凯顺控股(08203) - 2025 - 中期财报

Company Information and Report Statement This section outlines the nature of the GEM market, disclaims responsibility for the report's content by HKEX, and affirms the board's accountability for accuracy GEM Characteristics and Disclaimer The report highlights GEM's high investment risks for SMEs, disclaims HKEX responsibility, and affirms the Board's accountability for accuracy - The GEM market targets small and medium-sized companies, entailing higher investment risks and potential for significant market volatility for securities[2] - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited bear no responsibility for the report's content and make no representations[2] - The Company's directors collectively and individually assume full responsibility for the information in this report, confirming its accuracy, completeness, and absence of misleading or fraudulent elements[2] Financial Statements This section presents the condensed consolidated financial statements, including profit or loss, comprehensive income, financial position, equity changes, and cash flows Condensed Consolidated Statement of Profit or Loss For H1 2025, the Group turned from profit to a net loss, with revenue and gross profit significantly declining Key Data from Condensed Consolidated Statement of Profit or Loss (Six Months Ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 330,705 | 501,609 | -34.1% | | Cost of sales and services | (307,654) | (428,129) | -28.1% | | Gross profit | 23,051 | 73,480 | -68.6% | | Loss / Profit from operations | (20,671) | 14,739 | Turned from profit to loss | | Loss / Profit for the period | (28,486) | 3,725 | Turned from profit to loss | | Attributable to owners of the Company | (24,442) | (83) | Loss widened | | Basic loss per share (HK cents) | (4.19) | (0.01) | Loss widened | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For H1 2025, the Group recorded a significant increase in total comprehensive expense, primarily due to an expanded loss for the period Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Loss / Profit for the period | (28,486) | 3,725 | Turned from profit to loss | | Exchange differences on translation of overseas operations | 519 | (4,108) | Turned from expense to income | | Total comprehensive expense for the period | (27,967) | (383) | Loss widened | | Attributable to owners of the Company | (24,683) | (3,265) | Loss widened | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total assets less current liabilities improved, but it still faces significant net current liabilities and net liabilities, raising going concern uncertainties Key Data from Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 285,722 | 343,448 | -16.8% | | Current assets | 459,315 | 397,547 | +15.5% | | Current liabilities | 619,730 | 647,052 | -4.2% | | Net current liabilities | (160,415) | (249,505) | Improved | | Net liabilities | (45,916) | (17,949) | Worsened | | Equity attributable to owners of the Company | (63,678) | (38,995) | Loss widened | - As of June 30, 2025, the Group had net current liabilities of approximately HK$160,415 thousand and net liabilities of approximately HK$45,916 thousand, indicating significant uncertainties that may cast substantial doubt on its ability to continue as a going concern[13] Condensed Consolidated Statement of Changes in Equity For H1 2025, equity attributable to owners of the Company deteriorated, primarily due to the total comprehensive expense for the period, further expanding the capital deficit Key Data from Condensed Consolidated Statement of Changes in Equity (Six Months Ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Equity attributable to owners of the Company | (63,678) | (50,616) | | Capital deficit | (45,916) | (31,178) | | Total comprehensive expense for the period | (27,967) | (383) | Condensed Consolidated Statement of Cash Flows For H1 2025, the Group experienced a net decrease in cash and cash equivalents, with operating activities shifting from a net inflow to a net outflow, reflecting deteriorating operating conditions Key Data from Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net cash (used in) / generated from operating activities | (38,232) | 91,436 | | Net cash generated from / (used in) investing activities | (315) | (36,229) | | Net cash used in financing activities | (8,725) | (12,879) | | Net (decrease) / increase in cash and cash equivalents | (47,272) | 42,328 | | Cash and cash equivalents at end of period | 23,027 | 50,552 | Notes to the Financial Statements This section provides detailed notes on the Group's general information, accounting policies, and specific financial statement items General Information and Basis of Preparation The Company is an investment holding company primarily engaged in coal mining, consulting, media services, and corporate and investment businesses, facing significant going concern uncertainties despite the Board's confidence in business