Interim Report 中 期 報 告 2025 Southwest Securities International Securities Limited 西證國際證券股份有限公司 Southwest Securities International Securities Limited 西證國際證券股份有限公司 Interim Report 2025 中期報告 西證國際證券股份有限公司 2025年中期報告 目 錄 西證國際證券股份有限公司 2025年中期報告 | 公司資料 | 2 | | --- | --- | | 中期業績 | 4 | | 中期股息 | 4 | | 管理層討論及分析 | 4 | | 中期簡明綜合財務報表 | | | 簡明綜合損益及其他全面收益表 | 10 | | 簡明綜合財務狀況表 | 11 | | 簡明綜合權益變動表 | 13 | | 簡明綜合現金流量表 | 14 | | 中期簡明綜合財務報表附註 | 15 | | 其他資料 | 35 | 西證國際證券股份有限公司 2025年中期報告 公司資料 | 董事會 | 執行董事 | | --- | --- | | | 黃昌盛先生 （行政總 ...

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides an overview of the company's governance structure, key personnel, advisors, and operational locations [Board and Committees](index=3&type=section&id=Board%20and%20Committees) The company's board comprises executive, non-executive, and independent non-executive directors, supported by a supervisory committee, audit committee, remuneration and appraisal committee, and nomination committee, ensuring robust corporate governance - The Board of Directors includes **Li Weizhu (Chairman)**, **Li Weipeng (Vice Chairman)**, Xie Mingyu, Zhong Xipeng (Executive Directors), Zhong Yingqin (Non-executive Director), and Liu Guoxun, Yang Lan, Guo Qiuquan (Independent Non-executive Directors)[7](index=7&type=chunk)[8](index=8&type=chunk) - The Supervisory Committee members include Lin Liuzhi, Li Caiping, and Ni Xuepeng[7](index=7&type=chunk)[8](index=8&type=chunk) - The Audit Committee Chairman is **Yang Lan**, the Remuneration and Appraisal Committee Chairman is **Guo Qiuquan**, and the Nomination Committee Chairman is **Li Weizhu**[7](index=7&type=chunk)[8](index=8&type=chunk) [Key Personnel and Advisors](index=4&type=section&id=Key%20Personnel%20and%20Advisors) The company has authorized representatives, joint company secretaries, and engages Ernst & Young as auditors, Paul Hastings (Hong Kong) as Hong Kong legal counsel, and Fosun International Capital Co., Ltd. as compliance advisor - Authorized representatives are **Xie Mingyu** and **Weng Meiyi**, and joint company secretaries are **Wu Yang** and **Weng Meiyi**[10](index=10&type=chunk) - The auditor is **Ernst & Young**, legal counsel is **Paul Hastings (Hong Kong)**, and compliance advisor is **Fosun International Capital Co., Ltd.**[10](index=10&type=chunk) [Company Locations and Information](index=4&type=section&id=Company%20Locations%20and%20Information) The company's registered office and principal place of business in China are in Luohu District, Shenzhen, Guangdong Province, with its principal place of business in Hong Kong in Wan Chai; H Share registrar is Hong Kong Registrars Limited, and principal bank is Bank of China - Registered office and principal place of business in China: 2301–2409, Zhongguan Business Building, No. 3031 Taibai Road, Dongxiao Community, Dongxiao Street, Luohu District, Shenzhen, Guangdong Province, China[11](index=11&type=chunk)[12](index=12&type=chunk) - Principal place of business in Hong Kong: 40/F, Dah Sing Financial Centre, 248 Queen's Road East, Wan Chai, Hong Kong[12](index=12&type=chunk) - Company website is **www.zlf.cn**, and stock code is **6168**[13](index=13&type=chunk) [Results Highlights](index=6&type=section&id=Results%20Highlights) For the six months ended June 30, 2025, Zhouliufu Jewelry Co., Ltd. achieved growth in revenue, gross profit, and net profit, with net profit increasing by 11.9% year-on-year 2025 H1 Performance Highlights | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Revenue | 3,150.4 | 2,993.9 | 5.2% | | Gross Profit | 827.2 | 761.1 | 8.7% | | Net Profit | 415.3 | 371.2 | 11.9% | [Management Discussion And Analysis](index=7&type=section&id=Management%20Discussion%20And%20Analysis) This section provides a comprehensive review of the company's business performance, financial results, and future strategic outlook [Business Review](index=7&type=section&id=Business%20Review) As a Chinese jewelry enterprise, the company leverages online and offline networks to offer gold, diamond-set, and other jewelry products; during the reporting period, total revenue grew by 5.2% and gross profit by 8.7%, driven by the growth of the self-operated model, especially strong online sales, despite a reduction in offline franchised stores - The company's business model integrates jewelry product development, design, procurement, supply, franchising, and brand operation[20](index=20&type=chunk) - Revenue primarily derives from franchised stores, self-operated stores, and online sales channels[20](index=20&type=chunk) 2025 H1 Revenue and Gross Profit Overview | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Revenue | 3,150.4 | 2,993.9 | 5.2% | | Gross Profit | 827.2 | 761.1 | 8.7% | [Online Revenue Growth](index=7&type=section&id=Online%20Revenue%20Growth) In H1 2025, online sales channel revenue reached RMB 1.6319 billion, a year-on-year increase of approximately 34%, becoming a significant contributor to the group's revenue, driven by optimized operations, enhanced online capabilities, and deep collaboration with e-commerce platforms Online Sales Channel Revenue | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Online Sales Channel Revenue | 1,631.9 | 1,215.4 | 34% | - During the 2025 '6.18' shopping festival, the Group's online self-operated GMV across all platforms exceeded **RMB 700 million**, a **36% year-on-year increase**, marking two consecutive years of over 30% growth[27](index=27&type=chunk)[29](index=29&type=chunk) - The company maintained its **fourth-place ranking** in the gold category on Tmall during the 6.18 event[27](index=27&type=chunk)[29](index=29&type=chunk) [Fixed-Price Products Sales Increase](index=8&type=section&id=Fixed-Price%20Products%20Sales%20Increase) Amid rising gold prices and evolving consumer preferences, the company is exploring lightweight and fashionable product designs through IP collaborations and material combinations, enhancing product versatility; during the reporting period, offline retail sales of fixed-price products saw significant growth in volume and value, with an improved gross profit margin - The company explores lightweight and fashionable product designs through strategies such as **IP collaborations** and **combinations of gold with other materials**[28](index=28&type=chunk)[30](index=30&type=chunk) Offline Retail Fixed-Price Product Growth | Metric | YoY Growth (%) | | :--- | :--- | | Fixed-price product sales volume | 73.2% | | Fixed-price product sales value | 44.4% | | Offline retail gross profit margin | Increased by 12.2 percentage points to 41.7% | [Offline Store Adjustments](index=9&type=section&id=Offline%20Store%20Adjustments) Due to rising gold prices and macroeconomic uncertainties, consumer spending faced pressure, leading the company to encourage store layout optimization, resulting in a net closure of 272 stores during the reporting period; as of June 30, 2025, the company operated 3,760 franchised stores and 97 self-operated stores, with optimized city tiers, location strategies, and average store sizes - During the reporting period, the Group **net closed 272 stores**, primarily due to rapidly rising gold prices and macroeconomic uncertainties impacting consumer spending[31](index=31&type=chunk)[32](index=32&type=chunk) Store Network Overview (As of June 30, 2025) | Model | December 31, 2024 | Net Change | June 30, 2025 | | :--- | :--- | :--- | :--- | | Franchised Stores | 4,038 | -278 | 3,760 | | Self-operated Stores | 91 | 6 | 97 | | **Total** | **4,129** | **-272** | **3,857** | - Store structure optimization: **First and second-tier city stores accounted for nearly 50%**; shopping mall and department store locations exceeded **55%**; average single-store area increased to approximately **110 square meters** at period-end[31](index=31&type=chunk)[32](index=32&type=chunk) [Operating Revenue by Sales Channels](index=10&type=section&id=Operating%20Revenue%20by%20Sales%20Channels) In H1 2025, the Group's total revenue was RMB 3.1504 billion, a 5.2% year-on-year increase; online sales channel revenue's share rose to 52%, growing by 34% year-on-year, becoming the primary growth engine, while franchised and self-operated store revenues declined, though self-operated stores saw a 13.5% quarter-on-quarter increase in same-store revenue in Q2 Operating Revenue by Sales Channels (RMB thousand) | Channel | 2025 (RMB thousand) | Share (%) | 2024 (RMB thousand) | Share (%) | YoY Change (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Franchised Model | 1,228,695 | 39 | 1,481,487 | 49 | -252,792 | -17 | | Online Sales Channels | 1,631,931 | 52 | 1,215,410 | 41 | 416,521 | 34 | | Self-operated Stores | 213,091 | 7 | 250,948 | 8 | -37,857 | -15 | | Others | 76,705 | 2 | 46,071 | 2 | 30,634 | 66 | | **Total** | **3,150,422** | **100** | **2,993,916** | **100** | **156,506** | **5** | - Online business saw both volume and price increases, benefiting from rapidly rising gold prices and a divergence in online and offline consumption, with its share of Group revenue increasing to **52%**[38](index=38&type=chunk)[40](index=40&type=chunk) - Although self-operated store same-store revenue declined in Q1, it has achieved a **13.5% year-on-year increase** since Q2[41](index=41&type=chunk)[43](index=43&type=chunk) [Revenue by Products and Services](index=12&type=section&id=Revenue%20by%20Products%20and%20Services) During the reporting period, gold jewelry revenue increased by approximately 9% year-on-year to RMB 2.534 billion, primarily driven by online contributions, with significant growth in fixed-price gold; diamond-set jewelry and other revenue slightly declined by 4% to RMB 235.2 million, while service fee revenue decreased by 11% to RMB 381.3 million, mainly due to structural adjustments and closures of retail stores Operating Revenue by Products and Services (RMB thousand) | Product/Service | 2025 (RMB thousand) | Share (%) | 2024 (RMB thousand) | Share (%) | YoY Change (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gold Jewelry | 2,533,982 | 81 | 2,319,784 | 78 | 214,198 | 9 | | Diamond-set Jewelry and Others | 235,182 | 7 | 244,769 | 8 | -9,587 | -4 | | Service Fees | 381,258 | 12 | 429,363 | 14 | -48,105 | -11 | | **Total** | **3,150,422** | **100** | **2,993,916** | **100** | **156,506** | **5** | - The growth in gold jewelry revenue is primarily attributed to **online revenue contributions**, with significant growth in **fixed-price gold sales**, though rising gold prices constrained sales of weight-based gold[47](index=47&type=chunk)[50](index=50&type=chunk) - The decrease in service fee revenue is mainly due to a reduction in brand usage fees collected from franchisees, resulting from **structural adjustments and closures of retail stores** in H1 2025[49](index=49&type=chunk)[51](index=51&type=chunk) [Outlook and Prospects](index=13&type=section&id=Outlook%20and%20Prospects) Facing high gold prices, changing consumer psychology, and intensified industry competition, the company plans to seize market opportunities and upgrade brand development by strengthening product R&D, deepening marketing to young consumers, expanding offline stores across multiple ecosystems, and enhancing the competitive advantages of its online e-commerce business - The gold jewelry industry has entered a period of adjustment and integration, with overall growth slowing, competition intensifying, and **young consumer groups becoming a key battleground**[52](index=52&type=chunk)[54](index=54&type=chunk) [Product R&D and Innovation](index=13&type=section&id=Product%20R%26D%20and%20Innovation) The Group will collaborate with leading industry suppliers to increase investment in product innovation and R&D, including popular IP styles and trendy manufacturing processes, planning to launch upgraded versions of signature product series like "Jiuhua Dayuan" and "Yihe Xianjing," and reserving new series such as point-drilling and filigree to promote Oriental culture and national trends - Increase investment in **product innovation and R&D**, covering popular IP styles and trendy manufacturing processes[53](index=53&type=chunk)[55](index=55&type=chunk) - Will successively launch upgraded versions of signature product series such as **'Jiuhua Dayuan'** and **'Yihe Xianjing'**, highlighting Oriental culture and national trends[53](index=53&type=chunk)[55](index=55&type=chunk) - Reserve several newly developed series, emphasizing popular craftsmanship like **point-drilling and filigree**[53](index=53&type=chunk)[55](index=55&type=chunk) [Brand Marketing for Young Consumers](index=14&type=section&id=Brand%20Marketing%20for%20Young%20Consumers) The company will draw on the new media marketing experience of other renowned consumer brands, utilizing IPO proceeds to increase investment in new media channels like Xiaohongshu and Douyin, to boost online e-commerce performance and drive traffic to offline stores - Increase effective investment in new media channels such as **Xiaohongshu and Douyin** to empower online e-commerce and drive traffic to offline stores[57](index=57&type=chunk)[60](index=60&type=chunk) [Offline Store Expansion and Quality Improvement](index=14&type=section&id=Offline%20Store%20Expansion%20and%20Quality%20Improvement) The Group will expand its offline store network through various models, including enhancing franchised store competitiveness, expanding self-operated stores to approximately 200 within three years, co-investing with franchisees in joint venture stores, and promoting the "Zhouliufu Ji Culture Museum" high-end flagship store to premium malls nationwide; concurrently, it will actively expand into Southeast Asian overseas markets, aiming for 10 overseas stores within the year, and strengthen international e-commerce collaborations - Franchised stores: Enhance competitiveness through **product R&D, marketing traffic generation, store site selection, image upgrades, and operational empowerment**[58](index=58&type=chunk)[61](index=61&type=chunk) - Self-operated stores: Plan to increase the number of self-operated stores to approximately **200 within three years**, enhancing brand presence and reputation in mid-to-high-end shopping malls[59](index=59&type=chunk)[61](index=61&type=chunk) - High-end stores: The first high-end flagship store, **'Zhouliufu Ji Culture Museum'**, opened in Beijing China World Mall, with future plans to cover mainstream high-end malls nationwide[63](index=63&type=chunk)[65](index=65&type=chunk) - Overseas stores: Plan to increase stores in Southeast Asia to **10 within the year**, and strengthen cooperation with e-commerce platforms like Amazon and Lazada to boost overseas online revenue[64](index=64&type=chunk)[65](index=65&type=chunk) [Strengthen Online E-commerce Operations](index=16&type=section&id=Strengthen%20Online%20E-commerce%20Operations) The Group will utilize IPO proceeds to continuously increase resource investment in its e-commerce subsidiary across product, marketing, operations, and logistics, maintaining the agility, versatility, cost-effectiveness, and rapid turnover advantages of its online business, thereby solidifying its leading position on mainstream e-commerce platforms like Tmall and JD.com - Utilize IPO proceeds to continuously increase resource investment in the e-commerce subsidiary across **product, marketing, operations, and logistics**[67](index=67&type=chunk)[71](index=71&type=chunk) - Maintain the advantages of online business operations in terms of **agility, versatility, high cost-effectiveness, and rapid turnover**, solidifying its leading position on mainstream e-commerce platforms like Tmall and JD.com[67](index=67&type=chunk)[71](index=71&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) During the reporting period, the Group's revenue, gross profit, and net profit all increased; cost of sales grew with revenue, and gross profit margin improved; selling and marketing expenses and R&D expenses rose due to increased personnel and e-commerce platform fees, while other net expenses significantly increased due to gold lease losses and other factors; income tax expense grew with higher profit before tax 2025 H1 Key Financial Metrics Changes | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 3,150.4 | 2,993.9 | 156.5 | 5.2% | | Cost of Sales | 2,323.2 | 2,232.8 | 90.4 | 4.0% | | Gross Profit | 827.2 | 761.1 | 66.1 | 8.7% | | Gross Profit Margin | 26.3% | 25.4% | +0.9 percentage points | - | | Other Income and Gains | 20.0 | 18.7 | 1.3 | 6.9% | | Selling and Marketing Expenses | 241.6 | 236.5 | 5.1 | 2.2% | | Administrative Expenses | 65.1 | 64.8 | 0.3 | 0.5% | | Research and Development Expenses | 6.3 | 5.6 | 0.7 | 13.3% | | Other Net Expenses | 12.8 | 2.3 | 10.6 | 466.9% | | Finance Costs | 6.7 | 5.9 | 0.8 | 13.5% | | Income Tax Expense | 99.4 | 93.6 | 5.8 | 6.2% | - Changes in gross profit margin were primarily influenced by **rising gold prices, channel structure, and product mix changes** during the year[74](index=74&type=chunk)[78](index=78&type=chunk) - The significant increase in other net expenses was mainly due to **gold lease losses and other increased expenditures**[84](index=84&type=chunk)[89](index=89&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company's cash and cash equivalents significantly increased to RMB 1.5883 billion, primarily due to proceeds from the global offering; the company adopts a prudent capital management approach to maintain adequate liquidity Cash and Cash Equivalents | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 1,588.3 | 177.0 | +1,411.3 | - The increase in cash and cash equivalents was primarily due to **proceeds from the global offering** received during the reporting period[93](index=93&type=chunk)[95](index=95&type=chunk) - The company adopts a **prudent capital management approach** to its treasury policy to maintain appropriate and adequate liquidity[94](index=94&type=chunk)[95](index=95&type=chunk) [Indebtedness and Borrowings](index=19&type=section&id=Indebtedness%20and%20Borrowings) As of June 30, 2025, the company's interest-bearing bank and other borrowings decreased to RMB 411.6 million, mainly due to repayment of borrowings; total lease liabilities also declined, and the gearing ratio decreased from 34.9% at the end of 2024 to 23.1% Indebtedness and Borrowings Overview | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change (RMB million) | | :--- | :--- | :--- | :--- | | Interest-bearing bank and other borrowings | 411.6 | 641.1 | -229.5 | | Total outstanding contractual lease payments | 34.1 | 45.7 | -11.6 | | Gearing ratio | 23.1% | 34.9% | -11.8 percentage points | - The primary reason for the decrease in interest-bearing bank and other borrowings was **repayment of borrowings**[96](index=96&type=chunk)[99](index=99&type=chunk) - The gearing ratio is calculated as total liabilities divided by total assets, multiplied by 100%[98](index=98&type=chunk)[99](index=99&type=chunk) [Other Financial and Operational Information](index=20&type=section&id=Other%20Financial%20and%20Operational%20Information) The company has no significant contingent liabilities and insignificant foreign exchange risk; as of June 30, 2025, total pledged assets were approximately RMB 139.2 million as collateral for bank borrowings; capital expenditure during the reporting period was about RMB 172.7 million, mainly for property, plant, and equipment; the total number of employees was 1,737, and an employee share incentive scheme was implemented; there were no significant investments, acquisitions, or disposals during the reporting period - As of June 30, 2025, the company had **no significant contingent liabilities**[101](index=101&type=chunk)[107](index=107&type=chunk) - Foreign exchange risk is **insignificant**, as most business transactions are conducted in mainland China and denominated in RMB[102](index=102&type=chunk)[108](index=108&type=chunk) Asset Pledges and Capital Expenditure | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Total pledged assets | 139.2 | 398.3 | | Capital expenditure | 172.7 | - | | Capital commitments | 121.4 | 162.4 | - As of June 30, 2025, the company had **1,737 full-time employees**, all located in China[105](index=105&type=chunk)[111](index=111&type=chunk) - The company implemented a **Pre-IPO Employee Share Option Plan (ESOP)** in December 2017 to incentivize and retain talent[113](index=113&type=chunk)[116](index=116&type=chunk) - During the reporting period, the company had **no significant investments, acquisitions, or disposals** of subsidiaries, associates, or joint ventures[115](index=115&type=chunk)[117](index=117&type=chunk) [Future Plans and Use of Proceeds](index=22&type=section&id=Future%20Plans%20and%20Use%20of%20Proceeds) The company will continue to seek strategic investment and acquisition opportunities for long-term growth; net proceeds from the IPO, approximately HKD 1.42948 billion, will be used to expand the sales network, strengthen brand building, enhance product portfolio and R&D capabilities, and for working capital and general corporate purposes, with all funds expected to be fully utilized by December 31, 2028 - The company will continue to seek new opportunities for **strategic investments and/or acquisitions** to achieve its long-term growth strategy[118](index=118&type=chunk)[121](index=121&type=chunk) Use of Net Proceeds from IPO (HKD million) | Purpose | Percentage of Total Net Proceeds | Allocation of Net Proceeds (HKD million) | Unutilized Amount as of June 30, 2025 (HKD million) | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | | Expand and strengthen sales network | 50% | 714.74 | 714.74 | On or before December 31, 2028 | | Strengthen brand building | 20% | 285.90 | 285.90 | On or before December 31, 2028 | | Enhance product portfolio and R&D capabilities | 20% | 285.90 | 285.90 | On or before December 31, 2028 | | Working capital and general corporate purposes | 10% | 142.95 | 142.95 | On or before December 31, 2028 | | **Total** | **100%** | **1,429.48** | **1,429.48** | **On or before December 31, 2028** | - As of June 30, 2025, the **net proceeds from the IPO remained unutilized**[135](index=135&type=chunk)[138](index=138&type=chunk) [Subsequent Events After The Reporting Period](index=22&type=section&id=Subsequent%20Events%20After%20The%20Reporting%20Period) Subsequent to the reporting period, the company exercised its over-allotment option, increasing the total number of H shares, consequently changing the registered capital and share capital structure, and amending the articles of association; additionally, the Board recommended an interim dividend of RMB 0.45 per share - On July 23, 2025, the **over-allotment option was fully exercised**, involving **8,074,300 H shares**, representing approximately **15%** of the total shares offered in the global offering[119](index=119&type=chunk)[122](index=122&type=chunk) - Following the exercise of the over-allotment option, the company's registered capital and total number of shares changed to **RMB 440,616,028** and **440,616,028 shares**, respectively, with the articles of association amended on July 29, 2025[124](index=124&type=chunk)[128](index=128&type=chunk) - The Board recommended an **interim dividend of RMB 0.45 per ordinary share** for the six months ended June 30, 2025[126](index=126&type=chunk)[130](index=130&type=chunk)[136](index=136&type=chunk)[139](index=139&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board recommended an interim dividend of RMB 0.45 per ordinary share (tax inclusive) for the six months ended June 30, 2025, totaling approximately RMB 198.28 million; H share shareholders will be paid in HKD, with the exchange rate determined by the average RMB to HKD exchange rate published by the People's Bank of China five business days prior to the date of approval at the extraordinary general meeting; the dividend is expected to be paid on October 31, 2025 - A proposed interim dividend of **RMB 0.45 per ordinary share (tax inclusive)**, totaling approximately **RMB 198,277,212.60**, is recommended[136](index=136&type=chunk)[139](index=139&type=chunk) - H share shareholders will be paid in **HKD**, with the exchange rate determined by the average RMB to HKD exchange rate published by the People's Bank of China five business days prior to the date of approval at the extraordinary general meeting[137](index=137&type=chunk)[140](index=140&type=chunk) - The interim dividend is expected to be paid on **October 31, 2025**, to shareholders whose names appear on the register of members on September 30, 2025[142](index=142&type=chunk)[143](index=143&type=chunk) [Other Information](index=27&type=section&id=Other%20Information) This section covers the company's corporate governance practices, disclosure of interests, share schemes, and the review of interim results [Corporate Governance](index=27&type=section&id=Corporate%20Governance) The company has complied with all applicable provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules since its listing date and will continue to review and monitor its corporate governance practices; directors and supervisors also confirmed compliance with the standard code for securities transactions - From the listing date to the date of this report, the company has **complied with all applicable code provisions** set out in Part 2 of the Corporate Governance Code[144](index=144&type=chunk)[146](index=146&type=chunk) - The company has adopted the **Model Code for Securities Transactions by Directors of Listed Issuers** as set out in Appendix C3 of the Listing Rules, and all directors and supervisors have confirmed compliance[149](index=149&type=chunk)[152](index=152&type=chunk) [Disclosure of Interests](index=28&type=section&id=Disclosure%20of%20Interests) As of June 30, 2025, the company disclosed the interests of directors, supervisors, chief executives, and their associated corporations in the company's shares, as well as the interests of substantial shareholders; Mr. Li Weizhu and Mr. Li Weipeng, as ultimate controlling shareholders, hold significant shares through controlled corporations and acting-in-concert agreements Share Interests of Directors, Supervisors, and Chief Executives (As of June 30, 2025) | Name | Position | Nature of Interest | Number and Class of Shares | Approximate Percentage of Total Issued Share Capital of the Company | Approximate Percentage of Relevant Class of Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Li Weizhu | Chairman and Executive Director | Interest in controlled corporations and joint interest with other parties | 166,927,145 unlisted shares | 38.59% | 100.00% | | | | | 193,364,925 H shares | 44.70% | 72.80% | | Mr. Li Weipeng | Executive Director, Vice Chairman and General Manager | Interest in controlled corporations and joint interest with other parties | 166,927,145 unlisted shares | 38.59% | 100.00% | | | | | 193,364,925 H shares | 44.70% | 72.80% | | Ms. Zhong Yingqin | Non-executive Director | Spouse's interest | 166,927,145 unlisted shares | 38.59% | 100.00% | | | | | 193,364,925 H shares | 44.70% | 72.80% | Share Interests of Substantial Shareholders (As of June 30, 2025) | Name/Entity | Nature of Interest | Number and Class of Shares | Approximate Percentage of Total Issued Share Capital of the Company | Approximate Percentage of Relevant Class of Shares | | :--- | :--- | :--- | :--- | :--- | | Ruoshui United | Beneficial owner | 67,951,853 unlisted shares | 15.71% | 40.71% | | | | 70,725,500 H shares | 16.35% | 26.63% | | Shangshan United | Beneficial owner | 50,963,914 unlisted shares | 11.78% | 30.53% | | | | 53,044,100 H shares | 12.26% | 19.97% | | Shenzhen Zhouliufu | Interest in controlled corporations | 118,915,767 unlisted shares | 27.49% | 71.24% | | | | 123,769,600 H shares | 28.61% | 46.60% | | Qiankun United | Beneficial owner | 48,011,378 unlisted shares | 11.10% | 28.76% | | | | 54,140,600 H shares | 12.52% | 20.38% | - Mr. Li Weizhu and Mr. Li Weipeng are each deemed to be interested in the shares held by the other pursuant to the **acting-in-concert agreement**[159](index=159&type=chunk)[160](index=160&type=chunk) [Share Schemes and Equity Issuance](index=36&type=section&id=Share%20Schemes%20and%20Equity%20Issuance) The company implemented a Pre-IPO Employee Share Option Plan (ESOP) in December 2017 but has not implemented any other share schemes requiring disclosure under Chapter 17 of the Listing Rules since its listing; during the reporting period, no new equity securities were issued or treasury shares sold, except for the global offering related to the IPO - The company implemented a **Pre-IPO Employee Share Option Plan (ESOP)** in December 2017, which does not involve the granting of awards or issuance of new shares post-listing[177](index=177&type=chunk)[181](index=181&type=chunk) - From the listing date to the date of this interim report, the company has **not implemented any share schemes requiring disclosure** under Chapter 17 of the Listing Rules[178](index=178&type=chunk)[181](index=181&type=chunk) - During the reporting period, the company **did not issue any new equity securities or sell any treasury shares for cash**, except for the global offering related to the IPO[180](index=180&type=chunk)[183](index=183&type=chunk) [Review of Interim Results](index=37&type=section&id=Review%20of%20Interim%20Results) The Audit Committee has reviewed the accounting principles and practices adopted by the Group and the interim results for the reporting period, concluding that the interim financial results comply with relevant accounting standards, rules, and regulations, with appropriate disclosures made in a timely manner - The Audit Committee, comprising three independent non-executive directors, has **reviewed the Group's accounting principles, practices, and interim results**[185](index=185&type=chunk)[187](index=187&type=chunk) - The Audit Committee believes that the interim financial results **comply with relevant accounting standards, rules, and regulations**, and appropriate disclosures have been made in a timely manner[185](index=185&type=chunk)[187](index=187&type=chunk) [Interim Condensed Consolidated Financial Statements](index=38&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's interim condensed consolidated financial statements, including the profit or loss, comprehensive income, financial position, changes in equity, and cash flows [Interim condensed consolidated statement of profit or loss](index=38&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20profit%20or%20loss) For