联华超市(00980) - 2025 - 中期业绩

Financial Summary Key Financial Indicators For the six months ended June 30, 2025, turnover decreased by 12.0% to RMB 9.591 billion, while operating profit surged by 466.6% to RMB 81 million, and profit attributable to shareholders turned profitable at RMB 42 million Key Financial Indicators | Indicator | 2025 (RMB) | Year-over-Year Change | | :--- | :--- | :--- | | Turnover | RMB 9.591 billion | -12.0% | | Gross Profit | RMB 1.140 billion | -8.9% | | Gross Profit Margin | 11.89% | +0.40 percentage points | | Operating Profit | RMB 81 million | +466.6% | | Operating Profit Margin | 0.84% | +0.71 percentage points | | Profit Attributable to Equity Holders of the Company | RMB 42 million | Turned profitable (increased by RMB 97 million) | | Basic Earnings Per Share | RMB 0.03 | Turned profitable | - Same-store sales decreased by approximately 8.20% year-over-year, with large hypermarket format decreasing by approximately 9.85%, supermarket format by approximately 6.16%, and convenience store format by approximately 11.67%[2] Store Network Overview As of the end of the reporting period, the Group operated 3,091 stores, with 95 new stores opened during the period, including 83 supermarkets and 12 convenience stores Store Network Overview | Indicator | Number of Stores | | :--- | :--- | | Total Stores Operated | 3,091 | | New Stores Opened This Period | 95 | | - Supermarket Format | 83 | | - Convenience Store Format | 12 | Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the company's turnover was RMB 9,591,172 thousand, a decrease from the prior year, with total profit for the period of RMB 59,707 thousand, turning profitable from a loss of RMB 27,850 thousand in the prior year, and profit attributable to equity holders of the Company of RMB 42,246 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Turnover | 9,591,172 | 10,896,547 | | Gross Profit | 1,140,095 | 1,251,896 | | Other Income | 639,751 | 902,425 | | Other Income and Other Gains and Losses | 410,898 | 282,829 | | Distribution and Selling Costs | (1,696,579) | (1,973,101) | | Administrative Expenses | (311,328) | (324,077) | | Profit Before Tax | 84,066 | 17,522 | | Income Tax Expense | (24,359) | (45,372) | | Total Profit (Loss) for the Period | 59,707 | (27,850) | | Profit (Loss) Attributable to Equity Holders of the Company | 42,246 | (54,809) | | Basic Earnings (Loss) Per Share | 3.1 fen | (4.9) fen | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets were RMB 17,580,927 thousand, a decrease from December 31, 2024; equity attributable to equity holders of the Company turned positive to RMB 112,332 thousand, with total equity amounting to RMB 478,149 thousand Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Total Assets | 17,580,927 | 19,662,370 | | Non-current Assets | 10,270,051 | 11,382,383 | | Current Assets | 7,310,876 | 7,923,415 | | Equity Attributable to Equity Holders of the Company | 112,332 | (286,639) | | Total Equity | 478,149 | 67,931 | | Total Liabilities | 17,102,778 | 19,594,439 | Notes to the Condensed Consolidated Financial Statements Principal Activities and Liquidity Lianhua Supermarket Holdings Co., Ltd. primarily operates chain supermarkets, hypermarkets, and convenience stores in East China; despite net current liabilities, directors believe liquidity risk is effectively managed through non-current unrestricted time deposits and bill settlement, ensuring the Group's going concern - Principal business activities include operating chain supermarkets, hypermarkets, and convenience stores, primarily located in East China[6] Net Current Liabilities and Unrestricted Time Deposits | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Net Current Liabilities | 6,406,252 | 7,454,930 | | Non-current Unrestricted Time Deposits | 2,520,100 | 1,690,000 | - The company's directors believe the Group's liquidity risk is effectively monitored, enabling it to continue as a going concern[7] Significant Accounting Policies The condensed consolidated financial statements are prepared under the historical cost convention, with certain financial instruments measured at fair value; revisions to HKFRSs issued by HKICPA were first applied this period but had no significant impact on financial position or performance - The condensed consolidated financial statements are prepared on the historical cost basis, except for certain financial instruments measured at fair value as appropriate[9] - Revisions to Hong Kong Financial Reporting Standards issued by the HKICPA, effective for the Group's annual period beginning January 1, 2025, were first applied in this interim period[10] - The application of these revisions had no significant impact on the Group's financial position, performance, and/or disclosures in these condensed consolidated financial statements for the current and prior periods[11] Revenue and Other Income The Group primarily operates chain hypermarkets, supermarkets, and convenience stores; turnover mainly derives from goods sales, while service income and rental income from leased properties constitute other income, with both goods sales, service, and rental income decreasing year-over-year Revenue and Other Income by Type | Revenue Type | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Turnover - Sales of Goods | 9,591,172 | 10,896,547 | | Turnover - Service Income (from suppliers) | 440,798 | 657,273 | | Turnover - Franchise Fee Income | 17,761 | 18,829 | | Turnover - Commission Income | 4,644 | 659 | | Other Income - Rental Income from Leased Properties | 176,548 | 225,664 | | Total Turnover and Other Income | 10,230,923 | 11,798,972 | Segment Information Group segment revenue primarily derived from hypermarkets, supermarkets, and convenience stores; all segments' revenue decreased, but convenience store losses narrowed, with all revenue derived from customers in China Segment Revenue and Results | Segment | 2025 Revenue (RMB '000) | 2024 Revenue (RMB '000) | 2025 Results (RMB '000) | 2024 Results (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Hypermarket | 4,116,687 | 5,220,509 | 1,830 | 94,228 | | Supermarket | 5,363,098 | 5,756,369 | 9,979 | 29,776 | | Convenience Store | 704,771 | 785,340 | (9,585) | (18,432) | | Other Businesses | 46,367 | 36,754 | 8,251 | 1,277 | | Total | 10,230,923 | 11,798,972 | 10,475 | 106,849 | - All of the Group's revenue and segment results are attributable to customers in China[18] Other Income and Expenses Total other income and gains increased significantly by 45.3% year-over-year, primarily due to gains from the disposal of equity in certain subsidiaries, while interest income and liquidated damages decreased, and government subsidies and fair value gains on financial assets increased, with other operating expenses decreasing year-over-year Other Income and Other Gains and Losses | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Total Other Income and Other Gains and Losses | 410,898 | 282,829 | | - Interest Income from Bank Deposits and Time Deposits | 84,730 | 122,218 | | - Government Subsidies | 21,905 | 14,618 | | - Gain on Disposal of 3 Target Companies | 187,126 | – | | - Fair Value Gains on Financial Assets | 34,631 | 14,783 | | - Liquidated Damages Income | 5,879 | 48,841 | | Total Other Operating Expenses | 13,242 | 15,999 | | Total Finance Costs | 88,948 | 106,655 | - Government subsidies of RMB 21,905,000 (2024: RMB 14,618,000) were received to encourage business development for certain subsidiaries in specific regions of China[22] Profit Before Tax and Income Tax Group profit before tax significantly increased to RMB 84,066 thousand, primarily driven by gains from subsidiary disposals, while income tax expense decreased by 46.3% year-over-year, mainly due to deferred tax credits Profit Before Tax and Income Tax | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Profit Before Tax | 84,066 | 17,522 | | Income Tax Expense | 24,359 | 45,372 | | Total Amortization and Depreciation | 562,607 | 631,039 | | Staff Costs | 867,039 | 974,992 | - Domestic subsidiaries in China are subject to a 25% corporate income tax rate, while certain subsidiaries in specific western provinces enjoy a preferential rate of 15%, and small low-profit enterprises benefit from preferential rates ranging from 5% to 10%[24] Dividends and Earnings Per Share The Board of Directors recommended no interim dividend, and basic earnings per share turned profitable at RMB 0.03 from a loss in the prior year - The Board of Directors recommended no interim dividend payment[25] Earnings Per Share | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Profit (Loss) Attributable to Equity Holders of the Company for the Period | 42,246 | (54,809) | | Basic Earnings (Loss) Per Share | 3.1 fen | (4.9) fen | | Weighted Average Number of Ordinary Shares | 1,370,208,000 | 1,119,600,000 | Trade and Bills Receivables As of June 30, 2025, net trade and bills receivables were RMB 260,864 thousand, slightly lower than December 31, 2024, with a decrease in credit loss allowance and a significant reduction in total overdue trade receivables Trade and Bills Receivables | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Trade Receivables - from customer contracts | 268,833 | 270,006 | | Bills Receivables | – | 1,900 | | Less: Allowance for Credit Losses | (7,969) | (9,013) | | Net Trade and Bills Receivables | 260,864 | 262,893 | - Trade receivables primarily arise from sales to wholesalers, with credit terms ranging from 30 to 60 days[32] Aging Analysis of Overdue Trade Receivables | Aging of Overdue Trade Receivables | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | 1–30 days overdue | 23 | 1,189 | | Over 30 days overdue | 1,731 | 9,094 | | Total | 1,754 | 10,283 | Trade and Bills Payables As of June 30, 2025, total trade and bills payables were RMB 3,275,941 thousand, a decrease from December 31, 2024, primarily stemming from goods purchases with credit terms of 30 to 60 days Trade and Bills Payables | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Trade Payables | 2,200,063 | 2,765,969 | | Bills Payables | 1,075,878 | 1,104,924 | | Total | 3,275,941 | 3,870,893 | - Trade payables primarily arise from purchases of goods with credit terms ranging from 30 to 60 days[42] Management Discussion and Analysis Operating Environment In H1 2025, global economic uncertainty intensified, but China's economy remained stable with moderate consumption recovery; the Group actively responded by focusing on fresh produce operations, transformation, commodity management, marketing innovation, cost control, digitalization, organizational optimization, and safety - In H1 2025, global economic uncertainty intensified, but China's economy demonstrated strong resilience and sustainability in its growth, maintaining stable national economic operations[46] Key Economic Indicators (H1 2025) | Indicator | H1 2025 | | :--- | :--- | | National Consumer Price