福田实业(00420) - 2025 - 中期业绩

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended June 30, 2025, revenue decreased by 12.7% to HK$1,937,026 thousand, but profit for the period significantly increased to HK$35,812 thousand due to cost control and efficiency, with profit attributable to owners turning from loss to HK$30,670 thousand, and basic earnings per share notably improved Key Data from Condensed Consolidated Statement of Profit or Loss | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 1,937,026 | 2,219,366 | | Cost of Sales | (1,709,585) | (1,974,552) | | Gross Profit | 227,441 | 244,814 | | Other Income | 40,621 | 36,068 | | Other Gains and Losses | 9,288 | 2,787 | | Distribution and Selling Expenses | (28,904) | (53,494) | | Administrative Expenses | (192,268) | (197,065) | | Finance Costs | (5,235) | (8,014) | | Share of Profit of an Associate | 478 | 737 | | Profit Before Income Tax Expense | 51,421 | 25,833 | | Income Tax Expense | (15,609) | (21,590) | | Profit for the Period | 35,812 | 4,243 | | Profit/(Loss) for the Period Attributable to Owners of the Company | 30,670 | (9,906) | | Profit for the Period Attributable to Non-controlling Interests | 5,142 | 14,149 | | Basic Earnings/(Loss) Per Share (HK cents) | 2.5 | (0.8) | Key Data from Condensed Consolidated Statement of Other Comprehensive Income | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Exchange Differences Arising from Translation of Overseas Operations | 10,851 | (3,237) | | Other Comprehensive Income/(Expense) for the Period | 10,851 | (3,237) | | Total Comprehensive Income for the Period | 46,663 | 1,006 | | Total Comprehensive Income/(Expense) for the Period Attributable to Owners of the Company | 38,632 | (12,498) | | Total Comprehensive Income for the Period Attributable to Non-controlling Interests | 8,031 | 13,504 | CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of June 30, 2025, total assets slightly decreased, with minor reductions in both non-current and current assets; total current and non-current liabilities also slightly decreased, while net assets remained stable, with equity attributable to owners at HK$3,208,845 thousand Key Data from Condensed Consolidated Statement of Financial Position | Metric | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Investment Properties | 54,413 | 56,692 | | Property, Plant and Equipment | 1,146,441 | 1,175,999 | | Right-of-use Assets | 200,317 | 191,575 | | Other Intangible Assets | 28,239 | 29,766 | | Interests in an Associate | 26,496 | 26,018 | | Deferred Tax Assets | 37,590 | 38,227 | | Current Assets | | | | Inventories | 873,994 | 784,735 | | Trade and Bills Receivables | 806,542 | 802,069 | | Prepayments, Deposits and Other Receivables | 155,781 | 210,366 | | Short-term Bank Deposits | 362,164 | 380,973 | | Bank Balances and Cash | 889,371 | 914,502 | | Current Liabilities | | | | Trade and Bills Payables | 601,806 | 562,544 | | Other Payables and Accruals | 240,899 | 268,491 | | Bank Borrowings - Due within One Year | 25,039 | 48,795 | | Non-current Liabilities | | | | Deferred Income - Non-current Portion | 65,035 | 67,556 | | Lease Liabilities - Non-current Portion | 118,736 | 111,522 | | Deferred Tax Liabilities | 6,346 | 6,778 | | Equity | | | | Share Capital | 889,810 | 889,810 | | Reserves | 2,319,035 | 2,347,779 | | Equity Attributable to Owners of the Company | 3,208,845 | 3,237,589 | | Non-controlling Interests | 226,215 | 218,184 | | Total Equity | 3,435,060 | 3,455,773 | NOTES 1. GENERAL INFORMATION The company is a Hong Kong-incorporated listed entity, whose 2024 annual consolidated financial statements were submitted under the Companies Ordinance with an unqualified auditor's report - The company has submitted its statutory annual consolidated financial statements for the year ended December 31, 2024, to the Registrar of Companies, with an unqualified independent auditor's report[9][10][13] 2. BASIS OF PREPARATION The interim condensed consolidated financial statements are prepared in accordance with Appendix D2 of the Listing Rules and HKAS 34 Interim Financial Reporting - The interim condensed consolidated