杉杉品牌(01749) - 2025 - 中期业绩

Report Statement and Company Overview This section provides the disclaimer regarding the announcement's content and key information about the company and reporting period Report Statement Hong Kong Exchanges and Clearing Limited disclaims responsibility for the announcement's content and any losses arising from it - Hong Kong Exchanges and Clearing Limited is not responsible for the content of this announcement, nor does it make any representation as to its accuracy or completeness[1] - Hong Kong Exchanges and Clearing Limited expressly disclaims any liability whatsoever for any loss arising from or in reliance upon the whole or any part of the contents of this announcement[1] Company Information This section presents the unaudited condensed consolidated interim financial information for the six months ended June 30, 2025, reviewed by the Audit Committee - Company name: Shanshan Brand Management Co., Ltd., stock code: 1749[2] - Reporting period: For the six months ended June 30, 2025[3] - Nature of report: Unaudited condensed consolidated interim financial information, reviewed by the Board's Audit Committee[3] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated statements of profit or loss and other comprehensive income, and financial position Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, revenue decreased by 10.6% to RMB 425.2 million, gross profit decreased by 8.7% to RMB 179.1 million, and profit and total comprehensive income for the period decreased by 8.6% to RMB 12.1 million, with earnings per share of 9.05 RMB cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | For the six months ended June 30, 2025 (RMB Yuan) | For the six months ended June 30, 2024 (RMB Yuan) | Year-on-year change | | :--- | :--- | :--- | :--- | | Revenue | 425,213,042 | 475,669,316 | -10.6% | | Cost of sales | (246,145,684) | (279,439,188) | -11.9% | | Gross profit | 179,067,358 | 196,230,128 | -8.7% | | Profit before income tax | 15,712,497 | 19,602,851 | -19.9% | | Income tax expense | (3,644,182) | (6,392,999) | -42.9% | | Profit and total comprehensive income for the period attributable to owners of the Company | 12,068,315 | 13,209,852 | -8.6% | | Earnings per share attributable to owners of the Company | 9.05 RMB cents | 9.90 RMB cents | -8.6% | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total non-current assets increased to RMB 212 million, driven by a significant rise in property, plant and equipment; total current assets decreased to RMB 544 million due to lower inventories and trade receivables; total current liabilities decreased to RMB 441 million, with a notable reduction in trade payables; and net assets slightly increased to RMB 278 million Condensed Consolidated Statement of Financial Position Key Data | Indicator | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | | | | | Property, plant and equipment | 115,022,434 | 67,484,573 | +70.4% | | Total non-current assets | 211,693,958 | 164,164,886 | +28.9% | | Current assets | | | | | Inventories | 242,195,850 | 278,221,780 | -12.9% | | Trade and bills receivables | 200,391,602 | 239,825,926 | -16.5% | | Cash and cash equivalents | 59,104,350 | 106,457,075 | -44.5% | | Total current assets | 543,971,128 | 655,385,875 | -17.0% | | Current liabilities | | | | | Trade and bills payables | 114,628,370 | 216,080,405 | -47.0% | | Total current liabilities | 441,273,041 | 525,604,168 | -16.0% | | Net assets | | | | | Net assets | 277,672,764 | 276,276,449 | +0.5% | Notes to the Condensed Consolidated Interim Financial Statements This section provides detailed notes on the company's financial statements, covering company information, basis of preparation, key accounting judgments, segment information, and various financial accounts Company Information Shanshan Brand Management Co., Ltd., established in China on August 23, 2011, and listed on HKEX on June 27, 2018, primarily engages in the design, marketing, and sale of men's business and casual wear in China - The Company was established in China on August 23, 2011, and has been listed on the Hong Kong Stock Exchange since June 27, 2018[7] - The Group is principally engaged in the design, marketing and sale of men's business and casual wear in China[9] Basis of Preparation The interim financial statements are prepared in accordance with Appendix D2 of the Listing Rules and HKAS 34, read in conjunction with the 2024 annual financial statements, on a historical cost basis (except for financial assets measured at fair value), and presented in RMB - Basis of preparation: Appendix D2 to the Listing Rules and Hong Kong Accounting Standard 34 Interim Financial Reporting[10] - Measurement basis: Historical cost, except for financial assets measured at fair value[10] - Presentation currency: RMB[10] Critical Accounting Judgments and Key Sources of Estimation Uncertainty The critical accounting judgments and key sources of estimation uncertainty applied in preparing these financial statements