Index (CPI) | Decreased slightly by 0.1% year-over-year | | Total Retail Sales of Consumer Goods | RMB 24.5 trillion, increased by 5.0% year-over-year | | Retail Sales of Essential Goods (e.g., grain, oil, food) | Increased by 9.1% year-over-year | - The consumption structure is undergoing profound changes, characterized by a balance of rationality and experience, with consumers increasingly focusing on the actual value and utility of goods, making "quality-price ratio" a core consideration[47] - Short video platforms like Douyin and Video Accounts have become crucial channels for product promotion, increasingly shaping and influencing consumer preferences[47] - The Group focused on key areas including fresh produce operations, transformation and empowerment, commodity management, marketing innovation, cost control, digital development, organizational optimization, and safety and quality[48] Financial Review Group turnover decreased by 12.0% year-over-year due to evolving consumer demand, intensified competition, and strategic adjustments; gross profit margin improved, but other income declined; significant growth in other income and gains resulted from subsidiary disposals, while distribution and selling costs, administrative expenses, and income tax expenses decreased, leading to a turnaround to profit attributable to shareholders - Turnover decreased by approximately RMB 1.305 billion, a 12.0% year-over-year decline, primarily due to evolving consumer demand and intensified industry competition, alongside the Group's strategic adjustments including the disposal of equity in certain subsidiaries and reduction of unprofitable sales scale[49] - Gross profit margin was approximately 11.89%, an increase of approximately 0.40 percentage points year-over-year, mainly due to the Group's optimized commodity management, promotion of standardized fresh produce, reduction of losses, and enhancement of fresh produce gross profit, as well as developing distinctive products, focusing on key categories, and increasing the proportion of private label products to improve commodity profitability[50] - Other income and other gains amounted to approximately RMB 411 million, an increase of approximately RMB 128 million year-over-year, representing a 45.3% growth, primarily due to the Group's overall strategic adjustments and gains from the disposal of equity in certain subsidiaries[52] - Distribution and selling costs were approximately RMB 1.697 billion, a decrease of approximately RMB 277 million year-over-year, representing a 14.0% reduction, mainly due to the Group's adjustment of unprofitable store network scale, continued strengthening of operating expense control, and optimization of resource allocation[53] - Profit attributable to equity holders of the Company was RMB 42 million, an increase of approximately RMB 97 million year-over-year; net profit margin was approximately 0.44%, an increase of 0.94 percentage points year-over-year[59] Turnover Turnover decreased by 12.0% year-over-year to RMB 9.591 billion, primarily due to evolving consumer demand, intensified industry competition, and strategic adjustments including subsidiary disposals and reduction of unprofitable sales scale - During the reporting period, the Group's turnover was approximately RMB 9.591 billion, a year-over-year decrease of approximately RMB 1.305 billion, or 12.0%[49] - This was primarily due to the continuous impact of evolving consumer demand and intensified industry competition, alongside the Group's overall strategic adjustments, including the disposal of equity in certain subsidiaries and reduction of unprofitable sales scale, leading to a decrease in overall sales volume[49] Gross Profit Gross profit decreased by 8.9% year-over-year to RMB 1.140 billion, but gross profit margin increased by 0.40 percentage points to 11.89%, driven by optimized commodity management, standardized fresh produce, and increased private label product proportion - During the reporting period, the Group's gross profit was approximately RMB 1.140 billion, a year-over-year decrease of approximately RMB 112 million, or 8.9%[50] - The Group's overall gross profit margin was approximately 11.89%, an increase of approximately 0.40 percentage points from 11.49% in the prior year[50] - This was primarily due to the Group's optimized commodity management, promoting standardized fresh produce to reduce losses and enhance fresh produce gross profit, and developing distinctive products, focusing on key categories, and increasing the proportion of private label products to improve commodity profitability[50] Other Income Other income decreased by 29.1% year-over-year to RMB 640 million, mainly due to reduced supplier-related income from smaller sales scale and lower rental income from leased properties due to hypermarket strategic adjustments - During the reporting period, the Group's other income was approximately RMB 640 million, a year-over-year decrease of approximately RMB 263 million, or 29.1%[51] - Due to the reduction in sales scale, income from suppliers decreased by approximately RMB 216 million year-over-year[51] - The hypermarket format implemented a "smaller, community-focused" strategic adjustment, leading to a year-over-year decrease of approximately RMB 49 million in the Group's rental income from leased properties[51] Other Income and Other Gains and Losses Other income and other gains increased significantly by 45.3% year-over-year to