飞天云动(06610) - 2025 - 中期业绩

Financial Highlights Financial Summary During the reporting period, the company's performance significantly declined, with revenue decreasing by 14.9% year-on-year, gross profit sharply falling by 35.6%, a shift from profit to loss, and basic earnings per share also turning into a loss Financial Summary | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 381,313 | 448,013 | -14.9% | | Gross Profit | 80,653 | 125,239 | -35.6% | | Loss / Profit Before Tax | (135,912) | 74,435 | -282.6% | | Loss / Profit for the Period | (123,497) | 63,473 | -294.6% | | Total Comprehensive Expense / Income for the Period | (130,192) | 45,054 | -389.0% | | Basic Loss / Earnings Per Share (RMB cents) | (6.53) | 3.51 | -285.9% | Management Discussion and Analysis Business Review As a leading provider of AR and VR content and services in China, the company continued to deepen its expertise in metaverse, AR/VR, AI, and big data technologies, promoting the integration of digital technology with the real economy, achieving progress in technological innovation, market expansion, and brand influence, with AR/VR marketing services revenue decreasing while AR/VR content revenue increased, actively expanding diversified application scenarios Technology-Driven Innovation, Strengthening the Digital Foundation As a high-tech enterprise, the company continuously increased R&D investment, optimized AR/VR engines and AI algorithm models, and successfully launched the mobile virtual human live streaming software 'FT live', promoting the popularization and intelligence of virtual content creation - The company continuously increased R&D investment, further optimizing its self-developed AR and VR engines and AI algorithm models, promoting deep integration of AR, VR, and AI technologies[6] - Successfully launched the mobile virtual human live streaming software 'FT live', featuring self-developed mobile motion capture technology, integrating full-function modules such as scenes, lighting, camera movements, actions, and bullet screen interaction, introducing concepts of 'strong interaction and strong special effects'[7] Active Participation in Industry Events, Leading Industrial Development During the reporting period, the company actively participated in major domestic and international technology and industry exhibitions, showcasing its XR innovation capabilities, sharing insights on technology integration and industry applications, and promoting its virtual live streaming system and AI digital human products - Company management attended the 2025 China Shanghai VR/AR Industry Expo, delivering a keynote speech 'Digital Intelligence Empowerment: Progress and Changes in XR and AI-Driven Industrial Transformation'[8] - Showcased at the 2025 Zhejiang Service Trade (Shanghai) Digital Cultural Tourism Exhibition, presenting cultural heritage and famous scenic spot metaverse projects, promoting cross-regional cooperation in digital cultural tourism solutions[8] - Participated in the 2025 'Zhongguancun Hardcore Technology Carnival', showcasing the FT Live virtual live streaming system and Feitian AI Digital Human, receiving widespread industry attention[8] Accolades Received, Demonstrating User Recognition and Industry Standing The company received honors such as 'STIF 2024 Annual Digital Influence Enterprise' and 'Beijing User Satisfaction Enterprise' for its excellent technical strength and service system, also gaining high recognition from local governments - Awarded 'STIF 2024 Annual Digital Influence Enterprise', recognizing the company's outstanding contributions to promoting industrial digital transformation[9] - Included in the 'Beijing User Satisfaction Enterprise' list, signifying the company's industry-leading level in service quality, customer experience, and user satisfaction[9] - Received Huzhou Municipal Government's 2024 'Contributor' award for practical efforts and Anji County's 'High-Growth Demonstration Enterprise' honor, reflecting high recognition from local governments for the company's development potential and regional economic driving role[10] AR and VR Marketing Services AR and VR marketing services revenue decreased by 33.5% year-on-year to RMB 214.7 million, primarily due to a 24.0% decline in average spending per advertising client, despite stable client numbers and a 93% renewal rate, with overseas business growing by 2.0% - AR and VR marketing services generated revenue of RMB 214.7 million, a year-on-year decrease of 33.5%[12] - The revenue decline was mainly due to a 24.0% year-on-year decrease in the average spending per advertising client, from RMB 20,178.1 thousand to RMB 15,332.2 thousand[12] - Client renewal rate increased to 93% (compared to 75% in the same period of 2024), reflecting enhanced client stickiness[12][13] - Overseas AR and VR marketing business achieved revenue of RMB 70.4 million, a year-on-year increase of 2.0%[12] Key Operating Data for AR and VR Marketing Services | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Number of Advertising Clients | 14 | 16 | | Average Monthly Promotion Quantity of Advertising Products | 144 | 143 | | Average Spending Per Advertising Client (RMB thousands) | 15,332.2 | 20,178.1 | | Renewal Rate | 93% | 75% | AR and VR Content AR and VR content revenue increased by 12.6% year-on-year to RMB 119.9 million, primarily due to a significant improvement in project quality and unit price, with average project price rising from RMB 1,238.8 thousand to RMB 1,998.7 thousand, as the company deepened cultural tourism integration and created multiple benchmark cases - AR and VR content generated revenue of RMB 119.9 million, a year-on-year increase of 12.6%[14] - The average project price increased from RMB 1,238.8 thousand to RMB 1,998.7 thousand, indicating the company's greater focus on quality and efficiency in project selection and execution[14][15] - Deepened cultural tourism integration, creating the IP short drama "Fantasy Manor", showcasing the "Guilin Elephant Trunk Hill Metaverse Scenic