中国通信服务(00552) - 2025 - 中期业绩

Report Highlights The group achieved stable growth in operating revenue and net profit in H1 2025, with an optimized market structure and strong growth in application, content, and other services Key Financial Metrics | Metric | H1 2025 (RMB millions) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | 76,939 | 3.4% | | Net Profit | 2,129 | 0.2% | | Gross Profit Margin | 10.3% | -0.6 percentage points | | Net Profit Margin | 2.8% | -0.1 percentage points | - Combined revenue from domestic non-telecom operator enterprise market and overseas market exceeded half for the first time, indicating optimized market structure[2] - Application, content, and other services have been the core drivers of revenue growth for consecutive years, benefiting from deepening AI applications and accelerated digital transformation[2] Chairman's Statement This statement provides an overview of the Group's H1 2025 performance, strategic initiatives, and future outlook, emphasizing growth, innovation, and sustainability Business Performance Overview This chapter details the Group's overall operating performance in H1 2025, including double-digit growth in revenue and profit, and the steady development of its three business segments and three client markets. Despite facing pressure from declining capital expenditure from traditional clients, the Group achieved optimized revenue structure and rapid growth in emerging markets through diversified strategies and capability advantages Financial Performance This section details financial performance, including key metrics like operating revenue, net profit, and margins Financial Performance Metrics | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | :--- | | Operating Revenue | 76,939 | 74,412 | +3.4% | | Service Revenue | 74,981 | N/A | +2.9% | | Operating Gross Profit | 7,888 | 8,116 | -2.8% | | Net Profit | 2,129 | 2,125 | +0.2% | | Gross Profit Margin | 10.3% | 10.9% | -0.6 percentage points | | Net Profit Margin | 2.8% | 2.9% | -0.1 percentage points | | Return on Equity (ROE) | 9.3% (annualized) | N/A | N/A | | Basic Earnings Per Share | 0.307 RMB | 0.307 RMB | 0% | Business Segment Development This section details business segment development, highlighting revenue contributions and growth drivers across different service areas Revenue by Business Segment | Business Segment | H1 2025 Revenue (RMB millions) | YoY Growth | Share of Operating Revenue | | :--- | :--- | :--- | :--- | | Telecom Infrastructure Services | 38,272 | 1.6% | 49.7% | | Business Process Outsourcing Services | 22,383 | 1.0% | 29.1% | | Application, Content and Other Services | 16,284 | 11.7% | 21.2% | - Application, content, and other services revenue maintained rapid growth, serving as the core driver for revenue growth for consecutive years, benefiting from deepening AI application scenarios and accelerated digital transformation across various industries[6] Client Market Performance This section details client market performance, analyzing revenue trends and strategic initiatives across domestic telecom, non-telecom, and overseas markets Revenue by Client Market | Client Market | H1 2025 Revenue (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | | Domestic Telecom Operator Market | 38,203 | -4.6% | | Domestic Non-Telecom Operator Enterprise Market | 36,585 | +12.9% | | Overseas Market | 2,151 | +8.7% | - Domestic telecom operator market stabilized traditional business and expanded strategic emerging businesses through a "CAPEX+OPEX+Smart Application" strategy to counter declining capital expenditure challenges[7] - Domestic non-telecom operator enterprise market achieved double-digit growth by seizing opportunities in computing power infrastructure construction, leveraging "Consultant+Employee+Housekeeper" service models and "Platform+Software+Service" capabilities[9] - Overseas market showed good development by integrating into the "Belt and Road" initiative, expanding into high-value projects and new sectors like industrial digitalization and new energy services[9] Strategic Emerging Business Development In H1, the Group continued to deeply cultivate strategic emerging industries such as digital infrastructure, green and low-carbon, smart cities, and emergency security, focusing on key sectors. Strategic new businesses maintained rapid growth, with new contract value accounting for over 40%, injecting new momentum into the enterprise's high-quality development Digital Infrastructure Sector This section details digital infrastructure sector initiatives, focusing on seizing AI-driven computing power opportunities and undertaking major construction projects - Seizing the computing power market opportunities driven by AI technological transformation and promoting the evolution and upgrade of new information infrastructure[12] - Undertaking the construction of intelligent computing centers, data center renovations, cloud