南华集团控股(00413) - 2025 - 中期业绩

Company Information and Disclaimer This section presents the company's basic information and announcement summary, including the disclaimer from HKEX and SEHK Disclaimer The HKEX and SEHK are not responsible for this announcement's content, make no statement on its accuracy or completeness, and disclaim liability for any loss arising from it - The HKEX and SEHK are not responsible for this announcement's content, make no statement on its accuracy or completeness, and assume no liability for any loss[1] Company Basic Information and Announcement Summary South China Holdings Company Limited (Stock Code: 00413) announced its unaudited interim results for the six months ended June 30, 2025 - South China Holdings Company Limited (Stock Code: 00413) announced its unaudited interim results for the six months ended June 30, 2025[2] Financial Statements This section provides the consolidated income statement, statement of profit or loss and other comprehensive income, and statement of financial position Consolidated Income Statement For the six months ended June 30, 2025, revenue decreased by 23.7% to HK$891.68 million, with loss for the period expanding to HK$89.996 million and basic loss per share at 0.7 HK cents Consolidated Income Statement Key Data (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 891,682 | 1,168,503 | | Cost of sales | (829,072) | (1,016,427) | | Gross profit | 62,610 | 152,076 | | Other income and gains, net | 95,361 | 64,455 | | Net fair value gain/(loss) on investment properties | (75) | 72,843 | | Selling and distribution expenses | (15,813) | (18,708) | | Administrative expenses | (178,897) | (152,906) | | Operating profit | 36,104 | 44,842 | | Finance costs | (101,750) | (124,374) | | Loss before tax | (65,646) | (79,532) | | Income tax expense | (24,350) | (1,344) | | Loss for the period | (89,996) | (80,876) | | Loss attributable to owners of the Company | (91,769) | (79,142) | | Non-controlling interests | 1,773 | (1,734) | | Basic loss per share | (0.7) HK cents | (0.6) HK cents | | Diluted loss per share | (0.7) HK cents | (0.6) HK cents | Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, total comprehensive income for the period turned to a gain of HK$74.287 million from a loss of HK$215.635 million in 2024, mainly due to exchange differences on translating financial statements of overseas operations Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the period | (89,996) | (80,876) | | Surplus on revaluation of property, plant and equipment | – | 27,324 | | Exchange differences on translating financial statements of overseas operations | 192,286 | (162,083) | | Exchange reserve reclassified to profit or loss on disposal of subsidiaries | (28,003) | – | | Total comprehensive income for the period | 74,287 | (215,635) | | Attributable to owners of the Company | 58,781 | (203,383) | | Non-controlling interests | 15,506 | (12,252) | Consolidated Statement of Financial Position As of June 30, 2025, total assets less current liabilities were HK$8.396 billion, a decrease from HK$9.552 billion at the end of 2024, with net current liabilities significantly increasing to a HK$1.525 billion loss, while net assets slightly grew to HK$6.221 billion Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 397,306 | 430,689 | | Investment properties | 9,447,626 | 9,192,767 | | Total non-current assets | 9,921,252 | 9,790,196 | | Current assets | | | | Inventories | 836,130 | 720,711 | | Trade receivables | 349,834 | 399,041 | | Cash and bank balances | 389,630 | 621,514 | | Total current assets | 3,109,743 | 3,175,772 | | Current liabilities | | | | Trade payables | 613,824 | 699,173 | | Interest-bearing bank borrowings | 3,260,440 | 2,073,370 | | Total current liabilities | 4,635,030 | 3,414,216 | | Net current liabilities | (1,525,287) | (238,444) | | Non-current liabilities | | | | Interest-bearing bank borrowings | 274,072 | 1,597,999 | | Total non-current liabilities | 2,174,608 | 3,434,290 | | Net assets | 6,221,357 | 6,117,462 | | Total equity attributable to owners of the Company | 5,897,518 | 5,827,541 | | Non-controlling interests | 323,839 | 289,921 | | Total equity | 6,221,357 | 6,117,462 | Notes to the Financial Statements This section details the basis of preparation, accounting policies, revenue and segment information, other income, operating profit, finance costs, income tax, interim dividend, loss per share, trade receivables, trade payables, and share capital Basis of Preparation and Accounting Policies The interim financial statements are prepared in accordance with HKEX Listing Rules and HKAS 34, using the same accounting policies as the 2024 annual financial statements, with no new standards applied - The interim financial statements are prepared in accordance with the HKEX Listing Rules and Hong Kong Accounting Standard 34[7] - The Group has assessed the impact of adopting HKAS 21 (Revised) 'The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability' and believes it has no