佳兆业健康(00876) - 2025 - 中期业绩

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The company reported a substantial reduction in loss for the period despite a decrease in revenue, primarily driven by a positive shift in financial asset fair value changes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30): | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 69,577 | 88,516 | -21.4% | | Cost of Sales | (44,383) | (50,664) | -12.4% | | Gross Profit | 25,194 | 37,852 | -33.5% | | Other Income, Gains and Losses, Net | 792 | 2,571 | -69.2% | | Selling and Distribution Costs | (21,760) | (23,920) | -9.0% | | Administrative Expenses | (14,729) | (19,631) | -25.0% | | Gain (Loss) on Fair Value Change of Financial Assets at Fair Value Through Profit or Loss | 8,979 | (12,028) | N/A (Turned from loss to gain) | | Loss Before Income Tax | (9,334) | (22,620) | -58.7% | | Loss for the Period | (9,285) | (24,264) | -61.7% | | Loss for the Period Attributable to Owners of the Company | (9,125) | (24,264) | -62.4% | | Basic and Diluted Loss Per Share (HK Cents) | (0.18) | (0.48) | -62.5% | Condensed Consolidated Statement of Financial Position The company's financial position shows a slight increase in total assets and equity, with improved net current assets and reduced current liabilities Condensed Consolidated Statement of Financial Position (As at June 30/December 31): | Indicator | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 208,731 | 205,545 | +1.5% | | Current Assets | 304,340 | 312,048 | -2.5% | | Current Liabilities | 74,177 | 84,028 | -11.7% | | Net Current Assets | 230,163 | 228,020 | +0.9% | | Total Assets Less Current Liabilities | 438,894 | 433,565 | +1.2% | | Non-current Liabilities | 7,981 | 7,074 | +12.8% | | Net Assets | 430,913 | 426,491 | +1.0% | | Total Equity | 430,913 | 426,491 | +1.0% | Notes to the Condensed Consolidated Interim Financial Statements This section details the preparation basis, principal accounting policies, and the impact of revised Hong Kong Financial Reporting Standards on the interim financial statements - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and applicable disclosure provisions of the HKEX Listing Rules[6][7] - The revised Hong Kong Financial Reporting Standards were first applied in this interim period, with no significant impact on financial position or performance[8] 1. Basis of Preparation and Principal Accounting Policies This chapter explains that the condensed consolidated interim financial statements are prepared under HKAS 34 and HKEX Listing Rules, using a historical cost basis consistent with prior annual financial statements 1.1 Basis of Preparation The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and applicable disclosure provisions of the HKEX Listing Rules, and should be read in conjunction with the annual financial statements - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and applicable disclosure provisions of the HKEX Listing Rules[6] 1.2 Principal Accounting Policies The unaudited condensed consolidated interim financial statements are prepared on a historical cost basis, with accounting policies and methods of computation consistent with the prior year's annual consolidated financial statements, except for the application of revised HKFRS - The financial statements are prepared on a historical cost basis, with certain financial instruments measured at fair value[7] - Except for the application of revised Hong Kong Financial Reporting Standards, accounting policies are consistent with the prior year's consolidated financial statements[7] 2. Application of Revised Hong Kong Financial Reporting Standards During this interim period, the Group first applied revised HKFRS (HKAS 21 (Amendment) Lack of Exchangeability), which had no significant impact on the financial position, performance, or disclosures for current and prior periods - Hong Kong Accounting Standard 21 (Amendment) "Lack of Exchangeability" was first applied in this interim period[8] - The application of revised standards had no significant impact on the financial position, performance, or disclosures for the current and prior periods[8] 3. Revenue and Segment Information The Group operates in two segments: dental business and healthcare business, with total revenue of HK$69,577 thousand in H1 2025, where the dental business contributed HK$66,433 thousand and the healthcare business HK$3,144 thousand, with the dental business facing losses while the healthcare business achieved profitability - The Group's operations are divided into two segments: dental business and healthcare business[9] Segment Revenue (For the six months ended June 30): | Segment | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Dental Business | 66,433 | 85,888 | -22.6% | | Healthcare Business | 3,144 | 2,628 | +19.6% | | Total Revenue | 69,577 | 88,516 | -21.4% | Segment Operating (Loss) Profit (For the six months ended June 30): | Segment | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Dental Business | (16,658) | (2,986) | | Healthcare Business | 757 | (1,252) | | Total Segment Operating (Loss) Profit | (15,901) | (4,238) | 3.1 Segment Revenue and Results In H1 2025, dental business revenue decreased by 22.6% year-on-year to HK$66,433 thousand, recording an operating loss of HK$16,658 thousand, while healthcare business revenue increased by 19.6% year-on-year to HK$3,144 thousand, achieving an operating profit of HK$757 thousand, leading to an overall segment operating loss of HK$15,901 thousand Segment Revenue and Operating Results (For the six months ended June 30): | Indicator | Dental Business (HK$ Thousand) | Healthcare Business (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | | 2025 Revenue | 66,433 | 3,144 | 69,577 | | 2025 Segment Operating (Loss) Profit | (16,658) | 757 | (15,901) | | 2024 Revenue | 85,888 | 2,628 | 88,516 | | 2024 Segment Operating Loss | (2,986) | (1,252) | (4,238) | - Dental business revenue decreased, and operating loss expanded; healthcare business revenue grew, achieving operating profit[10][11] 3.2 Segment Assets and Liabilities As of June 30, 2025, the Group's total reportable segment assets were HK$511,923 thousand, with dental business assets at HK$271,757 thousand and healthcare business assets at HK$240,166 thousand, and total liabilities were HK$82,158 thousand, showing a decrease in both total assets and liabilities compared to December 31, 2024 Segment Assets and Liabilities (As at June 30/December 31): | Indicator | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Reportable Segment Assets | 511,923 | 515,802 | | Total Assets | 513,071 | 517,593 | | Reportable Segment Liabilities | (66,441) | (74,695) | | Total Liabilities | (82,158) | (91,102) | 3.3 Geographical Information The Group's operations are primarily located in Hong Kong and Mainland China (excluding Hong Kong), with over 90% of external customer revenue originating from Mainland China (excluding Hong Kong), and total non-current assets as of June 30, 2025, were HK$46,502 thousand, with Mainland China (excluding Hong Kong) accounting for HK$24,106 thousand - Over 90% of external customer revenue is from Mainland China (excluding Hong Kong)[13] Non-current Assets by Geographical Location: | Region | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Mainland China (excluding Hong Kong) | 24,106 | 22,679 | | Other | 22,396 | 22,605 | | Total | 46,502 | 45,284 | 3.4 Information About Major Customers The Group has no individual customer whose revenue accounts for more than 10% of total revenue - No individual customer's revenue accounts for more than 10% of the Group's total revenue[16] 4. Loss Before Income Tax The loss before income tax for H1 2025 was HK$9,334 thousand, a significant reduction from HK$22,620 thousand in the same period last year, primarily due to a shift from loss to gain in fair value changes of financial assets at fair value through profit or loss, and reduced depreciation, amortization, lease expenses, and R&D expenses Loss Before Income Tax Components (For the six months ended June 30): | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Amortisation of Intangible Assets | 347 | 343 | | Depreciation of Property, Plant and Equipment | 3,289 | 4,056 | | Depreciation of Right-of-use Assets | 2,773 | 3,322 | | Short-term Lease Expenses | 877 | 1,646 | | Research and Development Expenses | 7,779 | 8,584 | | Finance Costs on Lease Liabilities | 228 | 409 | | Bank Interest Income | (746) | (1,090) | | Dividend Income | (201) | (666) | | Net Exchange Gains | 485 | (153) | - Loss before income tax significantly decreased from HK$22,620 thousand in 2024 to HK$9,334 thousand in 2025[2] 5. Income Tax Credit (Expense) The income tax credit for H1 2025 was HK$49 thousand, compared to an expense of HK$1,644 thousand in the prior year, with no taxable profits in Hong Kong and overseas jurisdictions, and a 15% preferential tax rate for a PRC subsidiary due to its high-tech enterprise qualification and R&D super deduction policy Income Tax Credit (Expense) (For the six months ended June 30): | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current Tax | – | 1,558 | | Deferred Tax (Credit) Expense | (49) | 86 | | Total | (49) | 1,644 | - Hong Kong and overseas jurisdictions had no taxable profits, thus no Hong Kong profits tax provision was made[19][20] - A PRC subsidiary enjoys a 