joint venture Xinyu Rongkai, of which **RMB47.05 million** principal was due and unpaid on June 21, 2025[34](index=34&type=chunk)[35](index=35&type=chunk) - The Group's environmental businesses require valid operating permits from the **Jiangsu Provincial Environmental Protection Department in China** for specific categories of hazardous and/or regulated medical waste and industrial wastewater treatment services[36](index=36&type=chunk) [Foreign Currency Risk](index=38&type=section&id=Foreign%20Currency%20Risk) The Group primarily operates in China, with transactions, assets, and liabilities denominated in RMB, exposing it to RMB-HKD exchange rate fluctuations, and in H1 2025, the average appreciation of RMB against HKD resulted in a positive exchange difference of HK$24.54 million - The Group primarily operates in **China**, with most transactions, assets, and liabilities denominated in **RMB**[85](index=85&type=chunk) - For the six months ended June 30, 2025, the average appreciation of **RMB against HKD** resulted in an overall positive exchange difference of approximately **HK$24.54 million** from the translation of financial statements of subsidiaries, associates, and joint ventures in China[85](index=85&type=chunk) [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) The Group manages bank borrowings using fixed interest rates to mitigate risk, with RMB-denominated bank borrowings bearing annual interest rates ranging from 3.08% to 3.50% - The Group's bank borrowings are managed using a mix of fixed and floating interest rates, with **no floating rate bank borrowings**[86](index=86&type=chunk) - RMB-denominated bank borrowings bear different **fixed annual interest rates ranging from 3.08% to 3.50%**[86](index=86&type=chunk) [Credit Risk](index=39&type=section&id=Credit%20Risk) The Group's credit risk primarily arises from trade receivables, lease receivables, and other receivables, with limited credit risk from banks and financial institutions, and as of June 30, 2025, the full-term expected credit loss allowance was HK$17.83 million, representing 19.47% of total trade, lease, and bills receivables - The Group's credit risk primarily arises from **trade receivables, lease receivables, and other receivables**[87](index=87&type=chunk) - As of June 30, 2025, the full-term **ECL allowance** was approximately **HK$17.83 million**, representing approximately **19.47%** of the total carrying amount of trade, lease, and bills receivables of approximately **HK$91.60 million**[88](index=88&type=chunk) [Key Risks and Uncertainties](index=40&type=section&id=Key%20Risks%20and%20Uncertainties) The Group's hazardous waste treatment services business in China continues to incur losses, facing persistent pricing pressure due to local economic adjustments and market uncertainties, and the Group will reduce reliance on specific markets through enhanced market penetration, business restructuring, and industrial upgrading - The Group's business segment providing integrated industrial hazardous waste treatment and disposal services in China continues to incur **losses**[89](index=89&type=chunk) - Uncertainties and challenges faced by the local manufacturing and chemical industries may exert **continuous pricing pressure** on hazardous waste disposal services provided to the Group's specific customer base[89](index=89&type=chunk) - The Group will continue its environmental-related businesses, strengthen business strategies for **market penetration across different regions**, and prudently explore **business restructuring and industrial upgrading** to reduce reliance on and investment in specific markets[89](index=89&type=chunk) [Corporate Governance Practices](index=41&type=section&id=Corporate%20Governance%20Practices) The Company is committed to good corporate governance and complies with all code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules, except for one deviation where Mr. Xi Yu serves as both Chairman and CEO, which the Board believes is currently in the Company's best interest - The Company has complied with all code provisions of the **Corporate Governance Code** in Part 2 of Appendix C1 of the Listing Rules, except for code provision **C.2.1**[96](index=96&type=chunk) - Mr. Xi Yu concurrently holds the roles of **Chairman of the Board and Chief Executive Officer**, constituting a deviation from code provision C.2.1 of the Corporate Governance Code[97](index=97&type=chunk) - The Board believes that combining the roles of Chairman and CEO facilitates the **execution of business strategies** and **maximizes operational efficiency**, with sufficient internal controls in place[97](index=97&type=chunk) [Connected Transactions and Financial Assistance](index=42&type=section&id=Connected%20Transactions%20and%20Financial%20Assistance) There were no disclosable connected transactions during the period, but the Company provided a bank loan guarantee for joint venture Xinyu Rongkai, with part of the loan overdue, and the Group also provided unsecured advances to Xinyu Rongkai, while Executive Directors Mr. Xi Yu and Ms. Zhang Xiaoling have interests in office lease agreements with the Group, and Director Ms. Liu Yujie has investments in other hazardous waste project companies, which the Board deems not to constitute competition - The Group had **no disclosable connected transactions** during the announcement period or for the six months ended June 30, 2025[99](index=99&type=chunk) - The Company provided a bank loan guarantee for joint venture Xinyu Rongkai, with an outstanding loan of approximately **RMB47.05 million** that matured on June 21, 2025[101](index=101&type=chunk) - Advances from Xinyu Rongkai to the Group of approximately **HK$29.70 million** are **unsecured** and bear fixed annual interest rates ranging from **3.20% to 4.05%**[104](index=104&type=chunk) - Executive Directors **Mr. Xi Yu and Ms. Zhang Xiaoling** have interests in office lease agreements with the Group, conducted on terms no less favorable than those available to independent third parties[107](index=107&type=chunk) - Director **Ms. Liu Yujie** holds investments in four companies operating hazardous waste projects, which the Board believes **do not constitute competition** with the Group[109](index=109&type=chunk) [Compliance with Relevant Laws and Regulations](index=45&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) The Group prioritizes legal and regulatory compliance, engaging financial and legal advisors for guidance, and as of June 30, 2025, no significant breaches of relevant laws and regulations materially impacting the Group's business and operations were identified - The Group prioritizes **legal and regulatory compliance** in formulating its policies and practices[111](index=111&type=chunk) - For the six months ended June 30, 2025, the Group was unaware of any **material breaches of relevant laws and regulations** that significantly impacted its business and operations[111](index=111&type=chunk) [Other Information](index=40&type=section&id=Other%20Information) [Dividends](index=40&type=section&id=Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2025, and the final dividend for the 2024 financial year was paid on July 31, 2025 - The Board does not recommend the payment of an **interim dividend** for the six months ended June 30, 2025[90](index=90&type=chunk) - The **final dividend for FY2024** of **HK$0.0016 per share**, totaling approximately **HK$4.86 million**, was paid on July 31, 2025[90](index=90&type=chunk) [Changes in Directors' and Management's Information](index=40&type=section&id=Changes%20in%20Directors%27%20and%20Management%27s%20Information) There have been no significant changes in the information of the directors and management team members for the