recovery and debt negotiations - The Group primarily engages in coal mining, consulting and media services, and corporate and investment businesses[12] - As of June 30, 2025, the Group had net current liabilities of approximately HK$160,415 thousand and net liabilities of approximately HK$45,916 thousand, indicating significant going concern uncertainties[13] - The Board believes the Group will have sufficient working capital, based on the recovery of its Xinjiang coal business and active negotiations with creditors for debt repayment extensions[14][16] Changes in Accounting Policies The Group has applied IAS 21 (Amendment) "Lack of Exchangeability," which had no material impact on the interim financial report, and has not adopted any new standards not yet effective - The Group has applied IAS 21 (Amendment) "Lack of Exchangeability"[15] - The aforementioned amendment had no material impact on the preparation or presentation of this interim financial report[15] Revenue Breakdown For H1 2025, the Group's revenue decreased by 34.1% to HK$330,705 thousand, primarily driven by a 30.3% decline in coal production and sales, with China (excluding Hong Kong) remaining the main revenue source Revenue Breakdown (Six Months Ended June 30) | Product/Service Line | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Production and sales of coal | 310,066 | 444,832 | -30.3% | | Supply chain management services for mining industry | 3,934 | 40,327 | -90.2% | | Mining and metallurgical machinery products | 4,698 | 8,151 | -42.4% | | Mining logistics services | 6,580 | 2,157 | +204.1% | | Trust and agency services | 1,265 | 917 | +37.9% | | Event planning services | 2,014 | 2,798 | -28.1% | | Operating railway platforms | 1,993 | 2,158 | -7.6% | | Others | 155 | 269 | -42.4% | | Total Revenue | 330,705 | 501,609 | -34.1% | Revenue by Major Geographical Market (Six Months Ended June 30) | Region | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 3,434 | 3,732 | | China (excluding Hong Kong) | 325,278 | 495,467 | | Others | 1,993 | 2,410 | | Total | 330,705 | 501,609 | Segment Information The Group operates three reportable segments: coal mining, consulting and media services, and corporate and investment businesses, with coal mining being the primary revenue source but also the main contributor to the overall loss in H1 2025 - The Group has three reportable segments: coal mining, consulting and media services, and corporate and investment businesses[21] Segment Revenue and Loss / Profit (Six Months Ended June 30) | Segment | 2025 Revenue (HK$ thousand) | 2025 Loss / Profit (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2024 Profit / Loss (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Coal mining business | 327,271 | (25,379) | 497,625 | 15,067 | | Consulting and media services business | 3,344 | 209 | 3,984 | 22 | | Corporate and investment business | 90 | (3,316) | — | (11,364) | | Total | 330,705 | (28,486) | 501,609 | 3,725 | - The coal mining business turned from profit to loss in H1 2025, representing the primary reason for the Group's overall loss[22][23] Investment and Other Income For H1 2025, the Group's investment and other income significantly decreased to HK$418 thousand, mainly due to a sharp decline in interest income from bank deposits Investment and Other Income (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest income from bank deposits | 168 | 889 | | Dividend income from equity investments | 214 | 189 | | Miscellaneous income | 36 | 105 | | Total | 418 | 1,183 | Other Gains and Losses For H1 2025, the Group's other gains and losses improved to a loss of HK$3,482 thousand, primarily driven by a fair value gain on financial assets at fair value through profit or loss, despite increased impairment losses on trade and other receivables Other Gains and Losses (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net exchange loss | (52) | (357) | | Fair value gain / (loss) on financial assets at fair value through profit or loss | 1,794 | (4,253) | | Impairment loss on trade and other receivables | (5,224) | (3,947) | | Total | (3,482) | (8,557) | Income Tax Credit For H1 2025, the Group's income tax credit decreased to HK$807 thousand, mainly due to a reduction in deferred tax credit Income Tax Credit (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current tax expense | 147 | 191 | | Deferred tax credit | (954) | (1,965) | | Total | (807) | (1,774) | - Hong Kong and Mongolia profits tax are calculated at 16.5% and 10% respectively, while China corporate income tax is provided at a rate of 25%[29] Loss / Profit for the Period For H1 2025, the Group recorded a loss of HK$28,486 thousand, a reversal from profit, primarily influenced by cost of sales, depreciation, amortization, and impairment losses on trade receivables Components of Loss / Profit for the Period (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Directors' emoluments | 1,860 | 2,087 | | Cost