platforms, and 5G+ projects in multiple locations domestically and internationally, deeply serving government, internet, finance, energy, and other industry clients[12] - In H1, new contract value in this sector maintained rapid growth[12] Green and Low-Carbon Sector This section details green and low-carbon sector efforts, adopting a dual-driven model of green energy and energy-saving technologies to create benchmark projects - Adopting a "green energy + energy-saving technology" dual-driven model to create benchmark projects such as low-carbon intelligent computing centers, 5G green base stations, green and low-carbon industrial parks, and virtual power plant platforms[13] - Participating in the compilation of the first national standard for green data center evaluation, 'Green Data Center Evaluation', enhancing industry influence[13] Smart City Sector This section details smart city sector initiatives, leveraging full-chain service capabilities and integrating digital technologies to build new urban paradigms - Seizing opportunities in new urban infrastructure construction and leveraging full-chain service capabilities including "planning + design + implementation + delivery + operation"[14] - Deeply integrating digital technologies such as AI, IoT, and big data to create a new paradigm for livable, resilient, and smart cities[14] - In H1, new contract values in digital government, smart education, smart water conservancy, smart cultural tourism, smart healthcare, and enterprise digital transformation all achieved rapid growth[14] Emergency and Security Sector This section details emergency and security sector advancements, utilizing large AI models to empower intelligent emergency management and developing independently controllable cybersecurity products - Leveraging large AI models to empower clients in key sectors such as mining, chemical, water conservancy, and fire safety to achieve intelligent transformation of emergency management[15] - Developing multiple independently controllable cybersecurity products, undertaking major national cybersecurity projects, and providing integrated security services[15] Technological Innovation and New Quality Productive Forces In H1, the Group strengthened its technology innovation drive, targeted cutting-edge fields, concentrated R&D efforts, built differentiated core competitiveness, deepened industrial cooperation, and accelerated the cultivation of new quality productive forces Leading with Technological Innovation This section details leading with technological innovation, forming a product innovation library for emerging technologies and accumulating significant intellectual property - Forming a product innovation library of nearly a hundred products for emerging technologies such as AI, security, and low-carbon solutions[17] - Accumulated over 4,100 authorized patents, over 10,900 software copyrights, and participated in 48 national standards[17] AI Business Layout This section details AI business layout, implementing the 'AI+' initiative across integrated innovation, scenario cultivation, and ecosystem collaboration - Fully implementing the "AI+" initiative, strategically deploying AI business from three aspects: integrated innovation, deep scenario cultivation, and ecosystem collaboration[18] - Possessing an AI delivery team of over 1,400 people, providing customized services such as intelligent computing infrastructure construction and operation, data governance, and scenario-based application R&D[18] - In H1, new contract value in the AI sector exceeded RMB 1.3 billion, covering over 200 clients[18] Scientific and Technological Innovation System Reform This section details scientific and technological innovation system reform, optimizing R&D mechanisms, tackling cutting-edge technologies, and enhancing talent development - Optimizing R&D intensive operation and promotion mechanisms and achievement transformation mechanisms to improve the efficiency of R&D resource utilization[19] - Intensifying efforts to tackle cutting-edge technology areas with urgent customer needs and huge market potential, creating industry-leading flagship products[19] - Improving mechanisms for cultivating, introducing, and selecting scientific and technological innovation experts, and adopting multi-dimensional incentive methods to stimulate innovation and development vitality[19] Corporate Social Responsibility and Governance The Group actively fulfills its corporate mission, implements green development concepts, steadily advances the 'Dual Carbon' strategy, and promotes social green transformation through energy conservation, emission reduction, and green services. Concurrently, the Group adheres to a people-centric approach, actively participates in disaster relief, major event support, and rural revitalization, while continuously enhancing corporate governance capabilities, improving risk and internal control management