先施(00244) - 2025 - 中期业绩

Condensed Consolidated Interim Financial Statements Condensed Consolidated Statement of Profit or Loss The Group recorded a net loss of HK$26.468 million in H1 2025, a slight improvement from H1 2024, primarily due to significantly reduced finance costs Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator | H1 2025 (HK$ thousand) | H1 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 64,308 | 65,050 | (742) | -1.14% | | Cost of Sales | (33,904) | (29,116) | (4,788) | 16.44% | | Other Income and Net Gains | 10,180 | 10,368 | (188) | -1.81% | | Net Unrealized Loss on Securities Trading | (669) | (122) | (547) | 448.36% | | Selling and Distribution Expenses | (34,155) | (33,476) | (679) | 2.03% | | General and Administrative Expenses | (24,126) | (25,091) | 965 | -3.85% | | Other Net Operating Expenses | (23) | – | (23) | - | | Finance Costs | (8,073) | (14,275) | 6,202 | -43.45% | | Loss Before Income Tax | (26,462) | (26,662) | 200 | -0.75% | | Income Tax Expense | (6) | – | (6) | - | | Loss for the Period | (26,468) | (26,662) | 194 | -0.73% | | Loss Attributable to Owners of the Company | (26,684) | (27,260) | 576 | -2.11% | | Basic and Diluted Loss Per Share (HK$) | (0.02) | (0.02) | 0.00 | 0.00% | Condensed Consolidated Statement of Comprehensive Income The Group's H1 2025 total comprehensive loss increased to HK$26.423 million from HK$24.774 million in H1 2024, mainly due to the absence of a property revaluation surplus Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Indicator | H1 2025 (HK$ thousand) | H1 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Loss for the Period | (26,468) | (26,662) | 194 | -0.73% | | Other Comprehensive Income: | | | | | | Exchange Differences Arising from Translation of Foreign Operations | 45 | 5 | 40 | 800.00% | | Surplus on Revaluation of Leasehold Land and Buildings | – | 1,883 | (1,883) | -100.00% | | Total Comprehensive Loss for the Period | (26,423) | (24,774) | (1,649) | 6.66% | | Attributable to Owners of the Company | (25,853) | (25,415) | (438) | 1.72% | | Attributable to Non-controlling Interests | (570) | 641 | (1,211) | -188.92% | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's net assets significantly decreased by 28.60% to HK$65.967 million, primarily due to a substantial increase in net current liabilities Condensed Consolidated Statement of Financial Position (As at June 30, 2025) | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | ASSETS | | | | | | Non-current Assets | 277,125 | 266,636 | 10,489 | 3.93% | | Current Assets | 73,097 | 77,306 | (4,209) | -5.44% | | LIABILITIES | | | | | | Current Liabilities | 268,750 | 81,536 | 187,214 | 229.61% | | Non-current Liabilities | 15,505 | 170,016 | (154,511) | -90.88% | | EQUITY | | | | | | Net Assets | 65,967 | 92,390 | (26,423) | -28.60% | | Equity Attributable to Owners of the Company | 20,737 | 46,590 | (25,853) | -55.49% | | Non-controlling Interests | 45,230 | 45,800 | (570) | -1.24% | | Total Equity | 65,967 | 92,390 | (26,423) | -28.60% | | Net Current Liabilities | (195,653) | (4,230) | (191,423) | 4525.37% | - Net current liabilities significantly increased from HK$4.230 million as of December 31, 2024, to HK$195.653 million as of June 30, 2025, a 4525.37% increase, indicating a substantial rise in liquidity pressure[6] Notes to the Condensed Consolidated Interim Financial Statements 1. Company Information The Company is a limited liability company incorporated in Hong Kong, primarily engaged in department store operations, securities trading, and life insurance provision, with Merill Holdings Limited as its direct holding company - The Group's principal activities include operating department stores, trading securities, and providing life insurance, with no change in business nature during the period[8] - Merill Holdings Limited is the Company's direct holding company, with Dr. Lam Hiu Fung and Ms. So Kiu Wah as ultimate shareholders, holding 70% and 30% equity respectively in Merill Holdings[8] 2. Basis of Preparation The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and the Listing Rules, presented in HK$, with accounting policies consistent with annual statements except for adopted HKFRSs, and management assessing going concern with various measures to improve profitability and liquidity - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the applicable disclosure requirements of Appendix D2 to the Listing Rules of the Stock Exchange[9] - The