经纬天地(02477) - 2025 - 中期业绩

2025 Interim Results Financial Highlights The company's revenue and profit significantly declined, basic earnings per share decreased by nearly 30% year-on-year, and the Board did not recommend an interim dividend - During the reporting period, the company's revenue and profit both experienced significant declines, with basic earnings per share decreasing by nearly 30% year-on-year, and the Board did not recommend an interim dividend[3] 2025 Interim Financial Highlights (For the six months ended June 30, 2025) | Metric | Amount (RMB Million) | YoY Change (%) | | :--- | :--- | :--- | | Revenue | 90.1 | -15.1% | | Profit attributable to equity holders of the Company | 7.7 | -28.0% | | Basic earnings per share (RMB Cents) | 0.77 | -29.4% | | Interim Dividend | Not recommended for payment | - | Interim Condensed Consolidated Financial Statements The interim condensed consolidated financial statements provide a detailed overview of the company's financial performance and position, including comprehensive income, financial position, and cash flows Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, the company's revenue decreased by 15.1% year-on-year, and net profit decreased by 28.0%, primarily due to reduced revenue, a shift from net finance income to net finance cost, and increased depreciation and amortization Key Financial Data (For the six months ended June 30) | Metric | 2025 (RMB Thousand) | 2024 (RMB Thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 90,068 | 106,092 | -15.1% | | Other income | 3,934 | 667 | +489.8% | | Other gains – net | 80 | 1,435 | -94.4% | | Employee benefit expenses | (7,685) | (9,725) | -20.9% | | Subcontracting fees | (62,396) | (64,983) | -4.0% | | Cost of materials, supplies and other items | (8,000) | (8,853) | -9.7% | | Depreciation and amortization | (2,464) | (1,009) | +144.2% | | Operating profit | 8,777 | 10,919 | -19.6% | | Finance (costs)/income, net | (502) | 1,231 | -140.8% | | Profit before tax | 8,275 | 12,150 | -31.9% | | Income tax expense | (558) | (1,429) | -61.0% | | Profit for the period attributable to equity holders of the Company | 7,717 | 10,721 | -28.0% | | Basic earnings per share (RMB cents per share) | 0.77 | 1.09 | -29.4% | - Other comprehensive income: Exchange differences arising from translation of foreign operations resulted in a net other comprehensive loss of RMB 170 thousand for the period, compared to a net loss of RMB 2 thousand in the prior period[5] Interim Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets slightly increased, non-current assets significantly rose due to an increase in financial assets at fair value through profit or loss, while current assets and current liabilities both decreased, maintaining stable growth in net current assets and net assets Key Financial Position Data (As of June 30) | Metric | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total non-current assets | 53,978 | 25,693 | +110.1% | | Total current assets | 252,906 | 299,628 | -15.6% | | Total current liabilities | 98,141 | 123,918 | -20.8% | | Net current assets | 154,765 | 175,710 | -12.0% | | Total assets less current liabilities | 208,743 | 201,403 | +3.6% | | Net assets | 207,914 | 200,367 | +3.8% | | Total equity | 207,914 | 200,367 | +3.8% | - Changes in non-current asset composition: Financial assets at fair value through profit or loss increased from zero at the end of 2024 to RMB 23,986 thousand as of June 30, 2025[6] - Changes in current assets: Trade receivables and cash and cash equivalents significantly decreased, while prepayments, deposits, and other receivables increased[6] - Changes in current liabilities: Contract liabilities, other payables and accrued expenses, and interest-bearing bank borrowings all decreased[7] Notes to the Interim Condensed Consolidated Financial Statements These notes provide essential details on the company's corporate information, accounting policies, estimates, segment information, and specific financial line items, offering context to the interim financial statements Company Information Wellcell Holdings Limited, incorporated in the Cayman Islands, primarily offers wireless telecom network optimization, infrastructure maintenance, ICT integration, and software services, expanding into fintech, with shares listed on the HKEX since January 12, 2024 - Place and nature of incorporation: Incorporated in the Cayman Islands as an exempted company on September 14, 2021[8] - Principal activities: Provision of wireless telecommunication network optimization services, telecommunication network infrastructure maintenance and engineering services, ICT integration services, telecommunication network-related software development and related services, and sale of software[8] - Business expansion: Expanded into fintech business during the current period[8] - Listing information: Shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since January 12, 2024[9] Basis of Preparation and Accounting Policies The interim financial statements are prepared under HKAS 34 and HKEX Listing Rules, using a historical cost basis, with new and revised HKFRSs adopted for the first time, expected to have no material impact on financial performance or position - Basis of preparation: Prepared in accordance with Appendix D2 to the Listing Rules of the Stock Exchange and Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants[10] - Measurement basis: Prepared on the historical cost