RMB 411 million, primarily due to gains from the disposal of equity in certain subsidiaries as part of the Group's overall strategic adjustments - During the reporting period, the Group's other income and other gains amounted to approximately RMB 411 million, a year-over-year increase of approximately RMB 128 million, representing a 45.3% growth[52] - This was primarily due to the Group's overall strategic adjustments and gains from the disposal of equity in certain subsidiaries[52] Distribution and Selling Costs Distribution and selling costs decreased by 14.0% year-over-year to RMB 1.697 billion, mainly due to the Group's adjustment of unprofitable store network scale and strengthened control over operating expenses - During the reporting period, the Group's distribution and selling costs were approximately RMB 1.697 billion, a year-over-year decrease of approximately RMB 277 million, or 14.0%[53] - This was primarily due to the Group's adjustment of unprofitable store network scale, continued strengthening of operating expense control, and optimization of resource allocation[53] Administrative Expenses Administrative expenses decreased by 3.9% year-over-year to RMB 311 million - During the reporting period, the Group's administrative expenses were approximately RMB 311 million, a year-over-year decrease of approximately RMB 13 million, or 3.9%[54] Other Operating Expenses Other operating expenses decreased by approximately RMB 3 million year-over-year to RMB 13 million - During the reporting period, the Group's other operating expenses were approximately RMB 13 million, a year-over-year decrease of approximately RMB 3 million[55] Share of Results of Associates The Group's share of results of associates was approximately RMB 3 million, remaining largely stable year-over-year - During the reporting period, the Group's share of results of associates was approximately RMB 3 million, remaining largely stable year-over-year[56] Profit Before Tax Group profit before tax significantly increased to RMB 84 million, representing a year-over-year increase in profit of approximately RMB 67 million - During the reporting period, the Group's profit before tax was approximately RMB 84 million, representing a year-over-year increase in profit of approximately RMB 67 million[57] Income Tax Expense Income tax expense decreased by approximately RMB 21 million year-over-year to RMB 24 million - During the reporting period, the Group's income tax expense was approximately RMB 24 million, a year-over-year decrease of approximately RMB 21 million[58] Profit Attributable to Equity Holders of the Company Profit attributable to equity holders of the Company was RMB 42 million, representing a year-over-year increase in profit of approximately RMB 97 million, with net profit margin rising by 0.94 percentage points to 0.44% - During the reporting period, profit attributable to equity holders of the Company was RMB 42 million, representing a year-over-year increase in profit of approximately RMB 97 million[59] - During the reporting period, the net profit margin was approximately 0.44%, an increase of 0.94 percentage points year-over-year[59] - Basic earnings per share were approximately RMB 0.03[59] Liquidity and Financial Resources As of June 30, 2025, the Group held approximately RMB 6.148 billion in cash and bank balances with no bank borrowings; trade payables turnover was about 57 days, inventory turnover about 40 days, and the capital gearing ratio was 0.0% - As of June 30, 2025, the Group's cash and bank balances amounted to approximately RMB 6.148 billion[60] - For the six months ended June 30, 2025, the Group's trade payables turnover period was approximately 57 days, and inventory turnover period was approximately 40 days[60] - The Group did not use any financial instruments for hedging risks and had no outstanding hedging financial instruments as of June 30, 2025[60] - As of June 30, 2025, the Group's capital gearing ratio was 0.0% (December 31, 2024: 0.0%)[61] Retail Business Growth All three retail formats (hypermarkets, supermarkets, convenience stores) experienced turnover declines due to strategic adjustments and market competition; hypermarket and supermarket operating profits decreased, while convenience store losses narrowed, with all formats undergoing transformation to adapt to market changes - Hypermarket format turnover decreased by approximately 18.6% year-over-year, supermarket format turnover decreased by approximately 6.6% year-over-year, and convenience store format turnover decreased by approximately 9.9% year-over-year[62][65][67] - The decline in turnover was primarily due to the Group's overall strategic adjustments, including the disposal of equity in certain subsidiaries and reduction of unprofitable sales scale, leading to a year-over-year decrease in turnover[63] - Hypermarket format gross profit margin increased by approximately 1.32 percentage points year-over-year to approximately 13.98%, convenience store format gross profit margin increased by approximately 0.34 percentage points to approximately 11.00%, while supermarket format gross profit margin decreased by approximately 0.11 percentage points year-over-year to approximately 10.31%[63][65][67] Hypermarket Hypermarket turnover decreased by 18.6% to RMB 3.844 billion, accounting for 40.1% of Group turnover; gross profit margin increased to 13.98%, but operating profit significantly decreased to RMB 2 million, with