are consistent with those used in the 2024 annual financial statements - The critical accounting judgments and key sources of estimation uncertainty applied are the same as those applied in the 2024 annual financial statements[12] Segment Information and Revenue The Group operates a single reportable segment, apparel trading in China, with revenue primarily from the Chinese market, categorized by product (apparel trading, trademark licensing), brand (FIRS, SHANSHAN), and sales channel (e-commerce, franchisees, self-operated retail stores, distributors, workwear) - The Group has only one single reportable segment, which is apparel trading in China[13] Revenue by Major Product/Service, Brand and Sales Channel | Category | 2025 (RMB Yuan) | 2024 (RMB Yuan) | | :--- | :--- | :--- | | Major products/services | | | | Apparel trading | 374,483,426 | 421,878,831 | | Trademark licensing income | 50,729,616 | 53,790,485 | | By brand | | | | FIRS | 286,982,466 | 339,122,153 | | SHANSHAN | 136,069,821 | 133,170,268 | | By sales channel | | | | E-commerce platforms | 146,022,393 | 171,229,861 | | Franchisees | 78,999,209 | 94,390,390 | | Self-operated retail stores | 73,347,925 | 74,108,959 | | Distributors | 31,486,779 | 47,316,334 | | Workwear | 44,627,120 | 34,833,287 | Finance Costs Total finance costs for the period were RMB 2.27 million, a 34.3% decrease from RMB 3.54 million in the prior period, primarily comprising interest expense on bank borrowings (after capitalization) of RMB 1.64 million and interest expense on lease liabilities of RMB 0.62 million Finance Costs Details | Item | 2025 (RMB Yuan) | 2024 (RMB Yuan) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 2,705,776 | 3,341,904 | | Less: Amount capitalized on qualifying assets | (1,063,332) | – | | Interest expense on lease liabilities | 623,819 | 202,030 | | Total | 2,266,263 | 3,543,934 | - Finance costs decreased by 34.3% year-on-year, primarily due to the capitalization of interest on bank borrowings[19] Profit Before Income Tax Profit before income tax was RMB 15.71 million, a 19.9% decrease from the prior period, mainly impacted by increased amortization and depreciation, reduced net reversal of inventory write-downs, and higher advertising and promotion expenses, partially offset by an increase in net reversal of impairment losses Profit Before Income Tax Components | Item | 2025 (RMB Yuan) | 2024 (RMB Yuan) | | :--- | :--- | :--- | | Total amortization and depreciation | 22,109,955 | 16,001,685 | | Total net reversal of impairment losses | (3,507,162) | (114,774) | | Total net reversal of inventory write-downs | (1,171,500) | (1,069,266) | | Total expenses relating to leases | 13,850,563 | 13,376,435 | | Advertising and promotion expenses | 5,041,297 | 3,603,315 | | Staff costs | 20,900,959 | 23,888,013 | - Total amortization and depreciation increased by 38.2% year-on-year, mainly due to increased depreciation of right-of-use assets and property, plant and equipment[20] - Total net reversal of impairment losses significantly increased, primarily from trade receivables[20] Dividends For the six months ended June 30, 2025, the company approved and paid a final dividend of 8 RMB cents per share for the year ended December 31, 2024, totaling RMB 10.67 million, with no interim dividends paid, declared, or proposed for the current period - The annual general meeting on June 9, 2025, approved the payment of a final dividend of 8 RMB cents per ordinary share for the year ended December 31, 2024, totaling approximately RMB 10,672,000, which was paid on August 8, 2025[22] - No dividends were paid, declared, or proposed for the current period[23] Income Tax Expense Income tax expense for the period was RMB 3.64 million, a 42.9% decrease from RMB 6.39 million in the prior period, comprising income tax provision of RMB 3.90 million and deferred tax credit of RMB 0.26 million, with the company operating in mainland China subject to a 25% corporate income tax rate Income Tax Expense Details | Item | 2025 (RMB Yuan) | 2024 (RMB Yuan) | | :--- | :--- | :--- | | Provision for income tax | 3,899,783 | 5,506,156 | | Deferred tax (credit)/expense | (255,601) | 886,843 | | Income tax expense | 3,644,182 | 6,392,999 | - Income tax expense decreased by 42.9% year-on-year[25] - The Company operates in mainland China and is subject to a 25% PRC corporate income tax rate[24] Earnings Per Share For the six months ended June 30, 2025, basic and diluted earnings per share were 9.05 RMB cents, an 8.6% decrease from 9.90 RMB cents in the prior period, with diluted earnings per share being the same as basic earnings per share due to no potential dilutive ordinary shares outstanding Earnings Per Share Calculation | Indicator | 2025 (RMB Yuan) | 2024 (RMB Yuan) | | :--- | :--- | :--- | | Profit for the purpose of calculating basic and diluted earnings per share | 12,068,315 | 13,209,852 | | Weighted average number of ordinary shares | 133,400,000 | 133,400,000 | | Earnings per share | 9.05 RMB