the six months ended June 30, 2025, the company reported revenue of RMB 3.1504 billion, net profit of RMB 415.3 million, and basic and diluted earnings per share of RMB 1.09 Interim Condensed Consolidated Statement of Profit or Loss Summary | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 3,150,422 | 2,993,916 | | Cost of Sales | (2,323,173) | (2,232,774) | | Gross Profit | 827,249 | 761,142 | | Profit Before Tax | 514,680 | 464,845 | | Income Tax Expense | (99,386) | (93,598) | | Profit for the Period | 415,294 | 371,247 | | Basic and Diluted Earnings Per Share (RMB) | 1.09 | 1.01 | [Interim condensed consolidated statement of comprehensive income](index=39&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20comprehensive%20income) For the six months ended June 30, 2025, the company's profit for the period was RMB 415.3 million; considering the negative impact of exchange differences on translation of foreign operations, total comprehensive income for the period was RMB 413.7 million Interim Condensed Consolidated Statement of Comprehensive Income Summary | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the Period | 415,294 | 371,247 | | Exchange differences on translation of foreign operations | (1,593) | 703 | | Total Comprehensive Income for the Period | 413,701 | 371,950 | [Interim condensed consolidated statement of financial position](index=40&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20financial%20position) As of June 30, 2025, the company's total non-current assets were RMB 709.3 million, total current assets were RMB 4.3781 billion, and total current liabilities were RMB 1.102 billion; net assets significantly increased to RMB 3.9137 billion compared to the end of 2024 Interim Condensed Consolidated Statement of Financial Position Summary (RMB thousand) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 709,325 | 655,820 | | Total Current Assets | 4,378,118 | 3,301,751 | | Total Current Liabilities | 1,101,955 | 1,330,486 | | Net Current Assets | 3,276,163 | 1,971,265 | | Net Assets | 3,913,654 | 2,577,606 | - Cash and bank balances significantly increased from **RMB 561.7 million** at the end of 2024 to **RMB 1.6746 billion** as of June 30, 2025[193](index=193&type=chunk) - Trade payables and bills increased from **RMB 37.806 million** at the end of 2024 to **RMB 172.7 million** as of June 30, 2025[194](index=194&type=chunk) [Interim condensed consolidated statement of changes in equity](index=43&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20changes%20in%20equity) For the six months ended June 30, 2025, the company's total equity increased to RMB 3.9137 billion, primarily due to profit for the period and an increase in share capital and share premium from the issuance of shares Interim Condensed Consolidated Statement of Changes in Equity Summary (RMB thousand) | Metric | January 1, 2025 | Profit for the Period | Issuance of Shares | Dividends Declared | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 378,713 | - | 53,829 | - | 432,542 | | Share Premium | 291,101 | - | 1,063,174 | - | 1,354,275 | | Retained Earnings | 1,679,957 | 415,294 | - | (196,931) | 1,898,320 | | **Total Equity** | **2,577,606** | **415,294** | **1,117,003** | **(196,931)** | **3,913,654** | - Issuance of shares resulted in an equity increase of **RMB 1.117 billion**, while dividends declared reduced equity by **RMB 196.9 million**[197](index=197&type=chunk) [Interim condensed consolidated statement of cash flows](index=45&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20cash%20flows) For the six months ended June 30, 2025, net cash flow from operating activities was RMB 469.4 million; net cash flow from investing activities was RMB 272.5 million; net cash flow from financing activities was RMB 671.0 million, primarily from share issuance; cash and cash equivalents at period-end significantly increased to RMB 1.5883 billion compared to the beginning of the period Interim Condensed Consolidated Statement of Cash Flows Summary (RMB thousand) | Activity Type | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash flows from operating activities | 469,428 | 360,206 | | Net cash flows from investing activities | 272,505 | 54,911 | | Net cash flows from financing activities | 670,955 | 33,710 | | Net increase in cash and cash equivalents | 1,412,888 | 448,827 | | Cash and cash equivalents at end of period | 1,588,279 | 627,509 | - Net cash flow from financing activities significantly increased, primarily due to **RMB 1.117 billion in proceeds from share issuance**[203](index=203&type=chunk) - Net cash flow from investing activities significantly increased, mainly from **proceeds from the disposal of certificates of deposit and time deposits**[203](index=203&type=chunk) [Notes to interim condensed consolidated financial information](index=48&type=section&id=Notes%20to%20interim%20condensed%20consolidated%20financial%20information) This section provides detailed notes to the interim condensed consolidated financial information, covering corporate and group details, accounting policies, segment information, revenue breakdown, financial costs, profit before tax, income tax, dividends, earnings per share, property, plant and equipment, leases, inventories, trade receivables, cash and bank balances, trade and bills payables, other payables and accruals, interest-bearing bank borrowings, share capital, share-based payments, reserves, commitments, related party transactions, and financial instruments [Corporate and Group Information](index=48&type=section&id=Corporate%20and%20Group%20Information) Zhouliufu Jewelry Co., Ltd. was incorporated in China, and its shares have been listed on the Main Board of the Hong Kong Stock Exchange since June 26, 2025; the Group's principal activities are the design, manufacture, and sale of jewelry, as well as the provision of franchising and related services - The company was incorporated in the People's Republic of China, and its shares have been **listed on the Main Board of The Stock Exchange of Hong Kong Limited since June 26, 2025**[205](index=205&type=chunk)[209](index=209&type=chunk) - The Group's principal activities are the **design, manufacture, and sale of jewelry**, and the provision of **franchising and related services**[206](index=206&type=chunk)[210](index=210&type=chunk) [Basis of Preparation and Changes in Accounting Policies](index=48&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 and should be read in conjunction with the company's annual financial statements in the prospectus; newly adopted revised IFRS accounting standards in this period had no significant impact on the financial information - The interim condensed consolidated financial information has been prepared in accordance with **International Accounting Standard 34 'Interim Financial Reporting'**[207](index=207&type=chunk)[211](index=211&type=chunk) - The revised International Financial Reporting Standards accounting standards adopted for the first time in this period had **no significant financial impact** on the interim condensed consolidated financial information[213](index=213&type=chunk)[214](index=214&type=chunk)[219](index=219&type=chunk) [Operating Segment Information](index=49&type=section&id=Operating%20Segment%20Information) For management purposes, the Group has only one reportable operating segment, with the Board reviewing financial performance on an overall basis; no geographical information is presented as the principal operating entities and the majority of revenue and assets are located within China - The Group has **only one reportable operating segment**, and the Board reviews financial performance on an overall basis[215](index=215&type=chunk)[216](index=216&type=chunk)[220](index=220&type=chunk) - No geographical information is presented as the principal operating entities, and the majority of revenue and assets are located **within China**[217](index=217&type=chunk)[221](index=221&type=chunk) - For the six months ended June 30, 2025, approximately **RMB 490.9 million in revenue** was derived from sales to a single customer[218](index=218&type=chunk)[222](index=222&type=chunk) [Revenue, Other Income and Gains](index=50&type=section&id=Revenue%2C%20Other%20Income%20and%20Gains) The Group's revenue primarily derives from the sale of goods (gold jewelry, diamond-set jewelry, and others) and the provision of services; performance obligations for goods sales are satisfied upon product delivery, while service obligations are met over time or upon service completion; other income and gains mainly include government grants, interest income, and default compensation Revenue Disaggregation Information (RMB thousand) | Category of Goods or Services | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Gold Jewelry | 2,533,982 | 2,319,784 | | Diamond-set Jewelry and Other Products | 235,182 | 244,769 | | Provision of Services | 381,258 | 429,363 | | **Total Revenue from Contracts with Customers** | **3,150,422** | **2,993,916** | | Timing of revenue recognition: | | | | Transfer of goods at a point in time | 2,769,164 | 2,564,553 | | Transfer of services at a point in time | 61,208 | 69,499 | | Transfer of services over time | 320,050 | 359,864 | Other Income and Gains (RMB thousand) | Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest income | 5,121 | 2,964 | | Government grants | 9,645 | 12,799 | | Investment income | 465 | - | | Default compensation | 3,265 | 1,694 | | **Total** | **20,014** | **18,734** | - Performance obligations for goods sales are satisfied upon **customer pickup or product delivery at self-operated retail stores and online shops**, or upon delivery to franchisees and e-commerce platforms[227](index=227&type=chunk)[229](index=229&type=chunk) - Performance obligations for **franchising services and product access services are satisfied over time**, while supply chain management fees are satisfied upon product certification and transfer to franchisees[232](index=232&type=chunk)[234](index=234&type=chunk) [Finance Costs](index=54&type=section&id=Finance%20Costs) For the six months ended June 30, 2025, the company's total finance costs amounted to RMB 6.703 million, primarily comprising interest on bank loans and lease liabilities Finance Costs (RMB thousand) | Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank loans | 5,546 | 4,818 | | Interest on lease liabilities | 983 | 1,098 | | Interest on gold loans | 174 | - | | **Total** | **6,703** | **5,916** | [Profit Before Tax](index=55&type=section&id=Profit%20Before%20Tax) For the six months ended June 30, 2025, the company's profit before tax was RMB 514.7 million; key costs and expenses included cost of inventories sold, depreciation and amortization, employee benefit expenses, and listing expenses Profit Before Tax Components (RMB thousand) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories sold | 2,312,924 | 2,216,376 | | Cost of services provided | 10,249 | 16,398 | | Depreciation of property, plant and equipment | 14,876 | 10,938 | | Depreciation of right-of-use assets | 14,852 | 16,602 | | Amortization of intangible assets and other non-current assets | 4,067 | 4,117 | | Listing expenses | 12,208 | 17,165 | | Employee benefit expenses (excluding directors' and supervisors' emoluments) | 104,048 | 105,328 | | Net impairment losses/(reversal of impairment losses) on trade receivables | 1,558 | (322) | - Cost of inventories sold includes **write-downs of inventories to net realizable value**[253](index=253&type=chunk) - Depreciation and amortization expenses are recognized in 'Selling and marketing expenses', 'Administrative expenses', and 'Research and development expenses' in the statement of profit or loss, respectively[253](index=253&type=chunk) [Income Tax Expense](index=56&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, the company's income tax expense was RMB 99.4 million; mainland China subsidiaries generally apply a 25% corporate income tax rate, but some enjoy preferential rates of 15% or 5% due to specific qualifications (e.g., enterprises in Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, Western Development enterprises, high-tech enterprises, small and micro enterprises); Hong Kong subsidiaries apply a 16.5% profits tax rate, with some eligible entities benefiting from a two-tiered profits tax regime Income Tax Expense (RMB thousand) | Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current | 98,227 | 92,102 | | Deferred | 1,159 | 1,496 | | **Total** | **99,386** | **93,598** | - Mainland China subsidiaries generally apply a **25% corporate income tax rate**[246](index=246&type=chunk)[252](index=252&type=chunk) - Zhouliufu E-commerce Co., Ltd., Zhouliufu Jewelry Sales (Chongqing) Co., Ltd., Zhouliufu Jewelry (Chongqing) Co., Ltd., and Shenzhen Xiaoyudi Information Technology Co., Ltd. enjoy a **preferential corporate income tax rate of 15%**[247](index=247&type=chunk)[248](index=248&type=chunk)[254](index=254&type=chunk)[252](index=252&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) - Certain small and micro enterprise subsidiaries enjoy a **preferential income tax rate of 5%**[255](index=255&type=chunk)[258](index=258&type=chunk) - Hong Kong profits tax rate is **16.5%**, with some eligible subsidiaries under the two-tiered profits tax regime taxed at **8.25%** on the first HKD 2 million of assessable profits[256](index=256&type=chunk)[259](index=259&type=chunk) [Dividends](index=58&type=section&id=Dividends) During the reporting period, the company declared and fully paid a final dividend of RMB 0.52 per share for 2024, totaling approximately RMB 196.9 million; subsequent to the reporting period, the Board recommended an interim dividend of RMB 0.45 per share for the six months ended June 30, 2025, pending shareholder approval Dividends Declared (RMB thousand) | Period | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Dividends declared | 196,931 | 644,466 | - During the reporting period, the **2024 final dividend of RMB 0.52 per share**, totaling approximately **RMB 196.9 million**, was fully paid[263](index=263&type=chunk)[264](index=264&type=chunk) - Subsequent to the end of the reporting period, an **interim dividend of RMB 0.45 per share** for the six months ended June 30, 2025, is proposed, subject to shareholder approval at an extraordinary general meeting[265](index=265&type=chunk) [Earnings Per Share](index=59&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, the company's basic and diluted earnings per share were RMB 1.09, calculated based on profit attributable to ordinary equity holders and a weighted average of 380,199,522 ordinary shares; there were no potentially dilutive ordinary shares during the reporting period Earnings Per Share Calculation (RMB thousand) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders | 415,294 | 371,247 | | Weighted average number of ordinary shares in issue during the period | 380,199,522 | 366,866,805 | | Basic and Diluted Earnings Per Share (RMB) | 1.09 | 1.01 | - No potentially dilutive ordinary shares were issued during the reporting period, thus **basic and diluted earnings per share amounts were not adjusted**[267](index=267&type=chunk) [Property, Plant and Equipment](index=60&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group acquired assets at a cost of approximately RMB 172.7 million and disposed of assets with a net book value of approximately RMB 42 thousand, resulting in a net loss of approximately RMB 42 thousand Property, Plant and Equipment Changes (RMB thousand) | Item | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | | :--- | :--- | :--- | | Cost of assets acquired | 172,720 | 48,321 | | Net book value of assets disposed | 42 | 112 | | Net loss on disposal | 42 | 68 | [Leases](index=61&type=section&id=Leases) As of June 30, 2025, the Group's right-of-use assets had a carrying amount of RMB 142.3 million, and lease liabilities had a carrying amount of RMB 34.1 million; during the reporting period, new leases amounted to RMB 3.066 million, depreciation expense was RMB 14.852 million, and lease liabilities were adjusted due to changes in lease terms Right-of-Use Assets Changes (RMB thousand) | Item | December 31, 2024 | Additions | Depreciation Expense | Change in Lease Term | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Leased land | 111,213 | - | (2,000) | - | 109,213 | | Office properties, buildings and shops | 45,116 | 3,066 | (12,852) | (2,238) | 33,092 | | **Total** | **156,329** | **3,066** | **(14,852)** | **(2,238)** | **142,305** | Lease Liabilities Changes (RMB thousand) | Item | December 31, 2024 | New Leases | Interest Recognized | Change in Lease Term | Payments | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Lease liabilities | 45,742 | 3,066 | 983 | (2,497) | (13,177) | 34,117 | | Of which: Current portion | 24,762 | - | - | - | - | 21,552 | | Non-current portion | 20,980 | - | - | - | - | 12,565 | [Inventories](index=63&type=section&id=Inventories) As of June 30, 2025, the Group's total inventories amounted to RMB 2.282 billion, slightly lower than at the end of 2024; during the reporting period, the reversal of inventory write-downs to net realizable value was RMB 3.66 million Inventories Composition (RMB thousand) | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Finished goods | 1,464,522 | 1,563,074 | | Raw materials | 390,487 | 198,447 | | Work in progress | 1,638 | 88,238 | | Goods in transit | 425,366 | 468,252 | | **Total** | **2,282,013** | **2,318,011** | - For the six months ended June 30, 2025, the **reversal of write-downs of inventories to net realizable value was RMB 3.66 million**[280](index=280&type=chunk) [Trade Receivables](index=64&type=section&id=Trade%20Receivables) As of June 30, 2025, the Group's net trade receivables amounted to RMB 224.9 million, primarily from franchisees, e-commerce platforms, and sales collected by shopping malls; receivables are mostly due within one year, and fair value approximates carrying amount; during the reporting period, net impairment loss provision for trade receivables was RMB 1.558 million Trade Receivables (RMB thousand) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 241,288 | 226,802 | | Impairment | (16,433) | (16,935) | | **Total** | **224,855** | **209,867** | Trade Receivables Ageing Analysis (RMB thousand) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 222,718 | 201,918 | | 1 to 2 years | 2,027 | 7,627 | | 2 to 3 years | 110 | 322 | | **Total** | **224,855** | **209,867** | - Net impairment loss provision for trade receivables was **RMB 1.558 million**[289](index=289&type=chunk) [Cash and Bank Balances](index=66&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2025, the Group's total cash and bank balances amounted to RMB 1.6746 billion, of which cash and cash equivalents were RMB 1.5883 billion, primarily denominated in HKD and RMB; some bank deposits are restricted for project construction, issuance of bills payable, and as collateral for bank borrowings Cash and Bank Balances Composition (RMB thousand) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash and cash equivalents | 1,588,279 | 176,994 | | Time deposits | 30,000 | 370,000 | | Restricted deposits | 56,209 | 14,751 | | Interest receivable on bank deposits | 151 | - | | **Total** | **1,674,639** | **561,745** | | **By currency:** | | | | RMB | 496,529 | 513,114 | | HKD | 1,158,088 | 29,415 | | USD | 19,207 | 18,733 | | EUR | 463 | 316 | | GBP | 352 | 167 | - Restricted deposits include **guarantee deposits for online platforms, bank deposits restricted for project construction, and bank deposits restricted for the issuance of bills payable**[295](index=295&type=chunk) - A **RMB 30 million time deposit** is pledged as collateral for bank borrowings[296](index=296&type=chunk)[297](index=297&type=chunk) [Trade and Bills Payables](index=67&type=section&id=Trade%20and%20Bills%20Payables) As of June 30, 2025, the Group's total trade and bills payables amounted to RMB 172.7 million, a significant increase from the end of 2024; trade payables are interest-free and typically settled within one to six months from the invoice date, with fair value approximating carrying amount Trade and Bills Payables Ageing Analysis (RMB thousand) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 172,565 | 37,806 | | 1 to 2 years | 133 | - | | **Total** | **172,698** | **37,806** | - Trade payables are **interest-free** and generally settled within a credit period of one to six months from the invoice date[300](index=300&type=chunk)[301](index=301&type=chunk) [Other Payables and Accruals](index=68&type=section&id=Other%20Payables%20and%20Accruals) As of June 30, 2025, the Group's total current other payables and accruals amounted to RMB 197.7 million, largely consistent with the end of 2024, primarily including deposits, salaries and welfare payable, other payables, and accrued expenses Other Payables and Accruals (RMB thousand) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Deposits | 113,805 | 119,652 | | Salaries and welfare payable | 20,554 | 28,728 | | Other payables | 31,283 | 10,972 | | Accrued expenses | 9,074 | 15,970 | | Other taxes payable | 23,017 | 21,197 | | **Total Current** | **197,737** | **196,523** | | Non-current deferred income | 200 | 200 | [Interest-Bearing Bank Borrowings](index=69&type=section&id=Interest-Bearing%20Bank%20Borrowings) As of June 30, 2025, the Group's total interest-bearing bank borrowings amounted to RMB 411.6 million, a decrease from RMB 641.1 million at the end of 2024; all borrowings are denominated in RMB and include both unsecured and secured bank loans Interest-Bearing Bank Borrowings (RMB thousand) | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Current bank loans – unsecured | 322,504 | 242,754 | | Current bank loans – secured | 30,000 | 370,000 | | Non-current bank loans – secured | 59,069 | 28,299 | | **Total** | **411,573** | **641,053** | - All interest-bearing bank borrowings are **denominated in RMB**[307](index=307&type=chunk)[308](index=308&type=chunk) - The Group's total available bank borrowing facilities amounted to **RMB 1.88 billion**, of which **RMB 411.6 million was utilized** as of June 30, 2025[307](index=307&type=chunk)[308](index=308&type=chunk) [Share Capital](index=70&type=section&id=Share%20Capital) As of June 30, 2025, the company's authorized and paid-up share capital was RMB 432.5 million, consisting of 432,541,728 ordinary shares with a par value of RMB 1.00 each; during the reporting period, 53,829,200 ordinary shares were issued due to the initial public offering (IPO) Summary of Share Capital Changes (RMB thousand) | Item | Number of Shares Issued | Share Capital (RMB thousand) | | :--- | :--- | :--- | | January 1, 2024 | 366,174,073 | 366,174 | | Issuance of ordinary shares (Pre-IPO) | 12,538,455 | 12,538 | | December 31, 2024 and January 1, 2025 | 378,712,528 | 378,713 | | Issuance of ordinary shares (IPO) | 53,829,200 | 53,829 | | **June 30, 2025** | **432,541,728** | **432,542** | - The **Initial Public Offering (IPO) issued 53,829,200 ordinary shares** at a price of **HKD 24.00 per share**, with a total cash consideration of approximately **HKD 1.2919 billion**[316](index=316&type=chunk) [Share-Based Payments](index=71&type=section&id=Share-Based%20Payments) The Group approved and adopted equity incentive plans in December 2017 and June 2018, granting restricted share units (RSUs) to eligible employees to incentivize them; these RSUs had a fair value of RMB 9.73 per share and were subject to listing conditions; during the reporting period, share-based payment expenses of RMB 2.275 million were recognized - The Group granted **Restricted Share Units (RSUs)** to employees in December 2017 and June 2018, with a subscription price of **RMB 2.08 per share**[314](index=314&type=chunk)[315](index=315&type=chunk) - The fair value of RSUs was estimated at **RMB 9.73 per share** on the grant date and was subject to listing conditions[317](index=317&type=chunk)[318](index=318&type=chunk) Share-Based Payment Expenses and RSU Changes (RMB thousand) | Item | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | | :--- | :--- | :--- | | Share-based payment expenses | 2,275 | 4,103 | | **Number of RSUs** | | | | Beginning of period | 6,846,524 | 6,926,600 | | Forfeited during the period | - | (80,076) | | **End of period** | **6,846,524** | **6,846,524** | [Reserves](index=73&type=section&id=Reserves) The Group's reserves include share premium, share-based payment reserve, statutory surplus reserve, and exchange fluctuation reserve; the statutory surplus reserve is appropriated according to China's Company Law for offsetting losses or increasing share capital but cannot be distributed as cash dividends - Share premium refers to the amount paid by shareholders for capital contributions **exceeding the par value of subscribed ordinary shares**[322](index=322&type=chunk)[327](index=327&type=chunk) - Statutory surplus reserve is appropriated in accordance with the Company Law of China, used to **offset losses or convert into increased share capital**, but cannot be distributed as cash dividends[324](index=324&type=chunk)[329](index=329&type=chunk) - Exchange fluctuation reserve represents **exchange differences arising from functional currencies differing from the Group's presentation currency**[325](index=325&type=chunk)[330](index=330&type=chunk) [Commitments](index=74&type=section&id=Commitments) As of June 30, 2025, the Group's capital commitments primarily related to leases for property, plant, and equipment, with contracted but unprovided amounts totaling RMB 121.4 million Capital Commitments (RMB thousand) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Contracted but unprovided leases: property, plant and equipment | 121,431 | 162,423 | [Related Party Transactions and Balances](index=74&type=section&id=Related%20Party%20Transactions%20and%20Balances) The Group engages in goods procurement, sales, and has outstanding balances with key related parties, including controlling shareholders, directors, supervisors, and their close family members; key management personnel compensation includes salaries, allowances, pension plan contributions, and share-based payments - Key related parties include **Mr. Li Weizhu, Mr. Li Weipeng, Shenzhen Ruoshui United Investment Co., Ltd., Shenzhen Qiankun United Investment Co., Ltd., Shenzhen Shangshan United Investment Co., Ltd.**, among others[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) Purchases of Goods from Related Parties (RMB thousand) | Related Party | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Ms. Zhou Minling | 94 | 159 | Outstanding Balances with Related Parties (RMB thousand) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables: Ms. Zhou Minling | 4 | 3 | | Other payables and accruals: Ms. Huang Xiaoxin | 4 | 4 | Key Management Personnel Compensation (RMB thousand) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 3,820 | 3,013 | | Pension scheme contributions | 225 | 155 | | Equity-settled share-based payments | 1,341 | 3,481 | | **Total Compensation** | **5,386** | **6,662** | [Financial Instruments by Category](index=78&type=section&id=Financial%20Instruments%20by%20Category) As of June 30, 2025, the Group's total financial assets were RMB 2.0436 billion, and total financial liabilities were RMB 763.5 million; financial assets primarily include trade receivables, cash and bank balances measured at amortized cost, and debt investments measured at fair value through other comprehensive income Financial Assets (RMB thousand) | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Financial assets measured at amortized cost | | | | Trade receivables | 224,855 | 209,867 | | Cash and bank balances | 1,674,639 | 561,745 | | Debt investments | - | 20,184 | | Financial assets measured at fair value through other comprehensive income | | | | Debt investments | 120,224 | 78,667 | | Financial assets measured at fair value through profit or loss | | | | Financial assets | 4,043 | 33,530 | | **Total** | **2,043,581** | **921,804** | Financial Liabilities (RMB thousand) | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Financial liabilities measured at amortized cost | | | | Trade payables | 172,698 | 37,806 | | Financial liabilities included in other payables and accruals | 145,092 | 130,628 | | Lease liabilities | 34,117 | 45,742 | | Interest-bearing bank and other borrowings | 411,573 | 641,053 | | Gold loans | - | 42,982 | | **Total** | **763,480** | **898,211** | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=79&type=section&id=Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) Management assesses that the fair values of most financial assets and liabilities approximate their carrying amounts, primarily due to their short-term maturities; the fair value of debt investments is calculated by discounting expected future cash flows, while listed equity investments are based on market quotations - The fair values of cash and cash equivalents, trade receivables, trade and bills payables, and interest-bearing bank and other borrowings **approximate their carrying amounts**, primarily due to their short-term maturities[350](index=350&type=chunk)[352](index=352&type=chunk) - The fair value of debt investments is derived by **discounting expected future cash flows** using current available interest rates for instruments with similar terms, credit risk, and remaining maturities[353](index=353&type=chunk)[355](index=355&type=chunk) - The fair value of listed equity investments is based on **market quotations**[353](index=353&type=chunk)[355](index=355&type=chunk) [Glossary](index=81&type=section&id=Glossary) This section provides definitions for key terms and abbreviations used in the report, covering corporate governance, financial, legal, and operational vocabulary, to ensure a clear understanding of the report's content

( 於百慕達註冊成立之有限公司 ) Zhongchang International Holdings Group Limited 中 昌 國 際 控 股 集 團 有 限 公 司 股份代號： 859 中期報告 2025 公司資料 董事會 執行董事 陳志偉先生 （主席） 顧嘉莉女士 （行政總裁） 黃正紅女士 非執行董事 黃強博士 王志强先生 于丹女士 獨立非執行董事 劉懷鏡先生 劉欣先生 葉棣謙先生 委員會 審核委員會 葉棣謙先生 （主席） 劉欣先生 于丹女士 提名委員會 陳志偉先生 （主席） 劉懷鏡先生 劉欣先生 薪酬委員會 劉欣先生 （主席） 王志强先生 葉棣謙先生 授權代表 陳志偉先生 趙學亷先生 公司秘書 趙學亷先生 核數師 安永會計師事務所 執業會計師 香港主要營業地點 香港 灣仔 軒尼詩道303 號 協成行灣仔中心 17 樓1701 室 註冊辦事處 Clarendon House 2 Church Street Hamilton HM 11 Bermuda 主要往來銀行 （按英文字母順序排列） 恒生銀行有限公司 南洋商業銀行（中國）有限公司 上海浦東發展銀行股份有限公司香港分行 法律顧問 香港法律： ...

