巨星医疗控股(02393) - 2025 - 中期业绩

Company Information and Report Overview This section provides an overview of Yestar Healthcare Holdings Company Limited's basic information and the basis for preparing its financial report Company Basic Information Yestar Healthcare Holdings Company Limited, incorporated in the Cayman Islands and listed on the HKEX, operates as an investment holding company with subsidiaries engaged in imaging printing products and medical products and equipment manufacturing, sales, and distribution - Company Name: Yestar Healthcare Holdings Company Limited[2] - Registered in the Cayman Islands, with shares listed on the Main Board of The Stock Exchange of Hong Kong Limited[2][9][10] - Principal Business: Investment holding, with subsidiaries engaged in the manufacturing, sales, and distribution of imaging printing products and medical products and equipment[10][13][18] Basis of Report Preparation This condensed consolidated interim financial information is prepared in accordance with IAS 34 and reviewed in conjunction with the annual financial statements, with no significant impact from newly adopted IFRS amendments - Prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”[2][10] - Accounting policies are consistent with the 2024 annual consolidated financial statements, except for the first-time adoption of the amendment to IAS 21 “Lack of Exchangeability”[11] - The adoption of the amendment has no material impact on the amounts reported or disclosures in the condensed consolidated interim financial statements[12] Financial Performance Overview The company experienced a significant decline in revenue and profit for the six months ended June 30, 2025, primarily due to a large gain from the derecognition of preference shares in the prior period and the impact of centralized procurement policies on the medical segment Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2025, revenue from continuing operations decreased by 37.0% to RMB 802.6 million, gross profit fell by 38.6% to RMB 133.7 million, and profit before tax sharply declined from RMB 1,112.3 million to RMB 21.2 million For the six months ended June 30, 2025, Condensed Consolidated Statement of Profit or Loss Key Data | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 802,634 | 1,273,785 | -37.0% | | Cost of sales | (668,897) | (1,056,145) | -36.7% | | Gross profit | 133,737 | 217,640 | -38.6% | | Other income and gains | 8,880 | 1,094,425 | -99.2% | | Selling and distribution expenses | (38,802) | (76,459) | -49.3% | | Administrative expenses | (77,683) | (101,844) | -23.7% | | Finance costs | (6,515) | (21,240) | -69.3% | | Profit before income tax | 21,152 | 1,112,323 | -98.1% | | Profit for the period | 11,148 | 1,092,525 | -99.0% | Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, total comprehensive income for the period was RMB 15.3 million, a significant decrease from RMB 1,080.0 million in the prior year, primarily due to the sharp decline in profit for the period For the six months ended June 30, 2025, Condensed Consolidated Statement of Comprehensive Income Key Data | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the period | 11,148 | 1,093,061 | | Exchange differences on translation of foreign operations | 20,121 | (9,172) | | Exchange differences on translation of the Company | (16,018) | (3,840) | | Other comprehensive income for the period, net of tax | 4,103 | (13,012) | | Total comprehensive income for the period | 15,251 | 1,080,049 | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets decreased to RMB 1,361.8 million from RMB 1,430.1 million, while net current assets increased to RMB 319.8 million, driven by higher cash and cash equivalents and reduced inventories and trade receivables, leading to a significant improvement in the gearing ratio As of June 30, 2025, Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 317,036 | 343,983 | -7.8% | | Total current assets | 1,044,807 | 1,086,099 | -3.8% | | Total current liabilities | 724,995 | 805,270 | -10.0% | | Net current assets | 319,812 | 280,829 | +13.9% | | Total non-current liabilities | 114,917 | 116,571 | -1.4% | | Net assets | 521,931 | 508,241 | +2.7% | | Total equity | 521,931 | 508,241 | +2.7% | - Cash and cash equivalents increased from approximately RMB 93.8 million as of December 31, 2024, to approximately RMB 249.4 million as of June 30, 2025, primarily due to optimized cost management, recovery of trade receivables, and reduced inventory levels[7][58] - The