basis, except for financial assets at fair value through profit or loss[10] - New and revised standards: Amendments to HKAS 21 “Lack of Exchangeability” have been adopted for the first time and are not expected to have a material impact on the interim financial statements[12][13] - Standards effective in the future: HKFRS 18, HKFRS 19, amendments to HKFRS 9 and HKFRS 7, and amendments to HKFRS 10 and HKAS 28 will be effective in the future, with preliminary assessment indicating no material impact[14][15] Estimates Management made judgments, estimates, and assumptions in applying accounting policies and reporting amounts for the interim financial statements, with key sources of estimation uncertainty consistent with those applied in the 2024 annual financial statements - Management judgments and estimates: In preparing the interim financial statements, management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of revenue, expenses, assets, and liabilities[16] - Sources of uncertainty: The key sources of estimation uncertainty are the same as those applied in the 2024 annual financial statements[16] Revenue and Segment Information The Group's primary activities include telecom network services and software. The fintech business is in its early stages with no revenue, thus the Group has only one reportable operating segment: providing telecom network and infrastructure services and products - Principal activities: Provision of wireless telecommunication network optimization services, telecommunication network infrastructure maintenance and engineering services, ICT integration services, telecommunication network-related software development and related services, and sale of software[17] - Fintech business: In its preliminary development stage during the reporting period, it has not generated any revenue and does not constitute a separate reportable segment[17] - Reportable operating segment: The Directors have determined that the Group has only one reportable operating segment, which is the provision of telecommunication network and infrastructure services and products[17] Revenue Recognition Timing and Service Type (For the six months ended June 30) | Revenue Recognition Timing | Service Type | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | :--- | | Over time | Wireless telecommunication network optimization services | 28,636 | 41,136 | | | Telecommunication network infrastructure maintenance and engineering services | 17,170 | 16,842 | | | ICT integration services | 38,359 | 32,240 | | | Telecommunication network-related software development and related services | 3,683 | 11,515 | | At a point in time | Software sales | 2,220 | 4,359 | | Total Revenue | | 90,068 | 106,092 | Profit Before Tax Profit before tax for the six months ended June 30, 2025, significantly decreased to RMB 8,275 thousand from RMB 12,150 thousand in the prior period, influenced by reduced listing expenses, reversal of impairment losses on trade and contract assets, and increased fair value changes of financial assets at fair value through profit or loss Components of Profit Before Tax (For the six months ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Auditor's remuneration – non-audit services | 354 | 350 | | Depreciation and amortization | 2,464 | 1,009 | | Trade and contract assets (reversal of impairment loss)/net impairment loss | (320) | 3,363 | | Impairment loss on other receivables | 281 | – | | Listing expenses | – | 6,257 | | Government grants | 469 | 259 | | VAT refunds | 4 | 379 | | Net fair value change of financial assets at fair value through profit or loss | 3,442 | – | | Exchange gain | 130 | 1,386 | | Finance income (interest on bank deposits) | 94 | 1,679 | | Finance costs (interest on interest-bearing bank borrowings and leases) | (596) | (448) | - Significant reduction in listing expenses: No listing expenses were incurred in the first half of 2025, compared to RMB 6,257 thousand in the corresponding period of 2024[19] - Fair value changes of financial assets: A net fair value gain of RMB 3,442 thousand on financial assets at fair value through profit or loss was recorded in the first half of 2025, compared to zero in the prior period[20] - Net finance income shifted to net finance cost: Net finance cost was RMB 502 thousand in the first half of 2025, compared to net finance income of RMB 1,231 thousand in the corresponding period of 2024, primarily due to a significant decrease in interest income from bank deposits[22] Income Tax Expense Income tax expense for the six months ended June 30, 2025, significantly decreased to RMB 558 thousand from RMB 1,429 thousand in the prior period, mainly due to lower operating profit and the 15% preferential tax rate for high-tech enterprises in China Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Current tax – PRC Enterprise Income Tax | – | 837 | | Current tax – over-provision in prior periods | (285) | – | | Deferred tax | 843 | 592 | | Income Tax Expense | 558 | 1,429 | - PRC Enterprise Income Tax preferential treatment: The Group's principal operating subsidiaries in the PRC qualify as High and New Technology Enterprises, enjoying a preferential income tax rate of 15%[23] - Hong Kong Profits Tax: The Group had no assessable profits arising in Hong Kong during the reporting period, thus no provision for Hong Kong Profits Tax was made[23] Earnings Per Share Basic earnings per share for the six months ended June 30, 2025, was RMB 