six months ended June 30, 2025, and since the date of the most recent annual report - There were **no significant changes** in directors' information for the six months ended June 30, 2025[91](index=91&type=chunk) - There were **no significant changes** in the information of the Company's management team members[92](index=92&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=41&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended June 30, 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's **listed securities** during the six months ended June 30, 2025[93](index=93&type=chunk) [Events After Reporting Period](index=41&type=section&id=Events%20After%20Reporting%20Period) No significant events occurred after the six months ended June 30, 2025, and up to the date of this announcement, for either the Company or the Group - Neither the Company nor the Group undertook any **significant events after the reporting period** up to the date of this announcement[94](index=94&type=chunk) [Public Float](index=45&type=section&id=Public%20Float) For the six months ended June 30, 2025, the Company maintained an adequate public float of not less than 25% of its issued shares as required by the Listing Rules - For the six months ended June 30, 2025, the Company maintained an **adequate public float of not less than 25%** of its issued shares as required by the Listing Rules[110](index=110&type=chunk) [Review and Publication](index=46&type=section&id=Review%20and%20Publication) The Company's Audit Committee reviewed the interim financial results, and the independent auditor reviewed the interim financial report in accordance with HKSRS 2410, finding no material issues, with the interim results announcement published on the Company's and HKEX websites - The Audit Committee reviewed the Company's **unaudited condensed consolidated financial results and information** for the six months ended June 30, 2025, with management[112](index=112&type=chunk) - The Company's independent auditor, **Crowe (HK) CPA Limited**, conducted a review in accordance with **HKSRS 2410**, finding no matters to suggest that the interim financial report was not prepared in all material respects in accordance with **HKAS 34 'Interim Financial Reporting'**[113](index=113&type=chunk) - This interim results announcement is available on the Company's website (**www.nuigl.com**) and the HKEX website (**www.hkexnews.hk**)[114](index=114&type=chunk)

[Financial Summary](index=1&type=section&id=Financial%20Summary) The company achieved a significant turnaround from loss to profit in the first half of 2025, driven by a substantial increase in gross margin and a significant reduction in net impairment loss on financial assets Financial Highlights (HKD thousands) | Indicator | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,912,400 | 5,733,300 | -49.2% | | Gross Profit | 553,100 | 282,100 | +96.1% | | Gross Margin | 19.0% | 4.9% | +14.1 percentage points | | Operating Profit/(Loss) | 207,000 | (10,400) | Turned from Loss to Profit | | Net Impairment Loss on Financial Assets | (500) | (100,800) | Significant Decrease | | Profit/(Loss) Attributable to Owners of the Company | 172,700 | (162,800) | Turned from Loss to Profit | - The Board does not recommend the payment of any interim dividend for the first half of 2025 (first half of 2024: nil)[2](index=2&type=chunk) [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's financial performance and position for the first half of 2025, including detailed statements of profit or loss, comprehensive income, and financial position [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The company achieved a significant turnaround from loss to profit in the first half of 2025, primarily due to a substantial increase in gross margin and a significant reduction in net impairment loss on financial assets, improving operating efficiency despite a revenue decline Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (HKD thousands) | Indicator | H1 2025 (HKD thousands) | H1 2024 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 2,912,419 | 5,733,287 | | Cost of Sales | (2,359,303) | (5,451,219) | | Gross Profit | 553,116 | 282,068 | | Other Income and Gains | 42,948 | 67,391 | | Selling and Distribution Expenses | (35,117) | (66,651) | | Administrative Expenses | (242,475) | (239,822) | | Net Impairment Loss on Financial Assets | (486) | (100,810) | | Finance Costs | (79,435) | (47,691) | | Other Expenses | (32,004) | (5,655) | | Share of Profits and Losses of Associates | 10,290 | (24,505) | | Profit/(Loss) Before Tax | 216,837 | (135,675) | | Income Tax Expense | (35,588) | (41,859) | | Profit/(Loss) for the Period | 181,249 | (177,534) | | Profit/(Loss) Attributable to Owners of the Company | 172,696 | (162,783) | | Basic Earnings/(Loss) Per Share | HKD 0.0473 | (HKD 0.0475) | - Total comprehensive income for the period turned from a **loss of HKD 196,146 thousands** in the first half of 2024 to a **profit of HKD 208,891 thousands** in the first half of 2025[3](index=3&type=chunk)[4](index=4&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets slightly decreased, but net current liabilities significantly reduced, and net assets and equity attributable to owners of the company increased, indicating an improved financial position Interim Condensed Consolidated Statement of Financial Position (HKD thousands) | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Total Non-Current Assets | 4,956,741 | 5,063,574 | | Total Current Assets | 3,493,390 | 3,723,029 | | Total Current Liabilities | 4,882,628 | 5,382,420 | | Net Current Liabilities | (1,389,238) | (1,659,391) | | Net Assets | 2,327,081 | 1,977,187 | | Equity Attributable to Owners of the Company | 2,713,820 | 2,361,610 | - Net current liabilities decreased by **HKD 270.16 million**, indicating an improvement in liquidity position[5](index=5&type=chunk) - Equity attributable to owners of the company increased by **HKD 352.21 million**, primarily due to an increase in issued share capital and reserves[6](index=6&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures regarding the interim condensed consolidated financial statements, covering accounting policies, segment information, and key financial items [1. Basis of Preparation and Changes in Accounting Policies](index=6&type=section&id=1.%20Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) The interim financial statements are prepared in accordance with HKAS 34 and on a going concern basis, with the company securing sufficient working capital for the next 12 months through bank loan renewals and equity financing despite net current liabilities - As of June 30, 2025, the Group's current liabilities exceeded current assets by **HKD 1,389.2 million**[8](index=8&type=chunk) - Subsequent to the reporting period, the Group successfully renewed or obtained new bank loans of **HKD 131.6 million** and completed a placing of new shares, raising net proceeds of approximately **HKD 180.44 million** for bank loan repayment[8](index=8&type=chunk) - Newly issued and revised Hong Kong Financial Reporting Standards had no significant impact on the Group's condensed consolidated interim financial statements[9](index=9&type=chunk) [2. Operating Segment Information](index=7&type=section&id=2.