current ratio increased from approximately 1.35 as of December 31, 2024, to approximately 1.44 as of June 30, 2025[59] - The gearing ratio significantly decreased from approximately 29% as of December 31, 2024, to approximately 2% as of June 30, 2025[60] Operating Segment Information The Group is managed through two reportable operating segments: imaging printing products and medical products and equipment, with performance assessed based on adjusted profit or loss before tax Segment Classification and Management The Group's operations are divided into imaging printing products and medical products and equipment segments, with management allocating resources and assessing performance based on adjusted profit or loss before tax for each segment - Operating Segments: Imaging printing products (color photographic paper, industrial non-destructive testing X-ray film, printed circuit board film, trading of imaging equipment) and medical products and equipment (medical dry/wet/dental film manufacturing and sales, and distribution of medical equipment/diagnostic reagents)[14][18] - Segment Reporting Adjustment: Effective this period, the production of certain medical films was transferred from the imaging printing products segment to the medical products and equipment segment, with related expenses, assets, and liabilities reallocated[17] Segment Revenue and Performance For the six months ended June 30, 2025, the medical products and equipment segment remained the primary revenue source at RMB 722.1 million, despite a 37.9% year-on-year decrease, while the imaging printing products segment revenue also declined by 27.7% to RMB 80.6 million, with both segments experiencing a decrease in gross profit margin For the six months ended June 30, 2025, Segment Revenue and Performance | Segment | 2025 Revenue (RMB thousand) | 2024 Revenue (RMB thousand) | Revenue Change (%) | 2025 Segment Performance (RMB thousand) | 2024 Segment Performance (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Imaging printing products | 80,556 | 111,399 | -27.7% | (9,173) | 2,170 | | Medical products and equipment | 722,078 | 1,162,386 | -37.9% | 35,081 | 26,904 | | Total | 802,634 | 1,273,785 | -37.0% | 25,908 | 29,074 | - The gross profit margin for the medical segment decreased by 0.2 percentage points to approximately 16.9%, while the imaging printing products segment's gross profit margin decreased by 2.9 percentage points to 14.2%[54][55] - The decline in medical segment revenue was primarily impacted by China's centralized procurement policies[51][54] Segment Assets and Liabilities As of June 30, 2025, the Group's total segment assets were RMB 1,358.8 million and total segment liabilities were RMB 817.5 million, with the imaging printing products segment showing significant decreases in both assets and liabilities, while the medical products and equipment segment saw a slight increase in assets and a slight decrease in liabilities compared to December 31, 2024 As of June 30, 2025, Segment Assets and Liabilities | Segment | June 30, 2025 Assets (RMB thousand) | December 31, 2024 Assets (RMB thousand) | June 30, 2025 Liabilities (RMB thousand) | December 31, 2024 Liabilities (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Imaging printing products | 60,410 | 139,374 | 94,905 | 170,110 | | Medical products and equipment | 1,298,401 | 1,285,767 | 722,634 | 727,925 | | Total | 1,358,811 | 1,425,141 | 817,539 | 898,035 | Major Customers and Geographical Information For the six months ended June 30, 2025, sales to a single major customer accounted for 14.09% of total revenue, a decrease from 21.20% in the prior year, with all operations and non-current assets located in mainland China and unaffected by seasonality - Major Customer: Revenue from sales of medical imaging products and imaging printing products to one customer accounted for 14.09% of total revenue (2024: 21.20%)[22] - Geographical Operations: The Group operates solely in mainland China, where all non-current assets are located[23] - Seasonality: Operations are not affected by seasonal factors[24] Revenue and Profit Analysis This section analyzes the composition of revenue, profit before tax, and income tax expense for the period, highlighting key drivers of changes in financial performance Revenue Composition For the six months ended June 30, 2025, revenue from contracts with customers from continuing operations decreased by 37.0% to RMB 802.6 million, with sales of goods accounting