Area" project, and presenting the "Sanxingdui VR Archaeology" project[15][16] Key Operating Data for AR and VR Content Business | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Number of Clients | 17 | 28 | | Number of Projects | 60 | 86 | | Average Project Price (RMB thousands) | 1,998.7 | 1,238.8 | Application Scenario Expansion and Digital Human Empowerment The company actively expanded AR/VR/MR technology application scenarios in popular science education, cultural tourism, urban services, and enterprise marketing, launched 'Feitian AI Digital Human' for multi-scenario deployment, and leveraged digital twin technology to support smart airport construction - MR mixed reality technology was implemented in popular science education, launching the "Lunar Exploration" MR experience project at the Xuzhou Drone Popular Science Education Base[18] - The launched "Feitian AI Digital Human" has been deployed in various scenarios such as cultural tourism guidance, enterprise customer service, and municipal government affairs, providing 7x24-hour intelligent voice services[18] - Partnered with an airport group media company and an airport to create the "Tiangong" digital twin airport marketing platform, pioneering a new model for smart marketing in civil aviation[19] Outlook The company anticipates deepening AI and AR/VR/MR technology integration in the second half of the year, expanding industry application scenarios, enhancing digital content production efficiency and service quality, and strengthening deep cooperation with government, scenic spots, educational institutions, and enterprise clients to build an open and win-win digital ecosystem - In the second half of 2025, the company will continue to deepen the integration of AI with AR and VR/MR technologies, expand into more industry application scenarios, and drive continuous improvement in digital content production efficiency and service quality[21] - The company will further strengthen deep cooperation with government, scenic spots, educational institutions, and enterprise clients to build an open and win-win digital ecosystem, providing more valuable metaverse products and services to global users[21] Financial Review Revenue Total group revenue decreased by 14.9% year-on-year to RMB 381.3 million, primarily due to reduced AR/VR marketing services revenue, while AR/VR content revenue grew, integrated marketing emerged as a new business, AR/VR SaaS revenue significantly contracted, and other business revenue substantially increased - For the six months ended June 30, 2025, the group recognized total revenue of approximately RMB 381.3 million, a decrease of approximately 14.9% compared to the same period in 2024, mainly due to reduced revenue from AR and VR marketing services[22] Revenue Breakdown (by Service or Product Category) | Service/Product Category | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | AR and VR Marketing Services | 214,652 | 56.3 | 322,850 | 72.0 | | AR and VR Content | 119,922 | 31.5 | 106,539 | 23.8 | | Integrated Marketing | 16,827 | 4.4 | — | — | | AR and VR SaaS | 6,221 | 1.6 | 14,295 | 3.2 | | Others | 23,691 | 6.2 | 4,329 | 1.0 | | Total | 381,313 | 100.0 | 448,013 | 100.0 | AR and VR Marketing Services AR and VR marketing services revenue was approximately RMB 214.7 million, a year-on-year decrease of 33.5%, primarily impacted by reduced advertising spending from domestic clients, with revenue growth in the entertainment and e-commerce sectors, but declines in gaming, cultural tourism, and other industries - AR and VR marketing services revenue was approximately RMB 214.7 million, a decrease of approximately 33.5% compared to the same period in 2024, mainly due to domestic clients reducing advertising spending in response to continued weak economic growth[23] - Revenue from the entertainment and e-commerce sectors increased, while revenue from the internet, cultural tourism, gaming, and automotive industries decreased compared to the same period in 2024[24] AR and VR Marketing Services Revenue Breakdown (by Client Industry) | Client Industry | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Entertainment | 72,654 | 33.8 | 28,906 | 9.0 | | Internet | 26,312 | 12.3 | 52,194 | 16.2 | | E-commerce | 22,659 | 10.6 | 13,351 | 4.1 | | Cultural Tourism | 22,412 | 10.4 | 42,143 | 13.1 | | Gaming | 28,736 | 13.4 | 119,779 | 37.0 | | Automotive | 0 | 0 | 11,669 | 3.6 | | Others | 41,879 | 19.5 | 54,808 | 17.0 | | Total | 214,652 | 100.0 | 322,850 | 100.0 | AR and VR Content AR and VR content revenue was approximately RMB 119.9 million, a year-on-year increase of 12.6%, primarily driven by a significant increase in spending from major clients in the entertainment industry, with the gaming industry remaining the largest revenue source and the education sector showing significant growth - AR and VR content business revenue was approximately RMB 119.9 million, an increase of approximately 12.6% compared to the same period in 2024, mainly due to a significant increase in spending from major clients in the entertainment industry[26] - The gaming industry remains the largest revenue source for AR and VR content business (62.3%), and revenue from the education industry increased from 7.8% to 17.7%[27] AR and VR Content Business Revenue Breakdown (by Client Industry) | Client Industry | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Entertainment | 18,846 | 15.7 | 9,434 | 8.9 | | Gaming | 74,745 | 62.3 | 78,522 | 73.7 | | Education | 21,183 | 17.7 | 8,355 | 7.8 | | Others | 5,148 | 4.3 | 10,228 | 9.6 | | Total | 119,922 | 100.0 | 106,539 | 100.0 | Integrated Marketing The integrated marketing business, launched in the second half of 2024, generated approximately RMB 16.8 million in revenue during the reporting period, providing comprehensive marketing services to clients to enhance exposure, follower count, and traffic - The integrated marketing business was newly launched in the second half of 2024, generating revenue of approximately RMB 16.8 million for the six months ended June 30, 