systems, and receiving multiple corporate governance awards from the capital market Environmental and Social Responsibility This section details environmental and social responsibility, implementing the 'Dual Carbon' strategy and actively participating in disaster relief and community support - Implementing the national "Dual Carbon" strategy, steadily advancing green and low-carbon development plans, and building a green ecosystem through energy conservation, emission reduction, and green services[20] - Completed construction and communication support tasks related to disaster relief, major events, and rural revitalization, becoming a solid support for emergency rescue and livelihood security[21] Corporate Governance This section details corporate governance, continuously enhancing governance capabilities, improving risk management, and receiving multiple capital market awards - Continuously enhancing corporate governance capabilities, improving risk and internal control management systems, and strengthening corporate development momentum and security guarantees[22] - Awarded 'Most Respected Company', 'Best CFO', 'Best Investor Relations Company', 'Best ESG', and 'Best Company Board' in the Extel "2025 Asia's Best Management Team" rankings[22] - Awarded 'Asia Sustainable Development Award', 'Asia's Best CFO', and 'Best Investor Relations Company' in the "15th Asian Excellence Award" by Corporate Governance Asia[22] Future Outlook and Strategy The Group will firmly position itself as a "new-generation integrated smart service provider", fully embrace AI, deepen reforms, and develop new quality productive forces. By advancing the "AI+" initiative, empowering corporate governance, and strengthening service capabilities, the Group aims to build a distinctive technology-driven enterprise with AI at its core, driving comprehensive smart services, and actively expanding into emerging markets to achieve high-quality development and high-level security - Firmly positioning as a "new-generation integrated smart service provider", fully embracing AI, further deepening comprehensive reforms, and developing new quality productive forces tailored to local conditions[23] - Deeply advancing the "AI+" initiative, internally empowering corporate governance, externally strengthening service capabilities, and building a distinctive technology-driven enterprise with AI at its core, driving comprehensive smart services[23] - Actively expanding into emerging markets, focusing on intelligent computing centers, smart operations and maintenance, new energy, and other fields, continuously innovating business models, and creating industry-leading products[23] Group Performance This section presents the Group's core consolidated financial statements for H1 2025, including income, comprehensive income, and financial position, providing an overview of key financial data Consolidated Financial Statements This section presents the Group's core consolidated financial statements for H1 2025, including income, comprehensive income, and financial position, providing an overview of key financial data Consolidated Income Statement This statement provides a detailed breakdown of the Group's revenues, costs, and profits for H1 2025 Consolidated Income Statement | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Operating Revenue | 76,939,251 | 74,411,953 | | Operating Costs | (69,051,641) | (66,296,374) | | Gross Profit | 7,887,610 | 8,115,579 | | Other Income | 839,173 | 879,847 | | Selling, General and Administrative Expenses | (6,181,999) | (6,541,835) | | Finance Costs | (43,911) | (59,026) | | Profit Before Tax | 2,440,726 | 2,405,105 | | Income Tax | (234,123) | (207,155) | | Profit for the Period | 2,206,603 | 2,197,950 | | Profit Attributable to Equity Holders of the Company | 2,128,715 | 2,124,984 | | Basic Earnings Per Share (RMB) | 0.307 | 0.307 | Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's profit for the period and other comprehensive income components for H1 2025 Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period | 2,206,603 | 2,197,950 | | Equity instruments measured at fair value through other comprehensive income: Net change in fair value reserve | 394,782 | 501,997 | | Exchange differences on translation of financial statements of subsidiaries outside Mainland China | 16,089 | (14,030) | | Total Comprehensive Income for the Period | 2,617,474 | 2,685,917 | | Total comprehensive income attributable to equity holders of the Company | 2,539,573 | 2,612,916 | Consolidated Statement of Financial Position This statement outlines the Group's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Consolidated Statement of Financial Position | Metric | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 35,007,293 | 31,944,591 | +9.6% | | Total Current Assets | 103,240,919 | 104,672,985 | -1.4% | | Total Assets | 138,248,212 | 136,617,576 | +1.19% | | Total Current Liabilities | 88,449,062 | 87,954,679 | +0.56% | | Total Non-current Liabilities | 2,149,252 | 2,049,745 | +4.85% | | Total Liabilities | 90,598,314 | 90,004,424 | +0.66% | | Equity Attributable to Equity Holders of the Company | 46,460,941 | 45,435,871 | +2.26% | | Total Equity | 47,649,898 | 46,613,152 | +2.22% | - Term deposits with financial institutions for over one year increased significantly from RMB 12,170,901 thousand at the end of 2024 to RMB 15,163,324 thousand as of June 30, 2025[30] - The asset-liability ratio slightly decreased from 65.88% at the end of 2024 to 65.54% as of June 30, 2025[30][31][64] Notes to the Financial Statements This section provides detailed notes to the consolidated financial statements, covering the basis of preparation, changes in accounting policies, segment reporting, and the specific composition and changes of various revenues, costs, expenses, assets, and liabilities, offering essential background information for understanding the financial data Basis of Preparation This section details the basis of preparation for the interim financial information, adhering to International Accounting Standard 34 and HKEX Listing Rules - Interim financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and complies with the disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[32] Changes in Accounting Policies This section details changes in accounting policies, noting the first-time application of revised IAS 21 with no material impact on interim financial information - The first-time application of the revised International Accounting Standard 21 'The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability' had no material impact on the interim financial information[33] Segment Reporting This section details segment reporting, indicating the Group primarily operates in one business segment providing integrated smart solutions - The Group primarily operates in one business segment, providing integrated smart solutions for the informatization and digitalization sectors[35] Details of Operating Revenue This section details operating revenue, providing a breakdown by business nature and highlighting contributions from major clients and overseas markets Operating Revenue by Business Nature | Business Nature | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Telecom Infrastructure Services | 38,272,609 | 37,666,188 | | Business Process Outsourcing Services | 22,382,937 | 22,162,474 | | Application, Content and Other Services | 16,283,705 | 14,583,291 | | Total Operating Revenue | 76,939,251 | 74,411,953 | - Revenue contributions from China Telecom Group and China Mobile Group decreased from 36.4% and 9.4% to 33.6% and 8.3% respectively[37] - Operating revenue from regions outside Mainland China was RMB 2,151 million, representing a YoY increase of 8.7%[37] Details of Operating Costs This section details operating costs, presenting a breakdown by cost item and explaining changes in direct staff costs and material costs Operating Cost Breakdown | Cost Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Subcontracting Costs | 42,932,050 | 41,233,277 | | Material Costs | 13,341,575 | 12,336,999 | | Direct Staff Costs | 3,707,393 | 3,807,665 | | Total Operating Costs | 69,051,641 | 66,296,374 | - Direct staff costs decreased by 2.6%, reflecting the Group's effective control over total employment and optimization of its employment structure[38] - Material costs increased by 8.1%, primarily due to the Group's optimized business model and proactive engagement in large projects under the general contracting model[38] Details of Other Income This section details other income, providing a breakdown of various income streams for H1 2025 and H1 2024 Other Income Breakdown | Other Income Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest Income | 270,299 | 325,641 | | Dividend Income | 211,712 | 191,435 | | Management Fee Income | 166,948 | 165,747 | | Government Grants | 93,034 | 87,807 | | Additional Deduction for Input VAT | 2,750 | 29,241 | | Total Other Income | 839,173 | 879,847 | Details of Finance Costs This section details finance costs, presenting a breakdown of interest expenses on bank loans and lease liabilities for H1 2025 and H1 2024 Finance Cost Breakdown | Finance Cost Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest on Bank and Other Borrowings | 20,419 | 31,503 | | Interest on Lease Liabilities | 23,492 | 27,523 | | Total Finance Costs | 43,911 | 59,026 | Details of Profit Before Tax This section details profit before tax, outlining key components such as staff costs, amortization, depreciation, and impairment losses Profit Before Tax Components | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Staff Costs | 7,987,519 | 8,417,643 | | Amortization | 99,633 | 98,587 | | Depreciation | 709,824 | 729,391 | | Impairment Losses on Inventories and Reversals, Net | 27,729 | 18,604 | | Impairment Losses on Trade and