for RMB 781.7 million and services for RMB 20.9 million For the six months ended June 30, 2025, Revenue Analysis | Category | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue from contracts with customers | 802,634 | 1,273,785 | -37.0% | | Of which: Sales of goods | 781,693 | 1,253,154 | -37.6% | | Of which: Rendering of services | 20,941 | 20,631 | +1.5% | Profit Before Tax Composition For the six months ended June 30, 2025, profit before tax was RMB 21.2 million, a significant decrease from the prior year, primarily due to a substantial gain from the derecognition of preference shares in the comparative period and impairment losses on non-financial assets totaling RMB 9.7 million in the current period For the six months ended June 30, 2025, Major Components of Profit Before Tax | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Cost of inventories sold and services rendered | 668,897 | 1,056,145 | | Gain on derecognition of preference shares | — | (1,083,407) | | Depreciation of property, plant and equipment | 5,448 | 12,313 | | Depreciation of right-of-use assets | 6,458 | 18,480 | | Amortisation of other intangible assets | 7,334 | 11,308 | | Impairment of non-financial assets* | 9,744 | — | | Employee benefit expenses | 73,348 | 81,021 | | Net foreign exchange differences | 4,221 | 6,843 | - Impairment losses on non-financial assets totaled RMB 9.7 million, mainly due to the impact of China's national and provincial centralized drug procurement programs and national medical imaging data sharing on revenue, as well as reduced demand for industrial film[28] Income Tax Expense For the six months ended June 30, 2025, income tax expense decreased to RMB 10.0 million from RMB 19.8 million in the prior year, with mainland China's statutory tax rate at 25% and certain high-tech enterprises enjoying a preferential rate of 15% For the six months ended June 30, 2025, Income Tax Expense | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current tax — China expense for the period | 10,472 | 23,332 | | Deferred tax | (468) | (3,534) | | Income tax expense | 10,004 | 19,798 | - The statutory income tax rate in mainland China is 25%[29] - Yestar Medical and Caixing Chemical, as high-tech enterprises, enjoy a preferential tax rate of 15%[29] Earnings Per Share and Dividends This section details the basic and diluted earnings per share for the period and the Board's dividend policy Earnings Per Share For the six months ended June 30, 2025, basic earnings per share from continuing operations attributable to owners of the Company significantly decreased to RMB 0.25 cents from RMB 46.69 cents in the prior year, with diluted earnings per share being the same due to the absence of potential dilutive ordinary shares For the six months ended June 30, 2025, Earnings Per Share | Indicator | 2025 (RMB cents) | 2024 (RMB cents) | | :--- | :--- | :--- | | Basic earnings per share from continuing operations attributable to owners of the Company | 0.25 | 46.69 | | Basic earnings per share attributable to owners of the Company | 0.25 | 46.72 | - Diluted earnings per share are the same as basic earnings per share because there are no potential dilutive ordinary shares[35] Dividend Policy The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior year - Dividend: The Board does not recommend the payment of an interim dividend (for the six months ended June 30, 2025: nil; for the six months ended June 30, 2024: nil)[32][53][86] - Annual Dividend: No dividend was declared by shareholders at the annual general meeting held on May 30, 2025, for the year ended December 31, 2024[32] Assets and Liabilities Analysis This section provides a detailed analysis of the Group's trade receivables, borrowings, trade payables, other payables, and discontinued operations Trade and Bills Receivables As of June 30, 2025, net trade and bills receivables decreased to RMB 498.0 million from RMB 582.5 million as of December 31, 2024, with impairment provisions also decreasing, and the majority of trade receivables aged within 90 days As of June 30, 2025, Trade and Bills Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables | 530,661 | 632,758 | -16.1% | | Impairment allowance | (45,711) | (64,084) | -28.7% | | Net trade and bills receivables | 497,981 | 582,513 | -14.5% | As of June 30, 2025, Aging Analysis of Trade Receivables (Net of Allowance) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 90 days | 192,901 | 239,997 | | 91 to 180 days | 95,843 | 