2025[28] AR and VR SaaS AR and VR SaaS business revenue significantly decreased by approximately 56.5% to RMB 6.2 million, primarily due to the group's strategic reduction in the operational scale of this business segment - AR and VR SaaS business revenue significantly decreased by approximately 56.5%, from approximately RMB 14.3 million in the same period of 2024 to approximately RMB 6.2 million in the same period of 2025, mainly due to the group's strategic reduction in the operational scale of this business segment[29] Other Revenue Other business revenue significantly increased by 5.5 times to RMB 23.7 million, primarily driven by new business opportunities such as platform services, digital human development and operation services, and short drama production and operation - Other business revenue was approximately RMB 23.7 million, a significant increase of 5.5 times compared to RMB 4.3 million in the same period of 2024[30] - The increase was due to the group's proactive strategy in seeking new business opportunities, including diversifying revenue through digital human development, operation services, and short drama production and management[30] Cost of Revenue The group's cost of revenue decreased by 6.9% year-on-year to RMB 300.7 million, primarily due to a reduction in total revenue, with traffic acquisition costs decreasing as a percentage of total costs, while subcontracting and development costs increased - For the six months ended June 30, 2025, the group's cost of revenue was approximately RMB 300.7 million, a decrease of approximately 6.9% compared to the same period in 2024, mainly due to the decrease in the group's revenue during the reporting period[31] - Traffic acquisition costs decreased from 80.2% in 2024 to 67.1% in 2025, while subcontracting and development costs increased from 16.4% to 24.9%[31] Cost of Revenue Breakdown (by Nature) | Cost Nature | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Traffic Acquisition Costs | 201,770 | 67.1 | 258,716 | 80.2 | | Subcontracting and Development Costs | 74,715 | 24.9 | 53,013 | 16.4 | | Others | 24,175 | 8.0 | 11,045 | 3.4 | | Total | 300,660 | 100.0 | 322,774 | 100.0 | Cost of Revenue for AR and VR Marketing Services Cost of revenue for AR and VR marketing services decreased by 22.0% year-on-year to RMB 201.8 million, primarily due to reduced revenue from this business, with cost fluctuations across industries aligning with revenue changes - The cost of revenue generated from AR and VR marketing services was approximately RMB 201.8 million, a decrease of approximately 22.0% compared to the same period in 2024, mainly due to the decrease in AR and VR marketing services revenue during the reporting period[34] Cost of Revenue for AR and VR Marketing Services Breakdown (by Client Industry) | Client Industry | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Entertainment | 62,912 | 31.2 | 22,831 | 8.8 | | Internet | 22,794 | 11.3 | 40,782 | 15.8 | | E-commerce | 35,956 | 17.8 | 10,397 | 4.0 | | Cultural Tourism | 19,403 | 9.6 | 32,943 | 12.7 | | Gaming | 24,497 | 12.1 | 98,633 | 38.1 | | Automotive | 0 | 0 | 9,288 | 3.6 | | Others | 36,208 | 18.0 | 43,842 | 17.0 | | Total | 201,770 | 100.0 | 258,716 | 100.0 | Cost of Revenue for AR and VR Content Cost of revenue for AR and VR content services increased by 35.7% year-on-year to RMB 74.7 million, primarily due to increased revenue from this business, with the gaming industry remaining the main cost source and the education sector's cost share significantly rising - The cost of revenue generated from AR and VR content services was approximately RMB 74.7 million, an increase of approximately 35.7% compared to the same period in 2024, mainly due to the increase in AR and VR content services revenue during the reporting period[36] Cost of Revenue for AR and VR Content Business Breakdown (by Client Industry) | Client Industry | 2025 (RMB thousands) | 2025 (%) | 2024 (RMB thousands) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Entertainment | 15,641 | 20.9 | 8,170 | 14.8 | | Gaming | 42,199 | 56.5 | 33,140 | 60.2 | | Education | 12,340 | 16.5 | 4,623 | 8.4 | | Others | 4,535 | 6.1 | 9,110 | 16.6 | | Total | 74,715 | 100.0 | 55,043 | 100.0 | Gross Profit and Gross Profit Margin The group's gross profit decreased by 35.6% year-on-year to RMB 80.7 million, with the gross profit margin falling from 28.0% to 21.2%, as both AR/VR marketing services and content businesses experienced declining margins, primarily due to reduced advertising client budgets, increased traffic acquisition costs, and rising production costs - The group reported a gross profit of approximately RMB 80.7 million, a decrease of approximately 35.6% compared to the same period in 2024, mainly due to a significant decrease in AR and VR marketing services revenue[37] - The group's gross profit margin decreased from approximately 28.0% in the first half of 2024 to approximately 21.2% in the first half of 2025[38] - The gross profit margin for AR and VR marketing services decreased from approximately 19.9% in the first half of 2024 to approximately 13.5% in the first half of 2025, mainly due to reduced advertising client budgets and increased traffic acquisition costs[37] - The gross profit margin for AR and VR content business also decreased from approximately 48.3% in the first half of 2024 to approximately 37.7% in the same period of 2025, primarily attributable to continuously rising production costs[37] Gross Profit and Gross Profit Margin Breakdown (by Service and Product Type) | Service/Product Type | 2025 (RMB thousands) | 2025 Gross Profit Margin (%) | 2024 (RMB thousands) | 2024 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | AR and VR Marketing Services | 29,032 | 13.5 | 64,134 | 19.9 | | AR and VR Content | 45,207 | 37.7 | 51,496 | 48.3 | | Integrated Marketing | 676 | 4.0 | — | — | | AR and VR SaaS | 2,367 | 38.0 | 9,249 | 64.7 | | Others | 3,371 | 14.2 | 360 | 8.3 | | Total | 80,653 | 21.2 | 125,239 | 28.0 | Other Income Other income decreased by 