Company Information [Board of Directors and Committee Composition](index=3&type=section&id=Board%20of%20Directors%20and%20Committee%20Composition) The Board of Directors comprises an Executive Director (CEO), a Non-executive Director, and three Independent Non-executive Directors, with independent directors chairing key committees - Board members include **Executive Director Dr. Kaneko Hiroshi (CEO)**, **Non-executive Director Mr. Zhong Haowei**, and **three independent non-executive directors** Mr. Huang Zhongquan, Ms. Deng Yingxin, and Ms. Xia Shiyun[3](index=3&type=chunk) - The Audit Committee, Remuneration Committee, and Nomination Committee are all chaired by **independent non-executive directors**[3](index=3&type=chunk) [Company Contact and Listing Information](index=3&type=section&id=Company%20Contact%20and%20Listing%20Information) The Company Secretary is Mr. Tsang King Sum, and the auditor is Da Xin Liang Xue Lian (Hong Kong) CPA Limited. The Company's ordinary shares are listed on The Stock Exchange of Hong Kong Limited under stock code 627 - The Company Secretary is Mr. Tsang King Sum, and the authorized representatives are Dr. Kaneko Hiroshi and Mr. Tsang King Sum[3](index=3&type=chunk) - The auditor is Da Xin Liang Xue Lian (Hong Kong) CPA Limited, and the legal advisor is M.C.M. Solicitors[3](index=3&type=chunk) - The Company's ordinary shares are listed on The Stock Exchange of Hong Kong Limited, with stock code **627**, and the Company's website is www.jkgc.com.hk[4](index=4&type=chunk) Definitions [Key Term Definitions](index=4&type=section&id=Key%20Term%20Definitions) This section provides definitions for key terms used in the report, including Board, the Company, the Group, Hong Kong, HKD, Listing Rules, Model Code, Period, China, Prior Period, Target Properties, Purchaser, Remaining Properties, RMB, Sale Shares, SFO, Shares, Stock Exchange, and USD - "Period/During the Period" refers to January 1, 2025, to June 30, 2025[5](index=5&type=chunk) - "Prior Period" refers to January 1, 2024, to June 30, 2024[5](index=5&type=chunk) - "Target Properties" refers to certain vacant and residential properties located in Kosuge, Narita City, Tokyo, Japan, with an area of approximately **51,591.36 square meters**[5](index=5&type=chunk) Management Discussion and Analysis [Overall Review](index=6&type=section&id=Overall%20Review) The Group's principal businesses remain property development and property investment, with strategic expansion into the supply chain sector. Property sales revenue significantly decreased by 95.0% during the period, while the supply chain business contributed RMB 30,000 thousand in revenue, and operating expenses and finance costs substantially reduced - The Group's principal businesses are concentrated in property development and property investment, with expansion into the supply chain sector within China[7](index=7&type=chunk) Property Sales Revenue Comparison | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Property Sales Revenue | 3,024,000 | 60,295,000 | -95.0% | Rental Income Comparison | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Rental Income | 169,000 | 417,000 | - The supply chain business contributed revenue of approximately **RMB 30,000 thousand** during the period[10](index=10&type=chunk) Operating Expenses Comparison | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Selling and Distribution Expenses | 652,000 | 2,760,000 | | Administrative Expenses | 7,180,000 | 18,271,000 | Finance Costs Comparison | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Finance Costs | 9,384,000 | 185,365,000 | Income Tax Expense Comparison | Indicator | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Income Tax Expense/(Credit) | 35,000 | (20,409,000) | [Outlook and Strategy](index=7&type=section&id=Outlook%20and%20Strategy) Facing continued uncertainty in China's property market, the Group will expand its geographical footprint to high-potential markets such as Guangzhou, Shenzhen, Japan, and Australia, and strategically diversify its business portfolio by accelerating investments in modern logistics warehousing, distribution centers, and data centers to meet the growing demands of e-commerce and the digital economy - China's property market continues to face uncertainty, with a highly volatile operating environment, making 2025 an extremely challenging year for the Group[14](index=14&type=chunk) - The Group will expand its geographical footprint, actively seizing quality development opportunities in major cities like Guangzhou and Shenzhen, while exploring high-potential Asian markets, including Japan and Australia[14](index=14&type=chunk) - Strategically enriching its business portfolio, the Group will accelerate investments in modern logistics warehousing, distribution centers, and data centers to respond to demand growth driven by e-commerce, cloud computing, and economic digitalization[14](index=14&type=chunk) [Financial Position and Risks](index=8&type=section&id=Financial%20Position%20and%20Risks) The Board resolved not to declare an interim dividend for the period. As of June 30, 2025, the Group's bank balances and cash were approximately RMB 3,480 thousand, total borrowings were approximately RMB 194,691 thousand, and the net gearing ratio was 10.51%. The Group faces foreign exchange fluctuation risks but has not entered into hedging instruments - The Board resolved not to declare an interim dividend for the period (Prior Period: nil)[15](index=15&type=chunk) Liquidity and Borrowings | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank Balances and Cash | 3,480 | 3,922 | | Total Other Borrowings | 194,691 | 193,860 | | Net Gearing Ratio | 10.51% | 10.48% | Current Assets and Liabilities | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Assets | 3,514,484 | 3,494,570 | | Current Liabilities | 5,338,679 | 5,312,324 | | Net Liabilities | 1,813,480 | 1,806,734 | - The Group faces foreign exchange fluctuation risks in RMB, USD, and HKD, but considers the potential foreign exchange risk limited and has therefore not entered into hedging instruments[18](index=18&type=chunk) - As of January 1, 2025, and June 30, 2025, the number of issued shares remained **1,420,673,262** shares[20](index=20&type=chunk) - The Group had no material acquisitions or investments during the period, nor any significant events after the reporting period[21](index=21&type=chunk)[22](index=22&type=chunk) Corporate Governance and Other Information [Employees and Remuneration Policy](index=9&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had approximately 106 employees. Employee remuneration is determined by reference to market benchmarks, with discretionary year-end bonuses based on individual performance. The Group provides a state-managed retirement benefit scheme for mainland China employees and a Mandatory Provident Fund Scheme for Hong Kong employees - As of June 30, 2025, the Group had approximately **106 employees**, including directors[23](index=23&type=chunk) - Employee remuneration is determined by reference to market benchmarks, with discretionary year-end bonuses based on individual performance[23](index=23&type=chunk) - Mainland China employees are members of a state-managed retirement benefit scheme, and Hong Kong employees are members of a Mandatory Provident Fund Scheme[23](index=23&type=chunk) Central Pension Scheme Applicable Percentages | Pension Insurance | 12.0-20.0% | | :--- | :--- | | Medical Insurance | 5.2-10.5% | | Unemployment Insurance | 0.32-1.5% | | Housing Provident Fund | 5.0-12.0% | [Directors' and Major Shareholders' Interests](index=10&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) Executive Director Dr. Kaneko Hiroshi holds a 30% interest in the associated corporation Grateful Heart Inc. Major shareholder Mr. Yanase Kenichi holds approximately 69.97% of the Company's issued share capital through controlled corporations such as Advance Investment Limited and Grateful Heart Inc Directors' Interests in Ordinary Shares of Associated Corporations | Name of Director/Chief Executive | Name of Associated Corporation | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Equity Interest in Associated Corporation | | :--- | :--- | :--- | :--- | :--- | | Dr. Kaneko Hiroshi | Grateful Heart Inc. | Beneficial Owner | 3(L) | 30% | Major Shareholders' Interests in the Company's Securities | Name | Capacity | Total | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Yanase Kenichi | Interest in controlled corporation | 994,019,402(L) | 69.97% | | Grateful Heart Inc. | Interest in controlled corporation | 994,019,402(L) | 69.97% | | Sun Hung Kai Investment Services Limited | Investment Manager | 994,019,402(L) | 69.97% | | Sun Hung Kai Funds Open-ended Fund Company - Sun Hung Kai Opportunity Fund No. 1 | Interest in controlled corporation | 994,019,402(L) | 69.97% | | Advance Investment Limited | Beneficial Owner | 994,019,402(L) | 69.97% | - Mr. Yanase Kenichi is deemed to have an interest in the same number of shares held by Grateful Heart Inc. as he owns **70%** interest in Grateful Heart Inc.[29](index=29&type=chunk) [Share Option Scheme and Corporate Governance](index=12&type=section&id=Share%20Option%20Scheme%20and%20Corporate%20Governance) The Company has a share option scheme, but no share options were granted, exercised, cancelled, or lapsed during the period. The Audit Committee is responsible for reviewing financial reporting, risk management, and internal controls. The Company has complied with the Corporate Governance Code, although the roles of Chairman and CEO are held by the same person, but the Board believes there are sufficient safeguards to ensure a balance of power - The total number of share options available for grant under the share option scheme is **11,236,749**, but no unexercised share options existed during the period or as of the reporting date[31](index=31&type=chunk) - The Audit Committee, comprising three independent non-executive directors, is responsible for examining, reviewing, and overseeing the financial reporting process, risk management, and internal control systems[32](index=32&type=chunk) - The Company has complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules, except that the roles of Chairman and Chief Executive Officer are held by the same person, Executive Director and CEO Dr. Kaneko Hiroshi[33](index=33&type=chunk)[34](index=34&type=chunk) - The Board believes that there are sufficient safeguards to ensure a balance of power, as all major decisions are made after consultation among Board members, and three independent non-executive directors provide independent perspectives[34](index=34&type=chunk) - During the period, all directors complied with the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules[35](index=35&type=chunk) - 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[37](index=37&type=chunk) Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Overview of Profit or Loss and Comprehensive Income](index=14&type=section&id=Overview%20of%20Profit%20or%20Loss%20and%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's total revenue was RMB 33,193 thousand, a significant decrease from RMB 60,712 thousand in the prior year. The loss for the period narrowed significantly to RMB 13,432 thousand, compared to a loss of RMB 312,012 thousand in the prior year, primarily due to substantial reductions in cost of sales, impairment losses, and finance costs Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (RMB thousand) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | 33,193 | 60,712 | | Cost of Sales | (32,325) | (124,493) | | Gross Profit/(Loss) | 868 | (63,781) | | Other Income | 33 | 274 | | Net Other Gains and Losses | 3,220 | (6,279) | | Selling and Distribution Expenses | (652) | (2,760) | | Administrative Expenses | (7,180) | (18,271) | | Impairment Losses | – | (51,889) | | Finance Costs | (9,384) | (185,365) | | Loss Before Tax | (13,397) | (332,421) | | Income Tax Expense/(Credit) | (35) | 20,409 | | Loss for the Period | (13,432) | (312,012) | | Exchange Differences on Translation of Foreign Operations | 6,686 | (5,188) | | Total Comprehensive Expense for the Period | (6,746) | (317,200) | | Basic Loss Per Share (RMB cents) | (0.90) | (21.29) | - The loss for the period significantly narrowed, primarily due to substantial reductions in **cost of sales**, **impairment losses**, and **finance costs**[39](index=39&type=chunk) - Exchange differences on translation of foreign operations turned from a loss to a gain, positively impacting total comprehensive income[39](index=39&type=chunk) Condensed Consolidated Statement of Financial Position [Overview of Assets, Liabilities, and Equity](index=15&type=section&id=Overview%20of%20Assets,%20Liabilities,%20and%20Equity) As of June 30, 2025, the Group's total assets were RMB 3,532,535 thousand, and total liabilities were RMB 5,346,015 thousand, resulting in a total deficit of RMB 1,813,480 thousand. Net current liabilities were approximately RMB 1,824,195 thousand, indicating persistent liquidity pressure Condensed Consolidated Statement of Financial Position (RMB thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 287 | 290 | | Interests in an Associate | 9,939 | 10,241 | | Investment Properties | 7,100 | 7,100 | | Deferred Tax Assets | 225 | 225 | | **Current Assets** | | | | Properties Under Development/Held for Sale | 382,405 | 384,662 | | Trade and Other Receivables and Prepayments | 3,094,055 | 3,071,647 | | Bank Balances and Cash | 3,480 | 3,922 | | **Current Liabilities** | | | | Trade and Other Payables and Accruals | 4,921,496 | 4,898,797 | | Borrowings - Due within One Year | 194,691 | 193,860 | | Net Current Liabilities | (1,824,195) | (1,817,754) | | **Capital and Reserves** | | | | Share Capital | 12,924 | 12,924 | | Reserves | (1,892,261) | (1,886,221) | | Total Deficit | (1,813,480) | (1,806,734) | - The Group's net current liabilities as of June 30, 2025, were approximately **RMB 1,824,195 thousand**, a slight increase from RMB 1,817,754 thousand as of December 31, 2024, indicating persistent liquidity pressure[41](index=41&type=chunk) - The deficit attributable to owners of the Company further expanded to **RMB 1,879,337 thousand**[42](index=42&type=chunk) Condensed Consolidated Statement of Changes in Equity [Analysis of Changes in Equity](index=17&type=section&id=Analysis%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, the deficit attributable to owners of the Company increased from RMB 1,873,297 thousand at the beginning of the period to RMB 1,879,337 thousand. Total comprehensive expense for the period was RMB 6,746 thousand, primarily influenced by the loss for the period and exchange gains Condensed Consolidated Statement of Changes in Equity (RMB thousand) | Indicator | June 30, 2025 (Unaudited) | January 1, 2024 (Audited) | | :--- | :--- | :--- | | Share Capital | 12,924 | 12,924 | | Share Premium | 227,657 | 227,657 | | Exchange Reserve | 89,440 | 90,859 | | Accumulated Losses | (3,246,224) | (2,431,232) | | Total Deficit Attributable to Owners of the Company | (1,879,337) | (1,013,302) | | Non-controlling Interests | 65,857 | 300,524 | | Total Deficit | (1,813,480) | (712,778) | | Loss for the Period (Attributable to Owners of the Company) | (12,726) | (302,399) | | Other Comprehensive Income for the Period (Attributable to Owners of the Company) | 6,686 | (5,188) | | Total Comprehensive Expense for the Period (Attributable to Owners of the Company) | (6,040) | (307,587) | - Accumulated losses attributable to owners of the Company increased from approximately **RMB 2,431,232 thousand** as of January 1, 2024, to approximately **RMB 3,246,224 thousand** as of June 30, 2025[44](index=44&type=chunk) - The exchange reserve turned from a loss as of June 30, 2024, to a gain as of June 30, 2025, reflecting the impact of foreign currency exchange rate changes[44](index=44&type=chunk) Condensed Consolidated Statement of Cash Flows [Cash Flow Analysis](index=18&type=section&id=Cash%20Flow%20Analysis) For the six months ended June 30, 2025, the Group's net cash used in operating activities was RMB 1,325 thousand, net cash from investing activities was RMB 7 thousand, and net cash from financing activities was RMB 889 thousand. Cash and cash equivalents at the end of the period decreased from the beginning of the period Condensed Consolidated Statement of Cash Flows (RMB thousand) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash (Used in)/From Operating Activities | (1,325) | 5,063 | | Net Cash From Investing Activities | 7 | 144 | | Net Cash From Financing Activities | 889 | 666 | | Net (Decrease)/Increase in Cash and Cash Equivalents | (429) | 5,873 | | Cash and Cash Equivalents at Beginning of Period | 3,922 | 44,011 | | Cash and Cash Equivalents at End of Period | 3,480 | 50,493 | - Cash flow from operating activities turned from a net inflow in the prior year to a **net outflow**, primarily due to changes in working capital[46](index=46&type=chunk) - Cash and cash equivalents at the end of the period were **RMB 3,480 thousand**, a decrease from **RMB 3,922 thousand** at the beginning of the period[46](index=46&type=chunk) Notes to the Condensed Consolidated Financial Statements [1. Basis of Preparation](index=19&type=section&id=1.%20Basis%20of%20Preparation) This condensed consolidated interim financial information is prepared in accordance with HKAS 34 and on a going concern basis. However, the Group faces significant uncertainties including continuous losses, current liabilities exceeding current assets, and loan defaults, with its going concern ability dependent on management's plans to improve liquidity - This condensed consolidated interim financial information is prepared in accordance with **Hong Kong Accounting Standard 34 Interim Financial Reporting**[47](index=47&type=chunk) - For the period ended June 30, 2025, the Group recorded a net loss of approximately **RMB 13.4 million**, a total deficit of approximately **RMB 1.8793 billion**, and current liabilities exceeding current assets by approximately **RMB 1.8242 billion**[48](index=48&type=chunk) - The Group was unable to repay borrowings totaling approximately **RMB 151.5 million** and related accrued interest of approximately **RMB 37.1 million** by their scheduled repayment dates, resulting in defaulted borrowings of approximately **RMB 188.6 million** becoming immediately repayable[48](index=48&type=chunk) - The effectiveness of the going concern basis depends on management's plans to improve liquidity, including generating operating cash flows, successfully negotiating new loans/loan renewals, and controlling administrative costs[49](index=49&type=chunk) [2. Significant Accounting Policies](index=20&type=section&id=2.%20Significant%20Accounting%20Policies) The condensed consolidated financial information is prepared on a historical cost basis, except for investment properties and certain financial assets measured at fair value through other comprehensive income. HKAS 21 (Revised) "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" was first applied in this interim period but had no significant impact on financial position and performance - The condensed consolidated financial information is prepared on a **historical cost basis**, except for investment properties and certain financial assets measured at fair value through other comprehensive income[50](index=50&type=chunk) - **HKAS 21 (Revised) "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability"** was first applied in this interim period but had no significant impact on the Group's financial position and performance[51](index=51&type=chunk) [3. Revenue](index=20&type=section&id=3.%20Revenue) The Group's total revenue for H1 2025 was RMB 33,193 thousand, primarily from the supply chain business (RMB 30,000 thousand) and property development (RMB 3,024 thousand). Property sales revenue significantly decreased by 95.0% year-on-year, while the supply chain business is a new revenue source Revenue from Contracts with Customers (RMB thousand) | Type of Goods | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Sales of Completed Properties | 3,024 | 60,295 | | Sales of Goods | 30,000 | – | | Geographical Market: People's Republic of China | 33,024 | 60,295 | | Timing of Revenue Recognition: At a point in time | 33,024 | 60,295 | Total Revenue by Segment (RMB thousand) | Segment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Property Development | 3,024 | 60,295 | | Property Investment | 169 | 417 | | Supply Chain Business | 30,000 | – | | Total Revenue | 33,193 | 60,712 | - Property sales revenue significantly decreased from **RMB 60,295 thousand** in H1 2024 to **RMB 3,024 thousand** in H1 2025[53](index=53&type=chunk) - The supply chain business is a new revenue source in H1 2025, contributing **RMB 30,000 thousand**[53](index=53&type=chunk)[54](index=54&type=chunk) [4. Segment Information](index=21&type=section&id=4.%20Segment%20Information) The Group's operations are divided into three reportable segments: property development, property investment, and supply chain business. In H1 2025, the supply chain business contributed most of the segment revenue and profit, while the property development segment continued to record a loss. Segment assets and liabilities are primarily concentrated in property development Revenue and Results by Reportable Segment (H1 2025, RMB thousand) | Segment | Segment Revenue (External) | Segment Profit/(Loss) | | :--- | :--- | :--- | | Property Development | 3,024 | (2,277) | | Property Investment | 169 | 129 | | Supply Chain Business | 30,000 | 141 | | Total Segments | 33,193 | (2,007) | Assets by Reportable Segment (RMB thousand) | Segment | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property Development | 1,008,939 | 1,011,323 | | Property Investment | 7,119 | 7,113 | | Supply Chain Business | 30,000 | – | | Total Segments | 1,046,058 | 1,018,436 | Liabilities by Reportable Segment (RMB thousand) | Segment | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property Development | 1,229,251 | 1,231,563 | | Property Investment | 167 | 167 | | Supply Chain Business | 29,894 | – | | Total Segments | 1,259,312 | 1,231,730 | - The supply chain business became a significant contributor to revenue and profit in H1 2025, while the property development segment remained in a **loss-making state**[55](index=55&type=chunk) [5. Impairment Losses](index=23&type=section&id=5.%20Impairment%20Losses) For the six months ended June 30, 2025, the Group recorded no impairment losses, a significant improvement from the RMB 51,889 thousand impairment loss in the prior year, which primarily stemmed from amounts due from a former subsidiary and non-controlling interests Impairment Losses (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Amounts Due from a Former Subsidiary | – | 31,489 | | Amounts Due from Non-controlling Interests | – | 20,400 | | Total | – | 51,889 | - No impairment losses were recorded in the current period, representing a **significant improvement** compared to the prior year[59](index=59&type=chunk) [6. Other Income, Gains and Losses](index=24&type=section&id=6.%20Other%20Income,%20Gains%20and%20Losses) For the six months ended June 30, 2025, the Group's other income was RMB 33 thousand, mainly from bank interest income. Net other gains and losses amounted to RMB 3,220 thousand, primarily net exchange gains, a significant improvement from the exchange losses in the prior year Other Income (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Rental Income from Short-term Leases of Completed Properties Held for Sale | – | 116 | | Bank Interest Income | 7 | 108 | | Others | 26 | 50 | | Total | 33 | 274 | Net Other Gains and Losses (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Gain on Disposal of Property, Plant and Equipment | – | 14 | | Net Exchange Gains/(Losses) | 3,220 | (6,293) | | Total | 3,220 | (6,279) | - Net exchange gains of **RMB 3,220 thousand** in the current period, compared to a loss of RMB 6,293 thousand in the prior year, positively impacted overall gains[60](index=60&type=chunk) [7. Finance Costs](index=24&type=section&id=7.%20Finance%20Costs) For the six months ended June 30, 2025, the Group's finance costs were RMB 9,384 thousand, a significant decrease from RMB 185,365 thousand in the prior year, primarily due to a substantial reduction in interest on bank and other borrowings Finance Costs (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Interest on Bank and Other Borrowings | 9,384 | 180,798 | | Interest on Contract Liabilities | – | 4,567 | | Total | 9,384 | 185,365 | - Finance costs decreased significantly by **94.9%**, primarily due to a substantial reduction in interest on bank and other borrowings[61](index=61&type=chunk) [8. Income Tax Expense/(Credit)](index=25&type=section&id=8.%20Income%20Tax%20Expense%2F(Credit)) For the six months ended June 30, 2025, the Group recorded an income tax expense of RMB 35 thousand, compared to an income tax credit of RMB 20,409 thousand in the prior year, mainly due to the recognition of an over-provision for land appreciation tax last year. Chinese subsidiaries are subject to a 25% corporate income tax rate Income Tax Expense/(Credit) (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | China Corporate Income Tax | 35 | 2,497 | | Land Appreciation Tax | – | (22,821) | | Deferred Tax Credit | – | (85) | | Total | 35 | (20,409) | - The prior year's income tax credit was primarily due to the recognition of an **over-provision for land appreciation tax** from the previous year[13](index=13&type=chunk)[62](index=62&type=chunk) - Chinese subsidiaries are subject to a corporate income tax rate of **25%**[63](index=63&type=chunk) [9. Loss for the Period](index=26&type=section&id=9.%20Loss%20for%20the%20Period) For the six months ended June 30, 2025, the Group's loss for the period was RMB 13,432 thousand, primarily after deducting items such as cost of sales, administrative expenses, and finance costs. Total staff costs (excluding directors' emoluments) amounted to RMB 3,080 thousand Key Components of Loss for the Period (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Cost of Properties Held for Sale Included in Cost of Sales | 2,605 | 124,471 | | Cost of Goods Sold Included in Cost of Sales | 29,700 | – | | Impairment Loss on Properties Under Development/Held for Sale Included in Cost of Sales | – | 58,425 | | Depreciation of Property, Plant and Equipment | 4 | 997 | | Staff Salaries and Allowances | 2,882 | 7,427 | | Retirement Benefit Scheme Contributions | 198 | 554 | | Total Staff Costs (Excluding Directors' Emoluments) | 3,080 | 7,981 | - Cost of goods sold is a new item in H1 2025, reflecting the commencement of the **supply chain business**[64](index=64&type=chunk) - Impairment loss on properties held for sale was **zero** in the current period, compared to RMB 58,425 thousand in the prior year[64](index=64&type=chunk) [10. Dividends](index=26&type=section&id=10.%20Dividends) For the six months ended June 30, 2025, and 2024, the Company neither paid nor proposed any dividends to shareholders - For the six months ended June 30, 2025, and 2024, no dividends were paid or proposed to the Company's shareholders[65](index=65&type=chunk) [11. Loss Per Share](index=27&type=section&id=11.%20Loss%20Per%20Share) For the six months ended June 30, 2025, both basic and diluted loss per share attributable to owners of the Company were RMB 0.90 cents, a significant narrowing from RMB 21.29 cents in the prior year. No dilutive potential ordinary shares were issued during the period Loss Per Share (RMB cents) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Basic Loss Per Share | (0.90) | (21.29) | | Diluted Loss Per Share | (0.90) | (21.29) | - The loss for the period attributable to owners of the Company for basic loss per share was **RMB 12,726 thousand** (H1 2024: RMB 302,399 thousand)[66](index=66&type=chunk) - Diluted loss per share was equal to basic loss per share for the six months ended June 30, 2025, and 2024, as no dilutive potential ordinary shares were issued during the period[66](index=66&type=chunk) [12. Interests in an Associate](index=28&type=section&id=12.%20Interests%20in%20an%20Associate) As of June 30, 2025, the Group's interest in an associate, measured at its share of net assets, was RMB 9,939 thousand, a slight decrease from RMB 10,241 thousand as of December 31, 2024 Interests in an Associate (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Share of Net Assets | 9,939 | 10,241 | [13. Interests in a Joint Venture](index=28&type=section&id=13.%20Interests%20in%20a%20Joint%20Venture) As of June 30, 2025, the Group's interest in a joint venture was zero, as the investment cost was offset by the share of post-acquisition results Interests in a Joint Venture (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investment Cost, Unlisted | 1,275 | 1,275 | | Share of Post-acquisition Results | (1,275) | (1,275) | | Total | – | – | [14. Investment Properties](index=29&type=section&id=14.%20Investment%20Properties) As of June 30, 2025, the Group's investment properties were accounted for at fair value of RMB 7,100 thousand, consistent with December 31, 2024. All investment properties are located in China Investment Properties (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounted for at Fair Value | 7,100 | 7,100 | - All of the Group's investment properties are located in China and are measured using the **fair value model**[69](index=69&type=chunk)[70](index=70&type=chunk) [15. Properties Under Development/Held for Sale](index=29&type=section&id=15.%20Properties%20Under%20Development%2FHeld%20for%20Sale) As of June 30, 2025, the Group's total properties under development/held for sale amounted to RMB 382,405 thousand, a slight decrease from RMB 384,662 thousand as of December 31, 2024 Properties Under Development/Held for Sale (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Properties Under Development | 122,660 | 122,660 | | Properties Held for Sale | 259,745 | 262,002 | | Total | 382,405 | 384,662 | [16. Trade and Other Receivables and Prepayments](index=29&type=section&id=16.%20Trade%20and%20Other%20Receivables%20and%20Prepayments) As of June 30, 2025, the Group's total trade and other receivables and prepayments amounted to RMB 3,094,055 thousand, primarily including amounts due from a former subsidiary of RMB 3,040,547 thousand and trade receivables from customer contracts of RMB 30,000 thousand. All trade receivables from customer contracts have an aging of 0 to 90 days Trade and Other Receivables and Prepayments (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade and Other Receivables and Prepayments | 3,086,957 | 3,064,427 | | Prepaid Income Tax | 34,012 | 33,807 | | Total | 3,094,055 | 3,071,647 | - Trade receivables from customer contracts amounted to approximately **RMB 30,000 thousand** (2024: nil), all with an aging of **0 to 90 days**[72](index=72&type=chunk)[74](index=74&type=chunk) - Other receivables and prepayments include amounts due from a former subsidiary of approximately **RMB 3,040,547 thousand**, which are unsecured, interest-free, and repayable on demand[72](index=72&type=chunk) [17. Trade and Other Payables and Accruals](index=30&type=section&id=17.%20Trade%20and%20Other%20Payables%20and%20Accruals) As of June 30, 2025, the Group's total trade and other payables and accruals amounted to RMB 4,921,496 thousand, primarily including amounts due to a former subsidiary of RMB 3,123,068 thousand, provision for financial guarantees of RMB 599,775 thousand, and interest payable of RMB 50,662 thousand. Trade payables to suppliers mainly have an aging of 0 to 60 days Trade and Other Payables and Accruals (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade and Other Payables and Accruals | 3,679,990 | 3,661,098 | | Interest Payable | 50,662 | 41,285 | | Provision for Financial Guarantees | 599,775 | 599,775 | | Total | 4,921,496 | 4,898,797 | - Trade payables to suppliers amounted to approximately **RMB 29,743 thousand** (2024: RMB 43 thousand), of which **RMB 29,700 thousand** had an aging of **0 to 60 days**[75](index=75&type=chunk)[78](index=78&type=chunk) - Other payables and accruals include amounts due to a former subsidiary of **RMB 3,123,068 thousand**, which are unsecured, interest-free, and repayable on demand[75](index=75&type=chunk) [18. Borrowings](index=31&type=section&id=18.%20Borrowings) As of June 30, 2025, the Group's total other borrowings amounted to RMB 194,691 thousand, all due within one year or repayable on demand. During the period, new borrowings of RMB 889 thousand were raised, and no borrowings were repaid Borrowings (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Other Loans | 194,691 | 193,860 | | Due Immediately or on Demand or within One Year | 194,691 | 193,860 | - For the six months ended June 30, 2025, the Group raised new borrowings of approximately **RMB 889 thousand** and repaid no borrowings[79](index=79&type=chunk) - All borrowings are due within one year or repayable on demand, indicating **high short-term repayment pressure**[79](index=79&type=chunk) [19. Share Capital](index=32&type=section&id=19.%20Share%20Capital) As of June 30, 2025, the Company's authorized share capital was 50,000,000,000 shares with a par value of HKD 0.01 each, equivalent to RMB 423,381 thousand. The issued and fully paid share capital was 1,420,673,262 shares, equivalent to RMB 12,924 thousand, consistent with December 31, 2024 Share Capital (RMB thousand) | Item | Number of Shares | Amount (HKD thousand) | Equivalent Amount (RMB thousand) | | :--- | :--- | :--- | :--- | | Authorized Share Capital | 50,000,000,000 | 500,000 | 423,381 | | Issued and Fully Paid Share Capital | 1,420,673,262 | 14,207 | 12,924 | - The number of issued shares remained unchanged at **1,420,673,262** as of December 31, 2024, and June 30, 2025[81](index=81&type=chunk) [20. Disposal of a Subsidiary](index=32&type=section&id=20.%20Disposal%20of%20a%20Subsidiary) On May 21, 2024, the Group completed the disposal of its equity interest in Hunan Asia-Pacific Meilifang Investment Property Co., Ltd. for a consideration of approximately RMB 500 thousand, recording a disposal loss of approximately RMB 4,315 thousand. This disposal resulted in a net cash inflow of RMB 459 thousand - The Group disposed of its equity interest in Hunan Asia-Pacific Meilifang Investment Property Co., Ltd. on May 21, 2024, for a consideration of approximately **RMB 500 thousand**[82](index=82&type=chunk) - A loss on disposal of approximately **RMB 4,315 thousand** was recorded[82](index=82&type=chunk)[83](index=83&type=chunk) Net Cash Inflow from Disposal of Hunan Asia-Pacific (RMB thousand) | Item | Amount | | :--- | :--- | | Cash Consideration | 500 | | Less: Bank Balances and Cash Derecognized | (41) | | Net Cash Inflow | 459 | [21. Pledged Assets](index=33&type=section&id=21.%20Pledged%20Assets) As of June 30, 2025, the Group's properties under development and properties held for sale totaling RMB 295,441 thousand were pledged as collateral for bank and other financing, as well as customer mortgage loans. Additionally, certain shares of the Group's subsidiaries were also pledged Pledged Assets (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Properties Under Development | 122,660 | 122,660 | | Properties Held for Sale | 172,781 | 172,781 | | Total | 295,441 | 295,441 | - The aforementioned assets were pledged as collateral for certain bank and other financing obtained by the Group, as well as mortgage loans granted to the Group's customers[84](index=84&type=chunk) - Certain shares of the Group's subsidiaries were also pledged for certain borrowings obtained by the Group[85](index=85&type=chunk) [22. Other Commitments](index=33&type=section&id=22.%20Other%20Commitments) As of June 30, 2025, the Group's property development commitments contracted but not provided for in the condensed consolidated financial information amounted to RMB 1,373 thousand, consistent with December 31, 2024 Other Commitments (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commitments for Property Development Contracted but Not Provided for in the Condensed Consolidated Financial Information | 1,373 | 1,373 | [23. Related Party Balances and Transactions](index=34&type=section&id=23.%20Related%20Party%20Balances%20and%20Transactions) The Group's related parties include controlling shareholder Mr. Yanase Kenichi and companies controlled by him, as well as former controlling shareholder Mr. Pan Haoran and companies related to his family. For the six months ended June 30, 2025, total key management personnel emoluments amounted to RMB 1,668 thousand. No significant balances or transactions with related parties occurred during the period - Related parties include the current controlling shareholder **Mr. Yanase Kenichi** and his controlled company **Kyosei Bank Co., Ltd.**, as well as the former ultimate controlling shareholder **Mr. Pan Haoran** and companies related to his family[87](index=87&type=chunk) Key Management Personnel Emoluments (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Salaries and Allowances | 1,533 | 1,914 | | Performance-related Bonuses | 114 | 170 | | Retirement Benefit Scheme Contributions | 21 | 22 | | Total | 1,668 | 2,106 | - For the six months ended June 30, 2025, and 2024, the Group did not enter into any **significant transactions** with its related parties[89](index=89&type=chunk) [24. Fair Value Measurement of Financial Instruments](index=35&type=section&id=24.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group designated equity instruments measured at fair value through other comprehensive income as RMB 500 thousand, classified as Level 3 fair value measurement, using a discounted cash flow valuation technique. The directors believe that the carrying amounts of financial assets and financial liabilities approximate their fair values Fair Value Measurement of Financial Instruments (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | Fair Value Hierarchy Level | Valuation Techniques and Key Inputs | | :--- | :--- | :--- | :--- | :--- | | Equity Instruments Designated at Fair Value Through Other Comprehensive Income | 500 | 500 | Level 3 | Discounted cash flow—future cash flows are estimated based on expected returns and contractual investment costs, and discounted at internal rates of return reflecting different property projects. | - The directors believe that the carrying amounts of financial assets and financial liabilities recognized in the condensed consolidated financial statements approximate their fair values[93](index=93&type=chunk) - A significant unobservable input is the **discount rate**; an increase in the discount rate would result in a decrease in fair value, and vice versa[98](index=98&type=chunk) [25. Litigation](index=35&type=section&id=25.%20Litigation) The Group is involved in various legal proceedings arising in the ordinary course of business. Provisions are made for potential losses when the outcome of litigation can be reliably estimated; no provisions are made if the outcome cannot be reliably estimated or if an outflow of resources is not probable - The Group is involved in various legal proceedings and other legal actions arising in the ordinary course of business[95](index=95&type=chunk) - Provisions for potential losses are made when management can reliably estimate the outcome of litigation; no provisions are made if the outcome cannot be reliably estimated or if an outflow of resources is not probable[95](index=95&type=chunk) [26. Events After the Reporting Period](index=35&type=section&id=26.%20Events%20After%20the%20Reporting%20Period) The Group had no significant events after the reporting date and up to the date of these condensed consolidated financial statements - The Group had no significant events after the reporting date and up to the date of these condensed consolidated financial statements[96](index=96&type=chunk)

中原建業有限公司 CENTRAL CHINA MANAGEMENT COMPANY LIMITED CENTRAL CHINA MANAGEMENT COMPANY LIMITED / 中原建業有限公司 CONTENTS 2025 INTERIM REPORT / 二零二五年中期報告 目錄 2 CORPORATE INFORMATION 公司資料 6 CORPORATE PROFILE 公司簡介 8 CHAIRMAN'S STATEMENT 主席報告 14 FINANCIAL HIGHLIGHTS 財務摘要 15 MANAGEMENT DISCUSSION AND ANALYSIS 管理層討論及分析 30 DISCLOSURE OF INTERESTS 權益披露 34 CORPORATE GOVERNANCE AND OTHER INFORMATION 企業管治及其他資料 46 CONSOLIDATED STATEMENT OF PROFIT OR LOSS 綜合損益表 47 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE IN ...