%20Operating%20Segment%20Information) The Group's business is divided into four segments: manganese mining, electrolytic manganese metal and alloy materials production, battery materials production, and other businesses, with management allocating resources and assessing performance based on segment results and inter-segment sales at market prices - The Group's main operating segments include manganese mining (China and Gabon), electrolytic manganese metal and alloy materials production (China), battery materials production (China), and other businesses (China and Hong Kong)[10](index=10&type=chunk) H1 2025 Segment Revenue and Results (HKD thousands) | Segment | Sales to External Customers | Segment Results | | :--- | :--- | :--- | | Manganese Mining (China) | 86,994 | (5,873) | | Manganese Mining (Gabon) | 633,419 | 37,505 | | Electrolytic Manganese Metal and Alloy Materials Production (China) | 1,028,107 | 38,897 | | Battery Materials Production (China) | 753,657 | 206,153 | | Other Businesses (China and Hong Kong) | 410,242 | 78,967 | | **Total** | **2,912,419** | **355,649** | H1 2024 Segment Revenue and Results (HKD thousands) | Segment | Sales to External Customers | Segment Results | | :--- | :--- | :--- | | Manganese Mining (China) | 62,852 | (54) | | Manganese Mining (Gabon) | 591,426 | 80,305 | | Electrolytic Manganese Metal and Alloy Materials Production (China) | 1,160,859 | (50,664) | | Battery Materials Production (China) | 797,934 | 193,992 | | Other Businesses (China and Hong Kong) | 3,120,216 | (267,733) | | **Total** | **5,733,287** | **(44,154)** | [3. Revenue, Other Income and Gains](index=10&type=section&id=3.%20Revenue%2C%20Other%20Income%20and%20Gains) Total revenue for the first half of 2025 decreased by **49.2%** year-on-year, primarily due to a significant reduction in sales from the other businesses segment (trading business), while manganese mining revenue increased, and other income and gains decreased by **36.3%** due to lower grant income Revenue from Contracts with Customers (HKD thousands) | Segment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Manganese Mining | 720,413 | 654,278 | | Electrolytic Manganese Metal and Alloy Materials Production | 1,028,107 | 1,160,859 | | Battery Materials Production | 753,657 | 797,934 | | Other Businesses | 410,242 | 3,120,216 | | **Total** | **2,912,419** | **5,733,287** | - The Mainland China market contributed **HKD 2,660,732 thousands** to total revenue in the first half of 2025, accounting for **91.36%** of the total[17](index=17&type=chunk) Other Income and Gains (HKD thousands) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Interest Income | 2,032 | 4,886 | | Net Foreign Exchange Gains | – | 3,325 | | Grant Income | 13,472 | 34,713 | | Sales of Waste and Other Materials | 6,665 | 9,065 | | Rental Income | 5,976 | 9,279 | | Others | 14,803 | 6,123 | | **Total** | **42,948** | **67,391** | [4. Finance Costs](index=12&type=section&id=4.%20Finance%20Costs) Finance costs for the first half of 2025 significantly increased by **66.6%** year-on-year, primarily due to higher interest on loans and other payables, and finance costs for discounted bills receivable Finance Costs (HKD thousands) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Interest on Loans and Other Payables | 65,195 | 23,322 | | Finance Costs on Discounted Bills Receivable | 5,404 | 17,617 | | Interest Expense on Lease Liabilities | 8,836 | 5,736 | | Other Finance Costs | – | 1,016 | | **Total** | **79,435** | **47,691** | [5. Profit/(Loss) Before Tax](index=12&type=section&id=5.%20Profit%2F(Loss)%20Before%20Tax) The company's profit before tax turned from a loss in the prior period to a profit, mainly due to a net reversal of inventory provisions and a significant reduction in net impairment loss on financial assets Profit/(Loss) Before Tax - Key Deductions/(Additions) (HKD thousands) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Cost of Inventories Sold | 2,399,597 | 5,407,822 | | Net (Reversal)/Provision for Inventories | (40,294) | 43,397 | | Depreciation of Property, Plant and Equipment | 188,315 | 184,940 | | Depreciation of Right-of-Use Assets | 10,091 | 35,521 | | Net Impairment Loss on Financial Assets | 486 | 100,810 | | Research and Development Costs | 24,315 | 37,869 | | Employee Benefit Expenses | 282,111 | 290,948 | - Net impairment loss on financial assets significantly decreased from **HKD 100,810 thousands** in the first half of 2024 to **HKD 486 thousands** in the first half of 2025, a key factor in the turnaround to profit[20](index=20&type=chunk) [6. Income Tax Expense](index=13&type=section&id=6.%20Income%20Tax%20Expense) Income tax expense for the first half of 2025 slightly decreased year-on-year, with the effective tax rate largely consistent with statutory preferential corporate income tax rates, as the Group benefits from different preferential rates in Mainland China and Gabon Income Tax Expense (HKD thousands) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Current China | 40,688 | 27,707 | | Current Hong Kong | 1,881 | 3,281 | | Current Gabon | 528 | 17,387 | | Deferred | (7,509) | (6,516) | | **Total Tax Expense for the Period** | **35,588** | **41,859** | - Certain subsidiaries in Mainland China (South Manganese Group, Qinzhou Dameng New Materials Co., Ltd., and Huiyuan Manganese Industry) enjoy a **preferential corporate income tax rate of 15%** as high-tech enterprises[26](index=26&type=chunk) - Mining companies operating in Gabon are subject to corporate income tax at the higher of **35% of their taxable income or 1% of their revenue**[28](index=28&type=chunk) [7. Earnings/(Loss) Per Share Attributable to Owners of the Company](index=14&type=section&id=7.%20Earnings%2F(Loss)%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Company) In the first half of 2025, basic and diluted earnings per share attributable to owners of the company were **HKD 0.0473**, successfully reversing the loss from the prior period Earnings/(Loss) Per Share Data | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Owners of the Company (HKD thousands) | 172,696 | (162,783) | | Weighted Average Number of Ordinary Shares in Issue | 3,653,213,534 | 3,428,459,000 | | Basic and Diluted Earnings/(Loss) Per Share | HKD 0.0473 | (HKD 0.0475) | [8. Dividends](index=15&type=section&id=8.%20Dividends) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of any interim dividend for the first half of 2025 (first half of 2024: nil)[32](index=32&type=chunk) [9. Trade and Bills Receivables](index=15&type=section&id=9.%20Trade%20and%20Bills%20Receivables) As of June 30, 2025, total trade and bills receivables decreased by **HKD 303.7 million** year-on-year, consistent with the revenue decline, with the company typically offering credit terms of 1 to 3 months Trade and Bills Receivables (HKD thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Receivables (net of impairment provision) | 537,312 | 578,160 | | Bills Receivables | 106,199 | 369,006 | | **Total** | **643,511** | **947,166** | - An aging analysis of trade receivables by invoice date shows an increase in amounts overdue for more than three months[33](index=33&type=chunk) - Bills receivable refer to bank acceptance bills issued by banks in Mainland China, maturing within six months from the end of the reporting period[34](index=34&type=chunk) [10. Trade and Bills Payables](index=16&type=section&id=10.