of sales | 306,787 | 395,803 | | Depreciation of property, plant and equipment | 4,288 | 5,865 | | Amortisation of intangible assets | 4,998 | 5,055 | | Fair value (gain) / loss on financial assets at fair value through profit or loss | (1,794) | 4,253 | | Impairment loss on trade and other receivables | 5,224 | 3,947 | | Net exchange loss | 52 | 357 | Dividends The Board does not recommend the payment of any dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of a dividend for the six months ended June 30, 2025 (2024: nil)[33] Loss Per Share For H1 2025, the loss attributable to owners of the Company was HK$24,442 thousand, leading to an expanded basic loss per share of 4.19 HK cents, with no dilutive impact on ordinary shares Loss Per Share Calculation (Six Months Ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the purpose of calculating basic loss per share | (24,442) | (83) | | Weighted average number of ordinary shares (thousand shares) | 583,416 | 583,416 | | Basic loss per share (HK cents) | (4.19) | (0.01) | - The Company had no potentially dilutive ordinary shares, thus no diluted loss per share is presented[35] Finance Costs For H1 2025, the Group's finance costs decreased to HK$8,622 thousand, primarily due to zero interest on bonds payable and reduced interest expenses on bank borrowings and mining rights payables Finance Costs Breakdown (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest on bonds payable | — | 2,340 | | Interest portion of lease liabilities | 7 | 20 | | Interest on bank and other borrowings | 1,591 | 3,104 | | Imputed interest expense on mining rights payables | 7,024 | 7,324 | | Total | 8,622 | 12,788 | Property, Plant and Equipment For H1 2025, the Group's capital expenditure on property, plant and equipment significantly decreased, with purchases of approximately HK$0.7 million and no new construction in progress Property, Plant and Equipment Acquisitions (Six Months Ended June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Acquisition of property, plant and equipment | 700 | 7,500 | | Additions to construction in progress | — | 29,800 | Intangible Assets As of June 30, 2025, the Group's intangible assets, primarily mining rights, slightly increased to HK$244,493 thousand, with amortization of HK$4,998 thousand for the period Carrying Value of Mining Rights (As of June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Carrying value of mining rights | 244,493 | 242,391 | | Amortization for the period | 4,998 | 10,111 (2024 full year) | - The Group's mining rights pertain to the production and exploration of coal mines in Xinjiang, China, primarily long-flame coal reserves[40] Trade and Bills Receivables As of June 30, 2025, the Group's total trade and bills receivables decreased to HK$63,396 thousand, but the allowance for doubtful accounts increased, and trade receivables over one year old significantly rose, indicating heightened credit risk Trade and Bills Receivables (As of June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables | 125,063 | 123,996 | | Allowance for doubtful accounts | (63,105) | (52,435) | | Bills receivables | 1,438 | 4,627 | | Total | 63,396 | 76,188 | Ageing Analysis of Trade and Bills Receivables (As of June 30) | Ageing | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | 0–30 days | 4,898 | 20,670 | | 91–365 days | 41,971 | 58,340 | | Over 1 year | 73,279 | 42,145 | - Trade receivables over 1 year old increased from HK$42,145 thousand to HK$73,279 thousand, indicating rising long-term receivable risk[43] Trade Payables As of June 30, 2025, the Group's trade payables slightly decreased to HK$12,538 thousand, but the proportion of payables over 91 days, especially those over one year, increased Ageing Analysis of Trade Payables (As of June 30) | Ageing | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | 0–30 days | 2,160 | 6,023 | | 91–365 days | 6,816 | 5,380 | | Over 1 year | 1,719 | 509 | | Total | 12,538 | 13,638 | - The carrying amount of the Group's trade payables is denominated in RMB[44] Share Capital As of June 30, 2025, the Company's authorized share capital remained at HK$500,000 thousand, with issued and fully paid share capital of HK$58,342 thousand, comprising 583,415,844 ordinary shares Share Capital Structure (As of June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Authorized share capital | 500,000 | 500,000 | | Issued and fully paid share capital | 58,342 | 58,342 | | Number of issued shares (shares) | 583,415,844 | 583,415,844 | Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities, consistent with the situation as of December 31, 2024 - As of June 30, 2025, the Group had no significant contingent liabilities[46] Commitments As of June 30, 2025, the Group's total contracted but unexpended capital commitments slightly increased to HK$215,300 thousand, primarily for capital injections into subsidiaries Capital Commitments (As of June 30) | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Capital