百富环球(00327) - 2025 - 中期业绩

Report Overview This section provides a high-level summary of the company's financial performance and key balance sheet items for the interim period Financial Summary (Summary Table) PAX Global Technology reported a 9.9% revenue decrease to HKD 2.716 billion and a 14.9% profit decline to HKD 391 million for the six months ended June 30, 2025 Financial Summary for the Six Months Ended June 30 | Metric | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,716,164 | 3,013,241 | -9.9% | | Gross Profit | 1,272,545 | 1,409,236 | -9.7% | | Operating Profit | 470,997 | 537,525 | -12.4% | | Profit for the Period | 391,351 | 459,760 | -14.9% | | Profit Attributable to Owners of the Company | 390,877 | 454,583 | -14.0% | | R&D Costs | (305,174) | (304,219) | +0.3% | | Basic EPS (HKD) | 0.369 | 0.425 | -13.2% | | Diluted EPS (HKD) | 0.363 | 0.416 | -12.7% | | Interim Dividend per Ordinary Share (HKD) | 0.25 | 0.24 | +4.2% | Key Balance Sheet Items (As of June 30) | Metric | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Assets | | | | | Total Current Assets | 7,708,931 | 7,646,119 | +0.8% | | Total Assets | 9,208,715 | 9,169,505 | +0.4% | | Equity | | | | | Net Current Assets | 6,400,937 | 6,130,960 | +4.4% | | Total Equity | 7,805,146 | 7,564,587 | +3.2% | Financial Statements This section presents the interim condensed consolidated statements of profit or loss, comprehensive income, and financial position Interim Condensed Consolidated Statement of Profit or Loss Revenue decreased by 9.9% to HKD 2.716 billion, with operating profit and profit for the period declining by 12.4% and 14.9% respectively, driven by revenue reduction and increased other losses Key Data from Interim Condensed Consolidated Statement of Profit or Loss | Metric | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,716,164 | 3,013,241 | -9.9% | | Cost of Sales | (1,443,619) | (1,604,005) | -9.9% | | Gross Profit | 1,272,545 | 1,409,236 | -9.7% | | Other Income | 29,568 | 36,851 | -19.8% | | Other (Losses) / Gains | (9,871) | 1,589 | -721.2% | | Selling Expenses | (302,663) | (346,978) | -12.8% | | Administrative Expenses | (515,821) | (576,796) | -10.6% | | Net Impairment Loss on Financial Assets / Net Reversal of Impairment Loss | (2,761) | 13,623 | -120.3% | | Operating Profit | 470,997 | 537,525 | -12.4% | | Finance Costs | (2,446) | (2,908) | -15.9% | | Share of Results of Investments Accounted for Using Equity Method | (2,601) | 4,686 | -155.5% | | Profit Before Income Tax | 465,950 | 539,303 | -13.6% | | Income Tax Expense | (74,599) | (79,543) | -6.3% | | Profit for the Period | 391,351 | 459,760 | -14.9% | | Profit Attributable to Owners of the Company | 390,877 | 454,583 | -14.0% | | Basic EPS (HKD) | 0.369 | 0.425 | -13.2% | | Diluted EPS (HKD) | 0.363 | 0.416 | -12.7% | Interim Condensed Consolidated Statement of Comprehensive Income Total comprehensive income increased by 35.1% to HKD 515 million, primarily due to favorable exchange differences from overseas subsidiaries' financial statement translations Key Data from Interim Condensed Consolidated Statement of Comprehensive Income | Metric | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Profit for the Period | 391,351 | 459,760 | -14.9% | | Exchange Differences on Translation of Financial Statements of Overseas Subsidiaries (may be reclassified to profit or loss) | 119,159 | (77,283) | +254.1% | | Exchange Differences on Translation of Financial Statements of Overseas Subsidiaries (will not be reclassified to profit or loss) | 4,491 | (1,416) | +417.2% | | Total Comprehensive Income for the Period, Net of Tax | 515,001 | 381,061 | +35.1% | | Total Comprehensive Income Attributable to Owners of the Company | 510,036 | 377,300 | +35.2% | Interim Condensed Consolidated Statement of Financial Position Total assets increased by 0.4% to HKD 9.209 billion, total equity grew by 3.2% to HKD 7.805 billion, and total liabilities decreased by 12.6% to HKD 1.404 billion Key Data from Interim Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD Thousands) | December 31, 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Assets | | | | | Total Non-current Assets | 1,499,784 | 1,523,386 | -1.5% | | Total Current Assets | 7,708,931 | 7,646,119 | +0.8% | | Total Assets | 9,208,715 | 9,169,505 | +0.4% | | Equity | | | | | Equity