[Cover and Disclaimer](index=1&type=section&id=Cover%20and%20Disclaimer) [Disclaimer and Announcement Overview](index=1&type=section&id=Disclaimer%20and%20Announcement%20Overview) Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited are not responsible for the content of this announcement, make no representation, and accept no liability for any loss. This announcement presents the unaudited condensed consolidated interim results of Computer And Technologies Holdings Limited for the six months ended June 30, 2025 - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement[1](index=1&type=chunk) - This announcement presents the unaudited condensed consolidated interim results of Computer And Technologies Holdings Limited and its subsidiaries for the six months ended June 30, 2025, together with comparative figures[2](index=2&type=chunk)[3](index=3&type=chunk) [Condensed Consolidated Financial Statements](index=1&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group's revenue was HK$120,225 thousand, a decrease from HK$127,567 thousand in the prior year, while operating profit increased by 23.3% to HK$17,714 thousand and profit for the period slightly rose to HK$18,558 thousand Key Data from Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 120,225 | 127,567 | | Cost of sales and services | (52,080) | (58,616) | | Gross profit | 68,145 | 68,951 | | Other business income | 1,247 | 408 | | Selling and distribution expenses | (18,015) | (17,555) | | Net general and administrative expenses | (26,738) | (29,931) | | Operating profit | 17,714 | 14,368 | | Profit before tax | 21,527 | 20,764 | | Profit for the period | 18,558 | 18,043 | | Basic earnings per ordinary share attributable to owners of the parent (HK cents) | 7.66 | 7.46 | - Operating profit increased by **23.3%** year-on-year, demonstrating positive effects of cost control and efficiency improvements[4](index=4&type=chunk)[49](index=49&type=chunk) [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's total comprehensive income was HK$19,510 thousand, a 15.0% increase from HK$16,962 thousand in the prior year, primarily due to a reversal from loss to gain in exchange differences on overseas operations Key Data from Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Profit for the period | 18,558 | 18,043 | | Exchange differences on translating overseas operations | 952 | (1,081) | | Total comprehensive income for the period | 19,510 | 16,962 | | Total comprehensive income attributable to owners of the parent | 19,547 | 17,085 | - Exchange differences on translating overseas operations turned from a **loss of HK$1,081 thousand** in 2024 to a **gain of HK$952 thousand** in 2025, significantly boosting comprehensive income[6](index=6&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets were HK$656,718 thousand, a slight decrease from December 31, 2024, with net assets increasing to HK$508,757 thousand and net current assets maintaining steady growth Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Total non-current assets | 228,062 | 238,005 | | Total current assets | 428,656 | 434,602 | | Total current liabilities | (131,427) | (150,138) | | Net current assets | 297,229 | 284,464 | | Net assets | 508,757 | 502,260 | | Total equity | 508,757 | 502,260 | | Cash and cash equivalents | 326,925 | 128,907 | | Trade receivables | 28,526 | 39,514 | - Cash and cash equivalents significantly increased by **153.6%** to **HK$326,925 thousand**, indicating a substantial improvement in liquidity[7](index=7&type=chunk) - Trade receivables decreased by **27.8%** to **HK$28,526 thousand**, potentially reflecting improved collection efficiency or changes in business volume structure[7](index=7&type=chunk) [Notes to the Condensed Consolidated Interim Financial Information](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) [1. Company Information](index=6&type=section&id=1.%20Company%20Information) Computer And Technologies Holdings Limited is incorporated in Bermuda, with its principal place of business located in Wong Chuk Hang, Hong Kong - The Company is incorporated in Bermuda, with its principal place of business at 18/F, The Hub, 36 Yip Kan Street, Wong Chuk Hang, Hong Kong[9](index=9&type=chunk) [2. Basis of Preparation](index=6&type=section&id=2.%20Basis%20of%20Preparation) The condensed consolidated interim financial information is prepared in accordance with the Listing Rules of The Stock Exchange of Hong Kong Limited and HKAS 34 issued by the HKICPA, and should be read in conjunction with the annual consolidated financial statements - The condensed consolidated interim financial information has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[10](index=10&type=chunk) - Certain comparative amounts have been reclassified to conform with the presentation for the current period[11](index=11&type=chunk) [3. Changes in Accounting Policies and Disclosures](index=6&type=section&id=3.%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The accounting policies adopted for preparing the interim financial information are consistent with the prior year, with the initial adoption of the revised HKAS 21 "Lack of Exchangeability" having no impact as all Group transaction currencies are exchangeable - The accounting policies adopted in the preparation of the condensed consolidated interim financial information are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2024, except for the initial adoption of the revised Hong Kong Financial Reporting Standards for the financial information of the current period[12](index=12&type=chunk) - HKAS 21 (Amendment) "Lack of Exchangeability" had no impact on the condensed consolidated interim financial information, as the transaction currencies involved by the Group and the functional currencies of its subsidiaries are all exchangeable when converted to the Group's presentation currency[13](index=13&type=chunk) [4. Operating Segment Information](index=6&type=section&id=4.%20Operating%20Segment%20Information) The Group is organized into three reportable operating segments: Application Services, Solutions and Integration Services, and Investments, with performance independently monitored for resource allocation and assessment [4.1 Principal Activities and Segment Breakdown](index=6&type=section&id=4.1%20Principal%20Activities%20and%20Segment%20Breakdown) - The Group's principal activities include providing enterprise application software and e-commerce services (including SaaS products, GETS, cloud services) to enterprises; providing IT solution implementation and application software development (including SaaS products), IT and related operations/infrastructure outsourcing services; and property and treasury investments[14](index=14&type=chunk)[16](index=16&type=chunk) - The Group is organized into three reportable operating segments: Application Services, Solutions and Integration Services, and Investments, with management independently monitoring the performance of each segment for resource allocation and performance assessment[15](index=15&type=chunk)[16](index=16&type=chunk) [4.2 Operating Segment Results](index=8&type=section&id=4.2%20Operating%20Segment%20Results) Operating Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | Revenue Change (%) | 2025 Results (HK$ thousand) | 2024 Results (HK$ thousand) | Results Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Application Services | 67,771 | 70,191 | -3.4% | 15,747 | 14,708 | +7.1% | | Solutions and Integration Services | 51,626 | 56,517 | -8.7% | 14,797 | 14,550 | +1.7% | | Investments | 828 | 859 | -3.6% | (764) | (356) | +114.6% | | **Total** | **120,225** | **127,567** | **-5.8%** | **29,780** | **28,902** | **+3.0%** | - The Investment segment's loss expanded due to an increase in net fair value loss on investment properties from **HK$1,000 thousand** in 2024 to **HK$2,000 thousand** in 2025[23](index=23&type=chunk) - Net fair value gain/(loss) on financial assets at fair value through profit or loss turned from a **loss of HK$243 thousand** in 2024 to a **gain of HK$312 thousand** in 2025[23](index=23&type=chunk) [4.3 Geographical Information](index=11&type=section&id=4.3%20Geographical%20Information) Revenue from External Customers (By customer location) | Region | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong and other countries/regions | 100,530 | 104,680 | | Mainland China | 19,695 | 22,887 | | **Total** | **120,225** | **127,567** | Non-current Assets (By asset location) | Region | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 129,775 | 134,477 | | Mainland China | 94,092 | 98,810 | | **Total** | **223,867** | **233,287** | [4.4 Information on a Major Customer](index=11&type=section&id=4.4%20Information%20on%20a%20Major%20Customer) - For the six months ended June 30, 2025, revenue from a major customer was **HK$41,482 thousand** (2024: HK$40,664 thousand), accounting for **10% or more** of the Group's total revenue, primarily from the Application Services and Solutions and Integration Services segments[26](index=26&type=chunk) [5. Revenue, Other Business Income, and Other Income and Gains](index=12&type=section&id=5.%20Revenue%2C%20Other%20Business%20Income%2C%20and%20Other%20Income%20and%20Gains) The Group's revenue primarily derives from customer contracts, with software-as-a-service products and maintenance services being the largest source, while other business income and gains mainly include VAT refunds and bank interest income [5.1 Revenue from Contracts with Customers](index=12&type=section&id=5.1%20Revenue%20from%20Contracts%20with%20Customers) Revenue from Contracts with Customers (By goods or service category) | Goods or Service Category | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sale of goods and provision of software and Government Electronic Trading Services | 14,826 | 14,923 | | Provision of software implementation and related services, and IT solution implementation and related services | 37,947 | 45,779 | | Provision of Software-as-a-Service products and maintenance services | 66,624 | 66,006 | | **Total Revenue** | **119,397** | **126,708** | Revenue from Contracts with Customers (By timing of revenue recognition) | Timing of Revenue Recognition | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | At a point in time | 14,826 | 14,923 | | Over a period of time | 104,571 | 111,785 | | **Total Revenue** | **119,397** | **126,708** | - The amount of transaction price allocated to remaining performance obligations is expected to be recognized as revenue of **HK$47,270 thousand** within one year, and **HK$635 thousand** after one year[33](index=33&type=chunk) [5.2 Other Business Income and Other Income and Gains](index=14&type=section&id=5.2%20Other%20Business%20Income%20and%20Other%20Income%20and%20Gains) Other Business Income | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Recovery of VAT refunds | 312 | 131 | | Dividend income from listed investments at fair value through profit or loss | 92 | 98 | | Others | 843 | 122 | | **Total** | **1,247** | **408** | Other Income and Gains | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | 6,282 | 7,236 | | Gain on lease modification | 3 | - | | **Total** | **6,285** | **7,236** | [6. Profit Before Tax](index=15&type=section&id=6.%20Profit%20Before%20Tax) Profit before tax was HK$21,527 thousand, primarily influenced by depreciation, amortization, and employee benefit expenses, with total employee benefit expenses of HK$76,486 thousand including HK$9,327 thousand in research and development costs Components of Profit Before Tax (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 664 | 313 | | Depreciation of right-of-use assets | 2,387 | 4,045 | | Amortisation of other intangible assets | 6,449 | 6,673 | | Total employee benefit expenses | 76,486 | 77,430 | | Net impairment loss/(reversal of impairment loss) on trade receivables | (106) | 394 | - Employee benefit expenses include **HK$9,327 thousand** (2024: HK$9,689 thousand) for research and development costs of application software products[35](index=35&type=chunk) [7. Income Tax](index=16&type=section&id=7.%20Income%20Tax) Income tax expense was HK$2,969 thousand, with Hong Kong profits tax at 16.5% and a two-tiered tax rate for some subsidiaries; the Group is discussing additional R&D deductions with the tax authority and has objected to protective assessments and purchased tax reserve certificates Income Tax Expense (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current - Hong Kong | 4,131 | 3,974 | | Current - Other regions | 66 | 45 | | Deferred | (1,228) | (1,298) | | **Total tax expense for the period** | **2,969** | **2,721** | - Hong Kong profits tax rate is **16.5%**, with some subsidiaries subject to an **8.25%** tax rate on the first **HK$2,000,000** of assessable profits[36](index=36&type=chunk) - The Group is discussing additional deductions for R&D expenses with the tax authority, has objected to protective assessments for several tax years, and purchased tax reserve certificates, with directors believing sufficient tax provisions have been made[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [8. Dividends](index=17&type=section&id=8.%20Dividends) The Board of Directors declared an interim dividend of HK$0.055 per ordinary share, consistent with the prior year - The Board resolved to declare an interim dividend of **HK$0.055** per ordinary share (2024: interim dividend of HK$0.055) payable in cash to the ordinary shareholders of the Company whose names appear on the register of members on Tuesday, September 2, 2025[41](index=41&type=chunk)[82](index=82&type=chunk) - The final dividend for the previous financial year, approved and paid during the interim period, amounted to **HK$13,353 thousand** (2024: HK$13,366 thousand)[40](index=40&type=chunk) [9. Earnings Per Ordinary Share Attributable to Owners of the Parent](index=18&type=section&id=9.%20Earnings%20Per%20Ordinary%20Share%20Attributable%20to%20Owners%20of%20the%20Parent) Basic earnings per share were 7.66 HK cents, and diluted earnings per share were 7.64 HK cents, both showing an increase compared to the prior year Earnings Per Share (For the six months ended June 30) | Metric | 2025 (HK cents) | 2024 (HK cents) | | :--- | :--- | :--- | | Basic earnings per share | 7.66 | 7.46 | | Diluted earnings per share | 7.64 | 7.42 | Number of Shares Used in Calculating Earnings Per Share (For the six months ended June 30) | Number of Shares | 2025 | 2024 | | :--- | :--- | :--- | | Weighted average number of ordinary shares in issue during the period used in calculating basic earnings per share | 242,787,539 | 243,670,021 | | Dilutive effect - weighted average number of ordinary shares: restricted shares granted under the Company's restricted share award scheme | 761,024 | 1,040,374 | | Number of shares used in calculating diluted earnings per share | 243,548,563 | 244,710,395 | [10. Trade Receivables](index=19&type=section&id=10.%20Trade%20Receivables) As of June 30, 2025, net trade receivables were HK$28,526 thousand, a decrease from December 31, 2024; credit terms generally do not exceed 60 days, and management strictly controls overdue amounts Trade Receivables (Net) | Metric | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables | 33,466 | 44,522 | | Impairment | (4,940) | (5,008) | | **Net** | **28,526** | **39,514** | Ageing Analysis of Trade Receivables (Net) | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within one month | 16,991 | 24,232 | | One to three months | 6,436 | 9,269 | | Four to six months | 3,352 | 3,177 | | Seven to twelve months | 1,747 | 2,836 | | **Total** | **28,526** | **39,514** | - Net reversal of impairment loss on trade receivables was **HK$106 thousand** (2024: impairment loss of HK$793 thousand)[46](index=46&type=chunk) [11. Trade Payables, Other Payables, Accruals and Provisions](index=20&type=section&id=11.%20Trade%20Payables%2C%20Other%20Payables%2C%20Accruals%20and%20Provisions) As of June 30, 2025, total trade payables, other payables, and accruals amounted to HK$61,052 thousand, a decrease from December 31, 2024, with trade payables generally settled within 30 days Trade Payables, Other Payables, Accruals and Provisions | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables | 8,661 | 12,176 | | Other payables | 31,877 | 31,034 | | Accruals | 19,694 | 27,264 | | Provisions | 820 | 795 | | **Total** | **61,052** | **71,269** | - Trade payables are generally settled within **30 days** and are non-interest bearing[47](index=47&type=chunk) [12. Contingent Liabilities](index=20&type=section&id=12.%20Contingent%20Liabilities) As of June 30, 2025, the Company provided guarantees of HK$31,700 thousand to banks for performance bonds/guarantees issued for certain Group contracts, of which HK$21,643 thousand was utilized at the reporting date - The Company has provided guarantees of **HK$31,700 thousand** to various banks for performance bonds/guarantees issued by them for certain contracts undertaken by the Group, of which **HK$21,643 thousand** was utilized as at the reporting date[48](index=48&type=chunk) [Chairman's Statement](index=21&type=section&id=Chairman's%20Statement) [Review](index=21&type=section&id=Review) Despite challenging economic conditions, the Group's net revenue after direct third-party costs slightly decreased by 1.7%, but gross profit margin improved to 56.7%; operating profit grew by 23.3% due to streamlined processes and cost control, and consolidated net profit attributable to shareholders moderately increased by 2.4%, with the Board declaring an interim dividend of HK$0.055 per share - Net revenue after direct third-party costs recorded **HK$108.0 million**, a slight decrease of **1.7%** compared to the same period last year[49](index=49&type=chunk) - Gross profit margin increased to **56.7%** (2024: 54.1%), operating profit increased by **23.3%** to **HK$17.7 million**, and operating profit margin improved from **11.3%** to **14.7%**[49](index=49&type=chunk) - Consolidated net profit attributable to shareholders moderately increased by **2.4%** to **HK$18.6 million**, with basic earnings per share increasing to **7.66 HK cents**[50](index=50&type=chunk) - The Board declared an interim dividend of **5.5 HK cents** per ordinary share, consistent with the previous payment[50](index=50&type=chunk) [Business Review](index=21&type=section&id=Business%20Review) The Group's business segments demonstrated resilience amidst macroeconomic challenges; Application Software revenue declined but SaaS orders grew with active AI R&D, Solutions and Integration Services saw reduced revenue but stable maintenance income and sought China collaborations, e-services outperformed, and Investments recorded a loss due to market sentiment [Application Software](index=21&type=section&id=Application%20Software) - Overall revenue for the Application Software segment decreased, but recurring revenue from Software-as-a-Service (SaaS) orders continued to grow, successfully maintaining segment profitability[51](index=51&type=chunk) - Pi HCM (cloud-native Human Capital Management software) secured several new client contracts, including one of Hong Kong's largest cleaning service groups, a major statutory body under the HKSAR Government, and a vibrant digital technology hub in Hong Kong[52](index=52&type=chunk) - Profit contribution from the enterprise procurement management software business decreased due to increased resource allocation for deploying the new ProSmart 3.0 version with cloud-native architecture and AI capabilities[53](index=53&type=chunk) - The Group remains committed to innovation, continuously investing in product R&D to reshape its software portfolio with new AI functionalities[54](index=54&type=chunk) [Solutions and Integration Services](index=22&type=section&id=Solutions%20and%20Integration%20Services) - Revenue for the Solutions and Integration Services segment decreased by **8.7%** to **HK$51.6 million**, primarily due to reduced professional service income and lack of third-party product sales, yet maintained stable recurring maintenance revenue[55](index=55&type=chunk) - Managed services continued to generate strong recurring revenue during the period, while development services capitalized on new opportunities in high-demand areas such as cybersecurity and independent testing services for government and other organizations[55](index=55&type=chunk) - The Group is establishing strategic partnerships with leading innovative technology companies in mainland China to capitalize on the increasing adoption of AI technology and the drive for technology localization in both mainland China and Hong Kong[55](index=55&type=chunk) [Electronic Services and Related Businesses](index=23&type=section&id=Electronic%20Services%20and%20Related%20Businesses) - The Group's GETS business outperformed the market, recording **double-digit growth** in both revenue and profit contribution during the reporting period[57](index=57&type=chunk) [Investments](index=23&type=section&id=Investments) - The challenging market environment continued to negatively impact the valuation of the Group's investment properties, resulting in a **HK$2.0 million** valuation markdown (2024: HK$1.0 million) and a **HK$0.8 million** loss for the Investment segment[58](index=58&type=chunk) [Outlook](index=23&type=section&id=Outlook) Despite mixed global economic prospects and potential pressure on Hong Kong government IT spending, the Group is well-equipped to face challenges with stringent cost management, precise marketing, recurring revenue from a large customer base, and a strong SaaS portfolio, while actively exploring overseas joint venture and M&A opportunities - The global economic outlook is mixed, and Hong Kong's fiscal deficit may lead to pressure on government IT spending, potentially affecting the Group's performance in the second half of 2025[59](index=59&type=chunk) - The Group is well-positioned to navigate the current environment with stringent cost management, precise marketing strategies, recurring revenue from a large existing customer base, and a strong Software-as-a-Service portfolio based on cloud-native architecture[59](index=59&type=chunk) - The Group is actively exploring various joint venture and merger and acquisition opportunities to expand into overseas markets, with a strategic initiative expected to materialize in the second half of the year[59](index=59&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) [Net Revenue After Direct Third-Party Costs](index=24&type=section&id=Net%20Revenue%20After%20Direct%20Third-Party%20Costs) Net revenue after direct third-party costs slightly decreased by 1.7% to HK$108.0 million, primarily due to reduced professional service revenue recognition and delayed new contracts, though recurring revenue maintained stable growth - Net revenue after direct third-party costs slightly decreased by **1.7%** to **HK$108.0 million**, primarily due to reduced professional service revenue recognition and delayed new contracts[61](index=61&type=chunk) - Recurring revenue, including maintenance and Software-as-a-Service income, continued to maintain stable growth[61](index=61&type=chunk) - Cost of goods and services decreased by **30.9%** to **HK$12.3 million**, mainly due to reduced third-party product sales and outsourced services[61](index=61&type=chunk) [Staff Costs and Other Operating Expenses/Income](index=24&type=section&id=Staff%20Costs%20and%20Other%20Operating%20Expenses%2FIncome) Overall staff costs decreased by 1.2% due to headcount streamlining; sales and distribution expenses slightly increased, while net general and administrative expenses decreased by 10.7% due to office relocation and operational efficiency; other intangible asset amortization continued to decline, and other operating income increased due to government subsidies - Overall staff costs decreased by **1.2%** to **HK$76.5 million** due to headcount streamlining[61](index=61&type=chunk) - Net general and administrative expenses decreased by **10.7%** to **HK$26.7 million**, benefiting from office relocation and improved operational efficiency[62](index=62&type=chunk) - Amortization of other intangible assets decreased by **3.4%** to **HK$6.4 million**, while other operating income increased with the receipt of multiple government subsidies[63](index=63&type=chunk)[64](index=64&type=chunk) [Operating Profit](index=24&type=section&id=Operating%20Profit) Benefiting from cost and expense savings, operating profit increased by 23.3% to HK$17.7 million, with the operating profit margin improving to 14.7% - Benefiting from cost and expense savings, operating profit increased by **HK$3.3 million**, or **23.3%**, to **HK$17.7 million**[65](index=65&type=chunk) - The operating profit margin also improved, rising from **11.3%** in the same period last year to **14.7%** this year[65](index=65&type=chunk) [Net Non-Operating Income and Gains](index=24&type=section&id=Net%20Non-Operating%20Income%20and%20Gains) Other income and gains decreased by 13.1%, mainly due to lower bank interest income; investment properties recorded a HK$2.0 million fair value markdown, but a buoyant stock market led to a HK$0.3 million fair value gain on financial assets - Other income and gains decreased by **13.1%** to **HK$6.3 million**, primarily due to lower bank interest income during the reporting period[65](index=65&type=chunk) - Investment properties recorded a fair value markdown of **HK$2.0 million** (2024: HK$1.0 million), reflecting subdued market sentiment[65](index=65&type=chunk) - A buoyant stock market positively impacted the valuation of financial assets, resulting in a fair value gain of **HK$0.3 million** (2024: loss of HK$0.2 million)[65](index=65&type=chunk) [Income Tax Expense](index=24&type=section&id=Income%20Tax%20Expense) Income tax expense increased by 9.1% to HK$3.0 million, consistent with the rise in local assessable profits - Consistent with the increase in local assessable profits, income tax expense increased by **HK$0.2 million**, or **9.1%**, to **HK$3.0 million**[66](index=66&type=chunk) [Net Profit](index=25&type=section&id=Net%20Profit) Profit attributable to owners of the Company slightly increased by 2.4% to HK$18.6 million, with the net profit margin improving to 15.5% - Profit attributable to owners of the Company slightly increased by **HK$0.4 million**, or **2.4%**, to **HK$18.6 million**[67](index=67&type=chunk) - The net profit margin (calculated as profit attributable to owners for the period divided by total revenue) improved to **15.5%** (2024: 14.2%)[67](index=67&type=chunk) [Non-Current Assets](index=25&type=section&id=Non-Current%20Assets) Non-current assets moderately decreased by 4.2% to HK$228.1 million, primarily due to amortization of other intangible assets, investment property valuation markdown, and depreciation of right-of-use assets - Non-current assets moderately decreased by **HK$9.9 million**, or **4.2%**, to **HK$228.1 million** as of June 30, 2025[68](index=68&type=chunk) - This decrease was primarily due to the ongoing amortization of other intangible assets, the valuation markdown of investment properties, and depreciation of right-of-use assets[68](index=68&type=chunk) [Current Assets](index=25&type=section&id=Current%20Assets) Current assets slightly decreased by 1.4% to HK$428.7 million, mainly due to reduced trade receivables, prepayments, and cash balances, partially offset by increases in contract assets and refundable taxes - Current assets slightly decreased by **1.4%** to **HK$428.7 million** as of June 30, 2025[69](index=69&type=chunk) - This change was primarily due to decreases in trade receivables, prepayments and deposits paid, and cash and bank balances, partially offset by increases in contract assets and refundable taxes[69](index=69&type=chunk) [Current and Non-Current Liabilities](index=25&type=section&id=Current%20and%20Non-Current%20Liabilities) Total current and non-current liabilities decreased by 13.1% to HK$148.0 million, primarily due to reductions in trade payables, contract liabilities, and lease liabilities - The Group's current and non-current liabilities decreased by **HK$22.4 million**, or **13.1%**, to **HK$148.0 million**[70](index=70&type=chunk) - This decrease was primarily due to reductions in trade payables, contract liabilities, and lease liabilities[70](index=70&type=chunk) [Segment Assets and Liabilities](index=25&type=section&id=Segment%20Assets%20and%20Liabilities) Both Application Services and Solutions and Integration Services segments saw decreases in assets and liabilities, while Investment segment assets declined due to investment property valuation markdown - Segment assets for the Application Services business decreased, primarily due to amortization of other intangible assets, and reductions in right-of-use assets and trade receivables. Correspondingly, segment liabilities also decreased, reflecting a decline in accruals, contract liabilities, and lease liabilities[71](index=71&type=chunk) - Segment assets for the Solutions and Integration Services segment also decreased, due to reductions in trade receivables, prepayments, and deposits. Segment liabilities decreased, primarily due to reductions in trade payables and other payables, as well as contract liabilities[71](index=71&type=chunk) - Assets in the Investment segment decreased, primarily due to the valuation markdown of an investment property[72](index=72&type=chunk) [Equity Attributable to Owners of the Parent](index=25&type=section&id=Equity%20Attributable%20to%20Owners%20of%20the%20Parent) Total equity attributable to owners of the parent remained largely stable at HK$507.6 million as of June 30, 2025, with a slight increase reflecting profit generated during the period, partially offset by the final dividend paid - Total equity attributable to owners of the parent remained largely stable at **HK$507.6 million** as of June 30, 2025 (December 31, 2024: HK$501.1 million), a slight increase of **1.3%**[73](index=73&type=chunk) - The slight increase primarily reflects profit generated during the period, partially offset by the final dividend paid for 2024[73](index=73&type=chunk) [Other Information](index=25&type=section&id=Other%20Information) [Treasury Policy](index=25&type=section&id=Treasury%20Policy) The Group has adopted a prudent financial management approach to its treasury policy, maintaining a healthy liquidity position throughout the review period, and is committed to mitigating credit risk through continuous credit assessments and evaluating customer financial standing; to manage liquidity risk, the Board closely monitors the Group's liquidity to ensure its asset, liability, and other commitment liquidity structure can meet its funding needs - The Group has adopted a prudent financial management approach to its treasury policy, maintaining a healthy liquidity position[74](index=74&type=chunk) - Committed to mitigating credit risk through continuous credit assessments and closely monitoring liquidity to meet funding needs[74](index=74&type=chunk) [Pledge of Assets](index=26&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group pledged an investment property with a fair value of HK$55.0 million and bank balances of HK$0.2 million as security for general banking facilities, including guarantees/performance bonds totaling HK$33.9 million, of which HK$21.8 million was utilized - As of June 30, 2025, the Group pledged an investment property with a fair value of **HK$55.0 million** and bank balances of **HK$0.2 million**[75](index=75&type=chunk) - These were pledged as security for general banking facilities granted to the Group, including guarantees/performance bonds totaling **HK$33.9 million**, of which **HK$21.8 million** was utilized[75](index=75&type=chunk) [Financial Resources and Liquidity](index=26&type=section&id=Financial%20Resources%20and%20Liquidity) As of June 30, 2025, the Group's cash and cash equivalents were HK$326.9 million, with a current ratio of 3.3 and