%20Trade%20and%20Bills%20Payables) As of June 30, 2025, total trade and bills payables decreased by **HKD 250.93 million** year-on-year, with trade payables typically interest-free and settled within 60 days Trade and Bills Payables (HKD thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 209,862 | 501,529 | | 1 to 2 months | 117,277 | 118,681 | | 2 to 3 months | 110,258 | 1,288 | | Over 3 months | 519,564 | 586,402 | | **Total** | **956,961** | **1,207,900** | - Total trade payables decreased, with a significant drop in amounts due within one month, but amounts overdue for more than three months still represent a substantial proportion[35](index=35&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's perspective on the Group's financial performance, liquidity, and future outlook, discussing key drivers and strategic initiatives [Financial Review](index=17&type=section&id=Financial%20Review) In the first half of 2025, against a backdrop of moderate global economic growth and uneven recovery in China, the company successfully turned operating profit and profit attributable to owners of the company from loss to profit, with a significant increase in gross margin, through optimizing its trading product portfolio and strengthening cost control [Overview](index=18&type=section&id=Overview) Amid moderate and uneven global economic growth and an unbalanced recovery in China, the company achieved stable average selling prices for electrolytic manganese metal products, satisfactory battery materials production performance, and a successful turnaround in the trading business, leading to significant growth in overall operating profit and EBITDA - In the first half of 2025, the average selling price of electrolytic manganese metal products remained stable at **HKD 12,722 per tonne**, with a gross margin maintained at **12.9%**[38](index=38&type=chunk) - Sales volume of battery materials production (including electrolytic manganese dioxide) increased, with electrolytic manganese dioxide gross profit contribution growing by **8.3% to HKD 267.9 million**, and gross margin maintained at **43.1%**[39](index=39&type=chunk) - The trading business successfully turned from loss to profit, with gross margin turning to **16.7%** (first half of 2024: -6.8%), contributing **HKD 68.3 million** in gross profit[40](index=40&type=chunk) - Operating profit for the first half of 2025 was **HKD 207.0 million** (first half of 2024: loss of HKD 10.4 million), and EBITDA increased by **281.8% to HKD 494.6 million**[41](index=41&type=chunk) [Segment Revenue](index=19&type=section&id=Segment%20Revenue) Total revenue for the first half of 2025 decreased by **49.2% to HKD 2,912.4 million** year-on-year, primarily due to a decline in trading business sales revenue, with varied segment performance including increased manganese mining revenue, decreased electrolytic manganese metal and alloy materials production revenue, slightly decreased but gross profit-growing battery materials production revenue, and significantly decreased but profitable other businesses revenue - In the first half of 2025, revenue from the manganese mining segment increased by **10.1% to HKD 720.4 million**, primarily driven by higher average selling prices for Gabon ore and increased sales volume of manganese concentrate[46](index=46&type=chunk) - Revenue from the electrolytic manganese metal and alloy materials production segment decreased by **11.4% to HKD 1,028.1 million**, mainly due to a **6.3% reduction** in electrolytic manganese metal product sales volume and the cessation of alloy product production[50](index=50&type=chunk)[52](index=52&type=chunk) - Revenue from the battery materials production segment decreased by **5.5% to HKD 753.7 million**, but overall gross profit increased by **7.7% to HKD 262.1 million**, with gross margin rising to **34.8%**, primarily benefiting from increased sales volume of electrolytic manganese dioxide and cost control[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - Revenue from the other businesses segment significantly decreased by **86.9% to HKD 410.2 million**, but gross margin turned profitable at **16.7%**, with a gross profit of **HKD 68.3 million**, mainly due to active optimization of the trading product portfolio and adjustment of sales strategies[57](index=57&type=chunk) [Cost of Sales](index=23&type=section&id=Cost%20of%20Sales) Total cost of sales for the first half of 2025 decreased by **56.7% to HKD 2,359.3 million**, consistent with the revenue decline trend - Total cost of sales decreased by **56.7% to HKD 2,359.3 million**, consistent with the revenue decline[58](index=58&type=chunk) [Gross Profit](index=23&type=section&id=Gross%20Profit) Gross profit for the first half of 2025 significantly increased by **96.1% to HKD 553.1 million**, with the overall gross margin improving by **14.1 percentage points to 19.0%**, primarily due to the trading business turning from a gross loss to a gross profit - Gross profit increased by **96.1% to HKD 553.1 million**, with the overall gross margin improving to **19.0%** (first half of 2024: 4.9%)[59](index=59&type=chunk) - The improvement in gross margin was primarily due to the trading business turning from a gross loss in the first half of 2024 to a gross profit in the first half of 2025[59](index=59&type=chunk) [Other Income and Gains](index=23&type=section&id=Other%20Income%20and%20Gains) Other income and gains for the first half of 2025 decreased by **36.3% to HKD 42.9 million**, primarily due to a reduction in grant income - Other income and gains decreased by **36.3% to HKD 42.9 million**, primarily due to a reduction in grant income[60](index=60&type=chunk) [Selling and Distribution Expenses](index=24&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses for the first half of 2025 decreased by **47.3% to HKD 35.1 million**, consistent with the revenue decline trend - Selling and distribution expenses decreased by **47.3% to HKD 35.1 million**, consistent with the revenue decline[62](index=62&type=chunk) [Administrative Expenses](index=24&type=section&id=Administrative%20Expenses) Administrative expenses remained stable at **HKD 242.5 million** in the first half of 2025 - Administrative expenses remained stable at **HKD 242.5 million** (first half of 2024: HKD 239.8 million)[63](index=63&type=chunk) [Net Impairment Loss on Financial Assets](index=24&type=section&id=Net%20Impairment%20Loss%20on%20Financial%20Assets) Net impairment loss on financial assets significantly decreased in the first half of 2025, with the prior period primarily impacted by impairment provisions for amounts due from Dushan Jinmeng - The net impairment loss on financial assets in the first half of 2024 primarily referred to an impairment provision of **HKD 108.7 million** for amounts due from Dushan Jinmeng, arising from the settlement of guarantee liabilities for bank financing provided to Dushan Jinmeng[64](index=64&type=chunk) [Finance Costs](index=24&type=section&id=Finance%20Costs) Finance costs increased by **66.6% to HKD 79.4 million** in the first half of 2025, primarily due to the recognition of accrued interest on social insurance contributions payable - Finance costs increased by **66.6% to HKD 79.4 million**, primarily due to the recognition of accrued interest of **HKD 60.3 million** for social insurance contributions payable in the first half of 2024[65](index=65&type=chunk) [Other Expenses](index=24&type=section&id=Other%20Expenses) Other expenses increased to **HKD 32.0 million** in the first half of 2025, primarily due to net exchange differences - Other expenses amounted to **HKD 32.0 million** (first half of 2024: HKD 5.7 million), primarily due to net exchange differences[66](index=66&type=chunk) [Share of Profits and Losses of Associates](index=24&type=section&id=Share%20of%20Profits%20and%20Losses%20of%20Associates) Share of profits of associates was **HKD 10.3 million** in the first half of 2025, turning from a loss in the prior period, primarily due to the share of profit from Qingdao Manganese System - Share of profits of associates was **HKD 10.3 million** (first half of 2024: loss of HKD 24.5 million), primarily due to the share of profit from Qingdao Manganese System[67](index=67&type=chunk) [Income Tax Expense](index=24&type=section&id=Income%20Tax%20Expense) The effective tax rate for the first half of 2025 was **16.4%**, largely consistent with the relevant statutory preferential corporate income tax rates - The effective tax rate for the first half of 2025 was **16.4%** (first half of 2024: –30.9%), largely consistent with the