58.2% year-on-year to RMB 46 thousand, primarily because government grants received in the prior year were not obtained in 2025 - Other income was approximately RMB 46 thousand, a decrease of approximately 58.2% compared to the same period in 2024, mainly due to not receiving government grants in 2025 that were obtained in the prior year[39] Impairment Loss on Trade Receivables Impairment loss on trade receivables significantly increased by approximately RMB 85.1 million, primarily due to a rise in long-overdue receivables from major clients, reflecting the impact of current economic challenges on client liquidity - Credit loss provisions for trade receivables amounted to RMB 143.7 million, an increase of approximately RMB 85.1 million compared to December 31, 2024[41] - The significant increase in expected credit loss provisions was mainly due to an increase in long-overdue receivables from major clients[41] - The company has established collection policies, including negotiating repayment plans with clients, and may pursue legal action if satisfactory agreements are not reached[41] Distribution and Selling Expenses Distribution and selling expenses significantly increased by approximately 7.8 times to RMB 67.9 million, primarily due to higher costs associated with engaging subcontractors for brand promotion and product launches - Total distribution and selling expenses were approximately RMB 67.9 million, a significant increase of approximately 7.8 times compared to the same period in 2024[43] - The increase in expenses was mainly due to higher promotion costs related to engaging subcontractors[43] Administrative Expenses Administrative expenses decreased by 46.0% year-on-year to RMB 15.0 million, primarily due to reduced equity-settled share-based payment expenses from employee departures, and lower office expenses, meeting fees, and intermediary service fees resulting from strategic business downsizing - Administrative expenses decreased by approximately 46.0% from approximately RMB 27.7 million in the same period of 2024 to approximately RMB 15.0 million[45] - The decrease was due to reduced equity-settled share-based payment expenses from employee departures, and lower office expenses, meeting fees, and intermediary service fees resulting from strategic business downsizing[45] Research and Development Expenses Research and development expenses significantly increased by approximately 3.2 times to RMB 46.1 million, primarily due to the company's increased R&D investment in areas such as motion capture technology and VR large-space, as well as outsourced R&D technology reserve projects - Research and development expenses were approximately RMB 46.1 million, a significant increase of approximately 3.2 times compared to the same period in 2024[46] - The increase was mainly due to the group's increased R&D investment in areas such as motion capture technology and VR large-space, as well as a substantial increase in outsourced R&D technology reserve projects[46] Finance Costs Finance costs decreased by 19.2% year-on-year to RMB 2.1 million, primarily due to lower interest rates associated with bank borrowings - Finance costs were approximately RMB 2.1 million, a decrease of approximately 19.2% compared to the same period in 2024, mainly due to lower interest rates associated with the group's bank borrowings during this period[47] Income Tax Credit / (Expense) Income tax status shifted from an expense in 2024 to a credit of approximately RMB 12.4 million in 2025, primarily due to the group incurring a loss during the reporting period - Income tax status shifted from an expense of approximately RMB 11.0 million in the same period of 2024 to a credit of approximately RMB 12.4 million in the same period of 2025, mainly due to the group reporting a loss for the six months ended June 30, 2025[48] Loss / Profit for the Period and Net Profit Margin The group shifted from a profit to a loss of approximately RMB 123.5 million for the period, with the net profit margin decreasing from 14.2% to -32.4%, primarily due to declining revenue, reduced gross profit margin, a significant increase in impairment loss on trade receivables, and substantially higher selling expenses - The group incurred a loss of approximately RMB 123.5 million for the six months ended June 30, 2025, a decrease of approximately RMB 187.0 million compared to a profit of approximately RMB 63.5 million in the same period of 2024[49] - The group's net profit margin decreased from approximately 14.2% in the first half of 2024 to -32.4% in the first half of 2025[49] - The loss was mainly due to declining revenue and reduced gross profit margin in the first half of 2025, as well as a significant increase in impairment loss on trade receivables and substantially higher selling expenses[49] Financial Position and Resources Trade Receivables Trade receivables increased from RMB 641.9 million to RMB 781.1 million, primarily due to an increase in days outstanding, reflecting the broader economic challenges impacting client liquidity - The group's trade receivables increased from approximately RMB 641.9 million to approximately RMB 781.1 million as of June 30, 2025[50] - The increase was mainly due to an increase in the days outstanding for trade receivables, reflecting broader economic challenges currently affecting client liquidity[50] - As of the date of this announcement, approximately RMB 142 million (22%) of the group's trade receivables as of December 31, 2024, have been settled[50] Prepayments Prepayments decreased from RMB 755.4 million to RMB 721.0 million, primarily due to the utilization of a portion of prepayments for acquiring advertising traffic to support AR/VR marketing services - The group's prepayments decreased from approximately RMB 755.4 million as of December 31, 2024, to approximately RMB 721.0 million as of June 30, 2025[51] - The decrease was mainly due to the utilization of a portion of prepayments for acquiring advertising traffic to support the group's AR and VR marketing services[51] - As of