15% preferential tax rate due to its high-tech enterprise qualification and can apply for a 175% super deduction allowance for R&D expenses[21] Overseas Income Tax The Group is not subject to any income tax in the jurisdictions of Bermuda and the British Virgin Islands - The Group is not subject to any income tax in Bermuda and the British Virgin Islands[19] Hong Kong Profits Tax No provision for Hong Kong profits tax was made as the Group had no assessable profits for the six months ended June 30, 2025, and 2024 - The Group had no assessable profits in H1 2025 and 2024, thus no provision for Hong Kong profits tax was made[20] PRC Enterprise Income Tax PRC subsidiaries are subject to a 25% enterprise income tax rate, but one subsidiary, recognized as a "High and New Technology Enterprise," qualifies for a 15% preferential tax rate for three tax years from 2024 to 2026 and can apply for a 175% super deduction allowance for R&D expenses - PRC subsidiaries are subject to a 25% enterprise income tax rate, but one high-tech enterprise enjoys a 15% preferential tax rate[21] - Qualified enterprises can apply for a 175% super deduction allowance for R&D expenses[21] 6. Dividends The company did not pay, declare, or propose any dividends for the six months ended June 30, 2025, and 2024 - For the six months ended June 30, 2025, and 2024, the company neither paid, declared, nor proposed any dividends[22] 7. Loss Per Share The basic and diluted loss per share attributable to owners of the company for H1 2025 was 0.18 HK Cents, a significant reduction from 0.48 HK Cents in H1 2024, with diluted loss per share being the same as basic loss per share due to the exercise price of share options being higher than the average market price of shares Loss Per Share (For the six months ended June 30): | Indicator | 2025 (HK Cents) | 2024 (HK Cents) | | :--- | :--- | :--- | | Basic and Diluted Loss Per Share | (0.18) | (0.48) | - The exercise price of share options was higher than the average market price of shares, thus diluted loss per share was the same as basic loss per share[24][25] 8. Financial Assets at Fair Value Through Profit or Loss As of June 30, 2025, total financial assets at fair value through profit or loss amounted to HK$162,229 thousand, a slight increase from December 31, 2024, primarily comprising limited partnership interests in Zhuhai Partnership and Haoyi Partnership, with a fair value change gain of HK$8,979 thousand recorded for the period Financial Assets at Fair Value Through Profit or Loss (As at June 30/December 31): | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Zhuhai Partnership | 119,451 | 116,919 | | Haoyi Partnership | 42,778 | 43,342 | | Total | 162,229 | 160,261 | - A fair value change gain of HK$8,979 thousand was recorded for financial assets at fair value through profit or loss in the current period, compared to a loss of HK$9,772 thousand in the prior period[32] - The company's directors believe there is no actual control or significant influence over the two limited partnership entities, hence they are measured at fair value through profit or loss[26] (a) Zhuhai Partnership The Group holds a 5.51% equity interest in Zhuhai Partnership, which primarily invests in equity and equity-related securities in information technology and high-quality healthcare industries, and exercises financial and operational control over Shenzhen Dayi Zhen Technology Co Ltd (the equity holder of Zhuhai Partnership) through contractual arrangements (VIE agreements), consolidating its financial information into the consolidated financial statements - The Group holds a 5.51% equity interest in Zhuhai Partnership, primarily investing in information technology and high-quality healthcare industries[27] - Through cooperation agreements and VIE agreements with Shenzhen Yingdu and Shenzhen Dayi Zhen Technology Co Ltd, the Group exercises effective control over Shenzhen Dayi Zhen and consolidates its financial information into the consolidated financial statements[28][30] - Legal counsel believes the contractual arrangements comply with PRC laws and regulations, are valid, binding, and legally enforceable[29] (b) Haoyi Partnership The Group holds a 99.9% limited partnership interest in Haoyi Partnership, which focuses on China's healthcare business, and after selling part of its equity in 2023, the Group lost control, joint control, or significant influence over Haoyi Partnership, thus classifying it as a financial asset at fair value through profit or loss - The Group holds a 99.9% limited partnership interest in Haoyi Partnership, which focuses on China's healthcare business[31] - After selling part of its equity in 2023, the Group lost