121,821 | | 181 to 365 days | 117,518 | 118,972 | | 1 to 2 years | 41,700 | 49,148 | | Over 2 years | 36,988 | 38,736 | Bank and Other Borrowings As of June 30, 2025, total bank and other borrowings decreased to RMB 257.8 million from RMB 279.5 million as of December 31, 2024, with current borrowings at RMB 246.0 million and non-current borrowings at RMB 11.8 million, and most borrowings being secured and/or guaranteed As of June 30, 2025, Bank and Other Borrowings | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total bank and other loans | 257,833 | 279,519 | -7.7% | | Of which: Secured and/or guaranteed | 228,033 | 236,619 | -3.7% | | Of which: Unsecured | 29,800 | 42,900 | -30.5% | | Of which: Current | 246,033 | 272,519 | -9.7% | | Of which: Non-current | 11,800 | 7,000 | +68.6% | - Bank loans of RMB 87.0 million are secured by buildings and guaranteed by subsidiaries, while borrowings of RMB 86.0 million are guaranteed by non-controlling shareholders and subsidiaries, and borrowings of RMB 55.0 million are guaranteed by independent third parties and directors of subsidiaries[38][83] Trade Payables As of June 30, 2025, total trade payables decreased to RMB 193.2 million from RMB 230.6 million as of December 31, 2024, with the majority of payables aged within 90 days As of June 30, 2025, Aging Analysis of Trade Payables | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Within 90 days | 181,547 | 221,765 | -18.2% | | 91 to 180 days | 1,841 | 2,418 | -23.8% | | 181 to 365 days | 3,948 | 2,526 | +56.3% | | 1 to 2 years | 2,020 | 2,043 | -1.1% | | Over 2 years | 3,861 | 1,818 | +112.4% | | Total | 193,217 | 230,570 | -16.2% | Other Payables and Accrued Expenses As of June 30, 2025, total other payables and accrued expenses slightly decreased to RMB 224.0 million from RMB 237.9 million as of December 31, 2024, with amounts due to non-controlling interests being a major component, primarily related to the acquisition of remaining equity in Shengshiyuan and Kaihongda As of June 30, 2025, Other Payables and Accrued Expenses | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total current portion | 176,660 | 191,383 | -7.6% | | Total non-current portion | 47,388 | 46,548 | +1.8% | | Total | 224,048 | 237,931 | -5.9% | - Amounts due to non-controlling interests are primarily related to the acquisition of remaining equity in Guangzhou Shengshiyuan Trading Co., Ltd. (23.1%) and Beijing Kaihongda Technology Co., Ltd. (30%)[39] - The acquisition of a 6.9% equity interest in Shengshiyuan was completed during the period, with a related put option reserve of RMB 20.4 million transferred to other reserves[40] - Amounts due to non-controlling interests for Shengshiyuan, totaling RMB 60.8 million plus dividends of RMB 22.8 million, are to be settled in three installments by September 30, 2027[41] - Amounts due to non-controlling interests for Kaihongda, totaling RMB 65.3 million plus dividends of RMB 5.1 million, are recognized as current liabilities, with a final agreement yet to be reached[41] Discontinued Operations The Group completed the disposal of a 94.2% equity interest in Anbaida Group on January 12, 2024, with this business reclassified as discontinued operations, generating a profit for the period of RMB 536 thousand for the six months ended June 30, 2024 - Disposal: The disposal of a 94.2% equity interest in Anbaida Group was completed on January 12, 2024, for a consideration of RMB 574.8 million[42][43] - Business Nature: The disposed group primarily engaged in the sales and distribution of in-vitro diagnostic products, medical equipment, and other related consumables in Shanghai[44] For the six months ended June 30, 2024, Financial Performance of Discontinued Operations | Item | 2024 (RMB thousand) | | :--- | :--- | | Other income and gains | 536 | | Profit before income tax | 536 | | Income tax expense | — | | Profit for the period | 536 | Management Discussion and Analysis This section provides an overview of Yestar's market position, a review of its business performance, future outlook, financial review, capital structure, and significant asset and liability-related matters About Yestar and Market Overview Yestar Medical is a leading distributor and service provider of in-vitro diagnostic products in China, also manufacturing and selling medical and dental films, operating in a rapidly growing market driven by national policies supporting domestic product localization - Company Positioning: One of China's leading