operating profit margin falling to 0.05%, mainly due to strategic adjustments and subsidiary disposals - During the reporting period, hypermarket format turnover was approximately RMB 3.844 billion, a year-over-year decrease of approximately RMB 881 million, or 18.6%, accounting for approximately 40.1% of the Group's turnover[62] Hypermarket Performance Metrics | As of June 30 | 2025 | 2024 | | :--- | :--- | :--- | | Gross Profit Margin (%) | 13.98 | 12.66 | | Comprehensive Income Margin (%) | 24.52 | 27.03 | | Operating Profit Margin (%) | 0.05 | 1.99 | - The hypermarket format recorded an operating profit of approximately RMB 2 million, a year-over-year decrease in profit of approximately RMB 92 million[63] - The hypermarket format implemented a "smaller, community-focused" strategic adjustment, optimizing product structure, reducing operating area, and scientifically planning functional zones[63] Supermarket Supermarket turnover decreased by 6.6% to RMB 5.017 billion, accounting for 52.3% of Group turnover; gross profit margin slightly decreased to 10.31%, operating profit fell to RMB 10 million, with operating profit margin declining to 0.20%, as the format focuses on community needs to become a "community living service center" - During the reporting period, supermarket format turnover was approximately RMB 5.017 billion, a year-over-year decrease of approximately RMB 355 million, or 6.6%, accounting for approximately 52.3% of the Group's turnover[65] Supermarket Performance Metrics | As of June 30 | 2025 | 2024 | | :--- | :--- | :--- | | Gross Profit Margin (%) | 10.31 | 10.42 | | Comprehensive Income Margin (%) | 18.57 | 19.11 | | Operating Profit Margin (%) | 0.20 | 0.55 | - The supermarket format recorded an operating profit of approximately RMB 10 million, a year-over-year decrease of approximately RMB 20 million[65] - The supermarket format focuses on precisely targeting community needs, upgrading stores into "community living service centers"[65] Convenience Store Convenience store turnover decreased by 9.9% to RMB 689 million, accounting for 7.2% of Group turnover; gross profit margin increased to 11.00%, and operating loss narrowed to RMB 10 million, with operating profit margin rising to -1.39%, mainly due to the proactive closure of long-term unprofitable stores - During the reporting period, convenience store format turnover was approximately RMB 689 million, a year-over-year decrease of approximately RMB 76 million, or 9.9%, accounting for approximately 7.2% of the Group's turnover[67] Convenience Store Performance Metrics | As of June 30 | 2025 | 2024 | | :--- | :--- | :--- | | Gross Profit Margin (%) | 11.00 | 10.66 | | Comprehensive Income Margin (%) | 13.60 | 13.71 | | Operating Profit Margin (%) | -1.39 | -2.41 | - The convenience store format recorded an operating loss of approximately RMB 10 million, a year-over-year reduction in loss of approximately RMB 8 million[67] - Based on its overall strategic planning, the Group proactively closed some long-term unprofitable stores, leading to a year-over-year decrease in turnover[67] Capital Structure and Risks As of June 30, 2025, the Group held cash and cash equivalents primarily in RMB with no bank borrowings; equity attributable to equity holders turned positive due to capital increase and profit; the Group had no pledged assets or significant contingent liabilities and did not hedge foreign exchange risk, but directors believe it can meet foreign exchange needs - As of June 30, 2025, the Group's cash and cash equivalents were primarily held in RMB, with no other bank borrowings[71] - The Company's equity attributable to equity holders increased from approximately RMB -287 million to approximately RMB 112 million, primarily due to a capital increase of RMB 360 million and profit attributable to equity holders of approximately RMB 42 million during the period[71] - As of June 30, 2025, the Group had no pledged assets[72] - Most of the Group's income and expenditure items are denominated in RMB; during the reporting period, the Group did not encounter any significant difficulties due to exchange rate fluctuations, nor were its operations or liquidity affected, and the Group did not enter into any agreements or purchase financial instruments to hedge its exchange rate risk[73] - As of June 30, 2025, the Group had no significant contingent liabilities[76] Capital Structure As of June 30, 2025, the Group's cash and cash equivalents were primarily held in RMB with no bank borrowings; equity attributable to equity holders turned positive, mainly due to a capital increase of RMB 360 million and profit attributable to equity holders of RMB 42 million during the period - As of June 30, 2025, the Group's cash and cash equivalents were primarily held in RMB, with no other bank borrowings[71] - The Company's equity attributable to equity holders increased from approximately RMB -287 million to approximately RMB 112 million, primarily due to a capital increase of RMB 360 million and profit attributable to equity holders of approximately RMB 42 million during the period[71] Pledged Assets As of June 30, 2025, the Group had no pledged assets - As of June 30, 2025, the Group had no pledged assets[72] Foreign Exchange Risk Most of the Group's income and expenditure items are denominated in RMB; during the reporting period, the Group did not encounter any significant difficulties due to exchange rate fluctuations, nor were its operations