训修实业(01962) - 2025 - 中期财报

Company Information Basic Company Information This section details the foundational corporate structure and key appointments of Tristate Holdings Limited, including board composition, committee chairs, auditor, and listing details - Board members include executive directors (Mr. Cheung Yau Chuen as Chairman and CEO), non-executive directors, and independent non-executive directors[3] - Audit Committee Chairman is Mr. Sin Hon Di, Remuneration Committee Chairman is Mr. Szeto Yuk Ting, and Nomination Committee Chairman is Mr. Cheung Yau Chuen[3] - The company's auditor is RSM Hong Kong, and its shares are listed on The Stock Exchange of Hong Kong Limited (Stock Code: 1962)[3][4] Management Discussion and Analysis Business Review Global trade uncertainties and tariffs negatively impacted customer sentiment, leading to an 11.3% revenue decrease to HKD 465.7 million, primarily from lower-margin hair extension products, while gross margin improved to 24.2% due to material optimization and currency depreciation - Global trade prospects deteriorated sharply, with increased tariff and trade policy uncertainties negatively impacting customer sentiment, leading to a cautious "wait-and-see" approach to sales orders[6] - To address ongoing global trade uncertainties, the Group continuously enhances operations and strengthens customer communication channels to better understand customer needs, while actively exploring new markets and accelerating the development of additional e-commerce platforms[6] 2025 H1 Key Financial Indicators | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 465.7 | 525.2 | -11.3% | | Gross Margin | 24.2% | 22.4% | +1.8% | | Net Profit Margin | 4.0% | 4.5% | -0.5% | - Gross margin increase primarily attributed to raw material availability, focus on material optimization, and the continuous depreciation of the Bangladeshi Taka against the US Dollar, partially offset by rising labor costs[6] Outlook The Group will continue its growth strategy, monitor market changes, optimize financial performance, expand online stores on cross-border e-commerce platforms, and enlarge its core business sales team, expecting core product demand to gradually recover - The Group will continue to adopt a growth strategy, while closely monitoring market changes and business environment conditions to adjust its business development direction to manage any negative impacts on the Group[7] - The Group will continue to strengthen financial performance optimization measures across various businesses, continuously open more online stores on several well-known cross-border e-commerce platforms, and expand its core business sales team to drive revenue growth and cover existing and new market developments[7] - The Board believes the Group is capable of navigating the complex global trade environment and expects demand for its core products to gradually recover by year-end[7] Financial Review The Group's financial performance significantly declined compared to the prior period, primarily due to reduced revenue from trade policy uncertainties, negative customer sentiment from US tariffs, and increased distribution and selling expenses related to new overseas sales offices - During the period, the Group's financial performance significantly declined compared to the same period in 2024, mainly due to reduced revenue from trade policy uncertainties and the negative impact of increased US tariffs on customer sentiment, as well as increased distribution and selling expenses related to new overseas sales offices[8] Revenue Total revenue decreased by 11.3% to HKD 465.7 million, primarily due to a decline in higher-margin human hair extension products, while lower-margin braid products remained stable Revenue Overview | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 465.7 | 525.2 | (59.5) | -11.3% | | Bangladesh Factory Revenue Share | 99.2% | 98.9% | +0.3% | - | | US Market Revenue Share | 90.5% | 92.1% | -1.6% | - | | Wigs, Hair Accessories & Other Products Revenue Share | 90.9% | 84.1% | +6.8% | - | - Revenue decrease primarily due to stable demand for lower-margin braid products, while sales of higher-margin human hair extension products declined[9] Revenue by Product Category Revenue from high-end human hair extension products significantly decreased by 66.6% due to rebranding and inventory clearance, while Halloween product revenue increased by 12.9% Revenue by Product Category | Product Category | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Wigs, Hair Accessories & Other | 423.3 | 441.8 | (18.5) | -4.2% | | High-end Human Hair Extension Products | 21.8 | 65.1 | (43.3) | -66.6% | | Halloween Products | 20.6 | 18.3 | 2.3 | +12.9% | - Revenue from high-end human hair extension products significantly decreased, mainly due to reduced customer orders from rebranding, product updates, and inventory clearance[10] - Halloween product revenue increased, primarily due to a gradual recovery in sales volume from customers[10] Cost of Sales Total cost of sales decreased by 13.4% to HKD 353.0 million, consistent with the revenue decline, with similar trends across all product categories Cost of Sales Overview | Product Category | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Cost of Sales | 353.0 | 407.6 | (54.6) | -13.4% | | Wigs, Hair Accessories & Other | 325.8 | 351.2 | (25.4) | -7.3% | | High-end Human Hair Extension Products | 14.1 | 44.2 | (30.1) | -68.0% | | Halloween Products | 13.1 | 12.1 | 1.0 | +7.7% | - The decrease in cost of sales is consistent with the revenue decline during the period, with changes in cost of sales for each product category moving in the same direction as their respective revenue changes[12] Gross Profit Total gross profit decreased by 4.2% to HKD 112.7 million due to lower revenue, but the overall gross margin improved to 24.2%, with all product categories showing increased margins from reduced production costs Gross Profit and Gross Margin Overview | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Gross Profit | 112.7 | 117.6 | (4.9) | -4.2% | | Total Gross Margin | 24.2% | 22.4% | +1.8% | - | | Wigs, Hair Accessories & Other Gross Profit | 97.5 | 90.6 | 6.9 | +7.7% | | Wigs, Hair Accessories & Other Gross Margin | 23.0% | 20.5% | +2.5% | - | | High-end Human Hair Extension Products Gross Profit | 7.6 | 20.9 | (13.3) | -63.5% | | High-end Human Hair Extension Products Gross Margin | 35.1% | 32.1% | +3.0% | - | | Halloween Products Gross Profit | 7.6 | 6.1 | 1.5 | +24.6% | | Halloween Products Gross Margin | 36.6% | 33.5% | +3.1% | - | - Total gross profit decreased primarily due to lower revenue, but the total gross margin increased, with all product categories showing improved gross margins, mainly benefiting from reduced total production costs[13][14] Other Income Other income decreased by 9.1% to HKD 3.7 million, mainly due to lower bank interest and rental income Other Income | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Income | 3.7 | 4.1 | (0.4) | -9.1% | - Other income decreased primarily due to lower bank interest income and rental income during the period[15] Other Gains and Losses Other gains and losses increased by 55.6% to HKD 4.5 million, primarily driven by fair value changes in financial assets and foreign exchange gains Other Gains and Losses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Gains and Losses | 4.5 | 2.9 | 1.6 | +55.6% | - The increase in other gains and losses primarily includes a gain of HKD 0.4 million from fair value changes in financial assets measured at fair value through profit or loss and a gain of HKD 4.1 million from foreign currency exchange[16] Impairment Losses under Expected Credit Loss Model The Group recognized no impairment provisions for trade receivables in the current period, compared to HKD 0.1 million in the prior year - During the period, the Group did not make any impairment provisions for trade receivables (2024: the Group made a provision of HKD 0.1 million)[17] Distribution and Selling Expenses Distribution and selling expenses increased by 5.3% to HKD 13.9 million, mainly due to higher advertising and transportation costs Distribution and Selling Expenses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Distribution and Selling Expenses | 13.9 | 13.2 | 0.7 | +5.3% | - The increase in distribution and selling expenses was primarily due to higher advertising and transportation costs during the period[18] Administrative Expenses Administrative expenses increased by 4.3% to HKD 64.2 million, mainly due to higher salaries and staff benefits from increased headcount in a core business Administrative Expenses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative Expenses | 64.2 | 61.5 | 2.7 | +4.3% | - The increase in administrative expenses was primarily due to higher salaries and staff benefits resulting from an increase in headcount within one of the Group's core businesses[19] Other Expenses Other expenses increased by 129.9% to HKD 0.4 million, primarily due to higher donations Other Expenses | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other Expenses | 0.4 | 0.2 | 0.2 | +129.9% | - The increase in other expenses was primarily due to increased donations during the period[20] Finance Costs Finance costs decreased by 18.4% to HKD 17.6 million, mainly due to a slowdown in interest rates Finance Costs | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finance Costs | 17.6 | 21.5 | (3.9) | -18.4% | - The decrease in finance costs was primarily due to a slowdown in interest rates[21] Taxation Income tax expense increased by 41.9% to HKD 6.2 million, primarily due to the expiration of the income tax holiday in Bangladesh Income Tax Expense | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Income Tax Expense | 6.2 | 4.3 | 1.9 | +41.9% | - The increase in income tax expense was primarily due to the expiration of the income tax holiday in Bangladesh[22] Net Profit Net profit decreased by 21.1% to HKD 18.8 million, mainly due to reduced order shipments from trade policy uncertainties and US tariffs, coupled with increased distribution and selling expenses from new overseas sales offices Net Profit | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 18.8 | 23.9 | (5.1) | -21.1% | - The decrease in net profit was primarily due to reduced order shipments during the period resulting from trade policy uncertainties and the negative impact of increased US tariffs on customer sentiment, as well as increased distribution and selling expenses related to new overseas sales offices[23] Liquidity and Financial Resources Cash and bank balances increased by 23.0% to HKD 142.3 million, mainly due to higher bank borrowings, while pledged bank deposits decreased due to bank loan repayments Liquidity and Financial Resources Overview | Indicator | June 30, 2025 (million HKD) | Dec 31, 2024 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 142.3 | 115.7 | 26.6 | +23.0% | | Pledged Bank Deposits | 55.2 | 58.7 | (3.5) | -5.9% | | Trade and Other Receivables | 268.6 | 264.8 | 3.8 | +1.4% | - The increase in cash and bank balances was primarily due to increased bank borrowings during the period, while the decrease in pledged bank deposits was mainly due to the repayment of bank borrowings during the period[24] Borrowings and Gearing Ratio Total borrowings increased by 10.6% to HKD 645.0 million, leading to a 9.0% increase in the gearing ratio to 81.1%, while the Group maintains sufficient financial resources Borrowings and Gearing Ratio Overview | Indicator | June 30, 2025 (million HKD) | Dec 31, 2024 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Borrowings | 645.0 | 583.0 | 62.0 | +10.6% | | Bank Facilities | 869.0 | - | - | - | | Unused Bank Facilities | 192.5 | - | - | - | | Gearing Ratio | 81.1% | 72.1% | +9.0% | - | - The average effective annual interest rate for floating-rate bank borrowings ranged from 1.98% to 8.37% (December 31, 2024: 2.90% to 7.59%)[26] - The Group believes it has sufficient financial resources to meet its commitments and working capital requirements[26] Capital Expenditure and Capital Commitments Capital expenditure for property, plant, and equipment increased by 24.8% to HKD 16.6 million to maintain manufacturing capacity, while capital commitments decreased by 51.5% Capital Expenditure