a gearing ratio of 22.5%, indicating a sound financial position - As of June 30, 2025, the Group's cash and cash equivalents amounted to **HK$326.9 million** (December 31, 2024: HK$128.9 million)[76](index=76&type=chunk) - The Group's current ratio was **3.3** (December 31, 2024: 2.9), and the gearing ratio was **22.5%** (December 31, 2024: 25.3%)[76](index=76&type=chunk) - The Group has no bank borrowings and has not adopted any hedging policies, but closely monitors foreign exchange risk[76](index=76&type=chunk) [Remuneration Policy and Employee Numbers](index=26&type=section&id=Remuneration%20Policy%20and%20Employee%20Numbers) The Group remunerates employees based on performance, experience, and market conditions, offering discretionary bonuses and other incentives for their contributions; as of June 30, 2025, the Group employed 335 full-time and 10 part-time employees and operates a share award scheme - The Group remunerates employees based on their performance, work experience, and prevailing market conditions, and may offer discretionary bonuses and other incentives[77](index=77&type=chunk) - As of June 30, 2025, the Group employed **335 full-time** and **10 part-time employees** (December 31, 2024: 337 full-time and 10 part-time employees)[77](index=77&type=chunk) - The Company has established a share award scheme to incentivize and reward employees who contribute to the Group's business success and to retain them for the Group's continued development[77](index=77&type=chunk) [Significant Investments and Transactions](index=26&type=section&id=Significant%20Investments%20and%20Transactions) As of June 30, 2025, the Group held no significant investments and undertook no major transactions involving the acquisition or disposal of subsidiaries - Save as disclosed in this announcement, the Group did not hold any significant investments as at June 30, 2025[78](index=78&type=chunk) - Save as disclosed in this announcement, the Group did not undertake any significant transactions involving the acquisition or disposal of subsidiaries during the period and up to the date of this announcement[79](index=79&type=chunk) [Future Plans for Material Investments or Capital Assets](index=26&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) As of June 30, 2025, the Group had no specific plans for material investments or capital assets - As of June 30, 2025, the Group had no specific plans for material investments or capital assets[80](index=80&type=chunk) [Contingent Liabilities](index=26&type=section&id=Contingent%20Liabilities) Aside from the disclosed performance bonds/guarantees, the Group had no other significant contingent liabilities as of June 30, 2025 - Save as disclosed in this announcement, the Group had no significant contingent liabilities as at June 30, 2025[81](index=81&type=chunk) [Interim Dividend and Closure of Register of Members](index=26&type=section&id=Interim%20Dividend%20and%20Closure%20of%20Register%20of%20Members) The Board declared an interim dividend of HK$0.055 per share; to qualify for the dividend, the register of members will be closed from September 1 to September 2, 2025 - The Board declared an interim dividend of **HK$0.055** per ordinary share for the six months ended June 30, 2025[82](index=82&type=chunk) - The Company's register of members will be closed from Monday, September 1, 2025, to Tuesday, September 2, 2025 (both days inclusive)[83](index=83&type=chunk) - The dividend will be paid on or about Tuesday, September 16, 2025, to shareholders whose names appear on the Company's register of members on Tuesday, September 2, 2025 (the record date)[83](index=83&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=27&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20the%20Company's%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the period - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the period[84](index=84&type=chunk) [Corporate Governance Practices](index=27&type=section&id=Corporate%20Governance%20Practices) The Company is committed to maintaining high standards of corporate governance, emphasizing integrity, transparency, and accountability, believing good governance is crucial for success and shareholder value; the Board confirms compliance with the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period - The Company is committed to maintaining high standards of corporate governance, emphasizing integrity, high transparency, and accountability[85](index=85&type=chunk) - The Board believes that the Company has complied with the code provisions set out in the Corporate Governance Code in Appendix C1 of the Listing Rules throughout the reporting period[85](index=85&type=chunk) [Standard Code for Securities Transactions](index=27&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules as the code of conduct for directors' securities transactions, and all directors complied with it during the reporting period - The Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as the code of conduct for directors' dealings in the Company's securities[87](index=87&type=chunk) - Based on specific enquiries made to all directors of the Company, all directors have complied with the required standards set out in the Standard Code for the six months ended June 30, 2025[87](index=87&type=chunk) [Risk Management Framework](index=27&type=section&id=Risk%20Management%20Framework) The Group has established an effective risk governance and management framework, overseen by the Board's Risk Management Committee, which regularly reviews and aligns risk appetite with business strategy; the Board considers the risk management and internal control systems effective - The Group has established an effective risk governance and management framework in accordance with the requirements set out in the Listing Rules and other regulations[88](index=88&type=chunk) - The Risk Management Committee, reporting to the Board, is designated as the highest authority responsible for the Group's risk management framework, directly participating in defining the Group's risk appetite[88](index=88&type=chunk) - The Board has reviewed and considers the Company's risk management and internal control systems to be effective and appropriate[89](index=89&type=chunk) [Audit Committee](index=28&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and overseeing financial reporting, risk management, and internal controls, and has reviewed these interim results and report - The Company has established an Audit Committee in accordance with Rule 3.21 of the Listing Rules, comprising three independent non-executive directors[90](index=90&type=chunk) - Its purpose is to review and oversee the Group's financial reporting process, risk management, and internal controls, and it has reviewed the Group's interim results and interim report for the six months ended June 30, 2025[90](index=90&type=chunk) [Publication of Interim Results and Interim Report](index=28&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) This announcement is published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company (www.ctil.com); the 2025 Interim Report will be available on these websites and sent to shareholders upon request - This announcement and the interim report have been published on the websites of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company (www.ctil.com)[91](index=91&type=chunk) [Acknowledgement](index=28&type=section&id=Acknowledgement) The Board and management extend their sincere gratitude to all staff, shareholders, customers, and business partners for their support - The Board and management extend their sincere gratitude to all staff, shareholders, customers, and business partners for their support to the Group during the period[92](index=92&type=chunk)

[Financial Performance Overview](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E6%A5%AD%E7%B8%BE%E6%A6%82%E8%A6%BD) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%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) During the reporting period, the company turned from profit to loss, with an expanded loss for the period, but the loss attributable to owners of the Company narrowed, while revenue decreased and gross profit increased Financial Performance Overview (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 4,899,155 | 5,244,150 | -6.58% | | Cost of sales | (4,653,593) | (5,045,515) | -7.77% | | Gross profit | 245,562 | 198,635 | +23.62% | | Profit/(Loss) before tax | 145,911 | (211,362) | Turned from loss to profit | | Income tax expense | (400,040) | (29,650) | +1249.21% | | Loss for the period | (254,129) | (241,012) | +5.44% | | Loss for the period attributable to owners of the Company | (230,929) | (327,653) | -29.49% | | Basic loss per share (RMB cents) | (4.71) | (6.68) | -29.49% | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the company's total assets and liabilities both increased, with changes in non-current and current asset structures, notably a significant rise in properties held for sale, while net assets and total equity slightly grew Balance Sheet Overview (As of June 30) | Indicator | 2025 (RMB thousands) | 2024 December 31 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 39,309,244 | 37,598,407 | +4.55% | | Current assets | 96,662,189 | 87,145,623 | +10.92% | | Properties held for sale | 68,395,652 | 59,254,675 | +15.43% | | Bank balances and cash | 14,523,418 | 12,734,449 | +14.05% | | Current liabilities | 69,897,953 | 59,607,005 | +17.26% | | Contract liabilities | 32,256,923 | 23,958,048 | +34.63% | | Non-current liabilities | 32,266,258 | 32,043,017 | +0.70% | | Net assets | 33,807,222 | 33,094,008 | +2.15% | | Total equity | 33,807,222 | 33,094,008 | +2.15% | [Notes to the Condensed Consolidated Financial Statements](index=5&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [1. General Information](index=5&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) China Merchants Land Limited and its subsidiaries primarily engage in property development and sales, property leasing, and asset management, with the company registered in the Cayman Islands, listed on the Hong Kong Stock Exchange, and financial statements denominated in RMB - Principal activities: Property development and sales, property leasing, and asset management[8](index=8&type=chunk) - Functional currency: **RMB**[9](index=9&type=chunk) [2. Basis of Preparation](index=5&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules, adopting the same accounting policies as the 2024 financial statements, and authorized for issue on August 15, 2025 - Basis of preparation: Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules[10](index=10&type=chunk) - Accounting policies: Same as the 2024 annual financial statements, except for changes expected to be reflected in 2025[10](index=10&type=chunk) [3. Changes in Accounting Policies](index=6&type=section&id=3.%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E5%8B%95) The Group first applied the HKAS 21 amendment 'The Effects of Changes in Foreign Exchange Rates—Lack of Exchangeability' in this interim period, which had no significant impact on the interim report due to the absence of non-exchangeable foreign currency transactions - Newly adopted standard: Hong Kong Accounting Standard 21 amendment 'The Effects of Changes in Foreign Exchange Rates—Lack of Exchangeability'[11](index=11&type=chunk) - Impact: No significant impact due to the absence of non-exchangeable foreign currency transactions[11](index=11&type=chunk) [4. Revenue Analysis](index=6&type=section&id=4.%20%E6%94%B6%20%E7%9B%8A) Total revenue for the first half of 2025 was **RMB 4,899,155 thousand**, a year-on-year decrease of **6.58%**, with the primary source being sales of properties held for sale, accounting for **96.39%** of total revenue Revenue Composition (For the six months ended June 30) | Type of Goods or Services | 2025 (RMB thousands) | 2024 (RMB thousands) | Proportion (2025) | | :--- | :--- | :--- | :--- | | Sales of properties held for sale | 4,722,435 | 5,068,380 | 96.39% | | Rental income from investment properties | 124,796 | 123,794 | 2.55% | | Hotel operation income | 15,967 | 14,396 | 0.33% | | Property operation income | 28,387 | 28,266 | 0.58% | | Asset management services | 7,570 | 9,314 | 0.15% | | **Total Revenue** | **4,899,155** | **5,244,150** | **100%** | [5. Segment Information](index=7&type=section&id=5.%20%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group is divided into two operating segments: property development and sales and property leasing (Property Segment), and asset management for office properties and shopping malls (Asset Management Segment), with the Property Segment contributing the vast majority of revenue and results in the first half of 2025, while the Asset Management Segment saw declines in both revenue and results Segment Revenue and Results (For the six months ended June 30) | Indicator | Asset Management Segment (RMB thousands) | Property Segment (RMB thousands) | Consolidated (RMB thousands) | | :--- | :--- | :--- | :--- | | **2025** | | | | | Segment revenue – external customers | 7,570 | 4,891,585 | 4,899,155 | | Segment results | 4,313 | 299,453 | 303,766 | | **2024** | | | | | Segment revenue – external customers | 9,314 | 5,234,836 | 5,244,150 | | Segment results | 5,351 | 8,687 | 14,038 | - Property segment results significantly increased in 2025, from **RMB 8,687 thousand** in 2024 to **RMB 299,453 thousand**[16](index=16&type=chunk)[17](index=17&type=chunk) - Profit before tax was **RMB 145,911 thousand** in 2025, compared to a loss of **RMB 211,362 thousand** in the same period of 2024[16](index=16&type=chunk)[17](index=17&type=chunk) [6. Finance Costs](index=8&type=section&id=6.%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) Total borrowing costs for the first half of 2025 decreased by **26.9%** year-on-year to **RMB 573,103 thousand**, primarily due to reduced interest on bank and other borrowings and increased capitalized amounts Finance Costs (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Interest on bank and other borrowings | 329,604 | 514,839 | -36.0% | | Interest on loans from indirect holding company | 219,754 | 237,534 | -7.59% | | Total borrowing costs | 573,103 | 783,801 | -26.9% | | Less: Amount capitalized | (303,410) | (384,312) | -21.05% | | **Net finance costs** | **269,693** | **399,489** | **-32.5%** | [7. Income Tax Expense](index=9&type=section&id=7.%20%E6%89%80%E5%BE%97%E7%A8%85%E6%94%AF%E5%87%BA) Income tax expense for the first half of 2025 significantly increased to **RMB 400,040 thousand**, mainly due to substantial growth in PRC corporate income tax and land appreciation tax, with the latter turning from a credit to an expense Income Tax Expense (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | PRC corporate income tax | 222,602 | 10,645 | +1991.14% | | Land appreciation tax | 201,555 | (86,424) | Turned from credit to expense | | Deferred tax | (24,117) | 105,429 | Turned from expense to credit | | **Total income tax expense** | **400,040** | **29,650** | **+1249.21%** | - Land appreciation tax is levied at progressive rates ranging from **30% to 60%** of the land appreciation[20](index=20&type=chunk) [8. Loss for the Period](index=9&type=section&id=8.%20%E6%9C%9F%E5%85%A7%E虧%E6%90%8D) Loss for the period in the first half of 2025 was **RMB 254,129 thousand**, an increase from **RMB 241,012 thousand** in the same period last year, primarily due to increased depreciation expenses Depreciation Expenses (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 23,561 | 18,946 | +24.36% | | Depreciation of right-of-use assets | 7,970 | 12,535 | -36.35% | | Depreciation of investment properties | 72,785 | 75,331 | -3.38% | [9. Dividends](index=10&type=section&id=9.%20%E8%82%A1%20%E6%81%AF) For the six months ended June 30, 2025, the Group neither proposed, declared, nor paid any interim dividends, nor proposed any final dividend for 2024 - No interim dividends paid or proposed for the first half of 2025[22](index=22&type=chunk) - No final dividend proposed for the year 2024[22](index=22&type=chunk) [10. Loss Per Share](index=10&type=section&id=10.%20%E6%AF%8F%E8%82%A1%E虧%E6%90%8D) Basic loss per share for the first half of 2025 was **RMB 4.71 cents**, a narrowing from **RMB 6.68 cents** in the same period of 2024, mainly due to a decrease in loss attributable to owners of the Company - Basic loss per share: **RMB 4.71 cents** in 2025, compared to **RMB 6.68 cents** in 2024[4](index=4&type=chunk) - Weighted average number of ordinary shares: **4,905,257,860 shares**, consistent with the prior period[23](index=23&type=chunk) - No potential ordinary shares, thus no diluted loss per share[23](index=23&type=chunk) [11. Trade Receivables](index=11&type=section&id=11.%20%E6%A5%AD%E5%8B%99%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade receivables amounted to **RMB 24,271 thousand**, a **52.1%** increase from the end of 2024, with a significant rise in receivables aged 181 to 365 days Ageing Analysis of Trade Receivables (As of June 30) | Ageing | 2025 (RMB thousands) | 2024 December 31 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | 0 to 180 days | 13,205 | 11,770 | +12.2% | | 181 to 365 days | 7,650 | 60 | +12650% | | Over one year | 3,416 | 4,128 | -17.2% | | **Total** | **24,271** | **15,958** | **+52.1%** | [12. Trade Payables](index=11&type=section&id=12.%20%E6%A5%AD%E5%8B%99%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As of June 30, 2025, total trade payables amounted to **RMB 10,063,270 thousand**, a **28.9%** increase from the end of 2024, primarily concentrated within one year Ageing Analysis of Trade Payables (As of June 30) | Ageing | 2025 (RMB thousands) | 2024 December 31 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Within one year | 9,023,665 | 6,754,703 | +33.6% | | One to two years | 504,115 | 592,331 | -14.9% | | Two to three years | 230,937 | 208,486 | +10.7% | | Over three years | 304,553 | 251,773 | +21.0% | | **Total** | **10,063,270** | **7,807,293** | **+28.9%** | [13. Loans from Non-controlling Interests](index=12&type=section&id=13.%20%E9%9D%9E%E6%8E%A7%E8%82%A1%E6%AC%8A%E7%9B%8A%E8%B2%B8%E6%AC%BE) As of June 30, 2025, total loans from non-controlling interests amounted to **RMB 1,746,311 thousand**, a **7.2%** increase from the end of 2024, with non-interest-bearing loans constituting the largest portion Composition of Loans from Non-controlling Interests (As of June 30) | Loan Type | 2025 (RMB thousands) | 2024 December 31 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Fixed-rate loans (RMB) | 332,643 | 464,209 | -28.4% | | Non-interest-bearing loans (RMB) | 1,413,668 | 1,163,479 | +21.5% | | **Total** | **1,746,311** | **1,627,688** | **+7.2%** | - Loan analysis: Current portion **RMB 151,820 thousand**, non-current portion **RMB 1,594,491 thousand**[30](index=30&type=chunk) [14. Bank and Other Borrowings](index=13&type=section&id=14.%20%E9%8A%80%E8%A1%8C%E5%8F%8A%E5%85%B6%E4%BB%96%E5%80%9F%E8%B2%B8) The Group's bank borrowings have an effective annual interest rate ranging from **2.14% to 3.70%**, secured by land, investment properties, and trade receivables totaling **RMB 4,258,588 thousand** - Effective annual interest rate: **2.14% to 3.70%** (2024 year-end: **2.20% to 3.70%**)[31](index=31&type=chunk) - Pledged assets: Land, investment properties, trade receivables[31](index=31&type=chunk) - Secured amount: **RMB 4,258,588 thousand** (2024 year-end: **RMB 3,099,149 thousand**)[31](index=31&type=chunk) [15. Commitments](index=13&type=section&id=15.%20%E6%89%BF%20%E6%93%94) As of the reporting period end, the Group's contracted but unprovided commitments for the construction of properties held for sale amounted to **RMB 6,335,548 thousand**, a **28.5%** decrease from the end of 2024 - Commitments for construction of properties held for sale: **RMB 6,335,548 thousand** (2024 year-end: **RMB 8,865,265 thousand**)[32](index=32&type=chunk) [16. Financial Guarantee Contracts](index=14&type=section&id=16.%20%E8%B2%A1%E5%8B%99%E6%93%94%E4%BF%9D%E5%90%88%E7%B4%84) The Group provides financial guarantees for customer mortgage loans and financing for joint ventures/associates, with a total guaranteed amount of **RMB 5,626,321 thousand** as of June 30, 2025, and directors consider the fair value of initially recognized financial guarantee contracts to be immaterial Financial Guarantee Contracts (As of June 30) | Guarantee Type | 2025 (RMB thousands) | 2024 December 31 (RMB thousands) | | :--- | :--- | :--- | | Financing guarantees granted to customers | 3,347,705 | 3,059,086 | | Financing guarantees granted to joint ventures and associates | 2,278,616 | 2,341,730 | | **Total** | **5,626,321** | **5,400,816** | - Directors consider the fair value of financial guarantee contracts to be immaterial[33](index=33&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) [Market Conditions Analysis](index=15&type=section&id=%E5%B8%82%E5%A0%B4%E5%BD%A2%E5%8B%A2%E5%88%86%E6%9E%90) Facing global economic uncertainties and deep adjustments in the domestic real estate sector, the company operates steadily under China Merchants Group's strategic guidance, continuously reducing comprehensive funding costs, actively responding to policies, revitalizing existing land resources, and achieving market recognition for its product quality - Macroeconomic conditions: Domestic economy shows 'stabilizing growth with persistent pressure', with GDP growth of **5.4%** (Q1) and **5.2%** (Q2)[34](index=34&type=chunk) - Real estate industry: Rapid decline since peaking in 2021, with sales area decreasing from **1.6 billion square meters** to **970 million square meters** in 2024, projected to stabilize at **800-1,000 million square meters** in the medium term[35](index=35&type=chunk) - Policy direction: Central Political Bureau's '4.25' meeting called for 'continuously consolidating the stable trend of the real estate market', and the June State Council meeting demanded 'stronger efforts to stabilize and recover the real estate market'[34](index=34&type=chunk) - Company strategy: Focus on 'increasing cash reserves, optimizing asset structure', cost reduction and efficiency improvement, with effective interest rate reduced to **2.14%**, revitalizing existing land, and accelerating destocking[36](index=36&type=chunk) - Product strength: Nanjing, Guangzhou, and Xi'an projects were listed among CRIC's top ten works in the first half of 2025[36](index=36&type=chunk) [Financial Review](index=16&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The company's financial performance improved this period, with a narrowed loss attributable to owners of the Company and increased gross profit margin, maintaining a healthy financial structure with good net gearing ratio and cash-to-short-term debt ratio, and low foreign exchange risk [Financial Performance](index=16&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE) - Loss attributable to owners of the Company: **RMB 230,929 thousand** (2024 same period: **RMB 327,653 thousand**), a **29.49%** decrease[37](index=37&type=chunk) - Reasons for reduced loss: Recovery in real estate sales, higher gross profit margins for Nanjing and Chongqing projects, and recognition of fair value gain exceeding **RMB 400 million** from a joint venture becoming a consolidated subsidiary[37](index=37&type=chunk) - Basic loss per share: **RMB 4.71 cents** (2024 same period: **RMB 6.68 cents**)[37](index=37&type=chunk) - Equity attributable to owners of the Company: **RMB 7,748,905 thousand**, a **3.4%** decrease from 2024 year-end[37](index=37&type=chunk) - No significant foreign exchange fluctuation risk or related hedging[38](index=38&type=chunk) [Revenue](index=17&type=section&id=%E6%94%B6%20%E5%85%A5) - Total revenue: **RMB 4,899,155 thousand**, a year-on-year decrease of **6.58%**[39](index=39&type=chunk) - Reason for revenue decrease: Reduced total gross floor area completed and delivered[39](index=39&type=chunk) - Major revenue contributing cities (first half of 2025): Nanjing (**31.56%**), Chongqing (**27.32%**), Foshan (**24.32%**)[39](index=39&type=chunk) [Gross Profit](index=17&type=section&id=%E6%AF%9B%20%E5%88%A9) - Gross profit: **RMB 245,562 thousand**, a year-on-year increase of **23.62%**[40](index=40&type=chunk) - Gross profit margin: **5.01%**, an increase of **1.22 percentage points** from **3.79%** in the same period last year[40](index=40&type=chunk) [Capital Structure, Financial and Treasury Management Principles](index=17&type=section&id=%E8%B3%87%E6%9C%AC%E7%B5%90%E6%A7%8B%E3%80%81%E8%B2%A1%E5%8B%99%E5%8F%8A%E8%B3%87%E9%87%91%E7%AE%A1%E7%90%86%E5%8E%9F%E5%89%87) - Bank balances and cash: **RMB 14,523,418 thousand** (2024 year-end: **RMB 12,734,449 thousand**), a **14.05%** increase[41](index=41&type=chunk) - Total interest-bearing debt: **RMB 33,165,307 thousand** (2024 year-end: **RMB 34,908,872 thousand**), a **4.99%** decrease[41](index=41&type=chunk) - Net gearing ratio: **55%** (2024 year-end: **67%**), a significant decrease[42](index=42&type=chunk) - Asset-liability ratio: **51%**[42](index=42&type=chunk) - Cash to short-term debt ratio: **5.67 times**[42](index=42&type=chunk) - Effective annual interest rate for bank borrowings: **2.14% to 3.7%** (2024 year-end: **2.2% to 3.7%**)[42](index=42&type=chunk) - Foreign exchange risk: Relatively low, managed by maintaining a balance between monetary assets and liabilities[43](index=43&type=chunk) [Pledge of Assets](index=18&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) - Carrying value of pledged land (including properties held for sale): **RMB 13,491,970 thousand**[44](index=44&type=chunk) - Carrying value of pledged investment properties: **RMB 1,429,034 thousand**[44](index=44&type=chunk) - Carrying value of pledged trade receivables: **RMB 184 thousand**[44](index=44&type=chunk) - Amount of bank borrowings secured: **RMB 4,258,588 thousand**[44](index=44&type=chunk) [Business Review](index=18&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's real estate development business comprises 44 projects with ample land reserves, primarily in Chongqing, Nanjing, and Xi'an, while contracted sales value and area decreased year-on-year, with Xi'an contributing the most, and asset management business revenue remained stable [Property Development Business](index=18&type=section&id=%E6%88%BF%E5%9C%B0%E7%94%A2%E9%96%8B%E7%99%BC%E6%A5%AD%E5%8B%99) - Number of projects: **44** real estate development projects[45](index=45&type=chunk) - Product types: Apartments, villas, office buildings, and retail shops[45](index=45&type=chunk) - Land reserve (saleable gross floor area of unsold or unpresold properties): **3,791,122 square meters**[45](index=45&type=chunk) Land Reserve by City (Future Saleable Gross Floor Area) | City | Area (square meters) | Proportion | | :--- | :--- | :--- | | Chongqing | 2,097,974 | 55.34% | | Nanjing | 847,673 | 22.36% | | Xi'an | 477,809 | 12.60% | | Guangzhou | 283,135 | 7.47% | | Foshan | 84,531 | 2.23% | | **Total** | **3,791,122** | **100%** | [Contracted Sales](index=22&type=section&id=%E5%90%88%E5%90%8C%E9%8A%B7%E5%94%AE) - Total contracted sales value: **RMB 16,092.66 million**, a year-on-year decrease of **18.24%**[51](index=51&type=chunk) - Total contracted sales area: **720,958 square meters**, a year-on-year decrease of **17%**[51](index=51&type=chunk) - Average selling price: **RMB 22,321 per square meter**[51](index=51&type=chunk) Contracted Sales Area by Region (Square Meters) | Region | Area (square meters) | Proportion | | :--- | :--- | :--- | | Xi'an | 308,447 | 43% | | Chongqing | 148,883 | 21% | | Guangzhou | 116,979 | 16% | | Nanjing | 93,202 | 13% | | Foshan | 53,447 | 7% | Contracted Sales Value by Region (RMB millions) | Region | Amount (RMB millions) | Proportion | | :--- | :--- | :--- | | Xi'an | 5,397 | 33% | | Guangzhou | 3,826 | 24% | | Nanjing | 3,600 | 22% | | Chongqing | 1,866 | 12% | | Foshan | 1,404 | 9% | [Asset Management Business](index=23&type=section&id=%E8%B3%87%E7%94%A2%E7%AE%A1%E7%90%86%E6%A5%AD%E5%8B%99) - Asset management service revenue: **RMB 7,570,000**[54](index=54&type=chunk) - Business entity: China Merchants Land Asset Management Co., Ltd., acting as the REIT manager for China Merchants Commercial REIT[54](index=54&type=chunk) [Non-Competition Deed](index=23&type=section&id=%E4%B8%8D%E7%AB%B6%E7%88%AD%E5%A5%91%E6%93%9A) The company and China Merchants Shekou signed a non-competition deed in 2019, defining their business scope in Foshan, Guangzhou, Nanjing, Jurong, Chongqing, Xi'an, and 46 other cities (China Merchants Shekou cities), granting the Group the right to participate in non-controlling investment arrangements, exclusively manage office property assets in Beijing and Shanghai, and exclusively manage REITs in Hong Kong - Non-competition areas: China Merchants Shekou Group does not compete with the Group in Foshan, Guangzhou, Nanjing, and Jurong[55](index=55&type=chunk) - Exit plan: The Company is considering ceasing real estate business in Chongqing and Xi'an (excluding non-controlling investment arrangements)[55](index=55&type=chunk) - Exclusive business: The Group has the right to exclusively manage office property assets in Beijing and Shanghai, and exclusively manage REITs in Hong Kong[55](index=55&type=chunk) [Future Plans for Material Investments and Capital Assets](index=23&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) As of June 30, 2025, and the date of this announcement, the Group has no plans for material investments or increases in capital assets authorized by the Board - No plans for material investments or increases in capital assets[57](index=57&type=chunk) - No material events from the end of the reporting period to the date of this announcement[58](index=58&type=chunk) [Outlook](index=24&type=section&id=%E5%89%8D%E6%99%AF%E5%B1%95%E6%9C%9B) In the second half, the company will focus on 'precise investment, product upgrading, operational value-add, and asset revitalization' to expand project opportunities with 'five good' standards, optimize inventory structure, enhance asset operational efficiency, and leverage China Merchants Group's platform advantages to root in the Hong Kong market and achieve high-quality development goals - Second half strategy: Precise investment, product upgrading, operational value-add, and asset revitalization[59](index=59&type=chunk) - Development business: Focus on core locations in core cities, comprehensively promoting product upgrading and iteration for residential and investment properties[59](index=59&type=chunk) - Existing assets: Strengthen content operations, improve quality and efficiency, and contribute stable cash flow[59](index=59&type=chunk) - Financial objectives: Stabilize and continuously optimize the cash flow statement, improve core financial indicators such as revenue and profit[59](index=59&type=chunk) - Investment standards: Adhere to the 'five good' standards of 'good city, good location, good price, good product, good return'[60](index=60&type=chunk) - Group advantages: Leverage China Merchants Group's platform advantages, root in the Hong Kong market, and acquire high-quality market-oriented projects[60](index=60&type=chunk) [Other Information](index=25&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Interim Dividend](index=25&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board did not declare an interim dividend for the six months ended June 30, 2025 - No interim dividend declared for the first half of 2025[61](index=61&type=chunk) [Employees' Remuneration and Relationship](index=25&type=section&id=%E5%83%B1%E5%93%A1%E8%96%AA%E9%85%AC%E5%8F%8A%E9%97%9C%E4%BF%82) As of June 30, 2025, the Group had **717 employees**, with remuneration determined based on qualifications, experience, responsibilities, profitability, and market conditions - Number of employees: **717** (2024 year-end: **799**)[62](index=62&type=chunk) - Remuneration determination: Based on qualifications, experience, responsibilities, profitability, and market conditions[62](index=62&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=25&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - No purchase, sale, or redemption activities of listed securities during this period[63](index=63&type=chunk) [Audit Committee](index=25&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, composed of two independent non-executive directors and one non-executive director, is responsible for reviewing financial reporting, internal controls, and external auditor relations, and has reviewed these interim financial statements - Composition: Two independent non-executive directors and one non-executive director[64](index=64&type=chunk) - Responsibilities: Reviewing financial reporting, internal control principles, and relationship with external auditors[64](index=64&type=chunk) - Chairman: Dr. Wong Wing Kuen, with professional financial qualifications[64](index=64&type=chunk) [Corporate Governance Code](index=26&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The company complied with Appendix C1 of the Listing Rules' Corporate Governance Code during the reporting period, with two deviations: directors have no specific term but retire by rotation, and some non-executive and independent non-executive directors were unable to attend the AGM - Compliance: Generally complied with Appendix C1 of the Listing Rules' Corporate Governance Code[65](index=65&type=chunk) - Deviation 1 (Code Provision B.2.2): Directors do not have a specific term but retire by rotation and are eligible for re-election in accordance with the Company's Articles of Association, which the Board considers to achieve the same effect[65](index=65&type=chunk) - Deviation 2 (Code Provisions C.1.6 and F.2.2): Some non-executive and independent non-executive directors and the Chairman of the Board were unable to attend the Annual General Meeting, but sufficient directors were present to ensure shareholders' views were understood, and the Chairman appointed an alternate director to preside[65](index=65&type=chunk)[66](index=66&type=chunk) [Standard Code for Securities Transactions by Directors](index=26&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The Group has adopted a code of conduct for directors' securities transactions no less exacting than the Standard Code in Appendix C3 of the Listing Rules, and all directors confirmed compliance during the reporting period - Adopted code: No less exacting than the Standard Code in Appendix C3 of the Listing Rules[67](index=67&type=chunk) - Compliance: All directors have complied[67](index=67&type=chunk) [Publication of Interim Report on HKEX Website](index=27&type=section&id=%E5%9C%A8%E8%81%AF%E4%BA%A4%E6%89%80%E7%B6%B2%E7%AB%99%E5%88%8A%E7%99%BB%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) The Company's interim report for the six months ended June 30, 2025, containing all information required by the Listing Rules, will be dispatched to shareholders as required and published on the HKEX website and the Company's website - Interim report publication channels: HKEX website (www.hkexnews.hk) and the Company's website (ir.cmland.hk)[68](index=68&type=chunk)