0.77 cents, a 29.4% decrease from the restated RMB 1.09 cents in the prior period, with calculations retrospectively adjusted for the share split effective March 31, 2025, and the capitalization issue on January 12, 2024 Basic and Diluted Earnings Per Share (For the six months ended June 30) | Metric | 2025 | 2024 (Restated) | | :--- | :--- | :--- | | Profit for the period (RMB Thousand) | 7,717 | 10,721 | | Weighted average number of ordinary shares in issue (Thousand shares) | 1,000,000 | 984,890 | | Basic and diluted earnings per share (RMB cents per share) | 0.77 | 1.09 | - No dilutive effect: There were no potential dilutive ordinary shares during the reporting period, hence basic and diluted earnings per share are the same[28] - Retrospective adjustment: The calculation of earnings per share has been retrospectively adjusted for the share split (one share of HK$0.01 par value split into two shares of HK$0.005 par value) effective March 31, 2025, and the capitalization issue on January 12, 2024[30] Dividends The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior period - Interim dividend: The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: Nil)[29] Trade Receivables As of June 30, 2025, net trade receivables decreased to RMB 38,441 thousand from RMB 53,539 thousand at December 31, 2024, with a net reversal of impairment loss primarily due to the reduction in total trade receivables - Net trade receivables: As of June 30, 2025, net trade receivables amounted to RMB 38,441 thousand, a decrease from RMB 53,539 thousand as of December 31, 2024[31] Aging Analysis (As of June 30) | Aging | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Within 180 days | 18,053 | 33,122 | | 181 to 365 days | 2,950 | 5,166 | | 1 to 2 years | 13,882 | 14,932 | | Over 2 years | 3,556 | 319 | - Changes in impairment loss provision: A reversal of impairment loss of RMB 125 thousand was recognized during the period, compared to an impairment loss of RMB 3,263 thousand in the prior period[31] Financial Assets at Fair Value Through Profit or Loss As of June 30, 2025, financial assets at fair value through profit or loss totaled RMB 23,986 thousand, entirely classified as non-current assets, primarily comprising equity investments in unlisted entities in China and the Cayman Islands, generating approximately RMB 3,442 thousand in fair value gains during the period - Composition: Primarily includes investments in a 0.206% equity interest in an unlisted PRC entity and an 11% equity interest in an unlisted Cayman Islands entity[32] - Classification change: While some were classified as current assets as of December 31, 2024, all were classified as non-current assets totaling RMB 23,986 thousand as of June 30, 2025[32] - Fair value gain: A fair value gain of approximately RMB 3,442 thousand was recorded for the six months ended June 30, 2025[32] Trade Payables As of June 30, 2025, total trade payables increased to RMB 7,414 thousand from RMB 6,022 thousand at December 31, 2024, with the primary increase concentrated in the within 180 days aging category - Total trade payables: As of June 30, 2025, total trade payables amounted to RMB 7,414 thousand, an increase from RMB 6,022 thousand as of December 31, 2024[33] Aging Analysis (As of June 30) | Aging | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Within 180 days | 6,225 | 3,331 | | 181 to 365 days | 438 | 1,940 | | Over 1 year | 751 | 751 | Interest-Bearing Bank Borrowings As of June 30, 2025, total interest-bearing bank borrowings decreased to RMB 32,409 thousand from RMB 41,776 thousand at December 31, 2024, comprising both fixed and floating rate portions, secured by receivables from service contracts, with the company adhering to all loan covenants - Total borrowings: As of June 30, 2025, total borrowings amounted to RMB 32,409 thousand, a decrease from RMB 41,776 thousand as of December 31, 2024[34] Borrowing Composition and Interest Rates (As of June 30) | Type | Effective Interest Rate | Maturity Date | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | | Bank borrowings – unsecured | 2.4%-2.9% | August and September 2025 | 20,000 | 22,000 | | | Prime Lending Rate-0.5% | March 2026 | 10,000 | 10,000 | | Bank borrowings – secured | 2.6% | December 2025 | 2,409 | 9,776 | - Collateral: Bank borrowings are secured by a floating charge over receivables arising from certain service contracts[36] - Covenant compliance: The Company regularly monitors compliance with loan covenants, with no breaches at the end of the reporting period[36] Share Capital As of June 30, 2025, the company's authorized share capital was HK$10,000,000, divided into 2,000,000,000 ordinary shares of HK$0.005 each, with 1,000,000,000 shares issued and fully paid, totaling HK$5,000,000 (approximately RMB 4,549 thousand), reflecting a share split effective March 31, 2025, and the capitalization issue on January 12, 2024 - Changes in authorized share capital: Pursuant to a resolution passed at the EGM on March 27, 2025, effective March 31, 2025, each share of HK$0.01 par value was split into two shares of HK$0.005 par value, doubling the number of shares while the total authorized share capital remained unchanged[37] - Issued and fully paid share capital: As of June 30, 2025, the issued and fully paid share capital comprised 1,000,000,000 ordinary shares of HK$0.005 each, equivalent to approximately RMB 4,549 thousand[37][38] - Listing and capitalization issue: On January 