control over Haoyi Partnership, classifying it as a financial asset at fair value through profit or loss[31] 9. Trade and Other Receivables As of June 30, 2025, total trade and other receivables amounted to HK$140,842 thousand, a decrease from HK$148,177 thousand as of December 31, 2024, with a net reversal of impairment allowance for trade receivables of HK$197 thousand Trade and Other Receivables (As at June 30/December 31): | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade Receivables (net of impairment) | 98,178 | 111,201 | | Other Receivables related to Land Use Rights Acquisition | 21,935 | 21,202 | | Other Receivables, Prepayments and Deposits (net of impairment) | 42,664 | 36,976 | | Total | 140,842 | 148,177 | - Net reversal of impairment loss for trade receivables was HK$197 thousand[2] (a) Trade Receivables As of June 30, 2025, trade receivables (net of impairment) were HK$98,178 thousand, a decrease from HK$111,201 thousand as of December 31, 2024, with an increased proportion of receivables aged 91 to 180 days and over one year Trade Receivables Ageing Analysis (As at June 30/December 31): | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 90 days | 23,604 | 57,282 | | 91 to 180 days | 42,358 | 27,105 | | 181 to 365 days | 19,706 | 20,003 | | Over one year | 12,510 | 6,811 | | Total | 98,178 | 111,201 | - The average credit period for trade receivables is 30 to 90 days, with some good customers extending up to 360 days[34] (b) Other Receivables, Prepayments and Deposits As of June 30, 2025, other receivables related to the acquisition of land use rights amounted to HK$21,935 thousand, while a deposit of HK$20,000 thousand previously paid by the Group for a rural revitalization project was fully impaired in 2024 due to the termination of the original cooperation agreement and non-payment by the counterparty - As of June 30, 2025, other receivables related to the acquisition of land use rights amounted to HK$21,935 thousand[33] - In 2024, a HK$20,000 thousand deposit for land use rights was fully impaired due to the termination of the original cooperation agreement and non-payment by the counterparty[36] (c) Movement in Impairment of Other Receivables As of June 30, 2025, the impairment allowance for other receivables increased to HK$29,994 thousand, primarily due to an exchange adjustment increase of HK$1,002 thousand Movement in Impairment of Other Receivables (As at June 30/December 31): | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | At January 1 | 28,992 | 7,817 | | Recognized during the year | – | 21,893 | | Exchange adjustment | 1,002 | (718) | | At June 30/December 31 | 29,994 | 28,992 | (d) Other The directors believe there is no material difference between the fair value and carrying amount of trade and other receivables expected to be realized within one year, as these balances are due in the short term - The fair value of trade and other receivables has no material difference from their carrying amount, as all balances are due in the short term[37] 10. Amounts Due From/To Fellow Subsidiaries/Ultimate Holding Company These amounts are unsecured, interest-free, and repayable on demand, and the directors believe there has been no significant increase in credit risk or default rates for amounts due from fellow subsidiaries - Amounts due from/to fellow subsidiaries/ultimate holding company are unsecured, interest-free, and repayable on demand[38] - The directors believe there has been no significant increase in credit risk or default rates for amounts due from fellow subsidiaries[38] 11. Trade and Other Payables As of June 30, 2025, total trade and other payables amounted to HK$55,122 thousand, a decrease from HK$64,773 thousand as of December 31, 2024, with an increase in trade payables and a decrease in advances received and other payables Trade and Other Payables (As at June 30/December 31): | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade Payables | 9,495 | 5,552 | | Advances Received | 18,326 | 25,058 | | Other Payables | 13,763 | 20,688 | | Accrued Charges | 9,619 | 10,485 | | Contract Liabilities | 3,919 | 2,990 | | Total | 55,122 | 64,773 | (a) Trade Payables As of June 30, 2025, trade payables were HK$9,495 thousand, an increase from HK$5,552 thousand as of December 31, 2024, with an average credit period of 90 days Trade Payables Ageing Analysis (As at June 30/December 31): | Ageing | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 90 days | 7,741 | 5,179 | | 91 to 180 days | 1,389 | 295 | | Over 180 days | 365 | 78 | | Total | 9,495 | 5,552 | - The average credit period for purchases of goods is 90 days[40] (b) Other Payables Other payables primarily include