[Company Information](index=3&type=section&id=Company%20Information) This section provides key corporate details including board composition, administrative services, and professional advisors [Board of Directors and Management](index=3&type=section&id=Board%20of%20Directors%20and%20Management) This chapter details the board of directors' composition, including executive, non-executive, and independent non-executive directors, and reports changes during the period - Executive Directors include Dr. Liang Ruian (Chairman and CEO) and Mr. Wang Shanchun (President, China Region)[3](index=3&type=chunk) - Mr. Wang Shanchun ceased to be President, China Region from June 6, 2025, and resigned as an Executive Director from June 9, 2025[3](index=3&type=chunk) - Independent Non-executive Director Mr. Dylan Carlo TINKER passed away on May 29, 2025; Ms. Li Zhixiu and Mr. Shen Nan were appointed as Independent Non-executive Directors on June 30, 2025[3](index=3&type=chunk) [Corporate Administration and Professional Services](index=3&type=section&id=Corporate%20Administration%20and%20Professional%20Services) This chapter outlines key administrative and professional services, including company secretary, authorized representatives, registered office, auditor, and legal counsel - The Company Secretary is Ms. Chow Yuk Yin, and Authorized Representatives are Dr. Liang Ruian and Mr. Hua Jianping[4](index=4&type=chunk) - The Auditor is Ernst & Young; Legal Counsel includes DeHeng Law Offices (Hong Kong) LLP (Hong Kong Law) and Zhong Lun Law Firm (PRC Law)[4](index=4&type=chunk) - The company's registered office is located in Hong Kong Science Park, with stock code 3681[4](index=4&type=chunk) [Chairman's Statement](index=4&type=section&id=Chairman%27s%20Statement) This statement highlights the company's strategic growth, core drug pipeline advancements, financing activities, and strategic collaborations [Business Review](index=4&type=section&id=Business%20Review) This review covers the company's strategic growth in the 'Biotech 3.0 Era,' highlighting breakthroughs in core drug pipelines SM03 and SM17, financing, and strategic partnerships - The biopharmaceutical industry is undergoing the third revolution of the 'Biotech 3.0 Era,' characterized by innovation, multidisciplinary integration, and intelligent precision across the value chain[8](index=8&type=chunk) - During the reporting period, both core drug pipelines, Suciraslimab (SM03) and SM17, achieved breakthrough progress[9](index=9&type=chunk) - The company raised approximately **HKD 124 million** through share subscriptions, primarily for SM17 clinical advancement and new drug candidate R&D, and completed a new round of financing of approximately **HKD 369.5 million** in August[16](index=16&type=chunk) - The company signed a comprehensive strategic cooperation agreement with Sun Yat-sen University Hong Kong Advanced Research Institute (SYSU-IAS) to accelerate innovative drug development and explore AI for drug target identification[17](index=17&type=chunk) [Core Drug Pipeline Progress](index=4&type=section&id=Core%20Drug%20Pipeline%20Progress) This section details the latest clinical breakthroughs for core drugs Suciraslimab (SM03) and SM17, including strategic indication adjustments and efficacy data - Suciraslimab (SM03) achieved breakthrough preclinical in vivo results in treating Systemic Lupus Erythematosus (SLE), potentially addressing unmet needs regarding long-term safety risks and lack of organ protection in SLE treatment[9](index=9&type=chunk)[11](index=11&type=chunk) - The company strategically and voluntarily withdrew the Biologics License Application (BLA) for Suciraslimab in Rheumatoid Arthritis (RA) and will fully accelerate its clinical development for SLE treatment[12](index=12&type=chunk) - Suciraslimab also shows potential in Alzheimer's disease, aiming to be the world's first effective and safe immunotherapeutic for Alzheimer's[13](index=13&type=chunk) - SM17 achieved breakthrough top-line results in its Phase 1b proof-of-concept study for moderate-to-severe Atopic Dermatitis (AD): **91.7%** of high-dose patients achieved itch relief, **75%** achieved skin lesion recovery, and **41.7%** achieved complete or almost complete clearance of AD symptoms[14](index=14&type=chunk) - These SM17 trial results confirm its triple advantages in AD treatment: rapid itch relief, strong skin lesion recovery, and high safety[15](index=15&type=chunk) [Other Pipeline Drugs](index=6&type=section&id=Other%20Pipeline%20Drugs) This section introduces other pipeline drugs, including anti-CGC antibodies and bispecific antibodies, showing potential in autoimmune diseases and osteoporosis, with preclinical preparations underway - Anti-CGC antibody is a company-developed humanized anti-γc antibody, a potential therapeutic for alopecia areata, vitiligo, and other autoimmune diseases[16](index=16&type=chunk) - The bispecific antibody product targets RANKL and sclerostin, aiming to treat osteoporosis[16](index=16&type=chunk) - The company is advancing preclinical preparations for both products, with IND submissions expected in 2026[16](index=16&type=chunk) [Outlook](index=6&type=section&id=Outlook) This section forecasts the recovery and growth opportunities in China's innovative drug market, emphasizing the company's commitment to innovation as a core competency for commercializing existing pipelines and developing new drugs - In the first half of 2025, China's innovative drug outbound licensing transactions totaled **USD 66 billion**, an increase of approximately **27.2%** compared to the full year 2024 total[18](index=18&type=chunk) - The National Medical Products Administration (NMPA) compressed innovative drug clinical trial approval time to **30 days**, and the National Healthcare Security Administration's "16 Articles for Innovative Drugs" supports payment expansion, promoting the recovery of China's innovative drug market[18](index=18&type=chunk) - The company will continue to prioritize innovation as its core competency, driving the commercialization of existing drug pipelines and new drug R&D, believing Suciraslimab and SM17 will further validate their best-in-class characteristics[18](index=18&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) [Overview](index=7&type=section&id=Overview) As Hong Kong's first listed biopharmaceutical company, the company focuses on R&D, manufacturing, and commercialization of first-in-class monoclonal antibody biologics for immune diseases, aiming to be a global leader by integrating Hong Kong R&D with China's manufacturing capabilities - The company is the first Hong Kong-based biopharmaceutical listed company, primarily developing first-in-class monoclonal antibody-based biologics for immune diseases[21](index=21&type=chunk) - Flagship product Suciraslimab (SM03), a potential global first-in-class anti-CD22 monoclonal antibody, achieved breakthrough preclinical results in SLE treatment and has strategically withdrawn its BLA for RA indication to fully accelerate SLE clinical development[22](index=22&type=chunk)[23](index=23&type=chunk) - Key product SM17, a global first-in-class humanized anti-IL-25 receptor monoclonal antibody, achieved positive top-line results in its Phase 1b study for moderate-to-severe AD, demonstrating superior itch relief and skin clearance compared to existing therapies[24](index=24&type=chunk) - SN1011, a third-generation reversible covalent BTK inhibitor, has received **4 IND approvals** from the NMPA and is being co-developed with Everest Medicines for renal disease indications, showing positive preliminary results[26](index=26&type=chunk) [Business Review](index=8&type=section&id=Business%20Review) This section reviews the company's clinical project progress during the reporting period, including specific data and strategic adjustments for major product pipelines, as well as updates on collaborations, manufacturing, intellectual property, and human resources - The Group is primarily engaged in the R&D of pharmaceutical products; operational performance, progress, and future prospects of clinical projects during the review period are disclosed in the Chairman's Statement and this section[27](index=27&type=chunk) - Except for disclosures in the "Business Overview" section of the Chairman's Statement and this section, the Group has no immediate plans for significant investments or capital assets[27](index=27&type=chunk) [Clinical Project Progress](index=9&type=section&id=Clinical%20Project%20Progress) This section details the latest progress of the company's major clinical projects, including the potential of Suciraslimab (SM03) in SLE and AD, SM17's breakthroughs in AD treatment, and the development stages of other pipeline drugs such as SN1011, SM06, anti-CGC antibody, bispecific antibody, and SM09 Clinical Project Pipeline Overview | Product Line | Indication | Region | Phase I | Phase II | Phase III | BLA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | SM03 (Suciraslimab) | SLE | China | Planned | Planned | | | | | RA | China | | | Completed | Withdrawn | | | Alzheimer's Disease | | IND Preparation | | | | | SM17 | AD | China | Completed 1b | | | | | | Asthma | USA/China | Completed 1 period | | | | | SN1011 | SLE, Pemphigus, NMOSD, MS | China/USA | Completed 1 period | 1b/2a (pMN) | | | | SM06 | RA, NMOSD, SS | USA/China | IND Study | | | | | Anti-CGC antibody | Vitiligo, Alopecia Areata | Global | Preclinical | | | | | Bispecific antibody | Osteoporosis | Global | Preclinical | | | | | SM09 | NHL, Autoimmune Diseases | China | IND Study | | | | - Suciraslimab (SM03) demonstrates three key competitive advantages in SLE treatment: non-depleting B-cell modulation, dual mechanism with bidirectional regulation, and organ protection, showing significant reduction in anti-dsDNA antibody levels, improved proteinuria, and glomerular immune complex deposition in preclinical studies[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - SM17 achieved positive top-line results in its Phase 1b proof-of-concept study for moderate-to-severe AD

Stock Code 股份代號: 34 中期報告 2025 INTERIM REPORT Interim Report 2025 中期報 告 公司資料 2 集團業務架構 4 摘要 5 主席報告 6 財務回顧 11 獨立核數師審閱報告 13 綜合收益計算表 14 綜合全面收益表 15 綜合財務狀況表 16 綜合權益變動表 18 簡明綜合現金流量表 19 未經審核中期財務報告附註 20 其他資料 35 www.kdc.com.hk Kowloon Development Company Limited 九龍建業有限公司 Kowloon Development Company Limited (Stock Code: 34) has been engaged in property investment and investment holding with the operation of its business mainly in Hong Kong since its establishment. It has substantially broadened the areas of its busines ...

[Company Information](index=3&type=section&id=Company%20Information) This section details the company's governance structure, including board and committee compositions, along with essential corporate registration and banking details [Board Composition](index=3&type=section&id=Board%20Composition) The company's Board of Directors comprises Executive Director Mr. Ng Kin Shiu (Chairman and CEO) and four Independent Non-executive Directors, with Mr. Lau Kwok Fai having resigned on January 10, 2025 - Executive Director: **Mr. Ng Kin Shiu** (Chairman and Chief Executive Officer)[4](index=4&type=chunk) - Independent Non-executive Directors: **Mr. Wong Chun Wah**, **Mr. Siu Wai Lam**, **Ms. Ng Chung Che**, **Mr. Lau Kwok Fai** (resigned on January 10, 2025)[5](index=5&type=chunk) [Committee Composition](index=3&type=section&id=Committee%20Composition) The company has an Audit Committee, Remuneration Committee, and Nomination Committee, all with independent non-executive director participation to ensure governance independence and effectiveness; Mr. Lau Kwok Fai has resigned from the Audit and Nomination Committees - Audit Committee Chairman: **Ms. Ng Chung Che**; Members: **Mr. Wong Chun Wah**, **Mr. Siu Wai Lam**, **Mr. Lau Kwok Fai** (resigned)[5](index=5&type=chunk) - Remuneration Committee Chairman: **Mr. Ng Kin Shiu**; Members: **Mr. Wong Chun Wah**, **Mr. Siu Wai Lam**[6](index=6&type=chunk) - Nomination Committee Chairman: **Mr. Ng Kin Shiu**; Members: **Mr. Wong Chun Wah**, **Mr. Siu Wai Lam**, **Ms. Ng Chung Che**, **Mr. Lau Kwok Fai** (resigned)[6](index=6&type=chunk) [Company General Information](index=3&type=section&id=Company%20General%20Information) The company is registered in the Cayman Islands, with its head office and principal place of business in Wan Chai, Hong Kong, stock code 01826, and principal bankers including O-Bank Co., Ltd. and Bank of China (Hong Kong) Limited - Registered office in Cayman Islands, principal place of business in Hong Kong at New World Tower, 200 Gloucester Road, Wan Chai, Hong Kong[7](index=7&type=chunk) - Stock code: **01826**; principal bankers include **O-Bank Co., Ltd.**, **Bank of China (Hong Kong) Limited**, **The Bank of East Asia, Limited**, **Industrial and Commercial Bank of China (Asia) Limited**[7](index=7&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) This section provides a concise overview of the company's key financial performance indicators for the period, highlighting revenue, profit, and dividend trends [Key Financial Indicators](index=5&type=section&id=Key%20Financial%20Indicators) For the six months ended June 30, 2025, revenue decreased by 11.6% to HK$235.5 million, gross profit significantly dropped by 65.0% to HK$5.1 million, and the company reported a loss of HK$5.2 million (0.4 HK Cents per share) compared to a profit in the prior year, with no interim dividend recommended Key Financial Indicators for the Six Months Ended June 30 | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 235,454 | 266,253 | (11.6%) | | Gross Profit | 5,075 | 14,485 | (65.0%) | | (Loss)/Profit for the Period | (5,163) | 5,254 | N/A | | (Loss)/Earnings Per Share | (0.4 HK Cents) | 0.4 HK Cents | N/A | - Group revenue was approximately **HK$235.5 million**, a decrease of approximately **HK$30.8 million or 11.6%** compared to the same period last year[10](index=10&type=chunk) - Loss attributable to owners of the Company was approximately **HK$5.2 million**, compared to a profit of **HK$5.3 million** in the same period last year[10](index=10&type=chunk) - The Board does not recommend the payment of any interim dividend for the relevant period[10](index=10&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the company's financial performance, detailing revenue, costs, and the resulting profit or loss for the period [Profit or Loss Statement Overview](index=6&type=section&id=Profit%20or%20Loss%20Statement%20Overview) For the six months ended June 30, 2025, the company reported revenue of HK$235.5 million and cost of services of HK$230.4 million, resulting in a gross profit of HK$5.1 million, with a pre-tax loss of HK$5.2 million for the period, consistent with total comprehensive expenses Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 235,454 | 266,253 | | Cost of Services | (230,379) | (251,768) | | Gross Profit | 5,075 | 14,485 | | Other Income | 76 | 119 | | Share of Results of a Joint Venture | 614 | 516 | | Net Impairment Losses | (893) | (1,658) | | Administrative Expenses | (9,671) | (7,551) | | Finance Costs | (364) | (658) | | (Loss)/Profit Before Tax | (5,163) | 5,254 | | (Loss)/Profit for the Period | (5,163) | 5,254 | | Total Comprehensive (Expenses)/Income for the Period | (5,163) | 5,254 | - Loss for the period attributable to owners of the Company was **HK$5,163 thousand**, compared to a profit of **HK$5,254 thousand** in the same period last year[13](index=13&type=chunk) - Basic and diluted loss per share was **0.4 HK Cents**, compared to earnings of **0.4 HK Cents** in the same period last year[13](index=13&type=chunk) [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement outlines the company's assets, liabilities, and equity at a specific point in time, reflecting its financial health [Balance Sheet Overview](index=8&type=section&id=Balance%20Sheet%20Overview) As at June 30, 2025, non-current assets increased to HK$5.6 million due to higher right-of-use assets, current assets slightly decreased to HK$160.4 million (driven by lower contract assets and cash), and current liabilities rose to HK$162.7 million, resulting in net current liabilities of HK$2.3 million and an expanded net liabilities of HK$5.7 million Condensed Consolidated Statement of Financial Position (As at June 30) | Indicator | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Interests in a Joint Venture | 1,870 | 1,256 | | Property, Plant and Equipment | 366 | 442 | | Right-of-use Assets | 3,386 | 992 | | **Total Non-current Assets** | **5,622** | **2,690** | | **Current Assets** | | | | Contract Assets | 70,329 | 88,304 | | Trade and Other Receivables | 77,525 | 45,804 | | Pledged Deposits | 7,165 | 7,165 | | Bank Balances and Cash | 5,365 | 25,434 | | **Total Current Assets** | **160,384** | **166,707** | | **Current Liabilities** | | | | Trade and Other Payables | 105,004 | 125,850 | | Contract Liabilities | 817 | 2,256 | | Amounts Due to Shareholders | 3,500 | 10,000 | | Amounts Due to a Joint Venture | 42,091 | 21,813 | | Lease Liabilities | 2,413 | 1,006 | | Bank Borrowings | 8,898 | 884 | | **Total Current Liabilities** | **162,723** | **161,809** | | **Net Current (Liabilities)/Assets** | **(2,339)** | **4,898** | | **Total Assets Less Current Liabilities** | **3,283** | **7,588** | | **Non-current Liabilities** | | | | Bank Borrowings | 7,664 | 8,116 | | Deferred Tax Liabilities | 20 | 20 | | Lease Liabilities | 1,310 | — | | **Total Non-current Liabilities** | **8,994** | **8,136** | | **Net Liabilities** | **(5,711)** | **(548)** | | **Total Deficit** | **(5,711)** | **(548)** | - Net current (liabilities)/assets changed from **HK$4,898 thousand** as at December 31, 2024, to **(HK$2,339) thousand** as at June 30, 2025[14](index=14&type=chunk) - Net liabilities expanded from **(HK$548) thousand** as at December 31, 2024, to **(HK$5,711) thousand** as at June 30, 2025[15](index=15&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details the movements in the company's equity components over the reporting period, reflecting profit/loss and other comprehensive income [Equity Changes Overview](index=10&type=section&id=Equity%20Changes%20Overview) For the six months ended June 30, 2025, the company's total equity decreased from (HK$548) thousand as at January 1, 2025, to (HK$5,711) thousand, primarily due to a loss of HK$5,163 thousand for the period Condensed Consolidated Statement of Changes in Equity (For the Six Months Ended June 30) | Indicator | Share Capital (HK$ Thousand) | Share Premium (HK$ Thousand) | Other Reserves (HK$ Thousand) | Exchange Reserve (HK$ Thousand) | Accumulated Losses (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As at January 1, 2024 | 13,320 | 145,939 | 1,000 | 2,824 | (173,499) | (10,416) | | Profit and Other Comprehensive Income for the Period | — | — | — | — | 5,254 | 5,254 | | As at June 30, 2024 | 13,320 | 145,939 | 1,000 | 2,824 | (168,245) | (5,162) | | As at January 1, 2025 | 13,320 | 145,939 | 1,000 | 2,824 | (163,631) | (548) | | Loss and Other Comprehensive Expenses for the Period | — | — | — | — | (5,163) | (5,163) | | As at June 30, 2025 | 13,320 | 145,939 | 1,000 | 2,824 | (168,794) | (5,711) | - As at June 30, 2025, accumulated losses increased to **HK$168,794 thousand**, resulting in a total deficit of **HK$5,711 thousand**[16](index=16&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities, showing changes in cash and cash equivalents [Cash Flow Overview](index=11&type=section&id=Cash%20Flow%20Overview) For the six months ended June 30, 2025, net cash used in operating activities was HK$39.96 million, an improvement from the prior year; net cash used in investing activities was HK$30 thousand, a shift from a net inflow; and net cash from financing activities was HK$19.92 million, primarily from joint venture advances and bank loans, leading to a decrease in period-end cash and cash equivalents to HK$5.36 million Condensed Consolidated Statement of Cash Flows (For the Six Months Ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | **Operating Activities** | | | | (Loss)/Profit Before Tax | (5,163) | 5,254 | | Operating Cash Flow Before Working Capital Changes | (3,033) | 9,614 | | Net Cash Used in Operating Activities | (39,958) | (46,443) | | **Investing Activities** | | | | Net Cash (Used in)/From Investing Activities | (30) | 11,235 | | **Financing Activities** | | | | Net Cash From Financing Activities | 19,917 | 20,063 | | **Net Decrease in Cash and Cash Equivalents** | **(20,071)** | **(15,145)** | | Cash and Cash Equivalents at January 1 | 25,434 | 35,208 | | Cash and Cash Equivalents at June 30 | 5,363 | 20,063 | - Net cash used in operating activities was **HK$39,958 thousand**, an improvement from **HK$46,443 thousand** in the same period last year[18](index=18&type=chunk) - Net cash from investing activities changed from a net inflow of **HK$11,235 thousand** in the prior year to a net outflow of **HK$30 thousand** this period[19](index=19&type=chunk) - Net cash from financing activities was **HK$19,917 thousand**, primarily influenced by advances from a joint venture of **HK$87,548 thousand** and drawdown of bank loans of **HK$8,000 thousand**[19](index=19&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns of the figures presented in the financial statements, covering accounting policies, revenue, expenses, assets, and liabilities [1. General Information](index=13&type=section&id=1.%20General%20Information) Fengzhan Holdings Limited, incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange, primarily engages in contracting and project management, with Mr. Ng Kin Shiu, the Executive Director, CEO, and Chairman, as its ultimate controlling shareholder - The Company was incorporated in the Cayman Islands and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited[20](index=20&type=chunk) - The Group is principally engaged in the provision of contracting business and project management[20](index=20&type=chunk) - The ultimate controlling shareholder is **Mr. Ng Kin Shiu**, who is the executive director, chief executive officer, and chairman of the Board of the Company[20](index=20&type=chunk) [2. Basis of Preparation](index=13&type=section&id=2.%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and applicable disclosure requirements of Appendix 16 to the Listing Rules - The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[21](index=21&type=chunk) [3. Principal Accounting Policies](index=13&type=section&id=3.%20Principal%20Accounting%20Policies) The condensed consolidated financial statements are prepared on a historical cost basis, consistent with 2024 policies, and the adoption of new and revised HKFRSs had no significant impact on the interim financial statements for the period - The condensed consolidated financial statements are prepared on the historical cost basis, except for certain financial instruments that are measured at revalued amounts or fair values[22](index=22&type=chunk) - The adoption of new and revised Hong Kong Financial Reporting Standards had no significant impact on the Group's accounting policies in the interim financial statements for the period[22](index=22&type=chunk) [4. Revenue and Segment Information](index=14&type=section&id=4.%20Revenue%20and%20Segment%20Information) The Group's revenue is entirely derived from contracting services conducted in Hong Kong, thus no operating segment or geographical analysis is presented; for the six months ended June 30, 2025, contracting services revenue was HK$235.5 million, a decrease of 11.6% year-on-year - The Group recognizes revenue from contracting business and project management[23](index=23&type=chunk) Disaggregation of Revenue from Contracts with Customers (For the Six Months Ended June 30) | Service Type/Geographical Market/Timing of Revenue Recognition | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Contracting Services | 235,454 | 266,253 | | Hong Kong | 235,454 | 266,253 | | Over Time | 235,454 | 266,253 | - All of the Group's operations are carried out in Hong Kong, and no operating segment information or geographical analysis is presented[25](index=25&type=chunk) [5A. Other Income](index=14&type=section&id=5A.%20Other%20Income) For the six months ended June 30, 2025, other income totaled HK$76 thousand, primarily comprising other income of HK$75 thousand and bank interest income of HK$1 thousand, a slight decrease from HK$119 thousand in the prior year Other Income (For the Six Months Ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Bank Interest Income | 1 | 6 | | Others | 75 | 113 | | **Total** | **76** | **119** | [5B. Net Impairment Losses under Expected Credit Loss Model](index=15&type=section&id=5B.%20Net%20Impairment%20Losses%20under%20Expected%20Credit%20Loss%20Model) For the six months ended June 30, 2025, net impairment losses under the expected credit loss model were (HK$893) thousand, a reduction from (HK$1,658) thousand in the prior year, mainly due to decreased impairment losses on contract assets Net Impairment Losses under Expected Credit Loss Model (For the Six Months Ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Contract Assets | 453 | (1,376) | | Trade Receivables | (1,835) | (523) | | Retention Receivables | 490 | 240 | | Other Receivables and Deposits | (1) | 1 | | **Total** | **(893)** | **(1,658)** | - Net impairment losses decreased from **(HK$1,658) thousand** in 2024 to **(HK$893) thousand** in 2025[28](index=28&type=chunk) [6. Finance Costs](index=15&type=section&id=6.%20Finance%20Costs) For the six months ended June 30, 2025, finance costs significantly decreased to HK$364 thousand from HK$658 thousand in the prior year, primarily due to reduced interest on bank borrowings and advances Finance Costs (For the Six Months Ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on Bank Borrowings | 285 | 198 | | Interest on Lease Liabilities | 79 | 75 | | Interest on Advances | — | 385 | | **Total** | **364** | **658** | - Finance costs decreased by **44.7%** year-on-year to **HK$364 thousand**[30](index=30&type=chunk) [7. (Loss)/Profit Before Tax](index=15&type=section&id=7.%20(Loss)%2FProfit%20Before%20Tax) For the six months ended June 30, 2025, the company recorded a pre-tax loss of HK$5,163 thousand, compared to a profit of HK$5,254 thousand in the prior year, with total staff costs slightly decreasing to HK$9,989 thousand (Loss)/Profit Before Tax (For the Six Months Ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Directors' Emoluments | 1,166 | 1,161 | | Salaries and Other Allowances | 8,567 | 8,800 | | Contributions to Retirement Benefit Schemes | 256 | 609 | | **Total Staff Costs** | **9,989** | **10,570** | | Depreciation of Property, Plant and Equipment | 92 | 87 | | Depreciation of Right-of-use Assets | 1,397 | 1,448 | - Profit before tax of **HK$5,254 thousand** in 2024 turned into a loss of **HK$5,163 thousand** in 2025[32](index=32&type=chunk) - Total staff costs decreased from **HK$10,570 thousand** to **HK$9,989 thousand**[32](index=32&type=chunk) [8. Income Tax Expense](index=16&type=section&id=8.%20Income%20Tax%20Expense) No provision for Hong Kong Profits Tax has been made as the Group did not generate any assessable profits in Hong Kong for the relevant period - No provision for Hong Kong Profits Tax has been made as the Group did not generate any assessable profits in Hong Kong for the relevant period[33](index=33&type=chunk) [9. Dividends](index=16&type=section&id=9.%20Dividends) For the six months ended June 30, 2025, and 2024, the Board resolved not to pay any interim dividends - No dividends were paid, declared, or proposed for the six months ended June 30, 2025, and 2024[34](index=34&type=chunk) - The Directors have decided not to pay any dividend for the interim period[34](index=34&type=chunk) [10. (Loss)/Earnings Per Share](index=16&type=section&id=10.%20(Loss)%2FEarnings%20Per%20Share) For the six months ended June 30, 2025, basic loss per share was 0.4 HK Cents, compared to earnings of 0.4 HK Cents in the prior year; diluted (loss)/earnings per share are not presented due to the absence of potential dilutive ordinary shares in both periods (Loss)/Earnings Per Share (For the Six Months Ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | (Loss)/Profit for the Period | (5,163) | 5,254 | | (Loss)/Profit for Calculation of Basic (Loss)/Earnings Per Share | (5,163) | 5,254 | Number of Shares for Calculation of (Loss)/Earnings Per Share | Number of Shares | 2025 (Thousand Shares) | 2024 (Thousand Shares) | | :--- | :--- | :--- | | Weighted Average Number of Ordinary Shares for Calculation of Basic (Loss)/Earnings Per Share | 1,332,000 | 1,332,000 | - Diluted (loss)/earnings per share for both periods are not presented as there were no potential dilutive ordinary shares in issue during either period[38](index=38&type=chunk) [11. Contract Assets](index=17&type=section&id=11.%20Contract%20Assets) As at June 30, 2025, contract assets amounted to HK$70.3 million, a decrease from HK$88.3 million as at December 31, 2024, with approximately HK$61.6 million in retention money held by customers for contract work expected to be recovered within 12 months Contract Assets (As at June 30) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Contracting Services | 70,329 | 88,304 | - Contract assets include retention money held by customers for contract work of approximately **HK$61,571 thousand** (December 31, 2024: **HK$47,642 thousand**)[39](index=39&type=chunk) - The retention money is expected to be recovered or settled within twelve months from the end of the reporting period[39](index=39&type=chunk) [12. Trade and Other Receivables](index=17&type=section&id=12.%20Trade%20and%20Other%20Receivables) As at June 30, 2025, total trade and other receivables significantly increased to HK$77.5 million from HK$45.8 million as at December 31, 2024; trade receivables (net of allowance) rose to HK$62.7 million, with over 180-day aged accounts accounting for HK$16.2 million Trade and Other Receivables (As at June 30) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade Receivables (Net) | 62,673 | 19,686 | | Retention Receivables (Net) | 8,920 | 17,134 | | Other Receivables (Net) | 648 | 648 | | Prepayments and Sundry Deposits | 5,284 | 8,336 | | **Total** | **77,525** | **45,804** | Ageing Analysis of Trade Receivables (As at June 30) | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 1 to 30 days | 33,746 | 1,832 | | 31 to 60 days | 1,384 | 405 | | 61 to 90 days | 255 | 1,146 | | 91 to 180 days | 11,093 | 326 | | Over 180 days | 16,195 | 15,977 | | **Total** | **62,673** | **19,686** | - Trade receivables (net of allowance for expected credit losses) significantly increased from **HK$19,686 thousand** to **HK$62,673 thousand**[40](index=40&type=chunk)[42](index=42&type=chunk) [13. Trade and Other Payables](index=19&type=section&id=13.%20Trade%20and%20Other%20Payables) As at June 30, 2025, total trade and other payables decreased to HK$105.0 million from HK$125.9 million as at December 31, 2024; trade payables reduced to HK$31.8 million, with over 90-day aged accounts comprising HK$8.4 million Trade and Other Payables (As at June 30) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade Payables | 31,788 | 49,362 | | Retention Payables | 34,538 | 40,294 | | Accrued Subcontracting Charges | 37,457 | 34,182 | | Accrued Operating Expenses | 1,221 | 2,012 | | **Total** | **105,004** | **125,850** | Ageing Analysis of Trade Payables (As at June 30) | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 1 to 30 days | 23,423 | 42,361 | | 31 to 60 days | — | 34 | | 61 to 90 days | — | — | | Over 90 days | 8,365 | 6,967 | | **Total** | **31,788** | **49,362** | - The credit period for trade payables is **0 to 30 days**[44](index=44&type=chunk) [14. Amounts Due to Shareholders](index=19&type=section&id=14.%20Amounts%20Due%20to%20Shareholders) As at June 30, 2025, amounts due to shareholders significantly decreased to HK$3.5 million from HK$10.0 million as at December 31, 2024; these amounts are unsecured, interest-free, and repayable on demand - As at June 30, 2025, amounts due to shareholders were approximately **HK$3,500 thousand** (December 31, 2024: **HK$10,000 thousand**)[46](index=46&type=chunk) - The amount is unsecured, interest-free, and repayable on demand from the end of the reporting period[46](index=46&type=chunk) [15. Share Capital](index=20&type=section&id=15.%20Share%20Capital) As at June 30, 2025, the company's authorized share capital was HK$40.0 million, with issued and fully paid share capital of HK$13.32 million, comprising 1,332,000,000 ordinary shares at HK$0.01 par value each, consistent with the prior year-end Share Capital (As at June 30) | Item | Number of Shares | Amount (HK$ Thousand) | | :--- | :--- | :--- | | Authorized Share Capital (HK$0.01 par value per share) | 4,000,000,000 | 40,000 | | Issued and Fully Paid Share Capital (HK$0.01 par value per share) | 1,332,000,000 | 13,320 | - Issued and fully paid share capital remained unchanged as at June 30, 2025, compared to December 31, 2024[47](index=47&type=chunk) [16. Performance Guarantees](index=20&type=section&id=16.%20Performance%20Guarantees) As at June 30, 2025, the Group's outstanding performance guarantees amounted to approximately HK$37.45 million, secured by pledged deposits and counter-indemnities provided to financial institutions - Certain customers of construction contracts undertaken by the Group require Group entities to provide performance guarantees for contract work, which are secured by pledged deposits[48](index=48&type=chunk) - As at June 30, 2025, the Group's outstanding performance guarantees amounted to approximately **HK$37,449 thousand**, consistent with December 31, 2024[48](index=48&type=chunk) [17. Related Party Disclosures](index=20&type=section&id=17.%20Related%20Party%20Disclosures) For the six months ended June 30, 2025, total emoluments for key management personnel (Directors) were HK$1,166 thousand, remaining largely consistent with the prior year Key Management Personnel (Directors) Emoluments (For the Six Months Ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Salaries and Other Allowances | 1,157 | 1,152 | | Contributions to Retirement Benefit Schemes | 9 | 9 | | **Total** | **1,166** | **1,161** | [18. Events After Reporting Period](index=20&type=section&id=18.