current period's financial information (as comparative data) is extracted from the statutory annual consolidated financial statements for the year ended December 31, 2024, which received an unmodified auditor's report but highlighted material uncertainties regarding going concern[10] Going Concern Basis The Group recorded a net loss of HK$26.468 million and had net current liabilities of HK$195.653 million with cash and bank balances of HK$8.926 million in H1 2025, indicating significant going concern uncertainty, despite management's measures and financial support commitments - The Group recorded a net loss of HK$26.468 million in H1 2025, with net current liabilities of HK$195.653 million and cash and bank balances of HK$8.926 million, indicating significant uncertainty regarding its ability to continue as a going concern[11] - Management has implemented measures to improve profitability and liquidity, including revising marketing strategies, controlling capital and operating expenditures, negotiating rent reductions, and identifying asset realization opportunities[11] - Dr. Lam and Merill Holdings have committed to providing continuous financial support for at least twelve months, and a related company has provided a loan facility of up to HK$260 million, of which HK$80.392 million remained undrawn as of June 30, 2025[11][12] 3. Adoption of New and Revised HKFRSs The Group adopted HKAS 21 (Amendment) "Lack of Exchangeability" on January 1, 2025, with no material impact on the interim financial statements, and other new HKFRSs are not expected to have a significant effect - The Group adopted HKAS 21 (Amendment) "Lack of Exchangeability" on January 1, 2025, which had no material impact on the condensed consolidated interim financial statements[14][15] - Several new and revised HKFRSs issued but not yet effective are not expected to have a significant impact on the Group's condensed consolidated interim financial statements[16][17] 4. Segment Information The Group reports segment information by operating segments (department store, securities trading, and others) and geographical areas (Hong Kong, UK, and others), with management assessing performance based on adjusted loss before income tax - The Group's operating segments include department store business (providing consumer goods), securities trading (trading Hong Kong and overseas securities), and others (sub-leasing properties and life insurance)[18][20] - Segment results are assessed based on reportable segment profit/(loss), which is an adjusted loss before income tax, excluding certain interest income, unallocated income/(expenses), and finance costs[21] (a) Operating Segments The department store business segment saw a slight revenue decrease but an increased segment loss in H1 2025, while the securities trading segment recorded net unrealized losses despite increased dividend income, and other segments' losses slightly decreased Operating Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2025 Results (HK$ thousand) | 2024 Results (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Department Store Business | 64,263 | 65,293 | (23,709) | (17,309) | | Securities Trading | 376 | (257) | (1,253) | (1,340) | | Others | 15,307 | 16,735 | (3,415) | (3,628) | | Total (after elimination) | 64,899 | 65,812 | (28,377) | (22,277) | Operating Segment Assets and Liabilities (As at June 30, 2025) | Segment | 2025 Assets (HK$ thousand) | 2024 Assets (HK$ thousand) | 2025 Liabilities (HK$ thousand) | 2024 Liabilities (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Department Store Business | 117,305 | 116,979 | 103,855 | 109,563 | | Securities Trading | 6,967 | 7,636 | 1,032 | 948 | | Others | 20,326 | 36,165 | 5,395 | 5,194 | | Total (after elimination) | 129,551 | 129,932 | 95,235 | 84,857 | (b) Geographical Information The vast majority of the Group's revenue from external customers is generated in Hong Kong, with a small contribution from the UK and no revenue from other regions Revenue by Geographical Information (For the six months ended June 30) | Region | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 64,204 | 64,949 | | United Kingdom | 104 | 101 | | Others | – | – | | Total | 64,308 | 65,050 | 5. Revenue, Other Income and Net Gains The Group's total revenue slightly decreased, with increased sales of own goods offset by reduced counter sales and consignment income, while other income and net gains remained stable, primarily from imputed interest income