中国生命集团(08296) - 2025 - 中期财报

Financial Performance Overview Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's loss narrowed year-on-year, driven by revenue growth and controlled administrative expenses, despite fair value changes and finance costs Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2025 (RMB K) | 2024 (RMB K) | | :--- | :--- | :--- | | Revenue | 36,039 | 34,383 | | Gross Profit | 13,212 | 11,971 | | Operating Loss | (5,182) | (6,745) | | Loss Before Tax | (5,931) | (7,673) | | Loss for the Period | (7,172) | (8,909) | | Loss for the Period Attributable to Owners of the Company | (4,803) | (8,665) | | Basic Loss Per Share (RMB cents) | (0.51) | (0.96) | | Diluted Loss Per Share (RMB cents) | (0.38) | (1.00) | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total assets slightly increased, net current assets decreased, but cash and bank balances remained robust, and total equity slightly reduced Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Non-current Assets | 54,750 | 54,248 | | Current Assets | 195,914 | 196,378 | | Current Liabilities | 138,888 | 133,611 | | Net Current Assets | 57,026 | 62,767 | | Total Assets Less Current Liabilities | 111,776 | 117,015 | | Net Assets | 99,456 | 103,534 | | Total Equity | 99,456 | 103,534 | - Cash and bank balances increased from RMB 109,256 K on December 31, 2024, to RMB 110,858 K on June 30, 2025[7] Condensed Consolidated Statement of Changes in Equity For H1 2025, equity attributable to owners changed due to period loss and non-controlling interest contributions, resulting in a slight overall equity decrease - Equity attributable to owners of the Company decreased from RMB 123,452 K on January 1, 2025, to RMB 119,703 K on June 30, 2025[9] - Loss attributable to owners of the Company for the period was RMB 4,803 K[9] - Non-controlling interests contributed RMB 1,481 K during the period[9] Condensed Consolidated Statement of Cash Flows During the reporting period, the Group saw a significant reduction in net cash outflow from operating activities, net cash inflow from investing activities, net cash outflow from financing activities, and an increase in cash and cash equivalents at period-end Key Data from Condensed Consolidated Statement of Cash Flows | Metric | 2025 (RMB K) | 2024 (RMB K) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (1,989) | (12,145) | | Net Cash From Investing Activities | 74 | 704 | | Net Cash (Used in)/From Financing Activities | (1,255) | 1,534 | | Net Decrease in Cash and Cash Equivalents | (3,170) | (9,907) | | Cash and Cash Equivalents at June 30 | 110,858 | 118,770 | Notes to the Financial Statements 1. General Information The Company, incorporated in the Cayman Islands and listed on GEM, primarily engages in investment holding, with subsidiaries providing funeral services in China, Taiwan, Hong Kong, Vietnam, and selling biotech instruments and electronics in Hong Kong - The Company was incorporated in the Cayman Islands on February 24, 2005, and listed on GEM of the Stock Exchange on September 9, 2009[11] - The Group's principal activities include providing funeral and related services in China, Taiwan, and Hong Kong, selling burial plots and headstones and providing cemetery maintenance services in Vietnam, and selling high-end biotechnology instruments and other electronic products in Hong Kong[11] 2. Basis of Preparation Interim financial statements are prepared under GEM Listing Rules and HKFRS, using consistent 2024 accounting policies, based on historical cost, with some assets/liabilities measured at fair value - The financial statements are prepared in accordance with Chapter 18 of the GEM Listing Rules and Hong Kong Financial Reporting Standards (including HKAS 34 'Interim Financial Reporting')[12] - The same accounting policies are adopted as in the 2024 annual financial statements, except for changes in accounting policies expected to be reflected in the annual financial statements for the year ending December 31, 2025[13] - The financial statements are presented in RMB, with all values rounded to the nearest thousand[15] - These unaudited condensed consolidated interim financial statements have not been audited by the Company's auditors but have been reviewed by the Company's Audit Committee[15] 3. Revenue and Segment Information The Group's revenue primarily derives from funeral services, segmented by business type and region, with China as the main source and a 3.9% year-on-year growth in funeral service revenue, while Vietnam operations are being terminated due to declining market demand Major Revenue Categories | Revenue Category | 2025 (RMB K) | 2024 (RMB