[Performance Highlights](index=1&type=section&id=Performance%20Highlights) The company's financial performance for the six months ended June 30, 2025, showed significant growth in revenue, gross profit, and net profit Performance Highlights for the Six Months Ended June 30, 2025 | Metric | Change | Amount (CNY) | | :--- | :--- | :--- | | Revenue | ▲ 10.1% | 81,039,092,000 | | Gross Profit | ▲ 16.9% | 20,805,191,000 | | Profit for the Period | ▲ 35.4% | 13,551,310,000 | | Net Profit Attributable to Owners of the Company | ▲ 35.0% | 12,361,046,000 | | Basic Earnings Per Share | ▲ 36.0% | 1.314 | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated financial statements, including income statement and balance sheet, for the reporting period [Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In H1 2025, the company achieved revenue of CNY 81.04 billion, a 10.1% increase, with profit for the period reaching CNY 13.55 billion, up 35.4%, driven by revenue growth and cost control, leading to a 36.0% rise in basic EPS to CNY 1.314 Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended June 30) | Item | 2025 (CNY Thousand) | 2024 (CNY Thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 81,039,092 | 73,592,249 | ▲ 10.1% | | Gross Profit | 20,805,191 | 17,801,761 | ▲ 16.9% | | Profit Before Tax | 17,763,982 | 13,870,989 | ▲ 28.1% | | Profit for the Period | 13,551,310 | 10,007,876 | ▲ 35.4% | | Profit Attributable to Owners of the Company | 12,361,046 | 9,154,911 | ▲ 35.0% | | Basic Earnings Per Share (CNY) | 1.314 | 0.966 | ▲ 36.0% | [Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets were CNY 228.46 billion, slightly down from year-end 2024, with net assets at CNY 116.32 billion and cash increasing to CNY 48.74 billion, while current liabilities rose due to maturing debt Summary Statement of Financial Position | Item | As of June 30, 2025 (CNY Thousand) | As of December 31, 2024 (CNY Thousand) | | :--- | :--- | :--- | | **Total Assets** | **228,463,164** | **229,165,032** | | Non-current Assets | 125,597,771 | 119,340,473 | | Current Assets | 102,865,393 | 109,824,559 | | **Total Liabilities** | **112,138,581** | **110,551,534** | | Non-current Liabilities | 32,379,169 | 33,568,985 | | Current Liabilities | 79,759,412 | 76,982,549 | | **Total Equity** | **116,324,583** | **118,613,498** | [Notes to the Financial Statements](index=7&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, offering further insights into specific accounts and transactions [Note 4: Revenue](index=8&type=section&id=Note%204.%20Revenue) Total revenue for H1 2025 was CNY 81.04 billion, primarily from aluminum product sales, with liquid aluminum alloy and alumina products contributing CNY 48.74 billion and CNY 20.65 billion respectively, while China accounted for over 92% of revenue Revenue by Product and Region (For the Six Months Ended June 30) | Revenue Source | 2025 (CNY Thousand) | Proportion | | :--- | :--- | :--- | | **By Product** | | | | Liquid Aluminum Alloy | 48,738,576 | 60.1% | | Alumina Products | 20,654,946 | 25.5% | | Aluminum Alloy Processed Products | 8,074,302 | 10.0% | | Others | 3,571,268 | 4.4% | | **By Region** | | | | China | 75,358,618 | 93.0% | | India | 2,709,968 | 3.3% | | Others | 2,970,506 | 3.7% | [Notes 5-6: Expenses and Fair Value Changes](index=9&type=section&id=Notes%205-6.%20Expenses%20and%20Fair%20Value%20Changes) Other expenses significantly decreased to CNY 274 million due to reduced impairment losses on property, plant, and equipment, while fair value losses on financial instruments expanded to CNY 2.11 billion, mainly from convertible bond derivatives - Other expenses significantly decreased year-on-year, primarily due to impairment losses on property, plant, and equipment falling from **CNY 534 million** in the prior period to **CNY 59 million** in the current period[14](index=14&type=chunk) - Fair value changes on financial instruments resulted in an expanded loss of **CNY 2.11 billion**, mainly impacted by a **CNY 2.56 billion** loss from fair value changes of the convertible bond derivative component[14](index=14&type=chunk) [Note 8: Dividends](index=10&type=section&id=Note%208.%20Dividends) The Board did not recommend an interim dividend for H1 2025, but the final dividend for 2024, totaling approximately CNY 8.67 billion (HKD 102 cents per share), was significantly higher than the previous year - The Board did not recommend an interim dividend for **2025**[16](index=16&type=chunk) - The total final dividend for **2024** recognized during the period was approximately **CNY 8.67 billion**, representing a significant year-on-year increase[16](index=16&type=chunk) [Note 10: Property, Plant and Equipment](index=11&type=section&id=Note%2010.%20Property%2C%20Plant%20and%20Equipment) During the period, the Group significantly increased investment in property, plant, and equipment, spending approximately CNY 7.70 billion on new production lines and plants, a 59.8% increase, while impairment losses on equipment substantially decreased to CNY 59 million - The Group invested approximately **CNY 7.70 billion** in constructing new production lines and plants, a **59.8%** year-on-year increase (compared to CNY 4.82 billion in the prior period)[19](index=19&type=chunk) - Impairment losses on property, plant, and equipment amounted to approximately **CNY 58.61 million**, a significant reduction from **CNY 534 million** in the prior period[20](index=20&type=chunk) [Notes 15-16: Share Capital and Commitments](index=13&type=section&id=Notes%2015-16.%20Share%20Capital%20and%20Commitments) As of June 30, 2025, the company had 9.288 billion shares issued, having repurchased and cancelled 187.23 million shares for CNY 2.42 billion, and has significant capital expenditure commitments of CNY 7.4 billion and a USD 1.78 billion performance guarantee for the Simandou project - During the period, the company repurchased and cancelled a total of **187,229,500** of its own ordinary shares on the Stock Exchange for a total consideration of approximately **CNY 2.42 billion**[27](index=27&type=chunk)[28](index=28&type=chunk) - The Group has significant future capital commitments, including approximately **CNY 7.40 billion** for property, plant, and equipment capital expenditures, and a performance guarantee not exceeding **USD 1.78 billion** for the Simandou iron ore project[30](index=30&type=chunk) [Chairman's Report](index=15&type=section&id=Chairman%27s%20Report) The Chairman's Report provides an overview of the company's performance, strategic initiatives, and future outlook amidst global economic conditions [Performance Review and Operating Strategy](index=15&type=section&id=Performance%20Review%20and%20Operating%20Strategy) Despite global economic slowdown, the Group achieved strong H1 performance with 35.0% net profit growth, driven by robust China market demand and rising aluminum prices, leveraging its integrated industrial chain and cost control advantages while transforming towards high-end, intelligent, and green manufacturing - Despite global economic slowdown, China's economy showed steady momentum and cyclical improvement, with growing demand for aluminum in new energy vehicles and renewable energy sectors supporting the company's performance[31](index=31&type=chunk)[32](index=32&type=chunk) - Leveraging its integrated industrial chain and cost control advantages, the company achieved high profitability amidst rising aluminum prices, demonstrating strong risk resilience[33](index=33&type=chunk) - The company's strategy focuses on industrial optimization and upgrading, perfecting the complete industrial chain from bauxite to recycled aluminum, and promoting low-carbon transformation[34](index=34&type=chunk) [Green Development and Technological Innovation](index=16&type=section&id=Green%20Development%20and%20Technological%20Innovation) The Group released its Carbon Reduction Action Report, setting "25 • 55 Dual Carbon" goals for operational carbon peaking by 2025 and carbon neutrality by 2055, while achieving key technological breakthroughs in electrolytic cell measurement systems and lightweight chassis components - Released the "Carbon Reduction Action Report," proposing the "**25 • 55 Dual Carbon**" goals, committing to carbon peaking by **2025** and carbon neutrality by **2055**[35](index=35&type=chunk) - The Binzhou Aluminum Industry Advanced Manufacturing Shandong Provincial Laboratory opened, promoting collaborative innovation across the industrial chain[36](index=36&type=chunk) - The "Electrolytic Cell Dual-Level and Cell Temperature Automatic Measurement System" is operational, and lightweight chassis components have achieved mass delivery, demonstrating significant technological innovation achievements[36](index=36&type=chunk) [Capital Market Performance and Outlook](index=18&type=section&id=Capital%20Market%20Performance%20and%20Outlook) The Group's subsidiaries achieved AAA credit ratings, successfully issued CNY 8.1 billion in domestic bonds and USD 600 million in overseas bonds, and completed a pioneering "convertible bond + share repurchase" financing, demonstrating market confidence and a commitment to stable dividends despite future uncertainties - Subsidiaries Shandong Hongqiao and Weiqiao Aluminum & Electricity both had their corporate credit ratings upgraded to **AAA**[38](index=38&type=chunk) - Successfully issued domestic bonds totaling **CNY 8.1 billion** and USD bonds totaling **USD 600 million**[38](index=38&type=chunk) - Innovatively issued **USD 300 million** convertible bonds concurrently with a share repurchase, marking the first "convertible bond + repurchase" case in the Hong Kong stock market[38](index=38&type=chunk) - Looking ahead to the second half, the company will continue to advance steadily and is committed to rewarding shareholders with stable full-year dividends[39](index=39&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the company's operational performance, financial position, and future outlook, including industry trends and key financial metrics [Industry Review](index=19&type=section&id=Industry%20Review) In H1 2025, global electrolytic aluminum prices rose, with LME and SHFE average prices increasing by 6.0% and 1.9% respectively, while global primary aluminum production grew 1.8% and consumption 3.1%, with China accounting for approximately 60% of both and showing stronger consumption growth Global and China Primary Aluminum Market Data for H1 2025 | Metric | Global | China | China's Share of Global | | :--- | :--- | :--- | :--- | | Primary Aluminum Production | 36.59 million tonnes (▲1.8%) | 21.84 million tonnes (▲2.4%) | 59.7% | | Primary Aluminum Consumption | 36.72 million tonnes (▲3.1%) | 22.97 million tonnes (▲4.3%) | 62.6% | - The average LME three-month aluminum price was approximately **USD 2,546/tonne**, up approximately **6.0%** year-on-year[40](index=40&type=chunk) - The average SHFE three-month aluminum price was approximately **CNY 20,226/tonne**, up approximately **1.9%** year-on-year[40](index=40&type=chunk) [Business and Financial Performance Analysis](index=20&type=section&id=Business%20and%20Financial%20Performance%20Analysis) H1 2025 revenue grew 10.1% to CNY 81.04 billion, with net profit attributable to owners increasing 35.0% to CNY 12.36 billion, driven by higher volumes and prices of aluminum alloy and alumina products, leading to an overall gross profit margin improvement from 24.2% to 25.7% Key Product Sales Volume and Average Selling Price Changes (Year-on-Year) | Product | Sales Volume Change | Average Selling Price Change | | :--- | :--- | :--- | | Aluminum Alloy Products | ▲ 2.4% | ▲ 2.7% | | Alumina Products | ▲ 15.6% | ▲ 10.3% | | Aluminum Alloy Processed Products | ▲ 3.5% | ▲ 2.9% | Gross Profit Margin Performance by Product Segment | Product | H1 2025 Gross Profit Margin | H1 2024 Gross Profit Margin | Change (Percentage Points) | | :--- | :--- | :--- | :--- | | Aluminum Alloy Products | 25.2% | 24.6% | ▲ 0.6 | | Alumina | 28.8% | 25.4% | ▲ 3.4 | | Aluminum Alloy Processed Products | 23.3% | 21.0% | ▲ 2.3 | | **Total** | **25.7%** | **24.2%** | **▲ 1.5** | [Cost and Expense Analysis](index=22&type=section&id=Cost%20and%20Expense%20Analysis) During the period, the Group effectively controlled expenses, with sales and distribution expenses decreasing by 3.4% due to lower freight unit costs, administrative expenses falling by 5.4% due to reduced R&D, and finance costs significantly decreasing by 17.7% due to optimized debt structure and lower financing rates Key Expense Item Changes (Year-on-Year) | Expense Item | H1 2025 (CNY Thousand) | Change | | :--- | :--- | :--- | | Sales and Distribution Expenses | 354,125 | ▼ 3.4% | | Administrative Expenses | 2,321,954 | ▼ 5.4% | | Finance Costs | 1,284,152 | ▼ 17.7% | [Liquidity, Financial Resources and Capital Structure](index=22&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) As of period-end, cash and cash equivalents increased to CNY 48.74 billion, with strong net cash inflow from operating activities at CNY 22.31 billion, while capital expenditures surged 77.9% to CNY 9.89 billion, and the asset-liability ratio slightly rose to 49.1% with optimized debt structure - Net cash inflow from operating activities was approximately **CNY 22.31 billion**, with cash and cash equivalents increasing by **8.9%** from the beginning of the year to **CNY 48.74 billion**[50](index=50&type=chunk)[51](index=51&type=chunk) - Capital expenditures were approximately **CNY 9.89 billion**, a **77.9%** year-on-year increase, primarily for projects such as the Yunnan Green Aluminum Innovation Industrial Park, lightweight materials base, and new energy initiatives[51](index=51&type=chunk) - The asset-liability ratio was approximately **49.1%**, a slight increase from **48.2%** at the beginning of the year, with total liabilities of approximately **CNY 112.14 billion**[57](index=57&type=chunk) - Debt is primarily denominated in RMB, accounting for approximately **79.1%** of total debt; foreign currency debt accounts for approximately **20.9%**[59](index=59&type=chunk) [Outlook](index=27&type=section&id=Outlook) Looking ahead, despite global economic challenges, China's economy shows strong resilience, and the Group will focus on high-quality aluminum industry development, driven by technological innovation and green transformation, to break through in high-end aluminum alloy materials, deepen applications in new strategic areas, accelerate digitalization, and optimize global industrial layout for sustainable value creation - The company will prioritize technological innovation and green transformation as core drivers, focusing on breakthroughs in **high-end aluminum alloy material research and development**[67](index=67&type=chunk) - Accelerate digital and intelligent transformation and upgrading, establish industry-leading benchmarks, and enhance the supply chain's independent and controllable capabilities[67](index=67&type=chunk) - Optimize global industrial layout, build a more resilient supply chain system, and create sustainable value for investors[67](index=67&type=chunk) [Other Company Information and Disclosures](index=26&type=section&id=Other%20Company%20Information%20and%20Disclosures) This section provides additional company information and disclosures, including details on share repurchases, debt instruments, and corporate governance practices [Share Repurchases](index=31&type=section&id=Share%20Repurchases) For the six months ended June 30, 2025, the company repurchased and cancelled 187.23 million shares for approximately HKD 2.6 billion, reflecting the Board's confidence in the company's long-term strategy and growth, with one repurchase tranche synchronized with convertible bond issuance Share Repurchase Details for H1 2025 | Month of Repurchase | Number of Shares | Total Consideration Paid (HKD) | | :--- | :--- | :--- | | January 2025 | 11,294,000 | 134,428,179.50 | | February 2025 | 355,500 | 4,544,055.90 | | March 2025 | 45,230,500 | 693,738,605.60 | | April 2025 | 88,928,000 | 1,201,466,599.10 | | May 2025 | 41,421,500 | 577,322,388.10 | | **Total** | **187,229,500** | **2,611,499,828.20** | - The Board believes that the share repurchases reflect confidence in the company's long-term strategy and growth, and are in the overall best interests of the company and its shareholders[77](index=77&type=chunk) [Debt Instruments](index=32&type=section&id=Debt%20Instruments) The company adjusted the conversion price of its 2021 convertible bonds to HKD 5.68 per share due to dividends, issued new USD 300 million convertible bonds due 2030 with a 1.50% coupon, and actively managed its debt portfolio by issuing USD 600 million in senior unsecured notes and redeeming USD 300 million in maturing notes - Due to the declaration of the **2024** final dividend, the conversion price of the **2021** convertible bonds was adjusted from **HKD 6.14** per share to **HKD 5.68** per share[83](index=83&type=chunk) - In March **2025**, convertible bonds with a total principal amount of **USD 300 million**, maturing in **2030**, and bearing an interest rate of **1.50%** were issued[85](index=85&type=chunk) - During the period, two tranches of senior unsecured notes totaling **USD 600 million** were issued, and a **USD 300 million** maturing note was fully redeemed[87](index=87&type=chunk)[91](index=91&type=chunk) [Corporate Governance](index=31&type=section&id=Corporate%20Governance) The Audit Committee reviewed the interim results, confirming compliance with accounting standards, though a deviation exists where Mr. Zhang Bo serves as both Chairman and CEO, which the Board deems beneficial for stable business development given his extensive experience - The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's interim results for the six months ended **June 30, 2025**[76](index=76&type=chunk) - There is a deviation from the Corporate Governance Code: the roles of Chairman and Chief Executive Officer are not segregated, both held by **Mr. Zhang Bo**[92](index=92&type=chunk) - The Board believes that having the same individual serve as Chairman and Chief Executive Officer is beneficial for the Group's continuous and stable business development, and the current Board composition ensures a balance of power[92](index=92&type=chunk)

Company Information and Financial Summary [Company Overview](index=1&type=section&id=Company%20Overview) FireRock Holdings Limited (Stock Code: 1909) announced its interim results for the six months ended June 30, 2025, with its primary business in mobile game development, licensing, and publishing - FireRock Holdings Limited (Stock Code: 1909) announced its interim results for the six months ended June 30, 2025[2](index=2&type=chunk)[4](index=4&type=chunk) - The Group is principally engaged in the development, licensed operation, and publishing of mobile device games, and self-operates games in overseas markets[10](index=10&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the six months ended June 30, 2025, the Group's revenue increased by 15.7% to HK$72.9 million, while gross profit grew by 6.1% to HK$55.4 million, but the period shifted from a profit to a loss of HK$6.7 million Key Financial Data Comparison for H1 2025 | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 72.9 | 63.0 | +15.7% | | Gross Profit | 55.4 | 52.2 | +6.1% | | (Loss)/Profit for the Period | (6.7) | 14.1 | Profit to Loss | | Interim Dividend | Nil | Nil | - | Condensed Consolidated Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's revenue increased to HK$72,919 thousand, but an impairment loss on intangible assets and higher income tax expense led to a loss of HK$6,673 thousand Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 72,919 | 62,999 | | Gross Profit | 55,398 | 52,216 | | Other income | 659 | 238 | | Fair value change of financial assets at FVTPL | (232) | 6,468 | | Impairment loss on intangible assets | (10,803) | — | | Promotion costs | (19,960) | (26,553) | | Administrative expenses | (23,057) | (14,216) | | Profit before income tax | 1,961 | 18,109 | | Income tax expense | (8,634) | (4,046) | | (Loss)/Profit for the period | (6,673) | 14,063 | | (Loss)/Profit for the period attributable to owners of the Company | (18,242) | 6,766 | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets and net assets decreased, mainly due to a reduction in intangible assets, while net current assets remained stable with a slight decrease from year-end 2024 Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current assets | 49,079 | 57,687 | | Current assets | 71,018 | 76,989 | | Current liabilities | 16,826 | 19,865 | | Net current assets | 54,192 | 57,124 | | Net assets | 102,577 | 113,994 | | Total equity attributable to owners of the Company | 96,929 | 112,299 | [Notes to the Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section details the basis of preparation, segment information, revenue composition, expense breakdowns, balance sheet item changes, and events after the reporting period [General Information](index=5&type=section&id=General%20Information) FireRock Holdings Limited, incorporated in the Cayman Islands, is primarily engaged in mobile game development, licensed operation, and publishing, with self-operated games in overseas markets - The Company is an investment holding company incorporated in the Cayman Islands, primarily engaged in mobile game development, licensed operation, and publishing, with self-operated games in overseas markets[10](index=10&type=chunk) [Basis of Preparation](index=5&type=section&id=Basis%20of%20Preparation) The interim financial statements are prepared in accordance with Hong Kong Financial Reporting Standards on a historical cost basis and do not early adopt new and revised standards not yet in effect - The interim condensed financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA and have been reviewed by the Audit Committee[11](index=11&type=chunk)[12](index=12&type=chunk) - The statements are prepared on a historical cost basis, modified for the revaluation of certain financial assets held at fair value[14](index=14&type=chunk) - The Group has not early adopted the new and revised HKFRSs that have been issued but are not yet effective[13](index=13&type=chunk) [Segment Information](index=6&type=section&id=Segment%20Information) The Group has two reportable segments, Game and Software Development and Publishing, and Game Operation and Publishing, with the latter contributing the vast majority of revenue, all from the Asia-Pacific region [Reportable Segments](index=6&type=section&id=Reportable%20Segments) The Group's two reportable segments are Game and Software Development and Publishing, and Game Operation and Publishing, with the latter contributing all external revenue of HK$72,919 thousand in H1 2025 - The Group has two reportable segments: Game and Software Development and Publishing, and Game Operation and Publishing[15](index=15&type=chunk) Revenue from Customers by Segment | Segment | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Game and Software Development and Publishing | — | 22 | | Game Operation and Publishing | 72,919 | 62,977 | | **Total** | **72,919** | **62,999** | Reportable Segment (Loss)/Profit | Segment | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Game and Software Development and Publishing | (34,938) | (6,661) | | Game Operation and Publishing | 34,514 | 21,556 | | **Total** | **(424)** | **14,895** | [Revenue from Customers by Geographical Market and Timing of Revenue Recognition](index=9&type=section&id=Revenue%20from%20Customers%20by%20Geographical%20Market%20and%20Timing%20of%20Revenue%20Recognition) All of the Group's customer revenue originates from the Asia-Pacific region and is recognized at a point in time, with non-current assets primarily located in Singapore, China, and Thailand Revenue by Major Geographical Market | Geographical Market | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Asia-Pacific | 72,919 | 62,999 | Revenue by Timing of Revenue Recognition | Timing of Revenue Recognition | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | At a point in time | 72,919 | 62,999 | Non-current Assets by Geography | Geography | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Thailand | 1,616 | 1,745 | | China | 4,990 | 962 | | Hong Kong | 6 | 535 | | Singapore | 13,938 | 25,867 | | Indonesia | 31 | — | | **Total** | **20,581** | **29,109** | [Information about Major Licensed Operators](index=9&type=section&id=Information%20about%20Major%20Licensed%20Operators) For the six months ended June 30, 2025, no single customer accounted for 10% or more of the Group's total revenue - For the six months ended June 30, 2025, no revenue from an individual customer accounted for 10% or more of the Group's total revenue[23](index=23&type=chunk) [Revenue and Other Income](index=10&type=section&id=Revenue%20and%20Other%20Income) The Group's revenue, primarily from game operation and publishing, reached HK$72,919 thousand in H1 2025, while other income grew significantly due to increased interest income and net exchange gains Breakdown of Revenue and Other Income | Item | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | **Revenue** | | | | Game and Software Development and Publishing | — | 22 | | Game Operation and Publishing | 72,919 | 62,977 | | **Total Revenue** | **72,919** | **62,999** | | **Other Income** | | | | Interest income | 136 | 51 | | Government grants | 25 | — | | Net exchange (loss)/gain | 348 | (65) | | Others | 150 | 252 | | **Total Other Income** | **659** | **238** | [(Loss)/Profit Before Income Tax](index=10&type=section&id=(Loss)%2FProfit%20Before%20Income%20Tax) Profit before income tax fell sharply from HK$18,109 thousand in H1 2024 to HK$1,961 thousand in H1 2025, mainly due to impairment and amortization of intangible assets and higher staff costs Components of (Loss)/Profit Before Income Tax | Item | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 590 | 576 | | Depreciation of right-of-use assets | 654 | 444 | | Amortisation of intangible assets | 2,701 | — | | Impairment of intangible assets | 10,803 | — | | Legal and professional fees | 2,099 | 3,666 | | Employee costs (including directors' emoluments) | 23,760 | 8,279 | [Income Tax Expense](index=11&type=section&id=Income%20Tax%20Expense) The Group's income tax expense increased from HK$4,046 thousand in H1 2024 to HK$8,634 thousand in H1 2025, primarily due to higher corporate income tax and dividend withholding tax in Thailand Breakdown of Income Tax Expense | Item | H1 2025 (HK$ Thousand) | H1 2024 (HK$ Thousand) | | :--- | :--- | :--- | | China Corporate Income Tax | 59 | — | | Thailand Corporate Income Tax | 7,098 | 2,597 | | Dividend Withholding Tax | 1,477 | 1,449 | | **Total** | **8,634** | **4,046** | [Dividends](index=11&type=section&id=Dividends) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the same period last year - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (H1 2024: Nil)[27](index=27&type=chunk) [(Loss)/Earnings Per Share](index=11&type=section&id=(Loss)%2FEarnings%20Per%20Share) For the six months ended June 30, 2025, the loss attributable to owners of the Company resulted in a basic and diluted loss per share of 9.50 HK cents, compared to earnings per share of 3.52 HK cents last year (Loss)/Earnings Per Share | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company | (HK$18,242,000) | HK$6,766,000 | | Weighted average number of ordinary shares issued | 192,000,000 shares | 192,000,000 shares | | Basic and diluted (loss)/earnings per share | (9.50) HK cents | 3.52 HK cents | - The calculation of earnings per share has been adjusted to reflect the share consolidation effective on March 31, 2025[28](index=28&type=chunk) [Property, Plant and Equipment](index=11&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group's additions to property, plant and equipment amounted to approximately HK$637,000, a significant increase from the same period last year Additions to Property, Plant and Equipment | Item | H1 2025 (HK$) | H1 2024 (HK$) | | :--- | :--- | :--- | | Additions to property, plant and equipment | 637,000 | 203,000 | [Intangible Assets](index=12&type=section&id=Intangible%20Assets) As of June 30, 2025, the net carrying amount of intangible assets decreased to HK$14,697 thousand, mainly due to an impairment loss of HK$10,803 thousand and amortization of HK$2,701 thousand Summary of Changes in Intangible Assets | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Net carrying amount | 14,697 | 23,538 | | Additions during the period | 3,450 | 8,788 | | Amortisation during the period | 2,701 | — | | Impairment loss during the period | 10,803 | — | [Leases](index=13&type=section&id=Leases) The Group entered into a new lease agreement in China