卓尔智联(02098) - 2025 - 中期业绩

Company Information and Financial Summary This section presents the company's unaudited interim financial results, including key statements and highlights Company Overview Zall Smart Commerce Group Ltd. announced its unaudited interim results for the six months ended June 30, 2025 - The company, Zall Smart Commerce Group Ltd., stock code 2098, is incorporated in the Cayman Islands[2] Condensed Consolidated Interim Income Statement Revenue grew significantly, but gross profit and profit before tax declined; profit and basic EPS increased Condensed Consolidated Interim Income Statement Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 90,921,475 | 68,276,396 | +33.2% | | Cost of Sales | (90,644,136) | (67,912,566) | +33.5% | | Gross Profit | 277,339 | 363,830 | -23.8% | | Other Net Income | 19,093 | 55,065 | -65.3% | | Selling and Distribution Expenses | (147,551) | (122,849) | +20.1% | | Administrative and Other Expenses | (200,553) | (193,692) | +3.5% | | Net Impairment Loss | 18,132 | (42,596) | N/A | | Operating Profit | 272,207 | 354,292 | -23.2% | | Finance Income | 125,523 | 122,803 | +2.2% | | Finance Costs | (293,809) | (338,891) | -13.3% | | Profit Before Tax | 106,570 | 138,632 | -23.1% | | Profit for the Period | 69,972 | 40,760 | +71.7% | | Profit Attributable to Equity Holders of the Company | 97,051 | 49,817 | +94.8% | | Basic and Diluted Earnings Per Share (RMB cents) | 0.78 | 0.40 | +95.0% | Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income Profit for the period significantly increased, but total comprehensive income slightly decreased due to foreign exchange differences Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income Key Data (For the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period | 69,972 | 40,760 | | Other Comprehensive Loss for the Period (Exchange Differences) | (32,221) | (2,682) | | Total Comprehensive Income for the Period | 37,751 | 38,078 | | Total Comprehensive Income Attributable to Equity Holders of the Company | 64,830 | 47,135 | Condensed Consolidated Interim Statement of Financial Position Non-current assets and total assets slightly increased, net current liabilities improved but remained negative, and total equity remained stable Condensed Consolidated Interim Statement of Financial Position Key Data (As of June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current Assets | | | | Investment Properties | 25,194,024 | 24,879,292 | | Total Non-current Assets | 27,222,086 | 26,866,732 | | Current Assets | | | | Inventories | 4,328,550 | 3,975,854 | | Trade and Other Receivables | 28,562,645 | 26,286,928 | | Pledged Bank Deposits | 7,494,483 | 10,014,072 | | Cash and Cash Equivalents | 1,531,290 | 1,545,952 | | Total Current Assets | 42,560,212 | 42,618,024 | | Current Liabilities | | | | Trade and Other Payables | 18,380,210 | 18,755,310 | | Contract Liabilities | 16,872,656 | 14,924,656 | | Interest-bearing Borrowings | 9,640,129 | 11,568,152 | | Total Current Liabilities | 46,733,251 | 47,343,087 | | Net Current Liabilities | (4,173,039) | (4,725,063) | | Non-current Liabilities | | | | Interest-bearing Borrowings | 4,044,646 | 3,263,285 | | Deferred Tax Liabilities | 4,602,303 | 4,510,741 | | Total Non-current Liabilities | 8,668,343 | 7,798,716 | | Total Equity | 14,380,704 | 14,342,953 | Notes to the Financial Statements This section details financial statement notes, covering accounting policies, segment reporting, and key items Basis of Preparation and Going Concern Interim financial information is prepared on a going concern basis despite net current liabilities, with management addressing liquidity challenges - This condensed consolidated interim financial information is prepared in accordance with applicable disclosure provisions of the HKEX Listing Rules and IAS 34 'Interim Financial Reporting'[8] - As of June 30, 2025, the Group had net current liabilities of approximately RMB 4.173 billion, indicating significant uncertainty, but the Board is confident in meeting financial obligations for the next 12 months, thus preparing on a going concern basis[9][11] - The company has implemented measures to manage liquidity, including improving supply chain management and trading business revenue, investment property rental income, negotiating loan extensions or refinancing with banks, considering share placements, and disposing of non-core businesses and assets[10][13] Changes in Accounting Policies IAS 21 (Amendment) was applied, but had no material impact