material impact on results or financial position[9] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[10] Revenue and Segment Information For the six months ended June 30, 2025, Trade and Manufacturing segment revenue decreased by 25.7% to HK$789 million, incurring an operating loss of HK$102 million, while Property Investment and Development revenue slightly decreased but operating profit significantly increased Revenue and Operating Results by Business Segment (Six Months Ended June 30) | Business Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2025 Operating Results (HK$ thousand) | 2024 Operating Results (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Trade and Manufacturing | 789,096 | 1,061,505 | (102,481) | 31,767 | | Property Investment and Development | 102,529 | 106,936 | 110,210 | 41,354 | | Agricultural and Forestry Business | 57 | 62 | (10,929) | (2,859) | | Others | – | – | 39,304 | (25,420) | | Group Total | 891,682 | 1,168,503 | 36,104 | 44,842 | Revenue and Operating Profit Contribution by Geographical Segment (Six Months Ended June 30) | Geographical Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2025 Operating Profit (HK$ thousand) | 2024 Operating Profit (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | China (including Hong Kong and Macau) | 137,322 | 170,503 | 137,381 | 24,668 | | United States | 391,105 | 598,360 | (37,383) | 16,835 | | Europe | 220,844 | 281,128 | (39,208) | 2,215 | | Japan | 11,457 | 3,696 | (2,046) | 21 | | Others | 130,954 | 114,816 | (22,640) | 1,103 | | Total | 891,682 | 1,168,503 | 36,104 | 44,842 | Other Income and Gains, Net For the six months ended June 30, 2025, the company recognized a gain of approximately HK$67.561 million from the disposal of subsidiaries, with no such gain in the prior year - For the six months ended June 30, 2025, a gain of approximately HK$67,561,000 from the disposal of subsidiaries was recognized (2024: nil)[12] Operating Profit For the six months ended June 30, 2025, operating profit was derived after deducting cost of sales of HK$797.3 million (2024: HK$975.88 million) and depreciation expenses of HK$50.403 million (2024: HK$50.248 million) Operating Profit Deductions (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Cost of goods sold | 783,553 | 959,982 | | Cost of sales of completed properties | 13,747 | 15,899 | | Total Cost of Sales | 797,300 | 975,881 | | Depreciation: Property, plant and equipment | 15,191 | 16,230 | | Depreciation: Bearer plants | 554 | 626 | | Depreciation: Right-of-use assets | 34,658 | 33,392 | | Total Depreciation | 50,403 | 50,248 | Finance Costs For the six months ended June 30, 2025, total finance costs decreased to HK$101.75 million from HK$124.374 million in 2024, primarily due to lower interest on bank and other borrowings Finance Costs Analysis (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest on bank and other borrowings | 91,661 | 113,479 | | Interest on lease liabilities | 10,089 | 10,895 | | Total Finance Costs | 101,750 | 124,374 | Income Tax Income tax comprises current and deferred tax, with Hong Kong profits tax levied at 16.5% and other regions at prevailing local rates - Income tax comprises current tax and deferred tax[15] - Hong Kong profits tax is provided at a rate of 16.5%, with other regions calculated at prevailing local rates[15] Interim Dividend The Board resolved not to declare an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[16] Loss Per Share For the six months ended June 30, 2025, basic and diluted loss per share were both 0.7 HK cents, higher than 0.6 HK cents in 2024, mainly due to increased loss attributable to owners of the Company Loss Per Share Calculation Basis (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand/thousand shares) | 2024 (HK$ thousand/thousand shares) | | :--- | :--- | :--- | | Loss attributable to owners of the Company for basic and diluted loss per share | (91,769) | (79,142) | | Weighted average number of ordinary shares in issue for basic and diluted loss per share | 12,982,892 | 12,982,892 | - The Company's share options had no dilutive effect during the reporting period as the exercise price was higher than the average market price[18] - Diluted loss per share was the same as basic loss per share because the outstanding potential ordinary shares had an anti-dilutive effect[19] Trade Receivables As of June 30, 2025, trade receivables were approximately HK$349.834 million, a decrease from HK$399.041 million at the end of 2024, with most aged within six months - As of June 30, 2025, trade receivables were approximately HK$349,834,000 (December 31, 2024: HK$399,041,000), with most aged within six months[20] - The Group maintains strict control over outstanding receivables and has a credit control department to monitor credit risk[20] Trade Payables As of June 30, 2025, trade payables were approximately HK$613.824 million, a decrease from HK$699.173 million at the end of 2024, with most aged within six months - As of June 30, 2025, trade