financial statements are prepared in accordance with Appendix D2 of the Listing Rules and HKAS 34[11][14] 3. ACCOUNTING POLICIES The interim condensed consolidated financial statements are prepared on a historical cost basis, applying the same accounting policies as the 2024 annual consolidated financial statements, with new and unapplied HKFRS amendments not expected to have a significant impact on financial performance - The Group has first applied amendments to HKFRS accounting standards issued by the HKICPA and effective January 1, 2025, which have not had a significant impact on financial performance and position[16][17][20] - The Directors anticipate that the application of new and revised HKFRS accounting standards will not have a significant impact on the Group's financial performance and position[19][22] 4. SEASONALITY OF OPERATIONS Due to the seasonal nature of dyed fabric and yarn production and sales, first-half revenue and operating profit are typically lower than the second half, mainly affected by reduced supply during peak Chinese holidays - First-half revenue and operating profit are typically lower than the second half, mainly due to reduced supply of dyed fabrics and yarns during peak Chinese holidays[24][29] 5. SIGNIFICANT EVENTS AND TRANSACTIONS For the six months ended June 30, 2024, the Group decided to cease fabric dyeing and finishing production at Jiangyin Fuhui Textile Co., Ltd., retaining only its weaving capacity - The Group decided to cease fabric dyeing and finishing production at Jiangyin Fuhui Textile Co., Ltd., retaining only its weaving capacity[25][30] 6. REVENUE AND SEGMENT INFORMATION The Group segments operations by customer location, including Hong Kong, China, Taiwan, Korea, Sri Lanka, Americas, Europe, and other regions; total external sales for H1 2025 were HK$1,937,026 thousand, with China and Sri Lanka as main revenue sources, and manufacturing and sales of dyed fabrics and yarns as the primary product revenue Revenue and Segment Profit by Geographical Region for the six months ended June 30, 2025 | Region | External Sales (HK$ thousand) | Segment Profit (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 243,307 | 17,344 | | China | 700,113 | 67,634 | | Taiwan | 65,095 | 7,216 | | Korea | 99,750 | 10,962 | | Sri Lanka | 386,176 | 13,264 | | Americas | 16,481 | 1,813 | | Europe | 41,438 | 3,250 | | Other Regions | 384,666 | 37,836 | | Total | 1,937,026 | 159,319 | Revenue by Product for the six months ended June 30, 2025 | Product | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Manufacturing and Sales of Dyed Fabrics and Yarns | 1,690,012 | 1,893,885 | | Manufacturing and Sales of Garments | 247,014 | 325,481 | | Total | 1,937,026 | 2,219,366 | 7. FINANCE COSTS For the six months ended June 30, 2025, total finance costs decreased to HK$5,235 thousand from HK$8,014 thousand in the prior period, primarily from bank borrowings and lease liabilities Breakdown of Finance Costs | Item | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank Borrowings | 1,934 | 4,935 | | Lease Liabilities | 3,301 | 3,079 | | Total | 5,235 | 8,014 | 8. Income Tax Expense For the six months ended June 30, 2025, income tax expense was HK$15,609 thousand, a decrease from HK$21,590 thousand in the prior period, primarily from China, Hong Kong, and other jurisdictions, calculated based on local tax rates Breakdown of Income Tax Expense | Item | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current Tax | | | | Hong Kong | 842 | 824 | | China | 8,283 | 12,246 | | Other Jurisdictions | 6,369 | 9,185 | | (Over-provision)/Under-provision in Prior Years | | | | China | 288 | (1,153) | | Other Jurisdictions | (342) | 1,798 | | Deferred Tax | | | | Hong Kong | 2,039 | (3,184) | | China | (226) | 1,298 | | Other Jurisdictions | (1,644) | 576 | | Total | 15,609 | 21,590 | - Under Hong Kong's two-tiered profits tax regime, eligible subsidiaries are taxed at 8.25% for the first HK$2,000,000 of assessable profits and 16.5% thereafter; Chinese subsidiaries are taxed at 25%, and Sri Lankan subsidiaries at 30%[41][42][43] 9. OTHER REVENUE, OTHER GAINS AND