as the Group did not engage in relevant transactions - The Group applied IAS 21 (Amendment) 'The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability' in this accounting period, but it had no material impact as no foreign currency transactions involving non-exchangeable currencies were conducted[12] Revenue and Segment Reporting The Group's main businesses include developing and operating large consumer goods wholesale markets and providing supply chain management and trading services, with total revenue reaching RMB 90.921 billion - The Group's primary business involves developing and operating large consumer goods wholesale markets in China and providing supply chain management and trading services, e-commerce services, financial services, warehousing, and logistics services for online and offline customers[14] - The Group manages its business through two reportable segments: property development and related services, and supply chain management and trading[16][19] Revenue Breakdown Supply chain management and trading revenue significantly increased, while property sales and rental income decreased Revenue Breakdown (For the six months ended June 30) | Revenue Source | 2025 (RMB thousands) | 2024 (RMB thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Sales of Properties and Related Services | 45,952 | 54,321 | -15.4% | | Supply Chain Management and Trading Business | 90,693,400 | 68,047,691 | +33.3% | | Others (from contracts with customers) | 1,733 | 9,688 | -82.1% | | Total Revenue from Contracts with Customers | 90,741,085 | 68,111,700 | +33.2% | | Gross Rental Income from Investment Properties | 116,961 | 122,416 | -4.4% | | Financing Income | 24,987 | 31,029 | -19.5% | | Others (other sources) | 38,442 | 11,251 | +241.7% | | Total Revenue from Other Sources | 180,390 | 164,696 | +9.5% | | Total Revenue | 90,921,475 | 68,276,396 | +33.2% | - The total transaction price allocated to the remaining performance obligations under existing contracts of the Group was RMB 188.534 million, expected to be recognized within 1 to 24 months[18] Segment Reporting Supply chain management and trading revenue grew but incurred a loss, while property development remained profitable Reportable Segment Results (For the six months ended June 30) | Indicator | Property Development and Related Services (2025) | Property Development and Related Services (2024) | Supply Chain Management and Trading (2025) | Supply Chain Management and Trading (2024) | | :--- | :--- | :--- | :--- | :--- | | Reportable Segment Revenue (RMB thousands) | 163,148 | 176,698 | 90,756,594 | 68,090,010 | | Reportable Segment Profit/(Loss) (RMB thousands) | 71,529 | 64,380 | (109,948) | (54,301) | | Net Gain from Investment Property Valuation (RMB thousands) | 305,747 | 294,534 | – | – | - Supply chain management and trading segment revenue significantly increased but turned from profit to loss, primarily affected by finance costs and impairment losses[21] Geographical Segment Information Mainland China remains the primary revenue source, with significant growth in Singapore market revenue Geographical Segment Revenue and Designated Non-current Assets (As of June 30) | Region | Revenue from External Customers (2025, RMB thousands) | Revenue from External Customers (2024, RMB thousands) | Designated Non-current Assets (2025, RMB thousands) | Designated Non-current Assets (2024, RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | China | 58,703,618 | 55,935,779 | 26,668,642 | 26,255,302 | | Singapore | 32,217,857 | 12,340,617 | 2,044 | 2,044 | | Total | 90,921,475 | 68,276,396 | 26,670,686 | 26,257,346 | Other Net Income Other net income significantly decreased by 65.3%, mainly due to reduced government grants and fair value changes Other Net Income Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net change in fair value of financial instruments at FVTPL | 18,400 | 33,103 | | Government grants | 5,982 | 22,291 | | Cancellation of purchase orders and penalties for product defects | (4,263) | – | | Others | (1,026) | (329) | | Total | 19,093 | 55,065 | Profit Before Tax Profit before tax was influenced by finance income and costs, depreciation, staff costs, R&D, and impairment losses Finance Income and Costs Finance income slightly increased, while finance costs significantly decreased, mainly due to interest waivers Finance Income and Costs (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Finance Income | | | | Interest income from bank deposits | (125,523) | (122,803) | | Finance