payables were approximately HK$613,824,000 (December 31, 2024: HK$699,173,000), with most aged within six months[21] Share Capital As of June 30, 2025, the company's total authorized share capital was HK$260 million, and total issued and fully paid share capital was HK$134.413 million, with no changes in share capital quantity during the reporting period Share Capital Composition (As of June 30) | Share Capital Type | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Authorized ordinary shares (HK$0.01 par value per share) | 200,000 | 200,000 | | Authorized redeemable convertible preference shares (HK$0.02 par value per share) | 60,000 | 60,000 | | Total Authorized Share Capital | 260,000 | 260,000 | | Issued and fully paid ordinary shares (HK$0.01 par value per share) | 132,213 | 132,213 | | Issued and fully paid redeemable convertible preference shares (HK$0.02 par value per share) | 2,200 | 2,200 | | Total Issued and Fully Paid Share Capital | 134,413 | 134,413 | - Redeemable convertible preference shares can be redeemed by the Company at any time, and holders are entitled to dividends or distributions as determined by the Board, with priority over ordinary shares in liquidation[23] - There was no change in the number of ordinary shares and redeemable convertible preference shares issued by the Company for the six months ended June 30, 2025 and 2024[23] Management Discussion and Analysis This section provides a financial summary, business review, and analysis of liquidity, financial resources, exchange rate risks, capital structure, contingent liabilities, employees, and material acquisitions and disposals Financial Summary and Key Performance Indicators For the six months ended June 30, 2025, the Group's revenue decreased by 23.7% to approximately HK$891.7 million, with a loss after tax of approximately HK$90 million and loss per share of 0.7 HK cents Financial Summary (Six Months Ended June 30) | Indicator | 2025 (HK$) | 2024 (HK$) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. 891,700,000 | Approx. 1,168,500,000 | -23.7% | | Loss after tax | Approx. 90,000,000 | Approx. 80,900,000 | Increased | | Loss per share attributable to owners of the Company | 0.7 HK cents | 0.6 HK cents | Increased | Business Review The Group's main businesses include Trade and Manufacturing, Property Investment and Development, and Agricultural and Forestry businesses, with Trade and Manufacturing revenue declining and incurring an operating loss, while Property Investment and Development saw significant profit growth - The Group's main businesses are Trade and Manufacturing, Property Investment and Development, and Agricultural and Forestry businesses[25] Trade and Manufacturing Trade and Manufacturing segment revenue decreased by 25.7% to HK$789 million, turning from profit to an operating loss of HK$102 million, mainly due to a significant 35.1% drop in OEM toy production revenue, despite a 75.9% increase in footwear product trade revenue Trade and Manufacturing Segment Performance (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 789,100 | 1,061,500 | -25.7% | | Operating loss/(profit) | (102,500) | 31,800 | Turned to loss | OEM Toy Production OEM toy production revenue decreased by 35.1% to HK$625.7 million, primarily due to reduced US toy imports, weak consumer sentiment, geopolitical tensions, and tariff uncertainties, leading major US clients to adopt cautious ordering strategies OEM Toy Production Revenue (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 625,700 | 964,300 | -35.1% | - Total US toy imports decreased by 31% year-on-year, with imports from China decreasing by 47%, and tariffs posing a challenge to the toy industry[28] - The Group has factories in Vietnam and mainland China, and will cater to market demand by streamlining the supply chain, controlling costs, and strategically allocating production[29] Footwear Product Trading Footwear trade business revenue grew by 75.9% to HK$157.7 million, but operating profit decreased by 19.9% to HK$5.9 million due to an aggressive pricing strategy resulting in lower gross margins Footwear Product Trading Performance (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 157,700 | 89,700 | +75.9% | | Operating profit | 5,900 | 7,300 | -19.9% | - To outperform competitors, the Group adopted an aggressive pricing strategy, offering relatively lower prices to secure purchase orders[30] Branded Ball Product Sales Sales of branded ball products in mainland China decreased by 26.8% to HK$4.2 million, mainly because educational institutions shifted from bulk purchasing to on-demand procurement, with the Group planning to expand distribution channels using the 'Li Sheng' brand Branded Ball Product Sales Revenue (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 4,200 | 5,800 | -26.8% | - Revenue decline was mainly due to major customers (educational institutions) shifting from bulk purchasing to on-demand procurement, possibly influenced by tightened local government budgets[31] - The Group plans