LOSSES/PROFIT FOR THE PERIOD For the six months ended June 30, 2025, other revenue increased to HK$40,621 thousand, mainly from interest and miscellaneous income, while net other gains and losses were HK$9,288 thousand, primarily due to increased net exchange gains; profit for the period was net of various depreciation, amortization, and employee costs Analysis of Other Revenue | Item | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Amortisation of Deferred Income | 2,747 | 2,599 | | Compensation Income | 4,141 | 5,600 | | Government Grants | 877 | 538 | | Interest Income | 13,763 | 14,843 | | Net Rental Income from Investment Properties | 4,206 | 3,826 | | Others | 14,887 | 8,662 | | Total | 40,621 | 36,068 | Analysis of Other Gains and Losses | Item | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net Exchange Gains | 16,945 | 4,387 | | Gain on Disposal/Write-off of Property, Plant and Equipment | 1,070 | 3,131 | | Net Reversal of Impairment Loss Provision for Trade and Bills Receivables | (8,727) | (4,731) | | Total | 9,288 | 2,787 | Deductions from Profit for the Period | Item | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Amortisation of Other Intangible Assets | 1,526 | – | | Depreciation of Investment Properties | 2,494 | 2,549 | | Depreciation of Property, Plant and Equipment | 75,363 | 78,572 | | Impairment of Property, Plant and Equipment | – | 10,767 | | Depreciation of Right-of-use Assets | 17,657 | 13,971 | | Employee Costs (including Directors' Emoluments) | 327,178 | 342,171 | 10. DIVIDENDS For the six months ended June 30, 2025, the Board did not propose an interim dividend; the 2024 final and special dividends totaling HK$67,376 thousand were approved by shareholders Dividends Approved and Recognized as Distributions | Item | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | 2024 Final and Special Dividends | 67,376 | 36,751 | - The Board of Directors did not propose an interim dividend for the six months ended June 30, 2025[51][53] 11. EARNINGS/(LOSS) PER SHARE For the six months ended June 30, 2025, basic earnings per share were 2.5 HK cents, a significant improvement from a loss of 0.8 HK cents per share in the prior period; diluted earnings per share were the same as basic earnings per share due to no potentially dilutive ordinary shares Earnings/(Loss) Per Share Calculation Data | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Profit/(Loss) for the Period Attributable to Owners of the Company | 30,670 | (9,906) | | Weighted Average Number of Ordinary Shares | 1,225,026,960 | 1,225,026,960 | | Basic Earnings/(Loss) Per Share (HK cents) | 2.5 | (0.8) | - Diluted earnings/(loss) per share are equal to basic earnings/(loss) per share, as there were no potentially dilutive ordinary shares issued by the company for the periods ended June 30, 2025, and June 30, 2024[57][59] 12. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT For the six months ended June 30, 2025, the Group invested HK$60,720 thousand in property, plant and equipment to expand and upgrade production facilities; management reviewed the recoverable amounts of related assets and found no impairment losses - For the six months ended June 30, 2025, the Group's expenditure on property, plant and equipment was HK$60,720 thousand, used for expanding and upgrading production facilities[60][63] - Management reviewed the recoverable amounts of related property, plant and equipment and right-of-use assets under cash-generating units and found no impairment losses (impairment loss of HK$10,767 thousand was recognized on June 30, 2024)[61][62][64] 13. MOVEMENTS IN RIGHT-OF-USE ASSETS AND LEASE LIABILITIES As of June 30, 2025, the carrying value of right-of-use assets was HK$200,317 thousand and lease liabilities was HK$145,553 thousand; during the period, right-of-use assets and lease liabilities increased by HK$33,294 thousand due to new lease agreements and decreased by HK$6,333 thousand due to lease term modifications - As of June 30, 2025, the carrying values of right-of-use assets for leased land and buildings, equipment, and machinery were HK$200,020 thousand, HK$297 