from Win Dynamic Revenue Sources (For the six months ended June 30) | Revenue Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sales of goods – own goods | 51,460 | 48,944 | | Income from counter sales and consignment | 12,744 | 16,335 | | Net realized loss on securities trading | – | (330) | | Rental income | 104 | 101 | | Total Revenue | 64,308 | 65,050 | Other Income and Net Gains (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | 194 | 156 | | Imputed interest income from Win Dynamic donation | 9,426 | 9,424 | | Dividends from financial assets at fair value through profit or loss | 376 | 72 | | Net exchange (loss)/gain | (31) | 26 | | Others | 215 | 690 | | Total | 10,180 | 10,368 | - The transaction price for the customer loyalty program provision was HK$1,014,000 (2024: HK$1,202,000), expected to be recognized as revenue within one year[34] 6. Loss Before Income Tax The Group's loss before income tax was primarily influenced by employee benefit expenses, depreciation, inventory provisions, expected credit loss provisions, and leasehold property-related charges, with employee benefits and lease charges increasing while depreciation significantly decreased Major Deductions for Loss Before Income Tax (For the six months ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Employee benefit expenses (excluding directors' and chief executive's emoluments) | 18,668 | 16,848 | | Depreciation | 9,831 | 16,670 | | Provision for inventories | 389 | 580 | | Provision for expected credit losses on other receivables | 632 | 626 | | Other charges related to leasehold properties | 17,214 | 9,472 | 7. Income Tax Expense No provision for Hong Kong profits tax was made due to the absence of assessable profits in Hong Kong during the period, while other regions incurred a small amount of assessable profits tax Income Tax Expense (For the six months ended June 30) | Region | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | – | – | | Other Regions | 6 | – | | Total | 6 | – | 8. Loss Per Share Attributable to Owners of the Company For the six months ended June 30, 2025, both basic and diluted loss per share attributable to owners of the Company remained at HK$0.02, consistent with the prior period, due to unchanged ordinary shares in issue and no potential dilutive ordinary shares Loss Per Share (For the six months ended June 30) | Indicator | 2025 (HK$) | 2024 (HK$) | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company | (26,684) | (27,260) | | Weighted Average Number of Ordinary Shares in Issue | 1,313,962,560 | 1,313,962,560 | | Basic and Diluted Loss Per Share | (0.02) | (0.02) | 9. Dividends The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025, consistent with the corresponding period in 2024 - The Board of Directors resolved not to declare an interim dividend for H1 2025 (2024: nil)[40] 10. Property, Plant and Equipment As of June 30, 2025, the net book value of property, plant and equipment increased to HK$20.947 million, primarily due to additions and lease changes, partially offset by depreciation and disposals Movement in Property, Plant and Equipment (As at June 30, 2025) | Item | Owned Assets (HK$ thousand) | Right-of-use Assets (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | | Net Book Value as at January 1, 2025 | 1,764 | 14,319 | 16,083 | | Additions | 1,397 | 274 | 1,671 | | Lease Changes | – | 13,064 | 13,064 | | Depreciation for the Period | (567) | (9,264) | (9,831) | | Disposals | (38) | – | (38) | | Written Off | (2) | – | (2) | | Net Book Value as at June 30, 2025 | 2,554 | 18,393 | 20,947 | 11. Prepayments, Deposits, Other Receivables and Other Assets These assets primarily comprise amounts receivable from Win Dynamic donation, rental deposits, amounts due from credit card companies, and prepaid deposits for related company loans, with the Win Dynamic donation receivable showing a significant increase Prepayments, Deposits, Other Receivables and Other Assets (As at June 30, 2025) | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Receivable from Win Dynamic donation | 202,527 | 193,101 | | Prepayments, deposits and other receivables | 40,060 | 39,040 | | Other assets | 4,421 | 4,421 | | Provision for expected credit losses | (1,886) | (1,254) | | Total | 245,122 | 235,308 | | Less: Classified as current portion | (20,867) | (16,678) | | Classified as non-current portion | 224,255 | 218,630 | - Amounts receivable from Win Dynamic donation increased from HK$193.101 million