PRC Value Added Tax and other taxes payable - Other payables primarily include PRC Value Added Tax and other taxes payable[40] (c) Accrued Charges Accrued charges primarily include staff salaries and allowances, contributions to defined contribution retirement schemes, and consulting fees for dental and healthcare projects - Accrued charges primarily include staff salaries, retirement scheme contributions, and consulting fees for dental and healthcare projects[40] (d) Contract Liabilities Contract liabilities represent advances received for medical services under the healthcare business segment, amounting to HK$3,919 thousand as of June 30, 2025, an increase from December 31, 2024 - Contract liabilities represent advances received for medical services under the healthcare business segment[40] Movement in Contract Liabilities (As at June 30/December 31): | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | At January 1 | 2,990 | 2,536 | | Additions | 4,073 | 6,772 | | Revenue recognized during the year | (3,144) | (6,318) | | At June 30/December 31 | 3,919 | 2,990 | (e) Other The directors consider that all amounts are short-term, and therefore the carrying amounts of the Group's trade and other payables are considered to approximate their fair values - The carrying amounts of trade and other payables are considered to approximate their fair values, as all amounts are short-term[41] Management Discussion and Analysis The Group's H1 2025 revenue decreased by 21.4%, but the loss attributable to owners of the company significantly narrowed by 62.4%, primarily due to a positive shift in the fair value of financial assets - The Group's H1 2025 revenue decreased by 21.4%, but the loss attributable to owners of the company significantly narrowed by 62.4%[42] - Dental business revenue declined due to centralized procurement policies, while healthcare business revenue increased by 15% year-on-year[44][46] - The positive shift in fair value changes of financial assets at fair value through profit or loss was a primary reason for the narrowed loss[42][51] Financial Highlights In H1 2025, the Group's revenue was approximately HK$69,600 thousand, a 21.4% year-on-year decrease, with gross profit margin falling to 36.2%, while the loss attributable to owners of the company significantly narrowed to approximately HK$9,100 thousand (HK$24,300 thousand in the prior year), and basic and diluted loss per share was 0.18 HK Cents Financial Highlights (For the six months ended June 30): | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 69,600 | 88,500 | -21.4% | | Gross Margin | 36.2% | 42.8% | -6.6 percentage points | | Loss Attributable to Owners of the Company | (9,100) | (24,300) | -62.5% | | Basic and Diluted Loss Per Share (HK Cents) | (0.18) | (0.48) | -62.5% | Interim Dividend The Board of Directors does not recommend the payment of an interim dividend for the current period, consistent with the prior year - The Board of Directors does not recommend the payment of an interim dividend for the current period[43] Business Review The Group primarily operates dental and healthcare businesses, with dental business revenue decreasing by 22.6% due to centralized procurement policies, but continuing to invest in R&D and market expansion, while healthcare business revenue increased by 15% year-on-year and successfully renewed its medical insurance designated institution qualification - The Group primarily engages in dental business (sales and production of prosthetics) and healthcare business (sports rehabilitation services)[9][44][46] - Dental business revenue decreased, but the Group continues to invest in R&D and plans to establish regional manufacturing centers in Shanghai and Chengdu[44][45] - Healthcare business revenue increased by 15% year-on-year and successfully renewed its Shenzhen medical insurance designated institution qualification[46] Dental Business The dental business, primarily involving the sale and production of prosthetics, generated approximately HK$66,400 thousand in H1 2025, a year-on-year decrease of approximately HK$19,500 thousand, with the Group continuing to invest in R&D (approximately HK$7,800 thousand) and planning to establish regional manufacturing centers in Shanghai and Chengdu to reduce logistics costs, and despite the impact of centralized procurement policies and industry competition, the implant business has entered more chain dental institutions - Dental business revenue was approximately HK$66,400 thousand, a decrease of approximately HK$19,500 thousand compared to the prior year[44] - R&D expenses were approximately HK$7,800 thousand, reflecting management's commitment to future technology