12, 2024, the Company issued 125,000,000 ordinary shares through a share offer and undertook a capitalization issue of 374,999,600 ordinary shares[38] Capital Commitments As of June 30, 2025, the Group had no significant capital commitments, consistent with the situation at December 31, 2024 - No significant capital commitments: As of June 30, 2025, the Group had no significant capital commitments[39] Related Party Transactions The Group has non-trade balances and lease agreements with related parties, including companies controlled by Director Mr. Jia Zhengyi and his spouse Ms. Zheng Li. As of June 30, 2025, amounts due from a former direct holding company were RMB 1,219 thousand, and amounts due to a shareholder were RMB 32 thousand, with a significant year-on-year increase in key management compensation - Key related parties: Mr. Jia Zhengyi (Director and Shareholder), Ms. Zheng Li (spouse of Mr. Jia), Wellcell Group Limited (former direct holding company), Guangdong Huajun Sports Culture Communication Co., Ltd. (controlled by Mr. Jia and Ms. Zheng Li)[41] Balances with Related Parties (Non-trade nature) | Item | 2025 (RMB Thousand) | 2024 December 31 (RMB Thousand) | | :--- | :--- | :--- | | Amounts due from a related company (Wellcell Group Limited) | 1,219 | 1,205 | | Amounts due to a shareholder (Mr. Jia) | (32) | (1,032) | - Office lease agreement: The Group entered into a three-year lease agreement with Huajun in March 2024, with approximately RMB 413 thousand in rent paid during the period[43] Key Management Compensation (For the six months ended June 30) | Item | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Salaries and other short-term employee benefits | 1,475 | 730 | | Pension costs – defined contribution plans | 191 | 95 | | Total | 1,666 | 825 | Pledged Assets As of June 30, 2025, the Group pledged approximately RMB 244 thousand in deposits as collateral for customer projects and approximately RMB 1,774 thousand in receivables from service contracts as collateral for interest-bearing bank borrowings - Pledged deposits: Approximately RMB 244 thousand as collateral for customer projects (December 31, 2024: approximately RMB 133 thousand as collateral for bank payroll)[45] - Pledged receivables: Approximately RMB 1,774 thousand in receivables arising from certain service contracts (included in contract assets) as collateral for interest-bearing bank borrowings[45] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities, consistent with the situation at December 31, 2024 - No significant contingent liabilities: As of June 30, 2025, the Group had no significant contingent liabilities[46] Comparative Figures Comparative figures for earnings per share have been retrospectively adjusted, and certain other comparative figures have been reclassified to conform to the current period's presentation - Retrospective adjustment of earnings per share: Comparative figures for earnings per share have been retrospectively adjusted[47] - Reclassification of comparative figures: Certain comparative figures have been reclassified to conform to the current period's presentation[47] Management Discussion and Analysis This section reviews the Group's business performance, financial results, and future outlook, highlighting shifts in core business segments, the launch of new fintech initiatives, and an analysis of financial position, liquidity, and capital resources Business Review and Outlook During the reporting period, the Group's core telecom network support services revenue decreased, ICT integration services revenue increased, and software-related business revenue significantly declined. Concurrently, the Group actively expanded its fintech business, launching the "Fopay" crypto payment platform and planning to acquire relevant licenses globally. Management is cautious about the sustainable expansion of core businesses in the short term but is optimistic about the growth potential in fintech Core Business Segments The Group's core businesses include wireless telecom network optimization, infrastructure maintenance, ICT integration, and software-related services. During the period, telecom network support services revenue share decreased to 50.9%, ICT integration services revenue share increased to 42.6%, while software-related business revenue share significantly dropped to 6.5% - Business composition: Primarily derived from wireless telecommunication network optimization services, telecommunication network infrastructure maintenance and engineering services, ICT integration services, telecommunication network-related software development and related services, and sale of software[48] - Telecommunication network support services: Revenue accounted for approximately 50.9% (2024: 54.6%), including wireless telecommunication network optimization and telecommunication network infrastructure maintenance[49] - ICT integration services: Revenue accounted for approximately 42.6% (2024: 30.4%), primarily involving customized computer system design, equipment procurement, system assembly, and subsequent services[50] - Software-related business: Revenue accounted for approximately 6.5% (2024: 15.0%), including software development and sales, and provision of customized software development services[51] Fintech Business Expansion During the reporting period, the Company developed a new fintech business segment and launched its self-developed one-stop payment platform "Fopay" on July 21, 