雨润食品(01068) - 2025 - 中期业绩

Company Information and Report Statement Report Statement and Company Overview This report presents the unaudited condensed consolidated interim results of China Yurun Food Group Limited for the six months ended June 30, 2025, which has been reviewed by the company's Audit Committee - This report presents the unaudited condensed consolidated interim results of China Yurun Food Group Limited for the six months ended June 30, 2025[2][3] - The report has been reviewed by the company's Audit Committee[3] Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the company experienced a significant decline in revenue, with both loss for the period and total comprehensive income expanding Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 255,353 | 538,975 | -52.6% | | Cost of sales | (196,967) | (463,472) | -57.5% | | Gross profit | 58,386 | 75,503 | -22.7% | | Results from operating activities | 3,755 | 11,606 | -67.6% | | Loss before income tax | (15,203) | (13,236) | +14.9% | | Loss for the period | (15,207) | (13,191) | +15.3% | | Loss attributable to owners of the Company | (10,803) | (10,069) | +7.3% | | Total comprehensive income for the period | (21,591) | (48,120) | -55.1% | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's non-current assets slightly decreased, current assets declined, and both net current liabilities and net liabilities expanded, indicating continued financial pressure Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 234,976 | 238,720 | -1.6% | | Current assets | 386,352 | 406,233 | -4.9% | | Current liabilities | 1,288,795 | 1,278,594 | +0.8% | | Net current liabilities | (902,443) | (872,361) | +3.4% | | Net liabilities | (729,187) | (707,596) | +3.0% | | Cash and cash equivalents | 20,694 | 40,983 | -49.5% | | Bank borrowings (total) | 437,710 | 443,611 | -1.3% | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, operating, investing, and financing activities all showed net cash outflows, leading to a significant decrease in cash and cash equivalents Condensed Consolidated Statement of Cash Flows Key Data | Indicator | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (5,236) | (33) | | Net cash used in investing activities | (312) | (5,882) | | Net cash used in financing activities | (13,930) | (1,469) | | Net decrease in cash and cash equivalents | (19,478) | (7,384) | | Cash and cash equivalents at June 30 | 20,694 | 31,666 | Notes to the Financial Statements Basis of Preparation and Going Concern The company's interim financial report is prepared in accordance with International Accounting Standards, but faces significant going concern uncertainties, including net losses, expanded net current liabilities and net liabilities, and substantial overdue and defaulted bank borrowings; management has proposed several plans to alleviate liquidity pressure, but the effectiveness of going concern depends on the successful implementation of these plans - The Group recorded a net loss of HKD 15,207,000, with net current liabilities and net liabilities reaching HKD 902,443,000 and HKD 729,187,000 respectively[9] - Certain bank borrowings of HKD 348,827,000 along with accrued interest of HKD 271,858,000 are overdue, and loan covenants have not been met, leading to legal proceedings initiated by banks[10] - Management plans to improve the financial position by negotiating updated financing terms with banks, seeking consolidated restructuring for final settlement, and obtaining additional new financing, but significant uncertainties exist regarding going concern[11][12] Changes in Accounting Policies The adoption of new or revised International Financial Reporting Standards in the current period had no significant impact on the interim financial report - The adoption of new or revised International Financial Reporting Standards had no significant impact on the interim financial report[13] Revenue and Segment Information The Group's main businesses are divided into chilled and frozen meat and processed meat products segments; in the first half of 2025, external revenue from both segments significantly decreased, leading to a 52.6% year-on-year reduction in total revenue - The Group's reportable segment information is divided into chilled and frozen meat and processed meat products[14] Segment Results External revenue from both the chilled and frozen meat segment and the processed meat products segment significantly declined, leading to a substantial decrease in total reportable segment revenue and results Segment Results Key Data | Segment | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Chilled and frozen meat external revenue | 69,781 | 312,426 | -77.7% | | Processed meat products external revenue | 185,572 | 226,549 | -18.1% | | Total reportable segment revenue | 255,353 | 538,975 | -52.6% | | Reportable segment results | 9,812 | 17,679 | -44.5% | Reportable Segment Revenue and Loss The Group's consolidated revenue significantly decreased year-on-year, and the consolidated loss for the period expanded, primarily due to net finance costs and unallocated head office and corporate expenses Reportable Segment Revenue and Loss Key Data | Indicator | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Consolidated revenue | 255,353 | 538,975 | | Reportable segment profit before tax | 9,812 | 17,679 | | Net finance costs | (18,958) | (24,842) | | Income tax (expense) / credit | (4) | 45 | | Unallocated head office and corporate expenses | (6,057) | (6,073) | | Consolidated loss for the period | (15,207) | (13,191) | Other Net (Losses) / Income In the first half of 2025, the Group shifted from net income to net loss, primarily due to an increase in other expenses Other Net (Losses) / Income Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Government grants | – | 468 | | Gain on disposal of property, plant and equipment | – | 2,031 | | Rental income | 132 | 56 | | Sales of scrap materials | 135 | 235 | | Other expenses | (2,431) | (981) | | Other net (losses) / income | (2,164) | 1,809 | Loss Before Income Tax Loss before income tax is primarily affected by net finance costs, staff costs, and cost of inventories - Loss before income tax has been arrived at after charging / (crediting) net finance costs, staff costs, and other items[16] Net Finance Costs Net finance costs primarily consist of interest on bank borrowings, which decreased in the current period, but a significant amount of bank borrowings remains overdue and is subject to a restructuring plan Net Finance Costs Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Interest on bank borrowings | 18,936 | 23,836 | | Interest on lease liabilities | 18 | 1,038 | | Bank charges | 30 | 56 | | Net foreign exchange (gain) / loss | (11) | 57 | | Interest income from bank deposits | (15) | (145) | | Net finance costs | 18,958 | 24,842 | - As of June 30, 2025, bank borrowings of HKD 348,827,000 and accrued interest of HKD 271,858,000 are overdue and have been included in a consolidated restructuring plan[16][17] - Chinese courts have issued judgments for bank borrowings with a principal of HKD 327,697,000, requiring the subsidiary to repay the adjudicated outstanding bank borrowings together with accrued interest totaling HKD 437,726,000[18] Staff Costs Staff costs, primarily comprising salaries, wages, and other benefits, decreased year-on-year in the current period Staff Costs Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 24,230 | 32,421 | | Contributions to defined contribution retirement schemes | 1,469 | 2,276 | | Total | 25,699 | 34,697 | Other Items Other items primarily include cost of inventories, impairment losses on trade receivables, and depreciation and amortization, with significant decreases in cost of inventories and depreciation, but a substantial increase in impairment losses on trade receivables Other Items Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Cost of inventories | 196,967 | 463,472 | | (Reversal of write-down) / write-down of inventories | (49) | 484 | | Impairment losses on trade receivables | 10,109 | 5,245 | | Amortisation of prepaid lease payments | 540 | 995 | | Amortisation of intangible assets | 307 | – | | Depreciation of property, plant and equipment | 8,956 | 14,208 | Income Tax (Expense) / Credit Income tax shifted from a credit to an expense in the current period, mainly due to under-provision in prior years Income Tax (Expense) / Credit Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Current tax credit - current year | – | – | | Under-provision / (over-provision) in prior years | 4 | (45) | | Total income tax expense / (credit) | 4 | (45) | Loss Per Share Basic and diluted loss per share remained flat compared to the same period last year, as the company has no potential ordinary shares Loss Per Share Data | Indicator | Six Months Ended June 30, 2025 (HKD) | Six Months Ended June 30, 2024 (HKD) | | :--- | :--- | :--- | | Basic loss per share | (0.006) | (0.006) | | Diluted loss per share | (0.006) | (0.006) | Basic Loss Per Share Basic loss per share is calculated based on the loss attributable to owners of the Company and the weighted average number of ordinary shares, amounting to HKD 0.006 in the current period - Basic loss per share is calculated based on the loss attributable to owners of the