as of December 31, 2024, to HK$202.527 million as of June 30, 2025[42] 12. Trade Payables As of June 30, 2025, total trade payables were HK$40.310 million, a slight decrease from HK$41.392 million as of December 31, 2024, with a reduction in current to three-month payables and a significant increase in four to six-month payables Ageing Analysis of Trade Payables (As at end of reporting period) | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current to three months | 30,394 | 38,083 | | Four to six months | 7,794 | 1,195 | | Seven to twelve months | 109 | 55 | | Over one year | 2,013 | 2,059 | | Total | 40,310 | 41,392 | 13. Leases The Group, as a lessee, leases retail stores and warehouses for typical terms of 1 to 3 years, with right-of-use assets and lease liabilities increasing due to additions and lease modifications - The Group leases retail stores and warehouses, with lease terms generally ranging from 1 to 3 years, and some lease contracts include extension and termination options as well as variable lease payments[45] (b) Lease Liabilities Total lease liabilities increased from HK$13.643 million at the end of 2024 to HK$18.169 million as of June 30, 2025, primarily due to lease modifications and additions, partially offset by payments Movement in Lease Liabilities (As at June 30, 2025) | Item | H1 2025 (HK$ thousand) | FY 2024 (HK$ thousand) | | :--- | :--- | :--- | | At beginning of period/year | 13,643 | 11,913 | | Interest accrued during period/year | 1,031 | 1,609 | | Payments | (9,843) | (31,997) | | Additions | 274 | 9,389 | | Lease Changes | 13,064 | 22,729 | | At end of period/year | 18,169 | 13,643 | | Analysed as: Within one year | 9,597 | 7,319 | | Second to fifth year | 8,572 | 6,324 | 14. Bank Borrowings, Other Loans and Loans from Related Companies The Group's secured bank borrowings slightly increased, while other unsecured loans bear 2% annual interest, and unsecured related company loans (from Dr. Lam and Ms. So) bear HIBOR plus 5% interest, due March 2026, with approximately HK$179.6 million utilized - Secured bank borrowings amounted to HK$8.834 million (December 31, 2024: HK$8.572 million), bearing interest at HIBOR plus 1% per annum, and are secured by bank balances and time deposits of HK$11.103 million[48][49] - Other loans amounted to HK$576 thousand (December 31, 2024: HK$570 thousand), are unsecured, bear interest at 2% per annum, and are not repayable within 12 months after the reporting period[50][53] - Loans from related companies (owned by Dr. Lam and Ms. So) are unsecured, bear interest at HIBOR plus 5% per annum, and are repayable by March 20, 2026; approximately HK$179.6 million was utilized as of June 30, 2025[54][89] 15. Share Capital There was no change in the Company's share capital for the six months ended June 30, 2025, remaining at HK$469.977 million, comprising 1,313,962,560 ordinary shares Share Capital (As at June 30, 2025) | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Issued and fully paid: 1,313,962,560 ordinary shares | 469,977 | 469,977 | 16. Litigation The Company is involved in a lawsuit with Win Dynamic regarding a deed of gift from 2020, where Win Dynamic pledged approximately HK$260.443 million from share sales to the Company, but later claimed the deed invalid, a claim the Company and Welab Group Holdings Limited dispute, with the litigation ongoing and related amounts recognized as assets - Win Dynamic executed a deed in 2020, pledging approximately HK$260.443 million from the sale of the Company's shares as working capital for the Company[57] - In 2021, Win Dynamic claimed the deed was invalid and immediately cancelled it, citing undue influence, duress, and undervalue transactions, a claim not recognized by the Company's Board of Directors (excluding dissenting directors)[58][59] - Welab and the Company initiated legal proceedings against Win Dynamic and Mr. Ma King Hin in the High Court to enforce the deed and declare its validity; the Company has recognized HK$200.641 million (net of expected credit loss provision) as receivable from Win Dynamic donation and HK$9.426 million in imputed interest income[60][62][73] 17. Commitments and Contingent Liabilities As of the reporting period end, the Group's outstanding commitments primarily consist of irrevocable letters of credit totaling HK$1.536 million Commitments and Contingent Liabilities (As at end of reporting period) | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Irrevocable letters