injection into subsidiaries | 206,250 | 200,302 | | Capital expenditure on property, plant and equipment | 9,050 | 8,789 | | Total | 215,300 | 209,091 | Financial Assets at Fair Value Through Profit or Loss As of June 30, 2025, the Group's financial assets at fair value through profit or loss increased to HK$13,193 thousand, entirely comprising equity securities listed in Hong Kong, with a fair value gain of HK$1,794 thousand recorded during the period Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Equity securities at fair value | 13,193 | 11,399 | | Current assets | 13,193 | 11,399 | | Held for trading | 13,193 | 11,399 | - The fair value of listed securities is calculated based on current bid prices, providing the Group with return opportunities through dividend income and fair value gains[50] Management Discussion and Analysis This section provides an overview of the macroeconomic environment, business performance, strategic adjustments, and financial review for the period Macroeconomic Environment and Business Overview In H1 2025, the global economy faced geopolitical and trade challenges, with China's economy slowing and the energy sector under pressure, leading to a decline in the Group's gross profit despite administrative cost controls - Global GDP growth in H1 2025 was 3.3%, below the pre-pandemic average (3.5%), impacted by geopolitical conflicts and tariff disputes[51] - China's GDP grew by 5.3% year-on-year in H1 2025, but faced slowing growth, weak domestic demand, and pressure on the energy and mineral sectors[51] - The Group's gross profit decline was primarily due to weak domestic coal market demand and coal-consuming enterprises depleting inventory, with market recovery expected in H2[51] Management and Business Strategy Adjustments In H1 2025, the Group implemented management adjustments, including extending a shareholder loan and promoting executives, while strategically focusing on its core Xinjiang mining business and exiting non-core operations - Former Chairman Mr. Chan Lap Kei agreed to extend the interest-free shareholder loan to June 30, 2027, to support the Group's financial stability[52] - Mr. Chan Chun Long and Mr. Ching Ho Tung, former Co-Chief Executive Officers, have been promoted to Board members[53] - The Group decided to gradually withdraw from the public relations consulting business to concentrate resources on core business development[57] Management Adjustments Former Chairman Mr. Chan Lap Kei extended his interest-free shareholder loan to support the Group's financial stability, while two former Co-Chief Executive Officers were promoted to the Board - Former Chairman Mr. Chan Lap Kei will extend the interest-free shareholder loan to June 30, 2027, to support the Group's financial stability[52] - Mr. Chan Chun Long and Mr. Ching Ho Tung have been promoted to Board members, providing support for Board decisions[53] Business Strategy Adjustments The Group's strategic adjustments include focusing on its core Xinjiang mineral extraction business, enhancing efficiency through technology and management, and gradually exiting non-core operations to optimize resource allocation, with an optimistic outlook for H2 coal prices - Focus on core business: More resources will be concentrated on the Xinjiang mineral extraction business, leveraging existing assets and exploring resource integration opportunities[54] - Adjust management structure: Optimize the leadership team to enhance strategic execution and market responsiveness[54] - Gradual exit from non-core businesses: The public relations consulting business will be discontinued to optimize resource allocation and overall strategic focus[57] - Domestic coal prices are expected to rebound in H2, maintaining an optimistic outlook for the long-term development of the Xinjiang mineral business and related operations[56] Business Segment Review In H1 2025, the Group's Xinjiang coal mining business generated HK$310 million in sales, while public relations ceased operations, and securities trading recorded an unrealized gain amid a strong Hong Kong stock market rebound - Xinjiang Xingliang Mining achieved HK$310 million in sales revenue from engineering coal business through fire extinguishing projects and sales network expansion[74] - The public relations consulting business ceased operations in H1 2025 due to intensified industry competition and significant profit margin compression[86] - The securities trading business recorded an unrealized gain of HK$1,793,628 and received dividends of HK$213,767 amid a strong rebound in Hong Kong stocks[88] Production and Supply Chain Management of Mineral Resources, Mining and Metallurgical Machinery The Group's Shandong mining machinery production achieved HK$4.7 million in sales, while its Shandong supply chain services faced market pressure, and Xinjiang coal mining generated HK$310 million from engineering coal sales, despite a decline in