and Capital Commitments | Indicator | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Change (million HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Acquisition of Fixed Assets | 16.6 | 13.3 | 3.3 | +24.8% | | Capital Commitments for Property, Plant & Equipment | 3.2 | 6.6 | (3.4) | -51.5% | - Capital expenditure increased to maintain its manufacturing capacity in Bangladesh, while capital commitments decreased[27] Foreign Exchange Risk The Group faces foreign currency risk from transactions denominated in USD and RMB, but the HKD peg to USD minimizes this risk, and a 1% appreciation in BDT or RMB is not expected to significantly impact gross margin - The Group faces foreign currency risk as its transactions are denominated in foreign currencies (e.g., USD and RMB), but due to the HKD peg to the USD, the likelihood of the Group facing currency risk is extremely low[28] - The Group estimates that a 1% appreciation in Bangladeshi Taka or RMB would not have a significant impact on the Group's gross margin[28] - As of June 30, 2025, the Group did not have any outstanding foreign currency forward contracts to purchase USD to hedge against any fluctuations in the USD exchange rate[29] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities (December 31, 2024: Nil)[31] Pledge of Assets The Group's bank borrowings are secured by approximately HKD 52.0 million in bank deposits, HKD 69.3 million in land and buildings in Hong Kong, HKD 26.4 million in land and buildings in the US and China, HKD 4.8 million in investment properties in China, negative pledges over assets of certain subsidiaries in China and Bangladesh, and certain life insurance contracts - The Group's bank borrowings are secured by approximately HKD 52.0 million in bank deposits, approximately HKD 69.3 million in land and buildings and car park spaces in Hong Kong, approximately HKD 26.4 million in land and buildings in the US and China, approximately HKD 4.8 million in investment properties in China, negative pledges over assets of certain subsidiaries in China and Bangladesh, and certain life insurance contracts[32][34] - The Group's other borrowings are secured by bank deposits of approximately HKD 3.2 million (December 31, 2024: HKD 7.7 million)[32] Employees and Remuneration Policy The total number of employees decreased by 0.7% to 23,692, while total employee expenses increased by 1.2% to HKD 184.2 million, with remuneration policies remaining consistent Employee Overview | Indicator | June 30, 2025 | June 30, 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Number of Employees | 23,692 | 23,851 | (159) | -0.7% | | Total Employee Expenses (million HKD) | 184.2 | 182.1 | 2.1 | +1.2% | - The Group's remuneration policy has remained unchanged since the date of the annual report for the year ended December 31, 2024[33] - The Group has a Mandatory Provident Fund Scheme for Hong Kong employees, Chinese employees participate in state-managed retirement benefit schemes, and Bangladeshi employees are covered by a self-managed provident fund[33] Significant Investments Held, Material Acquisitions and Disposals, and Future Plans for Material Investments or Capital Assets During the period, the Group held no significant investments, nor did it undertake any material acquisitions or disposals, and there are no authorized plans for future material investments or capital asset additions - During the period, the Group did not hold any significant investments or undertake any material acquisitions or disposals[35] - As of June 30, 2025, the Board had not authorized any plans for any material investments or additions to capital assets[35] Significant Events Affecting the Group Since June 30, 2025 No significant events affecting the Group occurred from June 30, 2025, up to the date of this report - No significant events affecting the Group occurred after June 30, 2025, and up to the date of this report[36] Interim Dividend The Board declared an interim dividend of 2.0 HK cents per share, totaling approximately HKD 12.7 million, a decrease from 3.0 HK cents per share in the prior year, with a payout ratio of 67.6% Interim Dividend Overview | Indicator | 2025 H1 | 2024 H1 | Change | | :--- | :--- | :--- | :--- | | Interim Dividend (HK cents per share) | 2.0 | 3.0 | (1.0) | | Total Interim Dividend (million HKD) | 12.7 | - | - | | Interim Payout Ratio | 67.6% | 82.4% | -14.8% | - The Board declared an interim dividend of 2.0 HK cents per share for the period, totaling approximately HKD 12.7 million, a decrease from 3.0 HK cents per share in the same period of 2024[37] - The interim dividend will be distributed on November 28, 2025, to shareholders whose names appear on the Company's register of members on September 12, 2025[38] Closure of Register of Members The Company's register of members will be closed from September 10 to September 12, 2025, to determine shareholders eligible for the interim dividend - To determine shareholders eligible for the interim dividend, the Company's register of members will be closed from September 10, 2025, to September 12, 2025 (both dates inclusive)[39] Corporate Governance and Other Information Compliance with the Corporate Governance Code The company adheres to the Corporate Governance Code, with full compliance except for the combined roles of Chairman and CEO, which the Board believes ensures consistent leadership and efficient strategic planning - The Company has adopted the principles set out in the Corporate Governance Code contained in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[41] - During the period, the Company has complied with all code provisions in the Corporate Governance Code, except for code provision C.2.1, which stipulates that the roles of chairman and chief executive should be separate and not performed by the same individual[41] - The Board believes that combining the roles of Chairman and Chief Executive Officer allows the Group to benefit from consistent leadership and ensures more efficient and effective overall strategic planning for the Group[41] Compliance with the Model Code for Securities Transactions by Directors