Attributable to Owners of the Company | 7,765,647 | 7,530,053 | +3.1% | | Total Equity | 7,805,146 | 7,564,587 | +3.2% | | Liabilities | | | | | Total Non-current Liabilities | 95,575 | 89,759 | +6.5% | | Total Current Liabilities | 1,307,994 | 1,515,159 | -13.7% | | Total Liabilities | 1,403,569 | 1,604,918 | -12.6% | | Total Equity and Liabilities | 9,208,715 | 9,169,505 | +0.4% | Notes to Financial Statements This section provides detailed explanations of the accounting policies, segment information, and specific financial items presented in the interim financial statements General Information The Group primarily develops and sells electronic payment terminal products and provides related services, with its shares listed on the Hong Kong Stock Exchange since December 20, 2010 - The Group primarily engages in the development and sale of electronic payment terminal products, along with providing maintenance, installation, and payment solution services[9] - The company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on December 20, 2010[10] Basis of Preparation The interim condensed consolidated financial information is prepared under HKAS 34 "Interim Financial Reporting" and should be read with the 2024 annual consolidated financial statements - The interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants[14] - This interim condensed consolidated financial information should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024[14] Accounting Policies Accounting policies align with the 2024 annual consolidated financial statements, with HKFRS 18 expected to broadly impact presentation and disclosure upon its mandatory application from January 1, 2027 - The accounting policies adopted are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2024, except for income tax estimates and the adoption of new and revised standards as set out below[15] - HKFRS 18 will replace HKAS 1 “Presentation of Financial Statements” and is expected to have a broad impact on presentation and disclosure[17] - The Group expects to apply the new standard from its mandatory effective date of January 1, 2027[17] Revenue, Other Income and Other (Losses) / Gains Sales of electronic payment terminals decreased by 10.7% to HKD 2.544 billion, while service revenue grew 4.7% to HKD 172 million, with other income declining due to reduced VAT refunds Details of Revenue, Other Income and Other (Losses) / Gains | Item | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | | | | | Sales of electronic payment terminal products | 2,544,491 | 2,849,245 | -10.7% | | Providing services | 171,673 | 163,996 | +4.7% | | Total Revenue | 2,716,164 | 3,013,241 | -9.9% | | Other Income | | | | | Interest income | 9,480 | 9,928 | -4.5% | | Government grants | 1,142 | 2,691 | -57.5% | | VAT refunds | 8,011 | 11,426 | -29.9% | | Others | 10,935 | 12,806 | -14.5% | | Total Other Income | 29,568 | 36,851 | -19.8% | | Other (Losses) / Gains | | | | | Fair value (losses) / gains on investments at fair value through profit or loss | (7,873) | 1,589 | -595.4% | | Fair value loss on contingent consideration | (1,998) | – | N/A | | Total Other (Losses) / Gains | (9,871) | 1,589 | -721.2% | Segment Information The Group operates in electronic payment terminal solutions, with HKD 1.811 billion revenue from Hong Kong and other regions, and HKD 498 million from the US, where segment operating loss expanded to HKD 139 million - The Group primarily engages in the electronic payment terminal solutions business and considers itself to operate in a single business segment[19] Revenue from External Customers by Geographical Region (For the Six Months Ended June 30, 2025) | Region | Revenue (HKD Thousands) | | :--- | :--- | | China (excluding Hong Kong, Macau and Taiwan) | 184,447 | | Hong Kong and Others | 1,810,711 | | United States | 498,033 | | Italy | 222,973 | | Total | 2,716,164 | Segment Operating Profit / (Loss) by Geographical Region (For the Six Months Ended June 30, 2025) | Region | Operating Profit / (Loss) (HKD Thousands) | | :--- | :--- | | China (excluding Hong Kong, Macau and Taiwan) | 67,121 | | Hong Kong and Others | 326,377 | | United States | (139,660) | | Italy | 5,245 | | Elimination and Corporate Expenses | 211,914 | | Total | 470,997 | - For the six months ended June 30, 2025, revenue from the