Mongolia's coal output Shandong — Production of Mining and Metallurgical Machinery Tengzhou Kaiyuan, a joint venture, achieved approximately HK$4.7 million in sales revenue in 2025, focusing on intelligent technology application and organizational optimization, with future demand driven by steel recovery, chemical expansion, and policy-mandated technical upgrades - Tengzhou Kaiyuan primarily produces overhead personnel transport equipment and spare parts, holding 50 sets of mining product safety marks and European standard certificates[59] - In 2025, Tengzhou Kaiyuan achieved sales revenue of approximately HK$4.7 million, continuously advancing its strategy for intelligent application of mining machinery equipment[63] - In the next six months, steel recovery, chemical expansion, and policy-mandated technical upgrades will drive structural growth in coal equipment demand[62] Shandong — Supply Chain Management Services Shandong Kailai Energy Logistics, with railway dedicated line usage rights, recorded approximately HK$10.51 million in sales revenue by June 2025, implementing strategic contraction and risk hedging amidst a challenging coal market - Shandong Kailai holds the right to use the railway dedicated line at Guanchiao Station of Yanzhou Car Depot, Jinan Railway Bureau, with an annual loading and unloading capacity of 3 million tonnes[64] - As of June 2025, Shandong Kailai recorded cumulative sales revenue of approximately HK$10.51 million[67] - Facing an oversupplied coal market, price pressure, new energy impacts, and imported coal, the company implemented strategic contraction and risk hedging mechanisms[65][66][67] Xinjiang — Coal Mining Business Xinjiang Xingliang Mining, located in the Tuha coalfield, obtained a 1.2 million tonnes/year mining permit in 2022 and initiated fire zone treatment in November 2023, achieving HK$310 million in engineering coal sales despite a slowdown in Xinjiang coal outbound transport growth - Xingliang Mining is located in the Tuha coalfield, with long-flame coal as the main type, and obtained a 1.2 million tonnes/year mining permit in 2022[69] - From January to May 2025, Xinjiang's raw coal output increased by 9.8% year-on-year, but the overall growth rate of Xinjiang coal outbound transport significantly slowed due to weak demand, high base effects, and limited offsetting effects from freight policies[70][71] - Xingliang Mining completed systematic remediation of the fire zone, with cumulative sales revenue from engineering coal business reaching HK$310 million, covering key industrial enterprises in the region[74] Mongolia — Supply Chain Management Services The Group's acquired Choir City railway platform in Mongolia, a key logistics hub, generated approximately HK$2 million in cooperation sharing revenue in 2025, despite a 12.4% year-on-year decline in Mongolia's coal production - The Choir City railway platform in Mongolia has an annual loading and unloading capacity of 1.8 million tonnes, offering loading, unloading, warehousing, logistics, and customs clearance services[75] - From January to June 2025, Mongolia's coal production totaled 43.706 million tonnes, a 12.4% year-on-year decrease[76] - The Choir project generated cumulative cooperation sharing revenue of approximately HK$2 million in 2025, enhancing regional logistics functions through modern logistics hub construction[78][80] Kaisun Business Strategy Consulting and Trust In H1 2025, the Hong Kong capital market showed signs of recovery, prompting the team to explore new opportunities in digital assets and plan to leverage AI and stablecoin policies to enhance competitiveness in H2 - In H1 2025, the Hong Kong capital market showed signs of recovery, driven by improved investment sentiment and industry growth momentum[84] - The team actively explores new opportunities in the digital asset sector and plans to combine AI and stablecoin policies to enhance competitive advantages[84] Public Relations Business In H1 2025, the public relations consulting business became unsustainable due to intensified competition, significant profit margin compression, and rising operating costs, leading the Group to cease its operations - The public relations consulting business faced intensified industry competition and significant profit margin compression, making sustainable profitability difficult[86] - The Group decided to gradually withdraw from and cease public relations business operations in H1 2025 to concentrate resources on its core mining business[86] Securities Trading Business The Group's Hong Kong-listed securities trading business, guided by a strategy of buying blue-chip stocks at lows, recorded an unrealized gain of HK$1.79 million and received HK$0.21 million in dividends in H1 2025 amid a strong Hong Kong stock market rebound - The investment strategy involves buying blue-chip stocks at lows and stocks with stable dividend returns, while considering selling profitable stocks[87] - In H1 