The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance with its required standards during the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules as its code of conduct for directors' securities transactions[42] - Following specific enquiry by the Company, all Directors confirmed that they have complied with the required standards set out in the Model Code during the period[42] Directors' and Chief Executive's Interests in Shares and Underlying Shares of the Company and its Associated Corporations As of June 30, 2025, Mr. Cheung Yau Chuen held over 55% of the company's shares through trust beneficiaries and beneficial ownership, with other executive directors holding minor interests, and Ms. Jia Ziying and Mr. Li Yanbo deemed to have interests through spousal relationships Directors' and Chief Executive's Long Positions in Shares of the Company | Name of Director/Chief Executive | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Cheung Yau Chuen | (i) Beneficiary of a trust/Settlor of a discretionary trust | 343,369,803 | 53.97% | | | (ii) Beneficial owner | 12,790,000 | 2.01% | | Mr. Chan Kwok Keung | Beneficial owner | 1,000,000 | 0.16% | | Ms. Jia Ziying | (i) Beneficial owner | 394,000 | 0.06% | | | (ii) Spouse's interest | 100,000 | 0.02% | | Mr. Li Yanbo | (i) Beneficial owner | 100,000 | 0.02% | | | (ii) Spouse's interest | 394,000 | 0.06% | - Mr. Cheung Yau Chuen indirectly holds significant share interests through HSBC International Trustee Limited as trustee of Felix Family Trust and CLC Family Trust[46] - Ms. Jia Ziying is the spouse of Mr. Li Yanbo, and thus both are deemed to have interests in the interests held by the other[46] Substantial Shareholders' Interests in Shares and Underlying Shares of the Company This section lists substantial shareholders holding 5% or more of the company's interests as of June 30, 2025, including Evergreen Holdings and its controlling entities, HSBC International Trustee Limited, Ms. Wang Kexin (spouse of Mr. Cheung Yau Chuen), and Precision Global Capital Management LLC Substantial Shareholders' Interests in Shares of the Company | Name of Shareholder/Name | Capacity/Nature of Interest | Number of Shares | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Evergreen Holdings | Beneficial owner | 343,369,803 | 53.97% | | Golden Evergreen | Interest of controlled corporation | 343,369,803 | 53.97% | | FC Investment | Interest of controlled corporation | 343,369,803 | 53.97% | | FC Management | Interest of controlled corporation | 343,369,803 | 53.97% | | CLC Investment | Interest of controlled corporation | 343,369,803 | 53.97% | | CLC Management | Interest of controlled corporation | 343,369,803 | 53.97% | | HSBC International Trustee Limited | Trustee of a trust | 343,369,803 | 53.97% | | Ms. Wang Kexin | Spouse's interest | 356,159,803 | 55.98% | | Precision Global Capital Management LLC | Investment manager | 58,236,000 | 9.15% | - Evergreen Holdings and its upstream controlling companies (Golden Evergreen, FC Investment, FC Management, CLC Investment, CLC Management) and HSBC International Trustee Limited are all deemed to have interests in the shares held by Evergreen Holdings[55] - Ms. Wang Kexin is the spouse of Mr. Cheung Yau Chuen, and under the Securities and Futures Ordinance, she is deemed to have an interest in the shares in which Mr. Cheung Yau Chuen is deemed to have an interest[55] Share Option Scheme The company adopted a share option scheme in 2017 to provide ownership opportunities to contributors, with no options granted or agreed to be granted as of June 30, 2025, but 61,500,000 options remain available for grant - The Company adopted a share option scheme on June 19, 2017, to provide any employee, director, consultant, or advisor of the Group with an opportunity to acquire an ownership interest in the Company[57] - As of June 30, 2025, no share options had been granted or agreed to be granted under the share option scheme[58] - As of January 1, 2025, and June 30, 2025, the total number of share options available for grant under the share option scheme was 61,500,000[59] Purchase, Sale or Redemption of the Company's Listed Securities During the period, the company repurchased and cancelled 10,492,000 shares on the Stock Exchange for approximately HKD 6.5 million, which the Board believes will enhance net asset value and/or earnings per share, with no other listed securities purchased, sold, or redeemed Details of Share Repurchases in May 2025 | Month of Repurchase | Number of Ordinary Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration Paid (million HKD) | | :--- | :--- | :--- | :--- | :--- | | May 2025 | 10,492,000 | 0.62 | 0.60 | 6.5 | - The repurchased shares were subsequently cancelled, and as of June 30, 2025, the total number of issued shares was 636,182,000[60] - The Directors believe that the aforementioned share repurchases will enhance the net asset value and/or earnings per share, and are beneficial to the Company and its shareholders[60] Changes in Directors' Information Executive Director Ms. Jia Ziying was appointed as a member of the Company's Nomination Committee, effective June 5, 2025 - Ms. Jia Ziying, an executive director of the Company, has been appointed as a member of the Company's Nomination Committee, effective June 5, 2025[63] Audit Committee Review of Interim Results The Audit Committee, in conjunction with the Board and external auditor RSM Hong Kong, reviewed the Group's unaudited condensed consolidated interim financial statements and confirmed their fair presentation in accordance with applicable accounting standards - The Company's Audit Committee, together with the Board and the Company's external auditor, RSM Hong Kong, has reviewed the Group's unaudited condensed consolidated interim financial statements for the period[64] - The Audit Committee is satisfied that the Group's unaudited condensed consolidated interim financial statements for the period have been prepared in accordance with applicable accounting standards and fairly present the Group's financial position and performance for the period[64] Interim Financial Information Review Report Review Conclusion RSM Hong