largest customer was HKD 232 million, accounting for 8.6% of total revenue, attributable to the Hong Kong business segment[24] - As of June 30, 2025, total non-current assets amounted to HKD 1.499 billion, with China (excluding Hong Kong, Macau and Taiwan) accounting for the largest portion at HKD 1.187 billion[27] Expenses by Nature Cost of inventories sold, sales commissions, and net foreign exchange gains decreased, while provision for obsolete inventories and intangible asset amortization significantly increased, with employee benefits and R&D costs remaining stable Details of Expenses by Nature | Item | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of inventories sold | 1,327,135 | 1,529,980 | -13.2% | | Provision for obsolete inventories | 62,347 | 4,590 | +1258.3% | | Employee benefit expenses | 404,538 | 392,024 | +3.2% | | R&D costs | 305,174 | 304,219 | +0.3% | | Sales commissions | 60,960 | 74,808 | -18.5% | | Depreciation of property, plant and equipment | 34,811 | 29,197 | +19.2% | | Depreciation of right-of-use assets | 14,098 | 15,268 | -7.6% | | Amortisation of intangible assets | 5,337 | 1,595 | +234.6% | | Net foreign exchange (gains) / losses | (43,385) | 32,273 | -234.5% | | Net impairment loss on financial assets / (net reversal of impairment loss) | 2,761 | (13,623) | -120.3% | Employee Benefit Expenses Total employee benefit expenses, including directors' emoluments, increased by 3.2% to HKD 405 million, primarily due to higher wages and salaries Details of Employee Benefit Expenses | Item | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Wages and salaries | 376,269 | 364,481 | +3.2% | | Social security and pension costs | 28,269 | 27,543 | +2.6% | | Total | 404,538 | 392,024 | +3.2% | Income Tax Expense Total income tax expense decreased by 6.3% to HKD 74.6 million, with a significant drop in China corporate income tax offset by increased Hong Kong profits tax, while R&D tax incentives continue Details of Income Tax Expense | Item | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | China corporate income tax | 27,361 | 69,971 | -60.9% | | Hong Kong profits tax | 36,004 | 20,180 | +78.4% | | Overseas profits tax | 11,597 | 11,389 | +1.8% | | R&D expense tax incentives | (30,946) | (27,632) | +12.0% | | Total current income tax | 44,016 | 74,596 | -41.0% | | Deferred income tax | 30,583 | 4,947 | +518.2% | | Total Income Tax Expense | 74,599 | 79,543 | -6.3% | - PAX Computer Technology (Shenzhen) Co., Ltd., as a high-tech enterprise, enjoys a preferential corporate income tax rate of 15%[31] - The Group's subsidiaries in China benefit from tax incentives issued by Chinese tax authorities for their R&D expenses, allowing for additional tax deductions up to 100% of the relevant R&D expenses incurred[34] Earnings Per Share Basic earnings per share decreased by 13.2% to HKD 0.369, while diluted earnings per share declined by 12.7% to HKD 0.363 for the period Basic Earnings Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (HKD Thousands) | 390,877 | 454,583 | | Weighted Average Number of Ordinary Shares in Issue (Thousands) | 1,060,685 | 1,070,525 | | Basic EPS (HKD per share) | 0.369 | 0.425 | Diluted Earnings Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (HKD Thousands) | 390,877 | 454,583 | | Weighted Average Number of Ordinary Shares for Diluted EPS (Thousands) | 1,075,344 | 1,092,547 | | Diluted EPS (HKD per share) | 0.363 | 0.416 | Dividends The Board declared an interim dividend of HKD 0.25 per ordinary share for the six months ended June 30, 2025, marking a 4.2% increase year-on-year - The Board resolved to declare an interim dividend of HKD 0.25 per ordinary share for the six months ended June 30, 2025 (for the six months ended June 30, 2024: HKD 0.24 per ordinary share)[37] Trade and Other Receivables Total trade and other receivables increased by 8.3% to HKD 2.755 billion, with HKD 1.368 billion due within 90 days, and HKD 9.268 million in retention receivables from Chinese customers Details of Trade and Other Receivables | Item | June 30, 2025 (HKD Thousands) | December 31, 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables | 2,839,136 | 2,625,573 | +8.1% | | Less: Impairment allowance for trade receivables | (85,296) | (81,959) | +4.1% | | Net trade receivables | 2,753,840 | 2,543,614 | +8.3% | | Bills receivable | 673 | 270 | +149.3% | | Total Trade and Other Receivables | 2,754,513 | 2,543,884 | +8.3% | Ageing Analysis of Trade Receivables (As of June 30, 2025) | Ageing | Amount (HKD Thousands) | | :--- | :--- | | Within 90 days | 1,368,447 | | 91 to 180 days | 488,607 | | 181 to 365 days | 605,099 | | Over 365 days | 376,983 | | Total | 2,839,136 | - Trade receivables include retention receivables of HKD 9.268 million, representing approximately 2% to 5% of the total contract value granted to certain customers in China, with retention periods ranging from three to seven years[39] Trade and Other Payables Total trade and other payables decreased by 11.2% to HKD 833 million, with HKD 717 million due within 90 days Details of Trade and Other Payables | Item | June 30, 2025 (HKD Thousands) | December 31, 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Trade payables | 832,910 | 935,193 | -11.0% | | Amount due to an associate | – | 2,018 | -100.0% | | Total | 832,910 | 937,211 | -11.2% | Ageing Analysis of Trade Payables (As of June 30, 2025) | Ageing | Amount (HKD Thousands) | | :--- | :--- | | Within 90 days | 716,651 | | 91 to 180 days | 113,235 | | 181 to 365 days | 3,024 | | Total | 832,910 | Capital Commitments Contracted but unrecognized capital commitments for property, plant, and equipment in China decreased by 14.2% to HKD 6.962 million as of June 30, 2025 Details of Capital Commitments | Item | June 30, 2025 (HKD Thousands) | December 31, 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Property, plant and equipment in China | 6,962 | 8,110 | -14.2% | Management Discussion and Analysis This section provides an overview of the company's financial performance, including revenue, gross profit, expenses, and profit for the period, along with key drivers Financial Summary: Revenue Total revenue decreased by 9.9% to HKD 2.716 billion due to global economic uncertainty, with LACIS revenue down 36.0% and USCA revenue up 39.0% Sales by Geographical Region | Region | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Europe, Middle East and Africa (EMEA) | 1,083,949 | 1,103,965 | -1.8% | | Latin America and CIS (LACIS) | 684,151 | 1,069,814 | -36.0% | | United States and Canada (USCA) | 498,679 | 358,721 | +39.0% | | Asia Pacific (APAC) | 449,385 | 480,741 | -6.5% | | Total | 2,716,164 | 3,013,241 | -9.9% | - The decrease in revenue was primarily due to a decline in purchase orders in certain markets during the period, mainly attributable to global economic uncertainty[42] Sales by Product Category | Product Category | 2025 (HKD Thousands) | 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Sales of electronic payment terminal products | 2,544,491 | 2,849,245 | -10.7% | | Providing services | 171,673 | 163,996 | +4.7% | | Total | 2,716,164 | 3,013,241 | -9.9% | - The increase in revenue from providing services was mainly due to the growing demand for SaaS (Software-as-a-Service) solutions[45] Financial Summary: Gross Profit Margin Gross profit margin remained stable at 46.9% for the six months ended June 30, 2025, consistent with 46.8% in the prior period - The gross profit margin remained relatively stable at 46.9% and 46.8% for the six months ended June 30, 2025, and June 30, 2024, respectively[46] Financial Summary: Other Income Other income decreased by 19.8% to HKD 29.6 million, primarily attributed to a reduction in VAT refunds - Other income decreased by 19.8% from HKD 36.9 million for the six months ended June 30, 2024, to HKD 29.6 million for the six months ended June 30, 2025, mainly due to reduced VAT refunds[47] Financial Summary: Selling Expenses Selling expenses decreased by 12.8% to HKD 303 million, primarily due to lower sales commissions and reduced transportation costs for delivered goods - Selling expenses decreased by 12.8% from HKD 347.0 million for the six months ended June 30, 2024, to HKD 302.7 million for the six months ended June 30, 2025, primarily due to a decrease in sales commissions and transportation costs for delivered goods[48] Financial Summary: Administrative Expenses Administrative expenses decreased by 10.6% to HKD 516 million, mainly due to favorable foreign exchange movements, partially offset by increased employee benefits and other expenses - Administrative expenses decreased by 10.6% from HKD 576.8 million for the six months