Other Receivables, Contract Assets and Others, and Reversals, Net | 161,577 | 118,914 | - Selling and marketing expenses, administrative expenses, research and development costs, and other expenses either decreased or remained stable[41] Details of Income Tax This section details income tax, presenting the calculation of income tax expense and highlighting tax concessions and R&D deductions Income Tax Calculation | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit Before Tax | 2,440,726 | 2,405,105 | | Expected Income Tax Expense at Statutory Tax Rate of 25% | 610,182 | 601,276 | | Tax Concessions and Tax Rate Differences for Subsidiaries' Profits | (128,031) | (100,644) | | Additional Deduction for R&D Expenses | (239,848) | (292,495) | | Income Tax | 234,123 | 207,155 | - Subsidiaries qualified as high-tech enterprises, those in the Western Development region, and small-profit enterprises are eligible for preferential income tax rates of 15%, 15%, and 20% respectively[44] - Certain R&D costs are eligible for an additional 100% deduction[44] Earnings Per Share This section details earnings per share, presenting basic earnings per share and noting the absence of dilutive ordinary shares Earnings Per Share Details | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit Attributable to Equity Holders of the Company (RMB thousands) | 2,128,715 | 2,124,984 | | Number of Ordinary Shares Issued (thousand shares) | 6,926,018 | 6,926,018 | | Basic Earnings Per Share (RMB) | 0.307 | 0.307 | - As there were no potentially dilutive ordinary shares issued during either period, diluted earnings per share are the same as basic earnings per share[46] Other Comprehensive Income This section details other comprehensive income, outlining components such as fair value changes of equity instruments and exchange differences Other Comprehensive Income Components | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Fair Value Changes of Equity Instruments Measured at Fair Value Through Other Comprehensive Income Recognized in the Period | 526,396 | 670,820 | | Net Deferred Tax Recognized in Other Comprehensive Income | (131,614) | (168,823) | | Exchange Differences on Translation of Financial Statements | 16,089 | (14,030) | | Other Comprehensive Income for the Period | 410,871 | 487,967 | Dividend Policy This section details dividend policy, stating the Board's resolution not to declare an interim dividend and providing information on final dividends - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[48] Dividend Information | Dividend Type | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Final Dividend (per share) Pertaining to Previous Financial Year, Approved in Current Period | 0.2187 RMB | 0.2174 RMB | | Total Final Dividend | 1,514,720 | 1,505,716 | Trade and Bills Receivables This section details trade and bills receivables, presenting their net amount and aging profile as of June 30, 2025 Trade and Bills Receivables, Net | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bills Receivable | 869,866 | 1,410,736 | | Trade Receivables | 31,479,179 | 26,509,784 | | Provision for Credit Losses | (2,760,843) | (2,624,315) | | Net Amount | 29,588,202 | 25,296,205 | - Over 78% of trade and bills receivables (net of provision for credit losses) have an aging profile of less than one year[51] Contract Assets This section details contract assets, presenting their net amount by business type and explaining their nature as unbilled conditional receivables Contract Assets, Net | Business Type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Telecom Infrastructure Services | 36,472,255 | 32,552,493 | | Business Process Outsourcing Services | 1,610,953 | 1,469,655 | | Application, Content and Other Services | 5,015,331 | 4,271,528 | | Provision for Credit Losses | (538,668) | (525,867) | | Net Amount | 42,559,871 | 37,767,809 | - Contract assets represent unbilled amounts receivable for construction, design, and other services, where the right to receive payment is conditional[52] Trade and Bills Payables This section details trade and bills payables, presenting their total amount and aging profile as of June 30, 2025 Trade and Bills Payables | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 62,688,302 | 59,837,140 | | Bills Payable | 4,889,247 | 6,057,749 | | Total | 67,577,549 | 65,894,889 | - Over 96% of trade and bills payables have an aging profile of less than one year[53] Contract Liabilities This section details contract liabilities, presenting their total amount by business type and explaining their nature as customer prepayments Contract Liabilities | Business Type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Telecom Infrastructure Services | 4,951,610 | 6,700,059 | | Other Services | 2,195,968 | 2,489,991 | | Total | 7,147,578 | 9,190,050 | - Contract liabilities represent customer prepayments received by the Group before fulfilling performance