or liquidity affected, and the Group did not enter into any agreements or purchase financial instruments to hedge its exchange rate risk, but directors believe it can meet foreign exchange needs - Most of the Group's income and expenditure items are denominated in RMB[73] - During the reporting period, the Group did not encounter any significant difficulties due to exchange rate fluctuations, nor were its operations or liquidity affected[73] - The Group did not enter into any agreements or purchase financial instruments to hedge its exchange rate risk, and the Company's directors believe the Group can meet its foreign exchange needs[73] Share Capital As of June 30, 2025, the company had 1,479,600,000 issued shares, with domestic shares accounting for 72.68%, and capital increased during the period through the allotment and issuance of 360,000,000 domestic shares to Bailian Group via a subscription Issued Share Capital by Type | Class of Issued Shares | Number of Shares | Percentage (%) | | :--- | :--- | :--- | | Domestic Shares | 1,075,397,400 | 72.68 | | Unlisted Foreign Shares | 31,602,600 | 2.14 | | H Shares | 372,600,000 | 25.18 | | Total | 1,479,600,000 | 100.00 | - The Company duly allotted and issued 360,000,000 domestic shares ("Subscription Shares") to Bailian Group at a subscription price of RMB 1.00 per share[74] 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[76] Operating Strategies and Implementation The Group focused on the Yangtze River Delta region, driving transformation and empowerment across key formats through multi-dimensional adjustments, steadily expanding its network with 95 new stores (66 in the Yangtze River Delta) while closing 121 stores to enhance network quality, and implementing comprehensive measures including commodity and supply chain management, marketing innovation, digitalization, organizational optimization, talent development, and cost control to boost core competitiveness - The Group focused on the core Yangtze River Delta region, driving transformation and empowerment of its main business formats through multi-dimensional adjustments to achieve business optimization and upgrading[77] - During the reporting period, the Group steadily advanced its network expansion, opening a total of 95 new stores, including 26 directly operated stores and 69 franchised stores, with 66 new stores in the Yangtze River Delta region, accounting for 69.5%[77] - On the other hand, to adapt to market changes and enhance overall network quality, the Group systematically reviewed its stores, closing a total of 121 stores, including 21 directly operated stores and 100 franchised stores[77] - The Group focused on acquiring fresh produce customers, implementing multi-dimensional precise strategies, continuously strengthening direct sourcing at the origin in supply chain management, and establishing multi-origin backup mechanisms[81] - The Group comprehensively advanced its store digitalization transformation, significantly improving store operational efficiency, reducing costs, and enhancing human efficiency by achieving precise task assignment, standardized operations, mobile functionality, and visible tracking[84] Driving Transformation and Empowerment The Group drove transformation and empowerment across key formats through multi-dimensional adjustments, with hypermarkets shifting to "smaller, community-focused" models, supermarkets adopting refined operations, and convenience stores maintaining stable growth; 95 new stores were opened and 121 were closed to optimize network quality - The hypermarket format continued its transformation towards a "smaller, community-focused" direction, the supermarket format adopted a more refined operating model, the convenience store format maintained stable scale development, and franchise business moved towards a centralized direction[77] - The Group steadily advanced its network expansion, opening a total of 95 new stores, including 26 directly operated stores and 69 franchised stores, with 66 new stores in the Yangtze River Delta region, accounting for 69.5%[77] - The Group systematically reviewed its stores, closing a total of 121 stores, including 21 directly operated stores and 100 franchised stores[77] - The hypermarket format underwent systematic innovation around store development and transformation strategies, accelerating the upgrade of traditional hypermarkets into "quality living hubs"[78] - The supermarket format focuses on precisely targeting community needs, upgrading stores into "community living service centers" to meet residents' "one-stop" daily needs[79] - In the Zhejiang region, the Group actively incubated discount formats and expanded into new business segments, currently operating 13 outlets[79] Store Network by Format and Operation Type | Format | Directly Operated | Franchised | Total | | :--- | :--- | :--- | :--- | | Hypermarket | 98 | – | 98 | | Supermarket | 840 | 1,425 | 2,265 | | Convenience Store | 288 | 440 | 728 | | Total | 1,226 | 1,865 | 3,091 | Commodity and Supply Chain Management The Group focused on fresh produce customer acquisition, strengthening direct sourcing and regional resource integration, promoting standardized fresh produce, developing distinctive products, and increasing private label proportion; it also enhanced fresh produce quality and supply stability by integrating procurement and processing centers and building a fresh produce distribution system, while deepening