ended June 30, 2024, to HKD 515.8 million for the six months ended June 30, 2025, primarily due to favorable foreign exchange movements (e.g., JPY, EUR, and RMB), partially offset by increased employee benefits and other expenses[49] Financial Summary: Net Impairment Loss on Financial Assets / Net Reversal of Impairment Loss A net impairment loss of HKD 2.8 million on financial assets was recognized, contrasting with a net reversal of HKD 13.6 million in the prior period - The Group recognized a net impairment loss on financial assets of HKD 2.8 million and a net reversal of impairment loss on financial assets of HKD 13.6 million for the six months ended June 30, 2025, and June 30, 2024, respectively[50] Financial Summary: Profit for the Period and Profit Attributable to Owners of the Company Profit for the period decreased by 14.9% to HKD 391 million, and profit attributable to owners declined by 14.0% to HKD 391 million, influenced by various factors - Profit for the period was HKD 391.4 million, a 14.9% decrease compared to HKD 459.8 million for the six months ended June 30, 2024[51] - Profit attributable to owners of the company decreased by 14.0% from HKD 454.6 million for the six months ended June 30, 2024, to HKD 390.9 million for the six months ended June 30, 2025[51] Business Review and Industry Trends This section reviews the company's market performance, industry trends, product development, and strategic initiatives across various geographical regions Market Analysis and Industry Trends Rapid growth in digital payments and blockchain, supported by favorable policies, creates opportunities for the payment terminal industry, with the company maintaining a 46.9% gross profit margin and 14.4% net profit margin - The increasing popularity of digital payments, new opportunities from blockchain technology, and favorable policy environments (e.g., the US GENIUS Act and Hong Kong's Stablecoin Ordinance) are driving payment market development[52] - The Group actively seizes industry development opportunities, with PAX payment terminals now supporting emerging payment methods like stablecoins in multiple regions worldwide[52] - The Group's gross profit margin remained stable at 46.9%, with profit for the period reaching HKD 391.4 million and a net profit margin of 14.4%[52] Leading Global Payment Security Standards, Setting New Industry Benchmarks PAX was re-elected to the PCI SSC Board of Advisors as the sole Asian payment terminal vendor, with its A920Pro and A77 Android MiniPOS achieving significant security certifications, reinforcing its leadership in payment security - PAX was re-elected to the Payment Card Industry Security Standards Council (PCI SSC) Board of Advisors, becoming the only Asian payment terminal vendor among over sixty global companies[53] - The A920Pro smart terminal successfully passed EMVCo C-8 certification, laying the foundation for the industry's transition to next-generation contactless standards[53] - The A77 Android MiniPOS became the world's first payment terminal to receive PCI PTS POI v7.0 certification, the highest security specification for PIN entry devices[53] Promoting Global Adoption of Android Smart Payment Terminals, Expanding Diverse Application Scenarios The company is expanding Android smart payment terminal adoption across diverse sectors, with Android products contributing over 65% of the Group's total revenue during the period - PAX smart payment terminals are widely applied across various key industry scenarios, including retail, catering, fast-food chains, transportation, vending machines, theme parks, tourist hotspots, and electric vehicle charging stations[55] - During the period, Android products accounted for over 65% of the Group's total revenue[55] SaaS Ecosystem Expansion The company continues investing in its MAXSTORE SaaS solution, which now supports 15 million connected terminals and offers over 16,000 diverse applications as of June 30, 2025 - As of June 30, 2025, the MAXSTORE platform has reached a milestone of 15 million connected terminals[56] - The MAXSTORE platform offers over 16,000 diverse applications[56] Regional Analysis EMEA sales reached HKD 1.084 billion, remaining the largest contributor, while LACIS faced pressure, USCA sales grew 39.0%, and APAC saw Japan sales double with Australia's RKI