Company of HKD 10,803,000 and the weighted average number of ordinary shares of 1,822,756,000[22] Diluted Loss Per Share Diluted loss per share is equal to basic loss per share as the company has no potential ordinary shares - Diluted loss per share is equal to basic loss per share as the company has no potential ordinary shares[23] Income Tax Rules and Exemptions The Group is not subject to income tax in Bermuda and the British Virgin Islands, has no assessable profits in Hong Kong, and enterprises engaged in primary processing of agricultural products in mainland China are exempt from corporate income tax - The Group is not subject to any income tax in Bermuda and the British Virgin Islands, and has no assessable profits in Hong Kong[24] - Enterprises engaged in primary processing of agricultural products in mainland China are exempt from Chinese corporate income tax, and profits from slaughtering businesses are also exempt[24] Property, Plant and Equipment The recoverable amount of property, plant and equipment was assessed during the period, and no impairment loss was recognized - The Group assessed the recoverable amount of cash-generating units based on value in use, using management-approved five-year financial forecasts[25] - No impairment losses on property, plant and equipment and prepaid lease payments were recognized for the six months ended June 30, 2025 and 2024[25] Trade and Other Receivables As of June 30, 2025, net trade receivables slightly increased, but prepayments and other receivables grew significantly, leading to an increase in total receivables Trade and Other Receivables Details | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Gross trade receivables | 104,045 | 93,010 | +11.9% | | Less: Expected credit losses | (18,149) | (7,997) | +126.9% | | Trade receivables, net | 85,896 | 85,013 | +1.0% | | Deductible VAT | 55,439 | 61,468 | -9.8% | | Deposits and prepayments | 90,461 | 69,603 | +30.0% | | Other receivables | 104,981 | 70,665 | +48.6% | | Total | 336,777 | 286,749 | +17.4% | Trade and Other Payables As of June 30, 2025, total trade payables decreased, but accrued interest and other payables significantly increased, leading to a slight rise in total payables Trade and Other Payables Details | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Gross trade payables | 92,386 | 113,855 | -18.8% | | Customer deposits | 18,670 | 20,322 | -8.1% | | Contract liabilities | 17,465 | 19,465 | -10.3% | | Accrued salaries and welfare | 3,326 | 10,414 | -68.1% | | VAT payable | 67,752 | 64,229 | +5.5% | | Payables for acquisition of property, plant and equipment | 27,647 | 27,229 | +1.5% | | Provision for litigation losses | 64,271 | 63,299 | +1.5% | | Accrued interest | 271,858 | 250,721 | +8.4% | | Other payables and accrued expenses | 348,815 | 338,489 | +3.1% | | Total | 912,190 | 908,023 | +0.5% | Dividends The Board of Directors does not recommend the declaration of an interim dividend for the six months ended June 30, 2025 and 2024 - The Directors do not recommend the declaration of an interim dividend for the six months ended June 30, 2025 and 2024[28] Contingent Liabilities Aside from the bank litigation disclosed in Note 5(a), the Group has no other significant pending or threatened litigation or claims - Aside from the bank litigation disclosed in Note 5(a), the Group is not involved in any other significant litigation or arbitration[29] - Management believes that non-material litigation arising from ordinary business will not have any significant impact on the Group's financial position and results[29] Management Discussion and Analysis Macroeconomic and Industry Review In the first half of 2025, China's economy continued its recovery and improvement, with GDP growing by 5.3% year-on-year, but insufficient consumer willingness led to a 0.1% year-on-year decline in CPI; the hog farming industry faced downward pressure on pork prices, and pork consumption is expected to decline long-term, prompting industry transformation and upgrading - In the first half of 2025, China's GDP grew by 5.3% year-on-year, but insufficient consumer willingness led to a 0.1% year-on-year decline in CPI[31] - The hog farming industry faced significant downward pressure on pork prices, with hog slaughter volume increasing by 0.6% year-on-year, and pork production and sales are expected to decline long-term, necessitating industry transformation and upgrading[31] Business Review In the first half of the year, the Group focused on "Harbin Meat Union" series products, but overall revenue decreased by approximately 52.6% year-on-year due to falling hog prices, a strategic reduction