during H1 2025, leading to an increase in total lease liabilities, with a notable rise in the portion due within one year - The Group entered into a new lease agreement in China during the first half of 2025[31](index=31&type=chunk) Analysis of Lease Liability Maturity | Maturity | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Within 1 year | 2,059 | 1,372 | | After 1 year but within 2 years | 499 | 526 | | After 2 years but within 5 years | — | 96 | | **Total present value of minimum lease payments** | **2,558** | **1,994** | [Trade Receivables](index=14&type=section&id=Trade%20Receivables) As of June 30, 2025, total trade receivables decreased to HK$12,823 thousand, mainly due to a significant reduction in receivables aged 31-60 days, with no impairment provision recognized Ageing Analysis of Trade Receivables | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 0–30 days | 10,420 | 10,504 | | 31–60 days | 1,400 | 5,818 | | 61–90 days | — | 52 | | 91–180 days | — | 126 | | 181–365 days | — | 218 | | Over 1 year | 1,003 | 1,500 | | **Total** | **12,823** | **18,218** | - Management believes there has been no significant change in credit quality and no impairment provision has been made, and the Group does not hold any collateral[33](index=33&type=chunk)[34](index=34&type=chunk) [Other Payables and Accruals](index=14&type=section&id=Other%20Payables%20and%20Accruals) As of June 30, 2025, total other payables and accruals decreased to HK$6,182 thousand, primarily due to a reduction in other tax payables Breakdown of Other Payables and Accruals | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Other payables and accruals | 4,461 | 6,194 | | Other tax payables | 1,721 | 4,129 | | **Total** | **6,182** | **10,323** | [Share Capital](index=15&type=section&id=Share%20Capital) The Company completed a share consolidation on March 31, 2025, consolidating every 20 shares of HK$0.001/12 each into 1 share of HK$0.0167 each, reducing issued shares from 3,840,000,000 to 192,000,000 Changes in Share Capital | Item | Number of Shares | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Issued and fully paid at Dec 31, 2024 & Jan 1, 2025 | 3,840,000,000 | 3,200 | | Share Consolidation | (3,648,000,000) | — | | **Issued and fully paid at June 30, 2025** | **192,000,000** | **3,200** | - The share consolidation, effective March 31, 2025, consolidated every 20 shares of HK$0.001/12 each into 1 share of HK$0.0167 each[37](index=37&type=chunk) [Events After the Reporting Period](index=15&type=section&id=Events%20After%20the%20Reporting%20Period) The placing agreement dated June 24, 2025, lapsed as its conditions were not fulfilled, and the placing did not proceed; no other significant events occurred after the reporting period - The placing agreement entered into by the Company with the placing agent has lapsed, and the placing did not proceed[38](index=38&type=chunk) - Apart from the lapse of the placing agreement, no other significant events occurred after the reporting period and up to the date of this announcement[39](index=39&type=chunk) Management Discussion and Analysis [Business Review and Prospects](index=16&type=section&id=Business%20Review%20and%20Prospects) The Group shifted from profit to loss in H1 2025 due to intangible asset impairment, new game amortization, and higher staff costs, with future plans to establish an R&D team and expand into Indonesia [Overview](index=16&type=section&id=Overview) The loss attributable to owners of the Company was approximately HK$18.2 million, mainly due to impairment of existing games, amortization of a new game, and increased staff costs - The loss attributable to owners of the Company was approximately **HK$18.2 million**, compared to a profit of approximately HK$6.8 million in the prior period[41](index=41&type=chunk) - The loss was mainly due to: (i) provision for **impairment loss on intangible assets** of certain existing games; (ii) **amortisation of intangible assets** for the new game "Gods of Mythic"; and (iii) an **increase in staff costs**[41](index=41&type=chunk) [Future Prospects](index=16&type=section&id=Future%20Prospects) The Group plans to establish an R&D team, launch games in Indonesia, and prudently consider acquisitions or investments in online projects aligned with its business interests to support growth - The Group intends to establish an R&D team and launch games in Indonesia[41](index=41&type=chunk) - The Group will prudently consider acquiring or investing in games and other online projects that align with its business interests[41](index=41&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) Revenue growth was driven by the new game "Gods of Mythic," but the gross margin declined due to new game amortization and staff cost reclassification, while impairment losses and higher administrative expenses led to a net loss [Revenue](index=16&type=section&id=Revenue) For the six months ended June 30, 2025, the Group's revenue increased by 15.7% to HK$72.9 million, driven by the mobile games "Royal World" and the newly launched "Gods of Mythic" Revenue Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Revenue | 72.9 | 63.0 | +9.9 | - The increase in revenue was mainly due to increased revenue from the mobile device game "Royal World" and the newly launched self-developed mobile device game "Gods of Mythic"[42](index=42&type=chunk) [Revenue by Geographical Market](index=17&type=section&id=Revenue%20by%20Geographical%20Market) All of the Group's revenue was generated from the Asia-Pacific region, accounting for 100% of the total, consistent with the same period last year Revenue by Geographical Market | Geography | H1 2025 (HK$ Thousand) | % of Total | H1 2024 (HK$ Thousand) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Asia-Pacific | 72,919 | 100.0 | 62,999 | 100.0 | [Direct Costs](index=17&type=section&id=Direct%20Costs) Total direct costs increased to HK$17.5 million, primarily due to a significant rise in staff costs, intangible asset amortization, and channel costs related to the launch of "Gods of Mythic" Breakdown of Direct Costs | Item | H1 2025 (HK$ Thousand) | % of Total | H1 2024 (HK$ Thousand) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Staff costs and benefits | 4,616 | 26.4 | 566 | 5.3 | | Amortisation of intangible assets | 2,701 | 15.4 | — | 0.0 | | Self-operated channel costs | 7,156 | 40.8 | 3,809 | 35.3 | | Others | 3,048 | 17.4 | 6,408 | 59.4 | | **Total** | **17,521** | **100.0** | **10,783** | **100.0** | - Staff costs and benefits increased significantly by HK$4.0 million, mainly due to the launch of the "Gods of Mythic" game during the period[45](index=45&type=chunk) - Amortisation of intangible assets of approximately HK$2.7 million was mainly attributable to the "Gods of Mythic" game, which was commercially launched in March 2025[46](index=46&type=chunk) [Gross Profit and Gross Profit Margin](index=18&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) The Group's gross profit increased to HK$55.4 million, but the gross profit margin decreased from 82.9% to 76.0% due to amortization from the new game and reclassification of staff costs Gross Profit and Gross Profit Margin Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | | :--- | :--- | :--- | | Gross Profit | 55.4 | 52.2 | | Gross Profit Margin | 76.0% | 82.9% | - The decrease in gross profit margin was mainly due to the amortisation after the launch of the "Gods of Mythic" game and the reclassification of staff costs to direct costs[48](index=48&type=chunk) [Other Income](index=18&type=section&id=Other%20Income) The Group's other income increased to HK$0.7 million, primarily due to the gain on the disposal of a motor vehicle during the reporting period Other Income Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | | :--- | :--- | :--- | | Other income | 0.7 | 0.2 | - The increase in other income was mainly due to the gain on disposal of a motor vehicle during the reporting period[49](index=49&type=chunk) [Impairment Loss on Intangible Assets](index=18&type=section&id=Impairment%20Loss%20on%20Intangible%20Assets) For the six months ended June 30, 2025, the Group recognized an impairment loss of approximately HK$10.8 million on existing games, as their operating income could not cover operating costs Impairment Loss on Intangible Assets | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | | :--- | :--- | :--- | | Impairment loss on intangible assets | 10.8 | — | - The impairment loss was due to the operating income from existing games being unable to cover operating costs in the foreseeable future[50](index=50&type=chunk) [Promotion Costs](index=19&type=section&id=Promotion%20Costs) The Group's promotion costs decreased to HK$20.0 million, a reduction of HK$6.6 million from the prior year period, mainly due to lower advertising and promotion expenses Promotion Costs Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Promotion costs | 20.0 | 26.6 | (6.6) | - The decrease in promotion costs was due to a reduction in advertising and promotion expenses[51](index=51&type=chunk) [Administrative Expenses](index=19&type=section&id=Administrative%20Expenses) The Group's administrative expenses increased to HK$23.1 million, up by HK$8.9 million from the prior year period, primarily due to higher staff costs and other office expenses Administrative Expenses Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Administrative expenses | 23.1 | 14.2 | +8.9 | - The increase in administrative expenses was mainly due to higher staff costs and other office expenses during the reporting period[52](index=52&type=chunk) [Income Tax Expense](index=19&type=section&id=Income%20Tax%20Expense) The Group's income tax expense rose to HK$8.6 million, an increase of HK$4.6 million from the prior year period, mainly due to higher revenue and profit from its Thai subsidiary Income Tax Expense Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | Change (HK$ Million) | | :--- | :--- | :--- | :--- | | Income tax expense | 8.6 | 4.0 | +4.6 | - The increase in income tax expense was mainly due to the increased revenue and profit of our Thai subsidiary[53](index=53&type=chunk) [(Loss)/Profit for the Period](index=19&type=section&id=(Loss)%2FProfit%20for%20the%20Period) The loss attributable to owners of the Company was approximately HK$18.2 million, primarily driven by impairment losses on intangible assets, amortization of a new game, and increased staff costs (Loss)/Profit Attributable to Owners of the Company | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company | (18.2) | 6.8 | - The loss was mainly due to: (i) provision for **impairment loss on intangible assets** of certain existing games; (ii) **amortisation of intangible assets** for the new game; and (iii) an **increase in staff costs**[54](index=54&type=chunk) [Liquidity and Financial Resources](index=19&type=section&id=Liquidity%20and%20Financial%20Resources) The Group funds its operations primarily through cash from operating activities and plans to use internal resources for expansion, with a slight decrease in cash reserves and a lower gearing ratio as of June 30, 2025 [Financial Policies](index=20&type=section&id=Financial%20Policies) The Group deposits its funds with commercial banks in China, Hong Kong, Thailand, Singapore, and Indonesia and has not engaged in any high-risk investments or speculative derivative transactions - The Group deposits its funds with commercial banks in China, Hong Kong, Thailand, Singapore, and Indonesia[56](index=56&type=chunk) - The Group has not engaged in any high-risk investments or speculative derivative transactions[56](index=56&type=chunk) [Cash and Cash Equivalents](index=20&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2025, cash and cash equivalents stood at HK$49.9 million, a slight decrease from HK$53.6 million at year-end 2024, denominated mainly in USD, THB, and HKD Cash and Cash Equivalents Comparison | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Cash and cash equivalents | 49.9 | 53.6 | - Cash and cash equivalents were mainly denominated in **USD (approx 45.5%)**, **THB (approx 28.7%)**, and **HKD (approx 21.4%)**[57](index=57&type=chunk) [Capital Expenditure](index=20&type=section&id=Capital%20Expenditure) For the six months ended June 30, 2025, total capital expenditure was approximately HK$0.6 million, mainly for office furniture and equipment, representing an increase from the prior year period Capital Expenditure Comparison | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | | :--- | :--- | :--- | | Total capital expenditure | 0.6 | 0.2 | - Capital expenditure was mainly for the purchase of office furniture and office equipment[58](index=58&type=chunk) [Capital Structure](index=20&type=section&id=Capital%20Structure) The Company's shares were listed on GEM in 2016 and transferred to the Main Board in 2019, with its capital structure comprising issued share capital and reserves - The Company's shares were listed on GEM of the Stock Exchange on February 18, 2016, and transferred to the Main Board on June 27, 2019[59](index=59&type=chunk) - The Company's capital structure consists of issued share capital and reserves[59](index=59&type=chunk) [Borrowings and Gearing Ratio](index=20&type=section&id=Borrowings%20and%20Gearing%20Ratio) As of June 30, 2025, the Group had no short-term or long-term borrowings, and its gearing ratio decreased to approximately 14.6% from 15.4% at year-end 2024 - As of June 30, 2025, the Group did not have any short-term or long-term borrowings[60](index=60&type=chunk) Gearing Ratio | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gearing Ratio | 14.6% | 15.4% | [Pledge of Group's Assets](index=20&type=section&id=Pledge%20of%20Group's%20Assets) As of June 30, 2025, the Group had not pledged any of its assets as collateral for bank borrowings or any other financing arrangements - As of June 30, 2025, the Group had not pledged any of its assets as collateral for bank borrowings or any other financing arrangements[61](index=61&type=chunk) [Employee Information and Remuneration Policies](index=21&type=section&id=Employee%20Information%20and%20Remuneration%20Policies) As of June 30, 2025, the Group's headcount increased to 160 employees, with total remuneration rising significantly, reflecting competitive compensation and regular training programs Number of Employees by Functional Area | Department | June 30, 2025 (No.) | % of Total | June 30, 2024 (No.) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Management | 7 | 4% | 6 | 5% | | Project Development | 67 | 41% | 41 | 34% | | Game Design | 23 | 14% | 13 | 11% | | Programming | 31 | 19% | 17 | 14% | | Art | 13 | 8% | 11 | 9% | | Project Support | 56 | 36% | 52 | 44% | | Marketing | 25 | 16% | 27 | 23% | | Licensing and Operation Support | 28 | 18% | 24 | 20% | | Information Technology | 3 | 2% | 1 | 1% | | Finance and Administration | 30 | 19% | 21 | 17% | | **Total** | **160** | **100%** | **120** | **100%** | Total Employee Remuneration | Metric | H1 2025 (HK$ Million) | H1 2024 (HK$ Million) | | :--- | :--- | :--- | | Total employee remuneration | 23.8 | 8.3 | - The Group offers competitive remuneration packages and benefits commensurate with industry practice and regularly provides various training courses for its employees[63](index=63&type=chunk)[64](index=64&type=chunk) [Material Investments, Acquisitions or Disposals](index=22&type=section&id=Material%20Investments%2C%20Acquisitions%20or%20Disposals) For the six months ended June 30, 2025, the Company had no material investments, acquisitions, or disposals of subsidiaries and associated companies - For the six months ended June 30, 2025 and 2024, the Company had no material investments, acquisitions, or disposals of subsidiaries and associated companies[65](index=65&type=chunk) [Future Plans for Material Investments or Capital Assets](index=22&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) As of the date of this announcement, the Board has not authorized any plans for material investments or additions of capital assets, other than those disclosed in this announcement - Other than as disclosed in this announcement, as at the date of this announcement, the Board had not authorised any plans for material investments or additions of capital assets[66](index=66&type=chunk) [Contingent Liabilities](index=22&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group did not have any significant contingent liabilities - As of June 30, 2025, the Group did not have any significant contingent liabilities[67](index=67&type=chunk) [Foreign Exchange Risk](index=22&type=section&id=Foreign%20Exchange%20Risk) The Group is exposed to multiple foreign exchange risks, primarily related to the USD, THB, RMB, SGD, and IDR, and currently has no hedging policy but closely monitors risks - The Group is exposed to multiple foreign exchange risks, mainly related to the US dollar, Thai baht, Renminbi, Singapore dollar, and Indonesian rupiah[68](index=68&type=chunk) - The Group currently does not have a hedging policy for foreign currency risk, but the management team closely monitors foreign exchange risks[69](index=69&type=chunk) [(Loss)/Earnings Per Share](index=23&type=section&id=(Loss)%2FEarnings%20Per%20Share) For the six months ended June 30, 2025, the basic and diluted loss per share was 9.50 HK cents, compared to earnings per share of 3.52 HK cents in the prior year period, reflecting the share consolidation (Loss)/Earnings Per Share | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | (Loss)/Earnings per share | (9.50) HK cents | 3.52 HK cents | - The calculation of earnings per share has been adjusted to reflect the share consolidation effective on March 31, 2025[70](index=70&type=chunk) [Dividends](index=23&type=section&id=Dividends) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the same period last year - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (H1 2024: Nil)[71](index=71&type=chunk) Corporate Governance and Other Information [Compliance with Listing Rules and Corporate Governance Code](index=23&type=section&id=Compliance%20with%20Listing%20Rules%20and%20Corporate%20Governance%20Code) The Group is committed to high standards of corporate governance and has complied with all code provisions of the Corporate Governance Code as set out in the Listing Rules for the period ended June 30, 2025 - The Group is committed to achieving high standards of corporate governance to safeguard interests and enhance corporate value and accountability[72](index=72&type=chunk) - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules throughout the six months ended June 30, 2025[73](index=73&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=23&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%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[74](index=74&type=chunk) [Audit Committee](index=24&type=section&id=Audit%20Committee) The Company's Audit Committee has reviewed the Group's unaudited financial statements for the six months ended June 30, 2025, and found them compliant with applicable standards and rules - The Company established an Audit Committee on January 24, 2016, chaired by Mr Tam Cheuk Yi, an independent non-executive Director[75](index=75&type=chunk) - The Audit Committee has reviewed the Group's unaudited financial statements for the six months ended June 30, 2025[75](index=75&type=chunk) - The Audit Committee considers that the preparation of the financial statements complies with applicable accounting standards, the Listing Rules, and that adequate disclosures have been made[75](index=75&type=chunk) [Publication of Interim Results and Despatch of Interim Report](index=24&type=section&id=Publication%20of%20Interim%20Results%20and%20Despatch%20of%20Interim%20Report) This announcement and the interim report will be published on the websites of the Stock Exchange and the Company, and will be despatched to shareholders in due course - This announcement will be published on the website of the Stock Exchange at www.hkexnews.hk and the Company's website at www.firerock.sg[76](index=76&type=chunk) - The interim report of the Company for the six months ended June 30, 2025 will be despatched to shareholders and published on the above websites[76](index=76&type=chunk)

[Financial Summary](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E6%A6%82%E8%A6%81) The group experienced a revenue decline due to increased competition and shifting consumer preferences, leading to an expanded loss attributable to owners Financial Summary for the Six Months Ended June 30, 2025 | Metric | H1 2025 | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue (HKD) | 873,671,000 | 1,042,746,000 | -16.2% | | Operating Costs (HKD) | 1,153,403,000 | 1,224,550,000 | -5.8% | | Fair Value Loss on Investment Properties (HKD) | 8,332,000 | 29,625,000 | -71.9% | | Loss Attributable to Owners (HKD) | 205,264,000 | 184,457,000 | +11.3% | - The group's revenue decline was primarily due to increased competition in the outdoor media business and shifting consumer preferences, resulting in reduced advertising income[4](index=4&type=chunk) [Business Overview and Outlook](index=2&type=section&id=%E6%A5%AD%E5%8B%99%E6%A6%82%E8%A6%8B%E5%8F%8A%E5%89%8D%E6%99%AF) [Core Strategy and Content Reporting](index=2&type=section&id=%E6%A0%B8%E5%BF%83%E6%88%B0%E7%95%A5%E8%88%87%E5%85%A7%E5%AE%B9%E5%A0%B1%E5%B0%8E) The company upholds its 'Phoenix for Major Events' philosophy, focusing on in-depth reporting of global hotspots and significant Chinese diplomatic activities to enhance media credibility and international influence, with its programs receiving multiple international awards - Focused on reporting global hot topics, including Chinese President's diplomatic activities, Russia-Ukraine negotiations, and China-US economic and trade consultations, demonstrating authority in major international issues coverage[5](index=5&type=chunk) - Company programs won awards at international events like the 'New York International TV & Film Festival' and 'Asian Television Awards', with the brand consistently ranked among 'Asia's Top 500 Brands' and 'China's 500 Most Valuable Brands', reflecting its prominence in media and culture[6](index=6&type=chunk) [Global Reach and Platform Layout](index=3&type=section&id=%E5%85%A8%E7%90%83%E5%82%B3%E6%92%AD%E8%88%87%E5%B9%B3%E5%8F%B0%E4%BD%88%E5%B1%80) The group reaches over 2 billion global audiences through satellite, cable, mobile internet, IPTV, and OTT, with overseas new media business growing rapidly, notably a 49% increase in YouTube subscribers during the first half Global Audience Reach | Platform | Audience Reach | | :--- | :--- | | Global Total Audience | Over 2 billion | | TV Viewers | Over 500 million | | Overseas New Media Audience | Over 200 million | | Overseas Social Media Account Users | Over 10 million | - Phoenix Satellite Television's YouTube channel subscribers grew by **49%** in the first half, ranking among the top Chinese media in Hong Kong[7](index=7&type=chunk) [Deepening Hong Kong Market Presence and Business Innovation](index=3&type=section&id=%E9%A6%99%E6%B8%AF%E5%B8%82%E5%A0%B4%E6%B7%B1%E8%80%95%E8%88%87%E6%A5%AD%E5%8B%99%E5%89%B5%E6%96%B0) The company deepens its presence in the Hong Kong market via free TV Channel 85, achieving high local recognition and rising viewership, while actively building international exchange platforms like 'Phoenix Across the Globe' and planning events such as the 'Phoenix Greater Bay Area Financial Forum' to boost global influence - Phoenix Hong Kong Channel's viewership has continuously improved since its launch on free TV Channel 85, gaining high recognition from local audiences and senior government officials[8](index=8&type=chunk) - Continuously strengthening the 'Phoenix Across the Globe' international event brand, fully participating in multiple international events like the 'World Government Summit', and actively preparing brand events such as the 'Phoenix Greater Bay Area Financial Forum' to facilitate global exchange[9](index=9&type=chunk) [Development of Media Business Platforms](index=4&type=section&id=%E6%97%97%E4%B8%8B%E5%AA%92%E9%AB%94%E6%A5%AD%E5%8B%99%E5%B9%B3%E5%8F%B0%E7%99%BC%E5%B1%95) The group's media platforms are steadily developing, with Phoenix New Media leading in user scale and activity, Phoenix Metropolis Media specializing in outdoor LED media across 320+ cities and 31 countries, and Phoenix Weekly maintaining a diversified revenue structure with nearly 60 million online users - Phoenix New Media (ifeng.com) consistently leads the industry in user scale and activity, with increased average user time and click-through rates[11](index=11&type=chunk) - Phoenix Metropolis Media's outdoor LED network comprises over **2,100** screen points, covering over **320** cities in China and **31** countries and regions overseas[12](index=12&type=chunk) - Phoenix Weekly has nearly **60 million** online users globally, including over **21 million** video users, maintaining a diversified and stable revenue structure[13](index=13&type=chunk) [Financial Performance](index=5&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE) The group's total revenue decreased by 16.2% to HKD 874 million, primarily due to reduced advertising income, resulting in an expanded loss attributable to owners and increased basic loss per share [Overall Performance Review](index=5&type=section&id=%E6%95%B4%E9%AB%94%E6%A5%AD%E7%B8%BE%E5%9B%9E%E9%A1%A7) During the reporting period, the group's total revenue decreased by 16.2% to HKD 874 million, primarily due to reduced advertising income, leading to an 11.3% expansion in loss attributable to owners to HKD 205 million, with basic loss per share at HKD 41.10 cents Consolidated Results Summary | Metric | H1 2025 (HKD Thousands) | H1 2024 (HKD Thousands) | | :--- | :--- | :--- | | Total Group Revenue | 873,671 | 1,042,746 | | Operating Loss | (279,732) | (181,804) | | Loss for the Period | (244,733) | (211,458) | | Loss Attributable to Owners of the Company | (205,264) | (184,457) | | Basic and Diluted Loss Per Share (HK Cents) | (41.10) | (36.94) | [Segmental Business Performance Analysis](index=7&type=section&id=%E5%88%86%E9%A1%9E%E6%A5%AD%E5%8B%99%E8%A1%A8%E7%8F%BE%E5%88%86%E6%9E%90) During the period, only internet media business revenue grew by 5.1% year-on-year but with expanded losses, while TV broadcasting and outdoor media revenues significantly declined by 20.0% and 42.7% respectively, with increased losses, and the real estate business turned profitable Revenue and Results by Business Segment | Business Segment | H1 2025 Revenue (HKD Thousands) | H1 2025 Segment Results (HKD Thousands) | H1 2024 Revenue (HKD Thousands) | H1 2024 Segment Results (HKD Thousands) | | :--- | :--- | :--- | :--- | :--- | | Television Broadcasting | 306,018 | (103,785) | 382,584 | (43,979) | | Internet Media | 371,475 | (35,620) | 353,308 | (28,513) | | Outdoor Media | 140,730 | (60,830) | 245,565 | (4,687) | | Property | 13,759 | 228 | 18,669 | (28,094) | | Other Businesses | 41,689 | (2,509) | 42,620 | (15,572) | - TV broadcasting revenue decreased by **20.0%** year-on-year, with segment loss expanding to approximately **HKD 104 million**[17](index=17&type=chunk) - Outdoor media business revenue significantly decreased by **42.7%** year-on-year, with segment loss expanding from **HKD 4.69 million** to approximately **HKD 60.83 million**[19](index=19&type=chunk) [Financial Position and Capital Management](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%88%87%E8%B3%87%E6%9C%AC%E7%AE%A1%E7%90%86) The group maintains a sound financial position with substantial cash reserves, though its gearing ratio increased, and the Board does not recommend an interim dividend for the period [Liquidity and Financial Resources](index=8&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) As of June 30, 2025, the group maintained a sound financial position with approximately HKD 2.16 billion in cash and short-term bank deposits, while the gearing ratio increased from 72.7% to 76.4%, with foreign exchange risks primarily in USD and RMB regularly monitored Liquidity and Gearing Position | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Short-term Bank Deposits | 約2,160,419,000HKD | 2,130,672,000HKD | | Total Outstanding Borrowings | 約166,585,000HKD | 148,670,000HKD | | Gearing Ratio | 76.4% | 72.7% | - As of June 30, 2025, and December 31, 2024, the group had no pledged assets[24](index=24&type=chunk) [Dividend Policy](index=8&type=section&id=%E8%82%A1%E6%81%AF%E6%94%BF%E7%AD%96) Considering the group's financial performance, working capital needs, and overall economic conditions, the Board does not recommend an interim dividend for the reporting period - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (2024 interim dividend: nil)[20](index=20&type=chunk) [Capital Structure](index=9&type=section&id=%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) As of June 30, 2025, the company's authorized share capital was HKD 1 billion, with 499,365,950 issued and fully paid shares, showing no change in capital structure during the reporting period, and no share options granted or exercised - As of June 30, 2025, issued and fully paid shares totaled **499,365,950**, consistent with year-end 2024[25](index=25&type=chunk) - No share options were granted or exercised under the company's share option scheme during the reporting period[26](index=26&type=chunk) [Operations and Other Matters](index=8&type=section&id=%E9%81%8B%E7%87%9F%E8%88%87%E5%85%B6%E4%BB%96%E4%BA%8B%E9%A0%85) The group reported no significant acquisitions or disposals, a slight reduction in employee count with decreased staff costs, and confirmed adequate provisions for ongoing litigations [Significant Acquisitions, Disposals, and Investments](index=8&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E3%80%81%E5%87%BA%E5%94%AE%E5%8F%8A%E6%8A%95%E8%B3%87) During the reporting period, the group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures, nor did it hold any material investments, with its equity interest in Phoenix New Media remaining at 55.04% - For the six months ended June 30, 2025, the group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures[21](index=21&type=chunk) - As of June 30, 2025, the group held no material investments (representing 5% or more of total assets)[29](index=29&type=chunk) [Staffing Situation](index=9&type=section&id=%E5%93%A1%E5%B7%A5%E6%83%85%E6%B3%81) As of June 30, 2025, the group's employee count decreased to 2,420 from 2,535 at the end of 2024, with staff costs for the reporting period declining year-on-year to approximately HKD 501 million Staffing and Cost Changes | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Employees | 2,420 | 2,535 | | **Metric** | **H1 2025** | **H1 2024** | | Staff Costs | 500,962,000HKD | 537,808,000HKD | [Contingent Liabilities and Subsequent Events](index=10&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5%E5%8F%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) The group is involved in certain litigations in its ordinary course of business, for which directors believe adequate provisions have been made, and the Board is unaware of any other material matters requiring disclosure during the reporting period up to the announcement date - For litigations arising in the ordinary course of business, directors believe adequate provisions have been made in the financial information[31](index=31&type=chunk) - The Board confirms no other material matters requiring disclosure during the reporting period and up to the announcement date[32](index=32&type=chunk) [Corporate Governance](index=11&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) The company largely adheres to its Corporate Governance Code, with minor deviations concerning the Chairman's dual role, non-rotation, and absence from the AGM, while the Audit Committee actively reviews financial and internal control matters [Corporate Governance