service gaining PCI PIN certification - EMEA region sales reached HKD 1,083.9 million, consistently remaining PAX's largest sales contributor, with significant sales contributions from key markets such as Italy, the United Kingdom, and France[57] - The LACIS region faced some sales pressure, particularly in the Brazilian market, but achieved significant sales growth in Panama[58] - USCA market sales increased by 39.0% year-on-year, with further penetration of flagship payment products and significant progress in expanding the Android Commercial POS (EPOS) market[59] - Japan sales in the APAC region doubled, with the A8700 smart payment terminal being massively deployed by one of Japan's largest retail chains; Australia's newly established Remote Key Injection (RKI) service successfully obtained PCI PIN certification[60] Seizing Stablecoin Opportunities The company will actively embrace emerging stablecoin payment methods, leveraging its global network and SaaS ecosystem to capitalize on new opportunities as the policy environment matures - 2025 is hailed as the inaugural year for stablecoin payments, with the implementation of the US GENIUS Act and Hong Kong's Stablecoin Ordinance signaling a new landscape for the payment market[62] - PAX will actively embrace emerging digital currency payment methods, providing more diversified, secure, and efficient payment solutions for global merchants[62] Optimizing Payment Terminal Product Line, Focusing on High-Potential Android Models To enhance competitiveness, the company will streamline its payment terminal product line, focusing resources on high-demand Android models to strengthen brand influence and improve efficiency - The Group will streamline its payment terminal product line, concentrating resources on high-demand and high-value Android models to strengthen brand influence[63] Strengthening SaaS Ecosystem, Enhancing Value-Added Service Capabilities The company is actively building a comprehensive SaaS ecosystem, including AirViewer, GoInsight, Cyberlab, and PCI-certified RKI services, with plans to integrate AI technology for enhanced intelligent support and data application - The Group is actively building a comprehensive SaaS ecosystem, including value-added services such as remote assistance AirViewer, big data analytics GoInsight, cloud payment application testing platform Cyberlab, and PCI-certified RKI (Remote Key Injection)[64] - PAX is also accelerating the integration of Artificial Intelligence (AI) technology to enhance intelligent support and data application capabilities, laying a solid foundation for building next-generation smart payment infrastructure[64] Liquidity and Financial Resources This section details the Group's cash position, capital structure, and management of foreign exchange risk Liquidity and Financial Resources Overview As of June 30, 2025, the Group held HKD 2.976 billion in cash and equivalents with no borrowings, net current assets increased to HKD 6.401 billion, but net cash from operations decreased by 64.3% to HKD 154 million Key Data on Liquidity and Financial Resources | Metric | June 30, 2025 (HKD Thousands) | December 31, 2024 (HKD Thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 2,976,100 | 3,083,600 | -3.5% | | Short-term bank deposits | 165,800 | 162,500 | +2.0% | | Net current assets | 6,400,900 | 6,131,000 | +4.4% | | Net cash generated from operating activities (For the six months ended June 30) | 153,700 | 430,700 | -64.3% | - As of June 30, 2025, the Group had no borrowings, thus the gearing ratio is not applicable[65] Capital Structure and Pledging Details As of June 30, 2025, the Group had no significant borrowings or pledged assets, with cash and equivalents primarily denominated in RMB, USD, and HKD - As of June 30, 2025, the Group had no significant borrowings or bank credit facilities, and no assets were pledged[66] Cash and Cash Equivalents by Currency Denomination | Currency | June 30, 2025 (HKD Thousands) | December 31, 2024 (HKD Thousands) | | :--- | :--- | :--- | | RMB | 2,133,922 | 1,726,723 | | USD | 589,405 | 982,728 | | HKD | 76,001 | 138,012 | | EUR | 74,367 | 113,772 | | INR | 48,738 | 53,517 | | JPY | 37,415 | 36,171 | | Others | 16,210 | 32,675 | | Total | 2,976,058 | 3,083,598 | Exchange Rate Risk The Group's financial items are primarily denominated