the date of this announcement, approximately RMB 217.2 million (approximately 29%) of the group's prepayments as of December 31, 2024, have been utilized[51] Trade Payables Trade payables increased from RMB 170.8 million to RMB 235.1 million, primarily due to suppliers adopting more flexible credit policies, leading to extended payment cycles - Trade payables increased from approximately RMB 170.8 million as of December 31, 2024, to approximately RMB 235.1 million as of June 30, 2025[52] - The increase was mainly due to the group's suppliers adopting more flexible credit policies in response to current economic conditions, leading to extended payment cycles[52] Borrowings Borrowings increased from RMB 88.0 million to RMB 95.5 million, consistent with business development - Borrowings increased from RMB 88.0 million as of December 31, 2024, to RMB 95.5 million as of June 30, 2025, consistent with business development[53] 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[54] Liquidity and Capital Resources The group funds its cash requirements through cash generated from operations, bank borrowings, and net proceeds from the global offering, with cash and bank balances totaling RMB 21.0 million as of June 30, 2025 - The group funds its cash requirements through cash generated from its operations and bank borrowings, together with net proceeds from the global offering[55] - As of June 30, 2025, the group's cash and bank balances amounted to RMB 21.0 million[55] Capital Expenditure Capital expenditure for the reporting period was RMB 45.2 million, primarily for intangible assets and equipment, funded by cash generated from operations and bank borrowings - During the reporting period, the group's capital expenditure was RMB 45.2 million, mainly comprising expenditure on intangible assets and equipment[56] Pledge of Assets As of June 30, 2025, the group had no pledged assets - As of June 30, 2025, the group had no pledged assets[58] Gearing Ratio The gearing ratio is not applicable as the group is in a net cash position - The gearing ratio is not applicable because the group is in a net cash position[59] Foreign Exchange Risk Management The group primarily operates in China, with most transactions settled in RMB, facing foreign exchange risks related to USD and HKD, but currently has no significant foreign currency risk and has not entered into any foreign currency hedging transactions - The group primarily conducts its business in China, with most transactions settled in RMB, and is exposed to foreign exchange risks arising from different currencies, mainly related to USD and HKD[60] - As of June 30, 2025, apart from certain bank balances denominated in foreign currencies, the group did not face significant foreign currency risk from its operations and currently has no foreign currency hedging transactions[60] Financial Instruments As of June 30, 2025, the group had no financial instruments for hedging purposes - As of June 30, 2025, the group had no financial instruments for hedging purposes[61] Treasury Policy The Board will continue to adhere to a prudent treasury policy to maintain high liquidity, ensuring the ability to seize future growth opportunities - The directors will continue to adhere to the group's prudent treasury policy to manage its financial resources, aiming to maintain high liquidity to ensure that future growth opportunities can be seized when they arise[62] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Key Items) During the reporting period, the group shifted from profit to a loss of RMB 123.5 million, with total comprehensive expense of RMB 130.2 million, and basic loss per share of RMB 6.53 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Key Items) | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 381,313 | 448,013 | | Cost of Revenue | (300,660) | (322,774) | | Gross Profit | 80,653 | 125,239 | | Other Income | 46 | 110 | | Trade Receivables (Impairment Loss) / Reversal of Impairment Loss | (85,064) | 620 | | Distribution and Selling Expenses | (67,862) | (8,701) | | Administrative Expenses | (14,960) | (27,725) | | Research and Development Expenses | (46,116) | (14,350) | | Finance Costs | (2,061) | (2,567) | | Loss / Profit Before Tax | (135,912) | 74,435 | | Income Tax Credit / (Expense) | 12,415 | (10,962) | | Loss / Profit for the Period | (123,497) | 63,473 | | Total Comprehensive Expense / Income for the Period | (130,192) | 45,054 | | Basic and Diluted Loss / Earnings Per Share (RMB cents) | (6.53) | 3.51 | Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Financial Position (Key Items) As of June 30, 2025, the group's total assets slightly decreased, with non-current assets increasing and current assets decreasing, while current liabilities rose, leading to a reduction in net current assets and a decline in total equity Condensed Consolidated Statement of Financial Position (Key Items) | Metric | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current Assets | | | | Equipment | 3,283 | 5,222 | | Right-of-use Assets | 2,211 | 1,963 | | Intangible Assets | 122,723 | 99,676 | | Equity Investments at Fair Value Through Other Comprehensive Income | 68,637 | 74,882 | | Investments at Fair Value Through Profit or Loss | 10,000 | 10,000 | | Deferred Tax Assets | 24,072 | 10,512 | | Total Non-current Assets | 230,926 | 202,255 | | Current Assets | | | | Trade Receivables | 781,056 | 641,885 | | Prepayments | 721,032 | 755,418 | | Bank and Cash Balances | 20,995 | 162,422 | | Total Current Assets | 1,530,281 | 1,568,254 | | Current Liabilities | | | | Trade and Bills Payables | 255,072 | 190,821 | | Borrowings | 95,500 | 88,000 | | Total Current Liabilities | 416,915 | 373,507 | | Net Current Assets | 1,113,366 | 1,194,747 | | Net Assets | 1,322,592 | 1,383,002 | | Total Equity | 1,322,592 | 1,383,002 | Notes to the Condensed Consolidated Financial Statements General Information Feitian Yundong Technology Co Ltd was incorporated in the Cayman Islands, with its shares listed on the Main Board of the Stock Exchange, primarily