Costs | | | | Interest on interest-bearing borrowings | 257,249 | 338,215 | | Interest on lease liabilities | 621 | 520 | | Other borrowing costs | 1,907 | 2,963 | | Less: Capitalised into properties under development | (37,462) | (42,839) | | Bank charges and others | 68,970 | 42,906 | | Net exchange losses/(gains) | 2,524 | (2,874) | | Total Finance Income | (125,523) | (122,803) | | Total Finance Costs | 293,809 | 338,891 | Other Expense Details Total depreciation and amortization decreased, staff costs increased, R&D costs remained stable, and impairment losses reversed Other Expense Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Amortisation of intangible assets | 18,653 | 20,611 | | Depreciation of property, plant and equipment | 14,787 | 19,076 | | Depreciation of right-of-use assets | 8,980 | 11,393 | | Total Depreciation and Amortisation | 42,420 | 51,080 | | Salaries, wages and other benefits | 136,454 | 119,102 | | Contributions to defined contribution retirement plans | 9,950 | 10,479 | | Total Staff Costs | 146,404 | 129,581 | | Research and development costs | 7,223 | 7,255 | | Net impairment losses under ECL model | (27,034) | (15,341) | Income Tax Income tax expense significantly decreased due to reversal of prior year over-provision for China corporate income tax Income Tax Details (For the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current tax (China corporate income tax) | 14,561 | 22,635 | | Current tax (China land appreciation tax) | – | 1,015 | | Over-provision in prior years (China corporate income tax) | (151,121) | – | | Deferred tax | 173,158 | 74,222 | | Total Income Tax | 36,598 | 97,872 | - Some Chinese subsidiaries enjoy preferential corporate income tax rates of 15% or 9% under specific development strategies or enterprise regulations[28] - The Group expects Pillar Two rules to have no material impact on its income tax position, as Singapore's effective tax rate exceeds 15% and China has not yet implemented relevant legislation[29] Earnings Per Share Basic earnings per share increased by 95% to RMB 0.78 cents, driven by higher profit attributable to equity holders Earnings Per Share (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the Company (RMB thousands) | 97,051 | 49,817 | | Weighted average number of ordinary shares in issue (thousands) | 12,399,506 | 12,399,506 | | Basic and diluted earnings per share (RMB cents) | 0.78 | 0.40 | - Unexercised share options did not result in potential diluted ordinary shares, as their exercise price exceeded the average market price of ordinary shares for the periods[32] Investment Properties Investment properties were revalued, recognizing a net fair value gain, with a significant portion pledged for borrowings - Investment properties were revalued by independent valuers as of June 30, 2025, recognizing a net fair value gain of RMB 305.747 million[33] - As of June 30, 2025, the Group had pledged completed investment properties and investment properties under development with a total carrying amount of RMB 11.961 billion for interest-bearing borrowings[33] Property, Plant and Equipment New right-of-use assets and property additions were recognized, with some buildings lacking certificates or being pledged - For the six months ended June 30, 2025, the Group recognized new right-of-use assets of RMB 5.185 million and additions to property, plant and equipment totaling RMB 19.939 million[34] - As of June 30, 2025, certain buildings with a net carrying amount of RMB 45.375 million lacked property ownership certificates, and buildings with a net carrying amount of RMB 28.275 million were pledged[34] Trade and Other Receivables Total trade and other receivables increased to RMB 28.563 billion, with trade receivables and advances to suppliers as main components Trade and Other Receivables Details (As of June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | 10,097,931 | 8,725,888 | | Loans and factoring receivables (net of loss allowance) | 1,225,829 | 1,282,860 | | Advances to suppliers | 15,439,028 | 13,981,971 | | Other receivables, deposits and prepayments | 1,799,857 | 2,296,209 | | Total | 28,562,645 | 26,286,928 | - As of June 30, 2025, the Group pledged other receivables of RMB 250,000 for interest-bearing borrowings[35] Ageing Analysis of Trade Receivables Total trade receivables were RMB 10.098 billion, with the majority (96.6%) aged within six months Ageing Analysis of Trade Receivables (As of June 30) | Ageing | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 