to leverage the 'Li Sheng' brand to enhance product awareness and expand its sales network, reducing reliance on bulk purchases from educational institutions[31] Property Investment and Development Property Investment and Development segment revenue decreased by 4.1% to HK$102.5 million, but operating profit (including fair value changes of investment properties) significantly increased to HK$110.2 million, with the Group cautiously optimistic about the mainland China real estate market and having disposed of a non-material subsidiary in Tianjin to optimize resource allocation Property Investment and Development Segment Performance (Six Months Ended June 30) | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 102,500 | 106,900 | -4.1% | | Operating profit (including fair value changes) | 110,200 | 41,400 | +166.2% | | Operating profit (excluding fair value changes) | 37,400 | 41,400 | -9.7% | - The Group's investment property portfolio in China has a total gross floor area of approximately 570,000 square meters, with approximately 69% of the saleable area of the flagship 'Central Plaza' residential towers and serviced apartments already sold[33] - Management is cautiously optimistic about sales and rental contributions for 2025 and beyond, as the Chinese central government has introduced various measures to stimulate the real estate market[33] - A subsidiary located in Tianjin was disposed of during the period to reallocate resources to profitable core business segments[34] Agricultural and Forestry Business Agricultural product sales revenue decreased to HK$57,000, and other income from sub-leasing agricultural and forest land decreased to HK$6.6 million, with operating loss increasing to HK$10.9 million due to reduced sub-leasing income from expired leases Agricultural and Forestry Business Revenue and Loss (Six Months Ended June 30) | Indicator | 2025 (HK$) | 2024 (HK$) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Agricultural product sales revenue | 57,000 | 62,000 | -8.1% | | Other income from sub-leasing agricultural and forest land | 6,600,000 | 8,700,000 | -24.2% | | Operating loss | 10,900,000 | 2,900,000 | Increased | - The increase in operating loss was mainly due to the expiration of some leases, leading to a reduction in other income from sub-leasing[35] Liquidity and Financial Resources As of June 30, 2025, the Group's current ratio was 0.67 and gearing ratio was 4.4%, with the current ratio decreasing from 0.93 at the end of 2024, but the gearing ratio significantly improved, and the company funds operations through internal resources and bank borrowings while closely monitoring liquidity risk Liquidity and Financial Resources Indicators (As of June 30) | Indicator | 2025 June 30 | 2024 December 31 | | :--- | :--- | :--- | | Current ratio | 0.67 | 0.93 | | Gearing ratio | 4.4% | 26.1% | | Long-term bank borrowings | HK$274,100,000 | - | | Equity | HK$6,221,400,000 | - | - The Group's operations and investments continue to be funded by internal resources and bank borrowings[36] - The Group closely monitors liquidity risk and maintains a balance between funding continuity and flexibility by utilizing bank financing[36] Exchange Rate Fluctuation Risk and Related Hedging The Group faces foreign currency exchange rate risks, including RMB and USD, which are managed by closely monitoring exchange rate trends and entering into forward contracts as appropriate - The Group faces foreign currency exchange rate risks, including RMB and USD[37] - Foreign currency exchange rate risks are managed by closely monitoring exchange rate trends and entering into forward contracts as appropriate[37] Capital Structure There have been no significant changes in the Group's capital structure compared to the most recently published annual report - There have been no significant changes in the Group's capital structure compared to the most recently published annual report[38] Contingent Liabilities Certain investment properties are pledged to banks for loan facilities, and a subsidiary provided a guarantee of approximately HK$189 million for independent buyers of Central Plaza properties, which will be released upon issuance of property ownership certificates - Certain investment properties are pledged to banks for bank loan facilities[39] - A subsidiary of the Company provided a guarantee of approximately HK$189 million for independent buyers of Central Plaza properties, which will be released upon issuance of property ownership certificates[39] Employees As of June 30, 2025, the Group's total number of employees decreased to 13,422 (2024: 15,537), with employee costs of approximately HK$335.3 million (2024: HK$393.5 million), and the company provides salaries, benefits, provident funds, training allowances, and share option/award schemes Employee Information (As of June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Total number of employees | 13,422 | 15,537 | | Employee costs (including directors' emoluments) | Approx. HK$335,300,000 | Approx. HK$393,500,000 | - The Group provides employee benefits such as medical allowances, provident funds, and external training course allowances, and has share option and share award schemes[41] Material Acquisitions and Disposals During the period, the Company disposed of the entire issued share capital of Yu Kiu Limited, Hang Fai Limited, and Chun Wing Limited for a total consideration of HK$26.96 million, recognizing a gain on disposal of approximately HK$67.561 million, with no other material acquisitions or disposals - The Company disposed of the entire issued share capital of Yu Kiu Limited, Hang Fai Limited, and Chun Wing Limited for a total consideration of HK$26,960,296[42] - A gain on disposal of subsidiaries of approximately HK$67,561,000 was recognized during the period[42] - Save as aforesaid, there were no other material acquisitions and disposals of subsidiaries and associated companies by the Company during the period[43] Outlook This section provides an outlook on the macroeconomic environment and the Group's Trade and Manufacturing, Property Investment and Development, and Agricultural and Forestry businesses Macroeconomic Outlook The global economy in H1 2025 was affected by high interest rates, US tariff policies, and geopolitical uncertainties, with expectations for Fed rate cuts and more policy support for consumption and 'new economy' sectors in mainland China in H2 - The global economy in H1 2025 was affected by high interest rates, US tariff policies, and geopolitical uncertainties[44] - The Federal Reserve is expected to cut interest rates in H2 2025 to stimulate domestic consumption and mitigate the impact of import tariffs[44] - Mainland China is expected to introduce more policies to support consumption and 'new economy' sectors, setting a GDP growth target of approximately 5%[45] - The People's Bank of China is expected to continue supportive monetary policies, accelerate local government bond issuance to boost infrastructure projects, and prioritize consumption, innovation, and structural reforms[46] Trade and Manufacturing Business Outlook The Trade and Manufacturing business faces challenges from global economic volatility and geopolitical tensions, with the Group planning to enhance competitiveness through vertical integration, innovation, new customer acquisition, local sourcing, outsourcing, production optimization, and expansion of its Vietnam production base, while monitoring US tariffs and exploring AI applications in toy manufacturing - Global economic volatility and geopolitical tensions will continue to pose significant challenges to this business segment, with additional US tariffs and high interest rates impacting toy product demand[48] - The Group will establish itself as a one-stop solution provider by advancing vertical integration and innovation[48] - To expand market share and increase production utilization, the Group will focus on developing diverse customer sources, adapting to price-sensitive customers, increasing local sourcing, and outsourcing non-core manufacturing processes[49] - The Group will expand production processes to Vietnam, leveraging lower labor costs to diversify its production and supply chain network, and seek to dispose of idle manufacturing assets in mainland China[49][50] - The Group will actively monitor the impact of new US tariffs and adjust product pricing and supply chain management strategies in a timely manner[50] - The Group recognizes the transformative potential of artificial intelligence in revolutionizing toy manufacturing, aiming to improve operational efficiency, product quality, and cost-effectiveness[50] OEM Toy Production Outlook OEM toy production faces challenges from global economic volatility and geopolitical tensions, with additional US tariffs and high interest rates impacting demand, prompting the Group to enhance competitiveness through vertical integration, innovation, new customer acquisition, local sourcing, outsourcing, production optimization, and expansion of its Vietnam production base, while monitoring US tariffs and exploring AI applications - Global economic volatility and geopolitical tensions will continue to pose significant challenges to this business segment, with additional US tariffs and high interest rates impacting toy product demand[48] - The Group will establish itself as a one-stop solution provider by advancing vertical integration and innovation[48] - To expand market share and increase production utilization, the Group will focus on developing diverse customer sources, adapting to price-sensitive customers, increasing local sourcing, and outsourcing non-core manufacturing processes[49] - The Group will expand production processes to Vietnam, leveraging lower labor costs to diversify its production and supply chain network, and seek to dispose of idle manufacturing assets in mainland China[49][50] - The Group will actively monitor the impact of new US tariffs and adjust product pricing and supply chain management strategies