investment[45] - Plans include establishing regional manufacturing centers in Shanghai and Chengdu to reduce logistics costs and expanding the Sino-US implant R&D center team[44][45] Healthcare Business Hejia Rehabilitation Clinic successfully met the Shenzhen Medical Insurance Bureau's performance assessment, smoothly renewing its medical insurance designated institution qualification, expanded its team in H1 2025, increased operating revenue by 15% year-on-year, and became Shenzhen's most widely distributed medical-grade sports rehabilitation center, enhancing its industry influence - Hejia Rehabilitation Clinic successfully renewed its Shenzhen medical insurance designated institution qualification, with operating revenue increasing by 15% year-on-year[46] - It has become Shenzhen's most widely distributed medical-grade sports rehabilitation center and was invited to be a理事单位 of the National Sports Rehabilitation Industry Alliance, enhancing its industry influence[64] Operating Results and Financial Review This section provides a detailed analysis of the Group's revenue, gross profit, financial assets, cash flow, capital expenditure, contingent liabilities, and treasury policy, noting that revenue decline was primarily due to China's government centralized procurement policies, which also led to a lower gross profit margin, while fair value changes of financial assets shifted from loss to gain, bank balances remained robust, and capital expenditure increased - Revenue decreased by 21.4% to HK$69,600 thousand, primarily due to reduced average selling prices of dental products caused by China's government centralized procurement policies[47] - Gross profit decreased by 33.5% to HK$25,200 thousand, with gross profit margin falling to 36.2%, mainly due to lower average selling prices during the period[48] - Fair value changes of financial assets at fair value through profit or loss shifted from loss to gain, accounting for approximately 31.6% of total assets[51] Revenue Revenue for the period was approximately HK$69,600 thousand, a decrease of approximately 21.4% compared to the prior year, primarily due to the continued adverse impact of China's government centralized procurement price policies on the average selling prices of dental products Revenue (For the six months ended June 30): | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 69,600 | 88,500 | - Revenue decreased primarily due to reduced average selling prices of dental products caused by China's government centralized procurement price policies[47] Gross Profit and Gross Margin Gross profit for the period was approximately HK$25,200 thousand, a decrease of approximately 33.5% compared to the prior year, with gross profit margin at approximately 36.2%, a 6.6 percentage point decrease from the prior year, mainly due to lower average selling prices Gross Profit and Gross Margin (For the six months ended June 30): | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Gross Profit | 25,200 | 37,900 | | Gross Margin | 36.2% | 42.8% | - The decrease in gross profit margin was primarily due to lower average selling prices during the period[48] Financial Assets at Fair Value Through Profit or Loss As of June 30, 2025, the fair value of financial assets at fair value through profit or loss was approximately HK$162,200 thousand, an increase of approximately 1.2% from December 31, 2024, mainly due to the increased valuation of related equity and equity-related securities invested by Zhuhai Partnership, with a fair value gain of approximately HK$9,000 thousand recorded for the period Financial Assets at Fair Value Through Profit or Loss (As at June 30): | Investee | 2025 Fair Value (HK$ Million) | 2025 Fair Value Gain/(Loss) (HK$ Million) | | :--- | :--- | :--- | | Zhuhai Jinyiming Equity Investment Fund Partnership | 119.4 | 11.0 | | Haoyi Kangyang Services (Shenzhen) Partnership | 42.8 | (2.0) | | Total | 162.2 | 9.0 | - Financial assets increased by approximately 1.2%, primarily due to the increased valuation of investments by Zhuhai Partnership[51] - Management will review the performance of partnership investments quarterly to determine the investment approach[52] Zhuhai Partnership The Group holds a 5.51% limited partnership interest in Zhuhai Partnership through contractual arrangements, with an investment cost of RMB180,000,000, and this entity specializes in equity and equity-related securities in information technology, high-quality medical, and healthcare industries - The Group holds a 5.51% limited partnership interest in Zhuhai Partnership through contractual arrangements, with an investment cost of RMB180,000,000[49] - Zhuhai Partnership's investment portfolio focuses