in production at low-profit slaughterhouses, and the expiration of leases for some processed meat product factories - The Group focused on downstream "Harbin Meat Union" series products, adhering to traditional craftsmanship while exploring innovation[32] - Hog slaughter volume increased, market supply was abundant, and insufficient consumer demand led to a 2.2% year-on-year decrease in hog prices[32] - The Group strategically reduced production at low-profit slaughterhouses and experienced the expiration of leases for some processed meat product factories, resulting in an overall revenue decrease of approximately 52.6% year-on-year[34] Product Quality and Research & Development The Group adheres to the "quality first" principle, strictly controlling every aspect from raw material procurement to sales, ensuring product quality stability and safety - The Group consistently adheres to the "quality first" principle, strictly controlling every aspect from raw material procurement to sales[33] - Ensuring product quality stability and consistency to provide consumers with high-quality, safe, and reliable food[33] Sales and Distribution Chilled meat and low-temperature processed meat products are the main sources of income; chilled meat sales decreased by 80.1% year-on-year, while low-temperature processed meat product sales increased by 20.7% year-on-year, significantly increasing their proportion of total revenue Sales and Distribution Key Data | Product Category | H1 2025 Sales (HKD) | H1 2024 Sales (HKD) | Y-o-Y Change | % of Total Revenue (2025) | % of Total Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | | Chilled meat | HKD 54 million | HKD 270 million | -80.1% | 21% | 50% | | Low-temperature processed meat products | HKD 185 million | HKD 154 million | +20.7% | 73% | 28% | Production Facilities and Capacity As of June 30, 2025, the Group's annual production capacity for upstream slaughtering and downstream processed meat products remained consistent with December 31, 2024 - The Group's annual production capacity for upstream slaughtering and downstream processed meat products is approximately 2.35 million heads and 20,000 tons respectively, consistent with December 31, 2024[35] Financial Review and Key Performance Indicators The Group's revenue significantly decreased in the first half of the year, but by focusing on higher-margin downstream businesses, the overall gross profit margin improved; however, the loss attributable to owners of the Company still expanded Financial Review and Key Performance Indicators Overview | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 255 million | HKD 539 million | -52.6% | | Loss attributable to owners | HKD 11 million | HKD 10 million | +10.0% | | Basic and diluted loss per share | HKD 0.006 | HKD 0.006 | 0% | Revenue The Group's overall revenue decreased by approximately 52.6% year-on-year, primarily due to a significant decline in upstream business sales revenue, while downstream processed meat product business revenue also decreased - The Group's overall revenue decreased by approximately 52.6% year-on-year[34][36] Chilled and Frozen Meat Overall sales revenue from upstream business significantly decreased by 77.7%, with chilled meat sales decreasing by 80.1% and frozen meat sales decreasing by 61.9% Chilled and Frozen Meat Sales Data | Product Category | H1 2025 Sales (HKD) | H1 2024 Sales (HKD) | Y-o-Y Change | % of Upstream Total Revenue (2025) | % of Upstream Total Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | | Upstream business total sales revenue | HKD 70 million | HKD 312 million | -77.7% | - | - | | Chilled meat | HKD 54 million | HKD 270 million | -80.1% | 77% | 86% | | Frozen meat | HKD 16 million | HKD 42 million | -61.9% | 23% | 14% | Processed Meat Products Sales of processed meat products decreased by 18.1% year-on-year, with low-temperature processed meat product revenue increasing by 20.7%, but high-temperature processed meat products having no revenue due to lease expiration Processed Meat Products Sales Data | Product Category | H1 2025 Sales (HKD) | H1 2024 Sales (HKD) | Y-o-Y Change | % of Total Revenue (2025) | % of Total Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | | Processed meat products total sales | HKD 185 million | HKD 227 million | -18.1% | - | - | | Low-temperature processed meat products | HKD 185 million | HKD 154 million | +20.7% | 73% | 28% | | High-temperature processed meat products | None | HKD 73 million | -100% | 0% | - | Gross Profit and Gross Profit Margin The Group's overall gross profit decreased by 22.7% year-on-year, but by focusing on high-margin downstream