2025, the Hang Seng Index of Hong Kong stocks recorded a cumulative increase of nearly 25%, becoming one of the best-performing major indices globally[87] Key Data from Securities Trading Business (As of June 30) | Metric | Amount (HK$) | | :--- | :--- | | Fair value of listed securities | 13,192,529 | | Cost of listed investments | 36,015,545 | | Unrealized gain | 1,793,628 | | Dividends received | 213,767 | 2025 Development Objectives The Group's 2025 development objectives include diversifying application scenarios for Shandong's mining machinery, building a specialized coal marketing system for Shandong's supply chain, establishing a standardized safety production system for Xinjiang's coal mining, and deepening strategic partnerships for Mongolia's supply chain services - Shandong mining and metallurgical machinery business objective: Expand diversified application scenarios, extend product lines, and drive profit growth through lean production[82] - Shandong supply chain management services objective: Build a specialized coal marketing system, cultivate a high-performance sales team, break into incremental markets, and enhance revenue and operating cash flow[81] - Xinjiang coal mining business objective: Establish a standardized safety production system, optimize organizational structure, strengthen safety and compliance control in mining operations, and promote full-chain digitalization of mining, transportation, and sales[85] - Mongolia supply chain management services objective: Deepen strategic partner collaboration, expand resource integration dimensions, and ensure long-term project operation and ecological value appreciation[83] Financial Review For H1 2025, the Group's revenue declined 34.1% to HK$330 million, and gross profit fell 68.6% to HK$23.1 million, primarily due to weak coal market demand and price drops, resulting in a net loss of HK$28.5 million Financial Performance Comparison (Six Months Ended June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 330,000 | 501,000 | -34.1% | | Gross profit | 23,100 | 73,500 | -68.6% | | Administrative and other operating expenses | 40,700 | 51,400 | -20.9% | | Other gains and losses | (3,500) | (8,600) | Improved 59.3% | | Loss from operations | (20,700) | (14,700) | Loss widened | | Total profit for the period | (28,500) | 3,700 | Turned from profit to loss | - The decrease in revenue was primarily due to weak domestic coal market demand, with coal-consuming enterprises mainly depleting inventory[89] - The significant decline in gross profit was mainly due to falling coal prices during the period, leading to a narrower gross profit margin[89] - The improvement in other gains and losses was primarily due to a fair value gain of approximately HK$1.7 million on financial assets at fair value through profit or loss, a reversal from a loss[90] Liquidity and Financial Resources As of June 30, 2025, the Group's bank and cash balances significantly decreased to HK$23 million, with net current liabilities of approximately HK$160 million indicating ongoing concern issues, while the capital gearing ratio remained stable at 0.06 Liquidity and Financial Resources Key Data (As of June 30) | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank and cash balances | 23,000 | 70,800 | | Net current liabilities | 160,000 | 249,505 | | Capital gearing ratio | 0.06 | 0.06 | - The Group's net current liabilities position indicates ongoing concern issues, and management will negotiate debt repayment with creditors[94] - The Group has no pledged assets, and foreign exchange risk is primarily concentrated in HKD, RMB, and USD[97][99] Human Resources As of June 30, 2025, the Group employed 102 staff in Hong Kong and China, a slight decrease, with total staff costs increasing by 24.8% to HK$16.1 million, maintaining good employee relations through performance-based hiring and benefits Human Resources Key Data (As of June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Number of employees | 102 | 107 | | Total staff costs (Six months ended June 30, HK$ thousand) | 16,100 | 12,900 | - The Group hires, promotes, and rewards employees based on performance and experience, providing benefits such as provident funds[100] Other Information This section provides updates on the Group's response to the disclaimer of opinion, directors' and substantial shareholders' interests, share schemes, and compliance with securities trading codes Group's Response to Disclaimer of Opinion Update The Group continues to negotiate debt repayment with creditors and extended a shareholder loan, while maintaining operational performance despite falling coal prices and planning to optimize efficiency, manage costs, and explore new business opportunities - The Company continues to negotiate repayment arrangements for outstanding bonds payable and accrued interest with creditors, who have agreed not to take legal action for now[107] - Former Director Mr. Chan Lap Kei agreed to