6 months | 9,754,517 | 7,739,161 | | Over 6 months but within 12 months | 234,728 | 821,325 | | Over 12 months | 108,686 | 165,402 | | Total | 10,097,931 | 8,725,888 | Loans and Factoring Receivables Total loans and factoring receivables were RMB 1.226 billion, mostly aged within six months, with secured loans being a larger proportion Loans and Factoring Receivables Details (As of June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Secured loans receivable (net of loss allowance) | 1,087,346 | 1,106,477 | | Factoring receivables (net of loss allowance) | 138,483 | 176,383 | | Total | 1,225,829 | 1,282,860 | Ageing Analysis of Loans and Factoring Receivables (As of June 30) | Ageing | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 6 months | 1,142,061 | 1,077,822 | | Over 6 months but within 12 months | 30,335 | 117,935 | | Over 12 months | 53,433 | 87,103 | | Total | 1,225,829 | 1,282,860 | Trade and Other Payables Total trade and other payables decreased slightly to RMB 18.380 billion, with most aged within six months Trade and Other Payables Details (As of June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables and bills payable | 13,531,298 | 14,779,661 | | Receipts in advance | 71,914 | 76,313 | | Other payables and accrued expenses | 4,776,998 | 3,899,336 | | Total | 18,380,210 | 18,755,310 | Ageing Analysis of Trade Payables and Bills Payable (As of June 30) | Ageing | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 6 months | 12,112,634 | 13,737,077 | | Over 6 months but within 12 months | 1,223,104 | 727,534 | | Over 12 months | 195,560 | 315,050 | | Total | 13,531,298 | 14,779,661 | - Pledged bank deposits of RMB 7.189 billion were used as collateral for bills payable as of June 30, 2025[40] Interest-bearing Borrowings Total interest-bearing borrowings decreased by 7.7% to RMB 13.685 billion, with current borrowings remaining high Interest-bearing Borrowings Carrying Amount Analysis (As of June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current | | | | Bank and other financial institution loans | 3,912,200 | 4,985,867 | | Other loans | 1,937,089 | 1,996,716 | | Loans from entities controlled by ultimate holding company | 20,000 | 20,000 | | Discounted bank acceptance bills | 3,770,840 | 4,565,569 | | Total Current | 9,640,129 | 11,568,152 | | Non-current | | | | Bank and other financial institution loans | 2,184,043 | 1,316,019 | | Other loans | 1,860,603 | 1,947,266 | | Total Non-current | 4,044,646 | 3,263,285 | | Total | 13,684,775 | 14,831,437 | Bank and Other Financial Institution Loans Total bank and other financial institution loans amounted to RMB 6.096 billion, mostly secured/guaranteed, with some repayable on demand Bank and Other Financial Institution Loans Details (As of June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Secured/guaranteed | 5,319,765 | 5,124,272 | | Unsecured | 776,478 | 1,177,614 | | Total | 6,096,243 | 6,301,886 | - As of June 30, 2025, RMB 159.4 million in bank and other financial institution loans were repayable on demand due to breaches of financial covenants[43] - As of June 30, 2025, RMB 3.732 billion in bank and other financial institution loans were secured by Group assets with a total carrying amount of RMB 12.439 billion[42] Other Loans Total other loans amounted to RMB 3.798 billion, all unsecured, with fixed annual interest rates from 4.00% to 12.00% - As of June 30, 2025, total other loans amounted to RMB 3.798 billion, all unsecured, bearing fixed annual interest rates ranging from 4.00% to 12.00%[44] Loans from Entities Controlled by Ultimate Holding Company Loans from entities controlled by the ultimate holding company amounted to RMB 20 million, unsecured, with a fixed annual interest rate of 5% - Loans from entities controlled by the ultimate holding company amounted to RMB 20 million, unsecured, bearing a fixed annual interest rate of 5%[46] Discounted Bank Acceptance Bills The Group held discounted bank acceptance bills of RMB 3.771 billion, retaining all risks and rewards, thus recognizing them in full - The Group held discounted bank acceptance bills of RMB 3.771 billion, retaining all risks and rewards, including default risk, and thus continues to recognize these instruments in full[46] Capital, Reserves and Dividends The Group aims to ensure continuous operation and shareholder returns, managing capital structure through various adjustments and monitoring the adjusted net debt to capital ratio Dividends The Board does not recommend an interim