relevant statutory preferential corporate income tax rates[68](index=68&type=chunk) [Profit Attributable to Owners of the Company](index=25&type=section&id=Profit%20Attributable%20to%20Owners%20of%20the%20Company) Profit attributable to owners of the company for the first half of 2025 was **HKD 172.7 million**, successfully reversing the loss from the prior period - Profit attributable to owners of the company was **HKD 172.7 million** (first half of 2024: loss of HKD 162.8 million)[69](index=69&type=chunk) [Earnings Per Share](index=25&type=section&id=Earnings%20Per%20Share) Earnings per share for the first half of 2025 were **HKD 0.0473**, compared to a loss in the prior period - Earnings per share were **HKD 0.0473** (first half of 2024: –HKD 0.0475)[70](index=70&type=chunk) [Interim Dividends](index=25&type=section&id=Interim%20Dividends) The Board does not recommend the payment of any interim dividend for the first half of 2025 - The Board does not recommend the payment of any interim dividend for the first half of 2025 (first half of 2024: nil)[71](index=71&type=chunk) [Liquidity and Financial Resources](index=25&type=section&id=Liquidity%20and%20Financial%20Resources) The company's liquidity significantly improved, with increased cash and bank balances, reduced total borrowings, and a lower net gearing ratio, ensuring its going concern capability through bank loan renewals and equity financing [Cash and Bank Balances](index=25&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2025, cash and bank balances (including restricted and pledged deposits) increased to **HKD 953.5 million**, primarily denominated in RMB Cash and Bank Balances (HKD million) | Currency | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | RMB | 819.8 | 655.9 | | HKD | 1.7 | 3.3 | | USD | 129.8 | 48.9 | | Central African CFA franc | 1.8 | 4.4 | | Euro | 0.4 | 0.1 | | **Total** | **953.5** | **712.6** | - The Group's borrowings net of cash and bank balances decreased to **HKD 2,640.7 million** from **HKD 3,233.0 million** as of December 31, 2024[72](index=72&type=chunk) [Other Major Changes in Working Capital](index=26&type=section&id=Other%20Major%20Changes%20in%20Working%20Capital) Trade and bills receivables decreased by **HKD 303.7 million to HKD 643.5 million**, consistent with the revenue decline - Trade and bills receivables decreased by **HKD 303.7 million to HKD 643.5 million**, consistent with the revenue decline[74](index=74&type=chunk) [Net Current Liabilities](index=26&type=section&id=Net%20Current%20Liabilities) As of June 30, 2025, net current liabilities decreased to **HKD 1,389.2 million**, indicating an improvement in liquidity position - Net current liabilities decreased to **HKD 1,389.2 million** (December 31, 2024: HKD 1,659.4 million)[75](index=75&type=chunk) [Bank and Other Borrowings](index=26&type=section&id=Bank%20and%20Other%20Borrowings) As of June 30, 2025, total borrowings decreased to **HKD 3,594.2 million**, with both secured and unsecured borrowings declining, and the company plans to improve its borrowing structure through various means Borrowing Structure (HKD million) | Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Secured Borrowings | 998.3 | 1,300.7 | | Unsecured Borrowings | 2,595.9 | 2,644.9 | | **Total** | **3,594.2** | **3,945.6** | - Total borrowings decreased to **HKD 3,594.2 million**, and the company will continue to explore ways to improve its borrowing structure, including short/medium-term notes and long-term bank loans[78](index=78&type=chunk) - Fixed-rate borrowings constitute the vast majority of total borrowings, with interest rates ranging from **2.20% to 8.25%**[77](index=77&type=chunk) [Pledged Group Assets](index=27&type=section&id=Pledged%20Group%20Assets) Portions of the Group's assets, including right-of-use assets, bank balances, property, plant and equipment, leasehold land, and trade receivables, are pledged to secure bank borrowings and acceptance bills - As of June 30, 2025, bank balances of **HKD 174.9 million** were pledged to secure bank acceptance bills and bank borrowings[79](index=79&type=chunk) - Property, plant and equipment and leasehold land of **HKD 800.1 million**, and trade receivables of **HKD 44.8 million**, were pledged to secure bank and other borrowings[79](index=79&type=chunk) [Key Financial Ratios of the Group](index=28&type=section&id=Key%20Financial%20Ratios%20of%20the%20Group) As of June 30, 2025, the current ratio, quick ratio, and net gearing ratio all improved, primarily due to better operating performance, increased cash, and equity financing used for debt reduction Key Financial Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Ratio | 0.72 | 0.69 | | Quick Ratio | 0.56 | 0.51 | | Net Gearing Ratio | 97.3% | 136.9% | - The improvement in financial ratios was primarily due to better operating performance, increased cash and cash equivalents, and the use of proceeds from the first placing to reduce debt[80](index=80&type=chunk) [Liquidity Risk and Going Concern Basis](index=28&type=section&id=Liquidity%20Risk%20and%20Going%20Concern%20Basis) Despite net current liabilities, the Board believes the Group has sufficient working capital to support its going concern for the next twelve months, through internal funds, bank loan renewals, and equity financing - As of June 30, 2025, the Group's current liabilities exceeded current assets by **HKD 1,389.2 million**[82](index=82&type=chunk) - The company successfully renewed or obtained new bank loans of **HKD 131.6 million** and completed a placing of new shares, raising net proceeds of approximately **HKD 180.44 million** for bank loan repayment[82](index=82&type=chunk) - The Board believes the Group has sufficient working capital to meet its needs for the next twelve months from the end of the reporting period, and thus the interim condensed consolidated financial statements have been prepared on a going concern basis[82](index=82&type=chunk) [Credit Risk](index=29&type=section&id=Credit%20Risk) The Group aims to strictly control outstanding receivables to mitigate credit risk and regularly reviews overdue balances, acknowledging concentrated credit risk with specific customers (Customer A and Dushan Jinmeng) despite a diversified customer base - The Group typically offers credit terms of **1 to 3 months** to established customers and holds no collateral for trade and bills receivables balances[83](index=83&type=chunk) - As of June 30, 2025, trade receivables from Customer A amounted to **HKD 232.0 million**, representing **28.6%** of total trade receivables, which are fully overdue and fully provided for[84](index=84&type=chunk) - Fully impaired amounts due from Dushan Jinmeng totaled **HKD 321.1 million**, with its leasehold land and certain property, plant and equipment pledged to the Group as collateral for repayment[85](index=85&type=chunk) [Interest Rate Risk](index=30&type=section&id=Interest%20Rate%20Risk) The Group faces the risk of fluctuating interest rates on floating-rate debt, where an increase in China's Loan Prime Rate would raise finance costs and potentially increase future debt financing costs - The Group faces the risk of fluctuating interest rates on floating-rate debt, which are affected by changes in China's Loan Prime Rate[86](index=86&type=chunk) - An increase in China's Loan Prime Rate would raise finance costs and potentially increase the cost of new debt commitments[86](index=86&type=chunk) [Foreign Exchange Risk](index=30&type=section&id=Foreign%20Exchange%20Risk) The Group's operations in Hong Kong, China, and Gabon face varying foreign exchange risks: Hong Kong operations have minimal risk, China operations are primarily RMB-denominated, and Gabon operations have revenues in RMB and USD, with expenses in RMB