K) | | :--- | :--- | :--- | | Funeral and Cremation Services | 34,298 | 33,007 | | Funeral Arrangement and Consulting Services | 1,125 | 1,376 | | Sale of Burial Plots and Headstones | 616 | – | | Total Revenue | 36,039 | 34,383 | - The Group has two reportable segments: funeral services (including funeral-related services, cremation services, and sale of burial plots and headstones) and biotechnology and other businesses (selling biotechnology instruments and electronic products)[19] Revenue by Region | Region | 2025 (RMB K) | 2024 (RMB K) | | :--- | :--- | :--- | | China | 34,298 | 33,007 | | Taiwan | 626 | 962 | | Hong Kong | 499 | 414 | | Vietnam | 616 | – | | Total | 36,039 | 34,483 | 4. Other Income and Net Other Gains Net other income and gains significantly increased during the period, primarily due to higher gains from disposal of financial assets measured at fair value through profit or loss Details of Other Income and Net Other Gains | Item | 2025 (RMB K) | 2024 (RMB K) | | :--- | :--- | :--- | | Interest Income from Bank and Financial Institution Deposits | 216 | 144 | | Interest Income from Loans to Independent Companies | 54 | – | | Rental Income from Investment Properties | 559 | 574 | | Gain on Disposal of Financial Assets Measured at Fair Value Through Profit or Loss | 2,234 | 564 | | Miscellaneous Income | 294 | 38 | | Total | 3,395 | 1,321 | - Gain on disposal of financial assets measured at fair value through profit or loss significantly increased from RMB 564 K in 2024 to RMB 2,234 K in 2025[31] 5. Loss Before Tax The Group's loss before tax narrowed year-on-year, mainly due to reduced finance costs and relatively stable staff costs and depreciation and amortization Details of Finance Costs | Item | 2025 (RMB K) | 2024 (RMB K) | | :--- | :--- | :--- | | Interest on Lease Liabilities | 617 | 653 | | Interest on Bank Borrowings | 48 | 192 | | Interest on Convertible Bonds Designated at Fair Value Through Profit or Loss | 84 | 83 | | Total | 749 | 928 | - Staff costs (including directors' emoluments) were RMB 14,679 K (2024: RMB 14,658 K)[32] - Depreciation and amortization amounted to RMB 3,613 K (2024: RMB 3,443 K)[32] 6. Income Tax Expense Income tax expense for the period primarily stemmed from China corporate income tax, with no tax provisions made for Hong Kong, Cayman Islands, Samoa, BVI, Taiwan, and Vietnam due to absence of taxable profits - China corporate income tax expense was RMB 1,241 K (2024: RMB 1,236 K)[34] - The Group had no taxable profits in Hong Kong, Cayman Islands, Samoa, British Virgin Islands, Taiwan, and Vietnam, thus no tax provisions were made[34][37] 7. Loss Per Share Both basic and diluted loss per share improved during the period, primarily due to a reduction in loss attributable to owners of the Company Basic Loss Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company (RMB K) | (4,803) | (8,665) | | Weighted Average Number of Ordinary Shares | 94,500,000 | 90,181,300 | | Basic Loss Per Share (RMB cents) | (0.51) | (0.96) | Diluted Loss Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss Attributable to Owners of the Company for Diluted Loss Per Share Calculation (RMB K) | (4,104) | (9,599) | | Weighted Average Number of Shares for Diluted Loss Per Share Calculation | 108,912,698 | 95,827,919 | | Diluted Loss Per Share (RMB cents) | (0.38) | (1.00) | 8. Dividends The Directors do not recommend payment of an interim dividend for the current or prior periods - The Directors do not recommend payment of an interim dividend for the current or prior periods[41] 9. Property, Plant and Equipment Property, plant and equipment acquisitions increased during the period, alongside some disposals, with freehold land and buildings accounted for at fair value - Cost of property, plant and equipment acquired during the period was approximately RMB 143 K (prior period: RMB 52 K)[42] - Carrying amount of property, plant and equipment disposed of during the period was approximately RMB 430 K (prior period: RMB 560 K)[42] - The Group's freehold land and buildings held for own use are accounted for at fair value[43] 10. Investment Properties The Group's investment properties are measured at fair value, determined by Directors with reference to recent market transactions - The Group's investment properties are measured at fair value[45] 11. Financial Assets Measured at Fair Value Through Profit or Loss The Group's financial assets, primarily Taiwan mutual funds/unit trusts and offshore-listed equity securities/ETFs, saw a slight decrease in total fair value but a significant increase in disposal gains Financial Assets Measured at Fair Value Through Profit or Loss | Item | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Mutual Funds/Unit Trusts Established in Taiwan | 32,096 | 31,657 | | Equity Securities Listed Outside Hong Kong for Trading Purposes | 6,456 | 7,519 | | Exchange Traded Funds Listed Outside Hong Kong for Trading Purposes | 509 | 197 | | Total | 39,061 | 39,373 | - A net unrealized loss of approximately RMB 80 K was recognized during the period (prior period: net unrealized gain of approximately RMB 79 K)[48] 12. Trade and Other Receivables The Group's total trade and other receivables slightly decreased, with net trade receivables from customer contracts falling, but amounts due from securities brokers remaining stable Details of Trade and Other Receivables | Item | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Trade Receivables from Customer Contracts, Net | 332 | 527 | | Prepayments, Deposits Paid and Other Receivables | 30,105 | 31,101 | | Amounts Due from Securities Brokers | 12,634 | 12,695 | | Total | 43,071 | 44,323 | - For funeral arrangement services, the average credit period granted to non-funeral service contract customers is 45 days[50] 13. Trade and Other Payables and Deposits Received The Group's total trade and other payables and deposits received increased, mainly driven by growth in other payables and accruals Details of Trade and Other Payables and Deposits Received | Item | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Trade Payables | 1,945 | 2,256 | | Other Payables and Accruals | 15,541 | 10,249 | | Deposits Received | 338 | 338 | | Total | 17,824 | 12,843 | - The average credit period for purchases of goods is 30 days[55] 14. Capital and Reserves Share capital structure adjusted due to consolidation, changing par value from HKD0.1 to HKD1.0, reducing issued shares while maintaining capital amount; share option exercise price and shares issuable also adjusted Issued and Fully Paid Ordinary Shares | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Shares | 94,500,000 | 94,500,000 | | Par Value Per Share | 1.0 HKD | 1.0 HKD | | Amount (RMB K) | 87,489 | 87,489 | - On October 14, 2024, every ten issued and unissued shares of HKD0.1 par value were consolidated into one consolidated share of HKD1.0 par value[57] - The exercise price of share options was adjusted from HKD0.137 per option to HKD1.37, and the number of shares issuable was adjusted from 18,532,000 shares to 1,853,200 shares[66] - As of June 30, 2025, the total number of outstanding share options was 1,853,200[64][67] 15. Fair Value Measurement of Financial Instruments The Group's financial instruments are classified by fair value hierarchy, with financial assets measured at fair value through profit or loss in Level 1 and convertible bonds in Level 3 Financial Instruments Measured at Fair Value | Item | June 30, 2025 Fair Value (RMB K) | Fair Value Hierarchy Level | | :--- | :--- | :--- | | Financial Assets Measured at Fair Value Through Profit or Loss | 39,061 | Level 1 | | Convertible Bonds | 12,929 | Level 3 | - Level 1 fair value measurements are based solely on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date[70] - Level 3 fair value measurements are based on significant unobservable inputs[70] 16. Capital Commitments The Group's capital commitments at period-end primarily involve investments in associates, financial assets measured at fair value through profit or loss, and intangible assets Contracted Capital Expenditure Not Provided For | Item | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Investment in an Associate | 2,460 | 2,460 | | Financial Assets Measured at Fair Value Through Profit or Loss | 2,000 | 2,000 | | Intangible Assets | 225 | 225 | | Total | 4,685 | 4,685 | 17. Related Party Transactions The Group engages in various related party transactions with key management, their close relatives, and director-controlled entities, including remuneration, land trust deeds, trademark licenses, bank loan guarantees, and joint venture capital injections - Key management personnel emoluments were RMB 3,680 K (2024: RMB 3,677 K)[75] - Emoluments of close family members of key management personnel were RMB 605 K (2024: RMB 579 K)[76] - Mr. Liu provided guarantees for the Group's bank loans of approximately RMB 629 K[77] - Nanyue Tianche (ultimately owned approximately 71.25% by Mr. Xu Jianchun and his associates) contributed RMB 1,481 K to the paid-up capital of Zhongke Zhenhui during the period[78] Amounts Due to Directors | Director Name | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Mr. Liu | 2,190 | 2,390 | | Mr. Xu Jianchun | 477 | 517 | | Mr. Qi Zhongwei | 14 | 14 | | Ms. Hu Zhaohui | 14 | 14 | | Total | 2,695 | 2,935 | 18. Events After the Reporting Period Post-reporting period, the Company completed the sale of 100% equity in Junqun Development Co., Ltd. to exit Vietnam operations, streamline business, and reallocate resources to other promising segments - On July 30, 2025, the Company entered into a sale and purchase agreement with Hao Shan Limited to dispose of the entire issued share capital of Junqun Development Co., Ltd. for HKD 10,000,000[82] - The disposal aims to terminate the Disposal Group's operations in Vietnam, streamline business, and reallocate resources more effectively to other business segments with better growth prospects[83] - As of the date of this report, the disposal has been completed[83] Management Discussion and Analysis Economic Environment and Market Conditions Global business faces volatility from geopolitical tensions, trade shifts, high rates, and property adjustments; China's H1 GDP grew 5.3% with resilience, while post-pandemic consumer shifts to value-oriented products prompt Group service adjustments - The global economy is deeply fragmented, with weakening growth momentum and increasing instability and uncertainty[86] - In the first half of 2025, China's GDP reached RMB 66,053.6 billion, growing 5.3% year-on-year[86] - Post-pandemic consumer behavior is adjusting, with increasing focus on value-oriented products, and the Group is actively responding to market demand through customized services[86] Group Performance Overview Despite China's economic shifts, the Group demonstrated resilience with continued growth in some regional segments, driven by strategic responses to market changes; China's consumer market shows robust long-term prospects, with digital and health consumption as new highlights aligning with the Group's strategy - The Group demonstrated resilience for the six months ended June 30, 2025, with sustained growth in some regional segments[87] - China's consumer market maintains robust long-term prospects, supported by continuous improvements in living standards and stable income growth, driving consumption structure upgrades[87] - Emerging consumption highlights like digital and health consumption underscore growing demand for quality, aligning closely with the Group's long-term strategic objectives[87] Strategic Focus: Biotechnology Industry China's biotechnology sector is thriving with policy support, and the Group has established a specialized investment team to accelerate expansion in biomedicine, healthcare, and life science instruments - China's biotechnology industry is flourishing, driven by regulatory reforms and increased government funding[88] - Strategic initiatives like 'Healthy China 2030' and the '14th Five-Year Plan for Biotechnology Development' promote innovation and commercialization in biomedicine[88] - The Group has meticulously assembled a professional investment team, comprising biotechnology experts, seasoned investment and research professionals, and highly qualified specialists in management, finance, and law, to accelerate expansion in this sector[89] Outlook and Future Strategies The Group will continuously enhance operational efficiency, forge strategic partnerships, and closely monitor macroeconomic conditions and consumer confidence; its biotech investment platform, established in 2021, has generated synergies with existing businesses, balancing short-term recovery with long-term innovation investments - The Group will continue to focus on enhancing operational efficiency and forging strategic partnerships[90] - The Group's dedicated comprehensive investment platform, established in 2021 and focused on biotechnology development, has generated significant synergies with existing businesses through numerous strategic investments[90] - The Company will strategically balance short-term recovery measures with long-term investments in innovation and efficiency to enhance overall returns for the Company and its shareholders[90] Segment Revenue Analysis The Group's revenue primarily stems from China's funeral business, growing 3.9% year-on-year; Taiwan's performance declined, Hong Kong improved, and Vietnam operations were terminated and sold due to decreased market demand Revenue by Region | Region | 2025 (RMB K) | 2025 (%) | 2024 (RMB K) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | China | 34,298 | 95.2% | 33,007 | 96.0% | | Taiwan | 626 | 1.7% | 962 | 2.8% | | Hong Kong | 499 | 1.4% | 414 | 1.2% | | Socialist Republic of Vietnam | 616 | 1.7% | – | – | | Total | 36,039 | 100.0% | 34,383 | 100.0% | - China business revenue was approximately RMB 34,298 K, an increase of approximately 3.9% from the prior period, primarily