cents | 9.90 RMB cents | - Earnings per share decreased by 8.6% year-on-year[26] Property, Plant and Equipment The Group is constructing a comprehensive building, including a product R&D center, high-end digital intelligent manufacturing plant, and digital intelligent warehouse, with additions to construction in progress of approximately RMB 50.68 million recognized during the period, including capitalized interest of RMB 1.06 million, and pledged deposits of RMB 2.17 million securing building construction - The Group is constructing a comprehensive building, including a product R&D center, high-end digital intelligent manufacturing plant, and digital intelligent warehouse on the land[27] - Additions to construction in progress of approximately RMB 50,679,948 were recognized during the period, including capitalized interest of RMB 1,063,332[27] - Pledged deposits of approximately RMB 2,172,445 are used to secure building construction and are classified as non-current assets[28] Trade and Bills Receivables As of June 30, 2025, total trade and bills receivables were RMB 200.4 million, a 16.5% decrease from RMB 239.8 million at the end of 2024, with impairment provisions decreasing from RMB 29.97 million to RMB 26.53 million, and an aging analysis showing a decrease in receivables within three months and an increase in those over six months Trade and Bills Receivables Details | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Trade receivables | 226,087,477 | 269,698,165 | | Less: Impairment provision | (26,534,883) | (29,972,239) | | Bills receivable | 839,008 | 100,000 | | Total | 200,391,602 | 239,825,926 | Trade Receivables Aging Analysis (Net of Impairment Losses) | Aging | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Within 3 months | 125,920,105 | 197,068,156 | | Over 3 months but within 6 months | 22,479,550 | 13,294,132 | | Over 6 months but within 1 year | 42,485,790 | 22,504,325 | | Over 1 year | 8,667,149 | 6,859,313 | - The Group provides its customers with a general credit period ranging from 30 to 240 days[31] Prepayments, Deposits and Other Receivables As of June 30, 2025, total prepayments, deposits and other receivables were RMB 35.14 million, a 52% increase from RMB 23.12 million at the end of 2024, with prepayments rising from RMB 12.59 million to RMB 25.00 million, and deposits and other receivables primarily consisting of refundable earnest money paid to shopping malls and online platform operators Prepayments, Deposits and Other Receivables Details | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Deposits and other receivables (net) | 10,136,576 | 10,525,930 | | Prepayments | 25,001,944 | 12,592,569 | | Total | 35,138,520 | 23,118,499 | - Total prepayments, deposits and other receivables increased by 52%[32] - Deposits and other receivables primarily consist of refundable earnest money paid to shopping malls and online platform operators, and temporary payments made on behalf of franchisees[33] Trade and Bills Payables As of June 30, 2025, total trade and bills payables were RMB 114.6 million, a significant 47% decrease from RMB 216.1 million at the end of 2024, with trade payables falling from RMB 199.1 million to RMB 95.37 million, and bills payable secured by pledged deposits typically settled within six months Trade and Bills Payables Details | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Trade payables | 95,368,370 | 199,080,405 | | Bills payable | 19,260,000 | 17,000,000 | | Total | 114,628,370 | 216,080,405 | - Total trade and bills payables decreased by 47%[35] - Bills payable are secured by deposits of RMB 9,650,000 and guaranteed by a subsidiary of the Company, typically settled within six months from the invoice date[35] Other Payables and Accrued Expenses As of June 30, 2025, total other payables and accrued expenses were RMB 134.36 million, a 9.3% increase from RMB 122.87 million at the end of 2024, with amounts due for construction increasing from RMB 26.05 million to RMB 37.32 million, and other taxes payable decreasing from RMB 10.86 million to RMB 6.76 million Other Payables and Accrued Expenses Details | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Deposits received | 74,533,821 | 77,829,372 | | Amounts due for construction | 37,315,055 | 26,049,938 | | Other taxes payable | 6,763,254 | 10,859,056 | | Others | 15,747,463 | 8,133,250 | | Total | 134,359,593 | 122,871,616 | - Amounts due for construction increased by 43.2%, reflecting the progress of the industrial park project construction[36] Interest-Bearing Bank Borrowings As of June 30, 2025, total interest-bearing bank borrowings were RMB 168.2 million, a 16% increase from RMB 145.0 million at the end of 2024, with new non-current bank borrowings of RMB 23.24 million secured by land use rights, and existing borrowings including RMB 100 million guaranteed by a subsidiary and a director, and RMB 45 million guaranteed by a subsidiary Interest-Bearing Bank Borrowings Total | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Bank