on information technology, high-quality medical, and healthcare industries[49] Haoyi Partnership After selling part of its equity in 2023, the Group lost control over Haoyi Partnership, now holding a 99.9% limited partnership interest and classifying it as a financial asset at fair value through profit or loss, with Haoyi Partnership investing in the Zhuhai Shilianjiang project through Guanghao and its subsidiaries - The Group holds a 99.9% limited partnership interest in Haoyi Partnership, which has been classified as a financial asset at fair value through profit or loss[50] - Haoyi Partnership invests in the Zhuhai Shilianjiang project through Guanghao and its subsidiaries[50] Material Investments, Material Acquisitions and Disposals Except as disclosed in this announcement, the Group made no other material investments or material acquisitions or disposals of subsidiaries, associates, or joint ventures during the period - The Group had no other material investments, acquisitions, or disposals during the period[53] Bank Balances and Cash As of June 30, 2025, the Group's bank balances and cash were approximately HK$146,900 thousand, a slight decrease from December 31, 2024, but still maintaining a robust cash level Bank Balances and Cash (As at June 30/December 31): | Indicator | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Bank Balances and Cash | 146,900 | 149,600 | - The Group maintained a robust cash level during the review period[54] Capital Expenditure and Capital Commitments During the period, the Group invested approximately HK$9,300 thousand, primarily in right-of-use assets and production equipment, a significant increase from the prior year, and as of June 30, 2025, the Group had no capital expenditure commitments Capital Expenditure (For the six months ended June 30): | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Capital Expenditure | 9,300 | 2,100 | - Capital expenditure was primarily used for right-of-use assets and production equipment[55] - As of June 30, 2025, the Group had no capital expenditure commitments[55] Contingent Liabilities As of June 30, 2025, the Group had no contingent liabilities - As of June 30, 2025, the Group had no contingent liabilities[56] Pledge of the Group's Assets As of June 30, 2025, none of the Group's assets were pledged to secure bank financing - As of June 30, 2025, none of the Group's assets were pledged to obtain bank financing[57] Treasury Policy The Group's sales and purchases are primarily denominated in RMB and USD, with cash mainly held in USD, RMB, and HKD, and while directors currently anticipate no significant exchange rate fluctuation risks and have not entered into hedging financial instruments, they will closely monitor foreign exchange and interest rate risks - Group sales and purchases are primarily denominated in RMB and USD, with cash mainly held in USD, RMB, and HKD[58] - Directors currently anticipate no significant exchange rate fluctuation risks and have not entered into hedging financial instruments, but will closely monitor foreign exchange and interest rate risks[58] Liquidity, Capital Structure and Financial Resources As of June 30, 2025, equity attributable to owners of the company was approximately HK$435,900 thousand, with net current assets of approximately HK$230,200 thousand, and liquidity and quick ratios of 4.10 and 3.89 respectively, both showing improvement and indicating ample liquidity, with no net debt, and management believes there are sufficient resources to meet obligations and fund future operational expansion Liquidity Indicators (As at June 30/December 31): | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Equity Attributable to Owners of the Company (HK$ Thousand) | 435,900 | 431,200 | | Net Current Assets (HK$ Thousand) | 230,200 | 228,000 | | Current Ratio | 4.10 | 3.71 | | Quick Ratio | 3.89 | 3.55 | - The Group has no net debt, and thus no gearing ratio is calculated[59] - Management believes the Group has ample resources to settle outstanding debts and fund daily operations and future expansion[60] Outlook The Group will continue to focus on its core dental and healthcare businesses, aiming to enhance shareholder value by expanding sales networks, improving production capacity, developing high-end products, and seeking investment cooperation, thereby building the "Mega" and "Basic Dental" brands and forming an ecological cycle combining upstream and downstream oral care with medical and elderly care - The Group's business strategy is to further enhance shareholder value through expanded operations[61] - The Group aims to build the "Mega" and "Basic Dental" brands to become a high-end prosthetic consumables