JBP cooperation with suppliers - The Group focused on acquiring fresh produce customers, implementing multi-dimensional precise strategies, continuously strengthening direct sourcing at the origin in supply chain management, and establishing multi-origin backup mechanisms to mitigate supply risks and ensure stable supply of fresh produce[81] - In commodity management, the Group focused on optimizing strategies, on one hand promoting a standardized fresh produce model, and on the other hand focusing on key categories to develop distinctive products and increase the proportion of private label products[81][82] - The Group deepened its Joint Business Planning (JBP) cooperation model, expanding the scale and level of collaboration with suppliers, and strengthening strategic partnerships with leading brand suppliers[82] - In the supply chain, the Group continuously increased the proportion of direct sourcing and direct supply, advanced the standardization of commodities, and ensured product quality and supply stability[82] Marketing Innovation The Group enhanced brand visibility and engaged consumers through popular themed marketing campaigns like "CNY," "Spring Outing Season," "34th Anniversary," and "National Brands V. Trend," leveraging new media such as Video Account IPs to foster fan economy potential - The supermarket format meticulously planned marketing activities around popular themes, focusing on three S-tier seasonal campaigns: "CNY," "Spring Outing Season," and "34th Anniversary"[83] - The hypermarket format successfully ignited consumer enthusiasm for national brands with the "National Brands V. Trend" campaign as a key initiative[83] - The Group fully leveraged new media to enhance brand visibility, creating unique Video Account IPs by utilizing the locational advantages of popular stores, effectively unleashing the immense potential of the fan economy[83] Digital Transformation The Group comprehensively advanced store digitalization, significantly improving operational efficiency, reducing costs, and enhancing human efficiency by achieving precise task assignment, standardized operations, mobile functionality, and visible tracking, with a focus on four key digital initiatives: refined management, integrated business and finance, precise marketing, and data-driven operations - The Group comprehensively advanced its store digitalization transformation, significantly improving store operational efficiency, reducing costs, and enhancing human efficiency by achieving precise task assignment, standardized operations, mobile functionality, and visible tracking[84] - Key efforts focused on the coordinated implementation of four major digital initiatives: enhancing refined store management, upgrading the EAM system to achieve integrated business and finance, leveraging AI technology and digital hardware for precise marketing, and reconstructing data billboards for data-driven operations[84] Organizational Optimization and Talent Development The Group accelerated organizational reform, establishing Shanghai City Center and Supermarket Operations Center for hypermarket format, deepening headquarters' organizational reform, optimizing management efficiency, strengthening staffing management, advancing assessment system optimization, and piloting integrated operations and procurement performance, while increasing investment in talent acquisition and development - The establishment of the Shanghai City Center and Supermarket Operations Center for the hypermarket format was completed, clarifying functional settings, organizational structure, and staffing and personnel allocation[85] - The Group deepened headquarters' organizational reform by systematically reviewing functions and clearly defining the positioning of the headquarters and its member enterprises in terms of organizational structure, departmental setup, and core functional distribution[85] - At the company headquarters level, efforts focused on improving management efficiency ratios; at the frontline store level, staffing management was strengthened, personnel optimization paths were refined step-by-step, and key positions were filled[86] - The Group advanced the optimization of its assessment system, re-evaluating business team assessment methods and improving the operations and procurement indicator system; a pilot program for integrated operations and procurement performance was implemented in the Shanghai region for the supermarket format[86] - The Group increased investment in talent acquisition and development, strengthening the foundation of talent pipeline construction and focusing on the selection and cultivation of reserve talent[87] Strengthening Management and Cost Reduction The Group achieved cost reduction and efficiency improvement through various measures, including rent reduction, operating expense control, and labor cost optimization, by refining rent calculation models, implementing multi-position integration and smart scheduling, establishing daily store loss monitoring, optimizing energy consumption, and managing marketing resource allocation based on ROI - Regarding rent reduction, the Group improved its rent calculation model, formulated a red-line store rent renegotiation list, and promoted rent renegotiations for high-cost stores[88] - In operating cost reduction and energy consumption control, the Group optimized personnel allocation, implemented multi-position integration and smart scheduling to enhance