borrowings classified as current liabilities | 145,000,000 | 145,000,000 | | Bank borrowings classified as non-current liabilities | 23,241,911 | – | | Total | 168,241,911 | 145,000,000 | - New non-current bank borrowings of RMB 23,241,911 were secured by land use rights with a carrying amount of RMB 40,220,033[39] - Borrowings of RMB 100,000,000 are guaranteed by a subsidiary of the Company and a director, and are subject to certain financial covenant terms[37] Share Capital As of June 30, 2025, and December 31, 2024, the company's total registered domestic shares and H shares remained unchanged at 133,400,000 shares, with a share capital of RMB 133,400,000, indicating a stable capital structure - Total share capital is RMB 133,400,000, with a total of 133,400,000 shares, consistent with the end of 2024[42] Related Party Disclosures During the period, there were no rental expenses or utility transactions with related parties; key management personnel compensation totaled RMB 2.25 million, an 10.8% increase from the prior period; the maximum outstanding amount due from a key shareholder was RMB 0.62 million; and amounts due to a key shareholder involved a deposit for a trademark license agreement Key Management Personnel Compensation | Item | 2025 (RMB Yuan) | 2024 (RMB Yuan) | | :--- | :--- | :--- | | Short-term benefits | 2,205,333 | 1,950,262 | | Contributions to defined contribution retirement plans | 49,607 | 84,782 | | Total | 2,254,940 | 2,035,044 | - The maximum outstanding amount due from a key shareholder was approximately RMB 624,293, which is unsecured, interest-free, and repayable on demand[45][46] - Amounts due to a key shareholder involve a RMB 0.6 million deposit paid to Shanshan Group under a trademark license agreement[47] Fair Value Measurement of Financial Instruments The company's financial assets measured at fair value through profit or loss (listed equity investments) are classified as Level 1, and bills receivable as Level 2; as of June 30, 2025, listed equity investments had a fair value of RMB 0.45 million and bills receivable RMB 0.84 million, with no transfers between Level 1 and Level 2 fair value measurements during the period Financial Assets Measured at Fair Value | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | Fair value hierarchy level | | :--- | :--- | :--- | :--- | | Financial assets at fair value through other comprehensive income – Bills receivable | 839,008 | 100,000 | Level 2 | | Financial assets at fair value through profit or loss – Listed equity investments | 452,364 | 645,910 | Level 1 | - Fair value hierarchy levels: Level 1 for quoted prices in active markets; Level 2 for observable inputs; Level 3 for unobservable inputs[50] Commitments As of June 30, 2025, total future minimum lease payments under non-cancellable operating leases amounted to RMB 4.18 million (not later than one year); capital commitments included contracted but not provided for acquisition of property, plant and equipment of RMB 6.12 million, and construction of the project of RMB 62.04 million, totaling RMB 68.16 million - Total future minimum lease payments under non-cancellable operating leases due: not later than one year is RMB 4,178,249[53] Capital Commitments | Item | As of June 30, 2025 (RMB Yuan) | As of December 31, 2024 (RMB Yuan) | | :--- | :--- | :--- | | Contracted but not provided for – acquisition of property, plant and equipment | 6,120,316 | 6,119,751 | | Contracted but not provided for – construction of the project | 62,037,492 | 66,837,124 | | Total | 68,157,808 | 72,956,875 | Credit Facilities As of June 30, 2025, the Group had total bank facilities of RMB 130 million, of which RMB 23.24 million was utilized, leaving approximately RMB 106.76 million unutilized, with these facilities secured by land use rights and guaranteed by a subsidiary - The Group has obtained bank facilities totaling RMB 130,000,000, of which RMB 23,241,911 has been utilized[56] - Unutilized bank facilities amount to approximately RMB 106,758,089[56] - These bank facilities are secured by land use rights with a carrying amount of RMB 40,220,033 and guaranteed by a subsidiary of the Company[56] Contingent Liabilities As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities[57] Management Discussion and Analysis This section provides an overview of the Group's business performance, financial results, working capital management, liquidity, and future plans for the reporting period Business Review In H1 2025, China's apparel retail market saw slower recovery and intensified competition in menswear, leading to rising operating costs; the Group, guided by "high-quality development," focused on core markets, optimized stores and online business, resulting in a 10.6% revenue decrease to RMB 425.2 million and an 8.3% profit decrease to RMB 12.1 million, while actively promoting the SHANSHAN brand and advancing the 5G new quality productivity industrial park project - From January to June 