dividend for the six months ended June 30, 2025, and no final dividend was approved for the prior fiscal year - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[50] - For the six months ended June 30, 2025, no final dividend was approved or paid for the prior fiscal year (six months ended June 30, 2024: nil)[48] Capital Management The Group manages its capital structure by monitoring the adjusted net debt to capital ratio, which increased to 33.43% - The Group's primary objective in managing capital is to safeguard its ability to continue as a going concern, providing returns to shareholders and stakeholders by pricing products and services commensurate with risk and obtaining financing at reasonable cost[49] Adjusted Net Debt to Capital Ratio (As of June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Total borrowings | 13,710,993 | 14,861,164 | | Less: Pledged bank deposits | (7,494,483) | (10,014,072) | | Less: Cash and cash equivalents | (1,531,290) | (1,545,952) | | Adjusted Net Debt | 4,685,220 | 3,301,140 | | Total equity attributable to equity holders of the Company | 14,016,047 | 13,951,217 | | Adjusted Net Debt to Capital Ratio | 33.43% | 23.66% | Management Discussion and Analysis This section discusses the Group's business review, operating results, liquidity, and future outlook Business Review The Group's business primarily consists of consumer goods wholesale trade and supply chain management and trading, continuously deepening digital-real integration and expanding new business models - The Group's business is primarily divided into two major segments: consumer goods wholesale trade and supply chain management and trading[14] Consumer Goods Wholesale Trade Hankoubei International Trade City focuses on market upgrades, developing new models, and deepening integration to build a national commodity supply chain base - Hankoubei International Trade City has formed 30 large-scale comprehensive specialized market clusters, accelerating its development into 'China's largest and world-leading' supply chain management and commercial logistics platform[52] - Hankoubei continues to innovate, introducing diversified commercial resources, accelerating the construction of new experiential consumption transaction scenarios, and deepening digital-real integration to promote the vigorous development of live e-commerce[53][55] - Hankoubei and SF Group jointly built the Huahu Airport Hankoubei Cargo Station, achieving three-dimensional empowerment of 'aviation hub + commercial market + intelligent manufacturing technology' and accelerating 'one-stop overseas' channels for advantageous industries[54] Supply Chain Management and Trading The Group operates B2B platforms for agricultural products, chemical plastics, steel, and energy, enhancing efficiency and risk management through digital innovation - The Group has built and operates a matrix of B2B trading platforms for agricultural products, chemical plastics, steel, and energy[57] - Zhongnongwang (agricultural products B2B platform) achieved operating revenue of RMB 24.5 billion, strengthening domestic sugar supply chain control and expanding into high-value-added areas like coffee and spices through digital empowerment[58][59] - Huashuhui (chemical and plastic B2B platform) achieved operating revenue of approximately RMB 10.1 billion, with 56,088 cumulative customers, by refining distribution strategies, adding aromatic product channels, and building a TMS system for logistics efficiency[60][61] - Zhuoganglian (ferrous bulk commodity platform) built an ecosystem of smart trading and supply chain services, collaborating with 16 financial institutions and deploying 32 standard warehouses across 260 cities, achieving operating revenue of approximately RMB 7.5 billion[62] - CIC (World Commodity Intelligent Trading Center) achieved operating revenue of approximately RMB 32.2 billion, with 16,965 registered users and transaction volume exceeding USD 37.5 billion, by leveraging blockchain technology to reduce international trade risks[63] Future Outlook Zall Smart Commerce will enhance digital technology, build a comprehensive service architecture, and extend its reach across the industry chain to create a collaborative ecosystem - Zall Smart Commerce will increase digital technology R&D and application, building a "B2B transaction services + supply chain services + digital technology cloud services" architecture focused on "new trade models" using big data and AI[64] - The company will leverage industrial