in a timely manner[50] - The Group recognizes the transformative potential of artificial intelligence in revolutionizing toy manufacturing, aiming to improve operational efficiency, product quality, and cost-effectiveness[50] Footwear Product Trading Outlook The Group will maintain its referrer network to expand new customers and place orders with different factories based on customer recognition in various countries to balance production costs and profit margins, while also offering diverse products like athletic shoes and apparel to existing customers and continuously exploring business opportunities - The Group will maintain its referrer network to introduce new customers and expand business opportunities without incurring fixed costs[51] - The Group's strategy is to place orders with different factories based on customer recognition in various countries to balance production costs and profit margins for each order[51] - The Group has been offering a variety of products, including athletic shoes and apparel, to existing customers since Q2 2025[51] Property Investment and Development Business Outlook For property investment, the Group will continuously improve its tenant mix, upgrade mall facilities, and leverage favorable visa policies to attract tourists and increase rental income; for property development, the mainland China real estate market is expected to continue adjusting with gradual demand recovery and ongoing government support, prompting the Group to adopt a highly cautious approach to property project development and management, while actively pursuing land repurchase and redevelopment opportunities in Nanjing and Shenzhen to enhance land reserve value - The overall real estate market in mainland China is expected to remain in an adjustment period, with demand gradually recovering and policy support continuing to evolve[53] - The Group will continue to adopt a highly cautious approach to property project development and management[54] - The Chinese central government is expected to continue strengthening support measures in 2025 to boost the real estate market, such as easing purchase restrictions, lowering down payment ratios, and mortgage interest rates[55] - Local governments in Nanjing and Shenzhen are discussing land repurchase and redevelopment plans with the Group for inefficient land, which is expected to bring positive financial contributions and enhance land value[57] Property Investment Outlook The Group will continuously improve its tenant mix, renovate and upgrade Shenyang Xinghui Plaza facilities, establish experiential retail spaces, and expand the Central Plaza retail mall tenant portfolio, while leveraging favorable visa policies from mainland China authorities to attract tourists, expand customer base, and increase rental income - The Group will continuously improve and adjust its tenant mix, renovate and upgrade facilities at Shenyang Xinghui Plaza, and establish experiential retail spaces[52] - The retail mall at Central Plaza has expanded its tenant portfolio, leasing some spaces to hotel operators and other experiential retailers[52] - More favorable visa policies introduced by mainland China authorities will attract more tourists, positively impacting the retail industry and increasing leasing demand from retailers[52] Property Development Outlook The overall real estate market in mainland China is expected to remain in an adjustment period with gradual demand recovery and ongoing policy support, prompting the Group to adopt a highly cautious approach to property project development and management, while actively pursuing land repurchase and redevelopment opportunities in Nanjing and Shenzhen to enhance land reserve value - The overall real estate market in mainland China is expected to remain in an adjustment period, with demand gradually recovering and policy support continuing to evolve[53] - The Group will continue to adopt a highly cautious approach to property project development and management[54] - The Chinese central government is expected to continue strengthening support measures in 2025 to boost the real estate market, such as easing purchase restrictions, lowering down payment ratios, and mortgage interest rates[55] - Local governments in Nanjing and Shenzhen are discussing land repurchase and redevelopment plans with the Group for inefficient land, which is expected to bring positive financial contributions and enhance land value[57] Agricultural and Forestry Business Outlook The Group long-term leases over 290,000 mu of forest land, agricultural land, fish ponds, and lakes in mainland China, focusing on cultivating high-profit varieties, improving yields, sales and distribution channels, resource utilization, and cost control, while actively seeking opportunities to convert agricultural land for higher returns and strategic cooperation with agricultural operators - The Group long-term leases over 290,000 mu of forest land, agricultural land, fish ponds, and lakes across several provinces in mainland