Practices](index=11&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The company largely complied with the Corporate Governance Code during the reporting period, with three deviations: the Chairman and CEO roles are held by the same individual (Mr Xu Wei), the Chairman is not subject to rotation, and the Chairman was unable to attend the 2025 AGM due to business commitments - The roles of Chairman and Chief Executive Officer are concurrently held by Mr Xu Wei, which the Board believes is in the company's best interest[36](index=36&type=chunk)[37](index=37&type=chunk) - According to the company's articles of association, Chairman Mr Xu is not required to retire by rotation, which the Board believes benefits the leadership and execution of the company's long-term business plans[38](index=38&type=chunk)[39](index=39&type=chunk) - Chairman Mr Xu was unable to attend the Annual General Meeting on June 2, 2025, due to business schedule conflicts[40](index=40&type=chunk)[41](index=41&type=chunk) [Audit Committee](index=13&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, comprising two independent non-executive directors and one non-executive director, is responsible for reviewing interim and annual results, financial reporting, and internal controls, and has reviewed the unaudited interim financial information and results announcement for this period - The Audit Committee comprises Mr Thaddeus Thomas Beczak (Chairman), Mr Zhou Longshan, and Mr Cui Xian[43](index=43&type=chunk) - The Committee has reviewed the unaudited condensed consolidated interim financial information for the reporting period and discussed risk, internal control, and internal audit matters[43](index=43&type=chunk) [Unaudited Condensed Consolidated Interim Financial Information](index=14&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99) This section presents the group's unaudited interim financial statements, including the statements of profit or loss, comprehensive income, financial position, changes in equity, and cash flows, along with selected explanatory notes [Condensed Consolidated Statement of Profit or Loss](index=14&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the group recorded revenue of HKD 874 million, a 16.2% year-on-year decrease, with loss for the period expanding to HKD 245 million from HKD 211 million last year, and loss attributable to owners at HKD 205 million Condensed Consolidated Statement of Profit or Loss Summary | Item (HKD Thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | 873,671 | 1,042,746 | | Loss Before Income Tax | (258,005) | (219,434) | | Loss for the Period | (244,733) | (211,458) | | Loss Attributable to Owners of the Company | (205,264) | (184,457) | | Basic Loss Per Share (HK Cents) | (41.10) | (36.94) | [Condensed Consolidated Statement of Comprehensive Income](index=15&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) During the reporting period, the group's total comprehensive expense significantly narrowed to HKD 140 million from HKD 308 million in the prior year, primarily due to a HKD 105 million foreign currency translation gain, compared to a HKD 96.27 million loss in the previous period Condensed Consolidated Statement of Comprehensive Income Summary | Item (HKD Thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Loss for the Period | (244,733) | (211,458) | | Exchange Differences on Translation | 105,125 | (96,270) | | Total Comprehensive Expense for the Period | (140,132) | (307,728) | | Total Comprehensive Expense Attributable to Owners of the Company | (135,322) | (251,446) | [Condensed Consolidated Statement of Financial Position](index=16&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) As of June 30, 2025, the group's total assets were HKD 5.71 billion, total liabilities HKD 2.08 billion, and total equity HKD 3.63 billion, with both total assets and total equity slightly decreasing compared to year-end 2024 Condensed Consolidated Statement of Financial Position Summary | Item (HKD Thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | 5,712,766 | 5,832,803 | | Total Liabilities | 2,080,232 | 2,076,562 | | Total Equity | 3,632,534 | 3,756,241 | [Condensed Consolidated Statement of Changes in Equity](index=18&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) During the reporting period, equity attributable to owners decreased from HKD 2.86 billion to HKD 2.72 billion, primarily due to a HKD 205 million loss for the period, partially offset by a HKD 69.94 million increase in exchange reserves Summary of Changes in Equity Attributable to Owners of the Company | Item (HKD Thousands) | Change | | :--- | :--- | | Balance at January 1, 2025 | 2,857,060 | | Total Comprehensive Expense for the Period | (135,322) | | Total Transactions with Owners | 519 | | Balance at June 30, 2025 | 2,722,257 | [Condensed Consolidated Statement of Cash Flows](index=20&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) During the reporting period, the group's cash and cash equivalents decreased by HKD 354 million, with net cash outflows from operating, investing, and financing activities of HKD 95.2 million, HKD 162 million, and HKD 96.64 million respectively, resulting in HKD 1.70 billion cash and cash equivalents at period-end Condensed Consolidated Statement of Cash Flows Summary | Item (HKD Thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (95,202) | (11,415) | | Net Cash Used in Investing Activities | (162,404) | (59,672) | | Net Cash (Used in) / Generated from Financing Activities | (96,636) | 95,354 | | Net Decrease in Cash and Cash Equivalents | (354,242) | 24,267 | | Cash and Cash Equivalents at End of Period | 1,700,267 | 1,530,068 | [Selected Notes to the Financial Information](index=21&type=section&id=%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99%E9%99%84%E8%A8%BB%E9%81%B8%E6%91%98) The notes to the financial information detail accounting policies, financial risk management, segmental information, and specifics of financial statement items, with Note 5 identifying the group's five core operating segments: TV broadcasting, internet media, outdoor media, real estate, and other businesses - The group's five principal operating segments are: (i) Television Broadcasting; (ii) Internet Media; (iii) Outdoor Media; (iv) Property; and (v) Other Businesses[76](index=76&type=chunk) - Note 19 discloses related party transactions with major shareholder China Mobile Communications Group, primarily involving service fees and advertising sales[99](index=99&type=chunk)[101](index=101&type=chunk)

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) This section provides an overview of the supplemental announcement for the 2024 annual report, focusing on the new share option scheme [Purpose of Supplemental Announcement](index=1&type=section&id=Purpose%20of%20Supplemental%20Announcement) This announcement aims to provide supplementary information for the annual report of China Cultural Tourism Agriculture Group Co., Ltd. for the year ended December 31, 2024, particularly regarding the details of the new share option scheme - This announcement supplements the company's 2024 annual report, primarily detailing the new share option scheme[2](index=2&type=chunk) [Details of New Share Option Scheme](index=1&type=section&id=Details%20of%20New%20Share%20Option%20Scheme) This section outlines the specifics of the new share option scheme, including participant eligibility, authorization limits, and grant conditions [Eligible Participants of the Scheme](index=1&type=section&id=Eligible%20Participants%20of%20the%20Scheme) Eligible participants for the new share option scheme include employees (including executive directors, excluding non-executive and independent non-executive directors) and non-executive directors (including independent non-executive directors) of the Company, its subsidiaries, or group-held entities, with all grants subject to new requirements under Chapter 17 of the Listing Rules effective January 1, 2023 - Eligible participants include employees (including executive directors) and non-executive directors (including independent non-executive directors) of the Company, its subsidiaries, and group-held entities[2](index=2&type=chunk) - Share option grants must comply with the new requirements under Chapter 17 of the Listing Rules effective January 1, 2023[2](index=2&type=chunk) [Scheme Authorization Limit and Share Issuance](index=1&type=section&id=Scheme%20Authorization%20Limit%20and%20Share%20Issuance) The total number of ordinary shares issuable under the new share option scheme is 694,635,004 shares, representing approximately 9.04% of issued shares as of the annual report date, with no sub-limit for service providers New Share Option Scheme Authorization Limit | Metric | Value | | :--- | :--- | | Total ordinary shares issuable (2024) | 694,635,004 Shares | | Percentage of issued shares as of annual report date | Approximately 9.04% | - The scheme does not set a sub-limit for service providers[3](index=3&type=chunk) [Share Option Grant Conditions and Consideration](index=2&type=section&id=Share%20Option%20Grant%20Conditions%20and%20Consideration) Share option grantees are required to pay HKD 1.00 as consideration, with shareholder approval needed if total shares issued from option exercise exceed 1% of issued shares within 12 months, requiring related parties to abstain from voting - Grantees are required to pay **HKD 1.00** as consideration for the granted share options[5](index=5&type=chunk) - If the total number of shares issued from exercising share options within 12 months exceeds **1%** of the then-issued shares, approval from a general meeting of shareholders is required, and relevant participants and their associates must abstain from voting[4](index=4&type=chunk) [Board Information](index=2&type=section&id=Board%20Information) This section provides details on the announcement's signatory and the current composition of the Board of Directors [Announcement Signature and Board Composition](index=2&type=section&id=Announcement%20Signature%20and%20Board%20Composition) This announcement is signed by Mr. Yang Lijun, Chairman, on behalf of the Board, and lists the Board members as of the announcement date, including executive, non-executive, and independent non-executive directors - The announcement is signed by **Mr. Yang Lijun**, Chairman, on behalf of the Board[6](index=6&type=chunk) Board Member Composition (As of August 15, 2025) | Position | Name | | :--- | :--- | | Chairman and Executive Director | Mr. Yang Lijun | | Executive Director | Mr. Tam Ka Wai | | Non-executive Director | Mr. Wong Yuk Lun | | Independent Non-executive Director | Ms. Chan Hoi Ning | | Independent Non-executive Director | Ms. Tsui Wai Ting | | Independent Non-executive Director | Mr. Tsang Ho Pong | [Disclaimer](index=1&type=section&id=Disclaimer) This section presents the disclaimer from Hong Kong Exchanges and Clearing Limited regarding the announcement's content and any reliance thereon [HKEX Disclaimer](index=1&type=section&id=HKEX%20Disclaimer) Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no statement as to its accuracy or completeness, and expressly disclaim any liability for losses arising from reliance on its contents - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement and make no statement as to its accuracy or completeness[1](index=1&type=chunk) - Hong Kong Exchanges and Clearing Limited expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the contents of this announcement[1](index=1&type=chunk)

[Financial Summary](index=1&type=section&id=Financial%20Summary) [Key Financial Performance and Ratios](index=1&type=section&id=Key%20Financial%20Performance%20and%20Ratios) The company experienced significant financial decline for the six months ended June 30, 2025, with revenue down 6.0% to RMB 529.7 million and profit attributable to equity holders dropping 34.3% to RMB 21.55 million Key Financial Data for H1 2025 | Metric | For the six months ended June 30, 2025 (RMB Thousand) | For the six months ended June 30, 2024 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 529,747 | 563,585 | -6.0% | | **Gross Profit** | 154,203 | 171,722 | -10.2% | | **Gross Profit Margin** | 29.1% | 30.5% | -1.4 percentage points | | **Profit Attributable to Equity Holders** | 21,551 | 32,809 | -34.3% | | **Adjusted EBITDA** | 70,209 | 78,790 | -10.9% | | **Basic Earnings Per Share** | RMB 0.029 | RMB 0.043 | -32.6% | | **Net Cash Position** | 277,100 | (As of 2024/12/31: 415,079) | -33.2% | [Interim Condensed Consolidated Financial Information](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Information) [Interim Condensed Consolidated Statement of Profit or Loss](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) Revenue for the period decreased 6.0% to RMB 529.7 million, resulting in a 17.0% drop in operating profit to RMB 29.45 million and a 34.3% decline in profit for the period to RMB 21.55 million Summary of Interim Condensed Consolidated Statement of Profit or Loss | Item | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 529,747 | 563,585 | -6.0% | | Gross Profit | 154,203 | 171,722 | -10.2% | | Operating Profit | 29,452 | 35,476 | -17.0% | | Profit for the Period | 21,551 | 32,809 | -34.3% | | Basic Earnings Per Share | RMB 0.029 | RMB 0.043 | -32.6% | [Interim Condensed Consolidated Statement of Comprehensive Income](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for the period was RMB 26.78 million, a 17.8% year-on-year decrease, primarily due to lower profit for the period, partially offset by RMB 5.23 million in property revaluation gains - Total comprehensive income for the period was **RMB 26.78 million**, a **17.8% year-on-year decrease**, primarily due to lower profit for the period, but partially offset by **RMB 5.23 million** in property revaluation gains[7](index=7&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets decreased 13.4% to RMB 1.683 billion, total liabilities dropped 37.6% to RMB 452 million, and total equity slightly increased 1.0% to RMB 1.232 billion Key Balance Sheet Item Changes | Item | As of June 30, 2025 (RMB Thousand) | As of Dec 31, 2024 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 1,683,404 | 1,943,865 | -13.4% | | Total Liabilities | 451,865 | 724,004 | -37.6% | | Total Equity | 1,231,539 | 1,219,861 | +1.0% | | Cash and Bank Balances | 427,201 | 587,546 | -27.3% | | Inventories | 91,809 | 129,174 | -28.9% | | Accounts and Bills Payable | 155,925 | 316,148 | -50.7% | [Interim Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) The company experienced a significant deterioration in cash flow, with net cash outflow from operating activities of RMB 107 million and a net decrease in cash and cash equivalents of RMB 70.02 million Summary of Cash Flow Statement | Item | H1 2025 (RMB Thousand) | H1 2024 (RMB Thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (107,002) | 42,404 | | Net Cash from Investing Activities | 74,447 | (80,359) | | Net Cash Used in Financing Activities | (37,468) | (20,432) | | **Net Decrease in Cash and Cash Equivalents** | **(70,023)** | **(58,387)** | [Management Discussion and Analysis](index=33&type=section&id=Management%20Discussion%20and%20Analysis) [Industry Environment and Business Review](index=33&type=section&id=Industry%20Environment%20and%20Business%20Review) The company's H1 2025 performance was impacted by intense market competition and channel shifts, resulting in a 6.0% revenue decrease to RMB 529.7 million and a 34.3% net profit decline to RMB 21.6 million - The industry faces rapid development of emerging casual snack chain channels, impacting traditional channels, alongside increased consumer price sensitivity and intensified market competition[79](index=79&type=chunk) - The **6.0% revenue decrease** was primarily due to reduced sales from traditional channels, partially offset by increased sales to casual food chains, OEM manufacturing, and export businesses[81](index=81&type=chunk) - The decline in net profit was influenced by three factors: (i) decreased gross profit due to lower revenue; (ii) a one-time gain of **RMB 5.5 million** from the disposal of the Hubei Xiantao production base; and (iii) a one-time impairment loss of **RMB 5.4 million** from the termination of the Hubei Xiaogan construction project[82](index=82&type=chunk) [Segment Performance](index=35&type=section&id=Segment%20Performance) Segment performance was mixed, with jelly products revenue down 6.6% and gross margin declining, while seasoning products saw a 17.6% revenue decrease but improved gross margin, and candy and other products grew 0.7% Sales and Gross Profit Performance by Business Segment (H1 2025) | Business Segment | Sales (RMB Million) | Year-on-Year Change | Gross Profit (RMB Million) | Gross Profit Margin | Gross Profit Margin Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Jelly Products | 316.4 | -6.6% | 92.2 | 29.1% | -2.3 ppt | | Puffed Products | 149.0 | -2.9% | 43.3 | 29.1% | +0.1 ppt | | Seasoning Products | 34.2 | -17.6% | 12.5 | 36.5% | +0.9 ppt | | Candy and Others | 30.2 | +0.7% | 6.2 | 20.6% | +0.2 ppt | [Cost and Expense Analysis](index=37&type=section&id=Cost%20and%20Expense%20Analysis) The company effectively controlled costs, with distribution and selling expenses decreasing 4.6% to RMB 64.3 million and administrative expenses falling 3.2% to RMB 66.5 million - Distribution and selling expenses decreased by **4.6%**, primarily due to reduced employee bonuses and transportation costs in line with lower sales[89](index=89&type=chunk) - Administrative expenses decreased by **3.2%**, mainly due to a combined **RMB 2.5 million** reduction in depreciation of property, plant, and equipment and property taxes[90](index=90&type=chunk) [Strategic Development and Product Development](index=39&type=section&id=Strategic%20Development%20and%20Product%20Development) The company focuses on product innovation and upgrades to align with healthy consumption trends, launching new products in jelly and puffed snack categories and offering customized seasoning solutions - Product development focuses on meeting healthy, nutritious, and delicious consumption trends, such as launching non-fried, trans-fat-free "Seaweed Crispy Fruit" puffed snacks[95](index=95&type=chunk)[96](index=96&type=chunk) - The seasoning product business will continue to provide customized products and services to catering chains and supply chain clients, seeking growth opportunities in the industrialization of catering[96](index=96&type=chunk) [Promotion, Marketing and Channel Expansion](index=40&type=section&id=Promotion%2C%20Marketing%20and%20Channel%20Expansion) The company is actively transforming its sales channels by leveraging social media, expanding into emerging retail formats, and growing export and OEM businesses to offset traditional channel declines - The company is shifting from traditional to emerging channels, focusing on expanding into casual snack brand stores, convenience stores, and campus stores, achieving significant sales growth through these new channels[100](index=100&type=chunk) - E-commerce strategy has been adjusted to reduce sales of low-margin products and increase the proportion of high-margin self-produced products to enhance overall profitability[100](index=100&type=chunk) - The company is actively expanding export trade and OEM manufacturing businesses, successfully acquiring new international clients and achieving continuous growth in OEM sales during the reporting period[101](index=101&type=chunk) [Future Outlook and Strategies](index=43&type=section&id=Future%20Outlook%20and%20Strategies) The company's future strategy centers on product innovation, expanding sales channels, optimizing production, enhancing internal management through digitalization, and seeking synergistic investment opportunities for long-term growth - Core future strategies include: * **Product Innovation**: Adhering to a multi-category and high cost-performance strategy, optimizing the product portfolio * **Channel Expansion**: Consolidating existing networks and actively developing new channels such as casual snack brand stores and catering * **Production Optimization**: Improving production processes, enhancing efficiency, and moving towards green production * **Management Enhancement**: Strengthening digital transformation to improve operational efficiency * **Strategic Investment**: Seeking investment opportunities with synergistic effects to the core business[105](index=105&type=chunk)[108](index=108&type=chunk) [Other Financial and Corporate Information](index=44&type=section&id=Other%20Financial%20and%20Corporate%20Information) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a robust net cash position of RMB 277 million as of June 30, 2025, with an improved current ratio of 1.7 times, despite a decrease in net cash due to repayment of bills payable Liquidity Indicators | Metric | As of June 30, 2025 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Cash and Bank Balances | RMB 427 million | RMB 588 million | | Bank Loans | RMB 150 million | RMB 172 million | | **Net Cash Position** | **RMB 277 million** | **RMB 415 million** | | Net Current Assets | RMB 235 million | RMB 182 million | | Current Ratio | 1.7 times | 1.3 times | [Human Resources and Foreign Exchange Risk](index=46&type=section&id=Human%20Resources%20and%20Foreign%20Exchange%20Risk) The group maintained approximately 2,400 employees with a slight increase in benefit expenses, and faced minimal foreign exchange risk due to predominantly RMB-denominated domestic operations - Employee count remained stable at approximately **2,400**, with total employee benefit expenses of **RMB 99.1 million**, a slight year-on-year increase[113](index=113&type=chunk) - Foreign exchange risk is minimal, with primary operations in China and functional currency as RMB, recording a foreign exchange loss of **RMB 0.8 million** during the period[114](index=114&type=chunk) [Dividend Policy](index=47&type=section&id=Dividend%20Policy) The Board of Directors decided not to declare an interim dividend for the six months ended June 30, 2025, consistent with the prior year's policy - The Board of Directors did not declare an interim dividend for the six months ended June 30, 2025[115](index=115&type=chunk) [Corporate Governance and Compliance](index=47&type=section&id=Corporate%20Governance%20and%20Compliance) The company confirmed compliance with corporate governance codes and the Model Code for Securities Transactions by Directors, with interim results reviewed by the Audit Committee and external auditor - The company confirmed compliance with all provisions of the Corporate Governance Code during the reporting period[116](index=116&type=chunk) - The interim results have been reviewed by the Audit Committee and the company's auditor[121](index=121&type=chunk)

2025 Interim Results Announcement [Performance and Business Highlights](index=1&type=section&id=Performance%20and%20Business%20Highlights) Guangdong Yueyun Transportation Co., Ltd. reported a 3% year-on-year increase in H1 2025 operating revenue to RMB 3,770,028 thousand, with net profit slightly down 1% but net profit attributable to parent company shareholders up 3% to RMB 142,644 thousand, and no interim dividend proposed 2025 H1 Performance Summary (RMB '000) | Indicator | As of June 30, 2025 (RMB '000) | As of June 30, 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 3,770,028 | 3,674,663 | 3% | | Net Profit | 134,414 | 135,604 | (1%) | | Net Profit Attributable to Parent Company Shareholders | 142,644 | 138,669 | 3% | | Basic Earnings Per Share | RMB 0.18 | RMB 0.17 | 3% | | Diluted Earnings Per Share | RMB 0.18 | RMB 0.17 | 3% | - The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2025[3](index=3&type=chunk) [Report Notes](index=2&type=section&id=Report%20Notes) This announcement presents the unaudited consolidated interim results for Guangdong Yueyun Transportation Co., Ltd. and its subsidiaries for the six months ended June 30, 2025, reviewed by the Audit and Corporate Governance Committee and Lixin Certified Public Accountants - This interim results report has been reviewed by the Company's Audit and Corporate Governance Committee and Lixin Certified Public Accountants (Special General Partnership)[4](index=4&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents the consolidated balance sheet and income statement as of June 30, 2025, showing a decrease in total assets and liabilities, a slight increase in owner's equity, revenue growth, and a slight decline in net profit with attributable net profit increasing [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, total assets decreased by 3.25% to RMB 8,440,741 thousand, total liabilities decreased by 5.66% to RMB 5,771,581 thousand, and total owner's equity increased by 2.43% to RMB 2,669,160 thousand, with an increase in current liabilities and a significant decrease in non-current liabilities Consolidated Balance Sheet Key Data (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 8,440,741,072.68 | 8,724,059,777.83 | (3.25%) | | Total Current Assets | 2,706,704,677.29 | 2,666,605,098.63 | 1.50% | | Total Non-current Assets | 5,734,036,395.39 | 6,057,454,679.20 | (5.34%) | | Total Liabilities | 5,771,581,142.61 | 6,118,199,172.56 | (5.66%) | | Total Current Liabilities | 2,941,349,352.58 | 2,725,484,608.63 | 7.92% | | Total Non-current Liabilities | 2,830,231,790.03 | 3,392,714,563.93 | (16.58%) | | Total Owner's Equity | 2,669,159,930.07 | 2,605,860,605.27 | 2.43% | [Consolidated Income Statement](index=6&type=section&id=Consolidated%20Income%20Statement) For H1 2025, total operating revenue grew 3% year-on-year to RMB 3,770,028 thousand, net profit slightly decreased 1% to RMB 134,414 thousand, while net profit attributable to parent company shareholders increased 3% to RMB 142,644 thousand, and after-tax net other comprehensive income significantly improved from negative to positive Consolidated Income Statement Key Data (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 3,770,028,082.54 | 3,674,662,696.59 | 3.00% | | Total Operating Costs | 3,771,025,108.71 | 3,675,818,805.95 | 2.60% | | Operating Profit | 175,802,407.95 | 189,753,485.07 | (7.35%) | | Total Profit | 175,618,960.02 | 190,935,899.71 | (8.02%) | | Net Profit | 134,413,582.58 | 135,603,731.44 | (0.88%) | | Net Profit Attributable to Parent Company Shareholders | 142,643,705.10 | 138,669,235.05 | 2.87% | | After-tax Net Other Comprehensive Income | 8,638,035.36 | (6,201,100.27) | 239.29% | | Total Comprehensive Income | 143,051,617.94 | 129,402,631.17 | 10.55% | | Basic Earnings Per Share (RMB/share) | 0.18 | 0.17 | 5.88% | | Diluted Earnings Per Share (RMB/share) | 0.18 | 0.17 | 5.88% | [Notes to Financial Statements](index=8&type=section&id=Notes%20to%20Financial%20Statements) This section details the basis of financial statement preparation, changes in consolidation scope, composition and changes in major asset and liability items, specific details of profit and loss items, government grants, leases, and segment information [1. Basis of Preparation of Financial Statements](index=8&type=section&id=1.%20Basis%20of%20Preparation%20of%20Financial%20Statements) These interim financial statements are prepared in accordance with PRC Accounting Standard No. 32 and applicable disclosure provisions of the HKEX Listing Rules and Hong Kong Companies Ordinance, on a going concern basis - These interim financial statements are prepared in accordance with the requirements of PRC Accounting Standard No. 32 – Interim Financial Reporting, issued by the Ministry of Finance of the People's Republic of China[12](index=12&type=chunk) - These interim financial statements comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the applicable disclosure requirements of the Hong Kong Companies Ordinance[12](index=12&type=chunk) - These interim financial statements are prepared on a going concern basis[14](index=14&type=chunk) [2. Changes in Consolidation Scope](index=8&type=section&id=2.%20Changes%20in%20Consolidation%20Scope) The Group's consolidation scope changed during the period, including the loss of control over subsidiaries due to disposal of investments (Zhuhai Gongyun, Guangzhou Zengcheng, Guangzhou Yueyun Auto Transport) and the establishment of two new subsidiaries (Guangdong Leyi Commercial and Guangdong Tongyi Commercial Development) Disposal of Investments in Subsidiaries Resulting in Loss of Control | Subsidiary Name | Equity Disposal Price (RMB) | Equity Disposal Ratio (%) | Date of Loss of Control | Fair Value of Remaining Equity at Date of Loss of Control (RMB) | | :--- | :--- | :--- | :--- | :--- | | Zhuhai Gongyun Auto Passenger Transport Station Co., Ltd. | 25,096,100.00 | 100.00 | February 17, 2025 | N/A | | Guangzhou Zengcheng Auto Passenger Transport Station Co., Ltd. | – | 15.00 | May 22, 2025 | 11,701,216.79 | | Guangzhou Yueyun Auto Transport Co., Ltd. | 250,400.00 | 18.00 | May 22, 2025 | 459,066.67 | New Subsidiaries Established This Year | Company Name | Date of Establishment | Registered Capital (million RMB) | Shareholding Ratio (%) | | :--- | :--- | :--- | :--- | | Guangdong Leyi Commercial Co., Ltd. | March 14, 2025 | 40 | 95.56 | | Guangdong Tongyi Commercial Development Co., Ltd. | March 14, 2025 | 10 | 95.56 | [3. Accounts Receivable](index=9&type=section&id=3.%20Accounts%20Receivable) As of June 30, 2025, total accounts receivable increased by 10.08% to RMB 284,903,739.33, with the largest portion being current within 3 months, and bad debt provisions increasing due to group-based provisions Accounts Receivable by Age (RMB) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 3 months (inclusive) | 163,010,938.61 | 131,192,645.97 | | 3 to 6 months (inclusive) | 53,334,892.47 | 38,340,384.58 | | 6 months to 1 year (inclusive) | 49,392,132.29 | 82,330,921.47 | | 1 to 2 years (inclusive) | 34,481,038.71 | 19,113,279.43 | | 2 to 3 years (inclusive) | 11,252,464.50 | 10,651,170.50 | | Over 3 years | 28,701,831.18 | 25,491,579.91 | | Subtotal | 340,173,297.76 | 307,119,981.86 | | Less: Bad Debt Provisions | 55,269,558.43 | 48,298,900.83 | | Total | 284,903,739.33 | 258,821,081.03 | Movement in Bad Debt Provisions (RMB) | Category | December 31, 2024 | Recognized in P&L for the Period | Write-offs | Disposal of Subsidiaries | Exchange Difference on Foreign Currency Financial Statements | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Bad debt provisions recognized individually | 3,825,180.63 | (100,697.89) | – | 202,367.32 | – | 3,522,115.42 | | Bad debt provisions recognized by portfolio | 44,473,720.20 | 9,353,023.45 | 438,120.23 | 1,639,601.98 | (1,578.43) | 51,747,443.01 | | Total | 48,298,900.83 | 9,252,325.56 | 438,120.23 | 1,841,969.30 | (1,578.43) | 55,269,558.43 | [4. Fixed Assets](index=12&type=section&id=4.%20Fixed%20Assets) As of June 30, 2025, the carrying value of fixed assets decreased by 6.70% to RMB 1,827,695,854.58, primarily due to disposal of subsidiaries, write-offs or disposals, and depreciation, with a significant reduction in transportation equipment Fixed Assets Carrying Value (RMB) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fixed Assets | 1,827,695,854.58 | 1,959,016,114.87 | | Total | 1,827,695,854.58 | 1,959,016,114.87 | - The original cost of fixed assets decreased by **RMB 317,631,941.10** during the period, mainly due to disposal of subsidiaries, write-offs or disposals[26](index=26&type=chunk) - Accumulated depreciation increased by **RMB 168,969,115.08** and decreased by **RMB 283,992,917.10** during the period, mainly due to disposal of subsidiaries, write-offs or disposals[26](index=26&type=chunk) [5. Right-of-Use Assets](index=15&type=section&id=5.