businesses, the overall gross profit margin increased from 14.0% to 22.9%; upstream business gross profit margin slightly increased, while downstream business gross profit margin decreased due to increased raw material costs Gross Profit and Gross Profit Margin Data | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Overall gross profit (HKD) | HKD 58 million | HKD 76 million | -22.7% | | Overall gross profit margin | 22.9% | 14.0% | +8.9 percentage points | | Upstream overall gross profit margin | 1.5% | 1.4% | +0.1 percentage points | | Chilled meat gross profit margin | 2.5% | 2.2% | +0.3 percentage points | | Frozen meat gross profit margin | -2.2% | -3.6% | +1.4 percentage points | | Downstream overall gross profit margin | 30.9% | 31.4% | -0.5 percentage points | | Low-temperature processed meat products gross profit margin | 30.9% | 37.2% | -6.3 percentage points | Other Net Losses / Income The Group shifted from net income to a net loss of approximately HKD 2.2 million during the review period Other Net Losses / Income Data | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | | :--- | :--- | :--- | | Other net losses / income | (HKD 2.2 million) | HKD 1.8 million | Operating Expenses Operating expenses decreased by 20.1% year-on-year, primarily due to lower direct costs resulting from reduced sales volume, but their proportion of revenue increased Operating Expenses Data | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | Y-o-Y Change | % of Revenue (2025) | % of Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating expenses | HKD 52 million | HKD 66 million | -20.1% | 20.5% | 12.2% | Operating Results The Group's operating profit significantly decreased by 66.7% year-on-year Operating Results Data | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Operating profit | HKD 4 million | HKD 12 million | -66.7% | Net Finance Costs Net finance costs decreased by 23.7% year-on-year, primarily due to a lower interest rate on a bank borrowing and no longer accruing overdue interest and penalties Net Finance Costs Data | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Net finance costs | HKD 19 million | HKD 25 million | -23.7% | - The decrease in net finance costs was primarily due to a lower interest rate on a bank borrowing under a new agreement, and no longer needing to accrue overdue interest and penalties[43] Income Tax Income tax shifted from a credit to an expense during the review period Income Tax Data | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | | :--- | :--- | :--- | | Income tax expense / (credit) | HKD 4 thousand | (HKD 50 thousand) | Loss Attributable to Owners of the Company Loss attributable to owners of the Company expanded by 10% year-on-year Loss Attributable to Owners of the Company Data | Indicator | H1 2025 (HKD) | H1 2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Loss attributable to owners of the Company | HKD 11 million | HKD 10 million | +10.0% | Financial Resources and Liabilities The Group's cash and cash equivalents significantly decreased, and outstanding bank borrowings slightly declined but still faced substantial overdue borrowings and default issues; despite a net liability position, the Board believes non-current assets can provide support and is confident in future financial improvement - The Group's cash and cash equivalents decreased by approximately HKD 20 million to HKD 21 million[46] - Outstanding bank borrowings amounted to HKD 438 million, of which HKD 376 million are due within one year[46] - Despite recording a net liability position, the Group holds approximately HKD 235 million in non-current assets, which the Board believes does not pose a significant impact on going concern[54] Financial Resources As of June 30, 2025, cash and cash equivalents significantly decreased, outstanding bank borrowings slightly declined, and all borrowings were denominated in RMB Financial Resources Key Data | Indicator | June 30, 2025 (HKD) | December 31, 2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | HKD 21 million | HKD 41 million | -48.8% | | Outstanding bank borrowings | HKD 438 million | HKD 444 million | -1.4% | | Fixed-rate debt ratio | 95% | 94% | +1 percentage point | - Net cash outflow during the review period was primarily used for repayment of bank borrowings and operating activities[48] - Capital expenditure was approximately HKD 1.3 million, a significant decrease compared to the same period last year[49] Breach of Loan Covenants The Group failed to meet covenants for HKD 349 million in bank borrowings, which, along with accrued interest, are overdue and have been included in a consolidated restructuring