China, focusing on cultivating fruits and crops[58] - The Group is committed to exploring the cultivation of high-profit varieties while prioritizing improvements in yields, sales and distribution channels, resource utilization, and cost control[58] - The Group will actively seek opportunities to obtain higher returns by converting agricultural land use and strategically cooperate with other agricultural operators[58] Key Risks and Uncertainties This section outlines key risks and uncertainties related to the Group's Trade and Manufacturing, Property Investment and Development, and Agricultural and Forestry businesses Trade and Manufacturing Related Risks The Trade and Manufacturing business faces risks from a deteriorating macroeconomic environment leading to reduced non-essential consumption, and rising operating costs due to increased raw material, transportation, labor costs, or product liability lawsuits - A deteriorating macroeconomic environment (e.g., economic recession, credit crisis) may lead to reduced disposable income and lower consumer confidence, impacting customer orders[60] - Increased costs due to raw materials, transportation, mainland China's minimum wage legislation, or compliance with existing or future regulatory requirements may affect the Group's profit margins on product sales[61] - The Group may face product liability lawsuits or product recalls in the future, which could harm its business[61] Macroeconomic Environment Risk The Group's Trade and Manufacturing business relies on global non-essential consumption levels, and economic downturns, credit crises, or other economic slumps may reduce consumer disposable income and confidence, leading to fewer customer orders - The Group's financial performance depends on the level of non-essential consumption in the final sales markets for its products[60] - Economic recession, credit crises, and other economic downturns lead to reduced consumer disposable income and lower consumer confidence, which in turn results in fewer customer orders[60] Cost Increase Risk Increased costs due to raw materials, transportation, mainland China's minimum wage legislation, or compliance with existing or future regulatory requirements may affect the Group's profit margins on product sales, and product liability lawsuits or recalls could also harm the business - Increased costs due to raw materials, transportation, mainland China's minimum wage legislation, or compliance with existing or future regulatory requirements may affect the Group's profit margins on product sales[61] - The Group may face product liability lawsuits or product recalls in the future, which could harm its business[61] Property Investment and Development Related Risks The Group's property portfolio is mainly located in mainland China, facing risks from policy changes, RMB exchange rates, interest rates, supply-demand imbalances, and overall economic conditions, while the Hong Kong property market is also affected by economic conditions, legislative and regulatory changes, government policies, and competition - The Group's property portfolio is mainly located in mainland China, thus facing risks related to the mainland China real estate market[62] - Mainland China operations are affected by risks such as policy changes, RMB exchange rate fluctuations, interest rate changes, supply-demand imbalances, and overall economic conditions[62] - The economic and real estate market conditions in Hong Kong, legislative and regulatory changes, government policies and political environment also affect the Group's revenue from its property portfolio in Hong Kong[63] Mainland China Real Estate Market Risk The Group's property portfolio is mostly in mainland China, facing risks from policy changes, RMB exchange rate fluctuations, interest rate changes, supply-demand imbalances, and overall economic conditions, which could adversely affect its business, financial position, or operating results - The Group's property portfolio is mainly located in mainland China, thus facing risks related to the mainland China real estate market[62] - Mainland China operations are affected by risks such as policy changes, RMB exchange rate fluctuations, interest rate changes, supply-demand imbalances, and overall economic conditions[62] Hong Kong Real Estate Market Risk Hong Kong's economic and real estate market conditions, legislative and regulatory changes, government policies and political environment, and competition from primary supply may all impact the Group's property portfolio revenue, with the government potentially introducing cooling measures from time to time - The economic and real estate market conditions in Hong Kong, legislative and regulatory changes, government policies and political environment also affect the Group's revenue from its property portfolio in Hong Kong[63] - The government may introduce cooling measures for the property market from time to time[63] - Rental levels in Hong Kong may be affected by competition arising from