from funeral, cremation, and cemetery services[92] - Taiwan business revenue was approximately RMB 626 K, a decrease from RMB 962 K in the prior period; Hong Kong business revenue increased to RMB 499 K[93] - Vietnam operations strategically suspended sales activities due to a significant decline in market demand, and the decision to terminate this business has been made, with the related disposal completed[94] Financial Review The Group's revenue grew 4.8% year-on-year, gross profit increased 10.4%, and gross margin rose to 36.7%, driven by strategic adjustments in funeral services and effective cost management; sales expenses increased due to marketing, administrative expenses decreased, finance costs fell, and loss attributable to owners significantly narrowed - The Group's revenue increased by approximately 4.8% from approximately RMB 34,383 K in the prior period to approximately RMB 36,039 K in the current period[96] - Gross profit was approximately RMB 13,212 K, a year-on-year increase of approximately 10.4%; gross margin was approximately 36.7%, expanding by 1.9 percentage points from 34.8% in the prior period[96] - Net other income and gains were approximately RMB 3,395 K, more than double the prior period, mainly due to increased gains from disposal of financial assets measured at fair value through profit or loss[97] - Administrative expenses decreased by approximately 1.3% to approximately RMB 19,225 K, and finance costs decreased to approximately RMB 749 K[98] - Loss attributable to owners of the Company was approximately RMB 4,803 K (prior period: RMB 8,665 K)[99] Liquidity, Financial Resources and Capital Structure Equity attributable to owners of the Company slightly decreased, but liquidity remains robust with strong cash and bank balances; surplus cash is invested in listed equity securities and ETFs to enhance shareholder value, with bank borrowing and convertible bond terms and conversion status also disclosed - Equity attributable to owners of the Company decreased by approximately 3.0% to approximately RMB 119,703 K[100] - The Group maintained strong cash and bank balances of approximately RMB 110,858 K[100] - The Group's current bank borrowings were approximately RMB 1,348 K, and non-current bank borrowings were approximately RMB 524 K[101] - The principal amount of convertible bonds is HKD 18,160,000, bearing interest at 1% per annum, with a conversion price adjusted to HKD 1.26 per consolidated share[101][103] - During the period, no convertible bonds were converted by holders, nor did the Company redeem any portion of the convertible bonds[102] Financial Investments and Significant Holdings The Group invested approximately RMB 6,965,000 in offshore-listed equity securities and ETFs; the portfolio value decreased, but new investments and disposals were active, recognizing net unrealized and realized gains; the Group collaborates with an investment company to mitigate risk and maximize shareholder returns - As of June 30, 2025, the Group invested approximately RMB 6,965 K in certain equity securities and exchange-traded funds listed outside Hong Kong for trading purposes[105] - During the period, the total investment portfolio value decreased by approximately RMB 751 K, with new investments totaling approximately RMB 57,604 K and disposals totaling approximately RMB 60,509 K[106] - Other changes in the investment portfolio during the period included net unrealized and realized gains of approximately RMB 2,154 K from financial assets measured at fair value through profit or loss[106] - The Group established a partnership with a reputable investment company specializing in venture capital and investment advisory, aiming to reduce concentration risk, effectively utilize idle financial resources, and enhance shareholder returns[107] Treasury Policy The Group maintains a prudent treasury policy, primarily transacting in RMB and HKD; surplus cash is strategically placed in bank deposits, equity securities, and ETFs, with no financial instruments used for hedging - The Group's ongoing operating business transactions are primarily conducted in RMB and HKD[108] - Any surplus cash is strategically placed in bank deposits, equity securities, and exchange-traded funds, primarily denominated in USD, NTD, HKD, or RMB[108] - During the period, the Group did not use any financial instruments for hedging purposes[108] Gearing Ratio As of June 30, 2025, the Group's gearing ratio slightly increased to 60.3%, reflecting its financial leverage and capital structure - As of June 30, 2025, the Group's gearing ratio (calculated as total liabilities divided by total assets) was approximately 