Kong reviewed Tristate Holdings Limited's interim financial information under HKSRS 2410 and found no matters suggesting it was not prepared in all material respects in accordance with HKAS 34, noting the review scope is less than an audit - RSM Hong Kong has conducted its review in accordance with Hong Kong Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity," issued by the Hong Kong Institute of Certified Public Accountants[68] - Based on the review, nothing has come to the reviewer's attention that causes them to believe that the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[69] - A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit, and accordingly, no audit opinion is expressed[68] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Overview of Profit or Loss and Comprehensive Income For the six months ended June 30, 2025, Group revenue decreased by 11.3% to HKD 465,699 thousand, profit for the period fell by 21.1% to HKD 18,831 thousand, and profit attributable to owners decreased by 37.7% to HKD 15,505 thousand, halving basic and diluted earnings per share to HKD 0.02, while total other comprehensive expense significantly improved Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 465,699 | 525,178 | (59,479) | -11.3% | | Gross Profit | 112,744 | 117,627 | (4,883) | -4.2% | | Profit Before Tax | 24,998 | 28,228 | (3,230) | -11.4% | | Profit for the Period | 18,831 | 23,882 | (5,051) | -21.1% | | Profit Attributable to Owners of the Company for the Period | 15,505 | 24,882 | (9,377) | -37.7% | | Total Comprehensive Income (Expense) for the Period | 14,936 | (196) | 15,132 | - | | Basic and Diluted Earnings Per Share Attributable to Owners of the Company (HKD) | 0.02 | 0.04 | (0.02) | -50.0% | - Profit for the period and profit attributable to owners of the Company both significantly decreased, with earnings per share halved[72][73] - Total other comprehensive expense for the period significantly improved from a loss of HKD 24,078 thousand in the same period of 2024 to a loss of HKD 3,895 thousand in the same period of 2025, primarily due to reduced exchange differences arising from the translation of overseas operations[72] Condensed Consolidated Statement of Financial Position Overview of Assets, Liabilities and Equity As of June 30, 2025, total assets increased slightly to HKD 1,600,262 thousand, current assets grew by 6.9%, but a larger increase in current liabilities led to a 5.6% decrease in net current assets to HKD 248,431 thousand, while total equity slightly decreased by 1.2% Summary of Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 603,950 | 602,912 | 1,038 | +0.2% | | Current Assets | 996,312 | 932,027 | 64,285 | +6.9% | | Current Liabilities | 747,881 | 668,917 | 78,964 | +11.8% | | Net Current Assets | 248,431 | 263,110 | (14,679) | -5.6% | | Total Equity | 785,522 | 795,230 | (9,708) | -1.2% | | Non-current Liabilities | 66,859 | 70,792 | (3,933) | -5.6% | - Current assets increased, but current liabilities increased more, leading to a decrease in net current assets[75] - Total equity slightly decreased, and non-controlling interests turned from negative to positive[76] Condensed Consolidated Statement of Changes in Equity Overview of Changes in Equity For the six months ended June 30, 2025, profit attributable to owners was HKD 15,505 thousand, a decrease from the prior year, while total comprehensive income significantly improved to HKD 11,775 thousand due to reduced exchange differences, with dividends of HKD 18,107 thousand and a HKD 6,537 thousand reduction in equity from share repurchases and cancellations Summary of Condensed Consolidated Statement of Changes in Equity | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Profit Attributable to Owners of the Company for the Period | 15,505 | 24,882 | (9,377) | | Total Comprehensive Income (Expense) for the Period | 11,775 | 1,058 | 10,717 | | Dividends Recognized as Distribution | (18,107) | (19,014) | 907 | | Share Repurchases and Cancellations | (6,537) | - | (6,537) | | Equity Attributable to Owners of the Company at End of Period | 787,270 | 833,670 | (46,400) | - Profit attributable to owners of the Company decreased, but total comprehensive income for the period significantly improved, mainly due to a reduced impact from exchange differences[78] - Share repurchases and cancellations led to a reduction in share capital, affecting the total equity at period-end[78] Condensed Consolidated Statement of Cash Flows Overview of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was HKD 157,618 thousand, a decrease from the prior year, while net cash used in investing and financing activities both decreased, resulting in a net increase in cash and cash equivalents of HKD 18,885 thousand, bringing the period-end balance to HKD 142,269 thousand Summary of Condensed Consolidated Statement of Cash Flows | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Net Cash From Operating Activities | 157,618 | 192,248 | (34,630) | | Net Cash Used In Investing Activities | (7,494) | (16,885) | 9,391 | | Net Cash Used In Financing Activities | (131,239) | (171,584) | 40,345 | | Net Increase in Cash and Cash Equivalents | 18,885 | 3,779 | 15,106 | | Cash and Cash Equivalents at End of Period | 142,269 | 103,974 | 38,295 | - Net cash from operating activities decreased, but net cash outflows from both investing and financing activities decreased, ultimately leading to a significant increase in net cash and cash equivalents[80] - New secured bank and other borrowings increased to HKD 459,282 thousand, while repayment of secured bank and other borrowings amounted to HKD 436,912 thousand[80] Notes to the Condensed Consolidated Interim Financial Statements General Information and Basis of Preparation Tristate Holdings Limited, an investment holding company listed in Hong Kong, primarily manufactures and trades hair products, with financial data presented in HKD and functional currency in USD, prepared under HKAS 34 and Listing Rules, and reviewed by the Audit Committee and external auditor - The Company is a public company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited, primarily