distributors and service providers of in-vitro diagnostic products, also manufacturing Fujifilm medical films and its own brand "Yes!Star" dental films and medical dry films[47] - Market Size: China's in-vitro diagnostic market reached RMB 137.0 billion in 2024, projected to exceed RMB 140.0 billion in 2025[48] - Growth Drivers: Domestic economic development, aging population, increased per capita healthcare expenditure, and advancements in medical technology[48] - Localization Trend: In 2024, the registration volume of domestic Class III diagnostic products approved increased by approximately 40% year-on-year, accounting for 80.5% of the total, accelerating the import substitution process[49] Business Overview and Performance Review The Group's total revenue decreased by 37.0% year-on-year to RMB 802.6 million, and gross profit declined by 38.6% to RMB 133.7 million, primarily due to the impact of centralized procurement policies on the medical segment, while selling and distribution expenses, administrative expenses, and finance costs all significantly decreased - Own-brand Film Camera: Research and development of the own-brand "Yes!Star" S2 film camera is underway, with an expected launch in the second half of this year[50] - Total Revenue: Decreased by 37.0% year-on-year to RMB 802.6 million[51] - Gross Profit: Decreased by 38.6% year-on-year to RMB 133.7 million[51] - Selling and Distribution Expenses: Decreased by 49.3% year-on-year to RMB 38.8 million, mainly due to enhanced internal controls[51] - Administrative Expenses: Decreased by 23.7% year-on-year to RMB 77.7 million, primarily due to optimized cost management and reduced headcount[52][62] - Finance Costs: Sharply decreased by 69.3% year-on-year to RMB 6.5 million, mainly because no further interest payments were required after the redemption of preference shares last year[52][63] - Other Expenses: Increased by 39.4% year-on-year to RMB 17.6 million, primarily due to impairment losses on non-financial assets and exchange rate fluctuations[52] - Other Income: Decreased by 99.2% year-on-year to RMB 8.9 million, mainly due to the profit recognized from the redemption of preference shares last year[52][53] Medical Business The medical business accounted for 90.0% of total revenue, with revenue of RMB 722.1 million for the period, a 37.9% year-on-year decrease, primarily impacted by national healthcare reform and centralized procurement policies, while the gross profit margin remained relatively stable at approximately 16.9% - Revenue Contribution: Accounted for 90.0% of total revenue[54] - Revenue: RMB 722.1 million, a year-on-year decrease of 37.9%[54] - Gross Profit Margin: Decreased by 0.2 percentage points to approximately 16.9%[54] - Impact Factors: National healthcare reform and centralized procurement policies led to a decrease in demand for in-vitro diagnostic consumables[54] Non-Medical Business The non-medical business accounted for 10.0% of total revenue, with revenue of RMB 80.6 million for the period, a 27.7% year-on-year decrease, and a gross profit margin decline of 2.9 percentage points to 14.2%, mainly due to structural adjustments in the sales product portfolio - Revenue Contribution: Accounted for 10.0% of total revenue[55] - Revenue: RMB 80.6 million, a year-on-year decrease of 27.7%[55] - Gross Profit Margin: Decreased by 2.9 percentage points to 14.2%, primarily due to structural adjustments in the sales product portfolio[55] - Business Content: Manufacturing, marketing, distribution, and sales of Fujifilm professional and minilab color photographic paper, industrial imaging products (non-destructive testing X-ray film and printed circuit board film), and own-brand "Yes!Star" non-destructive testing X-ray film[55] Outlook China's in-vitro diagnostic industry is projected to grow at a CAGR of 5-8% over the next five years, reaching nearly RMB 165.0 billion by 2029, driven by an aging population, chronic disease management, early diagnosis awareness, and expanded medical insurance coverage, despite challenges from intensified market competition and product homogenization - Industry Growth: China's in-vitro diagnostic market is expected to grow at a CAGR of 5-8% from 2024 to 2029, potentially reaching RMB 165.0 billion by 2029[56] - Growth Drivers: Aging population, demand for chronic disease management, increased awareness of early diagnosis and screening, expanded medical insurance coverage, and the promotion of molecular diagnostics and genetic