%20Events%20After%20Reporting%20Period) As at the date of this report, the Directors are not aware of any significant events requiring disclosure that occurred after June 30, 2025 - The Directors are not aware of any significant events requiring disclosure that occurred after June 30, 2025, and up to the date of this report[51](index=51&type=chunk) [Management Discussion and Analysis](index=21&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's perspective on the company's operational and financial performance, future outlook, and key risks [Business Review and Outlook](index=21&type=section&id=Business%20Review%20and%20Outlook) The Group primarily engages in contracting and project management; moving forward, the company will thoroughly review its operations and financial position to formulate sustainable business plans, explore opportunities, control costs, and consider joint ventures for mutual benefit - The Group is principally engaged in the provision of contracting business and project management[52](index=52&type=chunk) - The Group will conduct a detailed review of its existing principal business operations and financial position to formulate a sustainable business plan or strategy[52](index=52&type=chunk) - The Group may consider participating in construction projects with other partners to achieve a win-win situation[52](index=52&type=chunk) [Financial Review](index=21&type=section&id=Financial%20Review) Revenue decreased by 11.6% to HK$235.5 million due to fewer contracting projects, gross profit significantly dropped by 65.0% to HK$5.1 million, administrative expenses increased by 27.6% to HK$9.7 million (driven by legal and professional fees), finance costs decreased by 44.7% to HK$364 thousand due to lower average bank borrowings, and the period shifted from a profit to a loss of HK$5.2 million - The Group's revenue decreased by approximately **HK$30.8 million or 11.6%** to approximately **HK$235.5 million**, primarily due to a reduction in the number of contracting projects[53](index=53&type=chunk) - The Group recorded a gross profit of approximately **HK$5.1 million** (2024: approximately **HK$14.5 million**)[53](index=53&type=chunk) - Administrative expenses increased by approximately **HK$2.1 million or 27.6%** to approximately **HK$9.7 million**, mainly due to legal and professional fees[56](index=56&type=chunk) - Finance costs decreased by approximately **HK$294 thousand or 44.7%** to approximately **HK$364 thousand**, primarily due to a reduction in average bank borrowings[57](index=57&type=chunk) - Total comprehensive expenses for the period attributable to owners of the Company were approximately **HK$5.2 million** (2024: income of approximately **HK$5.3 million**)[59](index=59&type=chunk) [Liquidity and Financial Resources](index=23&type=section&id=Liquidity%20and%20Financial%20Resources) As at June 30, 2025, the company's net borrowing position deteriorated, with net cash decreasing to HK$9.7 million, bank borrowings increasing to HK$16.6 million at an effective interest rate of approximately 4.45%, a current ratio of 0.99 times, and a negative gearing ratio reflecting the total deficit - As at June 30, 2025, amounts due to shareholders decreased by approximately **HK$6.5 million** to approximately **HK$3.5 million**, while bank borrowings increased by approximately **HK$7.5 million** to **HK$16.6 million**[60](index=60&type=chunk) - Bank balances and cash, along with pledged deposits, decreased by approximately **HK$20.1 million** to approximately **HK$12.5 million**, resulting in a reduction of net cash to approximately **HK$9.7 million**[60](index=60&type=chunk) - As at June 30, 2025, bank borrowings amounted to **HK$16.6 million**, with an effective interest rate of approximately **4.45%** (2024: approximately **3.56%**)[61](index=61&type=chunk) - The current ratio was **0.99 times** (December 31, 2024: **1.03 times**)[62](index=62&type=chunk) - The gearing ratio was negative due to the total deficit at the end of the relevant period[63](index=63&type=chunk) [Capital Structure](index=24&type=section&id=Capital%20Structure) The Group maintains prudent funding and treasury policies, placing surplus funds in short-term deposits, and plans to finance future projects through operating cash flows, bank financing, or other available financing in Hong Kong; the company's issued share capital is HK$13.32 million - The Group maintains a prudent funding and treasury policy for its overall business to minimize financial risks[64](index=64&type=chunk) - All future projects will be funded through cash flows from operations, bank financing, or any form of financing available in Hong Kong[64](index=64&type=chunk) - As at June 30, 2025, the Company's issued share capital was **HK$13,320 thousand**, with **1,332,000,000** ordinary shares in issue[64](index=64&type=chunk) [Exchange Rate Fluctuation Risk](index=24&type=section&id=Exchange%20Rate%20Fluctuation%20Risk) The Group's transactions are predominantly denominated in Hong Kong Dollars, thus it does not face any significant foreign exchange risk - Most of the Group's transactions are denominated in Hong Kong Dollars, and the Group is not exposed to any significant foreign exchange risk[65](index=65&type=chunk) [Future Plans for Material Investments and Capital Assets](index=24&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) The Group will continue to strengthen its construction business and client base, seeking investment opportunities to expand and inject capital for long-term growth potential, with no other material investment or capital asset plans as of the reporting date - The Group will continue to strengthen its business and customer base in the construction industry[66](index=66&type=chunk) - The Group will identify business and investment opportunities to expand its business and inject capital, thereby enhancing the Group's long-term growth potential[66](index=66&type=chunk) - As at the date of this report, the Group has no other plans for material investments and capital assets[66](index=66&type=chunk) [Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies](index=25&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20and%20Affiliated%20Companies) No material acquisitions or disposals of subsidiaries and affiliated companies occurred during the relevant period or subsequent to the reporting date - No material events occurred during the relevant period, after June 30, 2025, and up to the date of this report[67](index=67&type=chunk) [Pledge of the Group's Assets](index=25&type=section&id=Pledge%20of%20the%20Group's%20Assets) As at June 30, 2025, the Group pledged approximately HK$7.2 million in deposits to banks or insurance companies to secure banking facilities and performance guarantees totaling approximately HK$37.4 million - The Group pledged deposits of approximately **HK$7.2 million** to banks or insurance companies to secure banking facilities granted to the Group and guarantee facilities for performance guarantees of approximately **HK$37.4 million**[68](index=68&type=chunk) [Performance Guarantees and Contingent Liabilities](index=25&type=section&id=Performance%20Guarantees%20and%20Contingent%20Liabilities) The Group's construction contracts require performance guarantees, secured by pledged deposits and counter-indemnities; as at June 30, 2025, outstanding performance guarantees amounted to approximately HK$37.4 million, with no other significant contingent liabilities - Certain customers of construction contracts entered into by the Group require Group entities to provide performance guarantees for contract work, which are secured by pledged deposits[69](index=69&type=chunk) - As at June 30, 2025, and December 31, 2024, the Group's outstanding performance guarantees amounted to approximately **HK$37.4 million**[69](index=69&type=chunk) - Save as disclosed above, the Group had no other significant contingent liabilities as at June 30, 2025[69](index=69&type=chunk) [Employees and Remuneration Policy](index=26&type=section&id=Employees%20and%20Remuneration%20Policy) As at June 30, 2025, the Group employed 59 employees, a reduction from 85 in 2024, with total staff costs of approximately HK$10.0 million; remuneration policy is based on market terms, performance, qualifications, and experience, potentially including discretionary bonuses and share options to attract and retain talent - As at June 30, 2025, the Group employed a total of **59 employees** (2024: **85 employees**)[70](index=70&type=chunk) - For the six months ended June 30, 2025, the Group's staff costs (including Directors' emoluments) amounted to approximately **HK$10.0 million** (2024: approximately **HK$10.6 million**)[70](index=70&type=chunk) - Remuneration is determined with reference to market terms and the performance, qualifications, and experience of individual employees, with discretionary year-end bonuses and share options potentially granted[70](index=70&type=chunk) [Litigation](index=26&type=section&id=Litigation) The company's operating subsidiaries are involved in multiple litigations and arbitrations, including winding-up proceedings, arising from ordinary course of business disputes; management believes these have no material impact on operations and has instructed legal counsel to vigorously defend its rights - The Company's operating subsidiaries in Hong Kong are involved in various litigations and arbitrations as claimants/plaintiffs and respondents/defendants arising from disputes with employers, suppliers, and subcontractors in the ordinary course of business, including winding-up proceedings against the Company's operating subsidiaries[71](index=71&type=chunk) - These litigations and arbitrations have not had a material impact on the Group's business operations, and the Group has instructed its legal counsel to vigorously defend its rights in the pending litigations[71](index=71&type=chunk) [Disclosure of Interests](index=27&type=section&id=Disclosure%20of%20Interests) This section details the interests and short positions of directors, chief executives, substantial shareholders, and other relevant parties in the company's shares and related securities [A. Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=27&type=section&id=A.%20Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As at June 30, 2025, Executive Director and CEO Mr. Ng Kin Shiu held 62.09% of the company's shares (827,000,000 ordinary shares) through his controlled corporation, Masterveyor, of which he beneficially owns the entire issued share capital Directors' Long Positions in Ordinary Shares of the Company (As at June 30) | Director's Name | Capacity/Nature | Number of Shares Held/Interested | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Ng | Interest in a Controlled Corporation | 827,000,000 | 62.09% | Directors' Long Positions in Ordinary Shares of Associated Corporations (As at June 30) | Director's Name | Name of Associated Corporation | Capacity/Nature | Number of Shares Held/Interested | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Ng | Masterveyor | Beneficial Owner | 2 | 100% | - Mr. Ng beneficially owns the entire issued share capital of Masterveyor and is deemed to be interested in all shares of the Company held by Masterveyor[72](index=72&type=chunk) [B. Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares, Underlying Shares and Debentures](index=28&type=section&id=B.%20Substantial%20Shareholders'%20and%20Other%20Persons'%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As at June 30, 2025, Masterveyor held 62.09% of the company's shares, with Ms. Wong Choi Lin, Mr. Ng Kin Shiu's spouse, deemed to have the same interest; Gentle Soar Limited held 15.74% of shares, and its owner, Mr. Gao Yunhong, is also deemed to have the same interest Substantial Shareholders' and Other Persons' Long Positions in Shares (As at June 30) | Shareholder Name/Person | Capacity/Nature of Interest | Number of Shares | Long/Short Position | Percentage of Total Issued Share Capital of the Company | | :--- | :--- | :--- | :--- | :--- | | Masterveyor | Beneficial Owner | 827,000,000 | Long Position | 62.09% | | Ms. Wong Choi Lin | Spouse's Interest | 827,000,000 | Long Position | 62.09% | | Gentle Soar Limited | Beneficial Owner | 209,720,000 | Long Position | 15.74% | | Mr. Gao Yunhong | Interest in a Controlled Corporation | 209,720,000 | Long Position | 15.74% | - Ms. Wong Choi Lin, being the spouse of Mr. Ng, is deemed or taken to be interested in all the shares in which Mr. Ng is interested under the SFO[75](index=75&type=chunk) - Mr. Gao Yunhong beneficially owns the entire issued share capital of Gentle Soar Limited and is therefore deemed to be interested in the shares of the Company held by Gentle Soar Limited[75](index=75&type=chunk) [Competition and Conflicts of Interest](index=29&type=section&id=Competition%20and%20Conflicts%20of%20Interest) During the relevant period, no directors, controlling shareholders, or their associates were aware of any competing business or interests with the Group, nor were there any other conflicts of interest - During the relevant period, none of the Directors, controlling shareholders of the Company, or any of their respective associates had any business or interest that competes or may compete with the business of the Group, nor did any such persons have any other conflicts of interest with the Group[77](index=77&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=29&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the relevant period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the relevant period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities (including treasury shares)[78](index=78&type=chunk) [Corporate Governance Code](index=29&type=section&id=Corporate%20Governance%20Code) The company has adopted and complied with the Corporate Governance Code in Appendix C1 of the Listing Rules; while the roles of Chairman and CEO are combined in Mr. Ng Kin Shiu, the Board believes this enhances efficiency and will review the structure as needed, otherwise, the company has adhered to applicable code provisions - The Company has adopted and complied with the Corporate Governance Code set out in Appendix C1 to the Listing Rules[80](index=80&type=chunk) - The roles of Chairman and Chief Executive Officer should be separate and not performed by the same individual; Mr. Ng Kin Shiu currently holds both positions in the Company[80](index=80&type=chunk) - The Board believes this structure enhances the Company's efficiency in formulating and implementing strategies and will review the need to appoint a suitable candidate for the Chief Executive Officer role when necessary[80](index=80&type=chunk) [Directors' Securities Transactions](index=30&type=section&id=Directors'%20Securities%20Transactions) The company has adopted a code of conduct for Directors' securities transactions, with terms no less exacting than the Model Code under Appendix C3 of the Listing Rules; no non-compliance was found during the relevant period - The Company has adopted a code of conduct for Directors' securities transactions, with terms no less exacting than the required standards set out in the Model Code under Appendix C3 to the Listing Rules[81](index=81&type=chunk) - During the relevant period, the Company found no instances of non-compliance with the required standards for Directors' securities transactions[81](index=81&type=chunk) [Interim Dividend](index=30&type=section&id=Interim%20Dividend) The Board has resolved not to recommend the payment of an interim dividend for the relevant period, consistent with the prior year - The Board has resolved not to recommend the payment of an interim dividend for the relevant period (six months ended June 30, 2024: nil)[82](index=82&type=chunk) [Share Option Scheme](index=30&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme on September 16, 2015, to incentivize and retain eligible participants who contribute to the Group; as at June 30, 2025, no share options have been granted or agreed to be granted under the scheme - The Share Option Scheme is a share incentive scheme established under Chapter 17 of the Listing Rules, aiming to recognize and acknowledge the valuable contributions of Directors and other employees to the Group[83](index=83&type=chunk) - No share options have been granted or agreed to be granted under the Scheme from its adoption date up to June 30, 2025[83](index=83&type=chunk) [(A) Purpose](index=31&type=section&id=(A)%20Purpose) The Share Option Scheme aims to incentivize eligible participants to maximize performance efficiency and to attract and retain talent beneficial to the Group's long-term development - To incentivize eligible participants to maximize their performance efficiency for the benefit of the Group[85](index=85&type=chunk) - To attract and retain eligible participants whose contributions are or will be beneficial to the long-term development of the Group, or to maintain ongoing business relationships with them[85](index=85&type=chunk) [(B) Participants of the Scheme](index=31&type=section&id=(B)%20Participants%20of%20the%20Scheme) Eligible participants include full-time/part-time employees, executives, officers, directors (including independent non-executive directors) of the company or its subsidiaries, and other contributors as determined by the Board; grantees must pay HK$1.00 as consideration for the option grant - Eligible participants include any full-time or part-time employee, executive, or officer of the Company or any of its subsidiaries; any Director (including independent non-executive Directors) of the Company or any of its subsidiaries; and any consultants, advisors, and such other persons whom the Board, in its sole discretion, considers to have contributed or will contribute to the Company or any of its subsidiaries[85](index=85&type=chunk) - Upon acceptance of an option, the grantee shall pay **HK$1.00** to the Company as consideration for the grant of the option[84](index=84&type=chunk) [(C) Maximum Number of Shares](index=32&type=section&id=(C)%20Maximum%20Number%20of%20Shares) The aggregate maximum number of shares subject to options granted under this and any other company share option schemes shall not exceed 10% of the total issued shares (133,200,000 shares), unless a fresh approval is obtained - The maximum number of shares subject to options that may be granted under the Scheme and any other share option schemes of the Company shall not exceed **10%** of the total number of issued shares (i.e., **133,200,000 shares**), unless a fresh approval is obtained from the Company[86](index=86&type=chunk) [(D) Maximum Grant to Any Individual](index=32&type=section&id=(D)%20Maximum%20Grant%20to%20Any%20Individual) The total number of shares issued and to be issued upon exercise of options granted to each eligible participant under the Scheme and any other company share option schemes in any 12-month period up to the date of grant shall not exceed 1% of the company's issued shares as at the date of grant - The total number of shares issued and to be issued upon exercise of options granted to each eligible participant under the Scheme and any other share option schemes of the Company (including exercised and outstanding options) in any 12-month period up to the date of grant shall not exceed **1%** of the Company's issued shares as at the date of grant[87](index=87&type=chunk) [(E) Share Price](index=32&type=section&id=(E)%20Share%20Price) The subscription price for shares under any option granted by the Scheme is at the Board's discretion, but must be at least the higher of the official closing price on the grant date, the average closing price for the five preceding business days, and the nominal value of a share - The subscription price for shares subject to any particular option granted under the Scheme shall be determined by the Board in its sole discretion, but shall be at least the higher of: the official closing price of the shares as stated in the Stock Exchange's daily quotation sheet on the date of grant; the average of the official closing prices of the shares as stated in the Stock Exchange's daily quotation sheets for the five business days immediately preceding the date of grant; and the nominal value of a share[88](index=88&type=chunk) [(F) Exercise Period of Options and Validity Period of the Share Option Scheme](index=33&type=section&id=(F)%20Exercise%20Period%20of%20Options%20and%20Validity%20Period%20of%20the%20Share%20Option%20Scheme) Options may be exercised at any time from the grant date up to the day before its 10th anniversary, with the exercise period determined by the Board not exceeding 10 years from grant; the scheme is valid for 10 years from its adoption date, unless terminated earlier - An option may be exercised in accordance with the terms of the Scheme at any time from the date on which the option is deemed to be granted and accepted up to the day immediately preceding the 10th anniversary of that date[89](index=89&type=chunk) - The period during which an option may be exercised shall be determined by the Board in its sole discretion, provided that it shall not exceed **10 years** from the date of grant[89](index=89&type=chunk) - The Scheme shall be valid and effective for a period of **10 years** from its adoption date, unless terminated earlier by the Company in general meeting or by the Board[89](index=89&type=chunk) [Events After Reporting Period](index=33&type=section&id=Events%20After%20Reporting%20Period_2) As at the date of this report, the Directors are not aware of any significant events requiring disclosure that occurred after June 30, 2025 - The Directors are not aware of any significant events requiring disclosure that occurred after June 30, 2025, and up to the date of this report[90](index=90&type=chunk) [Audit Committee](index=33&type=section&id=Audit%20Committee) The Audit Committee, chaired by Ms. Ng Chung Che, comprises three independent non-executive directors; its main responsibilities include recommending external auditor appointments, monitoring their independence and audit effectiveness, and reviewing financial report integrity, having already reviewed the Group's unaudited condensed consolidated financial statements - The Audit Committee comprises three members: **Ms. Ng Chung Che**, **Mr. Siu Wai Lam**, and **Mr. Wong Chun Wah**, all of whom are independent non-executive Directors; **Ms. Ng Chung Che** currently serves as the Chairman of the Audit Committee[91](index=91&type=chunk) - The primary duties of the Audit Committee are to make recommendations to the Board on the appointment, reappointment, and removal of the external auditor; to review and monitor the external auditor's independence, objectivity, and the effectiveness of the audit process in accordance with applicable standards; and to oversee the integrity of the Company's annual and interim financial reports before submission to the Board[91](index=91&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the relevant period[92](index=92&type=chunk)

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides an overview of the company's governance structure, including board and committee compositions, and essential operational details [Board of Directors and Committees](index=3&type=section&id=1.1%20Board%20of%20Directors%20and%20Committees) This section lists the composition of the company's board of directors, including changes in appointments and resignations of executive, non-executive, and independent non-executive directors, as well as the members and chairpersons of the Audit, Nomination, and Remuneration Committees - Board members changed, with Mr. Chen Jingde and Mr. Jin Mingjie appointed as executive directors on May 8, 2025, while Mr. Liu Weiliang and Mr. Li Yang resigned on the same day; Mr. Zhou Weicheng was appointed as a non-executive director on August 1, 2025, and Mr. Ou Guowei resigned on January 17, 2025[7](index=7&type=chunk)[8](index=8&type=chunk) - The Audit Committee is chaired by Ms. Yang Yongyi, the Nomination Committee is chaired by Mr. Chen Jingde after Mr. Liu Weiliang's resignation, and the Remuneration Committee is chaired by Mr. Wang Chuanxu[7](index=7&type=chunk)[9](index=9&type=chunk) [Company Basic Information](index=4&type=section&id=1.2%20Company%20Basic%20Information) This section provides the company's basic operational details, including auditor, website, stock code, registered office, Hong Kong share registrar, China headquarters, and principal place of business in Hong Kong - The company's auditor is Zhonghui Anda Certified Public Accountants Limited, and its stock code is **6158**[12](index=12&type=chunk)[13](index=13&type=chunk) - The company's website is www.zhenrodc.com, and its China headquarters is located on the 3rd floor, Building 7, Hongqiao Zhenro Center, Lane 666, Shenhong Road, Minhang District, Shanghai[12](index=12&type=chunk)[13](index=13&type=chunk) [Land Bank Table](index=5&type=section&id=Land%20Bank%20Table) This section provides a comprehensive overview of the Group's land bank, detailing properties developed by both its subsidiaries and joint ventures across various regions in China [Properties Developed by the Group's Subsidiaries](index=5&type=section&id=2.1%20Properties%20Developed%20by%20the%20Group%27s%20Subsidiaries) This section details residential and retail property projects developed by the Group's subsidiaries in major Chinese cities, including their attributable interests, site areas, land costs, and estimated completion dates [Yangtze River Delta Region](index=5&type=section&id=2.1.1%20Yangtze%20River%20Delta%20Region) Subsidiary development projects in the Yangtze River Delta region are concentrated in Shanghai, Suzhou, Hangzhou, Nanjing, Chuzhou, Suqian, Xuzhou, and Hefei, covering residential and retail uses, with numerous projects in Nanjing - Projects such as Shanghai Hongqiao Zhenro Mansion, Shanghai Zhenro Guoling, and Shanghai Zhenro Yuelong Mansion are in Shanghai, while Suzhou Zhenro Hefeng Mingzhu and Zhangjiagang Tangsong Yunzhu are in Suzhou[15](index=15&type=chunk)[21](index=21&type=chunk) - Nanjing has multiple projects, including Nanjing Zhenro Aoti Nanchen Zique, Nanjing Zhenro Runjincheng, and Nanjing Zhenro Binjiang Zique, with most planned for residential/retail use[15](index=15&type=chunk)[21](index=21&type=chunk) [Central China Region](index=7&type=section&id=2.1.2%20Central%20China%20Region) Subsidiary development projects in the Central China region are primarily located in Zhengzhou, Wuhan, and Changsha, mainly for residential and retail purposes, with a higher number of projects in Changsha - Projects such as Zhengzhou Chengnan Zhenro Mansion and Zhengzhou Zhenro Yushoufu Tianyue are in Zhengzhou, while Wuhan Panlong Zhenro Mansion and Wuhan Zhenro Yuelong Mansion are in Wuhan[26](index=26&type=chunk)[31](index=31&type=chunk) - Changsha projects include Changsha Zhenro Fortune Center, Changsha Zhenro Binjiang Ziquetai, and Changsha Zhenro Meixi Ziquetai, with planned uses covering residential, retail, and S&O[26](index=26&type=chunk)[31](index=31&type=chunk) [Western China Region](index=7&type=section&id=2.1.3%20Western%20China%20Region) Subsidiary development projects in the Western China region are concentrated in Xi'an, Chengdu, and Chongqing, primarily for residential and retail uses - Projects such as Xi'an Beichen Tianyue North and Xi'an Zhenro Mansion are in Xi'an, while Chengdu Guihu Zhenro Mansion Phase II and Chengdu Dujiangyan Zhenro Yuelong Mansion are in Chengdu[26](index=26&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk)[38](index=38&type=chunk) - Chongqing Yuexi Zhenro Mansion and Chongqing Zhenro Langji Yuejiangwan are in Chongqing, with most planned for residential/retail use[33](index=33&type=chunk)[38](index=38&type=chunk) [Western Taiwan Straits Region](index=9&type=section&id=2.1.4%20Western%20Taiwan%20Straits%20Region) Subsidiary development projects in the Western Taiwan Straits region are mainly distributed in Fuzhou, Xiamen, Putian, Quanzhou, Nanchang, Ji'an, and Yichun, primarily for residential and retail uses, with more projects in Fuzhou and Putian - Projects such as Fuzhou Guanlan Mansion, Fuzhou Runtang Mansion, and Fuzhou Zhenro Fortune Center are in Fuzhou, while Xiamen Lianfa Zhenro Tianzhu Runchen and Xiamen Xiang'an Zhenro Mansion are in Xiamen[33](index=33&type=chunk)[38](index=38&type=chunk) - Putian Zhenro Fortune Center, Putian Zhenro Liyuan Huafu, and Putian Zhenro Times Square are in Putian, while Quanzhou Shishi Zhenro Mansion and Quanzhou Zhenro Baojia Jiangbin Mansion are in Quanzhou[33](index=33&type=chunk)[38](index=38&type=chunk) - Nanchang Zhenro Zhongao Yuexitai and Nanchang Zhenro Dahu Zhidu are in Nanchang, while Ji'an Luling Mansion Phase I and Yichun Jintou Zhenro Mansion are in Ji'an and Yichun[40](index=40&type=chunk)[46](index=46&type=chunk) [Pearl River Delta Region](index=11&type=section&id=2.1.5%20Pearl%20River%20Delta%20Region) Subsidiary development projects in the Pearl River Delta region are concentrated in Guangzhou and Foshan, primarily for residential and retail uses - Projects such as Guangzhou Nansha Plot, Guangzhou Zengcheng Plot, and Guangzhou Baiyun District Zhongluotan Plot are in Guangzhou, while Foshan Zhenro Jihua Zhenro Mansion and Foshan Jinmao Country Garden Zhenro Mansion are in Foshan[40](index=40&type=chunk)[46](index=46&type=chunk) - The Group's subsidiaries hold significant land reserves in the Yangtze River Delta, Central China, Western China, Western Taiwan Straits, and Pearl River Delta regions, primarily for residential (R) and retail (RE) development[15](index=15&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) Subtotal of Land Reserves Developed by the Group's Subsidiaries | Region | Site Area (square meters) | Land Cost (RMB 10k) | Land Bank (square meters) | | :--- | :--- | :--- | :--- | | Yangtze River Delta | 2,620,199 | 5,445,570 | 2,207,151 | | Central China | 878,636 | 876,601 | 1,393,769 | | Western China | 427,676 | 551,012 | 560,776 | | Western Taiwan Straits | 3,491,781 | 3,743,439 | 2,168,180 | | Pearl River Delta | 270,862 | 885,620 | 623,168 | | **Total** | **7,689,154** | **11,502,242** | **6,953,044** | [Properties Developed by the Group's Joint Ventures and Associated Companies](index=13&type=section&id=2.2%20Properties%20Developed%20by%20the%20Group%27s%20Joint%20Ventures%20and%20Associated%20Companies) This section lists residential and retail property projects developed by the Group's joint ventures and associated companies in major Chinese cities, including their attributable interests, site areas, land costs, and estimated completion dates [Yangtze River Delta Region](index=13&type=section&id=2.2.1%20Yangtze%20River%20Delta%20Region) Joint venture and associated company development projects in the Yangtze River Delta region are concentrated in Shanghai, Suzhou, Wuxi, Hangzhou, Nanjing, Chuzhou, Xuzhou, Hefei, Lu'an, and Fuyang, covering residential and retail uses - Projects such as Shanghai BU Center, Suzhou Xiangyue Siji Yayuan, and Wuxi Zhenro Xiyue are in Shanghai, Suzhou, and Wuxi[48](index=48&type=chunk)[53](index=53&type=chunk) - Projects such as Hangzhou Sunac Zhenro Hangyao Zhicheng, Nanjing Zhenro Runqifu, and Chuzhou Hongyang • Shiguang Lantian are in Hangzhou, Nanjing, and Chuzhou[48](index=48&type=chunk)[53](index=53&type=chunk) - Projects such as Xuzhou Wutong Mansion, Hefei Zhenro Yueduhui, Lu'an Country Garden Zhenro Fenghuangcheng Nanyuan, and Fuyang Yingzhou Zhenro Mansion are in Xuzhou, Hefei, Lu'an, and Fuyang[48](index=48&type=chunk)[53](index=53&type=chunk) [Central China Region](index=13&type=section&id=2.2.2%20Central%20China%20Region) Joint venture and associated company development projects in the Central China region are primarily located in Wuhan and Xuchang, mainly for residential and retail purposes - Wuhan Qingneng Zhenro Mansion is in Wuhan, and Xuchang Furong Yuefu is in Xuchang[48](index=48&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) [Western China Region](index=13&type=section&id=2.2.3%20Western%20China%20Region) Joint venture and associated company development projects in the Western China region are concentrated in Chongqing, primarily for residential use - Chongqing Zhongyang Yunjing is in Chongqing, with a planned use for residential purposes[48](index=48&type=chunk)[53](index=53&type=chunk)[56](index=56&type=chunk) [Bohai Rim Region](index=15&type=section&id=2.2.4%20Bohai%20Rim%20Region) Joint venture and associated company development projects in the Bohai Rim region are primarily distributed in Tianjin and Jinan, mainly for residential and retail purposes - Projects such as Tianjin Zhenro Zhengxing Ziquetai, Tianjin Zhongchu Zhenro Dongjing, and Tianjin Jiuhe Mansion are in Tianjin[58](index=58&type=chunk)[63](index=63&type=chunk) - Projects such as Jinan Jingyue, Jinan Zhenro Yuetang Mansion, Jinan Jiulong Mansion, Jinan Fenghuang Shoufu, Jinan Tianchen, Jinan Jinyue Mansion, Jinan Park Xuefu, and Jinan Times Lingyu are in Jinan[58](index=58&type=chunk)[63](index=63&type=chunk) [Western Taiwan Straits Region](index=15&type=section&id=2.2.5%20Western%20Taiwan%20Straits%20Region) Joint venture and associated company development projects in the Western Taiwan Straits region are primarily distributed in Xiamen, Putian, Nanchang, Ji'an, Ganzhou, and Fuzhou, mainly for residential and retail purposes - Xiamen Lianfa Zhenro Zhenhuafu is in Xiamen, and Putian Lianfa Zhenro Yuhu Tianjing is in Putian[58](index=58&type=chunk)[63](index=63&type=chunk) - Projects such as Nanchang Dongtou Zhenro Mansion, Ji'an Zhenro Sunshine City Wenlan Mansion, and Ganzhou Zhenro Yuerong Mansion are in Nanchang, Ji'an, and Ganzhou[58](index=58&type=chunk)[63](index=63&type=chunk) - Projects such as Mawei Country Garden Zhenro Yuejiangwan, Fuzhou Zhenro Shimao Tangyue Shannan, and Fuzhou Sunshine City Poly Yuanxili Mountain are in Fuzhou[58](index=58&type=chunk)[63](index=63&type=chunk) [Pearl River Delta Region](index=15&type=section&id=2.2.6%20Pearl%20River%20Delta%20Region) Joint venture and associated company development projects in the Pearl River Delta region are concentrated in Foshan, primarily for residential and retail purposes - Foshan Zhenro Ligao Guanshan Mansion is in Foshan, with a planned use for residential/retail purposes[58](index=58&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk) - The Group's joint ventures and associated companies hold land reserves in the Yangtze River Delta, Central China, Western China, Bohai Rim, Western Taiwan Straits, and Pearl River Delta regions, primarily for residential (R) and retail (RE) development[48](index=48&type=chunk)[57](index=57&type=chunk) Subtotal of Land Reserves Developed by the Group's Joint Ventures and Associated Companies | Region | Site Area (square meters) | Land Cost (RMB 10k) | Land Bank (square meters) | | :--- | :--- | :--- | :--- | | Yangtze