and Central African CFA franc - Hong Kong trading business sales and purchases are denominated in USD, resulting in minimal foreign exchange risk due to the HKD's peg to the USD[89](index=89&type=chunk) - China's mining and downstream business products are primarily sold to local customers (RMB-denominated) and partly to overseas customers (USD-denominated), with major expenses in RMB, facing slight foreign exchange risk[89](index=89&type=chunk) - Gabon operations' revenue is primarily denominated in RMB and USD, local operating expenses in RMB and Central African CFA franc, and ore freight in USD[88](index=88&type=chunk) [Use of Proceeds](index=31&type=section&id=Use%20of%20Proceeds) The company has utilized most of its IPO proceeds for designated projects, with the remainder primarily for acquiring mines and mining rights, while proceeds from the first placing were fully used for debt repayment and general working capital [Use of Proceeds from Initial Public Offering](index=31&type=section&id=Use%20of%20Proceeds%20from%20Initial%20Public%20Offering) As of June 30, 2025, **96.9%** of the IPO proceeds have been utilized, with **HKD 61 million** designated for acquiring mines and mining rights remaining unutilized, expected to be fully used by the end of 2032 Use of Proceeds from Initial Public Offering (HKD million) | Description | Amount Designated in Prospectus | Amount Utilized as of June 30, 2025 | Percentage Utilized | | :--- | :--- | :--- | :--- | | Expansion Project of Daxin Electrolytic Manganese Dioxide Plant | 79 | 79 | 100.0% | | Expansion Project of Daxin Manganese Mine Underground Mining and Ore Processing | 278 | 278 | 100.0% | | Expansion and Construction Project of Electrolytic Manganese Metal Production Facilities | 516 | 516 | 100.0% | | Construction Project of Chongzuo Base | 59 | 59 | 100.0% | | Development of Bembélé Manganese Mine and Related Facilities | 119 | 119 | 100.0% | | Technical Improvement and Renovation Projects of Production Facilities | 40 | 40 | 100.0% | | Acquisition of Mines and Mining Rights | 397 | 336 | 84.6% | | Repayment of Part of Bank Borrowings | 297 | 297 | 100.0% | | Working Capital and Other Corporate Purposes | 198 | 198 | 100.0% | | **Total** | **1,983** | **1,922** | **96.9%** | - IPO proceeds of **HKD 61 million** designated for acquiring mines and mining rights remain unutilized and are expected to be fully utilized on or before December 31, 2032[90](index=90&type=chunk) [Use of Proceeds from First Placing](index=32&type=section&id=Use%20of%20Proceeds%20from%20First%20Placing) The first placing raised net proceeds of **HKD 140.97 million**, with **97.5%** utilized, primarily for repaying the Group's outstanding liabilities and general working capital - The first placing involved the issuance of **685,691,800 new shares**, raising net proceeds of approximately **HKD 140.97 million**[91](index=91&type=chunk) Use of Proceeds from First Placing (HKD million) | Description | Designated Proposed Use Amount | Amount Utilized as of June 30, 2025 | Percentage Utilized | | :--- | :--- | :--- | :--- | | Repayment of the Group's Outstanding Liabilities | 133.92 | 133.92 | 100.0% | | General Working Capital of the Company | 7.05 | 3.52 | 49.9% | | **Total** | **140.97** | **137.44** | **97.5%** | [Post Balance Sheet Events](index=33&type=section&id=Post%20Balance%20Sheet%20Events) Subsequent to the reporting period, the company completed a second placing in July 2025, raising net proceeds of approximately **HKD 180.44 million** - On July 8, 2025, the company entered into a placing agreement with the placing agent for the placing of **822,830,160 shares** at **HKD 0.224 per share** (Second Placing)[93](index=93&type=chunk) - The Second Placing was completed on July 28, 2025, raising net proceeds of approximately **HKD 180.44 million**[93](index=93&type=chunk) [Business Model and Strategies](index=33&type=section&id=Business%20Model%20and%20Strategies) The Group aims to be a global leading integrated manganese producer with a full upstream and downstream value chain, achieving long-term profitability and asset growth through exploration, operational efficiency improvements, and strengthening customer relationships - The Group's goal is to become a global leading integrated manganese producer with a full upstream and downstream value chain[94](index=94&type=chunk) - Strategies include: expanding and enhancing manganese resources and reserves through exploration and strengthening strategic control via mergers and acquisitions; improving operational efficiency and profitability; and establishing and solidifying strategic business relationships with key customers and industry-leading partners[95](index=95&type=chunk) [Future Development and Outlook](index=33&type=section&id=Future%20Development%20and%20Outlook) Looking ahead, despite global uncertainties, China's economic stimulus policies are expected to accelerate demand for high-purity manganese products like electrolytic manganese metal and electrolytic manganese dioxide, with the company focusing on refined management and strong customer relationships for sustainable long-term value creation - China has introduced various economic stimulus policies, which are expected to accelerate demand for high-purity manganese products such as electrolytic manganese metal and electrolytic manganese dioxide[94](index=94&type=chunk) - The company will seize opportunities through refined management, rigorous production methods, and solid customer and supplier relationships to achieve sustainable long-term value creation[94](index=94&type=chunk) [Other Information](index=34&type=section&id=Other%20Information) This section covers corporate governance, directors' securities transactions, review of accounts, and forward-looking statements, ensuring transparency and compliance [Corporate Governance Code](index=34&type=section&id=Corporate%20Governance%20Code) The company has adopted and complied with the principles and applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules during the reporting period - The company has adopted and complied with the principles and applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[96](index=96&type=chunk) [Standard Code for Securities Transactions by Directors](index=34&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted a code of conduct for directors' dealings in company securities and confirmed that all directors complied with the required standards during the reporting period - The company has adopted a code of conduct for directors' dealings in company securities and confirmed that all directors have complied with the required standards throughout the reporting period[97](index=97&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=34&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the six months ended June 30, 2025 - Neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the six months ended June 30, 2025[98](index=98&type=chunk) [Review of Accounts](index=35&type=section&id=Review%20of%20Accounts) The Audit Committee and company management have reviewed the unaudited interim results for the six months ended June 30, 2025 - The Audit Committee and company management have reviewed the unaudited interim results for the six months ended June 30, 2025[99](index=99&type=chunk) [Forward-Looking Statements](index=35&type=section&id=Forward-Looking%20Statements) This interim results announcement contains forward-looking statements regarding the Group's financial condition, performance, and business, which involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - This interim results announcement contains certain forward-looking statements regarding the Group's financial condition, performance, and business, which involve known and unknown risks and uncertainties[100](index=100&type=chunk) [Glossary](index=35&type=section&id=Glossary) This glossary provides definitions for key terms and company entities used throughout the report to ensure clear understanding - The glossary provides definitions for key terms and company entities used in the report, such as 'Audit Committee', 'Bembélé Manganese Mine', and 'Dushan Jinmeng'[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) [Board Information](index=38&type=section&id=Board%20Information) This section lists the current composition of the company's Board of Directors, including executive, non-executive, and independent non-executive directors - As of the date of this announcement, the executive directors are Mr. Zhang Yi, Mr. Zhang He, Mr. Xu Xiang, Mr. Liu Yang, Mr. Pan Shenghai, and Ms. Cui Ling; the non-executive director is Mr. Huang Chuangxin; and the independent non-executive directors are Mr. Yuan Mingliang, Mr. Lu Sihong, Mr. Zhou Jie, Mr. Luo Guihua, and Mr. Wu Qi[105](index=105&type=chunk)