testing in precision medicine and personalized treatment[56] - Challenges: Intensified market competition, product homogenization, and price competition leading to downward pressure on profit margins[57] Financial Review The Group maintains a healthy liquidity position with significantly increased cash and cash equivalents, improved current and gearing ratios, and substantial reductions in selling and distribution expenses, administrative expenses, and finance costs due to cost control and preference share redemption, while foreign exchange risk remains negligible Liquidity and Financial Resources During the period, the Group's cash and cash equivalents increased from approximately RMB 93.8 million as of December 31, 2024, to approximately RMB 249.4 million, primarily due to optimized cost management, recovery of trade receivables, and reduced inventory levels, with current bank and other borrowings totaling approximately RMB 246.0 million - Cash and Cash Equivalents: Increased from RMB 93.8 million to RMB 249.4 million[58] - Reasons for Increase: Optimized cost management, reduced unnecessary operating expenses, employee and finance costs, as well as recovery of trade receivables and decreased inventory levels[58] - Current Borrowings: Approximately RMB 246.0 million[58] Current Ratio and Gearing Ratio As of June 30, 2025, the current ratio was approximately 1.44 (December 31, 2024: 1.35), and the gearing ratio was approximately 2% (December 31, 2024: 29%), indicating a significant improvement in financial position - Current Ratio: 1.44 (December 31, 2024: 1.35)[59] - Gearing Ratio: 2% (December 31, 2024: 29%)[60] Selling and Distribution Expenses Selling and distribution expenses decreased by 49.3% year-on-year to RMB 38.8 million, representing 4.8% of revenue, primarily due to enhanced internal control measures - Selling and Distribution Expenses: RMB 38.8 million, a year-on-year decrease of 49.3%[61] - Percentage of Revenue: 4.8% (2024: 6.0%)[61] - Reason for Decrease: Enhanced internal controls to avoid unnecessary expenses[61] Administrative Expenses Administrative expenses decreased by 23.7% year-on-year to RMB 77.7 million, representing 9.7% of revenue, primarily benefiting from stringent cost management and a reduction in headcount - Administrative Expenses: RMB 77.7 million, a year-on-year decrease of 23.7%[62] - Percentage of Revenue: 9.7% (2024: 8.0%)[62] - Reason for Decrease: Implementation of stringent measures to optimize cost management and reduce headcount[62] Finance Costs Finance costs sharply decreased by 69.3% year-on-year to RMB 6.5 million, primarily because no further interest payments were required after the redemption of preference shares last year, with interest-bearing loan rates ranging from 1.8% to 6.9% during the period - Finance Costs: RMB 6.5 million, a sharp year-on-year decrease of 69.3%[63] - Reason for Decrease: Redemption of preference shares last year, eliminating the need for further interest payments[63] - Loan Interest Rates: Ranged from 1.8% to 6.9% during the period (2024: 1.80% to 9.00%)[63] Foreign Exchange Risk The Group's foreign exchange risk is negligible as most of its revenue-generating activities are transacted in RMB, and it has not hedged its currency risk - Foreign Exchange Risk: Negligible, as most business is transacted in RMB[64] - Hedging: No agreements have been entered into to hedge currency risk[64] Capital Structure and Employees During the period, there were no changes to the Company's issued share capital and capital structure, while the number of employees decreased, leading to lower total staff costs, with remuneration policies designed to be competitive and provide benefits Share Capital and Capital Structure During the period, there were no changes to the Company's issued share capital and capital structure, with capital comprising ordinary shares and capital reserves - Share Capital Structure: No changes to issued share capital and capital structure[65] - Capital Composition: Ordinary shares and capital reserves[65] Employees and Remuneration Policy As of June 30, 2025, the Group had 479 employees (including directors), a decrease from 726 in the prior year, with total staff costs of RMB 73.3 million, and a remuneration policy designed for fair competition and providing benefits such as pension schemes - Number of Employees: 479 (2024: 726)[67] - Total Staff Costs: RMB 73.3 million (2024: RMB 81.0 million)[67] - Remuneration Policy: Fairly competitive, based