60.3% (December 31, 2024: 58.7%)[109] Capital Commitments and Contingent Liabilities The Group's capital commitments remained consistent with the prior period, primarily for investments in associates, financial assets, and intangible assets; a lawsuit was withdrawn during the period, with directors deeming its potential financial impact minor Contracted Capital Expenditure Not Provided For | Item | June 30, 2025 (RMB K) | December 31, 2024 (RMB K) | | :--- | :--- | :--- | | Investment in an Associate | 2,460 | 2,460 | | Financial Assets Measured at Fair Value Through Profit or Loss | 2,000 | 2,000 | | Intangible Assets | 225 | 225 | | Total | 4,685 | 4,685 | - In March 2025, the Group discovered certain Chinese subsidiaries were involved in a publicly recorded lawsuit; as of this report date, the lawsuit has been withdrawn, and directors consider the potential financial impact minor[110] Exchange Rate Fluctuation Risk Operating across multiple regions, the Group's financial statements are presented in RMB, but some income and expenses are denominated in USD, NTD, and VND, posing exchange rate fluctuation risk; the Board actively monitors and considers hedging strategies when necessary - The Group operates across China, Taiwan, Hong Kong, and Vietnam, with financial statements presented in RMB, while certain income and expenses are denominated in USD, NTD, and VND[111] - Fluctuations in exchange rates may impact the Group's operating results and financial position[111] - The Company's directors actively monitor the Group's foreign currency exposure and will consider implementing hedging strategies for significant risks when necessary[111] Significant Acquisitions and Disposals of Investments During the period, the Group did not undertake any significant acquisitions or disposals of investments - During the period, the Group did not undertake any significant acquisitions or disposals of investments[112] Subsequent Events Post-reporting period, the Company completed the sale of 100% equity in Junqun Development Co., Ltd. to exit Vietnam operations, streamline business, and reallocate resources to other promising segments - On July 30, 2025, the Company entered into a sale and purchase agreement with Hao Shan Limited to dispose of the entire issued share capital of Junqun Development Co., Ltd. for HKD 10,000,000[113] - The disposal will enable the Company to streamline its business operations, reallocate resources more effectively to other business segments with better growth prospects, and reserve additional capital for future business development opportunities[114] - As of the date of this report, the disposal has been completed[116] Pledge of Group Assets As of June 30, 2025, approximately RMB 27,186,000 of the Group's property, plant and equipment was pledged as collateral for bank borrowings - As of June 30, 2025, the carrying value of property, plant and equipment pledged as collateral for the Group's bank borrowings was approximately RMB 27,186 K (December 31, 2024: RMB 26,192 K)[117] Dividends The Directors do not recommend payment of any final dividend for the period - The Directors do not recommend payment of any final dividend for the period (prior period: RMB zero)[118] Number of Employees and Remuneration As of June 30, 2025, the Group's employee count increased to 212; remuneration packages are competitive and regularly reviewed, with the share option scheme designed to incentivize staff, leaving 1,853,200 options unexercised at period-end - As of June 30, 2025, the Group employed 212 employees (December 31, 2024: 173 employees)[119] - Remuneration packages (including performance bonuses and share option entitlements) are regularly reviewed to ensure competitiveness and incentivize high performance[119] - As of June 30, 2025, 1,853,200 share options remained unexercised, aligning employee interests with shareholder value[119] Prospects The Group anticipates significant external uncertainties in 2025, but China's economy is expected to remain stable and positive; the Group is actively investing in strategic emerging industries, transforming into a high-tech enterprise with a biotech investment team and establishing Fusha Aviation for the low-altitude economy, showing positive progress, and will continue to control costs, enhance R&D, and foster collaborations - The Group anticipates significant external uncertainties in 2025, but China's economy is expected to maintain a stable and positive momentum, showing a moderate recovery overall[120] - China's economy is in a transition period, with new quality productive forces (such as low-altitude economy, biotechnology, artificial