2025, retail sales of apparel, footwear, and knitwear by enterprises above designated size nationwide increased by 3.1% year-on-year, while online retail sales of physical apparel goods increased by 1.4% year-on-year, indicating a slowdown in recovery[58] - The Group's operating revenue slightly decreased by approximately 10.6% to RMB 425.2 million for the period compared to the same period in 2024, and profit and total comprehensive income attributable to owners of the Company was RMB 12.1 million, a slight decrease of approximately 8.3% compared to the same period in 2024[59] - The Group, as the "Exclusive Partner for Suits" of China International Fashion Week, promoted the SHANSHAN brand's "Oriental Gentleman" theme, focusing on the suit mega-item plan[60] - The Shanshan Brand 5G New Quality Productivity Industrial Park project is steadily progressing, expected to be completed in Q4 2025, aiming to create a benchmark industrial park integrating apparel R&D, design, new retail live-streaming base, intelligent manufacturing, and smart warehousing[60] - The number of retail stores was adjusted from 662 as of December 31, 2024, to 588 as of June 30, 2025, a decrease of approximately 11.2%[61] Financial Performance Analysis This section provides a detailed analysis of changes in financial indicators for the period, including revenue decline, reduced gross profit, lower other income and administrative expenses, and increased impairment loss reversals Revenue The Group's total revenue decreased by 10.6% year-on-year to RMB 425.2 million, primarily due to reduced sales to distributors and franchisees from a core market strategy, and lower e-commerce platform revenue from optimizing live-streaming stores and private domain business - The Group's total revenue slightly decreased by approximately 10.6% from RMB 475.7 million for the six months ended June 30, 2024, to RMB 425.2 million for the current period[62] - The decrease in revenue was primarily due to reduced sales to distributors and franchisees as a result of the strategy to focus on core markets, and a decline in e-commerce platform revenue from optimizing live-streaming stores and private domain business[62] Revenue by Sales Channel | Sales Channel | 2025 (RMB Thousand) | Share (%) | 2024 (RMB Thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Sales to distributors | 31,487 | 7.4 | 47,316 | 9.9 | | E-commerce platforms | 146,022 | 34.3 | 171,230 | 36.0 | | Self-operated retail stores | 73,348 | 17.3 | 74,109 | 15.6 | | Sales to franchisees | 78,999 | 18.6 | 94,390 | 19.8 | | Workwear | 44,627 | 10.5 | 34,833 | 7.3 | | Trademark licensing income | 50,730 | 11.9 | 53,791 | 11.4 | Revenue by Brand | Brand | 2025 (RMB Thousand) | Share (%) | 2024 (RMB Thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | FIRS | 286,982 | 67.5 | 339,122 | 71.3 | | SHANSHAN | 136,070 | 32.0 | 133,170 | 28.0 | Gross Profit The Group's gross profit decreased by 8.7% year-on-year to RMB 179.1 million, consistent with the decline in revenue - The Group's gross profit slightly decreased by approximately 8.7% from RMB 196.2 million for the six months ended June 30, 2024, to RMB 179.1 million for the current period[65] Other Income Other income significantly decreased by 81.3% year-on-year to RMB 0.3 million, primarily due to reduced raw material sales and a high-interest bank fixed deposit income in 2024 - The Group's other income decreased by approximately 81.3% from RMB 1.6 million for the six months ended June 30, 2024, to RMB 0.3 million for the current period[66] - Primarily due to reduced raw material sales by the Group and a high-interest bank fixed deposit income in 2024[66] Net Other Gains and Losses The period saw a turnaround from a loss of RMB 1.6 million in the prior period to a gain of RMB 1.1 million, mainly due to a charitable donation for an earthquake in the prior period - During the current period, the Group recorded a turnaround from other losses of RMB 1.6 million for the six months ended June 30, 2024, to other gains of RMB 1.1 million for the current period[67] - Primarily due to the Group's charitable donation of winter relief supplies for the Jishishan earthquake in Linxia, Gansu, China, for the six months ended June 30, 2024[67] Selling and Distribution Expenses Selling and distribution expenses decreased by 2.7% year-on-year to RMB 147.6 million, mainly due to reduced franchisee commissions resulting from lower revenue from cooperative franchisee channels - The Group's selling and distribution expenses decreased by approximately 2.7% from RMB 151.7 million for the six months ended June 30, 2024, to RMB 147.6 million for the current period[68] - Primarily due to a decrease in franchisee commissions resulting from lower revenue from cooperative franchisee channels[68] Administrative Expenses Administrative expenses decreased by 14.2% year-on-year to RMB 18.7 million, mainly due to reduced professional consulting fees - The Group's administrative expenses decreased by