River Delta | 1,580,493 | 2,675,495 | 1,528,397 | | Central China | 177,494 | 123,532 | 364,024 | | Western China | 150,048 | 215,072 | 34,497 | | Bohai Rim | 574,312 | 1,914,242 | 273,870 | | Western Taiwan Straits | 461,953 | 842,250 | 452,244 | | Pearl River Delta | 51,714 | 103,700 | 99,068 | | **Total** | **2,996,014** | **5,874,291** | **2,752,100** | [Total Land Bank](index=15&type=section&id=2.3%20Total%20Land%20Bank) As of June 30, 2025, the Group, together with its joint ventures and associated companies, held a total land bank with a gross floor area of 9.71 million square meters and a total land cost of RMB 17.377 billion Total Land Bank | Indicator | Amount | | :--- | :--- | | Total Site Area | 10,685,168 square meters | | Total Land Cost | 17,376,533 RMB 10k | | Total Land Bank | 9,705,144 square meters | [Chairman's Statement](index=17&type=section&id=Chairman%27s%20Statement) This statement provides an overview of the Group's performance, market conditions, operational review, and future outlook for the reporting period [Performance Overview](index=17&type=section&id=3.1%20Performance%20Overview) The Group recorded revenue of approximately RMB 4,645.4 million and a loss of approximately RMB 6,657.6 million for the first half of 2025, with loss attributable to owners of the parent at RMB 6,463.1 million, and no interim dividend is recommended 2025 H1 Key Financial Data | Indicator | Amount (RMB million) | | :--- | :--- | | Revenue | 4,645.4 | | Loss | 6,657.6 | | Loss attributable to owners of the parent | 6,463.1 | | Interim dividend | Not recommended | [Market and Business Review](index=17&type=section&id=3.2%20Market%20and%20Business%20Review) In the first half of 2025, the Chinese real estate market remained sluggish, posing significant operational pressure on the Group, which responded by advancing project construction, revitalizing existing assets, delivering new homes, and pursuing offshore debt restructuring - The Chinese real estate market continued to operate at a low level in the first half of 2025, with property developers facing immense operational pressure[70](index=70&type=chunk)[73](index=73&type=chunk) - The Group delivered approximately **2,000 new homes** on schedule and continued to ensure orderly progress in project construction[70](index=70&type=chunk)[74](index=74&type=chunk) - The Group implemented liquidity management and cost-saving measures, including seeking extensions for domestic and overseas financing, improving the quality of new home sales, revitalizing existing assets, accelerating cash recovery, streamlining organizational structure, and reducing administrative expenses[70](index=70&type=chunk)[75](index=75&type=chunk) - The Group actively collaborated with legal and financial advisors to advance the overall offshore debt restructuring to achieve a long-term sustainable capital structure[70](index=70&type=chunk)[75](index=75&type=chunk) [Outlook](index=18&type=section&id=3.3%20Outlook) For the second half of 2025, the Group anticipates continued challenges in the Chinese real estate sector but plans to maintain operational stability, capitalize on policy opportunities, restart key projects, enhance asset operation, and strengthen financial risk management - The Chinese real estate industry is expected to continue facing difficulties in the second half of 2025[78](index=78&type=chunk)[79](index=79&type=chunk) - The Group will seize policy opportunities for economic revitalization and stabilization of the real estate market, striving to restart key challenging projects and orderly advance the construction of ongoing projects[78](index=78&type=chunk)[79](index=79&type=chunk) - The Group will focus on enhancing its operational capabilities for existing assets to further improve the effectiveness of asset value recovery[78](index=78&type=chunk)[79](index=79&type=chunk) - The Group will continue to adhere to the "safe, healthy, and sustainable" operating principle, strengthen financial risk management, optimize asset structure, strictly control operating costs, and improve management efficiency and operational effectiveness[78](index=78&type=chunk)[79](index=79&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the Group's operational and financial performance, including property development, investment, land bank, financial review, liquidity, and contingent liabilities [Property Development](index=19&type=section&id=4.1%20Property%20Development) The Group's property development business faced challenges in the first half of 2025, with significant declines in contracted sales and gross floor area, though the average selling price of recognized properties increased [Contracted Sales](index=19&type=section&id=4.1.1%20Contracted%20Sales) In the first half of 2025, the Group, together with its joint ventures and associated companies, recorded contracted sales of RMB 2,365.2 million, a 31.0% year-on-year decrease, with total contracted sales GFA decreasing by 42.7% but average selling price increasing by 20.3% 2025 H1 Contracted Sales Data | Indicator | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Contracted Sales Amount (RMB million) | 2,365.2 | 3,430.7 | -31.0% | | Total Contracted Sales GFA (square meters) | 142,620 | 248,690 | -42.7% | | Average Contracted Selling Price (RMB/square meter) | 16,584 | 13,781 | +20.3% | [Revenue Recognized from Sales of Properties](index=19&type=section&id=4.1.2%20Revenue%20Recognized%20from%20Sales%20of%20Properties) During the period, revenue recognized from sales of properties was RMB 4,598.1 million, an 81.3% year-on-year decrease due to reduced GFA delivered, while the average recognized selling price increased by 46.0% to RMB 23,236.1 per square meter due to higher-priced properties delivered 2025 H1 Revenue Recognized from Sales of Properties | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Recognized Revenue (RMB million) | 4,598.1 | 24,609.6 | -81.3% | | Average Recognized Selling Price (RMB/square meter) | 23,236.1 | 15,912.0 | +46.0% | - Properties delivered during the period include Nanjing Zhenro Aoti Nanchen Zique, Nanjing Zhenro Runtang Mansion, Guangzhou Yunyue Huating, Suzhou Yingxi Siji Garden, and Putian Jiuxi Zhenro Mansion[84](index=84&type=chunk)[87](index=87&type=chunk) [Completed Properties Held for Sale](index=19&type=section&id=4.1.3%20Completed%20Properties%20Held%20for%20Sale) As of June 30, 2025, the Group's completed properties held for sale amounted to RMB 23,236.1 million, a 21.2% decrease from December 31, 2024, primarily due to fair value reductions from declining property market conditions Completed Properties Held for Sale Value | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | Change Rate | | :--- | :--- | :--- | :--- | | Completed properties held for sale | 23,236.1 | 29,483.4 | -21.2% | - All completed properties held for sale have obtained completion certificates[85](index=85&type=chunk)[89](index=89&type=chunk) [Properties Under Development](index=20&type=section&id=4.1.4%20Properties%20Under%20Development) As of June 30, 2025, the Group's properties under development amounted to RMB 32,848.9 million, a 1.6% decrease from December 31, 2024, mainly due to a reduction in the number of development projects in the first half of 2025 Properties Under Development Value | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | Change Rate | | :--- | :--- | :--- | :--- | | Properties under development | 32,848.9 | 33,373.4 | -1.6% | [Property Investment](index=20&type=section&id=4.2%20Property%20Investment) The Group's property investment business saw an increase in rental income in the first half of 2025, driven by improved occupancy rates of investment properties, with 8 out of 11 properties currently leased [Rental Income](index=20&type=section&id=4.2.1%20Rental%20Income) In the first half of 2025, the Group's rental income was approximately RMB 45.3 million, a 10.8% year-on-year increase, primarily due to improved occupancy rates of investment properties 2025 H1 Rental Income | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Rental income | 45.3 | 40.8 | +10.8% | [Investment Properties](index=20&type=section&id=4.2.2%20Investment%20Properties) As of June 30, 2025, the Group held 11 investment properties with a total GFA of 684,476 square meters, of which 8 properties with a total GFA of 429,429 square meters have commenced leasing - As of June 30, 2025, the Group held **11 investment properties**, with a total gross floor area of **684,476 square meters**[93](index=93&type=chunk)[98](index=98&type=chunk) - Of these, **8 investment properties** have commenced leasing, with a total gross floor area of **429,429 square meters**[93](index=93&type=chunk)[98](index=98&type=chunk) [Land Bank](index=20&type=section&id=4.3%20Land%20Bank) During the period, the Group did not acquire any land, maintaining a total land bank of 9.71 million square meters as of June 30, 2025, including those held by joint ventures and associated companies - In the first half of 2025, the Group did not acquire any land[94](index=94&type=chunk)[99](index=99&type=chunk) - As of June 30, 2025, the Group, together with its joint ventures and associated companies, held a total land bank with a gross floor area of **9.71 million square meters**[94](index=94&type=chunk)[99](index=99&type=chunk) [Financial Review](index=21&type=section&id=4.4%20Financial%20Review) The Group faced severe financial challenges in the first half of 2025, with significant declines in revenue and gross profit, substantial increases in various expenses and impairment losses, leading to an expanded loss for the period [Revenue](index=21&type=section&id=4.4.1%20Revenue) The Group's revenue significantly decreased by 81.2% from RMB 24,658.4 million in the first half of 2024 to RMB 4,645.4 million in the first half of 2025, primarily due to a substantial decline in property sales revenue Revenue Composition and Changes | Revenue Source | H1 2025 (RMB thousand) | % of Total | H1 2024 (RMB thousand) | % of Total | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Property sales | 4,598,119 | 99.0 | 24,609,579 | 99.7 | (81.3) | | Property leasing | 45,254 | 1.0 | 40,843 | 0.2 | 10.8 | | Management consulting services | 2,004 | 0.0 | 7,979 | 0.1 | (74.9) | | **Total** | **4,645,377** | **100.0** | **24,658,401** | **100.0** | **(81.2)** | [Cost of Sales](index=21&type=section&id=4.4.2%20Cost%20of%20Sales) The Group's cost of sales significantly decreased by 80.7% from RMB 23,344.3 million in the first half of 2024 to RMB 4,513.7 million in the first half of 2025, mainly due to a substantial reduction in properties delivered during the period Cost of Sales Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | 4,513.7 | 23,344.3 | (80.7) | [Gross Profit and Gross Profit Margin](index=22&type=section&id=4.4.3%20Gross%20Profit%20and%20Gross%20Profit%20Margin) The Group's gross profit decreased by 90.0% from RMB 1,314.1 million in the first half of 2024 to RMB 131.7 million in the first half of 2025, with the gross profit margin declining by 2.5 percentage points to 2.8% Gross Profit and Gross Profit Margin Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Gross profit | 131.7 | 1,314.1 | (90.0) | | Gross profit margin | 2.8% | 5.3% | -2.5 percentage points | [Other Income and Gains](index=22&type=section&id=4.4.4%20Other%20Income%20and%20Gains) Other income and gains increased by 37.2% from RMB 14.8 million in the first half of 2024 to RMB 20.3 million in the first half of 2025, primarily due to increased interest income, government grants, and forfeited deposits Other Income and Gains Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other income and gains | 20.3 | 14.8 | +37.2% | [Selling and Distribution Expenses](index=22&type=section&id=4.4.5%20Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased by 17.7% from RMB 483.4 million in the first half of 2024 to RMB 397.7 million in the first half of 2025, consistent with the decline in contracted sales during the period Selling and Distribution Expenses Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 397.7 | 483.4 | (17.7) | [Administrative Expenses](index=22&type=section&id=4.4.6%20Administrative%20Expenses) Administrative expenses decreased by 23.2% from RMB 324.1 million in the first half of 2024 to RMB 248.9 million in the first half of 2025, mainly due to the Group's streamlined corporate structure and enhanced cost control measures Administrative Expenses Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Administrative expenses | 248.9 | 324.1 | (23.2) | [Other Expenses](index=23&type=section&id=4.4.7%20Other%20Expenses) Other expenses significantly increased by 97.7% from RMB 1,262.0 million in the first half of 2024 to RMB 2,495.2 million in the first half of 2025, primarily including impairment losses on properties under development and completed properties held for sale, and net exchange losses Other Expenses Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Other expenses | 2,495.2 | 1,262.0 | +97.7% | | - Impairment losses on properties under development and completed properties | 1,971.5 | 1,198.5 | +64.5% | | - Net exchange losses | 336.6 | 33.8 | +895.8% | [Impairment Losses on Financial Assets, Net](index=23&type=section&id=4.4.8%20Impairment%20Losses%20on%20Financial%20Assets%2C%20Net) Net impairment losses on financial assets increased by 1,027.2% from RMB 119.3 million in the first half of 2024 to RMB 1,344.7 million in the first half of 2025, due to a significant decline in the overall fair value of financial assets Net Impairment Losses on Financial Assets Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Net impairment losses on financial assets | 1,344.7 | 119.3 | +1,027.2% | [Fair Value Losses on Investment Properties](index=23&type=section&id=4.4.9%20Fair%20Value%20Losses%20on%20Investment%20Properties) During the period, the Group recorded fair value losses on investment properties of RMB 259.3 million, an increase from RMB 225.6 million in the first half of 2024, mainly due to reduced demand for commercial properties under unfavorable macroeconomic conditions Fair Value Losses on Investment Properties Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Fair value losses on investment properties | 259.3 | 225.6 | +15.0% | [Finance Costs](index=23&type=section&id=4.4.10%20Finance%20Costs) The Group's finance costs increased by 24.4% from RMB 1,564.7 million in the first half of 2024 to RMB 1,946.3 million in the first half of 2025, primarily due to reduced capitalization of borrowing interest for properties under construction during the period Finance Costs Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 1,946.3 | 1,564.7 | +24.4% | [Share of Losses of Joint Ventures and Associated Companies](index=24&type=section&id=4.4.11%20Share%20of%20Losses%20of%20Joint%20Ventures%20and%20Associated%20Companies) The Group's share of losses from joint ventures decreased to RMB 0.6 million, while its share of losses from associated companies increased to RMB 228.8 million from a profit of RMB 21.9 million in the first half of 2024, mainly due to increased losses from projects delivered by associated companies Share of Losses of Joint Ventures and Associated Companies Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Share of losses of joint ventures | 0.6 | 17.3 | Loss decreased | | Share of profit/(losses) of associated companies | (228.8) | 21.9 (Profit) | Turned from profit to loss | | **Total** | **(229.4)** | **4.6** | **Turned from profit to loss** | [Income Tax Credit](index=24&type=section&id=4.4.12%20Income%20Tax%20Credit) The Group recorded an income tax credit of RMB 111.9 million for the period, a decrease from RMB 137.2 million in the first half of 2024, primarily due to the reversal of land appreciation tax during the period Income Tax Credit Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Income tax credit | 111.9 | 137.2 | -18.4% | [Loss for the Period](index=24&type=section&id=4.4.13%20Loss%20for%20the%20Period) Due to the combined impact of the aforementioned factors, the Group's loss for the period significantly expanded to RMB 6,657.6 million, compared to a loss of RMB 2,508.4 million in the first half of 2024 Loss for the Period Changes | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Loss for the period | 6,657.6 | 2,508.4 | +165.4% | [Liquidity, Financial and Capital Resources](index=24&type=section&id=4.5%20Liquidity%2C%20Financial%20and%20Capital%20Resources) The Group's liquidity remains tight, with reduced cash and bank balances, a slight decrease in total debt but a high proportion of current borrowings, significant asset pledges, and exposure to foreign exchange and interest rate risks [Cash Positions](index=25&type=section&id=4.5.1%20Cash%20Positions) As of June 30, 2025, the Group's cash and bank balances decreased to RMB 2,599.4 million from RMB 3,184.7 million on December 31, 2024, comprising RMB 467.6 million in cash and cash equivalents and RMB 2,076.7 million in restricted cash Cash and Bank Balances Changes | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and bank balances | 2,599.4 | 3,184.7 | -18.4% | | - Cash and cash equivalents | 467.6 | 1,215.3 | -61.5% | | - Pledged deposits | 55.1 | 63.9 | -13.8% | | - Restricted cash | 2,076.7 | 1,905.5 | +9.0% | [Indebtedness](index=25&type=section&id=4.5.2%20Indebtedness) As of June 30, 2025, the Group's total borrowings slightly decreased to RMB 57,193.2 million from RMB 58,853.8 million on December 31, 2024, with current borrowings accounting for the vast majority, indicating significant short-term repayment pressure Total Borrowings and Composition | Borrowing Type | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total current borrowings | 52,213,339 | 54,219,250 | | Total non-current borrowings | 4,979,825 | 4,634,529 | | **Total** | **57,193,164** | **58,853,779** | Borrowing Maturity Profile | Maturity Period | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Repayable within one year | 52,213,339 | 54,219,250 | | Repayable in the second year | 4,243,084 | 337,050 | | Repayable in three to five years | 736,741 | 4,297,479 | | **Total** | **57,193,164** | **58,853,779** | [Charge on Assets](index=27&type=section&id=4.5.3%20Charge%20on%20Assets) As of June 30, 2025, the Group's property, plant and equipment, right-of-use assets, investment properties, properties under development, and completed properties held for sale were pledged as collateral for secured borrowings - As of June 30, 2025, Group assets pledged include property, plant and equipment (**RMB 486.1 million**), right-of-use assets (**RMB 214.3 million**), investment properties (**RMB 7,174.4 million**), properties under development (**RMB 32,848.9 million**), and completed properties held for sale (**RMB 23,236.1 million**)[153](index=153&type=chunk)[154](index=154&type=chunk) [Financial Risks](index=28&type=section&id=4.5.4%20Financial%20Risks) The Group primarily faces foreign exchange rate risk and interest rate risk, with the ongoing downturn in the Chinese real estate market and difficult financing environment adversely impacting its funding capabilities - The Group primarily faces **foreign exchange rate risk** (RMB depreciation impacting dividend value) and **interest rate risk** (market interest rate changes affecting borrowings)[156](index=156&type=chunk)[158](index=158&type=chunk) - The downturn in China's real estate market, characterized by declining pre-sales and financing difficulties, severely restricts the Group's funding capabilities and debt repayment resources[156](index=156&type=chunk)[159](index=159&type=chunk) - The Group has implemented various liquidity management and cost-saving measures, including seeking financing extensions, asset disposals, accelerating sales and cash collection, streamlining corporate structure, and reducing administrative expenses[156](index=156&type=chunk)[159](index=159&type=chunk) - The Company has initiated an offshore holistic debt management plan[156](index=156&type=chunk)[159](index=159&type=chunk) [Key Financial Ratios](index=28&type=section&id=4.5.5%20Key%20Financial%20Ratios) As of June 30, 2025, the Group's current ratio was 0.83, and its net debt to equity ratio was -648.3% Key Financial Ratios | Indicator | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Current ratio | 0.83 | 0.88 | | Net debt to equity ratio | -648.3% | -2,441.9% | [Contingent Liabilities and Commitments](index=29&type=section&id=4.6%20Contingent%20Liabilities%20and%20Commitments) The Group faces various contingent liabilities, primarily including guarantees for customer mortgage loans and financial guarantees for associated companies and third parties, along with unprovided capital commitments, which the Board believes will not materially adversely affect the Group's financial position [Mortgage Guarantees](index=29&type=section&id=4.6.1%20Mortgage%20Guarantees) As of June 30, 2025, the Group provided guarantees for bank mortgage loans granted to customers amounting to RMB 21,564.5 million, an increase from December 31, 2024, with no significant buyer defaults encountered Mortgage Guarantees Amount | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | | :--- | :--- | :--- | | Mortgage guarantees | 21,564.5 | 19,760.2 | - The Group has not encountered any buyer defaults that would have a material adverse effect on its financial position and operating results[162](index=162&type=chunk)[168](index=168&type=chunk) [Other Financial Guarantees](index=29&type=section&id=4.6.2%20Other%20Financial%20Guarantees) As of June 30, 2025, the Group's guarantees to banks and other institutions for borrowings of associated companies and third parties amounted to RMB 2,538.0 million, a decrease from December 31, 2024 Other Financial Guarantees Amount | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | | :--- | :--- | :--- | | Other financial guarantees | 2,538.0 | 2,760.5 | [Legal Contingents](index=29&type=section&id=4.6.3%20Legal%20Contingents) The Group may be involved in litigation and other legal proceedings from time to time, but the directors believe that as of the date of this report, liabilities arising from such proceedings will not materially adversely affect the Group's business, financial position, or operating results - The Group is involved in litigation from time to time, but it is not expected to have a material adverse effect on its business, financial position, or operating results[170](index=170&type=chunk) [Commitments](index=29&type=section&id=4.6.4%20Commitments) As of June 30, 2025, the Group's contracted but unprovided capital commitments amounted to RMB 6,160.2 million, a decrease from RMB 7,955.2 million on December 31, 2024 Capital Commitments | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | | :--- | :--- | :--- | | Contracted but unprovided capital commitments | 6,160.2 | 7,955.2 | [Offshore Holistic Liability Management Solutions](index=30&type=section&id=4.7%20Offshore%20Holistic%20Liability%20Management%20Solutions) The Company has defaulted on principal, interest, and/or distributions for several senior notes and perpetual capital securities, constituting events of default, but has not received any acceleration notices and is actively pursuing offshore holistic debt restructuring - As of the date of this report, the Company has failed to pay the outstanding principal and/or payable distributions and/or payable interest for several senior notes and perpetual capital securities, constituting events of default[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - Despite the events of default, as of June 30, 2025, and the date of this report, the Company has not received any acceleration notices due to non-payment[185](index=185&type=chunk)[187](index=187&type=chunk) - The Company is committed to an offshore holistic debt management plan and will make further announcements on its progress in due course[190](index=190&type=chunk)[193](index=193&type=chunk) [Other Information](index=34&type=section&id=4.8%20Other%20Information) The Group held no significant investments during the period and has no plans for future material investments, while employee numbers decreased, and the Group continues to offer competitive remuneration and training, with a non-executive director appointed post-period, and defaults on 2019 and 2020 loan facilities [Significant Investments Held by the Group](index=34&type=section&id=4.8.1%20Significant%20Investments%20Held%20by%20the%20Group) During the period, the Group held no significant investments - In the first half of 2025, the Group held no significant investments[191](index=191&type=chunk)[194](index=194&type=chunk) [Future Plan for Material Investments and Capital Assets](index=35&type=section&id=4.8.2%20Future%20Plan%20for%20Material%20Investments%20and%20Capital%20Assets) The Group currently has no plans for any material investments or acquisitions of capital assets - The Group currently has no plans for any material investments or acquisitions of capital assets[196](index=196&type=chunk)[199](index=199&type=chunk) [Employees and Remuneration Policy](index=35&type=section&id=4.8.3%20Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 574 employees, a decrease from 709 on December 31, 2024, and is committed to providing competitive remuneration and systematic training programs Employee Count Changes | Indicator | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total employees | 574 | 709 | - The Group provides employees with competitive remuneration packages (basic salary, discretionary bonuses, performance-based pay) and systematic training programs[197](index=197&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - The Group participates in social insurance contribution schemes and the Hong Kong Mandatory Provident Fund Scheme[197](index=197&type=chunk)[203](index=203&type=chunk) [Subsequent Events](index=35&type=section&id=4.8.4%20Subsequent%20Events) Other than events disclosed under the offshore holistic liability management solutions, the Group has not undertaken any significant events from June 30, 2025, up to the date of this report - No significant events occurred after the reporting period, except for matters related to the offshore holistic debt management plan[198](index=198&type=chunk)[204](index=204&type=chunk) [Continuing Disclosure Obligations Pursuant to the Listing Rules](index=36&type=section&id=4.8.5%20Continuing%20Disclosure%20Obligations%20Pursuant%20to%20the%20Listing%20Rules) As of June 30, 2025, and the date of this report, the Company has defaulted on the outstanding principal and/or interest of its 2019 and 2020 loan facilities, constituting events of default, and is actively pursuing offshore holistic debt management solutions - The 2019 financing agreement stipulates that if there is a change in the collective shareholding, largest shareholder status, and management control of Mr. Ou Zongrong, Mr. Ou Guoqiang, and Mr. Ou Guowei, the loan commitment may be revoked and all outstanding amounts become immediately due[207](index=207&type=chunk)[210](index=210&type=chunk) - The 2020 financing agreement contains similar clauses regarding the shareholding and management control of relevant parties, as well as the identity of the Company's chairman[214](index=214&type=chunk)[216](index=216&type=chunk) - As of June 30, 2025, the Company failed to pay the outstanding principal and/or interest due for the 2019 and 2020 loan facilities, constituting events of default[218](index=218&type=chunk)[219](index=219&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=48&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This statement presents the Group's financial performance for the period, highlighting revenue, costs, expenses, and the resulting net loss [Statement of Profit or Loss](index=48&type=section&id=6.1%20Statement%20of%20Profit%20or%20Loss) The Group recorded revenue of RMB 4,645.4 million in the first half of 2025, an 81.2% year-on-year decrease, with gross profit at RMB 131.7 million, down 90.0%, and a widened loss for the period of RMB 6,657.6 million due to increased impairment losses, other expenses, fair value losses on investment properties, and finance costs Interim Condensed Consolidated Statement of Profit or Loss Summary | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 4,645,377 | 24,658,401 | | Cost of sales | (4,513,712) | (23,344,275) | | Gross profit | 131,665 | 1,314,126 | | Other income and gains | 20,262 | 14,817 | | Selling and distribution expenses | (397,698) | (483,394) | | Administrative expenses | (248,866) | (324,085) | | Impairment losses on financial assets, net | (1,344,660) | (119,340) | | Other expenses | (2,495,201) | (1,262,005) | | Fair value losses on investment properties | (259,300) | (225,600) | | Finance costs | (1,946,317) | (1,564,696) | | Share of losses of joint ventures and associated companies | (229,393) | 4,580 | | Loss before tax | (6,769,508) | (2,645,597) | | Income tax credit | 111,930 | 137,227 | | **Loss for the period** | **(6,657,578)** | **(2,508,370)** | | Loss attributable to owners of the parent | (6,463,094) | (2,343,441) | | Loss attributable to non-controlling interests | (194,484) | (164,929) | | Basic and diluted loss per share (RMB) | (1.48) | (0.54) | [Interim Condensed Consolidated Statement of Comprehensive Income](index=49&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This statement details the Group's total comprehensive income for the period, including net loss and other comprehensive income items [Statement of Comprehensive Income](index=49&type=section&id=7.1%20Statement%20of%20Comprehensive%20Income) The Group recorded a loss for the period of RMB 6,657.6 million in the first half of 2025, with other comprehensive income primarily from exchange differences on translating overseas operations of RMB 537.5 million, resulting in a net total comprehensive expense of RMB 6,120.1 million Interim Condensed Consolidated Statement of Comprehensive Income Summary | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the period | (6,657,578) | (2,508,370) | | Exchange differences on translating overseas operations | 537,497 | (182,126) | | **Total comprehensive expense for the period, net of tax** | **(6,120,081)** | **(2,690,496)** | | Attributable to owners of the parent | (5,925,597) | (2,525,567) | | Attributable to non-controlling interests | (194,484) | (164,929) | [Interim Condensed Consolidated Statement of Financial Position](index=50&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement presents the Group's assets, liabilities, and equity as of the reporting date, reflecting its financial health and solvency [Statement of Financial Position](index=50&type=section&id=8.1%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total non-current assets were RMB 15,788.3 million, total current assets were RMB 85,907.1 million, and total current liabilities were RMB 103,824.3 million, resulting in a net current liability of RMB 17,917.2 million and a total equity deficit of RMB 8,421.0 million Interim Condensed Consolidated Statement of Financial Position Summary | Indicator | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 15,788,274 | 16,811,768 | | Total current assets | 85,907,105 | 96,570,399 | | Total current liabilities | 103,824,342 | 109,438,139 | | Net current liabilities | (17,917,237) | (12,867,740) | | Total assets less current liabilities | (2,128,963) | 3,944,028 | | Total non-current liabilities | 6,292,001 | 6,223,813 | | Net liabilities | (8,420,964) | (2,279,785) | | Total equity | (8,420,964) | (2,279,785) | [Interim Condensed Consolidated Statement of Changes in Equity](index=52&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement illustrates the changes in the Group's equity components over the reporting period, including net loss, other comprehensive income, and transactions with owners [Statement of Changes in Equity](index=52&type=section&id=9.1%20Statement%20of%20Changes%20in%20Equity) The Group's equity further deteriorated from a deficit of RMB 2,279.8 million on December 31, 2024, to a deficit of RMB 8,421.0 million in the first half of 2025, primarily due to the significant loss for the period and changes in exchange fluctuation reserves and subsidiary ownership Interim Condensed Consolidated Statement of Changes in Equity Summary | Indicator | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total equity at beginning of period | (2,279,785) | 6,151,529 | | Loss for the period | (6,657,578) | (2,508,370) | | Other comprehensive income/(expense) for the period | 537,497 | (182,126) | | Changes in ownership interests in subsidiaries | (57,962) | (200) | | Capital injection from non-controlling interests of subsidiaries | 4,752 | - | | Capital reduction from non-controlling interests of subsidiaries | (25,850) | (331,048) | | Dividends paid to non-controlling shareholders of subsidiaries | - | (63,381) | | **Total equity at end of period** | **(8,420,964)** | **(2,279,785)** | [Interim Condensed Consolidated Statement of Cash Flows](index=53&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities, providing insights into the Group's liquidity generation and utilization [Statement of Cash Flows](index=53&type=section&id=10.1%20Statement%20of%20Cash%20Flows) In the first half of 2025, the Group generated net cash inflow of RMB 130.7 million from operating activities and RMB 0.5 million from investing activities, but experienced a net cash outflow of RMB 467.3 million from financing activities, resulting in a net decrease in cash and cash equivalents of RMB 336.1 million, with an ending balance of RMB 467.6 million Interim Condensed Consolidated Statement of Cash Flows Summary | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash flows from operating activities | 130,695 | (150,263) | | Net cash flows from investing activities | 528 | 1,153 | | Net cash flows used in financing activities | (467,332) | (332,246) | | Net decrease in cash and cash equivalents | (336,109) | (481,356) | | Cash and cash equivalents at beginning of period | 1,215,294 | 1,716,960 | | Effect of exchange rate changes, net | (411,570) | 239 | | **Cash and cash equivalents at end of period** | **467,615** | **1,235,843** | Analysis of Cash and Cash Equivalents Balance | Indicator | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash and bank balances | 2,599,417 | 3,869,673 | | Less: Restricted cash | (2,076,721) | (2,542,565) | | Less: Pledged deposits | (55,081) | (91,265) | | **Cash and cash equivalents** | **467,615** | **1,235,843** | [Notes to Interim Condensed Consolidated Financial Information](index=57&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements, including accounting policies, segment information, and specific financial item breakdowns [Basis of Preparation](index=57&type=section&id=11.1%20Basis%20of%20Preparation) This interim condensed consolidated financial information is prepared in accordance with IAS 34 and should be read in conjunction with the annual consolidated financial statements, with significant going concern uncertainties due to substantial losses, net current liabilities, and widespread debt defaults [Going Concern Basis](index=57&type=section&id=11.1.1%20Going%20Concern%20Basis) As of June 30, 2025, the Group reported a net loss of RMB 6,657.6 million, net current liabilities of RMB 17,917.2 million, and significant debt defaults, raising substantial doubt about its ability to continue as a going concern despite management's liquidity improvement plans - As of June 30, 2025, the Group reported a net loss of **RMB 6,657,578,000**[307](index=307&type=chunk)[309](index=309&type=chunk) - Current liabilities exceeded current assets by **RMB 17,917,237,000**[307](index=307&type=chunk)[309](index=309&type=chunk) - Total borrowings amounted to **RMB 59,551,166,000**, of which **RMB 53,559,327,000** are due within the next 12 months or repayable on demand, while cash and cash equivalents were only **RMB 467,615,000**[307](index=307&type=chunk)[309](index=309&type=chunk) - Multiple senior notes, interest-bearing bank borrowings, corporate bonds, perpetual capital securities, and asset-backed securities have defaulted or failed to be repaid on time, totaling **RMB 25,514,182,000** in principal and interest for senior notes, **RMB 20,619,286,000** in principal for interest-bearing bank and other borrowings, **RMB 2,532,335,000** in principal and interest for corporate bonds, **RMB 1,799,698,000** in principal and interest for perpetual capital securities, and **RMB 1,120,284,000** in principal and interest for asset-backed securities[307](index=307&type=chunk)[309](index=309&type=chunk) - The Group successfully extended the maturity dates of approximately **RMB 1.95 billion** in borrowings by one to six years, with annual interest cost reductions ranging from **0.4% to 7.4%**[311](index=311&type=chunk)[312](index=312&type=chunk) - Management is considering a revised restructuring plan and will continue to explore new offshore restructuring solutions[311](index=311&type=chunk)[312](index=312&type=chunk) [Changes in Accounting Policies and Disclosures](index=61&type=section&id=11.2%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The revised IAS 21 "Lack of Exchangeability" adopted for the first time in this period has no impact on the interim condensed consolidated financial information, as the Group's transaction and functional currencies are exchangeable - The revised IAS 21 "Lack of Exchangeability", adopted for the first time in this period, has **no impact** on the interim condensed consolidated financial information[322](index=322&type=chunk)[323](index=323&type=chunk) - The currencies of the Group's transactions and the functional currencies used by Group entities to translate into the Group's presentation currency are all exchangeable[322](index=322&type=chunk)[323](index=323&type=chunk) [Operating Segment Information](index=62&type=section&id=11.3%20Operating%20Segment%20Information) Management monitors the Group's business by project location, but all locations are aggregated into a single reportable operating segment due to similar economic characteristics and no single segment exceeding 10% of consolidated totals - The Group's business is monitored by project location, but all locations are aggregated into a single reportable operating segment due to similar economic characteristics[325](index=325&type=chunk)[328](index=328&type=chunk) - The Group's revenue from external customers is solely derived from operations in Mainland China, and no significant non-current assets are located outside Mainland China[326](index=326&type=chunk)[329](index=329&type=chunk) - Sales to a single customer or a group of customers under common control did not account for **10% or more** of the Group's revenue[327](index=327&type=chunk)[330](index=330&type=chunk) [Revenue](index=63&type=section&id=11.4%20Revenue) The Group's total revenue for the first half of 2025 was RMB 4,645.4 million, with property sales accounting for 99.0% and property leasing for 1.0%, showing an 81.3% year-on-year decrease in property sales revenue and a 10.8% increase in property leasing revenue Revenue Analysis | Revenue Source | H1 2025 (RMB thousand) | % of Total | H1 2024 (RMB thousand) | % of Total | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Property sales | 4,598,119 | 99.0 | 24,609,579 | 99.7 | (81.3) | | Property leasing | 45,254 | 1.0 | 40,843 | 0.2 | 10.8 | | Management consulting services | 2,004 | 0.0 | 7,979 | 0.1 | (74.9) | | **Total** | **4,645,377** | **100.0** | **24,658,401** | **100