advantages to extend service reach across the industry chain, enhancing operational efficiency and value, strengthening stability and resilience, and collaborating with partners to build an open, collaborative, and win-win industrial ecosystem[64] Investment Portfolio The Group holds listed equity securities in Fullshare Holdings Limited, recognizing an unrealized holding loss, with this investment being a minimal proportion of total assets Listed Equity Investment Portfolio (As of June 30) | Investee Company Name | Stock Code | Number of Shares Held | Effective Equity Interest | Acquisition Cost (RMB thousands) | Carrying Amount (RMB thousands) | Unrealized Holding Loss (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Fullshare Holdings Limited | 00607 | 11,819,250 | 1.86% | 620,157 | 4,419 | 1,053 | - For the six months ended June 30, 2025, the Group recognized an unrealized holding loss of approximately RMB 1.1 million, with this investment's carrying amount accounting for less than 0.01% of the Group's total assets[65] Operating Results Operating revenue significantly increased, but gross profit margin declined, while profit for the period grew due to reduced income tax and lower finance costs Operating Revenue Total revenue increased by 33.2% to RMB 90.9215 billion, primarily driven by expanded supply chain management and trading business - The Group's revenue increased by approximately 33.2% from approximately RMB 68.2764 billion for the six months ended June 30, 2024, to approximately RMB 90.9215 billion for the six months ended June 30, 2025, primarily due to increased revenue from supply chain management and trading business[67] - For the six months ended June 30, 2025, revenue from the Group's supply chain management and trading business contributed approximately 99.7% of total turnover, an increase of approximately 33.3% year-on-year[68] - The Group's rental income decreased from approximately RMB 122.4 million to approximately RMB 117.0 million, mainly due to a decrease in leased area during the reporting period[69] - Revenue from sales of properties and related services decreased by approximately 15.4% from approximately RMB 54.3 million to approximately RMB 46.0 million, primarily due to a decrease in delivered property gross floor area[71] Cost of Sales and Gross Profit Cost of sales increased with revenue, but gross profit decreased by 23.8% to RMB 277.3 million, with gross profit margin falling to 0.3% - The Group's cost of sales increased by approximately 33.5% from approximately RMB 67.9126 billion to approximately RMB 90.6441 billion, consistent with the increase in revenue[72] - The Group's gross profit decreased by approximately 23.8% from approximately RMB 363.8 million to approximately RMB 277.3 million, with the gross profit margin falling from 0.5% to 0.3%, primarily due to a decrease in the gross profit margin of the supply chain management and trading business[73] Other Net Income Other net income significantly decreased by 65.3% to RMB 19.1 million, due to reduced government grants and fair value changes - The Group's other net income decreased by approximately 65.3% from approximately RMB 55.1 million to RMB 19.1 million, primarily due to reduced government grants, lower net gain from fair value changes of forward contracts, and non-recognition of prior period contingent consideration net gain[74] Selling and Distribution Expenses Selling and distribution expenses increased by 20.1% to RMB 147.6 million, primarily due to increased promotion expenses - The Group's selling and distribution expenses increased by approximately 20.1% from RMB 122.8 million to approximately RMB 147.6 million, mainly due to an increase in promotion expenses of approximately RMB 25.3 million[75] Administrative and Other Expenses Administrative and other expenses increased by 3.5% to RMB 200.6 million, influenced by increased staff costs and reduced professional fees and depreciation - The Group's administrative and other expenses increased by approximately 3.5% from approximately RMB 193.7 million to approximately RMB 200.6 million, primarily due to increased staff costs, decreased professional fees, and decreased depreciation expenses[76] Net Impairment Losses under ECL Model The Group reversed expected credit losses of RMB 18.1 million, a significant improvement from prior period impairment losses - For the six months ended June 30, 2025, the Group reversed impairment losses under the expected credit loss model of approximately RMB 18.1 