of credit | 1,536 | 1,581 | Management Discussion and Analysis Interim Results The Group's principal activities during the review period were operating department stores, trading securities, and providing life insurance - The Group's principal activities during the review period were operating department stores, trading securities, and providing life insurance[76] Overall Financial Review The Group's consolidated revenue slightly decreased by 1.2% in H1 2025, with net loss marginally improving by 0.7%, while gross profit fell by 15.3% due to market weakness and promotions, partially offset by a 43.4% reduction in finance costs Overall Financial Performance (For the six months ended June 30) | Indicator | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenue | 64.3 | 65.1 | (0.8) | -1.2% | | Net Loss | (26.5) | (26.7) | 0.2 | -0.7% | | Gross Profit | 30.4 | 35.9 | (5.5) | -15.3% | | Finance Costs | 8.1 | 14.3 | (6.2) | -43.4% | - The persistent weak consumer and retail market in Hong Kong led to extended promotional activities and price reductions in the department store business, consequently impacting gross profit[78] Revenue In H1 2025, the Group's revenue was HK$64.3 million, a 1.2% decrease from the prior year, primarily driven by the department store business Revenue Comparison (For the six months ended June 30) | Item | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 64.3 | 65.1 | (0.8) | -1.2% | | Department Store Business Revenue | 64.2 | 65.3 | (1.1) | -1.7% | Other Income and Net Gains Other income and net gains for H1 2025 amounted to HK$10.2 million, a 1.9% decrease from the prior year, primarily comprising stable imputed interest income from Win Dynamic donation Other Income and Net Gains Comparison (For the six months ended June 30) | Item | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Income and Net Gains | 10.2 | 10.4 | (0.2) | -1.9% | | Imputed Interest from Win Dynamic Donation | 9.4 | 9.4 | 0.0 | 0.0% | Selling and Distribution Expenses Selling and distribution expenses increased by 2.1% to HK$34.2 million in H1 2025, mainly due to higher employee benefit expenses and short-term lease fees, despite a reduction in depreciation expenses Selling and Distribution Expenses Major Components (For the six months ended June 30) | Item | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Selling and Distribution Expenses | 34.2 | 33.5 | 0.7 | 2.1% | | Depreciation Expenses | 8.1 | 16.4 | (8.3) | -50.6% | | Short-term Lease Fees and Other Occupancy Costs | 15.5 | 7.4 | 8.1 | 109.5% | | Employee Benefit Expenses | 9.4 | 8.3 | 1.1 | 13.3% | General and Administrative Expenses General and administrative expenses decreased by 4.0% to HK$24.1 million in H1 2025, primarily due to the absence of trademark registration fees in the current period, partially offset by increased depreciation expenses related to leased warehouses General and Administrative Expenses Comparison (For the six months ended June 30) | Item | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total General and Administrative Expenses | 24.1 | 25.1 | (1.0) | -4.0% | | Employee Benefit Expenses | 9.3 | 8.5 | 0.8 | 9.4% | | Trademark Registration Fees | 0.0 | 2.3 | (2.3) | -100.0% | Finance Costs Finance costs significantly decreased by 43.4% to HK$8.1 million in H1 2025, mainly attributable to reduced interest expenses on bank borrowings and loans from related companies Finance Costs Comparison (For the six months ended June 30) | Item | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Finance Costs | 8.1 | 14.3 | (6.2) | -43.4% | | Decrease in Bank Borrowing Interest Expense | - | - | (2.4) | - | | Decrease in Related Company Loan Interest Expense | - | - | (3.9) | - | Loss Attributable to Owners of the Company The loss attributable to owners of the Company for H1 2025 was HK$26.7 million, a 2.2% decrease from the prior year, indicating a slight improvement in overall profitability Loss Attributable to Owners of the Company Comparison (For the six months ended June 30) | Item | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Loss Attributable to Owners of the Company | 26.7 | 27.3 | (0.6) | -2.2% | Business Review Department Store Business In H1 2025, department store business revenue decreased by 1.7% to HK$64.2 million due to a weak Hong Kong consumer market, leading to extended promotions and price reductions, which increased segment loss by 37.0% to HK$23.7 million, while inventory levels decreased by 14.9% Department