intelligence, digital economy, and other high-tech industries) experiencing vigorous development[120] - The Group is actively deploying in cutting-edge strategic emerging industries, driving its transformation from a traditional funeral service provider to a high-tech enterprise with independent R&D capabilities[121] - The Group has successfully assembled a professional investment team to advance its biotechnology business and established a controlling subsidiary, Fusha Aviation, to enter the low-altitude economy sector, having successfully developed and test-flown its first-generation new energy unmanned ground effect vehicle, FU1[121] - The Group will strictly control operating costs, establish comprehensive risk management mechanisms and countermeasures, accelerate new product R&D, and strengthen cooperation with industry partners and clients[122] Corporate Governance and Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations As of June 30, 2025, Mr. Xu Jianchun held 38.58% of the Company's shares and underlying share interests, primarily through his controlling stakes in Hong Kong Gaoqi and Nanyue Tianche Directors' Interests in Shares, Underlying Shares and Debentures | Director Name | Personal Interest | Corporate Interest (Number of Shares) | Corporate Interest (Number of Shares Related to Convertible Bonds) | Total | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Xu | – | 22,047,500 | 14,412,698 | 36,460,198 | 38.58% | - Mr. Xu holds an interest in 22,047,500 shares through his controlling interest in Hong Kong Gaoqi Biotechnology Co., Ltd[126] - Mr. Xu holds an interest in 14,412,698 conversion shares through his controlling interest in Shenzhen Nanyue Tianche Bio-Intelligent Equipment Investment Co., Ltd[126] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2025, Hong Kong Gaoqi, Ms. Qiu Qi, Mr. Ou Yafei, and Nanyue Tianche are the Company's substantial shareholders, holding 5% or more interest Substantial Shareholders' Interests in Shares and Underlying Shares | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Number of Underlying Shares Held Under Share Options | Number of Underlying Shares Held Under Convertible Bonds | Total | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Hong Kong Gaoqi | Beneficial Owner | 22,047,500 | – | – | 22,047,500 | 23.33% | | Ms. Qiu Qi | Interest of Controlled Corporation | 22,047,500 | – | – | 22,047,500 | 23.33% | | Mr. Ou Yafei | Beneficial Owner | 14,786,400 | 741,600 | – | 15,528,000 | 16.43% | | Nanyue Tianche | Beneficial Owner | – | – | 14,412,698 | 14,412,698 | 15.25% | - Ms. Qiu Qi, as Mr. Xu's spouse, is deemed to have an interest in all shares held by Mr. Xu under the Securities and Futures Ordinance[129] Directors' Interests in Contracts Mr. Xu Jianchun, through his controlled Nanyue Tianche, signed a capital increase agreement with the Company's indirect wholly-owned subsidiary, Zhongke Xunda, involving the acquisition of 20.25% equity in Zhongke Zhenhui, with convertible bonds as consideration - Zhongke Xunda, the Company's indirect wholly-owned subsidiary, entered into Sale and Purchase Agreement I with Nanyue Tianche (approximately 71.25% controlled by Mr. Xu, the Company's Chairman and Executive Director)[131] - Zhongke Xunda acquired 20.25% equity in Zhongke Zhenhui from Nanyue Tianche for RMB 15,930 K, to be paid by issuing convertible bonds with a principal amount of HKD 18,160,000[131] Directors' Rights to Acquire Shares or Debentures Aside from disclosed director share interests, during the period, neither the Company, its holding company, nor any subsidiaries participated in arrangements granting directors or chief executives rights to subscribe for securities of the Company or its associated corporations - Except as disclosed, at no time during the period did the Company, its holding company, or any of its subsidiaries or fellow subsidiaries participate in any arrangements enabling directors or chief executives of the Company or their respective associates to acquire rights to subscribe for securities of the Company or its associated corporations[133] Management Contracts During the period, no management and administration contracts were entered into or existed concerning the Company's overall business or any substantial part thereof - During the period, no management and administration contracts were entered into or existed concerning the Company's overall business or any substantial part thereof[134] Directors' Interests in Competing Business Mr. Xu Jianchun, through his controlled Nanyue Asset, engages in asset and investment management, potentially competing with the Group; however, the Company's