plan; the company is actively communicating with banks to seek extensions, renewals, or revised terms, and banks have indicated no intention to take extreme measures - As of June 30, 2025, the Group failed to meet certain loan covenants for bank borrowings of HKD 349 million, which, along with accrued interest of HKD 272 million, are overdue[50] - The overdue bank borrowings have been included in a consolidated restructuring plan, but relevant legal procedures will not be automatically lifted if banks do not convert the debt into equity in the new platform[51] - The Group is actively communicating with state-owned commercial banks to discuss extensions, renewals, and/or revisions of loan terms, and the banks have indicated no intention to take extreme measures[53] Assets and Liabilities The Group's total assets and total liabilities both slightly decreased, but net current liabilities and net liabilities both expanded, indicating increased financial leverage pressure Assets and Liabilities Key Data | Indicator | June 30, 2025 (HKD) | December 31, 2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total assets | HKD 621 million | HKD 645 million | -3.7% | | Total liabilities | HKD 1.351 billion | HKD 1.353 billion | -0.1% | | Property, plant and equipment | HKD 195 million | HKD 199 million | -2.0% | | Net current liabilities | HKD 902 million | HKD 872 million | +3.4% | | Net liabilities | HKD 729 million | HKD 708 million | +3.0% | - The Board assessed that despite the net liability position, the Group holds approximately HKD 235 million in non-current assets, which can support daily production and operations[54] Pledge of Assets As of June 30, 2025, approximately HKD 12 million of the Group's trade receivables were pledged to secure approximately HKD 23 million in bank borrowings Pledge of Assets Data | Indicator | June 30, 2025 (HKD) | December 31, 2024 (HKD) | | :--- | :--- | :--- | | Pledged trade receivables | HKD 12 million | HKD 17 million | | Secured bank borrowings | HKD 23 million | HKD 27 million | Material Investments, Acquisitions and Disposals of Subsidiaries and Associates, and Plans for Future Material Investments or Capital Asset Purchases During the review period, the Group had no material investments or significant acquisitions and disposals of subsidiaries, nor any plans for future material investments or capital asset purchases - The Group held no other material investments or significant acquisitions and disposals of subsidiaries during the review period[58] - As of the date of this announcement, the Group also has no plans for any material investments or capital asset purchases[58] Contingent Liabilities A bank in mainland China initiated litigation against a subsidiary of the Group, demanding immediate repayment of approximately HKD 349 million in bank borrowings, which the Group is negotiating to resolve - A bank in mainland China initiated litigation against a subsidiary of the Group, demanding immediate repayment of approximately HKD 349 million in bank borrowings[59] - The Group is negotiating with the bank to resolve these litigations, and there are no other significant contingent liabilities[59] Risk Management The Group's business is primarily settled in RMB, and it continuously monitors foreign exchange risk to ensure it remains within a controllable range - The Group's business is primarily settled in RMB, which is currently still subject to foreign exchange controls[60] - The Group continuously monitors its foreign exchange risk, considering exchange rate fluctuation trends and cash flow needs, to ensure related risks remain within a controllable range[60] Human Resources As of June 30, 2025, the Group's total number of employees decreased to approximately 600, and total staff costs decreased year-on-year but increased as a proportion of revenue; the company adheres to a people-oriented philosophy, providing competitive compensation, benefits, and training and promotion mechanisms Human Resources Key Data | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total number of employees | Approx. 600 | Approx. 