engaged in the manufacturing and trading of hair products[81][82] - The condensed consolidated interim financial information is presented in Hong Kong Dollars, with the Company's functional currency being US Dollars, and is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix D2 to the Listing Rules[82] - The condensed consolidated interim financial information is unaudited but has been reviewed by the Company's Audit Committee and the Company's external auditor in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants[84] Principal Accounting Policies The condensed consolidated interim financial information is prepared on a historical cost basis, with certain financial instruments and properties measured at fair value or revalued amounts, and accounting policies remain consistent with the 2024 audited financial statements, with no significant impact from new/revised HKFRSs - The condensed consolidated interim financial information has been prepared on the historical cost basis, except for certain financial instruments and properties which are measured at fair value or revalued amounts where applicable[85] - The accounting policies and methods of computation adopted in the condensed consolidated interim financial information for the six months ended June 30, 2025, are consistent with those followed in the preparation of the 2024 audited financial statements[85] - The adoption of new/revised Hong Kong Financial Reporting Standards accounting standards relevant to the Group and effective during the period has not had any significant impact on the Group's results or financial position for the current or prior periods[85] Revenue and Segment Information The Group's revenue primarily derives from manufacturing and selling wigs, hair accessories, high-end human hair extension products, and Halloween products, totaling HKD 465,699 thousand for the six months ended June 30, 2025, with the US remaining the primary market, and all revenue recognized upon transfer of goods control, with no seasonal operations Group Revenue by Product | Product Category | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Wigs, Hair Accessories & Other | 423,305 | 441,842 | | High-end Human Hair Extension Products | 21,750 | 65,055 | | Halloween Products | 20,644 | 18,281 | | Total | 465,699 | 525,178 | Group Revenue by Location of Delivery to Customers | Delivery Location | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | United States of America | 421,506 | 483,924 | | Germany | 10,309 | 15,215 | | United Kingdom | 14,746 | 11,046 | | Japan | 2,065 | 3,342 | | People's Republic of China | 8,439 | 5,368 | | Other | 8,634 | 6,283 | | Total | 465,699 | 525,178 | - The Group's chief operating decision maker considers that operations are not seasonal[89] Other Gains and Losses For the six months ended June 30, 2025, total other gains and losses increased to HKD 4,546 thousand, primarily from a net gain of HKD 411 thousand on financial assets measured at fair value through profit or loss and a net foreign exchange gain of HKD 4,092 thousand Details of Other Gains and Losses | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Net gain (loss) on financial assets measured at fair value through profit or loss | 411 | (230) | | Net foreign exchange gain | 4,092 | 3,152 | | Gain on early termination of lease | 43 | – | | Total | 4,546 | 2,922 | - Net foreign exchange gain is the main component of other gains and losses and has increased compared to the prior period[90] Impairment Assessment of Trade Receivables under Expected Credit Loss Model For the six months ended June 30, 2025, the Group recognized no impairment provisions for trade receivables, compared to HKD 7 thousand in the prior year, with consistent bases for determining inputs, assumptions, and valuation techniques Impairment Losses on Trade Receivables | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Impairment losses on trade receivables recognized under expected credit loss model, net of reversal | – | 7 | - No impairment losses on trade receivables were recognized in the current period, while a small amount was recognized in the prior period[91] Other Expenses For the six months ended June 30, 2025, other expenses increased to HKD 377 thousand, primarily due to higher donation expenses Details of Other Expenses | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Donation expenses | 377 | 164 | - Donation expenses increased compared to the prior period[92] Finance Costs For the six months ended June 30, 2025, total finance costs decreased to HKD 17,574 thousand, mainly due to a reduction in bank borrowing interest from HKD 19,899 thousand to HKD 15,968 thousand Details of Finance Costs | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Interest on bank borrowings | 15,968 | 19,899 | | Interest on lease liabilities | 421 | 336 | | Interest on other borrowings | 325 | 494 | | Interest on amounts due to related companies | 134 | 73 | | Other | 726 | 726 | | Total | 17,574 | 21,528 | - Total finance costs decreased, primarily due to a reduction in interest on bank borrowings[93] Profit Before Tax For the six months ended June 30, 2025, profit before tax decreased to HKD 24,998 thousand, after deducting cost of inventories sold of HKD 352,955 thousand and depreciation of property, plant and equipment of HKD 17,288 thousand, and including interest income of HKD 1,205 thousand Composition of Profit Before Tax | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Cost of inventories sold | 352,955 | 407,551 | | Depreciation of property, plant and equipment | 17,288 | 19,443 | | Interest income | (1,205) | (1,383) | | Government grants | – | (205) | - Profit before tax decreased, with both cost of inventories sold and depreciation decreasing, but interest income also slightly declined[94] Income Tax Expense For the six months ended June 30, 2025, income tax expense significantly increased to HKD 6,167 thousand, primarily due to a substantial rise in current tax in Bangladesh from HKD 916 thousand to HKD 5,339 thousand following the expiration of its income tax holiday Details of Income Tax Expense | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Current