primary supply[63] Agricultural and Forestry Business Related Risks The Agricultural and Forestry business is susceptible to natural disasters (e.g., droughts, floods, earthquakes) and adverse weather, which may lead to reduced yields or production delays, adversely affecting business and operating results - The Group's agricultural and forestry business is susceptible to natural disasters such as droughts, floods, earthquakes, and environmental disasters, as well as adverse weather conditions[64] - Any of the aforementioned events occurring in or around the planting areas may lead to reduced yields or production delays, which in turn could adversely affect the Group's business and operating results[64] Other Information This section covers interim dividend, securities transactions, corporate governance, standard code for securities transactions, litigation, post-reporting period events, audit committee review, publication of results, and board members Interim Dividend The Board resolved not to declare an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[66] Purchase, Sale or Redemption 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 - 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[67] Corporate Governance Code The Company has complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025 - The Company has complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025[68] Standard Code for Securities Transactions The Company has 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 in Appendix C3 of the Listing Rules as the code of conduct for directors' securities transactions[69] - All directors have confirmed their compliance with the required standards set out in the Standard Code for the six months ended June 30, 2025[69] Litigation No significant changes occurred in the copyright infringement and corporate interest damage liability cases during the reporting period; for the Tianjin Binhai land infringement case, the Supreme People's Court accepted the retrial application and is awaiting scheduling; the Nansha land arbitration case also saw no significant changes - No significant changes occurred in the copyright infringement case and the corporate interest damage liability case during the reporting period[70][71] - In the Tianjin Binhai land infringement case, the Supreme People's Court has accepted Huanwei's application for retrial and is currently awaiting scheduling[72] - No significant changes occurred in the Nansha land arbitration case during the reporting period[73] Events After Reporting Period On July 21, 2025, the Company's indirect wholly-owned subsidiary, Changrong Toys (Dongguan) Co Ltd, entered into a sale and purchase agreement with an independent third party to dispose of land use rights for two industrial plots in Xie Keng Village, Qingxi Town, Dongguan City, for a total consideration of RMB42.624 million (approximately HK$46.84 million), with the transaction yet to be completed - On July 21, 2025, Changrong Toys (Dongguan) Co Ltd, an indirect wholly-owned subsidiary of the Company, agreed to dispose of the land use rights for two industrial plots in Xie Keng Village, Qingxi Town, Dongguan City[74] - The total consideration is RMB42,624,000 (equivalent to approximately HK$46,840,000), payable in cash, and the transaction has not yet been completed[74] - Save as aforesaid, there were no other material events after the reporting period as of the date of this announcement[75] Audit Committee The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and found them to be in compliance with applicable accounting standards and requirements, with adequate disclosures - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[76] - The Audit Committee believes that these results comply with applicable accounting standards and requirements and that adequate disclosures have been made[76] Publication of Results Announcement and Interim Report This announcement has been published on the HKEX website and the Company's website, and the interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the aforementioned websites in due course - This announcement is published on the HKEX website (www.hkexnews.hk) and the Company's website (www.scholding.com)[77](index=77&type=chunk) - The interim report for the six months ended June 30, 2025, will be dispatched to the Company's shareholders and published on the aforementioned websites in due course[77] Board of Directors As of the announcement date, the Company's Board of Directors comprises Executive Directors Mr. Wu Hongsheng, Ms. Cheung Sair O, Mr. Wu Xuyang, Non-executive Directors Ms. Wu Xumo, Mr. Yu Pui Hang, and Independent Non-executive Directors Mr. Kam Yiu Sing, Ms. Pang Oi Lan, and Mr. Wong Chun Tat - The Board of Directors includes Executive Directors Mr. Wu Hongsheng, Ms. Cheung Sair O, and Mr. Wu Xuyang[79] - Non-executive Directors include Ms. Wu Xumo and Mr. Yu Pui Hang[79] - Independent Non-executive Directors include Mr. Kam Yiu Sing, Ms. Pang Oi Lan, and Mr. Wong Chun Tat[79]