2025, offering stablecoin custody and virtual/physical VISA prepaid card payment services, with plans to acquire more relevant licenses in the future - New business segment: Expanded into fintech business, covering payment services (including global payment services utilizing blockchain technology)[52] - Launch of Fopay platform: Launched its self-developed one-stop payment platform “Fopay” on July 21, 2025, offering stablecoin custody and prepaid card payment services[52][54] - Future plans: May consider obtaining licenses for providing custody services, money services, crypto-asset services, and/or other services in Hong Kong or other regions globally[54] Market Environment and Future Outlook Despite a complex and challenging market, core businesses face decline and increased competition, leading management to be cautious about short-term sustainable expansion. However, the company is optimistic about the growth potential in China's telecom industry and global fintech, particularly in Asia, and has strategically positioned itself in the fintech sector - Core business challenges: Core business experienced a slight decline, with market saturation and intensified competition putting pressure on profit margins, leading management to be cautious about short-term sustainable expansion[53] - Growth drivers for China's telecom industry: Driven by a large population base, expanding middle class, smartphone penetration, increasing internet penetration, and government digital transformation initiatives[53] - Fintech market advantages: Rapid global expansion of e-commerce, cross-border trade, and mobile payment applications, with Asian markets like Hong Kong benefiting from their international financial center status, open policies, advanced infrastructure, and digitally savvy user base[53] - Strategic positioning: In line with global fintech development trends, the Group has strategically positioned itself in the crypto payment sector under its fintech business segment[54] Financial Performance Analysis During the reporting period, the Group's total revenue decreased by 15.1% year-on-year, primarily due to significant reductions in wireless telecom network optimization services and software-related business revenue, despite growth in ICT integration services revenue. Other income significantly increased due to fair value changes of financial assets, but other gains, net, and net finance income substantially decreased. Both operating profit and net profit saw double-digit declines, mainly impacted by reduced revenue and increased depreciation, amortization, and other operating expenses Revenue Analysis Total revenue decreased by 15.1% year-on-year to RMB 90.1 million during the reporting period. Wireless telecom network optimization services and software-related business revenues declined by 30.4% and 62.9% respectively, mainly due to customer budget cuts and fewer projects. Telecommunication network infrastructure maintenance and engineering services revenue slightly increased by 2.4%, and ICT integration services revenue grew by 19.3%, driven by an increase in large-scale projects Revenue Breakdown (For the six months ended June 30) | Service Type | 2025 (RMB Thousand) | 2024 (RMB Thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Wireless telecommunication network optimization services | 28,636 | 41,136 | -30.4% | | Telecommunication network infrastructure maintenance and engineering services | 17,170 | 16,842 | +2.4% | | ICT integration services | 38,359 | 32,240 | +19.3% | | Software-related business | 5,903 | 15,874 | -62.9% | | Total Revenue | 90,068 | 106,092 | -15.1% | - Reasons for decrease in wireless telecommunication network optimization services: Primarily due to reduced quotations from major customers cutting budgets and the completion of some contracts[58] - Reasons for increase in ICT integration services: Primarily due to an increase in the number of large-scale projects tendered during the reporting period[60] - Reasons for decrease in software-related business: Primarily due to a decrease in the number of revenue-generating software development projects undertaken for customers[61] Analysis of Other Income and Expenses Other income significantly increased by 457.1% year-on-year to RMB 3.9 million, mainly due to a net fair value increase in financial assets at fair value through profit or loss. However, other gains, net, decreased by 92.9% due to reduced exchange gains. Employee benefit expenses decreased by 20.6%, partly capitalized as intangible asset development costs. Depreciation and amortization increased by 150.0%, primarily due to increases in property, plant and equipment and intangible assets. Impairment loss on trade and contract assets shifted from a loss to a reversal - Significant increase in other income: Increased from RMB 0.7 million to RMB 3.9 million, a 457.1% increase, primarily due to a net fair value increase in financial assets at fair value through profit or loss[62] - Significant decrease in other gains, net: Decreased from RMB 1.4 million to RMB 0.1 million, a 92.9% decrease, primarily due to reduced exchange gains[63] - Decrease in employee benefit expenses: Decreased from RMB 9.7 million to RMB 7.7 million, a 20.6% decrease, primarily due to partial capitalization of expenses as intangible asset development costs and higher bonuses in the prior period[64] - Slight decrease in subcontracting fees: Decreased from RMB 65.0 million to RMB 62.4 