in RMB, HKD, USD, EUR, INR, and JPY, with management monitoring exchange rates and deeming USD-related foreign exchange risk not significant - The Group's revenue, purchases, and expenses are primarily denominated in RMB, HKD, USD, EUR, INR, and JPY[70] - Currently, the Group has not entered into any agreements or purchased instruments to hedge most of its exchange rate risk[70] - Management considers the foreign exchange risk related to USD not significant, as HKD is pegged to USD[70] Other Significant Information This section covers human resources, dividend declarations, share repurchases, corporate governance practices, and the audit committee's review of interim results Human Resources and Remuneration Policy As of June 30, 2025, the Group had 1,500 employees, with 882 in R&D, and offers comprehensive remuneration including fixed salaries, bonuses, share options, and training subsidies Number of Employees by Function | Function | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Management | 12 | 12 | | Sales, After-sales Service and Marketing | 284 | 292 | | R&D | 882 | 881 | | Quality Control | 87 | 89 | | Administration and Human Resources | 91 | 93 | | Accounting | 43 | 41 | | Production, Procurement and Inventory Control | 101 | 101 | | Total | 1,500 | 1,509 | - The Group ensures its remuneration packages are comprehensive and attractive, including fixed directors' emoluments, discretionary bonuses, share options, and external training subsidies[74] Interim Dividend and Closure of Register of Members The Board declared an interim dividend of HKD 0.25 per ordinary share for the six months ended June 30, 2025, with share transfer registration suspended from September 9 to September 11, 2025, to determine dividend entitlements - The Board resolved on September 25, 2025, to declare an interim dividend of HKD 0.25 per ordinary share for the six months ended June 30, 2025, payable to shareholders whose names appear on the company's register of members at the close of business on September 11, 2025[76] - To determine shareholders' entitlement to the interim dividend, the company's share transfer registration will be suspended from Tuesday, September 9, 2025, to Thursday, September 11, 2025 (both days inclusive)[77] Purchase, Sale or Redemption of Shares For the six months ended June 30, 2025, the company repurchased 2,162,000 ordinary shares for HKD 9,863,740, believing it to be in the best interest of the company and shareholders, with all repurchased shares cancelled - For the six months ended June 30, 2025, the company repurchased a total of 2,162,000 ordinary shares for a total consideration of HKD 9,863,740[78] - The Board believes that the share repurchases are in the best interests of the company and its shareholders, and can enhance the company's net asset value per share and/or earnings per share[78] - As of the date of this announcement, all the aforementioned repurchased shares have been cancelled[78] Corporate Governance Practices The company adheres to the Corporate Governance Code, with the CEO also serving as Chairman, a deviation from C.2.1, which the Board believes enhances strategy execution and operational efficiency - The company's corporate governance practices are based on the principles and code provisions of good corporate governance as set out in Appendix C1 of the Listing Rules[82] - Following the appointment of Mr. Nie Guoming as Chief Executive Officer (effective July 3, 2025), he also serves as the Chairman of the Board and Chief Executive Officer, which deviates from code provision C.2.1 of the Corporate Governance Code[83] - The Board believes that combining the roles of Chairman of the Board and Chief Executive Officer in the same person facilitates the execution of the Group's business strategies and enhances its operational efficiency[83] Audit Committee Review of Interim Results The Audit Committee reviewed the Group's accounting principles, risk management, internal controls, and financial reporting, including the unaudited interim condensed consolidated financial information for the six months ended June 30, 2025 - The Audit Committee has reviewed the accounting principles and practices adopted by the Group with management, and discussed risk management, internal control, and financial reporting matters with the Directors[84]