%20Right-of-Use%20Assets) As of June 30, 2025, the carrying value of right-of-use assets decreased by 6.46% to RMB 2,160,909,849.74, mainly due to disposal of subsidiaries, disposals or expirations, and depreciation, with significant reductions in land leases and transportation equipment Right-of-Use Assets Carrying Value (RMB) | Item | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | | :--- | :--- | :--- | | Buildings | 2,138,612,036.84 | 2,177,495,677.16 | | Land Leases | 22,297,812.90 | 52,101,193.65 | | Transportation Equipment | – | 80,546,599.70 | | Total | 2,160,909,849.74 | 2,310,143,470.51 | - The original cost of right-of-use assets decreased by **RMB 298,321,007.91** during the period, mainly due to disposal of subsidiaries and disposals or expirations[29](index=29&type=chunk) - Accumulated depreciation increased by **RMB 105,994,331.81** and decreased by **RMB 200,269,856.07** during the period, mainly due to disposal of subsidiaries and disposals or expirations[29](index=29&type=chunk) [6. Intangible Assets](index=16&type=section&id=6.%20Intangible%20Assets) As of June 30, 2025, the carrying value of intangible assets decreased by 9.38% to RMB 559,541,405.26, primarily due to disposal of subsidiaries, amortization, and disposals, with land use rights and franchise rights being the largest components Intangible Assets Carrying Value (RMB) | Item | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | | :--- | :--- | :--- | | Land Use Rights | 445,320,715.29 | 450,795,055.34 | | Software Use Rights | 30,281,788.32 | 33,056,369.77 | | Passenger Transport Licenses and Service Franchise Rights | 40,138,895.60 | 40,759,057.93 | | Bridge and Road Toll Rights and Operating Rights | 17,123,512.72 | 62,812,823.89 | | Comprehensive Operating Income Rights and Trademark Rights | 25,743,230.18 | 28,797,022.06 | | Other | 933,263.15 | 1,259,368.13 | | Total | 559,541,405.26 | 617,479,697.12 | - The original cost of intangible assets decreased by **RMB 65,277,102.35** during the period, mainly due to disposal of subsidiaries and disposals[31](index=31&type=chunk) - Accumulated amortization increased by **RMB 19,117,441.50** and decreased by **RMB 23,701,821.49** during the period, mainly due to disposal of subsidiaries and disposals[31](index=31&type=chunk) [7. Short-term Borrowings](index=18&type=section&id=7.%20Short-term%20Borrowings) As of June 30, 2025, total short-term borrowings decreased by 13.52% to RMB 318,699,750.02, with credit borrowings being the largest component, and some subsidiaries having overdue short-term borrowings totaling RMB 108,130,000.00 Classification of Short-term Borrowings (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Pledged Borrowings | 8,000,000.00 | 12,700,000.00 | (37.01%) | | Mortgaged Borrowings | 116,860,000.00 | 119,610,648.34 | (2.30%) | | Pledged and Mortgaged Borrowings | – | 7,600,000.00 | (100.00%) | | Pledged and Guaranteed Borrowings | 13,131,750.02 | 13,800,000.00 | (4.84%) | | Credit Borrowings | 180,708,000.00 | 214,839,500.00 | (15.89%) | | Total | 318,699,750.02 | 368,550,148.34 | (13.52%) | - As of June 30, 2025, subsidiaries Heyuan Yueyun Auto Transport Co., Ltd. and Shanwei Yueyun Auto Transport Co., Ltd. had overdue short-term borrowings totaling **RMB 108,130,000.00**[34](index=34&type=chunk) [8. Accounts Payable](index=19&type=section&id=8.%20Accounts%20Payable) As of June 30, 2025, total accounts payable decreased by 2.32% to RMB 660,377,112.83, with construction progress payments and service area concession fees being significant, and a notable increase in accounts aged 1 to 2 years, including significant overdue construction payments Accounts Payable by Nature (RMB) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Payables for Material Purchases | 84,503,811.42 | 82,001,906.93 | | Freight Payables | 62,405,691.02 | 62,736,080.67 | | Vehicle Purchase Payables | 38,976,100.92 | 42,833,590.92 | | Construction Progress Payments | 217,210,895.15 | 229,785,343.99 | | Service Area Concession Fees | 188,628,662.33 | 147,723,720.64 | | Transport Fuel Payables | 11,121,202.82 | 19,256,129.09 | | Labor Service Fees | 7,526,920.08 | 11,574,063.91 | | Other | 50,003,829.09 | 80,169,038.43 | | Total | 660,377,112.83 | 676,079,874.58 | Accounts Payable Ageing Analysis (RMB) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 year (inclusive) | 411,970,243.37 | 468,885,160.18 | | 1 to 2 years (inclusive) | 139,264,105.47 | 66,825,658.78 | | 2 to 3 years (inclusive) | 32,394,326.22 | 30,616,021.41 | | Over 3 years | 76,748,437.77 | 109,753,034.21 | | Total | 660,377,112.83 | 676,079,874.58 | Significant Accounts Payable Over One Year (RMB) | Item | June 30, 2025 | Reason for Unpaid or Carried Forward | | :--- | :--- | :--- | | Guangxi Construction Engineering Group First Construction Engineering Co., Ltd. | 19,366,972.49 | Construction payment unsettled | | Guangdong Wuhua Erjian Engineering Co., Ltd. | 12,853,284.24 | Construction payment unsettled | | Total | 32,220,256.73 | | [9. Non-current Liabilities Due Within One Year](index=20&type=section&id=9.%20Non-current%20Liabilities%20Due%20Within%20One%20Year) As of June 30, 2025, non-current liabilities due within one year significantly increased by 47.37% to RMB 745,410,537.00, primarily driven by a nearly threefold increase in long-term borrowings due within one year Non-current Liabilities Due Within One Year (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Long-term Borrowings Due Within One Year | 452,758,451.40 | 152,847,526.21 | 196.22% | | Long-term Payables Due Within One Year | 125,749,979.83 | 153,959,092.13 | (18.32%) | | Lease Liabilities Due Within One Year | 166,902,105.77 | 199,019,728.66 | (16.04%) | | Total | 745,410,537.00 | 505,826,347.00 | 47.37% | [10. Long-term Borrowings](index=20&type=section&id=10.%20Long-term%20Borrowings) As of June 30, 2025, total long-term borrowings decreased by 3.19% to RMB 506,326,918.25, with credit borrowings being the largest component, and a significant increase in long-term borrowings due within one year, while those due after one year decreased substantially, with some subsidiaries having overdue long-term borrowings totaling RMB 76,578,533.29 Classification of Long-term Borrowings (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Credit Borrowings | 294,750,000.00 | 300,597,625.00 | (1.94%) | | Mortgaged Borrowings | 125,672,720.93 | 133,336,604.76 | (5.75%) | | Mortgaged and Guaranteed Borrowings | 41,431,898.64 | 41,941,817.27 | (1.22%) | | Pledged and Mortgaged Borrowings | 35,059,084.35 | 36,698,726.19 | (4.46%) | | Pledged, Mortgaged and Guaranteed Borrowings | 9,413,214.33 | 10,420,400.00 | (9.67%) | | Total | 506,326,918.25 | 522,995,173.22 | (3.19%) | | Less: Long-term Borrowings Due Within One Year | 452,758,451.40 | 152,847,526.21 | 196.22% | | Long-term Borrowings Due After One Year | 53,568,466.85 | 370,147,647.01 | (85.54%) | - As of June 30, 2025, subsidiaries Heyuan Yueyun Auto Transport Co., Ltd., Heyuan Yueyun Ludu Public Transport Co., Ltd., and Shanwei Yueyun Auto Transport Co., Ltd. had overdue long-term borrowings totaling **RMB 76,578,533.29**[40](index=40&type=chunk) [11. Lease Liabilities](index=21&type=section&id=11.%20Lease%20Liabilities) As of June 30, 2025, total lease liabilities decreased by 8.23% to RMB 2,448,723,181.92, with the majority of liabilities due after one year, primarily concentrated in those due in over five years Lease Liabilities (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Lease Liabilities | 2,448,723,181.92 | 2,668,599,543.21 | (8.23%) | | Less: Non-current Liabilities Due Within One Year | 166,902,105.77 | 199,019,728.66 | (16.04%) | | Lease Liabilities Due After One Year | 2,281,821,076.15 | 2,469,579,814.55 | (7.60%) | | Of which: Due After One Year but Within Two Years | 150,349,982.17 | 195,797,370.32 | (23.21%) | | Due After Two Years but Within Five Years | 443,006,752.00 | 494,543,273.19 | (10.42%) | | Due After Five Years | 1,688,464,341.98 | 1,779,239,171.04 | (5.09%) | [12. Retained Earnings](index=22&type=section&id=12.%20Retained%20Earnings) As of June 30, 2025, retained earnings increased by 6.76% to RMB 1,070,688,184.77, primarily due to net profit attributable to parent company owners, partially offset by final dividends for prior years and other comprehensive income transferred to retained earnings Movement in Retained Earnings (RMB) | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | Retained Earnings at Beginning of Year | 1,002,904,081.67 | 842,647,338.85 | | Add: Net Profit Attributable to Parent Company Owners for the Period | 142,643,705.10 | 138,669,235.05 | | Less: Final Dividends for Prior Years Approved and Declared for the Period | 71,986,302.00 | 63,987,824.00 | | Other Comprehensive Income Transferred to Retained Earnings | 2,835,598.67 | – | | Other | 37,701.33 | – | | Retained Earnings at End of Period | 1,070,688,184.77 | 917,328,749.90 | - The Company's final dividend of **RMB 71,986,302.00** for the year ended December 31, 2024, approved at the Annual General Meeting on June 30, 2025, remains unpaid as of June 30, 2025[45](index=45&type=chunk) [13. Finance Costs](index=22&type=section&id=13.%20Finance%20Costs) For H1 2025, finance costs decreased by 5.94% year-on-year to RMB 71,021,328.79, mainly due to lower interest expense on borrowings and improved exchange gains, despite an increase in interest expense on lease liabilities Details of Finance Costs (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Interest Expense on Borrowings | 18,582,266.72 | 28,185,796.58 | (34.07%) | | Interest Income | (7,286,168.54) | (9,986,035.48) | (27.04%) | | Exchange Gains | (1,291,239.55) | (1,981,856.44) | (34.85%) | | Interest Expense on Lease Liabilities | 50,460,511.52 | 47,295,704.83 | 6.70% | | Other | 10,555,958.64 | 11,993,514.60 | (11.99%) | | Total | 71,021,328.79 | 75,507,124.09 | (5.94%) | [14. Other Income](index=22&type=section&id=14.%20Other%20Income) For H1 2025, other income significantly decreased by 38.62% year-on-year to RMB 89,415,971.27, primarily due to a substantial decline in government grants related to income (especially bus route operating subsidies) and a reduction in asset-related government grants Details of Other Income (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Government Grants Related to Assets | 25,494,983.18 | 33,477,761.90 | (23.84%) | | Government Grants Related to Income | 63,834,487.25 | 111,427,095.05 | (42.72%) | | VAT Reduction and Exemption | 86,500.84 | 743,925.50 | (88.37%) | | Total | 89,415,971.27 | 145,648,782.45 | (38.62%) | Government Grants Included in Other Income (RMB) | Grant Item | January-June 2025 | January-June 2024 | Asset-Related / Income-Related | | :--- | :--- | :--- | :--- | | Bus Route Operating Subsidies | 57,298,765.29 | 101,593,749.10 | Income-Related | | New Energy Vehicle Purchase Subsidies | 21,137,724.79 | 28,500,719.92 | Asset-Related | | Fixed Asset Renovation Subsidies | 3,192,099.74 | 3,444,137.87 | Asset-Related | [15. Investment Income](index=23&type=section&id=15.%20Investment%20Income) For H1 2025, investment income significantly increased by 86.90% year-on-year to RMB 94,599,011.02, mainly driven by investment income from the disposal of subsidiaries, which rose from RMB 2,216,830.64 to RMB 55,713,441.19 Details of Investment Income (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Investment Income from Long-term Equity Investments Accounted for by Equity Method | 38,466,167.38 | 48,107,071.06 | (20.04%) | | Investment Income from Disposal of Subsidiaries | 55,713,441.19 | 2,216,830.64 | 2413.20% | | Other | 419,402.45 | 272,181.30 | 54.09% | | Total | 94,599,011.02 | 50,596,083.00 | 86.90% | [16. Credit Impairment Losses](index=23&type=section&id=16.%20Credit%20Impairment%20Losses) For H1 2025, credit impairment losses increased by 11.54% year-on-year to RMB 12,507,377.47, primarily due to an increase in bad debt losses on accounts receivable Details of Credit Impairment Losses (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Bad Debt Losses on Accounts Receivable | (9,252,325.56) | (5,913,485.27) | 56.49% | | Bad Debt Losses on Other Receivables | (3,255,051.91) | (5,300,458.92) | (38.60%) | | Total | (12,507,377.47) | (11,213,944.19) | 11.54% | [17. Asset Impairment Losses](index=23&type=section&id=17.%20Asset%20Impairment%20Losses) For H1 2025, asset impairment losses increased by 86.04% year-on-year to RMB 1,042,186.83, primarily due to increased impairment losses on long-term equity investments Details of Asset Impairment Losses (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Impairment Losses on Long-term Equity Investments | (1,042,186.83) | – | N/A | | Impairment Losses on Fixed Assets | – | (560,250.00) | (100.00%) | | Total | (1,042,186.83) | (560,250.00) | 86.04% | [18. Gains on Disposal of Assets](index=24&type=section&id=18.%20Gains%20on%20Disposal%20of%20Assets) For H1 2025, gains on disposal of assets slightly decreased by 1.63% year-on-year to RMB 6,334,016.13, primarily from gains on disposal of fixed assets Details of Gains on Disposal of Assets (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gains on Disposal of Fixed Assets | 6,334,016.13 | 6,438,923.17 | (1.63%) | | Total | 6,334,016.13 | 6,438,923.17 | (1.63%) | [19. Non-operating Income](index=24&type=section&id=19.%20Non-operating%20Income) For H1 2025, non-operating income decreased by 51.57% year-on-year to RMB 4,141,895.47, mainly due to a decline in other non-operating income and compensation, despite an increase in gains from disposal of non-current assets Details of Non-operating Income (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gains from Disposal of Non-current Assets | 2,961,370.84 | 824,131.03 | 259.33% | | Government Grants | 2,000.00 | – | N/A | | Compensation | 52,372.02 | 885,037.43 | (94.08%) | | Other | 1,126,152.61 | 6,842,853.14 | (83.54%) | | Total | 4,141,895.47 | 8,552,021.60 | (51.57%) | [20. Income Tax Expense](index=24&type=section&id=20.%20Income%20Tax%20Expense) For H1 2025, income tax expense decreased by 25.69% year-on-year to RMB 41,205,377.44, primarily due to a decrease in current income tax expense and a shift to deferred income tax benefit Income Tax Expense (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Current Income Tax Expense | 60,924,373.21 | 66,020,290.22 | (7.69%) | | Deferred Income Tax Expense | (19,718,995.77) | (10,688,121.95) | 84.50% | | Total | 41,205,377.44 | 55,332,168.27 | (25.69%) | [21. Earnings Per Share](index=25&type=section&id=21.%20Earnings%20Per%20Share) For H1 2025, both basic and diluted earnings per share increased to RMB 0.18 from RMB 0.17 in the prior year, calculated based on consolidated net profit attributable to parent company ordinary shareholders and the weighted average number of ordinary shares outstanding Earnings Per Share Calculation (RMB/share) | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | Consolidated Net Profit Attributable to Parent Company Ordinary Shareholders | 142,643,705.10 | 138,669,235.05 | | Weighted Average Number of Ordinary Shares Outstanding | 799,847,800.00 | 799,847,800.00 | | Basic Earnings Per Share (RMB/share) | 0.18 | 0.17 | | Diluted Earnings Per Share (RMB/share) | 0.18 | 0.17 | [22. Government Grants](index=25&type=section&id=22.%20Government%20Grants) For H1 2025, total government grants significantly decreased year-on-year to RMB 70,070,297.90, with asset-related grants down 23.84% and income-related grants down 44.89%, mainly due to reduced fuel subsidies and bus route operating subsidies Asset-Related Government Grants (RMB) | Type | Amount Recognized in P&L or Offset Against Costs/Expenses for Jan-Jun 2025 | Amount Recognized in P&L or Offset Against Costs/Expenses for Jan-Jun 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Vehicle Renewal Subsidies | 4,597.55 | 75,746.19 | (93.93%) | | New Energy Vehicle Purchase Subsidies | 21,137,724.79 | 28,500,719.92 | (25.83%) | | Fixed Asset Renovation Subsidies | 3,192,099.74 | 3,444,137.87 | (7.32%) | | Vehicle Purchase Tax Subsidies | 141,843.96 | 212,765.94 | (33.43%) | | Other Asset-Related Subsidies | 1,018,717.14 | 1,244,391.98 | (18.13%) | | Total | 25,494,983.18 | 33,477,761.90 | (23.84%) | Income-Related Government Grants (RMB) | Type | Amount Recognized in P&L or Offset Against Costs/Expenses for Jan-Jun 2025 | Amount Recognized in P&L or Offset Against Costs/Expenses for Jan-Jun 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Fuel Subsidies | 6,233,810.65 | 15,388,330.77 | (59.49%) | | Bus Route Operating Subsidies | 57,298,765.29 | 101,593,749.10 | (43.60%) | | Elderly Card Discount Bus Fare Subsidies | 3,931,173.53 | 4,576,165.74 | (14.09%) | | Other Subsidies | 2,604,548.43 | 5,257,180.21 | (50.46%) | | Other Subsidies (Non-operating Income) | 2,000.00 | – | N/A | | Total | 70,070,297.90 | 126,815,425.82 | (44.89%) | [23. Net Current Liabilities](index=26&type=section&id=23.%20Net%20Current%20Liabilities) As of June 30, 2025, net current liabilities significantly worsened to RMB (234,644,675.29) from RMB (58,879,510.00) as of December 31, 2024, indicating increased liquidity pressure Net Current Liabilities (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Current Assets | 2,706,704,677.29 | 2,666,605,098.63 | 1.50% | | Less: Current Liabilities | 2,941,349,352.58 | 2,725,484,608.63 | 7.92% | | Net Current Liabilities | (234,644,675.29) | (58,879,510.00) | 298.52% | [24. Total Assets Less Current Liabilities](index=26&type=section&id=24.%20Total%20Assets%20Less%20Current%20Liabilities) As of June 30, 2025, total assets less current liabilities decreased by 8.32% to RMB 5,499,391,720.10, reflecting a decline in total assets and an increase in current liabilities Total Assets Less Current Liabilities (RMB) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 8,440,741,072.68 | 8,724,059,777.83 | (3.25%) | | Less: Current Liabilities | 2,941,349,352.58 | 2,725,484,608.63 | 7.92% | | Total Assets Less Current Liabilities | 5,499,391,720.10 | 5,998,575,169.20 | (8.32%) | [25. Leases](index=26&type=section&id=25.%20Leases) For H1 2025, as a lessee, interest expense on lease liabilities, short-term lease expenses, and variable lease payments all increased, while as a lessor, operating lease income slightly decreased, but future undiscounted lease receivables remained high Lease-Related Expenses as Lessee (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Interest Expense on Lease Liabilities | 50,460,511.52 | 47,295,704.83 | 6.70% | | Short-term Lease Expenses (Simplified Treatment) | 34,501,516.01 | 3,321,580.13 | 938.70% | | Variable Lease Payments Not Included in Lease Liabilities Measurement | 12,048,005.63 | 5,132,407.74 | 134.75% | | Income from Subleasing Right-of-Use Assets | 216,671,650.56 | 245,101,426.32 | (11.52%) | | Total Cash Outflow Related to Leases | 177,358,838.77 | 127,844,152.21 | 38.73% | Operating Lease Income and Future Receivables as Lessor (RMB) | Item | January-June 2025 | January-June 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Operating Lease Income | 239,553,662.27 | 262,724,080.66 | (8.82%) | | Remaining Lease Term (Within 1 year) | 390,587,722.38 | 466,167,281.03 | (16.22%) | | Remaining Lease Term (Total) | 2,160,164,777.80 | 2,439,919,151.86 | (11.47%) | [26. Segment Information](index=27&type=section&id=26.%20Segment%20Information) The Group operates in three segments: highway service area operations, road passenger transport and related services, and Taiping Interchange operations and other businesses; in H1 2025, highway service area operations were the primary source of revenue and profit, with revenue up 14% and operating profit at RMB 152,247 thousand, while road passenger transport and Taiping Interchange operations saw declines H1 2025 Reported Segment Performance (RMB) | Item | Highway Service Area Operations | Road Passenger Transport and Related Services | Taiping Interchange Operations and Other Businesses | Inter-segment Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 2,992,593,473.23 | 727,786,156.29 | 55,349,807.67 | (5,701,354.65) | 3,770,028,082.54 | | Operating Costs | 2,713,675,090.85 | 733,779,983.17 | 20,646,690.24 | (3,924,560.50) | 3,464,177,203.76 | | Operating Profit | 152,246,721.58 | (9,984,588.24) | 34,589,168.44 | (1,048,893.83) | 175,802,407.95 | As of June 30, 2025, Reported Segment Assets and Liabilities (RMB) | Item | Highway Service Area Operations | Road Passenger Transport and Related Services | Taiping Interchange Operations and Other Businesses | Inter-segment Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 4,564,007,434.66 | 3,324,008,757.66 | 3,061,552,497.18 | (2,508,827,616.82) | 8,440,741,072.68 | | Total Liabilities | 3,430,495,670.97 | 2,096,753,957.36 | 1,218,498,244.66 | (974,166,730.38) | 5,771,581,142.61 | [Management Discussion and Analysis](index=29&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's H1 2025 business performance across core segments, analyzes financial results including revenue, gross profit, expenses, and investment income, discusses liquidity, capital structure, significant investments, and outlines H2 2025 development priorities and funding, emphasizing new energy and strategic emerging industries [Business Review](index=29&type=section&id=Business%20Review) In H1 2025, the Group, centered on highway travel services, achieved significant progress in energy, retail, investment promotion, advertising, and highway rescue through innovation and refined management, while steadily exiting road passenger transport, demonstrating stable and improving operations - The Group, focusing on highway travel services, has made significant progress in its diversified business segments including energy, retail, investment promotion, advertising, and highway rescue, driven by industry trends and reforms[59](index=59&type=chunk) - The exit from road passenger transport business is progressing steadily as planned, and the Group's overall operations show a positive trend of stability, progress, and improved quality and efficiency[59](index=59&type=chunk) [I. Highway Service Area Operations](index=29&type=section&id=I.%20Highway%20Service%20Area%20Operations) Highway service area operations, the Group's core business, made positive strides in H1 in energy, retail, investment promotion, and advertising, expanding networks, enhancing efficiency, optimizing operations, and strengthening brand influence [1. Energy Business](index=29&type=section&id=1.%20Energy%20Business) The energy business continued to strengthen, with 230 operating right gas stations (110 self-operated) and 338 service areas with charging stations (1,576 charging piles) by June 30, 2025, enhancing operational efficiency and market influence through standardized management, network expansion, fuel supply assurance, and marketing Energy Business Network Scale (As of June 30, 2025) | Item | Quantity | | :--- | :--- | | Operating Right Gas Stations | 230 | | Operating Gas Stations | 220 | | Self-operated Gas Stations | 110 | | Cooperatively Operated Gas Stations | 12 | | Contracted-out Gas Stations | 98 | | Service Areas with Charging Stations | 338 | | Number of Charging Piles | 1,576 | | Battery Swapping Stations | 10 | | CNG/LPG Stations | 4 | | Photovoltaic Deployment Points | 1 | - Standardized management is being promoted, with operational guidelines developed and specialized training conducted to comprehensively enhance gas station operational efficiency[60](index=60&type=chunk) - The gas station network layout has been expanded, successfully completing the operation of 3 new self-operated gas stations in Xiaolan and Chengnan, and the recovery of the Lankou gas station[60](index=60&type=chunk) - Fuel supply assurance management has been strengthened, deepening collaboration with suppliers and deploying in advance for holidays to ensure stable supply across the entire chain[61](index=61&type=chunk) - Marketing planning and promotion are being intensified, leveraging big data analysis to build customer profiles and implement differentiated strategies, thereby enhancing brand value and customer loyalty[61](index=61&type=chunk) [2. Retail Business](index=30&type=section&id=2.%20Retail%20Business) The retail business actively upgraded, with 526 Leyi convenience stores by June 30, 2025, expanding product categories to 3,673, optimizing selection and procurement, and supporting rural revitalization through a dual-channel consumption assistance system - As of June 30, 2025, the total number of Leyi convenience stores reached **526**[61](index=61&type=chunk) - "One store, one policy" refined operations are implemented, driving the opening of 8 new stores, increasing product categories to **3,673**, and planning multiple themed promotional activities[62](index=62&type=chunk) - The selection and investment promotion model has been optimized, completing 3 specialized investment promotions that introduced over **170** products, effectively reducing procurement prices year-on-year, and securing exclusive authorization for two brands[62](index=62&type=chunk) - Focusing on market demand, new categories such as children's toys and pet supplies have been introduced, creating a "retail + lifestyle services" composite consumption scenario, and developing private label products[62](index=62&type=chunk) - Supporting the rural revitalization strategy, local specialty stores have been established in **57** key service areas, and rural revitalization counters in **211** self-operated "Leyi" convenience stores, achieving "dual-channel linkage"[63](index=63&type=chunk) [3. Investment Promotion Business](index=32&type=section&id=3.%20Investment%20Promotion%20Business) The investment promotion business actively built a new operating system, with 387 service areas under operating rights (365 in operation) by June 30, 2025, enhancing comprehensive competitiveness and service quality through expanding self-operated projects, implementing unified cashier systems, developing commercial plans, and strengthening operational management - As of June 30, 2025, the number of service areas with operating rights reached **387**, with **365** service areas in operation[64](index=64&type=chunk) - The layout of self-operated projects is expanding, with KFC stores in Changshawan and Waxi successfully opened, and the first self-operated food store currently in preparation[64](index=64&type=chunk) - A unified cashier system is being implemented, with pilot programs launched in **10** pairs of service areas, and a merchant digital management system being built to enhance management efficiency[64](index=64&type=chunk) - Commercial investment promotion plans are being developed, deepening commercial planning and investment promotion layout for service areas, and creating "five-excellence" characteristic service areas and farmer-supporting service areas[66](index=66&type=chunk) - Commercial operation management is being strengthened, with specialized supervision, inspection, and rectification work carried out for auto repair and food safety businesses to maintain good operating order[66](index=66&type=chunk) [4. Advertising Business](index=33&type=section&id=4.%20Advertising%20Business) The advertising business focused on digital transformation, upgrading resource management, and expanding new media promotion, holding operating rights for 79 highway advertisements with 536 resources by June 30, 2025, enhancing efficiency through direct sales and innovative resource promotion - As of June 30, 2025, the Company holds operating rights for **79** highway advertisements, with **536** resources[65](index=65&type=chunk) - Efforts are focused on developing direct sales business, targeting key industries such as tourism, liquor, and regional consumer brands to expand customer base and customize personalized advertising service solutions[65](index=65&type=chunk) - Innovative resource promotion models are being explored in event planning, visual design, and emerging business areas, effectively promoting diversified business synergy[67](index=67&type=chunk) [II. Road Passenger Transport and Related Services](index=34&type=section&id=II.%20Road%20Passenger%20Transport%20and%20Related%20Services) The Group is steadily exiting road passenger transport to mitigate market impact, completing several equity transfers and divestments in H1, while highway rescue operations focus on improving service quality and efficiency through digital technology and training [1. Road Passenger Transport Business](index=34&type=section&id=1.%20Road%20Passenger%20Transport%20Business) Facing competition, the Group strategically adjusted to gradually exit passenger transport, completing equity transfers for Zhuhai Gongyun and divesting controlling stakes in Guangzhou Yueyun and Guangzhou Zengcheng, while actively disposing of assets, relocating personnel, and controlling costs - The Company has decisively implemented strategic adjustments, following the principle of "from easy to difficult, categorized and segmented," to gradually exit the passenger transport business[68](index=68&type=chunk) - In the first half of the year, the equity transfer of Zhuhai Gongyun Auto Passenger Transport Station Co., Ltd. was successfully completed, along with the divestment of controlling stakes in Guangzhou Yueyun Auto Transport Co., Ltd. and Guangzhou Zengcheng Auto Passenger Transport Station Co., Ltd[68](index=68&type=chunk) - Multiple measures are actively being taken, including efficient asset disposal to recover funds, reasonable personnel relocation, strengthening cost control, and seeking government support[68](index=68&type=chunk) [2. Highway Rescue Business](index=34&type=section&id=2.%20Highway%20Rescue%20Business) Highway rescue operations, centered on customer service, focused on improving quality and efficiency, covering over 7,500 km across 84 road sections by June 30, 2025, continuously enhancing clearance and rescue capabilities through a "monitoring-warning-disposal-improvement" system, intelligent dispatch, and digital platform development - As of June 30, 2025, the Company's highway vehicle rescue service covers over **7,500 kilometers** across **84** road sections, with **213** rescue stations and **745** various rescue equipment units[68](index=68&type=chunk) - Adhering to a customer-centric approach, rescue service quality and efficiency are enhanced through regular verification of operation videos and an intelligent dispatch system[70](index=70&type=chunk) - The "Digital Rescue" platform construction is continuously improved, adding functions such as rescue data statistics and analysis, rescue plan recommendations, and organizing various training and rating assessments to enhance clearance and rescue capabilities[70](index=70&type=chunk) [III. Taiping Interchange Operations](index=35&type=section&id=III.%20Taiping%20Interchange%20Operations) Taiping Interchange operations maintained operational management and maintenance, with cumulative toll traffic of approximately 14.62 million vehicles by June 30, 2025, a 25% year-on-year decrease due to diversion by Shenzhen-Zhongshan Link, while ensuring safety through ongoing maintenance plans - As of June 30, 2025, cumulative toll traffic was approximately **14.62 million** vehicles, with a daily average of approximately **81,200** vehicles, a year-on-year decrease of approximately **25%**[71](index=71&type=chunk) - The decrease in traffic volume is mainly due to the diversion effect of the Shenzhen-Zhongshan Link[71](index=71&type=chunk) - Maintenance and repair plans are continuously implemented, with regular inspections and maintenance of bridges, road surfaces, electromechanical systems, toll systems, communication systems, and monitoring systems[71](index=71&type=chunk) [Period Performance Analysis](index=36&type=section&id=Period%20Performance%20Analysis) In H1 2025, the Group's operating revenue increased by 3% year-on-year, driven by highway service area operations, but gross profit decreased by 19% with a lower gross margin due to refined oil price adjustments, new energy vehicle impact, and increased service area costs, while net profit attributable to parent company shareholders increased by 3% due to investment gains from transport business divestment and reduced management expenses - The Group's operating revenue increased by **3%** year-on-year, primarily due to the Company's active focus on deepening reforms in highway travel services and the year-on-year increase in revenue from highway service area operations[72](index=72&type=chunk) - Gross profit decreased by **19%** year-on-year, mainly due to adjustments in refined oil prices, changes in international oil prices, the continuous rise in new energy vehicle numbers impacting fuel sales, and increased costs resulting from the expansion of service area scale[72](index=72&type=chunk) - Net profit attributable to parent company shareholders increased by **3%** year-on-year, primarily due to increased investment income from the disposal of subsidiaries as part of the transport business exit and a corresponding reduction in administrative expenses[72](index=72&type=chunk) [Operating Revenue](index=36&type=section&id=Operating%20Revenue) 2025年上半年集團營業收入為人民幣3,770,028千元，同比增長3%。