Store Business Performance (For the six months ended June 30) | Indicator | H1 2025 (HK$ million) | H1 2024 (HK$ million) | Change (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 64.2 | 65.3 | (1.1) | -1.7% | | Segment Loss | (23.7) | (17.3) | (6.4) | 37.0% | | Inventory Level (Period-end) | 32.0 | 37.6 | (5.6) | -14.9% | - The weak consumer and retail market in Hong Kong led to extended promotional activities and price reductions, adversely affecting the department store business performance[85] Securities Trading Business In H1 2025, the securities trading business recorded a net unrealized loss of approximately HK$0.7 million, while dividend income increased from HK$0.07 million to HK$0.4 million, with segment loss remaining at approximately HK$1.3 million, and the Group plans to regularly review and improve its investment portfolio Securities Trading Business Performance (For the six months ended June 30) | Indicator | H1 2025 (HK$ million) | H1 2024 (HK$ million) | | :--- | :--- | :--- | | Net Realized Loss | 0.0 | (0.3) | | Net Unrealized Loss | (0.7) | (0.1) | | Dividend Income | 0.4 | 0.07 | | Segment Loss | (1.3) | (1.3) | - The Group will regularly review and improve its investment portfolio based on market conditions and capital requirements[86] Prospects The Group anticipates continued challenges in the Hong Kong retail sector due to a weak consumer market and growing online shopping trends, but management will continuously monitor and adjust department store business strategies, remaining optimistic with support from Dr. Lam and Merill Holdings - The Hong Kong retail sector is expected to continue facing challenges from a weak consumer and retail market and the increasing preference of retail customers for online shopping[87] - The Group will continue to monitor and flexibly adjust its department store business operating strategies to navigate the challenging operating environment[87] - With the support of Dr. Lam and Merill Holdings, the Board of Directors remains optimistic about the Group's prospects[88] Liquidity and Financial Resources As of June 30, 2025, the Group's total cash and bank balances, pledged bank balances, and deposits amounted to approximately HK$20.0 million, a decrease from end-2024, facing net current liabilities of HK$195.7 million and a liquidity ratio of 0.27, indicating significant liquidity pressure, with management implementing measures to improve profitability and liquidity and monitoring exchange rate risks Liquidity Position (As at June 30, 2025) | Indicator | June 30, 2025 (HK$ million) | December 31, 2024 (HK$ million) | | :--- | :--- | :--- | | Cash and bank balances, pledged bank balances and deposits | 20.0 | 22.2 | | Pledged portion | 11.1 | 11.2 | | Unpledged cash and bank balances | 8.9 | 10.9 | | Interest-bearing bank borrowings | 8.8 | 8.6 | | Utilized related company loans | 179.6 | 157.6 | | Net current liabilities | 195.7 | 4.2 | | Equity attributable to owners of the Company | 20.7 | 46.6 | | Current Ratio | 0.27 | 0.95 | | Capital to Debt Ratio | 314% | 195% | - Management is implementing measures to improve profitability, control operating costs, and reduce capital expenditures to enhance operational performance and mitigate liquidity risks[91] - The Group currently has no foreign exchange hedging policy, but management will continue to closely monitor foreign exchange risks[92] Employees and Remuneration Policy As of June 30, 2025, the Group had 191 employees and offers a diverse remuneration package including basic salary, discretionary bonuses, sales commissions, defined benefit retirement plans, MPF, staff purchase discounts, medical, and training subsidies Number of Employees | Date | Number of Employees | | :--- | :--- | | June 30, 2025 | 191 | | December 31, 2024 | 199 | - The Group provides employee benefits such as basic salary, discretionary bonuses, sales commissions, defined benefit retirement plans, Mandatory Provident Fund schemes, staff purchase discounts, medical, and training subsidies[93] Interim Dividend The Board of Directors has resolved not to declare an interim dividend for H1 2025 - The Board of Directors has resolved not to declare an interim dividend for H1 2025[94] Directors' Interests in Transactions, Arrangements or Contracts Except as disclosed elsewhere in this announcement, no director or their associated entities had a material interest in any significant transaction, arrangement, or contract of the Group during