million, compared to recognizing impairment losses of approximately RMB 42.6 million in the prior period, primarily due to improved impairment losses on various receivables[77] Net Gain from Investment Property Valuation Net gain from investment property valuation increased by 3.8% to RMB 305.7 million, primarily due to new properties transferred to investment properties - Net gain from investment property valuation increased by approximately 3.8% from approximately RMB 294.5 million to approximately RMB 305.7 million, primarily due to new properties transferred to investment properties during the period[78] Finance Income and Costs Finance income slightly increased by 2.2%, while finance costs significantly decreased by 13.3% due to interest waivers - The Group's finance income increased by approximately 2.2% from approximately RMB 122.8 million to approximately RMB 125.5 million, while finance costs decreased by approximately 13.3% from approximately RMB 338.9 million to approximately RMB 293.8 million, primarily due to a waiver of interest on interest-bearing borrowings[79] Share of Net (Loss)/Profit of Associates and Joint Ventures Share of net loss from associates increased, while share of net profit from joint ventures turned positive due to increased profit from one joint venture - Share of net loss from associates for the six months ended June 30, 2025, was approximately RMB 4.8 million, compared to a net profit of approximately RMB 0.7 million in the prior period, primarily due to increased net losses from certain associates[80] - The Group's share of net profit from joint ventures for the six months ended June 30, 2025, was approximately RMB 7.4 million, compared to a net loss of approximately RMB 0.2 million in the prior period, primarily due to increased profit from one joint venture[81] Income Tax Income tax decreased by 62.6% to RMB 36.6 million, primarily due to the reversal of over-provision for China corporate income tax - Income tax decreased by approximately 62.6% from approximately RMB 97.9 million to approximately RMB 36.6 million, primarily due to the reversal of over-provision for China corporate income tax of approximately RMB 40.0 million in prior years[82] Profit for the Period The Group's profit for the period significantly increased by 71.7% to RMB 70.0 million - For the six months ended June 30, 2025, the Group recorded a net profit of approximately RMB 70.0 million, an increase of approximately 71.7% compared to approximately RMB 40.8 million in the prior period[83] Liquidity and Capital Resources Net current liabilities improved but remained negative, total equity remained stable, and the company is managing liquidity through various measures - As of June 30, 2025, the Group's net current liabilities were approximately RMB 4.173 billion (December 31, 2024: approximately RMB 4.7251 billion) and total equity was approximately RMB 14.3807 billion (December 31, 2024: approximately RMB 14.343 billion)[84] - The Group is implementing measures to manage liquidity and improve its financial position, including increasing operating cash inflows, negotiating debt extensions or refinancing, considering equity financing, and disposing of non-core assets[84] Cash Position and Treasury Policy Cash and cash equivalents were approximately RMB 1.5313 billion, with regular monitoring of funding and financial position - As of June 30, 2025, the Group's cash and cash equivalents were approximately RMB 1.5313 billion (December 31, 2024: approximately RMB 1.546 billion)[85] Interest-bearing Borrowings Total interest-bearing borrowings decreased by 7.7% to RMB 13.6848 billion, with most denominated in RMB - The Group's total interest-bearing borrowings decreased by approximately 7.7% from approximately RMB 14.8314 billion as of December 31, 2024, to approximately RMB 13.6848 billion as of June 30, 2025[86] Net Gearing Ratio The net gearing ratio increased from 23.7% to 33.4%, primarily due to an increase in adjusted net debt - The Group's net gearing ratio increased from approximately 23.7% to approximately 33.4%, primarily due to an increase in adjusted net debt, despite decreases in total borrowings and pledged bank deposits[87] Foreign Exchange Risk Sales are primarily denominated in RMB, and future exchange rate fluctuations are not expected to have a material impact, with no hedging instruments used - The Group's sales are primarily denominated in RMB, and the Board does not expect future exchange rate fluctuations to have a material impact on the