extend his interest-free shareholder loan to June 30, 2027, to support the Company's financial stability and going concern[108] - The Group plans to optimize operational efficiency across business segments, prudently manage cost structures, and actively explore new business opportunities to diversify revenue sources[109] Directors' and Chief Executive's Interests in Shares of the Company As of June 30, 2025, Mr. Chan Lap Kei held 167,263,298 shares (28.67%), Mr. Yeung Wing Shing held 1,675,000 shares (0.29%), and Mr. Chan Chun Long held 6,147,000 shares (1.05%), with no other disclosable interests Directors' and Chief Executive's Share Interests (As of June 30) | Director Name | Capacity | Number of Shares (shares) | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | Chan Lap Kei | Beneficial owner | 167,263,298 | 28.67 | | Yeung Wing Shing | Beneficial owner | 1,675,000 | 0.29 | | Chan Chun Long | Beneficial owner | 6,147,000 | 1.05 | - Mr. Chan Lap Kei resigned on July 27, 2025, but his share interests are still listed as of the end of this reporting period[111][113] Substantial Shareholders' Interests in Shares of the Company As of June 30, 2025, substantial shareholders Mr. Chan Lap Kei and his spouse Ms. Yeung Po Yee were deemed to hold 167,263,298 shares (28.67%), while Mr. Cheung Hung Fung and his spouse Ms. Ng Ming Kan were deemed to hold 81,950,000 shares (14.05%) Substantial Shareholders' Share Interests (As of June 30) | Shareholder Name/Entity | Capacity and Nature of Interest | Number of Shares (shares) | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | Chan Lap Kei | Beneficial owner | 167,263,298 | 28.67 | | Yeung Po Yee | Interest of spouse | 167,263,298 | 28.67 | | Cheung Hung Fung | Beneficial owner | 81,950,000 | 14.05 | | Ng Ming Kan | Interest of spouse | 81,950,000 | 14.05 | - Save as disclosed above, no other persons held interests or short positions in the shares of the Company disclosable to the Company and the Stock Exchange[117] Share Schemes The Company has a 2016 Share Award Scheme, which has expired and whose shares are being transferred to the 2023 Share Award Scheme, designed to recognize contributions, provide incentives, and attract high-caliber talent - The 2016 Share Award Scheme has expired, and its shares are being transferred to the 2023 Share Award Scheme[120] - As of June 30, 2025, the total number of Company shares held under the 2016 Share Award Scheme was 13,610,000 shares, representing approximately 2.33% of the issued share capital[118] - The 2023 Share Award Scheme aims to recognize contributions from eligible participants, provide opportunities to acquire ownership interests in the Company, and attract high-caliber talent[122] - The 2023 Share Award Scheme has a scheme limit of 44,046,605 award shares, with a minimum vesting period of 12 months[121][127] 2016 Share Award Scheme The 2016 Share Award Scheme, adopted on June 14, 2016, with a five-year validity, held 13,610,000 Company shares as of June 30, 2025, representing approximately 2.33% of the issued share capital, and has now expired - The 2016 Share Award Scheme was adopted on June 14, 2016, with a validity period of five years[118] - As of June 30, 2025, the total number of Company shares held under the 2016 Share Award Scheme remained at 13,610,000 shares, representing approximately 2.33% of the Company's issued share capital[118] - No shares were granted under the Share Award Scheme to any director or employee of the Company for the six months ended June 30, 2025[119] - The 2016 Share Award Scheme has expired, and the Company intends to adopt a new share award scheme[120] 2023 Share Award Scheme The 2023 Share Award Scheme, adopted on July 14, 2023, aims to recognize contributions and attract talent, with a limit of 44,046,605 award shares (7.55% of issued capital) and a minimum vesting period of 12 months, valid until July 13, 2033 - The 2023 Share Award Scheme was adopted on July 14, 2023, to recognize contributions from eligible participants and attract high-caliber talent[120][122] - The scheme limit is 44,046,605 award shares, equivalent to approximately 7.55% of the Company's total issued shares[121] - Eligible participants include directors and employees of any member company of the Group[123] - The minimum vesting period for award shares is 12 months, and the scheme is valid until July 13, 2033[127][128] Share Option Scheme The Company's Share Option Scheme, adopted on July 14, 2023, aims to recognize contributions and attract talent, with a limit of 44,046,605 options (7.55% of issued capital), a 12-month minimum vesting period, and no options granted or exercised as of June 30, 2025 - The Share Option Scheme was adopted on July 14, 2023, to recognize contributions from directors and employees and attract talent[130][131] - The scheme limit is 44,046,605 share options, equivalent to approximately 7.55% of the Company's total issued shares[130] - The exercise price