independent management structure, diligent independent non-executive directors, and audit committee ensure the Group's independent operations - Mr. Xu is a director of Nanyue Asset and, with his associates, ultimately owns approximately 71.25% equity in Nanyue Asset; thus, Mr. Xu may be deemed to have an interest in a business competing with the Group[136] - Given the Company's management and administrative structure is independent of Nanyue Asset, coupled with the diligence of the Company's independent non-executive directors and Audit Committee, the Group can operate its business independently on an arm's length basis[136] Share Option Scheme The Company's 2021 share option scheme aims to attract, retain, and incentivize talent; following share consolidation, the exercise price and number of shares issuable under options were adjusted, with 1,853,200 options remaining unexercised at period-end - The Company adopted a new share option scheme on April 22, 2021, aiming to attract and retain key personnel, provide additional incentives to participants, and drive the Group's business success[137] - The subscription price for shares under the share option scheme is at the Directors' sole discretion, but shall in no event be less than the highest of the closing price on the Stock Exchange, the average closing price for the five preceding business days, and the nominal value of the shares[138] - Following the share consolidation effective October 14, 2024, the share option exercise price was adjusted to HKD 1.37 per consolidated share, and the total number of shares issuable was adjusted to 1,853,200 consolidated shares[139][145] Details of Outstanding Share Options | Name or Class of Grantee | Date of Grant | Adjusted Exercise Price (HKD) | Balance at January 1, 2025 | Lapsed During the Period | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Employees | May 19, 2022 | 1.37 | 370,000 | – | 370,000 | | Business Partners | May 19, 2022 | 1.37 | 1,483,200 | – | 1,483,200 | | Total | | | 1,853,200 | – | 1,853,200 | Purchase, Sale or Redemption of Securities During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and the Company held no treasury shares - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[144] - As of June 30, 2025, the Company held no treasury shares[144] Corporate Governance The Company is committed to high corporate governance standards, adhering to GEM Listing Rules Appendix C1 Corporate Governance Code; during the period, the Company complied with all code provisions, except for independent non-executive directors' absence from the AGM - The Company's corporate governance practices are based on the principles and code provisions outlined in Appendix C1 of the GEM Listing Rules Corporate Governance Code[146] - The Company complied with all code provisions during the period, except for deviations from Code Provisions C.1.2 and F.2.2 regarding independent non-executive directors' attendance at the Company's general meetings[146] Changes in Directors' Information Subsequent to the annual report date for the year ended December 31, 2024, there were no changes in directors' information requiring disclosure under GEM Listing Rule - Subsequent to the annual report date for the year ended December 31, 2024, there were no changes in directors' information requiring disclosure under GEM Listing Rule 17.50A(1)[147] Directors' Securities Transactions The Company adopted a code of conduct for directors' securities transactions, and all directors complied with it during the period - The Company adopted a code of conduct for directors' securities transactions, with terms no less exacting than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules[148] - Following specific enquiries to all Directors, they confirmed compliance with the code of conduct throughout the period[148] Audit Committee The Audit Committee, comprising three independent non-executive directors, reviews and monitors the Group's financial reporting and internal control systems; it has reviewed the unaudited condensed consolidated financial statements for the period, deeming them compliant with applicable accounting standards and adequately disclosed - The Audit Committee comprises three independent non-executive directors: Mr. Qi Zhongwei (Chairman), Ms. Hu Zhaohui, and Dr. Yang Jingjing[151] - The Audit Committee's primary responsibilities include reviewing and monitoring the Group's financial reporting process and internal control systems[151] - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the period and believes they comply with applicable accounting standards and provide adequate disclosure of information[151]