business, with no financial instruments used for hedging as of June 30, 2025[88] Pledged Assets The Group pledged assets totaling RMB 16.210 billion for interest-bearing borrowings and RMB 7.1891 billion for bills payable - As of June 30, 2025, the Group had pledged assets with a total carrying amount of approximately RMB 16.210 billion as collateral for interest-bearing borrowings, and approximately RMB 7.1891 billion as collateral for bills payable[89] Material Acquisitions and Disposals The Group had no material acquisitions or disposals during the reporting period and will continue to seek opportunities to dispose of non-core assets - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries, associates, and/or joint ventures[90] - The Group will continue to seek opportunities to dispose of non-core assets and businesses to enhance liquidity and allocate resources to its core businesses[90] Material Investments Held The Group's investment properties form the core of its offline markets, with ongoing investment and upgrades planned for Hankoubei International Trade City - Investment properties constitute the main part of the Group's offline markets, and the Group will continue to invest in and upgrade Hankoubei International Trade City to enhance market value through modern facilities and professional management[91] Contingent Liabilities The Group provided mortgage financing guarantees for pre-sold property buyers and financial guarantees for third parties - As of June 30, 2025, guarantees provided for mortgage financing granted to buyers of the Group's properties amounted to approximately RMB 68.8 million[93] - The Group provided financial guarantees to third parties amounting to approximately RMB 67.1 million[93] Events After Reporting Period As of the announcement date, the Group had no significant events after the reporting period - As of the date of this announcement, the Group had no significant events after the reporting period[95] Employees and Remuneration Policy The Group employed 1,558 full-time employees, with employee benefit expenses of RMB 146.4 million, and has incentive schemes in place - As of June 30, 2025, the Group employed a total of 1,558 full-time employees, with employee benefit expenses of approximately RMB 146.4 million for the six months ended June 30, 2025[96] - The Group has adopted a share option scheme and a share award scheme to provide incentives, but no new share options or awarded shares have been granted as of June 30, 2025[96][97] Other Information This section covers corporate governance, compliance, significant events, and board composition Compliance with Corporate Governance Code The Company has adopted and complied with the Corporate Governance Code set out in Appendix C1 Part 2 of the HKEX Listing Rules - The Company has adopted and complied with the Corporate Governance Code set out in Part 2 of Appendix C1 to the HKEX Listing Rules for the six months ended June 30, 2025[98] Compliance with Model Code for Securities Transactions by Directors The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 to the Listing Rules, and all Directors confirmed compliance for the six months ended June 30, 2025[99] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period - 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[100] Review of Interim Results The Review Committee has reviewed the Group's unaudited condensed consolidated interim results and discussed key financial reporting matters - The Review Committee has reviewed the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2025, in accordance with Listing Rules 3.21 and 3.22 and its written terms of reference[101] Interim Dividend The Board does not recommend an interim dividend for the six months ended June 30, 2025 - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[102] Publication of Interim Results Announcement and Interim Report This interim results announcement is published on the HKEX and Company websites, with the interim report to follow - This interim results announcement is published on the HKEX website and the Company's website, and the interim report will be published and dispatched to shareholders in due course[103] Board Composition As of the announcement date, the Board of Directors comprises eight members, including five executive and three independent non-executive directors - As of the announcement date, the Board of Directors comprises eight members, including five executive directors and three independent non-executive directors[105]