[Financial Statements](index=2&type=section&id=Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Net profit for the six months ended June 30, 2025, decreased by 28.1% due to lower interest income and other net losses, despite impairment reversals | Metric | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | 73,819 | 81,431 | -9.4% | | Impairment Losses | 4,594 | (12,528) | N/A (Shift from Loss to Gain) | | Profit Before Tax | 45,963 | 64,509 | -28.7% | | **Profit and Total Comprehensive Income for the Period** | **33,522** | **46,626** | **-28.1%** | | Profit Attributable to Equity Holders of the Company | 31,903 | 44,940 | -29.0% | | Basic and Diluted Earnings Per Share (RMB) | 0.03 | 0.04 | -25.0% | [Consolidated Statement of Financial Position](index=3&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) Total assets decreased due to reduced loans, while total liabilities significantly declined and net assets slightly increased | Metric | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Period Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **2,519,203** | **2,578,519** | **-2.3%** | | Loans and Advances to Customers | 2,402,371 | 2,462,054 | -2.4% | | **Total Liabilities** | **459,556** | **537,408** | **-14.5%** | | Interest-bearing Borrowings | 412,554 | 488,287 | -15.5% | | **Total Equity** | **2,059,647** | **2,041,111** | **+0.9%** | [Consolidated Statement of Changes in Equity](index=5&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity attributable to equity holders increased, driven by period profit and partially offset by distributed dividends - Profit and total comprehensive income for the period was **RMB 33.522 million**[7](index=7&type=chunk) - Approved and distributed dividends attributable to prior years totaled **RMB 14.986 million**[7](index=7&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operating activities increased by 9.6% to RMB 106 million, while net cash outflow from financing activities expanded | Cash Flow Activities | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 105,964 | 96,685 | | Net Cash from Investing Activities | — | 58 | | Net Cash Used in Financing Activities | (106,195) | (89,466) | | **Net (Decrease) / Increase in Cash and Cash Equivalents** | **(231)** | **7,277** | | Cash and Cash Equivalents at Period-End | 10,284 | 24,755 | [Notes to the Financial Statements](index=7&type=section&id=Notes%20to%20the%20Financial%20Statements) [Basis of Preparation and Accounting Policies](index=7&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) This interim financial report is prepared under HKAS 34 and reviewed by KPMG, with consistent accounting policies - Interim financial report was prepared in accordance with Hong Kong Accounting Standard 34[9](index=9&type=chunk) - The report is unaudited but was reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[10](index=10&type=chunk) [Analysis of Key Financial Items](index=8&type=section&id=Analysis%20of%20Key%20Financial%20Items) This section details key income statement and balance sheet items, including a 9.4% drop in net interest income and a net impairment reversal [3 Net Interest Income](index=8&type=section&id=3%20Net%20Interest%20Income) Net interest income for H1 2025 decreased by 9.4% to RMB 73.819 million, primarily due to reduced interest income from customer loans | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest Income from Customer Loans | 90,211 | 102,550 | | Interest Expense from Non-Bank Borrowings | (15,822) | (20,556) | | **Net Interest Income** | **73,819** | **81,431** | [5 Impairment Losses](index=9&type=section&id=5%20Impairment%20Losses) A net impairment loss reversal of RMB 4.594 million was recorded, a significant contrast to the prior period's provision, indicating improved asset quality - For the six months ended June 30, 2025, impairment losses were a net reversal of **RMB 4.594 million**, compared to a provisioned loss of **RMB 12.528 million** in the same period last year[15](index=15&type=chunk) [10 Loans and Advances to Customers](index=11&type=section&id=10%20Loans%20and%20Advances%20to%20Customers) Net loans and advances to customers decreased by 2.4% to RMB 2.402 billion, with guaranteed loans comprising 98.0% and overdue loans slightly decreasing 按性質分析 | Loan Type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Corporate Loans | 1,138,250 | 1,219,180 | | Retail Loans | 1,410,309 | 1,395,888 | | Internet Micro-lending | 23,000 | 25,466 | | **Total Loans (excluding interest)** | **2,571,559** | **2,640,534** | 按抵押物類型分析 | Collateral Type | June 30, 2025 (%) | December 31, 2024 (%) | | :--- | :--- | :--- | | Credit Loans | 1.0% | 1.1% | | Guaranteed Loans | 98.0% | 97.9% | | Mortgage Loans | 0.1% | 0.1% | | Pledged Loans | 0.9% | 0.9% | - Total overdue loans decreased from **RMB 105 million** at the end of 2024 to **RMB 99.59 million** as of June 30, 2025[23](index=23&type=chunk) [14 Interest-bearing Borrowings](index=19&type=section&id=14%20Interest-bearing%20Borrowings) Total interest-bearing borrowings decreased by 15.5% to RMB 413 million, primarily due to the repayment of Euro-denominated borrowings | Borrowing Source | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bank Borrowings | 25,028 | 25,028 | | Euro-denominated Borrowings | 387,526 | 463,259 | | **Total** | **412,554** | **488,287** | [18 Financial Risk Management](index=22&type=section&id=18%20Financial%20Risk%20Management) The group faces credit, liquidity, interest rate, and currency risks, with credit risk managed through strict controls and currency risk significantly reduced [18(a) Credit Risk](index=22&type=section&id=18%28a%29%20Credit%20Risk) Credit risk primarily arises from micro-lending, managed by a comprehensive risk mechanism, with low concentration despite geographical focus in Zhejiang Province - The group has established a credit risk management mechanism covering key operational stages of loan business, including pre-loan assessment, credit approval, and post-loan monitoring[44](index=44&type=chunk) - As of June 30, 2025, loan exposure to the largest customer and top five customers was **1.91%** and **7.17%** respectively, with manageable concentration[48](index=48&type=chunk) [18(b) Liquidity Risk](index=24&type=section&id=18%28b%29%20Liquidity%20Risk) Management ensures sufficient cash reserves by monitoring liquidity needs, with short-term liquidity appearing strong based on contractual cash flow analysis - The report provides a maturity analysis of financial assets and liabilities based on contractual undiscounted cash flows to assess liquidity risk[51](index=51&type=chunk) [18(c) Interest Rate Risk](index=25&type=section&id=18%28c%29%20Interest%20Rate%20Risk) The group's interest rate risk