高速公路服務區經營業務收入增長14%，佔總收入的79%，是主要增長動力。道路客運及配套業務收入減少26%，太平立交運營及其他業務收入減少24%，主要受業務退出和深中通道分流影響 Operating Revenue by Business Segment (RMB '000) | Business Category | For the Six Months Ended June 30, 2025 | Percentage (%) | For the Six Months Ended June 30, 2024 | Percentage (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Highway Service Area Operations | 2,991,062 | 79% | 2,621,531 | 71% | 14% | | Road Passenger Transport and Related Services | 723,616 | 19% | 980,218 | 27% | (26%) | | Taiping Interchange Operations and Other Businesses | 55,350 | 2% | 72,914 | 2% | (24%) | | Total | 3,770,028 | 100% | 3,674,663 | 100% | 3% | - Revenue from highway service area operations increased by **14%** year-on-year, mainly due to the expansion of self-operated gas stations and increased sales volume[75](index=75&type=chunk)[78](index=78&type=chunk) - Revenue from road passenger transport and related services decreased by **26%** year-on-year, primarily due to the gradual exit from the passenger transport business[75](index=75&type=chunk) - Revenue from Taiping Interchange operations and other businesses decreased by **24%** year-on-year, mainly due to the impact of the Shenzhen-Zhongshan Link diversion, which led to a year-on-year decrease in traffic volume[76](index=76&type=chunk) [Gross Profit](index=37&type=section&id=Gross%20Profit) In H1 2025, the Group's gross profit decreased by 19% year-on-year to RMB 305,851 thousand, with the gross profit margin falling to 8.11%, primarily due to reduced gross profit in highway service area operations (17% decrease) and increased gross loss in road passenger transport (13% increase), while advertising gross profit significantly increased by 49% Gross Profit by Business Segment (RMB '000) | Business Category | For the Six Months Ended June 30, 2025 | Percentage (%) | For the Six Months Ended June 30, 2024 | Percentage (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Highway Service Area Operations | 280,840 | 92% | 336,662 | 89% | (17%) | | Road Passenger Transport and Related Services | (20,707) | (7%) | (18,295) | (5%) | 13% | | Taiping Interchange Operations and Other Businesses | 45,718 | 15% | 60,768 | 16% | (25%) | | Total | 305,851 | 100% | 379,135 | 100% | (19%) | - Gross profit from energy business decreased by **15%**, with a gross profit margin of **9%**, mainly due to adjustments in refined oil prices, lower comprehensive oil product selling prices, and increased costs associated with scale expansion[80](index=80&type=chunk) - Gross profit from retail business decreased by **12%**, with a gross profit margin of **15%**, primarily due to the impact of the "Hundred, Thousand, Ten Thousand Project" micro-renovation and the Shenzhen-Zhongshan Link diversion[80](index=80&type=chunk) - Gross loss from investment promotion business increased by **726%**, with a gross loss margin of **8%**, mainly due to reduced shop occupancy rates affected by the "Hundred, Thousand, Ten Thousand Project" micro-renovation, and increased upfront investment costs from expanding service area scale[80](index=80&type=chunk) - Gross profit from advertising business increased by **49%**, with a gross profit margin of **47%**, primarily due to reduced costs[80](index=80&type=chunk) - Gross loss from road passenger transport and related services increased by **13%**, with a gross loss margin of **3%**, mainly due to increased highway rescue service costs from undertaking new routes and expanding standby personnel[81](index=81&type=chunk) - Gross profit from Taiping Interchange operations and other businesses decreased by **25%**, with a gross profit margin of **83%**, primarily due to reduced revenue affected by traffic volume[82](index=82&type=chunk) [Administrative and R&D Expenses](index=39&type=section&id=Administrative%20and%20R%26D%20Expenses) In H1 2025, administrative and R&D expenses totaled RMB 198,394 thousand, a 21% year-on-year decrease, primarily due to the steady exit from transport businesses and effective cost control - Administrative and R&D expenses totaled **RMB 198,394 thousand**, a **21%** decrease compared to the same period in 2024[83](index=83&type=chunk) - The decrease is mainly due to the steady exit from the transport business and effective cost control[83](index=83&type=chunk) [Finance Costs](index=39&type=section&id=Finance%20Costs) In H1 2025, finance costs were RMB 71,021 thousand, a 6% year-on-year decrease, mainly attributed to effectively reducing the scale of interest-bearing debt - Finance costs were **RMB 71,021 thousand**, a **6%** decrease compared to the same period in 2024[84](index=84&type=chunk) - The decrease is mainly due to effectively reducing the scale of interest-bearing debt[84](index=84&type=chunk) [Other Income](index=39&type=section&id=Other%20Income) In H1 2025, other income was RMB 89,416 thousand, a 39% year-on-year decrease, primarily due to a reduction in government grants following the exit from transport businesses - Other income was **RMB 89,416 thousand**, a **39%** decrease compared to the same period in 2024[85](index=85&type=chunk) - The decrease is mainly due to a year-on-year reduction in government grants following the exit from the transport business[85](index=85&type=chunk) [Investment Income](index=39&type=section&id=Investment%20Income) In H1 2025, investment income significantly increased by 87% year-on-year to RMB 94,599 thousand, mainly due to increased gains from the disposal of passenger transport subsidiaries - Investment income was **RMB 94,599 thousand**, an **87%** increase compared to the same period in 2024[86](index=86&type=chunk) - The increase is mainly due to increased gains from the disposal of passenger transport subsidiaries during the period[86](index=86&type=chunk) [Credit Impairment Losses](index=39&type=section&id=Credit%20Impairment%20Losses) In H1 2025, credit impairment losses increased by 12% year-on-year to RMB 12,507 thousand, primarily due to increased bad debt provisions for accounts receivable based on ageing ratios - Credit impairment losses were **RMB 12,507 thousand**, a **12%** increase compared to the same period in 2024[87](index=87&type=chunk) - The increase is mainly due to increased bad debt provisions for accounts receivable based on higher ageing ratios[87](index=87&type=chunk) [Asset Impairment Losses](index=40&type=section&id=Asset%20Impairment%20Losses) In H1 2025, asset impairment losses increased by 86% year-on-year to RMB 1,042 thousand, primarily due to increased impairment provisions for joint ventures - Asset impairment losses were **RMB 1,042 thousand**, an **86%** increase compared to the same period in 2024[88](index=88&type=chunk) - The increase is mainly due to increased impairment provisions for joint ventures during the period[88](index=88&type=chunk) [Gains on Disposal of Assets](index=40&type=section&id=Gains%20on%20Disposal%20of%20Assets) In H1 2025, gains on disposal of assets slightly decreased by 2% year-on-year to RMB 6,334 thousand - Gains on disposal of assets were **RMB 6,334 thousand**, a **2%** decrease compared to the same period in 2024[89](index=89&type=chunk) [Non-operating Income and Expenses](index=40&type=section&id=Non-operating%20Income%20and%20Expenses) In H1 2025, net non-operating expenses were RMB 183 thousand, a 116% year-on-year decrease in net income compared to a net income of RMB 1,182 thousand in the prior year, mainly due to service area closure compensation income in the previous year - Net non-operating expenses were **RMB 183 thousand**, representing a **116%** year-on-year decrease in net income compared to a net income of **RMB 1,182 thousand** in the same period of 2024[90](index=90&type=chunk) - The decrease is mainly due to service area closure compensation income in the prior year[90](index=90&type=chunk) [Working Capital and Capital Structure](index=40&type=section&id=Working%20Capital%20and%20Capital%20Structure) The Group maintains prudent financial management with strict budget control, possessing sufficient available credit of RMB 4,813,890 thousand as of June 30, 2025, showing an improved net cash position, decreased operating cash flow, increased investment cash outflow, and increased financing cash outflow - The Group implements prudent financial management policies and exercises strict budget control over fund utilization[91](index=91&type=chunk) - As of June 30, 2025, the available credit lines from banks and other financial institutions totaled **RMB 4,813,890 thousand**, providing ample assurance for the Group's operating loans[91](index=91&type=chunk) [Financial Position](index=40&type=section&id=Financial%20Position) As of June 30, 2025, the Group's net debt improved to a net cash position of RMB (573,933) thousand, total liabilities decreased by 5.7%, and the asset-liability ratio improved to 68.38% Key Financial Position Indicators (RMB '000) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Borrowings (Banks and Other Financial Institutions) | 973,597 | 1,183,416 | (17.7%) | | Less: Cash and Cash Equivalents | 1,547,530 | 1,425,057 | 8.6% | | Net Debt | (573,933) | (241,641) | (137.5%) | | Total Liabilities | 5,771,581 | 6,118,199 | (5.7%) | | Total Shareholders' Equity | 2,669,160 | 2,605,861 | 2.4% | | Total Capital | 2,095,227 | 2,364,220 | (11.4%) | | Total Assets | 8,440,741 | 8,724,060 | (3.2%) | | Capital Gearing Ratio | (27.39%) | (10.22%) | (168.0%) | | Asset-Liability Ratio | 68.38% | 70.13% | (2.5%) | [Cash Flow from Operating Activities](index=41&type=section&id=Cash%20Flow%20from%20Operating%20Activities) In H1 2025, net cash inflow from operating activities decreased by 30.2% year-on-year to RMB 434,928 thousand, primarily due to increased oil procurement costs and payments for goods and services in the service area segment Cash Flow from Operating Activities (RMB '000) | Item | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | Change (RMB '000) | | :--- | :--- | :--- | :--- | | Operating Activities | 434,928 | 623,201 | (188,273) | - Net cash inflow from operating activities decreased by **RMB 188,273 thousand** year-on-year, mainly due to increased oil procurement costs in the service area segment and a year-on-year increase in cash paid for goods and services[94](index=94&type=chunk) [Cash Flow from Investing Activities](index=41&type=section&id=Cash%20Flow%20from%20Investing%20Activities) In H1 2025, net cash outflow from investing activities was RMB 64,302 thousand, a net outflow increase of RMB 68,929 thousand compared to a net inflow in the prior year, mainly due to increased capital expenditure for service area business enhancements Cash Flow from Investing Activities (RMB '000) | Item | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | Change (RMB '000) | | :--- | :--- | :--- | :--- | | Investing Activities | (64,302) | 4,627 | (68,929) | - The net outflow increased by **RMB 68,929 thousand**, mainly due to increased capital expenditure for the construction of long-term assets to enhance service area operations[95](index=95&type=chunk) [Cash Flow from Financing Activities](index=41&type=section&id=Cash%20Flow%20from%20Financing%20Activities) In H1 2025, net cash outflow from financing activities increased by RMB 23,265 thousand year-on-year to RMB 247,241 thousand Cash Flow from Financing Activities (RMB '000) | Item | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | Change (RMB '000) | | :--- | :--- | :--- | :--- | | Financing Activities | (247,241) | (223,976) | (23,265) | - The net outflow increased by **RMB 23,265 thousand**[96](index=96&type=chunk) [Borrowings](index=41&type=section&id=Borrowings) As of June 30, 2025, the Group's total outstanding borrowings decreased by 17.7% to RMB 973,597 thousand, with diverse types of borrowings and approximately 25% at fixed interest rates, and the Board believes overdue loans from some subsidiaries have limited impact on overall operations - As of June 30, 2025, the Group's outstanding borrowings totaled **RMB 973,597 thousand**, a **17.7%** decrease compared to December 31, 2024[97](index=97&type=chunk) - Borrowings include unsecured short-term loans, secured short-term loans, pledged short-term loans, unsecured long-term loans, pledged long-term loans, and finance lease payables[97](index=97&type=chunk) - Approximately **25%** of the borrowings are at fixed interest rates[97](index=97&type=chunk) - Despite some subsidiaries having overdue short-term and long-term loans, the Board believes the impact on the Group's overall business operations is limited[97](index=97&type=chunk) [Significant Investments, Acquisitions, Disposals, and Establishment of New Companies](index=42&type=section&id=Significant%20Investments%2C%20Acquisitions%2C%20Disposals%2C%20and%20Establishment%20of%20New%20Companies) During the reporting period, the Company did not undertake any significant acquisitions, disposals, establishment of subsidiaries, associates, or joint ventures, or major investments - During the reporting period, the Company did not undertake any significant acquisitions, disposals, establishment of subsidiaries, associates, or joint ventures, or major investments[99](index=99&type=chunk) [Principal Properties Held for Investment](index=42&type=section&id=Principal%20Properties%20Held%20for%20Investment) The Group holds several properties for investment purposes, primarily for operating leases, including commercial centers, offices, and ground-floor shops in Hong Kong, and driver apartments and passenger transport center buildings in mainland China, with most lease agreements being short-term (under 10 years) except for one long-term lease Principal Properties Held for Investment | Property Name | Address | Purpose | Lease Contract Type | | :--- | :--- | :--- | :--- | | Hong Kong Commercial Centre | Units 13-14, 24/F, Hong Kong Commercial Centre, 188 Connaught Road West, Sai Wan, Hong Kong | Operating Lease | Short-term Lease (within 10 years) | | Office Unit 2, 1/F, Wai King Court, 65-75 Wui Ching Street, Jordan, Kowloon | Office Unit 2, 1/F, Wai King Court, 65, 67, 69, 71, 73, 75 Wui Ching Street, Jordan, Kowloon, Hong Kong | Operating Lease | Short-term Lease (within 10 years) | | Ground Floor Shop, Hang On Building, 159A Sai Yeung Choi Street North, Mong Kok, Kowloon | Ground Floor Shop, Hang On Building, 159A Sai Yeung Choi Street North, Mong Kok, Kowloon | Operating Lease | Short-term Lease (within 10 years) | | Driver Apartments | Intersection of Fuqian West Road and Huancheng Road, Qujiang District, Shaoguan City | Operating Lease | Short-term Lease (within 10 years) | | Lianzhou Passenger Transport Center Building | No. 136 Beihu Road, Lianzhou City | Operating Lease | Short-term Lease (within 10 years) | | Danxiashan Auto Passenger Transport Station Comprehensive Building | Danxiashan Auto Passenger Transport Station Comprehensive Building | Operating Lease | Long-term Lease (over 10 years) | [Pledged Assets](index=42&type=section&id=Pledged%20Assets) As of June 30, 2025, fixed assets with a net value of approximately RMB 146,740 thousand, land use rights of RMB 56,695 thousand, and investment properties of RMB 164,681 thousand were pledged as collateral for borrowings and long-term payables - As of June 30, 2025, fixed assets with a net value of approximately **RMB 146,740 thousand** and land use rights with a net value of approximately **RMB 56,695 thousand** were pledged as collateral for borrowings and long-term payables[101](index=101&type=chunk) - As of June 30, 2025, investment properties with a net value of approximately **RMB 164,681 thousand** were pledged as collateral for borrowings[101](index=101&type=chunk) [Foreign Exchange Risk](index=43&type=section&id=Foreign%20Exchange%20Risk) Except for cross-border transport service income and expenses, the Group's majority of income and expenses are settled or denominated in RMB, resulting in minimal impact from foreign exchange fluctuations on operations and liquidity in H1 2025, and the Directors believe the Group has sufficient foreign currency to meet its needs - The majority of the Group's income and expenses are settled or denominated in RMB, so the impact of foreign exchange fluctuations on operations and liquidity in H1 2025 was minimal[102](index=102&type=chunk) - The Directors believe that the Group will have sufficient foreign currency to meet its needs and will continue to closely monitor RMB exchange rate fluctuations[102](index=102&type=chunk) [Contingent Liabilities](index=43&type=section&id=Contingent%20Liabilities) As of June 30, 2025, there were no significant contingent liabilities - As of June 30, 2025, there were no significant contingent liabilities[103](index=103&type=chunk) [H2 2025 Business Development Priorities](index=43&type=section&id=H2%202025%20Business%20Development%20Priorities) In H2 2025, the Group will focus on expanding and upgrading highway service area operations (energy, retail, investment promotion, advertising), steadily exiting road passenger transport, innovating highway vehicle rescue, and strategically developing emerging industries like "Yueyun Changxing Industrial Park" and "low-altitude economy" to support high-quality growth [I. Highway Service Area Operations](index=43&type=section&id=I.%20Highway%20Service%20Area%20Operations) In H2, highway service area operations will remain a development priority, with the energy business expanding traditional energy and accelerating new energy deployment, retail business advancing store upgrades and online-offline integration, investment promotion innovating models and enhancing commercial space value, and advertising focusing on direct sales and digital transformation for overall quality and efficiency improvement [1. Energy Business](index=43&type=section&id=1.%20Energy%20Business) The energy business plans to open 12 new self-operated gas stations and reclaim 10 in H2, strengthening cooperation with central SOEs, implementing lean management, accelerating reclaimed station renovations, optimizing fuel supply chains, and expediting new energy initiatives including a new energy subsidiary, integrated solar-storage-charging projects, and a digital energy management platform - Plans include building **12** new self-operated gas stations and reclaiming **10** self-operated gas stations to expand the terminal sales scale of gas stations[104](index=104&type=chunk) - Deepened cooperation with central state-owned enterprises in fuel supply and sales will be strengthened to establish long-term stable strategic partnerships[104](index=104&type=chunk) - Lean management will be promoted, strictly implementing standardized management operating guidelines to enhance management efficiency[104](index=104&type=chunk) - The renovation of reclaimed gas stations will be accelerated, ensuring legal and compliant recovery processes and implementing standardized renovations to strive for "early completion, early operation, and early revenue"[105](index=105&type=chunk) - The fuel supply chain management system will be optimized, strengthening coordination with suppliers and formulating refined emergency plans to ensure adequate fuel supply[105](index=105&type=chunk) - The implementation of new energy businesses will be accelerated, establishing a new energy subsidiary, advancing the integrated solar-storage-charging project in Daihu Service Area, planning to build photovoltaic power generation systems in **45** pairs of service areas, and developing a digital energy comprehensive management platform[105](index=105&type=chunk) [2. Retail Business](index=45&type=section&id=2.%20Retail%20Business) The retail business plans to open 13 new stores and upgrade 16 in H2, enhancing store image and service standards, expanding online and offline sales channels, innovating investment promotion strategies, optimizing supply chain management, conducting precise marketing, and deepening rural revitalization support - Store scale will be steadily expanded, with **13** new stores planned for opening and **16** stores undergoing comprehensive upgrade and renovation to optimize store visual image and service standards[106](index=106&type=chunk) - Investment in proprietary brand product R&D will be increased, focusing on developing characteristic products for high-frequency consumer demand scenarios, and advancing the opening and operation of self-operated local specialty stores as planned[106](index=106&type=chunk) - Online Leyi Mall sales channels will be accelerated, a professional e-commerce oper

[Annual Report Supplement: Change in Use of Proceeds](index=1&type=section&id=Annual%20Report%20Supplement%20and%20Change%20in%20Use%20of%20Proceeds) This supplement details the reallocation of unutilized 2018 and 2024 convertible bond proceeds to fund a new graphite and mineral trading platform [2018 Convertible Bonds: Fund Status and Change in Use of Proceeds](index=1&type=section&id=2018%20Convertible%20Bonds%3A%20Fund%20Status%20and%20Change%20in%20Use%20of%20Proceeds) Unutilized HK$11.98 million from 2018 convertible bonds is reallocated to fund a new graphite and mineral trading platform 2018 Convertible Bonds Proceeds Utilization Details (As of December 31, 2024) | Purpose | Allocated Proceeds (HKD) | Utilized Proceeds (HKD) | Unutilized Proceeds (HKD) | | :--- | :--- | :--- | :--- | | Plant and Warehouse | 21,796,600 | 21,796,600 | – | | Production Lines | 39,747,000 | 32,227,000 | 7,520,000 | | Transportation Pipelines, Vehicles, and Handling Equipment | 33,484,500 | 29,023,000 | 4,461,500 | | Wages | 1,560,000 | 1,560,000 | – | | Other | 5,527,400 | 5,527,400 | – | | **Total** | **102,115,500** | **90,134,000** | **11,981,500** | - Following the sale of two production lines in Madagascar, the company plans to operate its graphite business under an asset-light model and develop a graphite trading platform to enhance synergies[7](index=7&type=chunk) - Approximately **HK$11.98 million** of unutilized net proceeds will be reallocated as working capital for the new mineral product trading platform, expected to be fully utilized by December 31, 2028[6](index=6&type=chunk)[7](index=7&type=chunk) [2024 Convertible Bonds: Fund Status and Change in Use of Proceeds](index=3&type=section&id=2024%20Convertible%20Bonds%3A%20Fund%20Status%20and%20Change%20in%20Use%20of%20Proceeds) HK$21 million from 2024 convertible bonds, unutilized after AI/Web3 venture termination, is reallocated to the new graphite trading platform - The original plan to explore Web3 combined with AI business has been terminated due to the company's inability to reach commercial consensus with potential partners, and joint venture GoMeta Limited will not further develop related businesses[9](index=9&type=chunk) - The company's strategic focus has shifted from Web3 to its existing graphite business, aiming to develop a global graphite product trading platform[9](index=9&type=chunk) New Utilization Details for HK$21 Million Unutilized Proceeds from 2024 Convertible Bonds | New Purpose | Planned Allocation Amount (HKD) | | :--- | :--- | | R&D for Graphite and Various Commodity Trading Platforms | 9,000,000 | | Marketing and Brand Building | 5,500,000 | | Trading Platform Working Capital | 6,500,000 | | **Total** | **21,000,000** | [Board's Opinion and Future Outlook](index=4&type=section&id=Board%27s%20Opinion%20and%20Future%20Outlook) The Board believes reallocating unutilized proceeds to the new graphite trading platform optimizes financial resources and enhances long-term shareholder value - The Board believes the change in use of proceeds will enable more effective utilization of financial resources, enhancing the Group's long-term business performance and aligning with the overall interests of the Group and its shareholders[10](index=10&type=chunk) - The Board will continuously monitor fund utilization and may revise the usage plan based on market conditions to achieve optimal business performance[10](index=10&type=chunk)

[Summary](index=1&type=section&id=Summary) The report summary outlines Baihong Industrial Holdings Limited's key financial performance for the six months ended June 30, 2025, including a decrease in revenue but significant profit growth, and earnings per share data Key Financial Data for H1 2025 | Indicator | H1 2025 (RMB) | | :--- | :--- | | Revenue | 9.485 billion | | Profit | 377 million | | Earnings Per Share | 0.18 | - Revenue for H1 2025 reached **RMB 9.485 billion**, a **10.7% decrease** year-on-year[2](index=2&type=chunk) - Profit for H1 2025 reached **RMB 377 million**, a **15.0% increase** year-on-year[2](index=2&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Baihong Industrial Holdings Limited and its subsidiaries for the six months ended June 30, 2025, including the income statement, statement of comprehensive income, and statement of financial position, with comparisons to the corresponding period in 2024 or December 31, 2024 [Unaudited Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the company's revenue decreased by 10.7% year-on-year, but operating profit and profit for the period both grew due to cost control and reduced finance costs Key Data from Condensed Consolidated Statement of Profit or Loss | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 9,484,707 | 10,619,933 | -10.7% | | Cost of sales | (8,680,344) | (9,888,027) | -12.2% | | Gross profit | 804,363 | 731,906 | +9.9% | | Operating profit | 495,838 | 428,392 | +15.7% | | Profit before tax | 429,660 | 343,006 | +25.2% | | Profit for the period attributable to owners of the Company | 376,692 | 327,465 | +15.0% | | Earnings per share (RMB) | 0.18 | 0.15 | +20.0% | [Unaudited Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, profit attributable to owners of the Company increased, but total comprehensive income for the period decreased due to negative impacts from exchange differences Key Data from Condensed Consolidated Statement of Comprehensive Income | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | | Profit for the period attributable to owners of the Company | 376,692 | 327,465 | | Other comprehensive loss for the period, net of tax | (73,495) | (4,151) | | Total comprehensive income for the period attributable to owners of the Company | 303,197 | 323,314 | - Exchange differences on translation of foreign operations expanded from a loss of **RMB 5.134 million** in H1 2024 to a loss of **RMB 71.637 million** in H1 2025[5](index=5&type=chunk) [Unaudited Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets slightly decreased, but net current liabilities significantly improved, with both net assets and total equity increasing Key Data from Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 12,095,217 | 12,309,993 | -1.7% | | Current assets | 16,290,593 | 15,904,789 | +2.4% | | Current liabilities | 16,781,440 | 16,727,542 | +0.3% | | Net current liabilities | (490,847) | (822,753) | +40.4% (improvement) | | Net assets | 11,291,394 | 10,989,593 | +2.7% | | Total equity | 11,291,394 | 10,989,593 | +2.7% | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section details the basis of preparation, accounting policies, going concern assumption, adoption of new accounting standards, revenue and segment information, income and expense breakdowns, taxation, dividends, earnings per share, significant investments, inventories, trade and other receivables/payables, bank deposits, cash and cash equivalents, bank borrowings, and share capital changes [1. Basis of Preparation](index=6&type=section&id=1.%20Basis%20of%20Preparation) The interim financial statements are prepared in accordance with HKAS 34 and the Listing Rules, on a historical cost basis, and presented in RMB. Management believes the Group can continue as a going concern based on future cash flows and credit commitments - The financial statements are prepared on a historical cost basis, presented in RMB, and have been reviewed by the Company's audit committee[3](index=3&type=chunk)[8](index=8&type=chunk) - As of June 30, 2025, the Group recorded **net current liabilities of approximately RMB 490.847 million**, but the Board believes the Group has sufficient working capital for continuous operation in the next 12 months[10](index=10&type=chunk) - The adoption of HKAS 21 (Amendment) 'Lack of Exchangeability' had no significant impact on the consolidated financial statements[12](index=12&type=chunk) [2. Revenue and Segment Information](index=7&type=section&id=2.%20Revenue%20and%20Segment%20Information) The Group primarily manufactures and sells polyester filament yarn, polyester products, polyester industrial yarn, and ES fiber products, operating as a single reportable segment, with revenue disaggregated by major product categories and customer geographical locations - The Group's main products include polyester filament yarn, polyester products (BOPET film, polyester chips, etc.), polyester industrial yarn, and ES fiber products[13](index=13&type=chunk)[14](index=14&type=chunk) Revenue by Major Product Category | Product Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Polyester filament yarn products | 3,399,973 | 4,502,961 | -24.5% | | Polyester products* | 5,054,138 | 5,227,993 | -3.3% | | Polyester industrial yarn products | 968,958 | 828,618 | +16.9% | | ES fiber products | 61,638 | 60,361 | +2.1% | | **Total Revenue** | **9,484,707** | **10,619,933** | **-10.7%** | Revenue by Customer Geographical Location | Customer Region | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | | People's Republic of China ("China") | 6,349,491 | 7,374,624 | | Vietnam | 497,198 | 542,367 | | Others | 2,638,018 | 2,702,942 | - The Group has a diversified customer base, with no single customer accounting for more than **10% of total revenue**[15](index=15&type=chunk) Geographical Location of Specific Non-current Assets | Geographical Location | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | China | 9,690,812 | 9,749,612 | | Vietnam | 2,329,357 | 2,484,071 | | Hong Kong | 39,228 | 40,490 | [3. Other Income](index=9&type=section&id=3.%20Other%20Income) Other income decreased by 37.1% year-on-year for the six months ended June 30, 2025, primarily due to a reduction in government grants Breakdown of Other Income | Income Source | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Bank interest income | 90,472 | 95,084 | -4.8% | | Government grants | 32,667 | 115,205 | -71.6% | | Sales of raw materials | 18,428 | 16,952 | +8.7% | | Dividend income | 1,378 | – | N/A | | Others | 70 | 24 | +191.7% | | **Total** | **143,015** | **227,265** | **-37.1%** | [4. Other Gains and (Losses), Net](index=10&type=section&id=4.%20Other%20Gains%20and%20(Losses),%20Net) Other net losses significantly decreased by 89.6% for the six months ended June 30, 2025, mainly due to improved net exchange gains Breakdown of Other Gains and (Losses), Net | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Net exchange gains (losses) | 9,729 | (51,958) | N/A (from loss to gain) | | Net fair value gains on financial instruments at FVTPL (unrealised) | 862 | 12,511 | -93.1% | | Net fair value gains (losses) on financial instruments at FVTPL (realised) | (16,681) | 3,432 | N/A (from gain to loss) | | **Total** | **(3,493)** | **(33,469)** | **-89.6%** | [5. Profit Before Tax](index=10&type=section&id=5.