H1 2025 - During H1 2025, no director or their respective associated entities had a material interest, directly or indirectly, in any transaction, arrangement, or contract entered into by the Company or any of its subsidiaries that was significant to the Group's business[95] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during H1 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during H1 2025[96] Directors' Interests in Competing Business No director was considered to have an interest in any business that competes or is likely to compete, directly or indirectly, with the Group's business during H1 2025 - During H1 2025, no director was considered to have an interest in any business that competes or is likely to compete, directly or indirectly, with the Group's business[97] Litigation The Group has no other material litigation apart from what is disclosed in Note 16 to the condensed consolidated interim financial statements - The Group has no other material litigation, with details provided in Note 16 to the condensed consolidated interim financial statements[98] Commitments and Contingent Liabilities The Group has no other material commitments apart from what is disclosed in Note 17 to the condensed consolidated interim financial statements - The Group has no other material commitments, with details provided in Note 17 to the condensed consolidated interim financial statements[99] Material Investments, Acquisitions and Disposals of Subsidiaries and Associates The Group did not undertake any material acquisitions or disposals of subsidiaries and associates, nor made any material investments, during H1 2025 - The Group did not undertake any material acquisitions or disposals of subsidiaries and associates, nor made any material investments, during H1 2025[100] Standard Code for Securities Transactions The Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules for directors' securities dealings, and all directors confirmed compliance during H1 2025 - The Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance with the code during H1 2025[101] Corporate Governance The Company complied with the Corporate Governance Code in Appendix C1 of the Listing Rules during H1 2025, except for code provision C.1.5, as one independent non-executive director was unable to attend the general meeting due to business arrangements - The Company complied with the Corporate Governance Code as set out in Appendix C1 of the Listing Rules during H1 2025, with the exception of code provision C.1.5[102] - Mr. Chung Chun Hung, an independent non-executive director, was unable to attend the Company's relevant general meeting during H1 2025 due to business arrangements[102] Audit Committee and Review of Financial Statements The Audit Committee, comprising three independent non-executive directors, reviewed the Group's accounting principles and practices, and discussed audit, risk management, internal control, and financial reporting matters, including the unaudited condensed consolidated interim financial statements for H1 2025 - The Audit Committee comprises three independent non-executive directors, with Mr. Yu Leung Fai as Chairman[103] - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed matters concerning audit, risk management, internal control, and financial reporting, including the review of the unaudited condensed consolidated interim financial statements for H1 2025[103] Publication of Interim Results and 2025 Interim Report on HKEX and Company Website This interim results announcement has been published on the HKEX and the Company's website, with the full 2025 interim report containing all required information to be dispatched to shareholders and published on the respective websites later - This interim results announcement has been published on the HKEX website (www.hkexnews.hk) and the Company's website (www.sincere.com.hk)[104](index=104&type=chunk) - The 2025 interim report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the HKEX and the Company's websites at a later date[104] Acknowledgement The Board extends its sincere gratitude to all employees for their dedication and loyalty, and to customers, suppliers, business partners, and shareholders for their continuous support during the period - The Board extends its sincere gratitude to all employees for their dedication and loyalty to the Group during the period, and to all customers, suppliers, business partners, and shareholders for their continuous support[105]