百福控股(01488) - 2025 - 中期业绩

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