million, a 4.0% decrease, as stable operation of the core network needs to be maintained[65] - Significant increase in depreciation and amortization: Increased from RMB 1.0 million to RMB 2.5 million, a 150.0% increase, primarily due to increases in property, plant and equipment and intangible assets[67] - Reversal of impairment loss on trade and contract assets: A reversal of impairment loss of approximately RMB 320 thousand was recognized (2024: impairment loss of approximately RMB 3.4 million), primarily due to a decrease in total trade and contract assets[68] - Increase in other operating expenses: Increased from RMB 3.1 million to RMB 4.8 million, a 54.8% increase, primarily due to increased professional fees[69] - No listing expenses incurred: No listing expenses were incurred in the first half of 2025, compared to RMB 6.257 million in the corresponding period of 2024[70] - Net finance (costs)/income turned negative: Net finance cost was approximately RMB 0.5 million in the first half of 2025 (2024: net finance income of approximately RMB 1.2 million), primarily due to decreased interest income from reduced bank deposits and interest rates[71] Operating Profit and Net Profit Operating profit decreased by 19.3% year-on-year to RMB 8.8 million, and net profit decreased by 28.0% to RMB 7.7 million, primarily due to reduced revenue, lower interest income from bank deposits, and increased other operating expenses and depreciation and amortization. Income tax expense decreased by 57.1% due to lower operating profit - Decrease in operating profit: Decreased from RMB 10.9 million to RMB 8.8 million, a 19.3% decrease, primarily due to reduced revenue and increased other operating expenses, depreciation, and amortization[72] - Decrease in income tax expense: Decreased from RMB 1.4 million to RMB 0.6 million, a 57.1% decrease, primarily due to reduced operating profit[73] - Decrease in net profit: Decreased from RMB 10.7 million to RMB 7.7 million, a 28.0% decrease, primarily due to reduced revenue and interest income from bank deposits, as well as increased other operating expenses, depreciation, and amortization[74] Financial Position, Liquidity and Capital Resources As of June 30, 2025, cash and cash equivalents decreased by 34.5% to RMB 68.8 million, primarily used for financial asset investments, bank loan repayments, and operations. Total bank borrowings decreased, and the gearing ratio fell to 15.6%. The current ratio slightly increased to 2.6 times, indicating good liquidity - Cash position: Cash and cash equivalents amounted to approximately RMB 68.8 million (December 31, 2024: RMB 105.0 million), a decrease of approximately 34.5%, primarily used for the purchase of financial assets, repayment of bank borrowings, and operations[78] - Total borrowings: Total bank borrowings amounted to RMB 32.409 million (December 31, 2024: RMB 41.776 million), comprising both fixed and floating rate borrowings, with unutilized bank facilities of RMB 5 million[79][80] - Pledged assets: Approximately RMB 244 thousand in pledged deposits as collateral for customer projects, and approximately RMB 1,774 thousand in pledged receivables from service contracts as collateral for interest-bearing bank borrowings[81] - Current ratio: Approximately 2.6 times (December 31, 2024: 2.4 times)[82] - Gearing ratio: Approximately 15.6% (December 31, 2024: 20.8%), with the decrease primarily due to reduced interest-bearing bank borrowings[83] Share Capital and Board Lot Size During the reporting period, the company's share capital underwent a share split, dividing each HK$0.01 par value share into two HK$0.005 par value shares, doubling the total number of issued shares. Concurrently, the HKEX board lot size changed from 4,000 shares to 800 shares - Share split: Effective March 31, 2025, each ordinary share of HK$0.01 par value was split into two ordinary shares of HK$0.005 par value, increasing the total number of issued shares from 500,000,000 to 1,000,000,000[84] - Change in board lot size: Effective March 31, 2025, the board lot size was changed from 4,000 shares to 800 shares[85] Foreign Exchange Risk and Treasury Policy The Group primarily operates in China, with transactions, monetary assets, and liabilities mainly denominated in RMB and HKD. During the reporting period, exchange rate fluctuations did not significantly impact the Group, and no derivative instruments were entered into to hedge foreign exchange risk. The Board will continue to prudently manage cash and maintain a robust liquidity position - Principal currencies: RMB and HKD[87] - Impact of foreign exchange risk: Fluctuations in exchange rates between different currencies did not have a material adverse impact on the Group during the reporting period[87] - Hedging strategy: No derivative instruments were entered into to hedge foreign exchange risk[87] - Treasury policy: Follows a prudent policy in managing cash to maintain a strong and robust liquidity position[87] Employees and Remuneration Policy As of June 30, 2025, the Group had 116 employees. Total wages and salaries (before capitalization) for the reporting period were approximately RMB 8.8 million. The remuneration policy is based on performance, qualifications, experience, and market terms, linked to company profitability and shareholder returns, and reviewed annually by the Remuneration Committee - Number of employees: 116 as of June 30, 2025 (December 31, 2024: 115)[89] - Total wages and