%20Profit%20Before%20Tax) Profit before tax was primarily affected by finance costs, staff costs, and other operating items, with finance costs decreasing by 22.5% year-on-year, and changes in staff and R&D costs [5. (a) Finance Costs](index=10&type=section&id=5.%20(a)%20Finance%20Costs) Finance costs decreased by 22.5% year-on-year, mainly due to a reduction in other interest expenses Breakdown of Finance Costs | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Interest on bank borrowings | 28,245 | 14,439 | +95.6% | | Other interest expenses | 38,245 | 71,119 | -46.2% | | **Total Finance Costs** | **66,178** | **85,386** | **-22.5%** | - The annual interest rate for capitalised borrowing costs decreased from **2.44%** in H1 2024 to **2.24%** in H1 2025[25](index=25&type=chunk) [5. (b) Staff Costs](index=11&type=section&id=5.%20(b)%20Staff%20Costs) Staff costs, including directors' emoluments, slightly increased year-on-year, primarily due to higher salaries, wages, allowances, and other benefits Breakdown of Staff Costs | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Salaries, wages, allowances and other benefits | 259,583 | 242,496 | +7.0% | | Contributions to defined contribution retirement plans | 12,406 | 10,178 | +21.9% | | **Total** | **271,989** | **252,674** | **+7.6%** | [5. (c) Other Items](index=11&type=section&id=5.%20(c)%20Other%20Items) Other items include cost of inventories, depreciation, and research and development costs, with both inventory and R&D costs decreasing Breakdown of Other Items | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Cost of inventories | 8,680,344 | 9,888,027 | -12.2% | | Depreciation (property, plant and equipment) | 403,815 | 405,373 | -0.4% | | Depreciation (right-of-use assets) | 27,723 | 14,951 | +85.4% | | Research and development costs | 239,631 | 260,632 | -8.0% | [6. Income Tax Expense](index=12&type=section&id=6.%20Income%20Tax%20Expense) Income tax expense significantly increased by 240.8% year-on-year for the six months ended June 30, 2025, mainly due to higher PRC and Vietnam corporate income tax Breakdown of Income Tax Expense | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | PRC corporate income tax (current) | 46,343 | 8,377 | +453.2% | | Vietnam corporate income tax (current) | 2,467 | – | N/A | | Withholding tax on dividends | 1,002 | 500 | +100.4% | | Deferred tax | 6,423 | 6,664 | -3.7% | | **Total** | **52,968** | **15,541** | **+240.8%** | - Baihong Fujian and Baihong Gaoxin, as high-tech enterprises, enjoy a reduced PRC corporate income tax rate of **15%**[27](index=27&type=chunk) - Baihong Vietnam enjoys Vietnam corporate income tax exemptions and reductions, with a two-year tax exemption from 2024 for its fully drawn yarn and drawn textured yarn products, followed by an **eight-year 50% reduction**[29](index=29&type=chunk)[30](index=30&type=chunk) [7. Dividends](index=13&type=section&id=7.%20Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 and 2024 - The Board does not recommend the payment of an interim dividend for H1 2025[31](index=31&type=chunk) [8. Earnings Per Share](index=14&type=section&id=8.%20Earnings%20Per%20Share) Basic earnings per share for the six months ended June 30, 2025, was RMB 0.18, higher than RMB 0.15 in the prior year, with diluted earnings per share being the same as basic due to no potential dilutive ordinary shares Earnings Per Share Calculation Data | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company for basic EPS calculation (RMB thousand) | 376,692 | 327,465 | | Weighted average number of ordinary shares | 2,115,506,398 | 2,118,447,000 | | **Basic and Diluted EPS (RMB)** | **0.18** | **0.15** | [9. Equity Investments – Designated at Fair Value Through Other Comprehensive Income](index=14&type=section&id=9.%20Equity%20Investments%20%E2%80%93%20Designated%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) The Group holds a 1.56% equity interest in a local bank, designated as an equity investment at fair value through other comprehensive income, and received dividend income in H1 2025 - The Group holds a **1.56% equity interest** in a local bank in Jinjiang, Quanzhou, Fujian Province, China, with an investment of approximately **RMB 35.82 million**[33](index=33&type=chunk) - In H1 2025, this investment generated dividend income of approximately **RMB 1.378 million**[33](index=33&type=chunk) [10. Inventories](index=15&type=section&id=10.%20Inventories) As of June 30, 2025, total inventories increased compared to the end of 2024, primarily due to growth in raw materials and finished goods stock Breakdown of Inventories | Inventory Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Raw materials | 838,193 | 683,839 | +22.6% | | Work in progress | 216,077 | 205,813 | +5.0% | | Finished goods | 4,691,940 | 4,425,086 | +6.0% | | **Total** | **5,746,210** | **5,314,738** | **+8.1%** | [11. Trade and Other Receivables](index=15&type=section&id=11.%20Trade%20and%20Other%20Receivables) As of June 30, 2025, total trade and other receivables slightly increased, with trade receivables and bills receivable decreasing, but deposits, prepayments, and other receivables significantly growing Breakdown of Trade and Other Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | 663,526 | 1,127,178 | -41.1% | | Bills receivable | 89,955 | 69,549 | +29.3% | | Deposits, prepayments and other receivables | 3,866,457 | 3,201,994 | +20.7% | | **Total** | **4,372,484** | **4,257,385** | **+2.7%** | - As of June 30, 2025, discounted bank acceptance bills of approximately **RMB 3.731 billion** and endorsed bank acceptance bills of approximately **RMB 102 million** were derecognised as financial assets[36](index=36&type=chunk) Ageing Analysis of Trade Receivables and Bills Receivable | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 733,274 | 1,140,691 | | 1 to 2 months | 2,417 | 48,170 | | 2 to 3 months | 12,202 | 7,586 | | Over 3 months | 5,588 | 280 | | **Total** | **753,481** | **1,196,727** | [12. Restricted Bank Deposits](index=16&type=section&id=12.%20Restricted%20Bank%20Deposits) As of June 30, 2025, total restricted bank deposits amounted to RMB 5.012 billion, primarily pledged for bank borrowings and bills payable Purpose of Restricted Bank Deposits | Purpose | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Pledged for bank borrowings | 223,581 | 221,120 | | Pledged for bills payable | 4,788,549 | 5,868,227 | | **Total** | **5,012,130** | **6,089,347** | [13. Cash and Cash Equivalents](index=16&type=section&id=13.%20Cash%20and%20Cash%20Equivalents) As of June 30, 2025, bank balances and cash significantly increased by 404.6% Cash and Cash Equivalents | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Bank balances and cash | 1,148,198 | 227,528 | +404.6% | [14. Trade and Other Payables](index=17&type=section&id=14.%20Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables significantly decreased, mainly due to reductions in bills payable and trade payables Breakdown of Trade and Other Payables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Trade payables | 1,475,743 | 1,776,654 | -16.9% | | Bills payable | 10,041,349 | 13,478,598 | -25.5% | | Other payables and accrued expenses | 213,358 | 218,456 | -2.3% | | **Total** | **12,076,422** | **15,810,267** | **-23.6%** | - The Group generally obtains credit terms of **60 to 180 days** from suppliers[42](index=42&type=chunk) Ageing Analysis of Trade Payables and Bills Payable | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 6,869,987 | 7,502,733 | | Over 3 months but within 6 months | 1,603,013 | 4,693,857 | | 6 months to 1 year | 3,037,042 | 3,032,934 | | Over 1 year | 7,050 | 25,728 | | **Total** | **11,517,092** | **15,255,252** | [15. Bank Borrowings](index=18&type=section&id=15.%20Bank%20Borrowings) As of June 30, 2025, total bank borrowings significantly increased, with most repayable within one year and secured by restricted bank deposits, buildings, and corporate guarantees Bank Borrowings Repayment Schedule | Repayment Period | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Within 1 year or on demand | 3,647,077 | 501,852 | +626.8% | | After 1 year but within 2 years | 91,336 | 281,952 | -67.6% | | **Total** | **3,738,413** | **783,804** | **+377.0%** | - Bank borrowings are jointly secured by restricted bank deposits (approximately **RMB 223.581 million**), self-occupied buildings (approximately **RMB 39.228 million**), and corporate guarantees provided by Baihong Fujian and Baihong Gaoxin (approximately **RMB 2.69 billion**)[43](index=43&type=chunk) Effective Interest Rate Range for Bank Borrowings | Bank Borrowing Type | June 30, 2025 (%) | December 31, 2024 (%) | | :--- | :--- | :--- | | Fixed-rate bank borrowings | 2.00 – 4.00 | 2.00 – 2.80 | | Variable-rate bank borrowings | 5.35 | 5.98 | [16. Share Capital](index=19&type=section&id=16.%20Share%20Capital) As of June 30, 2025, the Company's issued share capital slightly decreased due to share repurchases and cancellations Authorised and Issued Share Capital | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of issued ordinary shares | 2,115,328,000 | 2,115,676,000 | | Nominal value of issued ordinary shares (RMB) | 17,788,692 | 17,791,619 | - For the six months ended June 30, 2025, the Company repurchased a total of **1,184,000 shares** on the Stock Exchange, of which **224,000 shares** were cancelled, and **960,000 shares** were cancelled after the reporting period[46](index=46&type=chunk)[106](index=106&type=chunk) [17. Capital Commitments](index=21&type=section&id=17.%20Capital%20Commitments) As of June 30, 2025, the Group's capital commitments significantly increased, primarily for domestic capacity expansion and development of Vietnam production operations Breakdown of Capital Commitments | Capital Commitment Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Authorised but not contracted for | 2,395,730 | – | N/A | | Contracted for | 1,062,692 | 623,224 | +70.5% | | **Total** | **3,458,422** | **623,224** | **+454.9%** | [Management Discussion and Analysis](index=22&type=section&id=Management%20Discussion%20and%20Analysis) This section covers the macroeconomic environment, industry review, Group's operating strategies, detailed financial performance analysis, future business outlook, and corporate governance [Changes in Macroeconomic Environment](index=22&type=section&id=Changes%20in%20Macroeconomic%20Environment) Despite global economic challenges from the pandemic, geopolitical conflicts, and interest rate hikes, the global economy shows signs of recovery with the fading of the pandemic and implementation of stimulus policies, and China's economy is expected to expand steadily - The global economy is affected by the pandemic, Russia-Ukraine/Israel-Palestine conflicts, global interest rate hikes, and China-US relations, but is showing signs of recovery with the passing of the pandemic and stimulus policies[49](index=49&type=chunk) - The long-term positive fundamentals of China's economy remain unchanged, with macroeconomic policies focusing more on stable growth to stimulate consumption[49](index=49&type=chunk) [Industry Review](index=22&type=section&id=Industry%20Review) The textile and apparel industry faces complex external challenges and domestic structural issues, but China's long-term positive macroeconomic outlook and supportive national policies will help the industry alleviate operational pressure and achieve stable progress - The textile and apparel industry faces complex external challenges and domestic structural issues, but China's long-term positive macroeconomic outlook and policies will help the industry achieve stable growth[50](index=50&type=chunk) - Exports of textile machinery and chemical fibers with higher technological content and added value in China's textile industry are on an upward trend, and trade frictions may accelerate industry adjustments[50](index=50&type=chunk) [The Group's Operating Strategies and Development](index=23&type=section&id=The%20Group's%20Operating%20Strategies%20and%20Development) The Group aims to be a premium supplier of raw materials for consumer goods globally, enhancing product value and market competitiveness through technological innovation, intelligent manufacturing, talent development, and market expansion, while actively developing new product lines and overseas markets - The Group aims for "technological innovation to enhance corporate competitiveness," pursuing a path of integrated "production, education, research, and application" to develop new products and increase product added value[51](index=51&type=chunk) - As a national "high-tech enterprise," the Group has pioneered fully intelligent and automated production, enhancing product quality and risk resistance through intelligent transformation[51](index=51&type=chunk) - The ES fiber project commenced production in June 2020, targeting high-end customers with customized products, and has broad future demand and application prospects[52](index=52&type=chunk)[53](index=53&type=chunk) - The G-zone project for **255,000 tons/year** of functional environmentally friendly polyester film commenced production in December 2020, using internationally advanced processes and targeting high-end domestic and international markets, doubling the Group's polyester film capacity[54](index=54&type=chunk) - The Group's new polyester chip production facility (**300,000 tons/year**) in Vietnam gradually commenced commercial production in July 2023; the polyester film production line (additional polymerization capacity of **400,000 tons/year**) commenced commercial production in November 2023[55](index=55&type=chunk) - The polyester industrial yarn business commenced production in July 2022, with a total capacity of approximately **250,000 tons/year**, positioning the Group among China's top ten polyester industrial yarn producers[56](index=56&type=chunk) - The Group plans to invest approximately **RMB 2.396 billion** from 2025-2027 to expand its nylon business, expecting an additional capacity of **120,000 tons/year**, with commercial production gradually commencing from 2026[57](index=57&type=chunk) - The Group signed a 5G new technology strategic cooperation agreement with China Mobile, deploying a 5G intelligent factory to alleviate labor costs and improve production efficiency[57](index=57&type=chunk) - Phase I of the Group's "**700,000 tons differentiated chemical fiber project**" in Vietnam, comprising two projects, has been completed and commenced production, aiming to build a demonstration platform for China-Vietnam capacity cooperation[58](index=58&type=chunk) - Baihong Fujian and Baihong Gaoxin, the Group's main subsidiaries, are qualified as high-tech enterprises, with differentiated product revenue and R&D expenses accounting for **54.1%** and **2.5%** of total revenue, respectively[59](index=59&type=chunk) [Financial Review](index=27&type=section&id=Financial%20Review) This section provides a detailed review of the Group's operating performance during the reporting period, including changes and reasons for key financial indicators such as revenue, cost of sales, gross profit, other income and expenses, income tax, and profit for the period [1. Revenue](index=27&type=section&id=Financial%20Review%20-%201.%20Revenue) For the six months ended June 30, 2025, the Group's total revenue decreased by 10.7% year-on-year, mainly due to lower revenue from polyester filament yarn and polyester products, though polyester product sales volume grew and overseas sales proportion increased Revenue and Proportion by Product Category | Product Category | H1 2025 Revenue (RMB thousand) | Proportion | H1 2024 Revenue (RMB thousand) | Proportion | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Polyester filament yarn | 3,399,973 | 35.9% | 4,502,961 | 42.4% | -24.5% | | Polyester products | 5,054,138 | 53.3% | 5,227,993 | 49.2% | -3.3% | | ES fiber | 61,638 | 0.6% | 60,361 | 0.6% | +2.1% | | Polyester industrial yarn | 968,958 | 10.2% | 828,618 | 7.8% | +16.9% | | **Total** | **9,484,707** | **100.0%** | **10,619,933** | **100.0%** | **-10.7%** | - The average selling price per ton of polyester filament yarn decreased by **6.7%** year-on-year, and polyester products by **9.2%** year-on-year[61](index=61&type=chunk)[63](index=63&type=chunk) - Sales volume of polyester products increased from **773,671 tons** in H1 2024 to **824,171 tons** in H1 2025, a **6.5% increase**[63](index=63&type=chunk) Revenue and Proportion by Sales Region | Sales Region | H1 2025 Revenue (RMB thousand) | Proportion | H1 2024 Revenue (RMB thousand) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Domestic sales (Total) | 6,349,491 | 67.0% | 7,374,624 | 69.5% | | Fujian Province | 3,736,139 | 39.4% | 4,658,977 | 43.9% | | Guangdong Province | 1,315,230 | 13.9% | 1,369,345 | 12.9% | | Other provinces | 1,298,122 | 13.7% | 1,346,302 | 12.7% | | Overseas sales (Total) | 3,135,216 | 33.0% | 3,245,309 | 30.5% | | Vietnam | 497,198 | 5.2% | 542,367 | 5.1% | | Other overseas | 2,638,018 | 27.8% | 2,702,942 | 25.4% | [2. Cost of Sales](index=31&type=section&id=Financial%20Review%20-%202.%20Cost%20of%20Sales) For the six months ended June 30, 2025, cost of sales decreased by 12.2% year-on-year, primarily due to lower raw material prices for polyester filament yarn and polyester products Cost of Sales and Proportion by Product Category | Product Category | H1 2025 Cost of Sales (RMB thousand) | Proportion | H1 2024 Cost of Sales (RMB thousand) | Proportion | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Polyester filament yarn | 3,030,637 | 34.9% | 4,022,508 | 40.6% | -24.6% | | Polyester products | 4,699,418 | 54.1% | 4,999,879 | 50.6% | -6.0% | | ES fiber | 58,116 | 0.7% | 59,304 | 0.6% | -2.0% | | Polyester industrial yarn | 892,173 | 10.3% | 806,336 | 8.2% | +10.6% | | **Total** | **8,680,344** | **100.0%** | **9,888,027** | **100.0%** | **-12.2%** | - The average cost of sales per ton for polyester filament yarn decreased by **6.9%**, with raw material prices decreasing by **9.6%**. The average cost of sales per ton for polyester products decreased by **11.8%**, with raw material prices decreasing by **13.3%**[70](index=70&type=chunk)[71](index=71&type=chunk) - PTA and MEG account for **69.7%** of the total cost of sales for polyester filament yarn, with their prices influenced by crude oil prices[70](index=70&type=chunk) [3. Gross Profit](index=33&type=section&id=Financial%20Review%20-%203.%20Gross%20Profit) For the six months ended June 30, 2025, gross profit increased by 9.9% year-on-year, and gross profit margin rose from 6.9% to 8.5%, mainly because the decrease in average cost per ton was greater than the decrease in average selling price Gross Profit and Gross Profit Margin Analysis | Indicator | H1 2025 | H1 2024 | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Gross profit (RMB thousand) | 804,363 | 731,906 | +9.9% | | Sales volume (tons) | 1,375,133 | 1,400,536 | -1.8% | | Average selling price per ton (RMB) | 6,897 | 7,583 | -9.0% | | Average cost per ton (RMB) | 6,312 | 7,060 | -10.6% | | Average gross profit per ton (RMB) | 585 | 523 | +11.8% | | Gross profit margin | 8.5% | 6.9% | +1.6 percentage points | - Polyester filament yarn gross profit margin increased from **10.7% to 10.9%**; polyester products gross profit margin increased from **4.4% to 7.0%**; ES fiber gross profit margin increased from **1.8% to 5.7%**; polyester industrial yarn gross profit margin increased from **2.7% to 7.9%**[76](index=76&type=chunk)[77](index=77&type=chunk)[81](index=81&type=chunk) - Despite facing loss of foreign trade orders and intensified international competition, the Group maintained steady growth in sales volume and revenue by expanding markets and production scale[78](index=78&type=chunk) [4. Other Income](index=37&type=section&id=Financial%20Review%20-%204.%20Other%20Income) Other income decreased by 37.1% year-on-year, primarily due to a reduction in government grants Other Income | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Other income | 143,015 | 227,265 | -37.1% | [5. Other Gains and Losses, Net](index=37&type=section&id=Financial%20Review%20-%205.%20Other%20Gains%20and%20Losses,%20Net) Other net losses significantly decreased by 89.6% year-on-year, mainly due to a reduction in net exchange losses Other Gains and Losses, Net | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Other net losses | (3,493) | (33,469) | -89.6% | [6. Selling and Distribution Expenses](index=37&type=section&id=Financial%20Review%20-%206.%20Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased by 16.2% year-on-year, primarily due to lower transportation costs resulting from reduced sales in provinces outside Fujian and overseas sales Selling and Distribution Expenses | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 126,009 | 150,282 | -16.2% | [7. Administrative Expenses](index=37&type=section&id=Financial%20Review%20-%207.%20Administrative%20Expenses) Administrative expenses decreased by 7.2% year-on-year, primarily due to reduced research and development expenses Administrative Expenses | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Administrative expenses | 322,038 | 347,028 | -7.2% | [8. Finance Costs](index=37&type=section&id=Financial%20Review%20-%208.%20Finance%20Costs) Finance costs decreased by 22.5% year-on-year, primarily due to a reduction in other interest expenses Finance Costs | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 66,178 | 85,386 | -22.5% | [9. Income Tax](index=38&type=section&id=Financial%20Review%20-%209.%20Income%20Tax) Income tax expense significantly increased by 240.8% year-on-year Income Tax | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Income tax | 52,968 | 15,541 | +240.8% | [10. Profit for the Period](index=38&type=section&id=Financial%20Review%20-%2010.%20Profit%20for%20the%20Period) Profit for the period increased by 15.0% year-on-year, primarily due to reduced expenses compared to the prior year Profit for the Period | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Profit for the period | 376,692 | 327,465 | +15.0% | [Financial Position](index=38&type=section&id=Financial%20Position) This section analyzes the Group's liquidity, capital resources, inventory and trade receivables/payables turnover days, capital commitments, total liabilities, capital and reserves, and bank borrowings [1. Liquidity and Capital Resources](index=38&type=section&id=Financial%20Position%20-%201.%20Liquidity%20and%20Capital%20Resources) As of June 30, 2025, cash and cash equivalents significantly increased by 404.6%. Net cash outflow from operating activities was substantial, but net cash inflow from financing activities covered part of the demand. Inventory turnover days increased, trade receivables turnover days decreased, and trade payables turnover days significantly decreased Cash and Cash Equivalents | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 1,148,198 | 227,528 | +404.6% | - Net cash outflow from operating activities was **RMB 2.925 billion**, net cash inflow from investing activities was **RMB 949 million**, and net cash inflow from financing activities was **RMB 2.895 billion**[89](index=89&type=chunk) Turnover Days | Turnover Days | H1 2025 (days) | H1 2024 (days) | Change (days) | | :--- | :--- | :--- | :--- | | Inventory turnover days | 116.3 | 84.8 | +31.5 | | Trade receivables turnover days | 18.8 | 21.0 | -2.2 | | Trade payables turnover days | 196.7 | 369.8 | -173.1 | - As of June 30, 2025, capital commitments amounted to **RMB 3.458 billion**, primarily for domestic capacity expansion and Vietnam production operations[90](index=90&type=chunk) Financial Ratios | Financial Ratio | June 30, 2025 | | :--- | :--- | | Gearing ratio | 151.4% | | Debt-to-asset ratio | 1.66 times | - Total bank borrowings amounted to **RMB 3.738 billion**, of which **RMB 3.647 billion** is repayable within one year, secured by properties and restricted bank deposits[91](index=91&type=chunk) [Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries, and Plans for Material Investments or Purchases of Capital Assets in the Future](index=39&type=section&id=Significant%20Investments%20Held,%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries,%20and%20Plans%20for%20Material%20Investments%20or%20Purchases%20of%20Capital%20Assets%20in%20the%20Future) Except for disclosed information, the Group had no other significant investments, acquisitions, or disposals during the reporting period. Future plans primarily focus on domestic capacity expansion and Vietnam production operations, funded by internally generated funds and bank borrowings - The Group's future plans are mainly related to domestic capacity expansion and the development of Vietnam production operations, funded by internally generated funds and bank borrowings[92](index=92&type=chunk) [Pledge of Assets](index=39&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no other pledges of assets apart from those disclosed in the report - As of June 30, 2025, the Group had no other pledges of assets apart from those disclosed in the report[93](index=93&type=chunk) [Contingent Liabilities](index=39&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no contingent liabilities - As of June 30, 2025, the Group had no contingent liabilities[94](index=94&type=chunk) [Foreign Currency Risk](index=39&type=section&id=Foreign%20Currency%20Risk) The Group's foreign exchange risk is minimal, with most financial assets and liabilities denominated in functional currencies. Management closely monitors foreign exchange risk and enters into forward foreign exchange contracts when necessary - The Group's foreign exchange risk is minimal, with most financial assets and liabilities denominated in functional currencies[95](index=95&type=chunk) - As of June 30, 2025, the Group had significant outstanding foreign currency forward contracts of approximately **RMB 98.562 million**[97](index=97&type=chunk) [Employees and Remuneration](index=40&type=section&id=Employees%20and%20Remuneration) As of June 30, 2025, the Group had 9,562 employees, with remuneration policies based on job performance, professional experience, and market conditions, and discretionary bonuses provided - As of June 30, 2025, the Group had **9,562 employees**[98](index=98&type=chunk) - Employee remuneration is determined based on job performance, professional experience, and market conditions, with discretionary bonuses provided[98](index=98&type=chunk) [Business Outlook](index=40&type=section&id=Business%20Outlook) The Group anticipates continued global and Chinese economic rebound, with a solid foundation for the textile industry. The Group will continue to achieve stable business growth through technological innovation, new product launches, cost control, overseas market expansion, and capacity expansion, maintaining confidence in its medium to long-term development - The global economy is expected to continue its rebound in 2025, with stable economic development in China stimulating consumption[99](index=99&type=chunk) - As the largest polyester filament yarn producer in South China, the Group benefits from the economic cycle and rising crude oil prices, with polyester product prices continuing to improve[99](index=99&type=chunk) - The Vietnam polyester filament yarn project has commenced production, polyester industrial yarn production lines have gradually entered commercial production, and new polyester chip production facilities and polyester film production lines have also commenced commercial production, further expanding overseas markets and enhancing capacity[99](index=99&type=chunk)[100](index=100&type=chunk) - The Group plans to invest approximately **RMB 2.396 billion** to expand its nylon business, expecting an additional capacity of **120,000 tons/year**, with commercial production gradually commencing from 2026[101](index=101&type=chunk) - Despite short-term impacts from the pandemic, the textile industry has a solid foundation, and the Group remains confident in its medium to long-term business development[100](index=100&type=chunk) [Corporate Governance and Other Information](index=41&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section discloses the Company's interim dividend policy, compliance with corporate governance code, board diversity, directors' securities dealing standard code compliance, audit committee composition and responsibilities, and information on share repurchases and report publication [Interim Dividend](index=41&type=section&id=Interim%20Dividend) The Board resolved not to declare any interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for H1 2025[102](index=102&type=chunk) [Compliance with Corporate Governance Code](index=41&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has complied with the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period. With the appointment of Ms. Shi Haiyan, the Board now meets the Listing Rule 13.92 requirement for board diversity - The Company has complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules during the reporting period[103](index=103&type=chunk) - With the appointment of Ms. Shi Haiyan on June 30, 2025, the Board has met the Listing Rule 13.92 requirement for at least one director of a different gender for board diversity[103](index=103&type=chunk) [Standard Code for Securities Transactions by Directors](index=42&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules and confirmed that directors have complied with it during the reporting period - The Company has adopted the Standard Code for Securities Transactions by Directors set out in Appendix C3 of the Listing Rules and confirmed that directors have complied with it during the reporting period[104](index=104&type=chunk) [Audit Committee](index=42&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and overseeing the Group's financial reporting process, risk management, and internal control systems, and has reviewed these interim financial statements - The Audit Committee comprises three independent non-executive directors, with Mr. Yu Weiming as Chairman[105](index=105&type=chunk) - The Audit Committee's primary responsibilities include reviewing and overseeing the Group's financial reporting process, risk management, and internal control systems, and it has reviewed these interim financial statements[105](index=105&type=chunk) [Purchases, Sales or Redemptions of Listed Shares](index=42&type=section&id=Purchases,%20Sales%20or%20Redemptions%20of%20Listed%20Shares) For the six months ended June 30, 2025, the Company repurchased a total of 1,184,000 shares, of which 224,000 shares were cancelled, and the remaining 960,000 shares were cancelled after the reporting period Details of Share Repurchases | Month of Repurchase | Number of Shares Repurchased | Total Price Paid (HKD) | | :--- | :--- | :--- | | January | 6,000 | 26,100 | | March | 42,000 | 178,360 | | April | 130,000 | 548,780 | | May | 106,000 | 467,880 | | June | 900,000 | 4,044,860 | | **Total** | **1,184,000** | **5,265,980** | - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any other listed securities of the Company[107](index=107&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=43&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement has been published on the Company's website and the HKEXnews website, and the interim report will be dispatched to shareholders and available on these websites in due course - This interim results announcement has been published on the Company's website (www.baihong.com) and the HKEXnews website (www.hkexnews.hk)[108](index=108&type=chunk) - The interim report will be dispatched to shareholders in due course and will be available on the aforementioned websites[108](index=108&type=chunk)