obligations, recognized until the completion of related contractual obligations[54] Financial Performance Analysis This section provides a detailed analysis of the Group's financial performance in H1 2025, covering operating revenue, costs, gross profit, expenses, net profit, cash flow, and balance sheet Operating Revenue Analysis The Group's operating revenue increased by 3.4% YoY in H1 2025, with service revenue growing by 2.9%. Revenue growth was primarily driven by the advancement of the Digital China strategy, opportunities in computing network construction, and deepening AI application scenarios, leading to rapid growth in application, content, and other services revenue Revenue Analysis by Business Segment This section details revenue by business segment, highlighting contributions and growth drivers across different service areas Revenue by Business Segment | Business Segment | H1 2025 Revenue (RMB millions) | YoY Growth | | :--- | :--- | :--- | | Telecom Infrastructure Services | 38,272 | 1.6% | | Business Process Outsourcing Services | 22,383 | 1.0% | | Application, Content and Other Services | 16,284 | 11.7% | - Application, content, and other services revenue maintained rapid growth, serving as the core driver for revenue growth for consecutive years, benefiting from deepening AI application scenarios and accelerated digital transformation across various industries[56] Revenue Analysis by Market Segment This section details revenue by market segment, analyzing trends and strategic initiatives across domestic telecom, non-telecom, and overseas markets Revenue by Client Market | Client Market | H1 2025 Revenue (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | | Domestic Telecom Operator Market | 38,203 | -4.6% | | Domestic Non-Telecom Operator Enterprise Market | 36,585 | +12.9% | | Overseas Market | 2,151 | +8.7% | - Revenue from the domestic non-telecom operator enterprise market achieved rapid growth, attributed to the Group's integrated service capabilities and focus on strategic emerging industries[58] - Overseas market operating revenue showed stable growth by integrating into the "Belt and Road" initiative, expanding into high-value projects and new sectors[58] Operating Cost Analysis The Group's operating costs increased by 4.2% YoY in H1 2025. Direct staff costs decreased by 2.6%, subcontracting costs increased by 4.1%, and material costs increased by 8.1%. Changes in cost structure reflect the Group's strategic adjustments in employment optimization, subcontracting management, and the general contracting model Operating Cost Breakdown | Cost Item | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | :--- | | Operating Costs | 69,051 | 66,296 | +4.2% | | Direct Staff Costs | 3,707 | 3,808 | -2.6% | | Subcontracting Costs | 42,932 | 41,233 | +4.1% | | Material Costs | 13,341 | 12,337 | +8.1% | - The increase in material costs is primarily due to the Group's optimized business model, actively undertaking large projects under the general contracting model[59] Gross Profit Analysis The Group's gross profit decreased by 2.8% YoY to RMB 7,888 million in H1 2025, with gross profit margin declining by 0.6 percentage points to 10.3%, primarily due to factors such as decreased client capital expenditure. The Group is working to improve gross profit margin by increasing the proportion of high-value businesses, optimizing R&D mechanisms, and strengthening cost control Gross Profit and Margin | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Decrease | | :--- | :--- | :--- | :--- | | Gross Profit | 7,888 | 8,116 | -2.8% | | Gross Profit Margin | 10.3% | 10.9% | -0.6 percentage points | - The decline in gross profit margin was mainly influenced by factors such as decreased capital expenditure from clients[60] - The Group aims to improve gross profit margin by selecting high-margin projects, increasing the proportion of high-value businesses, optimizing R&D mechanisms, and strengthening project management and cost control[60] Selling, General and Administrative Expenses Analysis The Group's selling, general, and administrative expenses decreased by 5.5% YoY to RMB 6,182 million in H1 2025, with its share of operating revenue decreasing by 0.8 percentage points to 8.0%, reflecting the Group's effective cost control and precise investment in R&D resources Selling, General and Administrative Expenses | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Decrease | | :--- | :--- | :--- | :--- | | Selling, General and Administrative Expenses | 6,182 | 6,542 | -5.5% | | Percentage of Operating Revenue | 8.0% | 8.8% | -0.8 percentage points | - The Group actively controls selling, general, and administrative expenses, strictly implements quality and efficiency improvement measures, and precisely invests in R&D capabilities related to AI and digital infrastructure[61] Profit Attributable to Equity Holders of the Company Analysis The Group's profit