salaries: Approximately RMB 8.8 million (before capitalization) for the six months ended June 30, 2025, a decrease from RMB 9.7 million in the corresponding period of 2024[89] - Remuneration determination: Remuneration packages are determined based on performance, qualifications, capabilities, and comparable market remuneration, including salaries, retirement scheme contributions, and discretionary bonuses, and are linked to shareholder returns[90] Material Investments and Plans Except as disclosed in this announcement, as of June 30, 2025, the Group held no material investments, undertook no material acquisitions or disposals of subsidiaries and associates, and had no other material investment or capital asset plans - No material investments: No material investments were held during the reporting period[91] - No material acquisitions or disposals: No material acquisitions or disposals of subsidiaries and associates occurred during the reporting period and up to the date of this announcement[91] - No material capital asset plans: As of June 30, 2025, there were no other material investment or capital asset plans[91] Use of Proceeds The net proceeds from the company's IPO on January 12, 2024, were approximately RMB 56.0 million, with the intended use and expected implementation timetable unchanged. As of June 30, 2025, RMB 8.6 million had been utilized, mainly for ICT integration and R&D projects, with the remaining RMB 24.3 million unutilized and held in licensed banks in Hong Kong - Net proceeds from IPO: Approximately RMB 56.0 million[94] Use of Proceeds and Application Status (As of June 30) | Use | Allocation in Prospectus (%) | Allocation in Prospectus (RMB Million) | Actual Use as of December 31, 2024 (RMB Million) | Unutilized as of December 31, 2024 (RMB Million) | Utilized during the Reporting Period (RMB Million) | Unutilized as of June 30, 2025 (RMB Million) | Expected Timeline for Full Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Funding for future ICT integration projects | 20.5% | 11.5 | 8.7 | 2.8 | 2.8 | – | Not applicable | | Undertaking new R&D projects | 34.6% | 19.4 | 5.0 | 14.4 | 3.9 | 10.5 | By end of 2027 | | Strengthening project management team | 19.8% | 11.1 | 0.1 | 11.0 | – | 11.0 | By end of 2026 | | Funding for sales and marketing efforts | 5.4% | 3.0 | 0.2 | 2.8 | – | 2.8 | By end of 2026 | | Repayment of part of bank borrowings | 12.9% | 7.2 | 7.2 | – | – | – | Not applicable | | General working capital | 6.8% | 3.8 | 1.9 | 1.9 | 1.9 | – | Not applicable | | Total | 100% | 56.0 | 23.1 | 32.9 | 8.6 | 24.3 | | - Placement of unutilized funds: Unutilized net proceeds are held as bank balances in licensed banks in Hong Kong[96] Events After Reporting Period Except as disclosed in this announcement, the Group had no material events after the reporting period and up to the date of this announcement - No material events after reporting period: No material events occurred after the reporting period and up to the date of this announcement[97] Other Information This section covers details on directors' and major shareholders' interests, share disposal by a controlling shareholder, the share option scheme, corporate governance practices, audit committee review, public float compliance, interim dividend policy, and board composition Directors' and Chief Executive's Interests As of June 30, 2025, Mr. Qian Fenglei, Mr. Jia Zhengyi, and Mr. Lin Qihao held company shares through controlled corporations, representing 29.9%, 16.6%, and 16.6% of the share capital, respectively Directors' Long Positions in the Company's Shares (As of June 30) | Name of Director | Capacity/Nature | Number of shares held/in which interests are held | Percentage of Equity | | :--- | :--- | :--- | :--- | | Mr. Qian Fenglei | Interest in controlled corporation | 299,000,000 | 29.9% | | Mr. Jia Zhengyi | Interest in controlled corporation | 166,000,000 | 16.6% | | Mr. Lin Qihao | Interest in controlled corporation | 166,000,000 | 16.6% | - Directors' long positions in shares of associated corporations: Mr. Qian Fenglei holds a 58.48% interest in Hengfeng; Mr. Jia Zhengyi wholly owns Lichao Limited, which holds a 51.50% interest in Wellcell Group Limited; Mr. Lin Qihao wholly owns Cheer Partners Limited, which holds a 37.5% interest in Wellcell Group Limited[100][101] Major Shareholders' Interests As of June 30, 2025, Hengfeng International Holdings Limited held 29.9% of the company's equity, and Wellcell Group Limited held 16.6%. Lichao Limited, Cheer Partners Limited, Mr. Jia Zhengyi, Mr. Lin Qihao, Ms. Zheng Li, and Ms. Zhong Shumin (spouses of Mr. Jia Zhengyi and Mr. Lin Qihao) are all deemed to have interests in the shares held by Wellcell Group Limited Major Shareholders' Long Positions in the Company's Shares (As of June 30) | Name/Designation | Capacity/Nature | Number of Shares | Percentage of Equity | | :--- | :--- | :--- | :--- | | Hengfeng | Beneficial owner | 299,000,000 | 29.9% | | Wellcell Group Limited | Beneficial owner | 166,000,000 | 16.6% | | Lichao Limited | Interest in controlled corporation | 166,000,000 | 16.6% | | Cheer Partners Limited | Interest in controlled corporation | 166,000,000 | 16.6% | | Ms. Zheng Li | Spouse's interest | 166,000,000 | 16.6% | | Ms. Zhong Shumin | Spouse's interest | 166,000,000 | 16.6% | - Related party interests: Hengfeng is 58.48% owned by Mr. Qian Fenglei. Wellcell Group Limited is 51.5% owned by Lichao Limited (wholly owned by Mr. Jia