of share options is the higher of the closing price on the grant date and the average closing price of the preceding five days, with a minimum vesting period of 12 months[137][136] - The scheme is valid until July 13, 2033, and as of June 30, 2025, no share options were granted, exercised, cancelled, or lapsed[130][138] Directors' Interests in Competing Businesses As of June 30, 2025, no directors or their associates held any interests in businesses competing with the Group, nor were there any other conflicts of interest - Directors or their associates held no interests in any business that competes or may compete with the Group[141] - There were no other conflicts of interest between the directors and the Group[141] Purchase, Sale or Redemption of Listed Securities For the six months ended June 30, 2025, neither the Company nor its subsidiaries redeemed, purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries redeemed, purchased, sold, or redeemed any of the Company's listed securities[142] Corporate Governance This section details the Company's committee structure, membership changes, compliance with corporate governance codes, and risk management systems Committee Structure and Membership Changes The Company's audit, remuneration, and nomination committees are currently without members or chairs due to independent non-executive director resignations, leading the Board to review the interim results directly - The Company has established an Audit Committee, Remuneration Committee, and Nomination and Corporate Governance Committee[144] - Due to the resignation of several independent non-executive directors, all committees are without members and chairpersons as of the report date[143][145] - The unaudited interim results and report for the six months ended June 30, 2025, were reviewed by the Board, not the Audit Committee or external auditors[145][151] Corporate Governance Code For H1 2025, the Company deviated from the GEM Listing Rules' Corporate Governance Code, lacking independent non-executive directors and committee members, and failing to meet board diversity requirements, which the Board is actively addressing - The Company failed to comply with the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules, with multiple deviations[146] - The Board lacks independent non-executive directors, failing to meet the minimum number and one-third proportion requirements under GEM Listing Rules 5.05(1) and 5.05A[147] - The Audit Committee, Remuneration Committee, and Nomination and Corporate Governance Committee are without members and chairpersons, non-compliant with relevant GEM Listing Rules[149] - The Company failed to comply with GEM Listing Rule 17.104 regarding board diversity (single-gender composition), with a female director expected to be appointed by the end of August 2025 to meet requirements[148][150] Code of Conduct Regarding Securities Transactions by Directors The Company has adopted a code of conduct for directors' securities transactions, which is no less stringent than the GEM Listing Rules' required standards, and directors have confirmed full compliance - The Company has adopted a code of conduct for directors' securities transactions, with terms no less stringent than the dealing restrictions required by the GEM Listing Rules[152] - Directors have confirmed no non-compliance with the required dealing restrictions and the code of conduct for securities transactions[152] Risk Management and Internal Control Systems The Board conducted an annual review of the Group's risk management and internal control systems for H1 2025, deeming them effective and appropriate, covering significant financial, operational, and compliance controls - The Board conducted an annual review of the Group's risk management and internal control systems[153] - The Board considers the Group's risk management and internal control systems to be effective and appropriate, covering significant financial, operational, and compliance controls[153] Report Signature and Disclaimer This section confirms the Board's approval and signing of the report, its publication details, the current Board composition, and the precedence of the English version in case of discrepancies Board Approval and Information Release This report was signed by Executive Director Mr. Ching Ho Tung on behalf of the Board on August 29, 2025, published on HKEX and the Company's websites, with the English version prevailing in case of any ambiguity - This report was signed by Executive Director Mr. Ching Ho Tung on behalf of the Board on August 29, 2025[154] - This report is published on the website of The Stock Exchange of Hong Kong Limited and the Company's website[156] - As of the report date, the Board comprises three executive directors: Mr. Yeung Wing Shing, Mr. Chan Chun Long, and Mr. Ching Ho Tung[156] - In case of any discrepancy between the Chinese and English versions of this report, the English version shall prevail[155]