thousand, and zero, respectively[65][71] - For the six months ended June 30, 2025, the Group recognized an increase in right-of-use assets of HK$33,294 thousand due to new lease agreements[66][71] - For the six months ended June 30, 2025, lease liabilities decreased by HK$6,333 thousand due to lease term modifications, with right-of-use assets adjusted by the same amount[69][72] 14. INVENTORIES As of June 30, 2025, total inventories amounted to HK$873,994 thousand, an increase from December 31, 2024, primarily comprising raw materials, work-in-progress, and finished goods Breakdown of Inventories | Item | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Spare Parts | 22,716 | 24,879 | | Raw Materials | 292,910 | 217,545 | | Work-in-progress | 314,297 | 307,211 | | Finished Goods | 244,071 | 235,100 | | Total | 873,994 | 784,735 | 15. TRADE AND BILLS RECEIVABLES/PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES As of June 30, 2025, net trade and bills receivables were HK$806,542 thousand, with a primary credit period of 30 to 60 days; other receivables included recoverable VAT, prepayments, and deposits, with land expropriation compensation received on January 2, 2025 Aging Analysis of Trade and Bills Receivables | Aging | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 month | 410,857 | 338,956 | | 1 to 2 months | 191,444 | 254,840 | | 2 to 3 months | 132,118 | 103,191 | | Over 3 months | 121,286 | 145,273 | | Less: Provision for Expected Credit Losses | (49,163) | (40,191) | | Total | 806,542 | 802,069 | - As of June 30, 2025, other receivables included recoverable VAT of HK$9,653 thousand, prepayments, deposits, and other receivables of HK$146,128 thousand; land expropriation compensation of HK$96,791 thousand was received on January 2, 2025[78][79][81] 16. TRADE AND BILLS PAYABLES As of June 30, 2025, total trade and bills payables amounted to HK$601,806 thousand, an increase from December 31, 2024, primarily comprising trade payables and bills payables Breakdown of Trade and Bills Payables | Item | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade Payables | 500,187 | 494,187 | | Bills Payables | 101,619 | 68,357 | | Total | 601,806 | 562,544 | Aging Analysis of Trade and Bills Payables | Aging | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 month | 399,385 | 346,916 | | 1 to 2 months | 101,675 | 122,921 | | 2 to 3 months | 43,619 | 40,917 | | Over 3 months | 57,127 | 51,790 | | Total | 601,806 | 562,544 | 17. OTHER PAYABLES AND ACCRUALS As of June 30, 2025, total other payables and accruals amounted to HK$240,899 thousand, a decrease from December 31, 2024 Breakdown of Other Payables and Accruals | Item | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Other Payables | 149,823 | 155,281 | | Accruals | 91,076 | 113,210 | | Total | 240,899 | 268,491 | 18. BANK BORROWINGS For the six months ended June 30, 2025, the Group obtained new bank borrowings of HK$76,672 thousand and repaid HK$100,433 thousand, primarily for working capital; bank borrowings were mainly floating and fixed-rate, with an average effective annual interest rate of 3.67%, all unsecured and compliant with covenants - For the six months ended June 30, 2025, the Group obtained new bank borrowings of HK$76,672 thousand and repaid HK$100,433 thousand, primarily for working capital[88][93] - The Group's bank borrowings are mainly floating and fixed-rate, with an average effective annual interest rate of 3.67% (December 31, 2024: 6.24%)[89][93] - For the six months ended June 30, 2025, and the year ended December 31, 2024, the Group complied with all covenant ratios[90][91][94] 19. SHARE CAPITAL As of June 30, 2025, the company had 1,225,026,960 issued and fully paid ordinary shares, with share capital of HK$889,810 thousand, and ordinary shares have no par value Breakdown of Share Capital | Item | As of June 30, 2025 (Number of Shares) | As of June 30, 2025 (HK$ thousand) | As of December 31, 2024 (Number of Shares) | As of December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Ordinary Shares, Issued and Fully Paid | 1,225,026,960 | 889,810 | 1,225,026,960 | 889,810 | - In accordance