Zhengyi) and 37.5% owned by Cheer Partners Limited (wholly owned by Mr. Lin Qihao). Ms. Zheng Li and Ms. Zhong Shumin are deemed to have interests in the shares held by Mr. Jia Zhengyi and Mr. Lin Qihao, respectively, due to their spousal relationships[102] Disposal of Shares by Controlling Shareholder During the reporting period, Wellcell Group Limited disposed of 299,000,000 shares, representing 29.9% of the company's total issued share capital, to Hengfeng International Holdings Limited. Following the disposal, Hengfeng International Holdings Limited became the beneficial owner of 29.9% of the company's shares, while Wellcell Group Limited's shareholding decreased to 16.6% - Number of shares disposed: Wellcell Group Limited disposed of a total of 299,000,000 shares to Hengfeng International Holdings Limited[104] - Shareholding percentage after disposal: Hengfeng International Holdings Limited holds a 29.9% equity interest, and Wellcell Group Limited holds a 16.6% equity interest[104] Share Option Scheme The company conditionally approved a share option scheme on December 15, 2023, effective upon listing on January 12, 2024, to incentivize or reward eligible participants. Since its adoption, no share options have been granted, exercised, cancelled, lapsed, forfeited, or restricted - Scheme effective: The Share Option Scheme became effective upon listing on January 12, 2024, with a validity period of 8.5 years[105] - Purpose: To incentivize or reward eligible participants for their contributions to the Group[105] - Status: No share options have been granted, exercised, cancelled, lapsed, forfeited, or restricted since the adoption of the scheme[105] Corporate Governance The company's corporate governance practices are based on the Corporate Governance Code in Appendix C1 of the Listing Rules. From the beginning of the reporting period until May 26, 2025, the roles of Chairman and Chief Executive Officer were combined under Mr. Jia Zhengyi, deviating from Code Provision C.2.1. Since Mr. Qian Fenglei's appointment as Chairman on May 26, 2025, the company has complied with all applicable code provisions. Directors and relevant employees adhere to the Model Code for Securities Transactions - Code compliance: The Company has complied with all applicable code provisions set out in the Corporate Governance Code, except for the deviation where the roles of Chairman and Chief Executive Officer were combined from the beginning of the reporting period until May 26, 2025[106][107] - Separation of Chairman and Chief Executive Officer roles: Since Mr. Qian Fenglei's appointment as Chairman on May 26, 2025, the Company has complied with Code Provision C.2.1[107] - Model Code for Securities Transactions: All Directors confirm that they have complied with the required standards for dealing in securities as set out in the Model Code throughout the reporting period[108] Audit Committee The Audit Committee reviewed and discussed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, confirming their compliance with applicable accounting standards, Listing Rules, and adequate disclosure - Committee composition: The Audit Committee comprises three members, with Mr. Wong Chi Man as Chairman[109] - Scope of review: Reviewed and discussed the Group's unaudited condensed consolidated interim financial statements, accounting principles, and practices for the six months ended June 30, 2025[109] - Conclusion: Deemed the results to be in compliance with applicable accounting standards, the Listing Rules, and to have made adequate disclosures[109] Sufficient Public Float Based on publicly available information and the Directors' knowledge, the company has maintained the required public float in accordance with the Listing Rules since its listing - Public float: Has maintained the required public float in accordance with the Listing Rules since its listing[110] Interim Dividend The Board did not recommend the payment of any dividend for the six months ended June 30, 2025, consistent with the prior period - No dividend payment: The Board did not recommend the payment of any dividend for the six months ended June 30, 2025[111] Publication of Interim Results Announcement and Despatch of Interim Report This announcement has been published on the HKEX and company websites, and the interim report for the six months ended June 30, 2025, will be available on these websites in due course - Announcement publication: This announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the Company's website (www.wellcell.com.cn)[112](index=112&type=chunk) - Interim report: The interim report for the six months ended June 30, 2025, will be available on the aforementioned websites in due course[112] Acknowledgement The Board extends its sincere gratitude to shareholders, management team, employees, business partners, and customers for their support and contributions to the Group - Acknowledgements: Shareholders, management team, employees, business partners, and customers[113] Board of Directors As of the date of this announcement, the Board of Directors comprises four executive directors, one non-executive director, and three independent non-executive directors - Board composition: Comprises four executive directors (Mr. Qian Fenglei, Mr. Jia Zhengyi, Mr. Cong Bin, and Mr. Li Shihua), one non-executive director (Mr. Lin Qihao), and three independent non-executive directors (Mr. Wong Chi Man, Ms. Dan Xi, and Mr. Chen Weiduan)[114]