on skills, knowledge, performance, contribution, and market conditions, offering benefits such as pension insurance, unemployment insurance, maternity insurance, work injury insurance, medical insurance, and a central provident fund scheme[67] Material Investments and Asset-Liability Related Matters The Group's fixed-income investment products have matured and been partially recovered, with an increase in reversal of impairment losses on financial assets, no material securities investments held, and no significant future investment plans, while certain assets are pledged for bank loans and borrowings are guaranteed, with no other material adverse changes or contingent liabilities disclosed Material Investments Held The Group previously held two one-year fixed-income investment products with principal amounts of US$3.7 million and US$4.4 million, which matured in 2023 and were not renewed, with a total of US$5.0 million recovered as of June 30, 2025 - Fixed-Income Investment Products: Two one-year fixed-income investment products (annual interest rate of 6%) with principal amounts of US$3.7 million and US$4.4 million, which matured in 2023 and were not renewed[69] - Funds Recovered: As of June 30, 2025, a total of US$5.0 million has been recovered[70] Reversal of Impairment Loss on Financial Assets During the period, the reversal of impairment loss on financial assets calculated using the expected credit loss method increased to RMB 19.1 million, primarily due to a reduction in impairment provisions for trade receivables - Reversal of Impairment Loss: RMB 19.1 million (2024: RMB 12.4 million)[71] - Primary Reason: Reduction in impairment provisions for trade receivables[71] Securities Investments and Future Plans The Group does not hold any material securities investments requiring disclosure and has no significant future plans for investments and capital assets as of June 30, 2025 - Securities Investments: No securities investments held that are valued at 5% or more of total assets[72] - Future Plans: No significant future plans for investments and capital assets[73] Material Acquisitions and Disposals During the period, there were no material acquisitions or disposals of subsidiaries and associated companies, nor any acquisitions involving financial performance commitments or guarantees - Acquisitions and Disposals: No material acquisitions or disposals of subsidiaries and associated companies during the period[74] - Performance Guarantees: No discloseable acquisitions involving financial performance commitments or guarantees during the period[75] Pledge of Assets and Contingent Liabilities As of June 30, 2025, the Group had pledged buildings with a net book value of approximately RMB 61.4 million to secure bank loans, and certain borrowings are guaranteed by non-controlling shareholders, independent third parties, and directors of subsidiaries, with no other material contingent liabilities apart from arbitration matters - Pledge of Assets: Buildings with a net book value of approximately RMB 61.4 million have been pledged to secure bank loans[76][83] - Borrowing Guarantees: Certain borrowings are guaranteed by non-controlling shareholders, independent third parties, and directors of subsidiaries[83] - Contingent Liabilities: No other material contingent liabilities apart from arbitration matters[78] Material Adverse Changes The Directors are not aware of any material adverse changes in the Group's financial or trading position since June 30, 2025, other than those disclosed in this announcement - Material Adverse Changes: The Directors are not aware of any material adverse changes in the Group's financial or trading position since June 30, 2025[79] Other Information This section covers changes in the Company's principal place of business, arbitration matters, reaffirmation of dividend policy, competition and conflicts of interest, securities transactions, corporate governance, and report publication details Change of Principal Place of Business The Company's principal place of business in Shanghai has changed its address effective April 15, 2025 - Shanghai Principal Place of Business: The address of the principal place of business in Shanghai has changed effective April 15, 2025[80] Arbitration Matters The Company has received a judgment from the Shanghai No. 2 Intermediate People's Court dismissing its application to set aside an arbitration award, and has fulfilled all payments to one of Shengshiyuan's vendors, with