engaged in providing AR and VR marketing services, AR and VR content, and related services - The company was incorporated in the Cayman Islands, and its shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on October 18, 2022[68] - The group is principally engaged in providing augmented reality and virtual reality (AR and VR) marketing services, AR and VR content, and related services[68] Basis of Preparation The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the applicable disclosure requirements of the Listing Rules of the Stock Exchange, using consistent accounting policies and methods of computation as the annual financial statements for the year ended December 31, 2024 - These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' issued by the International Accounting Standards Board and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[69] - The accounting policies and methods of computation adopted in preparing these condensed consolidated financial statements are consistent with those adopted in the annual financial statements for the year ended December 31, 2024[69] Adoption of New and Revised International Financial Reporting Standards The group has adopted all new and revised International Financial Reporting Standards effective from January 1, 2025, which did not result in significant changes to accounting policies or the presentation of financial statements - During the current period, the group has adopted all new and revised International Financial Reporting Standards that are relevant to its operations and effective for accounting periods beginning on January 1, 2025[70] - The adoption of these new and revised International Financial Reporting Standards has not resulted in significant changes to the group's accounting policies, the presentation of the group's consolidated financial statements, or the amounts reported for the current and prior years[70] Revenue and Segment Information Revenue details are presented by customer contract pricing, revenue recognition timing, and geographical market, with the group having only one reportable operating segment, thus no segment information is presented Revenue Breakdown by Customer Contract Pricing, Revenue Recognition Timing, and Geographical Market | Category | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Customer Contract Pricing | | | | AR and VR Marketing Services | 214,652 | 322,850 | | AR and VR Content | 119,922 | 106,539 | | Integrated Marketing Services | 16,827 | — | | AR and VR Software as a Service ('SaaS') Services | 6,221 | 14,295 | | Platform Services | 14,174 | 156 | | Digital Human Development and Operation Services | 3,856 | — | | Others | 5,661 | 4,173 | | Total | 381,313 | 448,013 | | Timing of Revenue Recognition | | | | At a point in time | 375,092 | 438,463 | | Over time | 6,221 | 9,550 | | Total | 381,313 | 448,013 | | Geographical Market | | | | Mainland China | 310,918 | 378,064 | | Hong Kong | 70,395 | 69,949 | | Total | 381,313 | 448,013 | Geographical Breakdown of Non-current Assets | Geographical Location | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 117,479 | 93,922 | | Hong Kong | 10,738 | 12,939 | | Total | 128,217 | 106,861 | - For management purposes, the group does not organize its business units by service, and the group has only one reportable operating segment[72] Income Tax (Credit) / Expense Income tax shifted from an expense in 2024 to a credit in 2025, primarily comprising current income tax and deferred tax Income Tax (Credit) / Expense Breakdown | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Income Tax | 1,145 | 11,399 | | Deferred Tax | (13,560) | (437) | | Total | (12,415) | 10,962 | Loss / Profit for the Period The calculation of loss/profit for the period has accounted for items such as depreciation of equipment, depreciation of right-of-use assets, and amortization of intangible assets Loss / Profit for the Period Deductions | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Depreciation of Equipment | 2,039 | 2,010 | | Depreciation of Right-of-use Assets | 2,371 | 2,569 | | Amortization of Intangible Assets (included in cost of revenue and R&D expenses) | 23,603 | 15,784 | Dividends No dividends were paid or proposed for the six months ended June 30, 2025 - No dividends were paid or proposed for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[75] Loss / Earnings Per Share Basic and diluted loss per share was RMB 6.53 cents, calculated based on a loss for the period of RMB 123.508 million and a weighted average of 1,891,908 thousand ordinary shares - Basic and diluted loss / earnings per share was RMB (6.53) cents[77] Basic and Diluted Loss / Earnings Per Share Calculation Data | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss / Profit used in calculating basic and diluted loss / earnings per share | (123,508) | 63,473 | | Weighted average number of ordinary shares (thousands) used in calculating basic and diluted loss / earnings per share | 1,891,908 | 1,807,224 | Intangible Assets During the reporting period, the group acquired software for RMB 46,566 thousand and intellectual property for RMB 130 thousand - For the six months ended June 30, 2025, the group acquired software for RMB 46,566 thousand and intellectual property for RMB 130 thousand[78] Trade Receivables (Aging Analysis) Total trade receivables amounted to RMB 781.1 million, with over RMB 226.9 million being overdue for more than one year, representing a significant proportion Aging Analysis of Trade Receivables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 6 months | 302,369 | 282,108 | | Over 6 months but within 1 year | 251,814 | 220,084 | | Over 1 year | 226,873 | 139,693 | | Total | 781,056 | 641,885 | Prepayments (Details) Total prepayments amounted to RMB 721.0 million, primarily used for purchasing advertising traffic and outsourcing services Prepayments Details | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Prepayments for traffic acquisition | 710,198 | 742,383 | | Prepayments for outsourcing services | 9,617 | 9,007 | | Prepayments for intangible assets | 102 | 1,689 | | Others | 1,115 | 2,339 | | Total | 721,032 | 755,418 | Trade and Bills Payables Total trade and bills payables amounted to RMB 255.1 million, with trade payables at RMB 235.1 million, and an increased proportion of payables overdue for more than 6 months Trade and Bills Payables Details | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 235,072 | 170,821 | | Bills Payables | 20,000 | 20,000 | | Total | 255,072 | 190,821 | Aging Analysis of Trade Payables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 6 months | 145,617 | 100,448 | | Over 6 months but within 1 year | 56,675 | 28,834 | | Over 1 year but within 2 years | 4,991 | 22,887 | | Over 2 years | 27,789 | 18,652 | | Total | 235,072 | 170,821 | Share Capital As of June 30, 2025, the number of issued and fully paid ordinary shares was 2,168,328 thousand, with a par value of RMB 154 thousand, and 361,000 thousand new ordinary shares were issued during the reporting period - As of June 30, 2025, the number of issued and fully paid ordinary shares was 2,168,328 thousand shares, equivalent to a par value of RMB 154 thousand[81] - On May 19, 2025, the company issued 361,000,000 new ordinary shares at a subscription price of HKD 0.201 per share, for a total cash consideration of RMB 66,862,000[81] Details of Share Capital Movement | Item | Number of Ordinary Shares (thousands) | Par Value of Ordinary Shares (USD thousands) | Par Value of Ordinary Shares (RMB thousands) | | :--- | :--- | :--- | :--- | | Authorized: As at January 1, 2024, December 31, 2024, January 1, 2025 and June 30, 2025 | 5,000,000 | 50 | 319 | | Issued and fully paid: As at January 1, 2024, December 31, 2024 and January 1, 2025 | 1,810,000 | 18 | 128 | | Shares issued | 361,000 | 4 | 26 | | Shares cancelled | (2,672) | — | — | | As at June 30, 2025 | 2,168,328 | 22 | 154 | Comparative Figures Comparative figures have been reclassified to conform with the current period's presentation, including the reclassification of private equity fund investments previously designated as equity investments at fair value through other comprehensive income to investments at fair value through profit or loss - Comparative figures have been reclassified to conform with the current period's presentation, including the reclassification of private equity fund investments previously designated as equity investments at fair value through other comprehensive income to investments at fair value through profit or loss[81] Other Information Material Investments Held, Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures As of June 30, 2025, the group held 31,101,000 shares of Hebei Yichen Industrial Group Co Ltd, with a fair value of approximately RMB 68.6 million, and recorded a fair value loss of RMB 6.3 million during the reporting period - As of June 30, 2025, the group held 31,101,000 shares of Hebei Yichen Industrial Group Co Ltd, representing approximately 3.5% of Yichen's total issued share capital[82] - The fair value of the equity investment was approximately RMB 68.6 million, and a fair value loss of RMB 6.3 million was recorded during the reporting period[82] - During the reporting period, the company did not receive any dividend income from Yichen[83] Future Plans for Material Investments or Capital Assets The group intends to utilize the net proceeds from the global offering according to the plans outlined in the 'Use of Proceeds from Listing' section, with no other material investment or capital asset plans - The group intends to utilize the net proceeds from the global offering according to the plans outlined in the 'Use of Proceeds from Listing' section of this announcement[85] Employees and Remuneration Policy As of June 30, 2025, the group had 103 full-time employees, all located in China, attracting, motivating, and retaining qualified personnel through competitive remuneration, performance-based incentive schemes, and diverse training programs - As of June 30, 2025, the group had 103 full-time employees, all located in China[86] - The group offers competitive remuneration packages and working environments, and has established a performance-based incentive scheme to motivate employees[86] - The group places high importance on providing training to its employees, including induction training, product training, business training, financial training, and management training[87] Use of Proceeds from Listing Net proceeds from the global offering were approximately HKD 531.9 million; as of June 30, 2025, HKD 79.8 million was allocated for selected mergers, acquisitions, and strategic investments, with HKD 69.8 million utilized and the remaining HKD 69.8 million expected to be used by the end of 2025, while other proposed uses remained unutilized - The company received net proceeds of approximately HKD 531.9 million from the global offering[88] - As of June 30, 2025, the intended use for selected mergers, acquisitions, and strategic investments was HKD 79.8 million, with HKD 69.8 million utilized and HKD 69.8 million unutilized, expected to be used by the end of 2025[89] - Other intended uses, including enhancing R&D capabilities, improving sales and marketing functions, developing the Feitian Metaverse platform, and working capital, remained unutilized as of June 30, 2025[89] Intended and Actual Use of Net Proceeds from Listing | Intended Use | Net Proceeds (HKD millions) | Percentage of Total Net Proceeds (%) | Net Proceeds Utilized as at June 30, 2025 (HKD millions) | Net Proceeds Unutilized as at June 30, 2025 (HKD millions) | Expected Timeline for Unutilized Net Proceeds | | :--- | :--- | :--- | :--- | :--- | :--- | | Enhancing our R&D capabilities and improving our services and products | 175.6 | 33.0% | 0.0 | 0.0 | — | | Enhancing sales and marketing functions | 133.0 | 25.0% | 0.0 | 0.0 | — | | Selected mergers, acquisitions and strategic investments | 79.8 | 15.0% | 69.8 | 69.8 | By end of 2025 | | Developing our Feitian Metaverse platform | 53.1 | 10.0% | 0.0 | 0.0 | — | | Working capital and general corporate purposes | 53.2 | 10.0% | 0.0 | 0.0 | — | | Total | 531.9 | 100.0 | 69.8 | 69.8 | | Use of Proceeds from Placing Net proceeds from the placing amounted to approximately HKD 71.62 million; as of June 30, 2025, HKD 33.29 million was utilized, including HKD 19.29 million for enhancing R&D capabilities and improving services/products, HKD 10.5 million for sales and marketing functions, and HKD 3.5 million for general working capital, with the remaining funds expected to be used by the end of 2025 - The net proceeds from the placing (after deducting placing commissions payable to the placing agent and other expenses incurred from the placing) amounted to approximately HKD 71.62 million[93] - As of June 30, 2025, HKD 33.29 million of the net proceeds had been utilized, including HKD 19.29 million for enhancing R&D capabilities and improving services and products, HKD 10.5 million for enhancing sales and marketing functions, and HKD 3.5 million for general working capital purposes[93] - The remaining net proceeds of HKD 38.33 million are expected to be utilized by the end of 2025[93] Intended and Actual Use of Net Proceeds from Placing | Intended Use | Net Proceeds (HKD millions) | Percentage of Total Net Proceeds (%) | Net Proceeds Utilized as at June 30, 2025 (HKD millions) | Net Proceeds Unutilized as at June 30, 2025 (HKD millions) | Expected Timeline for Unutilized Net Proceeds | | :--- | :--- | :--- | :--- | :--- | :--- | | Enhancing R&D capabilities and improving services and products | 42.97 | 60.0% | 19.29 | 23.68 | By end of 2025 | | Enhancing sales and marketing functions | 21.49 | 30.0% | 10.5 | 10.99 | By end of 2025 | | General working capital purposes | 7.16 | 10.0% | 3.5 | 3.66 | By end of 2025 | | Total | 71.62 | 100.0 | 33.29 | 38.33 | | Interim Dividend The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[94] Compliance with Corporate Governance Practices The company complied with all applicable principles and code provisions of the Corporate Governance Code during the reporting period, except for Mr. Wang Lei holding both Chairman and Chief Executive Officer roles, an arrangement the Board believes benefits management and whose effectiveness will be continuously reviewed - The company has complied with all applicable principles and code provisions of the Corporate Governance Code during the reporting period and up to the date of this announcement[96] - There was a deviation from Code Provision C.2.1 of the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer of the company were not segregated and were both held by Mr. Wang Lei[96] - The Board believes that the combined roles of Chairman and Chief Executive Officer facilitate efficient management of the group and will continue to review the effectiveness of the company's corporate governance structure[96] Compliance with the Standard Code for Securities Transactions The company has adopted the Standard Code, and all directors confirmed compliance with it during the reporting period - The company has adopted the Standard Code as its code of conduct for securities transactions by directors and relevant employees[97] - Following specific inquiries with all directors, they have all confirmed compliance with the Standard Code during the reporting period[98] Audit Committee The Audit Committee, comprising three independent non-executive directors, reviewed the group's interim results and deemed them compliant with applicable accounting standards, Listing Rules, and legal requirements - The Audit Committee comprises three independent non-executive directors, namely Ms. Chen Yuelin, Mr. Jiang Yi, and Mr. Li Shaojie, with Ms. Chen Yuelin serving as the chairperson[99] - The Audit Committee has reviewed the group's unaudited condensed consolidated interim results for the reporting period with the company's management and external auditors, and is of the opinion that the interim results comply with applicable accounting standards, the Listing Rules, and all other applicable legal requirements[100] Purchase, Sale or Redemption of the Company's Securities During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities; 2,672,000 shares repurchased in 2023 were cancelled in May 2025, while 1,182,000 shares repurchased in 2024 are held as treasury shares - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[101] - A total of 2,672,000 shares repurchased in 2023 were cancelled in May 2025[101] - A total of 1,182,000 shares repurchased in 2024 are held as treasury shares, and the company intends to use these treasury shares in accordance with applicable rules and regulations[101] Events After the Reporting Period No significant events affecting the group occurred after the reporting period - No significant events affecting the group occurred after the reporting period[102] Publication of Interim Results Announcement and Interim Report The interim results announcement has been published on the Stock Exchange and the company's website, with the interim report to be dispatched and published in due course - This interim results announcement has been published on the website of the Stock Exchange and the company's website[103] Definitions This section provides definitions for key terms used in the report, covering financial, technical, and corporate governance-related vocabulary - This section provides definitions for key terms used in the report, covering financial, technical, and corporate governance-related vocabulary, such as AR, VR, AI, SaaS, XR, IFRS, and Listing Rules[104][105][106][107][110] Board of Directors As of the announcement date, the Board of Directors comprises three executive directors (Mr. Wang Lei, Ms. Xu Bing, and Mr. Li Yao) and three independent non-executive directors (Mr. Jiang Yi, Ms. Chen Yuelin, and Mr. Li Shaojie) - As of the date of this announcement, the Board of Directors comprises executive directors Mr. Wang Lei, Ms. Xu Bing, and Mr. Li Yao, and independent non-executive directors Mr. Jiang Yi, Ms. Chen Yuelin, and Mr. Li Shaojie[109]