[Company Profile](index=2&type=section&id=Company%20Profile) The company, established in October 1949, is China's first national insurance company and has grown into a leading comprehensive insurance and financial group - The company, China's first national insurance company, was established in October 1949 and has become a leading large-scale comprehensive insurance and financial group[4](index=4&type=chunk) - The company was listed on the Hong Kong Stock Exchange (H-share code: 1339) in December 2012 and on the Shanghai Stock Exchange (A-share code: 601319) in November 2018[4](index=4&type=chunk) - Ranked **141st** in the 2025 Fortune Global 500, an increase of **17 places** from the previous year[4](index=4&type=chunk) - The company's business covers property and casualty insurance (PICC Property and Casualty, PICC Hong Kong), life insurance (PICC Life Insurance), health insurance (PICC Health Insurance), asset management (PICC Asset Management, PICC Capital, PICC Investment Holdings, PICC Pension), reinsurance (PICC Reinsurance), and technology services (PICC Technology)[5](index=5&type=chunk) [Company Basic Information](index=4&type=section&id=Company%20Basic%20Information) This section provides fundamental details about the company, including its legal name, registered address, and stock exchange listings - The company's legal Chinese name is China People's Insurance Group Co., Ltd., abbreviated as PICC Group, with Ding Xiangqun as the legal representative[9](index=9&type=chunk) - The company's registered and office address is 88 West Chang'an Street, Xicheng District, Beijing, China[9](index=9&type=chunk) - A-shares are listed on the Shanghai Stock Exchange (stock name: PICC, code: 601319); H-shares are listed on The Stock Exchange of Hong Kong Limited (stock name: PICC Group, code: 1339)[9](index=9&type=chunk) [Definitions](index=5&type=section&id=Definitions) This chapter defines key terms used throughout the report, including major entities and regulatory bodies - This section provides definitions for commonly used terms in the report, including "the Company", "PICC", "PICC Property and Casualty", "PICC Life Insurance", "PICC Asset Management", and other major entities and their abbreviations[11](index=11&type=chunk) - It also defines relevant regulatory bodies such as "Ministry of Finance", "National Council for Social Security Fund", "China Securities Regulatory Commission", and "National Financial Regulatory Administration"[11](index=11&type=chunk) [1. About Us](index=6&type=section&id=1.%20About%20Us) This section provides an overview of the company's performance and key operational highlights for the reporting period [1.1 Performance Highlights](index=6&type=section&id=1.1%20Performance%20Highlights) In the first half of 2025, the Group's total assets, total liabilities, and total equity all grew by 6.3%, with net assets per share increasing proportionally; insurance service revenue rose by 7.1%, net profit and net profit attributable to parent company shareholders increased by 14.8% and 14.0% respectively, and both earnings per share and weighted average return on net assets significantly improved Key Financial Position Indicators | Indicator | June 30, 2025 (million yuan) | December 31, 2024 (million yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 1,878,102 | 1,766,321 | 6.3 | | Total Liabilities | 1,487,464 | 1,398,900 | 6.3 | | Total Equity | 390,638 | 367,421 | 6.3 | | Net Assets Per Share (yuan) | 6.47 | 6.08 | 6.3 | Key Performance Indicators | Indicator | January-June 2025 (million yuan) | January-June 2024 (million yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Insurance Service Revenue | 280,250 | 261,629 | 7.1 | | Net Profit | 36,155 | 31,489 | 14.8 | | Net Profit Attributable to Parent Company Shareholders | 26,671 | 23,400 | 14.0 | | Earnings Per Share (yuan) | 0.60 | 0.53 | 14.0 | | Weighted Average Return on Net Assets (unannualized) (%) | 9.5 | 9.3 | Up 0.2 percentage points | [1.2 Operating Highlights](index=6&type=section&id=1.2%20Operating%20Highlights) The Group achieved double-digit growth in net profit and net profit attributable to the parent company in the first half of 2025, proposing an interim cash dividend increase of 19.0%; business scale grew steadily, with insurance service revenue and original premium income both increasing, and investment asset scale exceeding 1.7 trillion yuan; comprehensive strength enhanced, with high solvency ratios maintained; operating efficiency across business segments continuously optimized, property and casualty insurance market share remaining first, life insurance new business value significantly growing, and investment returns substantially improving; the Group actively served national strategies, provided substantial risk protection, and made significant progress in technology, green, inclusive, pension, and digital finance; additionally, the Group focused on risk reduction services, enhanced disaster prevention, mitigation, and relief capabilities, significantly boosted brand value, accelerated digital construction, and effectively responded to external risk challenges [1.2.1 Steady Growth in Operating Performance, Continuous Improvement in Dividend Payout](index=6&type=section&id=1.2.1%20Steady%20Growth%20in%20Operating%20Performance%2C%20Continuous%20Improvement%20in%20Dividend%20Payout) The Group achieved robust operating performance with double-digit net profit growth and proposed a significant increase in interim cash dividends - In the first half of 2025, the Group achieved a net profit of **36.155 billion yuan**, a year-on-year increase of **14.8%**; net profit attributable to parent company shareholders was **26.671 billion yuan**, a year-on-year increase of **14.0%**[15](index=15&type=chunk) - The Group plans to distribute an interim cash dividend of **0.75 yuan** (tax inclusive) per 10 shares for 2025, a year-on-year increase of **19.0%**[15](index=15&type=chunk) [1.2.2 Steady Business Scale Growth, Continuously Enhanced Comprehensive Strength](index=7&type=section&id=1.2.2%20Steady%20Business%20Scale%20Growth%2C%20Continuously%20Enhanced%20Comprehensive%20Strength) The Group demonstrated steady growth in business scale and continuously strengthened its comprehensive capabilities, with significant increases in insurance service revenue, premium income, and investment assets - In the first half of 2025, insurance service revenue reached **280.250 billion yuan**, a year-on-year increase of **7.1%**; original premium income was **454.625 billion yuan**, a year-on-year increase of **6.4%**[17](index=17&type=chunk) - As of June 30, 2025, the Group's investment asset scale exceeded **1.7 trillion yuan**, an increase of **7.2%** from the beginning of the year[17](index=17&type=chunk) Group Solvency Indicators | Indicator | June 30, 2025 (billion yuan) | Increase from year-end (%) | | :--- | :--- | :--- | | Group Total Assets | 1,878.102 | 6.3 | | Net Assets | 390.638 | 6.3 | | Comprehensive Solvency Ratio (%) | 276 | - | | Core Solvency Ratio (%) | 219 | - | [1.2.3 Steady Progress in High-Quality Development, Continuous Optimization of Operating Efficiency](index=7&type=section&id=1.2.3%20Steady%20Progress%20in%20High-Quality%20Development%2C%20Continuous%20Optimization%20of%20Operating%20Efficiency) The Group achieved steady progress in high-quality development, optimizing operating efficiency across its property and casualty, life, health, and investment segments - PICC Property and Casualty maintained its industry-leading market share of **33.5%**, with a combined ratio of **94.8%**, a year-on-year decrease of **1.4 percentage points**[18](index=18&type=chunk) - PICC Life Insurance's new business value for the half-year increased by **71.7%** year-on-year on a comparable basis; regular premium income accounted for **79.5%** of original premium income, a year-on-year increase of **0.9 percentage points**[18](index=18&type=chunk) - PICC Health Insurance's new business value for the half-year increased by **51.0%** year-on-year on a comparable basis; first-year regular premium income increased by **52.3%** year-on-year[18](index=18&type=chunk) - Investment business achieved total investment income of **40.758 billion yuan**, a year-on-year increase of **40.2%**; annualized total investment yield was **5.0%**, a year-on-year increase of **0.9 percentage points**[18](index=18&type=chunk) [1.2.4 Serving National Development Strategy, Demonstrating State-Owned Enterprise Responsibility](index=8&type=section&id=1.2.4%20Serving%20National%20Development%20Strategy%2C%20Demonstrating%20State-Owned%20Enterprise%20Responsibility) The Group actively served national development strategies, providing substantial risk protection and making significant contributions across various financial sectors - In the first half of 2025, the Group provided risk protection totaling **1,780 trillion yuan**, a year-on-year increase of **6.9%**; investment scale serving the "Five Key Financial Initiatives" reached **264.9 billion yuan**, an increase of **12.4%** from the beginning of the year[20](index=20&type=chunk) - In technology finance, the Group established the first national technology achievement and intellectual property appraisal center, underwrote **127.1 thousand high-tech companies**, and AI capability calls increased by **27.2%** compared to the end of 2024[21](index=21&type=chunk) - In green finance, the number of new energy vehicles underwritten increased by **36.8%** year-on-year, and green finance investment scale increased by **13.6%** year-on-year[21](index=21&type=chunk) - In inclusive finance, the Group undertook **1,373 major illness insurance and other policy-based health insurance projects**, covering over **1 billion person-times**; insurance coverage for three major grain crops reached **337 million mu**[21](index=21&type=chunk) - In pension finance, second-pillar annuity management scale reached **678.3 billion yuan**, third-pillar commercial pension management assets grew **twofold** from the beginning of the year, and individual pension premium income increased by **177.4%** year-on-year[21](index=21&type=chunk) [1.2.5 Dedicated to Risk Reduction Services, Enhancing Disaster Prevention, Mitigation, and Relief Capabilities](index=9&type=section&id=1.2.5%20Dedicated%20to%20Risk%20Reduction%20Services%2C%20Enhancing%20Disaster%20Prevention%2C%20Mitigation%20and%20Relief%20Capabilities) The Group is committed to building a comprehensive risk reduction service value chain, enhancing disaster prevention, mitigation, and relief capabilities through proactive measures and rapid response - The Group built a full-process risk reduction service value chain, strengthening pre-insurance risk surveys, issuing **1.914 million digital risk survey reports**, achieving full coverage of digital risk surveys for corporate businesses[22](index=22&type=chunk)[23](index=23&type=chunk) - Enhanced in-insurance warnings, providing **28.145 million risk reduction services** for individual customers and **4.492 million services** for corporate customers[23](index=23&type=chunk) - In the first half of 2025, the Group activated over **70** first, second, and third-level claims emergency responses, effectively handling multiple major disaster accidents[23](index=23&type=chunk) [1.2.6 Establishing a Positive Corporate Image, Significantly Enhancing Brand Value](index=10&type=section&id=1.2.6%20Establishing%20a%20Positive%20Corporate%20Image%2C%20Significantly%20Enhancing%20Brand%20Value) The Group has successfully cultivated a positive corporate image, leading to a significant enhancement in its brand value and improved customer satisfaction - Ranked **141st** in the 2025 Fortune Global 500, marking its **16th consecutive year** on the list[24](index=24&type=chunk) - In the "Brand Finance Global 500 2025" ranking, brand value improved by **10 places** to **150th**, and brand strength improved by **20 places** to **85th**[24](index=24&type=chunk) - In the first half of 2025, consumer complaints across the Group decreased by **24.0%** year-on-year, and **ten cases** won the "2025 Financial Consumer Protection and Service Innovation Case" award[24](index=24&type=chunk) [1.2.7 Accelerating Digital Transformation, Strongly Supporting Strategy Implementation](index=11&type=section&id=1.2.7%20Accelerating%20Digital%20Transformation%2C%20Strongly%20Supporting%20Strategy%20Implementation) The Group is accelerating its digital transformation, optimizing computing resources, enhancing data management, and fostering intelligent technology innovation to support strategic implementation - Optimized computing resource deployment, steadily advancing the construction of the western data center, with the northern center achieving the insurance industry's first dual certification for a national financial data center[25](index=25&type=chunk) - The Group's data resource management coverage reached **95.7%**, actively promoting the unified Group BI tool, accelerating the release of data element value[25](index=25&type=chunk) - Strengthened intelligent technology innovation, upgraded the Group-level AI intelligent platform, introduced various mainstream foundation models, and increased the number of invention patent applications across the Group by **55.3%** compared to the same period last year[25](index=25&type=chunk) [1.2.8 Coordinated Response to External Risk Challenges and Resolution of Existing Risks, Building a Solid Foundation for Safe Development](index=12&type=section&id=1.2.8%20Coordinated%20Response%20to%20External%20Risk%20Challenges%20and%20Resolution%20of%20Existing%20Risks%2C%20Building%20a%20Solid%20Foundation%20for%20Safe%20Development) The Group effectively coordinated its response to external risk challenges and resolved existing risks, maintaining a stable risk appetite and preventing major risk events - In the first half of 2025, the Group's risk appetite execution remained generally stable, with no major risk events occurring, demonstrating significant achievements in risk prevention and control[26](index=26&type=chunk) - PICC Property and Casualty's SARMRA score steadily improved, PICC Life Insurance's comprehensive risk rating rose to A, and PICC Health Insurance's comprehensive risk rating rose to AA[26](index=26&type=chunk) - The intelligent risk control platform's application continued to deepen, enhancing dynamic risk monitoring and early warning capabilities, shifting risk control from "human defense" to "technical defense" and "intelligent control"[26](index=26&type=chunk) [2. Management Discussion and Analysis](index=13&type=section&id=2.%20Management%20Discussion%20and%20Analysis) This section provides a comprehensive analysis of the Group's operational performance, financial condition, and risk management strategies [2.1 Business Overview](index=14&type=section&id=2.1%20Business%20Overview) This section outlines the company's industry environment, operational performance of key business segments, crucial business data, financial indicators, and differences in accounting standards between domestic and international practices; in the first half of 2025, the insurance industry experienced steady growth, with the National Financial Regulatory Administration actively promoting high-quality development; the Group made good progress in its core businesses, including property and casualty insurance, life and health insurance, and asset management, with significant increases in claims expenses and premium income, and substantial growth in investment returns; solvency remained adequate, and financial conditions were stable [2.1.1 Industry Conditions](index=14&type=section&id=2.1.1%20Industry%20Conditions) The insurance industry experienced steady growth in the first half of 2025, with regulatory bodies actively promoting high-quality development and risk prevention - In the first half of 2025, the insurance industry achieved original premium income of **3.74 trillion yuan**, a year-on-year increase of **5.3%**; original claims expenses were **1.35 trillion yuan**, a year-on-year increase of **9.4%**[28](index=28&type=chunk) - As of the end of June 2025, the insurance industry's total assets reached **39.22 trillion yuan**, a year-on-year increase of **16.1%**; net assets were **3.75 trillion yuan**, a year-on-year increase of **23.4%**[28](index=28&type=chunk) - The National Financial Regulatory Administration actively promoted the implementation of the "State Council's Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry", improved the policy system for the "Five Key Financial Initiatives", and strengthened supervision to prevent and resolve risks[28](index=28&type=chunk) [2.1.2 Principal Businesses](index=15&type=section&id=2.1.2%20Principal%20Businesses) This section details the performance of the Group's core business segments, including property and casualty insurance, life and health insurance, investment, and technology [2.1.2.1 Property and Casualty Insurance Segment](index=15&type=section&id=2.1.2.1%20Property%20and%20Casualty%20Insurance%20Segment) PICC Property and Casualty maintained its market leadership with strong premium growth, improved underwriting profitability, and significant net profit increase - In the first half of 2025, PICC Property and Casualty achieved original premium income of **323.282 billion yuan**, a year-on-year increase of **3.6%**, maintaining its industry-leading market share of **33.5%**[30](index=30&type=chunk) - The combined ratio for motor vehicle insurance was **94.2%**, a year-on-year decrease of **2.2 percentage points**; the company's overall combined ratio was **94.8%**, a year-on-year decrease of **1.4 percentage points**[30](index=30&type=chunk)[31](index=31&type=chunk) - Underwriting profit reached **13.015 billion yuan**, a year-on-year increase of **44.6%**; net profit was **24.455 billion yuan**, a year-on-year increase of **32.3%**[31](index=31&type=chunk) [2.1.2.2 Life and Health Insurance Segment](index=16&type=section&id=2.1.2.2%20Life%20and%20Health%20Insurance%20Segment) PICC Life Insurance and PICC Health Insurance both achieved significant growth in original premium income and new business value, with PICC Health maintaining its leading position in internet health insurance - PICC Life Insurance achieved original premium income of **90.513 billion yuan** in the first half of the year, a year-on-year increase of **14.5%**; half-year new business value was **4.978 billion yuan**, a year-on-year increase of **71.7%** on a comparable basis[32](index=32&type=chunk) - PICC Health Insurance achieved original premium income of **40.654 billion yuan** in the first half of the year, a year-on-year increase of **12.2%**; half-year new business value was **3.837 billion yuan**, a year-on-year increase of **51.0%** on a comparable basis[32](index=32&type=chunk) - PICC Health Insurance's internet health insurance business achieved original premium income of **10.247 billion yuan**, maintaining its market-leading position[32](index=32&type=chunk) [2.1.2.3 Investment Segment](index=16&type=section&id=2.1.2.3%20Investment%20Segment) The Group's investment segment delivered strong performance in the first half of 2025, with significant growth in total investment income and an expanding third-party asset management scale - In the first half of 2025, the Group achieved total investment income of **40.758 billion yuan**, a year-on-year increase of **40.2%**; annualized total investment yield was **5.0%**, a year-on-year increase of **0.9 percentage points**[33](index=33&type=chunk)[34](index=34&type=chunk) - As of June 30, 2025, the Group's third-party asset management scale reached **1,095.63 billion yuan**[34](index=34&type=chunk) [2.1.2.4 Technology Segment](index=17&type=section&id=2.1.2.4%20Technology%20Segment) The technology segment achieved new successes in empowering grassroots operations, enhancing intelligent marketing, and strengthening risk control, while expanding its digital service reach - Technology empowerment at the grassroots level achieved new results, with the sales outreach tool "PICC e-Tong" serving over **51 million customers** and generating over **70 billion yuan** in original premium income[36](index=36&type=chunk) - PICC Property and Casualty's intelligent marketing assistant was launched in **37 branches**; PICC Health Insurance's commercial group claims auto-calculation system processed **62.0%** more cases year-on-year[36](index=36&type=chunk) - The claims anti-fraud model effectively identified high-risk cases, reducing losses by nearly **800 million yuan**; the "PICC" APP's average monthly active users approached **4 million**[36](index=36&type=chunk) [2.1.3 Key Business Data](index=17&type=section&id=2.1.3%20Key%20Business%20Data) This section presents key business data for the Group and its main operating segments, highlighting their capital strength and solvency ratios - The Group primarily operates three major businesses: property insurance, life insurance, and asset management, structured into four main operating segments: property insurance, life insurance, health insurance, and asset management[37](index=37&type=chunk)[38](index=38&type=chunk) Solvency Indicators by Segment | Indicator | The Group (million yuan) | PICC Property and Casualty (million yuan) | PICC Life Insurance (million yuan) | PICC Health Insurance (million yuan) | | :--- | :--- | :--- | :--- | :--- | | Actual Capital | 563,257 | 284,513 | 163,384 | 44,674 | | Core Capital | 448,256 | 257,672 | 107,018 | 24,835 | | Minimum Capital | 204,279 | 120,879 | 62,454 | 14,192 | | Comprehensive Solvency Ratio (%) | 276 | 235 | 262 | 315 | | Core Solvency Ratio (%) | 219 | 213 | 171 | 175 | [2.1.4 Key Financial Indicators](index=18&type=section&id=2.1.4%20Key%20Financial%20Indicators) This section provides a summary of the Group's key financial performance and position indicators for the reporting period Key Performance Indicators | Indicator | January-June 2025 (million yuan) | January-June 2024 (million yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 324,122 | 292,342 | 10.9 | | Insurance Service Revenue | 280,250 | 261,629 | 7.1 | | Total Operating Expenses | 280,338 | 255,994 | 9.5 | | Insurance Service Expenses | 246,201 | 227,518 | 8.2 | | Profit Before Tax | 43,064 | 36,348 | 18.5 | | Net Profit | 36,155 | 31,489 | 14.8 | | Net Profit Attributable to Parent Company Shareholders | 26,671 | 23,400 | 14.0 | | Earnings Per Share (yuan/share) | 0.60 | 0.53 | 14.0 | | Weighted Average Return on Net Assets (%) | 9.5 | 9.3 | Up 0.2 percentage points | | Net Cash Flow from Operating Activities | 74,845 | 70,044 | 6.9 | Key Financial Position Indicators | Indicator | June 30, 2025 (million yuan) | December 31, 2024 (million yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 1,878,102 | 1,766,321 | 6.3 | | Total Liabilities | 1,487,464 | 1,398,900 | 6.3 | | Net Assets | 390,638 | 367,421 | 6.3 | | Equity Attributable to Parent Company Shareholders | 285,925 | 268,866 | 6.3 | | Total Share Capital | 44,224 | 44,224 | – | | Net Assets Per Share (yuan/share) | 6.47 | 6.08 | 6.3 | [2.1.5 Explanation of Differences in Accounting Standards between Domestic and Overseas](index=19&type=section&id=2.1.5%20Explanation%20of%20Differences%20in%20Accounting%20Standards%20between%20Domestic%20and%20Overseas) This section highlights the accounting differences between China Enterprise Accounting Standards and International Financial Reporting Standards, particularly concerning agricultural insurance catastrophe premium reserves and equity dilution in associates - Differences exist between China Enterprise Accounting Standards and International Financial Reporting Standards in the accounting treatment of agricultural insurance catastrophe premium reserves and equity dilution in associates[44](index=44&type=chunk)[45](index=45&type=chunk) Reconciliation of Net Profit and Equity Attributable to Parent Company Shareholders | Indicator | January-June 2025 (million yuan) | January-June 2024 (million yuan) | June 30, 2025 (million yuan) | December 31, 2024 (million yuan) | | :--- | :--- | :--- | :--- | :--- | | Net Profit Attributable to Parent Company Shareholders under China Enterprise Accounting Standards | 26,530 | 22,687 | - | - | | Net Profit Attributable to Parent Company Shareholders under International Financial Reporting Standards | 26,671 | 23,400 | - | - | | Equity Attributable to Parent Company Shareholders under China Enterprise Accounting Standards | - | - | 285,111 | 268,733 | | Equity Attributable to Parent Company Shareholders under International Financial Reporting Standards | - | - | 285,925 | 268,866 | [2.1.6 Other Key Financial and Regulatory Indicators](index=20&type=section&id=2.1.6%20Other%20Key%20Financial%20and%20Regulatory%20Indicators) This section presents additional key financial and regulatory indicators for the Group and its major subsidiaries, providing a more comprehensive view of their performance and solvency Other Key Financial and Regulatory Indicators | Indicator | June 30, 2025 / January-June 2025 (million yuan) | December 31, 2024 / January-June 2024 (million yuan) | | :--- | :--- | :--- | | **Group Consolidated** | | | | Insurance Contract Liabilities | 1,199,701 | 1,122,797 | | Investment Assets | 1,760,674 | 1,641,756 | | Total Investment Yield (annualized) (%) | 5.0 | 4.1 | | Asset-Liability Ratio (%) | 79.2 | 79.2 | | **PICC Property and Casualty** | | | | Insurance Service Revenue | 249,040 | 235,841 | | Combined Ratio (%) | 94.8 | 96.2 | | **PICC Life Insurance** | | | | Insurance Service Revenue | 14,018 | 10,576 | | Half-Year New Business Value | 4,978 | 3,935 | | Embedded Value | 130,561 | 119,731 | | Surrender Rate (%) | 1.0 | 2.7 | | **PICC Health Insurance** | | | | Insurance Service Revenue | 15,603 | 13,786 | | Half-Year New Business Value | 3,837 | 3,025 | | Embedded Value | 35,662 | 30,117 | | Surrender Rate (%) | 0.6 | 0.6 | [2.2 Performance Analysis](index=22&type=section&id=2.2%20Performance%20Analysis) This section provides an in-depth analysis of the Group's operating performance across its property and casualty insurance, reinsurance, life and health insurance, and asset management businesses, highlighting key achievements and strategic initiatives [2.2.1 Insurance Business](index=22&type=section&id=2.2.1%20Insurance%20Business) This section analyzes the performance of the Group's property and casualty, reinsurance, and life and health insurance businesses, detailing premium growth, profitability, and strategic developments [2.2.1.1 Property and Casualty Insurance Business](index=22&type=section&id=2.2.1.1%20Property%20and%20Casualty%20Insurance%20Business) This section examines the performance of PICC Property and Casualty and PICC Hong Kong, highlighting their market positions, profitability, and strategic contributions [2.2.1.1.1 PICC Property and Casualty](index=22&type=section&id=2.2.1.1.1%20PICC%20Property%20and%20Casualty) PICC Property and Casualty's insurance service revenue increased by 5.6% year-on-year in the first half of 2025, with original premium income of 323.282 billion yuan, maintaining a leading market share of 33.5%; the company achieved an underwriting profit of 13.015 billion yuan, a 44.6% year-on-year increase, and a net profit of 24.455 billion yuan, a 32.3% year-on-year increase, by optimizing business structure, strengthening risk reduction services, and improving underwriting and claims efficiency; the combined ratio decreased by 1.4 percentage points to 94.8% - PICC Property and Casualty achieved insurance service revenue of **249.040 billion yuan** in the first half of 2025, a year-on-year increase of **5.6%**; original premium income was **323.282 billion yuan**, accounting for **33.5%** of the property and casualty insurance market share[50](index=50&type=chunk) - Underwriting profit reached **13.015 billion yuan**, a year-on-year increase of **44.6%**; net profit was **24.455 billion yuan**, a year-on-year increase of **32.3%**[50](index=50&type=chunk)[51](index=51&type=chunk) - The combined ratio was **94.8%**, a year-on-year decrease of **1.4 percentage points**; the combined claims ratio was **71.8%**, a year-on-year increase of **1.7 percentage points**; the combined expense ratio was **23.0%**, a year-on-year decrease of **3.1 percentage points**[51](index=51&type=chunk) Underwriting Profit and Combined Ratio by Line of Business | Line of Business | Insurance Service Revenue (million yuan) | Underwriting Profit (million yuan) | Combined Ratio (%) | | :--- | :--- | :--- | :--- | | Motor Vehicle Insurance | 150,276 | 8,726 | 94.2 | | Accident and Health Insurance | 30,975 | (569) | 101.8 | | Agricultural Insurance | 23,179 | 2,697 | 88.4 | | Liability Insurance | 18,575 | (674) | 103.6 | | Enterprise Property Insurance | 9,243 | 918 | 90.1 | | Other Insurance Classes | 16,792 | 1,917 | 88.6 | | Total | 249,040 | 13,015 | 94.8 | Original Premium Income by Channel | Channel | January-June 2025 Amount (million yuan) | Proportion (%) | Change (%) | | :--- | :--- | :--- | :--- | | Agency Sales Channel | 156,624 | 48.4 | (2.5) | | Direct Sales Channel | 140,360 | 43.5 | 11.3 | | Insurance Brokerage Channel | 26,298 | 8.1 | 4.0 | | Total | 323,282 | 100.0 | 3.6 | [2.2.1.1.2 PICC Hong Kong](index=29&type=section&id=2.2.1.1.2%20PICC%20Hong%20Kong) PICC Hong Kong achieved insurance service revenue of 1.03 billion yuan in the first half of 2025, with a combined ratio of 98.4%; the company actively serves as the Group's international development window, safeguarding Chinese enterprises "going global" with a service network covering over 80 countries and regions, and supports Hong Kong's role as an