approximately 14.2% from RMB 21.8 million for the six months ended June 30, 2024, to RMB 18.7 million for the current period[69] - Primarily due to a reduction in the Group's professional consulting fees during the current period[69] Net Reversal of Impairment Losses on Trade Receivables A net reversal of impairment losses on trade receivables of RMB 3.4 million was recorded for the period, a significant increase from RMB 0.1 million in the prior period, mainly due to the recovery of overdue payments from a workwear customer - A net reversal of impairment losses on trade receivables of RMB 3.4 million was recorded for the current period, compared to a net reversal of impairment losses of RMB 0.1 million for the six months ended June 30, 2024[70] - Primarily due to the Group's recovery of overdue payments of approximately RMB 3.5 million from a workwear customer[70] Net Reversal of Impairment Losses on Deposits and Other Receivables The net reversal of impairment losses on deposits and other receivables remained at RMB 0.1 million for the period - The net reversal of impairment losses on deposits and other receivables remained at RMB 0.1 million for the current period[71] Finance Costs Finance costs decreased by 34.3% year-on-year to RMB 2.3 million, primarily due to a decrease in bank borrowing interest rates and the capitalization of certain finance costs - The Group's finance costs decreased by approximately 34.3% from RMB 3.5 million for the six months ended June 30, 2024, to RMB 2.3 million for the current period[72] - Primarily due to a decrease in bank borrowing interest rates and the capitalization of certain finance costs[72] Income Tax Expense Income tax expense decreased by 43% year-on-year to RMB 3.6 million - Income tax expense for the current period was RMB 3.6 million (for the six months ended June 30, 2024: RMB 6.4 million), a year-on-year decrease of 43%[73] Profit for the Period The Group's profit for the period decreased by 8.3% year-on-year to RMB 12.1 million - The Group's profit decreased by 8.3% from RMB 13.2 million for the six months ended June 30, 2024, to RMB 12.1 million for the current period[74] Working Capital Management During the period, average inventory turnover days increased to 191 days, average trade receivables turnover days increased to 93 days, and average trade payables turnover days increased to 121 days Working Capital Turnover Days | Indicator | For the six months ended June 30, 2025 | For the year ended December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Average inventory turnover days | 191 | 148 | Increase 43 days | | Average trade receivables turnover days | 93 | 84 | Increase 9 days | | Average trade payables turnover days | 121 | 107 | Increase 14 days | - The increase in average inventory turnover days was mainly due to lower-than-expected sales of spring products[75] - The increase in average trade receivables turnover days was mainly due to the Group's adaptation to market conditions by moderately extending collection periods[75] - The increase in average trade payables turnover days was mainly due to extended credit periods from suppliers[75] Liquidity and Financial Resources As of June 30, 2025, cash and cash equivalents decreased to RMB 59.1 million, total bank borrowings increased to RMB 168.2 million, and the gearing ratio rose from 17.7% at the end of 2024 to 22.3% - During the period, the Group's cash and cash equivalents were approximately RMB 59.1 million (December 31, 2024: approximately RMB 106.5 million), a decrease of 44.5%[76] - As of June 30, 2025, and December 31, 2024, the Group's total bank borrowings were approximately RMB 168.2 million and RMB 145.0 million respectively, an increase of 16%[76] - As of June 30, 2025, and December 31, 2024, the Group's gearing ratio (total borrowings divided by total assets) was approximately 22.3% and 17.7% respectively[76] Treasury Policy The Group adopts a prudent financial management approach for its treasury policy, maintaining a robust liquidity position, with the Board closely monitoring liquidity and appropriately investing surplus cash - The Group has adopted a prudent financial management approach for its treasury policy, thus maintaining a robust liquidity position throughout the current period[77] - The Board closely monitors the Group's liquidity position to ensure that the liquidity structure of the Group's assets, liabilities, and other commitments can meet its funding needs from time to time[77] Foreign Exchange Risk and Hedging The Group's transactions are mostly denominated in RMB, but H-share dividend payments are made in HKD, exposing the Group to market risks from foreign exchange rate fluctuations - Most of the Group's transactions are denominated in RMB[78] - Any dividend payments to H-share shareholders are made or will be made in HKD, which exposes the Group to market risks arising from foreign exchange rate fluctuations[78] Dividends The Board has resolved not to declare any interim dividend