with Section 135 of the Hong Kong Companies Ordinance (Cap. 622), the company's ordinary shares have no par value[96] MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW In H1 2025, despite geopolitical tensions, global economic downturn, and trade uncertainties, the Group significantly improved operating efficiency through enhanced customer management, reduced procurement costs, strengthened cost control, and lean management; revenue decreased by 12.7%, but profit attributable to owners turned from loss to profit, and pre-tax profit grew by 99.1% - In H1 2025, geopolitical tensions, increased global economic downside risks, rising trade uncertainties, and accelerated relocation of the international textile and apparel supply chain from China intensified[97][100] - The Group implemented a series of strategies and measures, including strengthening customer management, reducing procurement costs, enhancing cost control, promoting lean and total quality management, and deepening internal operational management reforms[101][102][103] Key Financial Performance Improvements in H1 2025 | Metric | H1 2025 (HK$ thousand) | H1 2024 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 1,937,026 | 2,219,366 | -12.7% | | Profit/(Loss) Attributable to Owners of the Company | 30,670 | (9,906) | Turned from loss to profit | | Profit Before Tax | 51,421 | 25,833 | +99.1% | | Basic Earnings/(Loss) Per Share (HK cents) | 2.5 | (0.8) | +412.5% | | Gross Profit Margin | 11.7% | 11.0% | +0.7% | | Finance Costs | 5,235 | 8,014 | -34.7% | | Cost of Sales | 1,709,585 | 1,974,552 | -13.4% | PRODUCTION AND SALES OF DYED FABRICS AND YARNS Manufacturing and sales of dyed fabrics and yarns is the Group's core business, contributing approximately HK$1,690,012 thousand in revenue in H1 2025, accounting for 87.2% of total revenue - The Group's core business, manufacturing and sales of dyed fabrics and yarns, generated approximately HK$1,690,012 thousand in revenue, accounting for 87.2% of the Group's total revenue[112][116] PRODUCTION AND SALES OF GARMENTS In H1 2025, revenue from manufacturing and sales of garments was approximately HK$247,014 thousand, accounting for 12.8% of the Group's total revenue - In H1 2025, revenue from manufacturing and sales of garments was approximately HK$247,014 thousand, accounting for 12.8% of the Group's total revenue[113][117] DIVIDEND The Board decided not to declare an interim dividend for the six months ended June 30, 2025; given the Group's strong cash flow and expected H2 profit, a final dividend for the twelve months ended December 31, 2025, is anticipated, maintaining the payout ratio where possible - The Board of Directors decided and announced not to declare any interim dividend for the six months ended June 30, 2025[114][118] - After reviewing the Group's strong cash flow as of June 30, 2025, and anticipating a high probability of profit in H2 2025, it is expected that a final dividend for the twelve months ended December 31, 2025, will be declared, maintaining the payout ratio as much as possible[114][118] AWARDS AND CERTIFICATIONS In H1 2025, the Group and its subsidiaries received multiple awards and certifications, including Global Recycled Standard, Organic Content Standard, Global Organic Textile Standard, US Cotton Trust Protocol membership, Oeko-Tex Standard 100, Higg Index FEM self-assessment, and ISO environmental and energy management certifications, demonstrating commitment to sustainability and quality - The Group and its subsidiaries obtained multiple international certifications in H1 2025, including Global Recycled Standard (GRS 4.0), Organic Content Standard (OCS 3.0), Global Organic Textile Standard (GOTS 6.0/7.0), and US Cotton Trust Protocol membership certificate[120][121] - Awards and certifications also included Oeko-Tex Standard 100 certificate, Higg Facility Environmental Module self-assessment certificate, Dongguan City Clean Production Enterprise Award, Dongguan City "Zero-Waste Factory" plaque, and ISO14001 Environmental Management System certification, among others[120][121][122][123] OUTLOOK INDUSTRY OUTLOOK AND STRATEGIES