the Board believing the profit guarantee for the acquisition of a 70% equity interest in Shengshiyuan has been met - Arbitration Outcome: The Shanghai No. 2 Intermediate People's Court dismissed the Company's application to set aside the arbitration award[84] - Payment Fulfillment: The Company has fulfilled and settled all payments to one of Shengshiyuan's vendors[84] - Profit Guarantee: The Board believes that the profit guarantee related to the acquisition of a 70% equity interest in Shengshiyuan has been fulfilled[85] Reaffirmation of Dividend Policy The Board reaffirms its recommendation not to declare any interim dividend for the current period - Interim Dividend: The Board does not recommend the declaration of any interim dividend for the current period[86] Competition and Conflicts of Interest During the period, no Directors, controlling shareholders, or substantial shareholders and their associates engaged in any business competing with the Group's business, nor were there any other conflicts of interest, apart from the Group's disclosed interests - Competition and Conflicts of Interest: No Directors, controlling shareholders, or substantial shareholders and their associates engaged in any business competing with the Group's business, nor were there any other conflicts of interest[87] Securities Transactions and Corporate Governance The Company and its subsidiaries did not purchase, sell, or redeem any listed securities during the period, and the Company has adopted and complied with the Model Code for Securities Transactions by Directors, with the Board confirming adherence to all Corporate Governance Code provisions and the Audit Committee's review of the unaudited interim results Purchase, Sale or Redemption of Listed Securities During the period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and no treasury shares were held as of June 30, 2025 - Securities Transactions: No purchase, sale, or redemption of any of the Company's listed securities during the period[88] - Treasury Shares: No treasury shares held as of June 30, 2025[88] Code of Conduct for Securities Transactions by Directors The Company has adopted the Model Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules, with all Directors providing written confirmation of compliance - Code of Conduct: The Model Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules has been adopted[89] - Compliance: All Directors have provided written confirmation of compliance with the Model Code[89] - Relevant Employees: The Board has adopted the Model Code to regulate securities dealings by relevant employees who may possess inside information, with no non-compliance noted during the period[90] Corporate Governance Practices The Board believes that the Company has complied with all the Corporate Governance Code provisions as set out in Appendix C1 of the Listing Rules during the period - Corporate Governance: The Company has complied with all the Corporate Governance Code provisions as set out in Appendix C1 of the Listing Rules during the period[91] Audit Committee The Audit Committee, comprising three independent non-executive Directors, is responsible for reviewing and overseeing financial reporting, risk management, and internal control systems, and has reviewed the Group's unaudited interim results for the period, deeming them to be in compliance with applicable accounting principles and standards - Composition: Composed of three independent non-executive Directors (Mr. Zhao Ziwei, Mr. Zeng Jinsong, Mr. Kuang Xiangfan)[92] - Responsibilities: Reviewing and overseeing the financial reporting system, risk management, and internal control systems[92] - Interim Results Review: The interim results for the period are unaudited but have been reviewed by the Audit Committee and are considered to be in compliance with applicable accounting principles and standards[92] Publication of Report This interim results announcement has been published on the HKEX website and the Company's website, with the interim report containing information required by Appendix D2 of the Listing Rules to be dispatched to shareholders and published on the website in due course - Announcement Publication: The interim results announcement has been published on the HKEX website and the Company's website[93] - Interim Report: The interim report, containing information required by Appendix D2 of the Listing Rules, will be dispatched to shareholders and published on the website in due course[93]