for the current period - The Board has resolved not to declare any interim dividend for the current period[79] Employees and Remuneration Policy As of June 30, 2025, the Group had 272 employees, a 16% decrease from the prior period, with employee costs for the period totaling RMB 20.9 million, a 12.5% year-on-year decrease, and remuneration policy based on experience, responsibility, market conditions, and performance - As of June 30, 2025, the Group had 272 employees (June 30, 2024: 324 employees), a decrease of 16%[80] - Employee costs (including directors' emoluments) for the current period were approximately RMB 20.9 million (for the six months ended June 30, 2024: RMB 23.9 million), a year-on-year decrease of 12.5%[80] - The remuneration policy for directors and senior management is determined based on their experience, level of responsibility, and general market conditions, with discretionary bonuses and other performance-based incentives linked to the Group's profit performance and individual performance[80] Significant Investments, Acquisitions and Disposals The Group held no significant investments and undertook no material acquisitions or disposals during the period - The Group held no significant investments and undertook no material acquisitions or disposals of assets, subsidiaries, associates, or joint ventures during the current period[81] Future Plans for Material Investments or Capital Assets The industrial park project has an estimated total cost of RMB 280 million, with RMB 41.32 million for land use rights settled and related investment and construction contracts signed as of June 30, 2025, and future funding expected from existing internal resources and bank borrowings - The total cost of the industrial park project is estimated to be RMB 280 million[82] - As of June 30, 2025, the Company had cumulatively settled land use rights consideration of RMB 41,321,952 and signed a series of investment and construction contracts related to the industrial park project[82] - The Company's expected funding sources for the coming year will temporarily come from the Group's existing internal resources and bank borrowings for the development of the industrial park project[82] Capital Structure The Company's capital structure as of June 30, 2025, remained unchanged compared to December 31, 2024 - The Company's capital structure as of June 30, 2025, remained unchanged compared to December 31, 2024[83] Pledge of Assets As of June 30, 2025, the Group had pledged deposits of RMB 11.8 million for bills payable margins and industrial park project construction margins, and non-current bank borrowings of RMB 23.2 million were secured by the Group's land use rights - As of June 30, 2025, the Group had pledged deposits of RMB 11.8 million for bills payable margins and industrial park project construction margins[84] - The Group's non-current bank borrowings of RMB 23.2 million are secured by the Group's land use rights[84] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[85] Mandatory Conditional Cash Offer As of June 30, 2025, the offeror held 65.10% of Ningbo Liankangcai's equity through equity transfer agreements, resulting in the offeror, Shaanxi Maoye, and Ningbo Liankangcai collectively owning approximately 39.00% of the company's total issued shares, thus requiring the offeror to make a mandatory conditional general cash offer under Rule 26.1 of the Takeovers Code - As of June 30, 2025, the offeror entered into equity transfer agreements with the sellers, pursuant to which the offeror held 65.10% of Ningbo Liankangcai's equity[86] - The offeror, Shaanxi Maoye, and Ningbo Liankangcai collectively owned 52,021,000 domestic shares, representing approximately 39.00% of the total issued shares as of the announcement date[86] - Pursuant to Rule 26.1 of the Takeovers Code, the offeror is required to make a mandatory conditional general cash offer for all issued domestic shares and H shares (other than those already owned or agreed to be acquired by the concert group) in cash under the Takeovers Code[87] Events After the Reporting Period Except for the Mandatory Conditional Cash Offer announcement and its subsequent developments, no other significant events occurred after the reporting period up to the announcement date that could affect the Group - Except for the MGO announcement and its subsequent developments, no other significant events occurred after the reporting period and up to the date of this announcement that could affect the Group[89] Outlook and Plans In H2 2025, the Group will continue its "high-quality development" strategy, focusing on talent, brand, and capital to build a multi-brand, multi-format, diversified, high-return, and high-growth model, planning to establish omni-channel marketing, deepen the "suit mega-item" strategy, expand into "light business" and "light outdoor" new products, and ensure the quality and progress of the 5G new quality productivity industrial park construction to enhance brand