Looking ahead, the macroeconomic and textile and apparel industry outlook remains challenging, with global supply chains rapidly restructuring; despite significant operational challenges, the Group is cautiously optimistic for H2, continuing to drive development through technological innovation, market expansion, internationalization, accelerated production technology upgrades, strengthened lean management, improved product quality, and strict cost control - The macroeconomic and textile and apparel industry outlook is not optimistic, with persistent global economic growth uncertainties and accelerating restructuring of the global textile and apparel supply chain[125][128] - The Group maintains a relatively cautious optimistic outlook for H2 performance, continuing to drive enterprise development through technological innovation, market expansion, increased operating scale, systematic promotion of international operations, accelerated progress in informatization, automation, intelligentization, and green production technology upgrades, strengthened lean management, improved product quality, streamlined organizational structure, and strict control of costs and expenses[125][128] OUR APPRECIATION The Group extends sincere gratitude to all shareholders, customers, business partners, suppliers, and employees for their continued support and contributions amidst increasing economic uncertainty - The Group extends its gratitude to all shareholders, customers, business partners, and suppliers for their continued support amidst increasing economic uncertainty[127][130] - The Group also appreciates the dedication, commitment, and contributions of all employees to its success[127][130] FINANCIAL REVIEW KEY OPERATING AND FINANCIAL INDICATORS The Group's key operating and financial indicators for H1 2025 show significant profitability improvement despite decreased revenue, with better gross profit and EBITDA margins; asset efficiency saw slight increases in inventory and receivables turnover days Income Statement Items (HK$ thousand) | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | 1,937,026 | 2,219,366 | | Gross Profit | 227,441 | 244,814 | | EBITDA | 148,556 | 125,557 | | Profit for the Period | 35,812 | 4,243 | | Profit/(Loss) Attributable to Owners of the Company | 30,670 | (9,906) | | Basic Earnings/(Loss) Per Share (HK cents) | 2.5 | (0.8) | Profitability Ratios (%) | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Gross Profit Margin | 11.7% | 11.0% | | EBITDA Margin | 7.7% | 5.7% | | Distribution and Selling Expenses to Revenue Ratio | 1.5% | 2.4% | | Administrative Expenses to Revenue Ratio | 9.9% | 8.9% | | Finance Costs to Revenue Ratio | 0.3% | 0.4% | Asset Efficiency and Ratios | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Inventory Turnover Days | 93 | 79 | | Trade and Bills Receivables Turnover Days | 75 | 73 | | Trade and Bills Payables Turnover Days | 64 | 62 | | Current Ratio | 3.2 | 3.2 | | Net Debt/EBITDA Ratio (Annualized) | (8.3) | (4.6) | | Total Liabilities/Equity Attributable to Owners of the Company | 0.4 | 0.4 | REVENUE For the six months ended June 30, 2025, the Group's revenue was approximately HK$1,937,026 thousand, a 12.7% decrease from the prior period, with manufacturing and sales of dyed fabrics and yarns accounting for 87.2% and garments for 12.8% of total revenue - The Group's revenue for the six months ended June 30, 2025, was approximately HK$1,937,026 thousand, a 12.7% decrease from the prior period[137][139][143] Revenue by Business Segment | Business Segment | H1 2025 Contribution | | :--- | :--- | | Manufacturing and Sales of Dyed Fabrics and Yarns | 87.2% | | Manufacturing and Sales of Garments | 12.8% | COST OF SALES AND GROSS PROFIT For the six months ended June 30, 2025, the Group's cost of sales was approximately HK$1,709,585 thousand, with an overall gross profit margin of 11.7%, an improvement from 11.0% in the prior period, mainly due to a greater decrease in production costs than in revenue - The Group's overall cost of sales for the six months ended June 30, 2025, was approximately HK$1,709,585 thousand, with an overall