supplier[61] - The Group actively explores upstream and downstream medical device systems for oral care, and integrated medical and elderly care service systems, to form an ecological cycle[61] Dental Business The Group anticipates continued rapid growth in China's dental market and has formulated growth strategies including expanding domestic and international sales networks, enhancing production capacity, developing high-end new dental products, actively participating in exhibitions and public hospital tenders, and seeking investment and cooperation opportunities in high-tech dental-related fields - China's dental market is expected to maintain rapid growth, with several times its current development potential[62] - Growth strategies include expanding domestic and international sales networks, enhancing production capacity, developing high-end new dental products, and actively participating in exhibitions and public hospital tenders[62] - Continuous improvement of Basic Dental production processes, addition of automated equipment, and expansion of distribution networks are expected to lead to significant growth in the implant business[63] Healthcare Business With tightening approval and consumption management standards for Shenzhen medical insurance designated institutions, Hejia Rehabilitation Clinic, as a medical insurance designated unit, has gained more patient trust and has become Shenzhen's most widely distributed medical-grade sports rehabilitation center, further enhancing its professional influence in the industry - Hejia Rehabilitation Clinic, as a Shenzhen medical insurance designated unit, has gained more patient trust[64] - It has become Shenzhen's most widely distributed medical-grade sports rehabilitation center and was invited to be a理事单位 of the National Sports Rehabilitation Industry Alliance, enhancing its professional industry influence[64] Significant Events After the Reporting Period No significant events affecting the company have occurred since June 30, 2025, up to the date of this announcement - No significant events affecting the company have occurred after the reporting period[65] Employees and Remuneration Policy As of June 30, 2025, the Group had approximately 917 employees, with a remuneration policy based on Group and employee performance, providing benefits such as social insurance and pensions, and adopting a share option scheme for long-term incentives Employee Count: | Date | Employee Count | | :--- | :--- | | June 30, 2025 | 917 | | December 31, 2024 | 861 | - The remuneration policy is based on Group and employee performance, providing social insurance, pension, and other benefits, and adopting a share option scheme for long-term incentives[66] Directors' Compliance with the Model Code for Securities Transactions The company has adopted the Model Code set out in Appendix C3 of the Listing Rules and established written guidelines for employees, with all directors confirming compliance with the Model Code during the period, and no instances of non-compliance by employees were found - The company has adopted the Model Code set out in Appendix C3 of the Listing Rules and established written guidelines for employees that are no less exacting than the Model Code[67] - All directors have confirmed compliance with the Model Code, and no instances of non-compliance by employees were found[67] Purchase, Sale or Redemption of the Company's Listed Securities During the period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period[68] Compliance with the Corporate Governance Code For the six months ended June 30, 2025, the company has complied with all relevant code provisions of the Corporate Governance Code set out in Part 2 of Appendix C1 of the Listing Rules - The company has complied with all relevant code provisions of the Corporate Governance Code set out in Part 2 of Appendix C1 of the Listing Rules[69] Review of Financial Information The company's audit committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025 - The audit committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated interim financial statements[70] Publication of 2025 Interim Results and Interim Report The interim results announcement has been published on the websites of Hong Kong Exchanges and Clearing Limited and the company, and the interim report will be dispatched to shareholders and published on the aforementioned websites in due course as required by the Listing Rules - The interim results announcement has been published on the Hong Kong Exchange and company websites[71] - The interim report will be dispatched to shareholders and published on the websites in due course as required by the Listing Rules[71]