tax in Bangladesh | 5,339 | 916 | | Current tax in other jurisdictions | 8 | 81 | | (Over) under-provision in prior years | (715) | 1,753 | | Deferred tax | 1,535 | 1,596 | | Total | 6,167 | 4,346 | - Income tax expense significantly increased, primarily due to a substantial rise in current tax in Bangladesh following the expiration of its income tax holiday[95] Dividends For the six months ended June 30, 2025, a final dividend of 2.8 HK cents per share, totaling HKD 18,107 thousand, was declared and paid for the year ended December 31, 2024, and an interim dividend of 2.0 HK cents per share, totaling HKD 12,724 thousand, was declared after the period end Dividend Distribution Status | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Total final dividend paid | 18,107 | 19,014 | | Interim dividend declared (HK cents per share) | 2.0 | - | | Total interim dividend declared | 12,724 | - | - The total final dividend for 2024 slightly decreased, and an interim dividend of 2.0 HK cents per share was declared for 2025[96] Earnings Per Share For the six months ended June 30, 2025, basic and diluted earnings per share attributable to owners of the Company decreased by 50% to HKD 0.02, with no potential dilutive ordinary shares in either period Earnings Per Share Overview | Indicator | 2025 H1 (HKD) | 2024 H1 (HKD) | | :--- | :--- | :--- | | Basic and Diluted Earnings Per Share | 0.02 | 0.04 | - Basic and diluted earnings per share decreased by 50% compared to the prior period[97] - There were no potential dilutive ordinary shares for the six months ended June 30, 2025, and 2024, hence diluted earnings per share were the same as basic earnings per share[97] Property, Plant and Equipment For the six months ended June 30, 2025, the Group acquired property, plant, and equipment worth HKD 16,614 thousand, an increase from the prior year, with no revaluation surplus or deficit recognized, and new lease agreements resulted in HKD 6,200 thousand in right-of-use assets and lease liabilities Changes in Property, Plant and Equipment | Indicator | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Acquisition of property, plant and equipment | 16,614 | 13,260 | | Property revaluation deficit | – | (2,731) | | Recognition of right-of-use assets and lease liabilities | 6,200 | 216 | - Acquisitions of property, plant and equipment increased, no revaluation deficit was recognized in the current period, and new lease agreements were entered into[98] Inventories As of June 30, 2025, total inventories increased by 7.1% to HKD 523,194 thousand, with finished goods inventories showing the largest increase of 38.8% to HKD 105,746 thousand Composition of Inventories | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Raw materials | 302,972 | 300,717 | 2,255 | +0.7% | | Work in progress | 114,476 | 111,626 | 2,850 | +2.6% | | Finished goods | 105,746 | 76,158 | 29,588 | +38.8% | | Total Inventories | 523,194 | 488,501 | 34,693 | +7.1% | - Total inventories increased, with finished goods showing the largest increase[99] Trade and Other Receivables As of June 30, 2025, total trade and other receivables increased by 3.3% to HKD 283,984 thousand, primarily driven by higher prepayments and deposits for property, plant, and equipment acquisitions, with typical credit terms of 30 to 90 days Details of Trade and Other Receivables | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade receivables (net of provision) | 214,020 | 210,137 | 3,883 | +1.8% | | Other receivables | 16,787 | 19,330 | (2,543) | -13.1% | | Prepayments | 13,360 | 8,555 | 4,805 | +56.2% | | Deposits for acquisition of property, plant and equipment | 14,244 | 9,429 | 4,815 | +51.1% | | Total | 283,984 | 275,007 | 8,977 | +3.3% | Aging Analysis of Trade Receivables | Aging | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | 0 to 60 days | 144,771 | 147,064 | | 61 to 90 days | 42,227 | 37,026 | | 91 to 120 days | 10,878 | 11,632 | | Over 120 days | 16,144 | 14,415 | - Total trade receivables slightly increased, with prepayments and deposits for property, plant and equipment acquisitions showing larger increases[100] Pledged Bank Deposits Pledged bank deposits, classified as current assets, secure the Group's bank facilities and will be released upon settlement of the related bank and other borrowings - Pledged bank deposits refer to deposits pledged for bank facilities granted to the Group and are therefore classified as current assets[103] - Pledged bank deposits will be released upon settlement of the related bank and other borrowings[103] Trade and Other Payables As of June 30, 2025, total trade and other payables increased by 2.1% to HKD 138,143 thousand, with trade payables rising by 5.6% to HKD 64,870 thousand, notably with a high proportion of trade payables over 120 days related to a lawsuit involving a Chinese subsidiary, for which management is negotiating an out-of-court settlement Details of Trade and Other Payables | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Trade payables | 64,870 | 61,418 | 3,452 | +5.6% | | Accrued staff costs | 36,141 | 36,162 | (21) | -0.1% | | Other employee liabilities | 10,622 | 15,879 | (5,257) | -33.1% | | Accruals and other payables | 26,510 | 21,869 | 4,641 | +21.2% | | Total | 138,143 | 135,328 | 2,815 | +2.1% | Aging Analysis of Trade Payables | Aging | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | 0 to 60 days | 26,183 | 27,304 | | 61 to 120 days | 1,135 | 2 | | Over 120 days | 37,552 | 34,112 | - Total trade payables slightly increased, with a higher proportion of trade payables over 120 days related to a lawsuit involving a Chinese subsidiary, for which management is negotiating an out-of-court settlement with the relevant suppliers[105] Secured Bank and Other Borrowings As of June 30, 2025, total secured bank and other borrowings increased by 11.1% to HKD 624,842 thousand, mainly from bank borrowings and supplier financing, secured by various assets and subject to loan covenants, all of which the Group confirmed compliance with Details of Secured Bank and Other Borrowings | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Change (thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Bank overdrafts | 199 | – | 199 | - | | Bank borrowings | 504,169 | 472,194 | 31,975 | +6.8% | | Bank borrowings under supplier financing arrangements | 111,274 | 72,850 | 38,424 | +52.7% | | Other borrowings | 9,200 | 17,288 | (8,088) | -46.8% | | Total | 624,842 | 562,332 | 62,510 | +11.1% | - The average effective annual interest rate for the Group's bank borrowings under floating rate arrangements ranged from 1.98% to 8.37% (December 31, 2024: 2.90% to 7.59%)[106] - The Group's bank facilities are secured by bank deposits, land and buildings, investment properties, negative pledges over assets of subsidiaries, and certain life insurance contracts[108] - The Directors of the Company believe that the Group complied with the loan covenants as at June 30, 2025, and December 31, 2024[109] Company's Share Capital As of June 30, 2025, the Company's issued and fully paid shares decreased by 1.6% to 636,182,000 shares, following the repurchase and cancellation of 10,492,000 ordinary shares for HKD 6,537 thousand through the Stock Exchange during the period Changes in Company's Share Capital | Indicator | June 30, 2025 (thousand shares) | Dec 31, 2024 (thousand shares) | Change (thousand shares) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Number of issued and fully paid shares | 636,182 | 646,674 | (10,492) | -1.6% | | Shares repurchased and cancelled (thousand shares) | 10,492 | 8,978 | 1,514 | +16.9% | | Total consideration for shares repurchased and cancelled (thousand HKD) | 6,537 | 5,730 | 807 | +14.1% | - The Company repurchased and cancelled 10,492,000 ordinary shares during the period, leading to a reduction in the total number of issued shares[110][113][114] Share Option Scheme The Group's 2017 share option scheme aims to retain, incentivize, and reward participants by offering ownership interests, with exercise prices based on market closing prices and a 10% limit on total shares, and no options granted as of the authorization date of these interim financial statements - The purpose of the share option scheme is to provide any director and full-time employee of the Group who has contributed or will contribute to the Group with an opportunity to acquire an ownership interest in the Company[115] - The exercise price of a share option must be at least the highest of the closing price of the shares as stated in the daily quotation sheet of the Stock Exchange on the offer date, the average closing price for the 5 business days immediately preceding the offer date, and the nominal value of the Company's shares[116] - As of the authorization date of these condensed consolidated interim financial statements, no share options had been granted by the Group[118] Fair Value Measurement of Financial Instruments The Group's financial instruments are measured across three fair value hierarchy levels, with investment funds and life insurance contracts classified as Level 3, valued based on net asset value and reported account value, respectively, and no transfers between Level 1 and Level 2 occurred, with carrying amounts of financial assets and liabilities at amortized cost approximating their fair values Fair Value Measurement of Financial Assets on a Recurring Basis | Financial Asset | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | Fair Value Level | Valuation Techniques and Key Inputs | | :--- | :--- | :--- | :--- | :--- | | Investment funds | 888 | 977 | Level 3 | Based on the net asset value of the investment funds | | Life insurance contracts | 44,856 | 43,789 | Level 3 | Account value reported by the insurance company | | Total | 45,744 | 44,766 | | | - Investment funds and life insurance contracts are both Level 3 fair value measurements, primarily based on net asset value or account value reported by the insurance company[120] - No transfers between Level 1 and Level 2 occurred during the period, and the carrying amounts of financial assets and financial liabilities carried at amortized cost approximate their respective fair values[121][124] Major Non-Cash Transactions Major non-cash transactions for the six months ended June 30, 2025, included recognizing HKD 6,200 thousand in right-of-use assets and lease liabilities from new lease agreements, and approximately HKD 145,029 thousand in direct payments to suppliers by banks under supply chain financing arrangements - For the six months ended June 30, 2025, the Group entered into new lease agreements for the use of leased land, leased properties, and plant buildings, recognizing right-of-use assets of HKD 6,200 thousand and lease liabilities of approximately HKD 6,200 thousand[125] - Bank borrowings of approximately HKD 145,029 thousand under supply chain financing arrangements refer to amounts directly paid to suppliers by the relevant banks[125] Related Party Transactions The Group engaged in related party transactions, including computer product and service expenses of HKD 540 thousand with Sunshine Software Limited, controlled by Mr. Cheung Yau Chuen, and total remuneration for directors and key management personnel increased to HKD 3,229 thousand Details of Related Party Transactions | Related Party Transaction | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Computer products and services expenses | 540 | 540 | | Key management personnel remuneration | 3,229 | 2,938 | - Computer product and service expenses were incurred with Sunshine Software Limited, controlled by Mr. Cheung Yau Chuen, and key management personnel remuneration increased[127][128] Capital Commitments As of June 30, 2025, the Group's capital commitments contracted but not provided for in the condensed consolidated financial information for the purchase of construction land decreased to HKD 3,185 thousand Overview of Capital Commitments | Indicator | June 30, 2025 (thousand HKD) | Dec 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Contracted but not provided for in the condensed consolidated financial information for the purchase of construction land | 3,185 | 6,566 | - Capital commitments for the purchase of construction land decreased compared to the end of last year[129]