gross profit margin of 11.7% (H1 2024: 11.0%)[142][146] - The improvement in gross profit margin was primarily due to a greater decrease in production costs than in revenue[143][146] DISTRIBUTION AND SELLING EXPENSES For the six months ended June 30, 2025, the Group's distribution and selling expenses were approximately HK$28,904 thousand, accounting for 1.5% of total revenue, a decrease from 2.4% in the prior period Distribution and Selling Expenses | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Distribution and Selling Expenses | 28,904 | 53,494 | | Percentage of Revenue | 1.5% | 2.4% | ADMINISTRATIVE EXPENSES For the six months ended June 30, 2025, the Group's administrative expenses were approximately HK$192,268 thousand, accounting for 9.9% of total revenue, a slight increase from 8.9% in the prior period Administrative Expenses | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Administrative Expenses | 192,268 | 197,065 | | Percentage of Revenue | 9.9% | 8.9% | EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (EBITDA) For the six months ended June 30, 2025, the Group's EBITDA was approximately HK$148,556 thousand, with an EBITDA margin of 7.7%, an increase from 5.7% in the prior period EBITDA | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | EBITDA | 148,556 | 125,557 | | EBITDA Margin | 7.7% | 5.7% | FINANCE COSTS For the six months ended June 30, 2025, the Group's finance costs were approximately HK$5,235 thousand, accounting for 0.3% of total revenue, a decrease from 0.4% in the prior period Finance Costs | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Finance Costs | 5,235 | 8,014 | | Percentage of Revenue | 0.3% | 0.4% | CAPITAL EXPENDITURE In H1 2025, the Group invested approximately HK$60,720 thousand in property, plant and equipment; capital commitments primarily for purchasing property, plant and equipment amounted to approximately HK$36,504 thousand - During the review period, the Group invested approximately HK$60,720 thousand to increase property, plant and equipment[151][156] - As of June 30, 2025, the Group's contracted capital commitments for the purchase of property, plant and equipment amounted to approximately HK$36,504 thousand[151][156] INCOME TAX EXPENSE For the six months ended June 30, 2025, the Group's income tax expense was approximately HK$15,609 thousand, a decrease from the prior period Income Tax Expense | Metric | For the six months ended June 30, 2025 (HK$ thousand) | For the six months ended June 30, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Income Tax Expense | 15,609 | 21,590 | LIQUIDITY AND FINANCIAL RESOURCES As of June 30, 2025, the Group's net assets were approximately HK$3,435,060 thousand; funding needs are met primarily through operating cash flow and bank borrowings; bank balances and cash totaled HK$1,251,535 thousand, mainly denominated in HKD, USD, and RMB; the Group complied with all major bank financial covenants Key Financial Position Data of the Group (HK$ thousand) | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Non-current Assets | 1,495,112 | 1,518,322 | | Current Assets | 3,090,409 | 3,096,296 | | Total Assets | 4,585,521 | 4,614,618 | | Current Liabilities | 960,344 | 972,989 | | Non-current Liabilities | 190,117 | 185,856 | | Total Liabilities | 1,150,461 | 1,158,845 | | Net Assets | 3,435,060 | 3,455,773 | - As of June 30, 2025, the Group's bank balances and cash (including short-term bank deposits) totaled HK$1,251,535 thousand, primarily denominated in HKD, USD, and RMB[160][161] Key Financial Covenant Ratios | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Consolidated Net Tangible Assets | 3,094,598千港元 | 3,118,670千港元 | | Consolidated Total Bank Liabilities to Consolidated Net Tangible Assets Ratio | 0.0 | 0.0 | | Consolidated EBITDA to Consolidated Interest Expense Ratio | 28.4 | 20.9 | | Consolidated Current Assets to Consolidated Current Liabilities Ratio | 3.2 | 3.2 | | Consolidated Capital Expenditure | 60,720千港元 | 174,737千港元 | RISK MANAGEMENT The Group adheres to stringent and prudent risk management policies, closely monitoring foreign exchange (HKD, USD, RMB) and