international financial center and integration into the Guangdong-Hong Kong-Macao Greater Bay Area, resulting in a net profit of 0.74 billion yuan - In the first half of 2025, PICC Hong Kong achieved insurance service revenue equivalent to **1.03 billion yuan**, with a combined ratio of **98.4%**[69](index=69&type=chunk) - Its international business service network covers over **80 countries and regions** globally, and global reinsurance qualification registration locations increased to **8 countries**[69](index=69&type=chunk) - In the first half of 2025, net profit was equivalent to **0.74 billion yuan**[69](index=69&type=chunk) [2.2.1.2 Reinsurance Business](index=30&type=section&id=2.2.1.2%20Reinsurance%20Business) This section focuses on the performance of PICC Reinsurance, highlighting its insurance service revenue, net profit, and strong risk comprehensive rating [2.2.1.2.1 PICC Reinsurance](index=30&type=section&id=2.2.1.2.1%20PICC%20Reinsurance) PICC Reinsurance achieved insurance service revenue of 2.495 billion yuan in the first half of 2025, with a net profit of 0.155 billion yuan, a 4.0% year-on-year increase; the company maintained an AA-class comprehensive risk rating, demonstrating its leading position in the industry, and is committed to becoming a technologically advanced reinsurance company with outstanding professional capabilities - In the first half of 2025, PICC Reinsurance achieved insurance service revenue of **2.495 billion yuan**[70](index=70&type=chunk) - Net profit reached **0.155 billion yuan**, a year-on-year increase of **4.0%**[70](index=70&type=chunk) - Maintained an **AA-class** comprehensive risk rating, holding a leading position in the industry[70](index=70&type=chunk) [2.2.1.3 Life and Health Insurance Business](index=30&type=section&id=2.2.1.3%20Life%20and%20Health%20Insurance%20Business) This section analyzes the performance of PICC Life Insurance and PICC Health Insurance, detailing their premium growth, new business value, and strategic initiatives [2.2.1.3.1 PICC Life Insurance](index=30&type=section&id=2.2.1.3.1%20PICC%20Life%20Insurance) PICC Life Insurance's insurance service revenue increased by 32.5% year-on-year in the first half of 2025, with original premium income growing by 14.5% year-on-year; new business value on a comparable basis increased by 71.7% year-on-year, and net profit reached 6.862 billion yuan; the company's business structure continued to optimize, with significant growth in ordinary life insurance premium income and a 107.7% year-on-year increase in new business value from the bancassurance channel; premium persistency rates remained healthy, with both 13-month and 25-month persistency rates improving - In the first half of 2025, PICC Life Insurance achieved insurance service revenue of **14.018 billion yuan**, a year-on-year increase of **32.5%**; original premium income increased by **14.5%** year-on-year[71](index=71&type=chunk) - Half-year new business value reached **4.978 billion yuan**, a year-on-year increase of **71.7%** on a comparable basis; net profit reached **6.862 billion yuan**[71](index=71&type=chunk) Original Premium Income by Line of Business | Line of Business | January-June 2025 Amount (million yuan) | Proportion (%) | Change (%) | | :--- | :--- | :--- | :--- | | Life Insurance | 81,558 | 90.1 | 16.5 | | Ordinary Life Insurance | 70,079 | 77.4 | 70.2 | | Participating Insurance | 11,417 | 12.6 | (60.3) | | Health Insurance | 8,375 | 9.3 | (1.3) | | Accident Insurance | 580 | 0.6 | 3.2 | | Total | 90,513 | 100.0 | 14.5 | Original Premium Income by Channel | Channel | January-June 2025 Amount (million yuan) | Proportion (%) | Change (%) | | :--- | :--- | :--- | :--- | | Individual Insurance Channel | 35,414 | 39.1 | 3.0 | | Bancassurance Channel | 53,104 | 58.7 | 24.1 | | Group Insurance Channel | 1,994 | 2.2 | 5.3 | | Total | 90,513 | 100.0 | 14.5 | - The bancassurance channel achieved half-year new business value of **2.924 billion yuan**, a year-on-year increase of **107.7%** on a comparable basis; first-year regular premiums increased by **53.9%** year-on-year[78](index=78&type=chunk) Premium Persistency Rates | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | 13-Month Premium Persistency Rate (%) | 96.4 | 96.0 | | 25-Month Premium Persistency Rate (%) | 94.3 | 90.1 | [2.2.1.3.2 PICC Health Insurance](index=36&type=section&id=2.2.1.3.2%20PICC%20Health%20Insurance) PICC Health Insurance's insurance service revenue increased by 13.2% year-on-year in the first half of 2025, with a net profit of 5.128 billion yuan; half-year new business value on a comparable basis increased by 51.0% year-on-year; the company actively serves the Healthy China strategy, maintaining a market-leading position in internet health insurance, with commercial group insurance premium income for projects over one million yuan increasing by 32.7% year-on-year; health management business service revenue reached 0.159 billion yuan, serving 4.8009 million person-times, a 21.4% year-on-year increase - In the first half of 2025, PICC Health Insurance achieved insurance service revenue of **15.603 billion yuan**, a year-on-year increase of **13.2%**; net profit reached **5.128 billion yuan**[86](index=86&type=chunk) - Half-year new business value reached **3.837 billion yuan**, a year-on-year increase of **51.0%** on a comparable basis[86](index=86&type=chunk) - Health management business achieved service revenue of **0.159 billion yuan**, providing health management services to **4.8009 million person-times**, a year-on-year increase of **21.4%**[86](index=86&type=chunk) Original Premium Income by Line of Business | Line of Business | January-June 2025 Amount (million yuan) | Proportion (%) | Change (%) | | :--- | :--- | :--- | :--- | | Medical Insurance | 20,411 | 50.2 | 10.7 | | Participating Endowment Insurance | 8,697 | 21.4 | (7.1) | | Critical Illness Insurance | 3,610 | 8.9 | 3.6 | | Long-Term Care Insurance | 7,413 | 18.2 | 63.2 | | Accident Insurance | 422 | 1.0 | 23.4 | | Disability Income Insurance | 101 | 0.2 | 42.3 | | Total | 40,654 | 100.0 | 12.2 | Original Premium Income by Channel | Channel | January-June 2025 Amount (million yuan) | Proportion (%) | Change (%) | | :--- | :--- | :--- | :--- | | Individual Insurance Channel | 11,915 | 29.3 | 8.7 | | Bancassurance Channel | 14,030 | 34.5 | 18.8 | | Group Insurance Channel | 14,709 | 36.2 | 9.3 | | Total | 40,654 | 100.0 | 12.2 | Premium Persistency Rates | Item | January-June 2025 | January-June 2024 | | :--- | :--- | :--- | | 13-Month Premium Persistency Rate (%) | 94.6 | 92.1 | | 25-Month Premium Persistency Rate (%) | 90.8 | 82.2 | [2.2.2 Asset Management Business](index=43&type=section&id=2.2.2%20Asset%20Management%20Business) This section details the performance of the Group's asset management subsidiaries, including PICC Asset Management, PICC Pension, PICC Investment Holdings, and PICC Capital, highlighting their asset under management, revenue, and strategic initiatives [2.2.2.1 PICC Asset Management](index=43&type=section&id=2.2.2.1%20PICC%20Asset%20Management) PICC Asset Management's assets under management reached 1.94 trillion yuan as of June 30, 2025, a 2.3% increase from the beginning of the year; the company achieved operating revenue of 0.864 billion yuan and net profit of 0.391 billion yuan, adhering to long-term and value investment philosophies, optimizing fixed income and equity investment strategies, and innovating in alternative investments, including the successful issuance of the market's first highway equity-type held-for-investment ABS - As of June 30, 2025, PICC Asset Management's assets under management reached **1.94 trillion yuan**, an increase of **2.3%** from the beginning of the year[105](index=105&type=chunk) - In the first half of this year, operating revenue reached **0.864 billion yuan**, and net profit was **0.391 billion yuan**[105](index=105&type=chunk) - Successfully issued the market's first highway equity-type held-for-investment ABS, which is also the first held-for-investment ABS managed by an insurance asset management company[106](index=106&type=chunk) [2.2.2.2 PICC Pension](index=44&type=section&id=2.2.2.2%20PICC%20Pension) PICC Pension's assets under management reached 702.646 billion yuan as of June 30, 2025, with operating revenue of 0.462 billion yuan and net profit of 0.167 billion yuan; the company actively supports the construction of the national multi-pillar pension security system, with enterprise annuity and occupational annuity assets under management totaling 678.339 billion yuan, a 5.1% increase from the beginning of the year; commercial pension management assets reached 24.307 billion yuan, a 223.9% increase from the beginning of the year, serving 172.5 thousand customers - As of June 30, 2025, PICC Pension's assets under management reached **702.646 billion yuan**[107](index=107&type=chunk) - In the first half of this year, operating revenue reached **0.462 billion yuan**, and net profit was **0.167 billion yuan**[107](index=107&type=chunk) - Enterprise annuity and occupational annuity assets under management totaled **678.339 billion yuan**, an increase of **5.1%** from the beginning of the year[107](index=107&type=chunk) - Commercial pension management assets reached **24.307 billion yuan**, an increase of **223.9%** from the beginning of the year; serving **172.5 thousand customers**, an increase of **10.0%** from the beginning of the year[107](index=107&type=chunk) [2.2.2.3 PICC Investment Holdings](index=44&type=section&id=2.2.2.3%20PICC%20Investment%20Holdings) PICC Investment Holdings achieved a net profit of 0.062 billion yuan in the first half of 2025, demonstrating steady growth in operating performance; the company is dedicated to building a unified real estate management platform within the system, enhancing refined asset management capabilities, and deepening its presence in community and home-based eldercare to support the Group's large health and eldercare ecosystem development - In the first half of this year, net profit reached **0.062 billion yuan**[108](index=108&type=chunk) - High-quality construction of a unified real estate management platform within the system, continuously improving refined asset management capabilities[108](index=108&type=chunk) - Deepening its presence in community and home-based eldercare, serving the Group's large health and eldercare ecosystem development[108](index=108&type=chunk) [2.2.2.4 PICC Capital](index=45&type=section&id=2.2.2.4%20PICC%20Capital) PICC Capital's assets under management reached 145.818 billion yuan as of June 30, 2025, with operating revenue of 0.186 billion yuan and net profit of 0.047 billion yuan; the company focuses on meeting insurance fund allocation needs by stabilizing debt, strengthening equity, and optimizing physical asset investments, actively serving national strategies, including the establishment of the "PICC Capital - State Grid Xinyuan Equity Investment Plan," and has received multiple industry awards - As of June 30, 2025, PICC Capital's assets under management reached **145.818 billion yuan**[109](index=109&type=chunk) - In the first half of this year, operating revenue reached **0.186 billion yuan**, and net profit was **0.047 billion yuan**[109](index=109&type=chunk) - Initiated the "PICC Capital - State Grid Xinyuan Equity Investment Plan," actively serving the construction of China's new energy system and the green and low-carbon transformation of energy[109](index=109&type=chunk) [2.2.3 Investment Portfolio and Returns](index=45&type=section&id=2.2.3%20Investment%20Portfolio%20and%20Returns) This section provides an overview of the Group's investment portfolio composition and an analysis of its investment returns, highlighting asset allocation strategies and performance [2.2.3.1 Investment Portfolio](index=46&type=section&id=2.2.3.1%20Investment%20Portfolio) As of June 30, 2025, the Group's total investment assets amounted to 1,760.674 billion yuan; fixed income investments constituted 66.6%, with bond investments at 49.7%, and AAA-rated corporate bonds and non-policy bank financial bonds accounting for 96.8%; fair value equity investments represented 20.4%; the Group optimized its asset allocation structure, increased equity positions, and strengthened credit risk management Investment Portfolio Composition | Investment Object | June 30, 2025 Amount (million yuan) | Proportion (%) | December 31, 2024 Amount (million yuan) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Investment Assets | 1,760,674 | 100.0 | 1,641,756 | 100.0 | | Cash and Cash Equivalents | 38,528 | 2.2 | 44,147 | 2.7 | | Fixed Income Investments | 1,173,143 | 66.6 | 1,115,058 | 67.9 | | Equity Investments Measured at Fair Value | 360,015 | 20.4 | 299,503 | 18.2 | | Other Investments | 188,988 | 10.7 | 183,048 | 11.1 | | Investments in Associates and Joint Ventures | 172,644 | 9.8 | 167,816 | 10.2 | - As of June 30, 2025, bond investments accounted for **49.7%**. Among corporate bonds and non-policy bank financial bonds, those with an external credit rating of AAA accounted for **96.8%**[113](index=113&type=chunk) - In terms of equity investments, the Group increased its equity positions; it strengthened its absolute return orientation, optimized the structure of equity holdings, and gradually increased the scale of other equity instrument investments that align with insurance funds' long-term and value investment philosophies[114](index=114&type=chunk) [2.2.3.2 Investment Returns](index=48&type=section&id=2.2.3.2%20Investment%20Returns) In the first half of 2025, the Group's total investment income reached 40.758 billion yuan, a 40.2% year-on-year increase; net investment income was 29.604 billion yuan, a 10.5% year-on-year increase; the annualized total investment yield was 5.0%, up 0.9 percentage points year-on-year, while the annualized net investment yield was 3.6%, down 0.2 percentage points year-on-year Investment Returns | Item | January-June 2025 (million yuan) | January-June 2024 (million yuan) | | :--- | :--- | :--- | | Total Investment Income | 40,758 | 29,064 | | Net Investment Income | 29,604 | 26,795 | | Total Investment Yield (annualized) (%) | 5.0 | 4.1 | | Net Investment Yield (annualized) (%) | 3.6 | 3.8 | - In the first half of 2025, the Group's total investment income was **40.758 billion yuan**, a year-on-year increase of **40.2%**; net investment income was **29.604 billion yuan**, a year-on-year increase of **10.5%**[117](index=117&type=chunk) - Annualized total investment yield was **5.0%**, a year-on-year increase of **0.9 percentage points**; annualized net investment yield was **3.6%**, a year-on-year decrease of **0.2 percentage points**[117](index=117&type=chunk) [2.3 Special Analysis](index=49&type=section&id=2.3%20Special%20Analysis) This section provides a focused analysis of the Group's liquidity and solvency, highlighting key trends and management strategies [2.3.1 Liquidity Analysis](index=49&type=section&id=2.3.1%20Liquidity%20Analysis) The Group maintains ample liquidity, with net cash flow from operating activities increasing by 6.9% year-on-year, primarily due to higher premium cash inflows; net cash outflow from investing activities increased due to higher investment payments, while net cash outflow from financing activities decreased due to reduced net cash payments for repurchase financial assets - The Group's liquidity funds primarily originate from cash received from issuing insurance contracts, investment income, sale or maturity of investment assets, and financing activities[118](index=118&type=chunk) - The Group's net cash flow from operating activities changed from a net inflow of **70.044 billion yuan** in the first half of 2024 to a net inflow of **74.845 billion yuan** in the first half of 2025, primarily due to increased premium cash inflows[122](index=122&type=chunk) - The Group's net cash flow used in investing activities changed from a net outflow of **44.453 billion yuan** in the first half of 2024 to a net outflow of **65.733 billion yuan** in the first half of 2025, primarily due to increased cash payments for investments[122](index=122&type=chunk) - The Group's net cash flow used in financing activities changed from a net outflow of **21.759 billion yuan** in the first half of 2024 to a net outflow of **14.567 billion yuan** in the first half of 2025, primarily due to a decrease in net cash payments for repurchase financial assets[123](index=123&type=chunk) [2.3.2 Solvency](index=50&type=section&id=2.3.2%20Solvency) The Group maintains strong solvency, with its major subsidiaries showing steady improvements in comprehensive risk ratings and sufficient capital to withstand risks - The Group's solvency situation is detailed in the "I. Company Business Overview" section of this report's Management Discussion and Analysis, showing a comprehensive solvency ratio of **276%** and a core solvency ratio of **219%**[17](index=17&type=chunk)[40](index=40&type=chunk)[124](index=124&type=chunk) [2.4 Future Outlook and Risk Analysis](index=51&type=section&id=2.4%20Future%20Outlook%20and%20Risk%20Analysis) This section outlines the Group's future strategic priorities, including strengthening functions, pursuing high-quality development, deepening reforms, and enhancing risk control, while also identifying and addressing key risks from the macroeconomic environment, market, credit, and insurance operations [2.4.1 Future Outlook](index=51&type=section&id=2.4.1%20Future%20Outlook) The Group anticipates a positive macroeconomic environment in the second half of 2025, laying a solid foundation for its strategic focus on strengthening functions, high-quality development, deepening reforms, and robust risk control - In the second half of 2025, the national economy is projected to grow by **5.3%**, with steady progress in macroeconomic policies, laying a solid foundation for the development of the financial and insurance industries[125](index=125&type=chunk) - The Group will focus on strengthening its functions, serving the overall economic and social development, and implementing the central government's "Four Stabilities" work deployment and the "Five Key Financial Initiatives" requirements[126](index=126&type=chunk) - The Group will focus on high-quality development, maintaining an upward and positive development trend, continuously consolidating its property and casualty insurance advantages, sustaining rapid growth in life insurance new business value, increasing innovation in health insurance products, and enhancing the proactive investment capabilities of its investment segment[127](index=127&type=chunk) - The Group will focus on promoting "Six Reforms," including deepening corporate governance reform, Group strategic management and control mechanism reform, and digitalization reform, to remove institutional and mechanism obstacles hindering high-quality development[127](index=127&type=chunk) - The Group will focus on risk prevention and control, firmly holding the risk bottom line, coordinating stable growth with risk prevention, strengthening asset-liability linkage management, and enhancing risk prevention and control capabilities[128](index=128&type=chunk) [2.4.2 Key Potential Risks and Countermeasures](index=53&type=section&id=2.4.2%20Key%20Potential%20Risks%20and%20Countermeasures) This section identifies key risks, including macroeconomic, market, credit, and insurance business risks, and outlines the Group's corresponding mitigation strategies - Macroeconomic environment risks: Domestic economic structural optimization and adjustment face challenges, and international uncertainties have significantly increased. The Group will continuously analyze the impact of the macroeconomic environment and policies, and enhance risk management capabilities[129](index=129&type=chunk) - Market and credit risks: Equity investments are affected by geopolitical factors and external economic policies, fixed income investments face pressure from low-interest rate environments, and credit conditions in sectors like real estate require attention. The Group will strengthen risk exposure monitoring, optimize asset allocation, and enhance post-investment risk management[129](index=129&type=chunk)[130](index=130&type=chunk) - Insurance business risks: Property and casualty insurance faces pressure to control claims costs due to extreme weather events, while life insurance faces interest rate risk where asset returns may not cover liability costs. The Group will accelerate the construction of a catastrophe insurance system, enhance risk reduction services, and reasonably control liability-side costs[131](index=131&type=chunk) [2.5 Risk Management](index=54&type=section&id=2.5%20Risk%20Management) This section details the Group's risk management organizational framework, institutional mechanisms, key methods, and processes, along with the assessment and analysis of Group-specific and special risks; the Group has established a vertically and horizontally integrated risk management structure and a three-tier institutional system, continuously enhancing risk management effectiveness through intelligent risk control tools, regular risk monitoring and screening, and comprehensive risk assessment; in the first half of 2025, the Group maintained adequate solvency, executed its risk appetite well, and experienced no major risk events [2.5.1 Risk Management Organizational Framework and Operating Model](index=54&type=section&id=2.5.1%20Risk%20Management%20Organizational%20Framework%20and%20Operating%20Model) The Group has established a comprehensive risk management framework that integrates vertical and horizontal structures to ensure effective risk oversight and collaboration - The Group has established a vertically and horizontally integrated risk management framework, which vertically spans the Board of Directors, management, and various functional departments, and horizontally features a collaborative "three lines of defense" in risk management[132](index=132&type=chunk) [2.5.2 Risk Management System and Mechanism](index=55&type=section&id=2.5.2%20Risk%20Management%20System%20and%20Mechanism) The Group has implemented a robust three-tier risk management system and a comprehensive set of mechanisms covering the entire risk management process - The Group has established a three-tier risk management system, including basic risk management policies, special risk and special work policies, and practical procedures and operating guidelines[133](index=133&type=chunk) - A complete set of risk control mechanisms has been established, covering the entire risk management process, including risk policy formulation, responsibility implementation, comprehensive coordination, monitoring, identification, analysis, assessment and reporting, risk screening, supervision and inspection, emergency and risk disposal, risk performance appraisal, and risk accountability[133](index=133&type=chunk) [2.5.3 Key Risk Management Methods and Processes](index=55&type=section&id=2.5.3%20Key%20Risk%20Management%20Methods%20and%20Processes) The Group continuously refines its risk management tools and methodologies, optimizing the entire process from risk identification to reporting to enhance overall effectiveness - The Group continuously optimizes its risk management tools and methods, constantly improving the full process of risk identification, assessment, analysis, and reporting to enhance risk management effectiveness[134](index=134&type=chunk) - Continuously optimized Group risk appetite management, compiled the "2025 Risk Appetite Statement", and optimized stress testing models and threshold settings[135](index=135&type=chunk) - Continuously strengthened the application of intelligent risk control tools such as big data and artificial intelligence, promoting the shift of risk control from "human defense" to "technical defense" and "intelligent control", with the intelligent risk control platform already launched and widely implemented[135](index=135&type=chunk) - Regularly conducted risk monitoring and screening, forming risk monitoring and early warning mechanisms at daily, weekly, monthly, quarterly, and annual frequencies[136](index=136&type=chunk) [2.5.4 Key Risk Assessment and Analysis](index=56&type=section&id=2.5.4%20Key%20Risk%20Assessment%20and%20Analysis) This section provides an in-depth assessment and analysis of the Group's specific risks and various special risks, outlining mitigation strategies [2.5.4.1 Group-Specific Risks](index=56&type=section&id=2.5.4.1%20Group-Specific%20Risks) The Group actively manages risks such as contagion, organizational opacity, concentration, and non-insurance sector risks through robust internal controls and monitoring - Regarding risk contagion, the Group strengthened daily management of related party transactions and internal transactions to ensure fairness, and improved firewall management measures[138](index=138&type=chunk) - Regarding organizational structure opacity risk, the Group continuously optimized the setup of functional departments and regularly assessed the Group's equity structure, management structure, operational processes, and business types[139](index=139&type=chunk) - Regarding concentration risk, the Group strengthened control from four aspects: counterparty, industry, customer, and business, to prevent risk accumulation at the Group level[139](index=139&type=chunk) - Regarding non-insurance sector risks, the Group strengthened the management of non-insurance subsidiaries to prevent their operating activities from adversely affecting the Group and its insurance member companies' solvency[140](index=140&type=chunk) [2.5.4.2 Special Risks](index=58&type=section&id=2.5.4.2%20Special%20Risks) The Group effectively manages strategic, insurance, market, credit, liquidity, operational, and reputational risks through proactive measures and continuous monitoring - Regarding strategic risk, the Group strengthened overall coordination, improved management levels, achieved steady operating performance, and actively researched and formulated deepening reform plans[141](index=141&type=chunk) - Regarding insurance risk, the Group deepened integrated liability-side management, with stable insurance risk indicators for major subsidiaries, effective control of combined ratios, and low surrender rates[141](index=141&type=chunk) - Regarding market risk, the Group closely monitored macroeconomic and capital market changes, optimized major asset allocation, enhanced monitoring and early warning effectiveness, and saw value restoration in listed equity investment assets[142](index=142&type=chunk) - Regarding credit risk, the Group strengthened credit risk control and post-investment management, with no investment credit risk events occurring in the first half of 2025[142](index=142&type=chunk) - Regarding liquidity risk, the Group continuously strengthened liquidity management, enhanced cash flow monitoring and early warning, and the Group as a whole did not experience any major liquidity risk events in the first half of 2025[143](index=143&type=chunk) - Regarding operational risk, the Group continuously improved and perfected its operational risk management system and mechanisms, strengthened the application of the three major basic tools for operational risk, and continuously enhanced management capabilities[143](index=143&type=chunk) - Regarding reputational risk, the Group implemented full-process reputational risk management, continuously conducted 24/7 public opinion monitoring, and reputational risk remained generally stable in the first half of 2025[144](index=144&type=chunk) [2.6 Borrowings](index=59&type=section&id=2.6%20Borrowings) As of June 30, 2025, the Group's bank borrowings amounted to 0.327 billion yuan, also including issued capital supplementary bonds and repurchase agreements related to investment activities - As of June 30, 2025, the Group's bank borrowings amounted to **0.327 billion yuan**[145](index=145&type=chunk) - Borrowings also include capital supplementary bonds issued by the Group and repurchase agreements involved in investment activities[145](index=145&type=chunk) [3. Embedded Value](index=60&type=section&id=3.%20Embedded%20Value) This section presents the independent actuary's review reports on the embedded value of PICC Life Insurance and PICC Health Insurance, including methodologies, assumptions, and sensitivity analyses [3.1 Independent Actuary's Review Report on the Embedded Value of PICC Life Insurance Company Limited](index=61&type=section&id=3.1%20Independent%20Actuary's%20Review%20Report%20on%20the%20Embedded%20Value%20of%20PICC%20Life%20Insurance%20Company%20Limited) Ernst & Young (China) Advisory Limited conducted an independent actuarial review of PICC Life Insurance's embedded value and half-year new business value as of June 30, 2025; the review concluded that the valuation methods, economic assumptions, and operating assumptions adopted by PICC Life Insurance comply with relevant standards and are reasonable, and the embedded value results are consistent with the methods and assumptions; the report details the overall results of embedded value, results by channel, valuation assumptions, and sensitivity test results [3.1.1 Scope of Work](index=61&type=section&id=3.1.1%20Scope%20of%20Work) This section outlines the scope of the independent actuary's review, covering valuation methods, assumptions, and various results including embedded value and new business value - The scope of review included valuation methods, assumptions, various results (embedded value, half-year new business value, and sensitivity testing), and half-year new business value results by sales channel[151](index=151&type=chunk) [3.1.2 Basis, Reliance, and Limitations of Opinion](index=61&type=section&id=3.1.2%20Basis%2C%20Reliance%2C%20and%20Limitations%20of%20Opinion) This section clarifies the foundation, dependencies, and inherent limitations of the independent actuary's opinion on embedded value - The review was conducted in accordance with the "Actuarial Practice Standard: Embedded Value Valuation Standard for Life Insurance" issued by the China Association of Actuaries in November 2016[150](index=150&type=chunk) - The report's conclusions are based on the assumption that the data and information provided by PICC Life Insurance are accurate and complete, without independent verification[152](index=152&type=chunk) - Embedded value calculations involve numerous future projections and assumptions, and actual operating results may deviate from these projections[152](index=152&type=chunk) [3.1.3 Review Opinion](index=62&type=section&id=3.1.3%20Review%20Opinion) The independent actuary's review concluded that PICC Life Insurance's embedded value valuation methods and assumptions are reasonable and consistent with the results - PICC Life Insurance's embedded value valuation methods comply with the standards of the China Association of Actuaries[154](index=154&type=chunk) - The economic and operating assumptions adopted consider current investment market conditions, the company's investment strategy, past operating experience, and future outlook[154](index=154&type=chunk) - The various embedded value results are consistent with the methods and assumptions used and are generally reasonable[154](index=154&type=chunk) [3.1.4 PICC Life Insurance Company Limited Embedded Value Report as of June 30, 2025](index=63&type=section&id=3.1.4%20PICC%20Life%20Insurance%20Company%20Limited%20Embedded%20Value%20Report%20as%20of%20June%2030%2C%202025) This section presents the detailed embedded value report for PICC Life Insurance, including definitions, methodology, results, valuation assumptions, and sensitivity analysis [3.1.4.1 Definitions and Methodology](index=63&type=section&id=3.1.4.1%20Definitions%20and%20Methodology) This section defines key terms such as embedded value and new business value, and describes the non-random cash flow discounting method used for their calculation - Embedded value is the sum of adjusted net assets and the value of in-force business as of the valuation date[158](index=158&type=chunk) - Half-year new business value is the present value of shareholders' interests in future cash flows generated by new policies sold during the specified half-year period and their corresponding assets, as of the policy issuance date[158](index=158&type=chunk) - PICC Life Insurance uses the non-random cash flow discounting method to calculate embedded value and half-year new business value, a method widely used in the industry[156](index=156&type=chunk) [3.1.4.2 Results Summary](index=63&type=section&id=3.1.4.2%20Results%20Summary) This section summarizes the embedded value and half-year new business value results for PICC Life Insurance, including a breakdown by distribution channel Embedded Value | Indicator | June 30, 2025 (million yuan) | December 31, 2024 (million yuan) | | :--- | :--- | :--- | | Embedded Value | 130,561 | 119,731 | | Adjusted Net Assets | 103,921 | 97,494 | | Value of In-Force Business after Cost of Required Capital | 26,639 | 22,237 | Half-Year New Business Value | Indicator | June 30, 2025 (million yuan) | June 30, 2024 (million yuan) | | :--- | :--- | :--- | | Half-Year New Business Value after Cost of Required Capital | 4,978 | 3,935 | | Bancassurance Channel Half-Year New Business Value | 2,924 | 1,934 | | Individual Insurance Channel Half-Year New Business Value | 2,048 | 1,968 | [3.1.4.3 Valuation Assumptions](index=65&type=section&id=3.1.4.3%20Valuation%20Assumptions) This section details the key assumptions used in the embedded value calculation for PICC Life Insurance, covering discount rates, investment returns, policyholder dividends, mortality, morbidity, claims, surrender rates, expenses, and tax rates - The risk discount rate is **8.5% per annum**, and the investment return assumption is **4% per annum**[164](index=164&type=chunk)[165](index=165&type=chunk) - Policyholder dividends are determined according to the company's dividend policy; mortality and morbidity rates are set based on industry experience and the company's actual experience[166](index=166&type=chunk)[167](index=167&type=chunk) - Claims ratios are based on the company's actual operating experience, ranging from **40% to 90%** of gross premiums; surrender rates are based on company experience and future outlook[168](index=168&type=chunk)[169](index=169&type=chunk) - Expense and commission assumptions are based on the company's past expense levels and future expectations, assuming an annual inflation rate of **2%**; the corporate income tax rate is assumed to be **25%**[17