1,000 | | Total staff costs (HKD) | HKD 26 million | HKD 35 million (H1 2024) | | Staff costs as % of revenue | 10.1% | 6.4% (H1 2024) | - The company adheres to a people-oriented philosophy, strictly safeguarding employees' legitimate rights and interests, and providing competitive salaries, performance bonuses, retirement plans, and other benefits[61] - Continuously optimizing employee training programs and establishing fair promotion mechanisms to stimulate employee enthusiasm and creativity[61] Environmental Protection and Performance The Group places sustainable development at its core, actively fulfilling corporate social responsibility, integrating green and low-carbon concepts into corporate governance and business operations, and continuously optimizing energy structure, advocating green office and travel - The Group places sustainable development at the core of its development, actively fulfilling corporate social responsibility[62] - Integrating green and low-carbon concepts into corporate governance and business operations, optimizing energy structure, and improving energy utilization efficiency[62] - Continuously deepening the green office concept, advocating green travel, and will comprehensively promote the enterprise's transformation towards low-carbon and green operations in the future[62] Corporate Governance Corporate Governance Principles and Structure The company adheres to principles of integrity, transparency, openness, and efficiency in corporate governance, adopting a sound governance structure and measures, overseeing company operations through the Board of Directors and its committees (Audit, Remuneration, Nomination), and establishing risk management and internal control systems - The company adheres to principles of integrity, transparency, openness, and efficiency in corporate governance, striving to achieve high standards of corporate governance[63] - The Board of Directors consists of five directors and has an Audit Committee, Remuneration Committee, and Nomination Committee, with clearly defined terms of reference[63] - A risk management and internal control system has been established and its effectiveness is reviewed by the Audit Committee with the assistance of the internal audit department[63] Roles of Chairman and Chief Executive Officer Ms. Zhu Yuan serves as both the Chairman of the Board and Chief Executive Officer, which does not comply with Code Provision C.2.1 of the Corporate Governance Code; the Board believes this arrangement facilitates efficient formulation and execution of business strategies and plans to identify a suitable Chief Executive Officer in the long term - Ms. Zhu Yuan serves as both the Chairman of the Board and Chief Executive Officer of the company, which does not comply with Code Provision C.2.1 of the Corporate Governance Code[65] - The Board believes this arrangement facilitates more effective and efficient formulation of business strategies and execution of business plans, benefiting the Group's business prospects and management[65] - The composition of the Board ensures a balance of power, and a suitable Chief Executive Officer will be identified and appointed in the long term[65] Standard Code for Securities Transactions by Directors The company has adopted Appendix C3 "Standard Code" of the Listing Rules and confirms that all Directors have complied with the code during the review period - The company has adopted Appendix C3 "Standard Code" of the Listing Rules as the code of conduct for Directors' dealings in company securities[66] - The company confirms that all Directors have complied with the requirements of the Standard Code during the review period[66] Purchase, Sale or Redemption of the Company's Listed Securities During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[67] Audit Committee The Audit Committee has reviewed the Group's accounting principles, practices, internal controls, risk management, and financial reporting matters with management, including the unaudited interim results for the current period - The Audit Committee has reviewed the Group's accounting principles and practices with management, and discussed internal controls, risk management, and financial reporting matters[68] - The review included the Group's unaudited interim results for the review period[68] Post-Reporting Events and Publication Significant Events Affecting the Group After the Reporting Period From June 30, 2025, up to the date of this announcement, there have been no significant events affecting the Group - From June 30, 2025, up to the date of this announcement, there have been no significant events affecting the Group[69] Publication of Interim Results and Interim Report This announcement has been published on the HKEX and company websites, and the interim report will be dispatched to shareholders and published on the company and HKEX websites in due course - This announcement has been published on the website of The Stock Exchange of Hong Kong Limited and the company's website[70] - The company's 2025 interim report will be dispatched to the company's shareholders (if requested) and published on the company's and HKEX websites in due course[70]