human efficiency; it also established a daily store loss monitoring mechanism and implemented refined loss control for high-loss categories[88] - In marketing and promotion resource allocation management, all marketing and promotion activities and member engagements were clearly aimed at "increasing customer traffic and repurchase rates," with ROI as the assessment benchmark[88] Strategies and Plans For H2 2025, China's economy is expected to remain resilient with further consumption potential; the Group will focus on reform and transformation, enhancing core capabilities, deepening restructuring, and embracing agile development, while optimizing supermarket and hypermarket formats, accelerating innovative commodity and supply chain systems, and systematically deploying eight core tasks to achieve high-quality brand development - In H2 2025, China's economy is expected to maintain overall development resilience, relying on a stable development foundation and a continuously expanding domestic demand market[89] - The Group will closely adhere to the core requirements of its reform and transformation strategy, focusing on enhancing core capabilities and further deepening reform and restructuring; it will uphold a self-driven and agile development philosophy, fully unleashing employees' creativity and potential[89] - The Group will continue to deeply cultivate the optimization and upgrading of its supermarket and hypermarket formats, accelerate the construction of innovative commodity and supply chain systems, and precisely capture consumption trends[89] - The Group will continue to focus on the core objective of stable growth, systematically deploying eight core tasks: "supermarket development and refined operations, hypermarket transformation and upgrading, commodity and supply chain development, Quick-Mart expansion and innovative franchise business, cross-sector collaboration and efficiency enhancement, digital development and empowerment, special cost-saving initiatives, and organizational efficiency improvement and personnel optimization"[90] - The Group will focus on supply chain upgrading, operational efficiency improvement, marketing empowerment and innovation, and integrated online-offline development, converging multi-dimensional efforts to drive sales growth[92] Other Information Events After the Reporting Period From July 1, 2025, to the date of this interim results announcement, there were no significant events after the reporting period that materially affected the Company's results - From July 1, 2025, to the date of this interim results announcement, there were no significant events after the reporting period that materially affected the Company's results[93] Interim Dividend The Board of Directors recommended no interim dividend payment for the six months ended June 30, 2025 - The Board of Directors recommended no interim dividend payment for the six months ended June 30, 2025[94] Purchase, Sale or Redemption of Shares For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, nor did the Company hold any treasury shares - For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[95] - As of June 30, 2025, the Company held no treasury shares[95] Audit Committee The Audit Committee reviewed the Group's unaudited condensed interim financial statements for the six months ended June 30, 2025, discussed accounting principles, internal controls, and financial reporting with management, and had no disagreements on the adopted accounting principles and methods - The Company's Audit Committee considered and reviewed the accounting principles and methods adopted by the Group with management, discussed matters related to internal controls and financial reporting, and reviewed the Group's unaudited condensed interim financial statements for the six months ended June 30, 2025[96] - The Audit Committee had no disagreements on the accounting principles and methods adopted by the Group[96] Compliance with Listing Rules All directors, supervisors, and relevant employees fully complied with the Model Code for Securities Transactions by Directors of Listed Issuers, but there were deviations from the Corporate Governance Code regarding the absence of a clear rotation mechanism for directors and non-attendance of some non-executive and independent non-executive directors at board and AGM meetings - All directors, supervisors, and relevant employees fully complied with the provisions of the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period[97] - Deviation from Corporate Governance Code provision B.2.2: The Articles of Association currently do not explicitly stipulate a mechanism for directors' rotation by retirement[98] - Deviation from Corporate Governance Code provision C.1.6: Some non-executive directors and independent non-executive directors did not attend Board meetings and the Annual General Meeting due to other work commitments, but all appointed other directors to attend and exercise voting rights on their behalf[99] Board of Directors This announcement lists the members of the Company's Board of Directors as of the announcement date, including executive directors, non-executive directors, and independent non-executive directors - Executive Directors: Wang Xiaoyan, Zhang Huiqin, and Zhu Dingping[103] - Non-executive Directors: Pu Shaohua, Shen Chen, Cao Hailun, and Yang Qin[103] - Independent Non-executive Directors: Xia Dawei, Li Guoming, Chen Wei, and Zhao Xinsheng[103]