attributable to equity holders of the Company was RMB 2,129 million in H1 2025, representing a YoY increase of 0.2%, maintaining stable growth Profit Attributable to Equity Holders of the Company | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Growth | | :--- | :--- | :--- | :--- | | Profit Attributable to Equity Holders of the Company | 2,129 | 2,125 | +0.2% | Cash Flow Analysis The Group's net cash outflow was RMB 8,073 million in H1 2025, an improvement compared to RMB 9,123 million in the same period last year. The Group will continue to strengthen working capital management to maintain a healthy cash flow level Net Cash Flow | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Net Cash Flow | -8,073 | -9,123 | Outflow decreased by 1,050 | - The Group consistently prioritizes working capital management and will continue to strengthen related efforts to maintain a healthy cash flow level[63] Assets and Liabilities Analysis As of June 30, 2025, the Group's total assets and total liabilities both increased, but the asset-liability ratio slightly decreased to 65.5%, indicating a stable financial position Assets, Liabilities and Ratios | Metric | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 138,248 | 136,618 | +1,630 | | Total Liabilities | 90,598 | 90,004 | +594 | | Asset-Liability Ratio | 65.5% | 65.88% | -0.38 percentage points | Corporate Governance and Other Disclosures This section outlines the Group's adherence to corporate governance principles, compliance with regulatory codes, and other relevant disclosures for H1 2025 Audit Committee The Audit Committee has reviewed the Group's accounting principles and practices with management and discussed matters related to risk management, internal control, and financial reporting, including the H1 2025 interim results - The Audit Committee has reviewed the Group's accounting principles and practices with management and discussed matters related to risk management, internal control, and financial reporting, including the H1 2025 interim results[65] Compliance with Corporate Governance Code The Board confirms that for the six months ended June 30, 2025, the Company has complied with all code provisions set out in Appendix C1 'Corporate Governance Code' of the Listing Rules - The Board confirms that for the six months ended June 30, 2025, the Company has complied with all code provisions set out in Appendix C1 'Corporate Governance Code' of the Listing Rules[66] Compliance with Model Code for Securities Transactions by Directors Following specific inquiries by the Company, each Director and Supervisor confirmed compliance with the 'Model Code for Securities Transactions by Directors of Listed Issuers' as set out in Appendix C3 of the Listing Rules for dealings in the Company's securities during the six months ended June 30, 2025 - Each Director and Supervisor confirmed that for the six months ended June 30, 2025, they have complied with the 'Model Code for Securities Transactions by Directors of Listed Issuers' as set out in Appendix C3 of the Listing Rules regarding dealings in the Company's securities[67] Compliance with Appendix D2 of Listing Rules Except for publicly announced disclosures, the Company confirms that there have been no material changes to the existing company information regarding matters listed in paragraph 32 of Appendix D2 of the Listing Rules compared to the information disclosed in the 2024 Annual Report - The Company confirms that there have been no material changes to the existing company information regarding matters listed in paragraph 32 of Appendix D2 of the Listing Rules compared to the information disclosed in the 2024 Annual Report[68] Dealings in 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[69] Interim Report Publication The interim report for the six months ended June 30, 2025, will be published later on the HKEXnews website and the Company's website, and dispatched to shareholders who request it - The interim report will be published later on the HKEXnews website (www.hkexnews.hk) and the **Company's website (www.chinaccs.com.hk)**[70](index=70&type=chunk) Forward-Looking Statements The report reminds readers that forward-looking statements are subject to various risks, uncertainties, and assumptions, including changes in macroeconomic environment, natural disasters, industry growth, regulatory changes, and execution of business strategies, and actual results may differ materially, with no commitment from the Company to update these statements - Forward-looking statements are subject to various risks, uncertainties, and assumptions, including changes in macroeconomic environment, natural disasters, industry growth, regulatory changes, and execution of business strategies[71] - The Company's actual results may differ materially from those described in forward-looking statements, and the Company undertakes no obligation to update these statements[71]