is extremely low as most financial assets and liabilities are fixed-rate, limiting market rate fluctuation impact - The group's loans and advances to customers and interest-bearing borrowings are all at fixed interest rates, resulting in very low interest rate exposure[54](index=54&type=chunk) - Sensitivity analysis shows that a general increase of **50 basis points** in interest rates is expected to increase net profit by approximately **RMB 38 thousand** over the next 12 months[55](index=55&type=chunk) [18(d) Currency Risk](index=26&type=section&id=18%28d%29%20Currency%20Risk) Currency risk, primarily from Euro-denominated borrowings, significantly reduced as exposure decreased from RMB 125 million to RMB 42.25 million Foreign Currency Exposure (Euro) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest-bearing Borrowings | (42,250) | (124,527) | [20 Related Party Transactions](index=29&type=section&id=20%20Related%20Party%20Transactions) Key related party transactions include guarantees for bank borrowings by the Chairman and property leases from Zuoli Holding Group, all on normal commercial terms - The Chairman of the Board and other related parties provided guarantees for the group totaling **RMB 57.50 million** in borrowings[65](index=65&type=chunk)[67](index=67&type=chunk)[108](index=108&type=chunk) - The group leased properties from related party Zuoli Holding Group Co., Ltd. and paid for utilities and catering expenses[66](index=66&type=chunk)[69](index=69&type=chunk) [Management Discussion and Analysis](index=31&type=section&id=Management%20Discussion%20and%20Analysis) [Industry Overview](index=31&type=section&id=Industry%20Overview) The company benefits from policy advantages in Zhejiang Province, holding a significant regional leading position as Huzhou's first green micro-lending company - The company seized opportunities from Zhejiang Province's common prosperity demonstration zone and Huzhou City's National Green Finance Reform and Innovation Pilot Zone, becoming Huzhou's first green micro-lending company[70](index=70&type=chunk) - In its main market, Deqing County, the group's loan balance accounted for approximately **86.8%** of the total balance of local micro-lending companies, holding an absolute advantage in market share[71](index=71&type=chunk) [Business Overview](index=32&type=section&id=Business%20Overview) The company, Zhejiang's largest licensed micro-lender by registered capital, saw total loan balance decrease and average interest rate decline due to competition, yet asset quality improved [Loan Portfolio Analysis](index=32&type=section&id=Loan%20Portfolio%20Analysis) Total loan balance decreased by 2.6% to RMB 2.572 billion, with leverage ratio declining and average interest rate dropping to 6.8% due to market competition | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Loans (RMB thousands) | 2,571,559 | 2,640,534 | | Leverage Ratio | 2.18 | 2.24 | - For the six months ended June 30, 2025, the average loan interest rate was **6.8%**, a decrease from **7.6%** in the same period last year, to cope with market competition and ensure asset quality[73](index=73&type=chunk)[81](index=81&type=chunk) [Asset Quality](index=35&type=section&id=Asset%20Quality) Asset quality indicators improved, with impaired loan ratio decreasing to 3.8% and provision coverage ratio increasing to 191%, enhancing risk resilience | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Impaired Loan Ratio | 3.8% | 3.9% | | Provision Coverage Ratio | 191% | 185% | | Overdue Loan Ratio | 3.8% | 4.0% | - Total overdue loans decreased from **RMB 105 million** at the end of 2024 to **RMB 99.60 million** As of August 15, 2025, **RMB 2.50 million** had been recovered[79](index=79&type=chunk) [Financial Overview](index=36&type=section&id=Financial%20Overview) Performance faced pressure due to reduced net interest income and other net losses, despite a positive contribution from impairment loss reversals [Operating Results](index=36&type=section&id=Operating%20Results) Profit for the period decreased by 28.1% to RMB 33.50 million, primarily due to lower net interest income and other net losses, despite impairment reversals - Net interest income decreased primarily due to reduced loan balances and a decline in average loan interest rate from **7.6%** to **6.8%**[81](index=81&type=chunk) - Other net income turned into a loss, primarily due to a **RMB 13.30 million** reduction in government subsidies and a **RMB 15.60 million** decrease in exchange gains[83](index=83&type=chunk) - Impairment losses shifted from a provision of **RMB 12.50 million** in the same period last year to a reversal of **RMB 4.60 million** this period, positively contributing to profit[84](index=84&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company relies on equity, borrowings, and operating cash flow, with net cash from operations at RMB 106 million and reduced interest-bearing borrowings - For the six months ended June 30, 2025, net cash from operating activities was **RMB 106 million**[90](index=90&type=chunk) - Net cash outflow from financing activities was **RMB 106 million**, primarily used for repayment of **RMB 187 million** in interest-bearing borrowings[91](index=91&type=chunk) [Key Financial Ratios](index=44&type=section&id=Key%20Financial%20Ratios) Key financial ratios indicate stable profitability and optimized financial structure, with annualized ROE at 3.2% and debt-to-asset ratio significantly decreasing | Metric | Six Months Ended June 30, 2025 | For the Year Ended December 31, 2024 | | :--- | :--- | :--- | | Weighted Average Return on Equity (%) | 3.2 (annualized) | 3.2 | | Average Return on Assets (%) | 2.6 (annualized) | 2.5 | | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Debt-to-Asset Ratio (%) | 20.1 | 24.1 | [Prospects](index=47&type=section&id=Prospects) The company will leverage policy support and its unique advantages to deepen green credit business, aiming for inclusive finance and sustainable development - The company will seize opportunities from Zhejiang Province's common prosperity demonstration zone and Huzhou's 'Two Mountains' concept to explore a sustainable green credit path[122](index=122&type=chunk) - The company has partnered with international institutions such as DEG and GCPF to introduce green loan concepts and technical support[123](index=123&type=chunk) - The company officially became Huzhou City's first green micro-lending company in May 2023[123](index=123&type=chunk) [Other Information](index=49&type=section&id=Other%20Information) [Corporate Governance](index=49&type=section&id=Corporate%20Governance) The company is committed to high corporate governance standards and fully complied with the Corporate Governance Code during the reporting period - During the reporting period, the company fully complied with the Corporate Governance Code[125](index=125&type=chunk) [Dividend Policy](index=49&type=section&id=Dividend%20Policy) The Board decided not to declare an interim dividend for the six months ended June 30, 2025, consistent with the prior year's policy - The Board decided not to declare an interim dividend for the six months ended June 30, 2025[128](index=128&type=chunk) [Other Disclosures](index=49&type=section&id=Other%20Disclosures) No significant post-period events or listed securities transactions occurred, though a major shareholder pledged 27.33% of the company's domestic shares in April 2025 - On April 23, 2025, major shareholder Puhua Energy pledged **322,540,960 shares** of domestic shares, representing **27.33%** of the company's total issued share capital[130](index=130&type=chunk) - As of the end of the reporting period and the announcement date, there were no significant post-period events[129](index=129&type=chunk)