interest rate risks; bank borrowings are primarily floating and fixed-rate, with an average effective annual interest rate of 3.67%, and appropriate measures will continue to be taken to mitigate risks - The Group's sales and raw material purchases are primarily denominated in HKD, USD, and RMB, with main production bases in China, thus involving foreign exchange risk arising from RMB[164][167] - The Group's bank borrowings are denominated in HKD and RMB, with interest primarily calculated at floating and fixed rates; during the review period, the average effective annual interest rate for the Group's bank borrowings was 3.67% (December 31, 2024: 6.24% per annum)[165][167] OTHER CORPORATE INFORMATION EMPLOYEES AND REMUNERATION POLICIES As of June 30, 2025, the Group had approximately 5,600 full-time employees; remuneration policies are based on employee performance and regional salary trends, with regular training and education subsidies provided - As of June 30, 2025, the Group had approximately 5,600 full-time employees (June 30, 2024: approximately 5,700 employees)[168][174] - The Group's remuneration policy is formulated and regularly reviewed based on individual employee performance and regional salary trends, providing regular training courses and subsidies for further education programs to employees[168][169][174] PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES In H1 2025, neither the company nor its subsidiaries engaged in any redemption, purchase, or sale activities of its listed securities - In H1 2025, the company did not redeem its listed securities, nor did the company or its subsidiaries purchase or sell such securities[170][175] CORPORATE GOVERNANCE CODE The company has complied with the Corporate Governance Code in Appendix 14 of the Listing Rules, except for code provision C.2.1 where the Chairman and CEO roles are held by the same person; the Board believes this arrangement allows for more efficient overall strategy planning, with power balance ensured by experienced Board members - The company has applied and consistently complied with the principles, all mandatory disclosure requirements, and code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules, except for code provision C.2.1[171][176] - Since April 1, 2023, Mr. Liu Xianfu, the Chairman and Executive Director, has also served as the company's Chief Executive Officer, which deviates from the requirements of code provision C.2.1[171][176] - The Board believes that having the same individual serve as both Chairman and Chief Executive Officer allows the Group to plan overall strategies and achieve budget targets more efficiently, with the balance of power fully ensured by the Board[171][172][176] MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 of the Listing Rules, and all directors confirmed compliance during the period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules, and all directors have confirmed their compliance with the required standards of the Model Code during the period[178][181] AUDIT COMMITTEE'S REVIEW The company's Audit Committee has reviewed the Group's unaudited consolidated interim results for H1 2025 and this interim report, responsible for reviewing and monitoring financial reporting, risk management, and internal control systems - The Audit Committee, comprising one non-executive director and two independent non-executive directors, has reviewed the Group's unaudited consolidated interim results for H1 2025 and this 2025 Interim Report[179][182] PUBLICATION OF 2025 INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT This results announcement has been published on the company's and HKEX websites; the 2025 Interim Report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on relevant websites in due course - This results announcement has been published on the company's website (www.fshl.com) and the HKEX website (www.hkexnews.hk)[180](index=180&type=chunk)[183] - The company's 2025 Interim Report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the company's and HKEX websites in the format required by the Listing Rules in due course[180][183]