awareness and market competitiveness - In the second half of 2025, the Group will continue to focus on the theme of "high-quality development," centering on talent, brand, and capital, striving to build a multi-brand, multi-format, diversified, high-return, and high-growth development model[90] - The Group will continue to build a parallel online and offline development model, relying on product innovation to promote the joint development of offline stores and online platforms, and select some benchmark offline stores to pilot live-streaming models[90] - The Group will continue to deepen the implementation of its "suit mega-item" strategy, accelerate the expansion of new product series such as "light business" and "light outdoor," and build a system with prominent main products and a rich array of tiered products[90] - The Group will ensure the quality and quantity of the 5G new quality productivity industrial park construction, striving to build a modern digital intelligent industrial park integrating smart production, intelligent warehousing, new retail live-streaming bases, and brand incubation[91] Other Information This section covers the company's corporate governance, audit committee review, securities transactions, compliance with codes, availability of the interim report, and board composition Compliance with Corporate Governance Code The company is committed to high corporate governance standards and complies with all code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules, with one deviation where the roles of Chairman and Chief Executive are combined by Mr. Luo Yefei, which the Board believes maximizes operational efficiency and is safeguarded by independent non-executive directors - The Company has complied with all code provisions of the Corporate Governance Code set out in Part 2 of Appendix C1 to the Listing Rules during the current period, except for the roles of Chairman and Chief Executive not being separated, with Mr. Luo Yefei, an executive director and Chairman of the Board, holding both positions[92] - The Board believes that the current structure facilitates the execution of the Group's business strategies and maximizes operational efficiency, and the presence of three independent non-executive directors provides independent perspectives, ensuring a balance of power[92][93] Audit Committee The Audit Committee, comprising all three independent non-executive directors, has reviewed and agreed to the Group's unaudited condensed consolidated interim results and this announcement for the current period - The Audit Committee, comprising all three independent non-executive directors, has reviewed and agreed to the Group's unaudited condensed consolidated interim results and this announcement for the current period[94] Purchase, Sale or Redemption of the Company's Listed Securities During the period, neither the company nor its subsidiaries redeemed, purchased, or sold any H shares listed on the Stock Exchange, and the company held no treasury shares - During the current period, the Company did not redeem any of its H shares listed on the Stock Exchange, nor did the Company or any of its subsidiaries purchase or sell any such H shares[95] - As of June 30, 2025, and up to the date of this announcement, the Company held no treasury shares[95] Compliance with Model Code The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix C3 of the Listing Rules as its code of conduct for directors and supervisors dealing in company securities, with all directors and supervisors confirming compliance during the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 to the Listing Rules as its code of conduct for its directors and supervisors dealing in the Company's securities[96] - All directors and supervisors confirmed their compliance with the Model Code during the current period[96] Interim Report Available for Inspection The company's interim report for the current period will be published on the Stock Exchange and company websites and sent to shareholders upon request - The Company's interim report for the current period will be published on the websites of the Stock Exchange (https://www.hkexnews.hk/) and the Company (https://chinafirs.com/) respectively, and will be sent to shareholders (if requested) at the appropriate time[97] Board of Directors As of the announcement date, the Board of Directors includes executive directors Luo Yefei (Chairman), Cao Yang (Vice Chairman), Yan Jingfen, Zhou Yumei; non-executive directors Mao Weiyong, Wang Mingming; and independent non-executive directors Zhou Zhengning (Audit Committee Chairman), Wang Yashan, Wu Xuekai - The Board of Directors includes executive directors Mr. Luo Yefei (Chairman), Mr. Cao Yang (Vice Chairman), Ms. Yan Jingfen, and Ms. Zhou Yumei[99] - Non-executive directors include Mr. Mao Weiyong and Mr. Wang Mingming[99] - Independent non-executive directors include Mr. Zhou Zhengning (Chairman of the Audit Committee), Mr. Wang Yashan, and Mr. Wu Xuekai[99]