联亚集团(00458) - 2025 - 中期财报

Company Overview and Contact Information This section provides key corporate governance and contact details, including board members, committees, management, auditors, legal advisors, banks, and registered offices - The Company Overview section details key corporate governance and contact information, including board members, committee composition, key management personnel, auditors, legal advisors, principal bankers, registered office, head office, and principal place of business in Hong Kong[6] - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 1988, with stock short name 'Union Asia Group' and stock code '458'[7] Condensed Consolidated Interim Financial Statements This section presents the unaudited condensed consolidated interim financial statements, including the income statement, comprehensive income statement, statement of financial position, statement of changes in equity, and cash flow statement, along with their explanatory notes - These unaudited condensed consolidated interim financial statements are presented in Hong Kong Dollars and were approved for publication by the Board of Directors on August 21, 2025[17] - These condensed consolidated interim financial statements have not been audited or reviewed by external auditors[18] Condensed Consolidated Interim Income Statement For the six months ended June 30, 2025, the company's revenue decreased by 13% year-on-year to HK$1.676 billion, with profit for the period significantly reduced to HK$3.5 million, a 94.5% decrease from HK$63.9 million in the prior year, and basic earnings per share fell from HK$0.23 to HK$0.006 Condensed Consolidated Interim Income Statement Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 1,676,431 | 1,926,401 | -13.0% | | Cost of sales | (989,531) | (1,131,468) | -12.5% | | Gross profit | 686,900 | 794,933 | -13.6% | | Operating profit | 47,394 | 125,387 | -62.2% | | Profit before tax | 23,687 | 97,141 | -75.6% | | Profit for the period | 3,546 | 63,903 | -94.5% | | Profit attributable to equity holders of the Company | 1,675 | 62,532 | -97.3% | | Basic earnings per share | HK$0.006 | HK$0.23 | -97.4% | Condensed Consolidated Interim Statement of Comprehensive Income For the six months ended June 30, 2025, the company's total comprehensive income was HK$98.9 million, a significant increase from HK$25.98 million in the prior year, primarily due to a reversal from loss to gain in exchange differences arising from the translation of financial statements of overseas subsidiaries Condensed Consolidated Interim Statement of Comprehensive Income Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Profit for the period | 3,546 | 63,903 | -94.5% | | Exchange differences arising from translation of financial statements of overseas subsidiaries | 94,405 | (36,347) | From loss to gain | | Other comprehensive income for the period | 95,354 | (37,925) | From loss to gain | | Total comprehensive income for the period | 98,900 | 25,978 | +280.7% | Condensed Consolidated Interim Statement of Financial Position As of June 30, 2025, the company's total assets less current liabilities increased to HK$2.061 billion, and net assets rose to HK$1.307 billion, with growth in both non-current and current assets, including inventories and trade and bills receivables, while cash and bank balances decreased Condensed Consolidated Interim Statement of Financial Position Key Data (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 1,252,253 | 1,191,504 | +5.1% | | Current assets | 1,824,305 | 1,784,754 | +2.2% | | Current liabilities | 1,015,536 | 976,980 | +3.9% | | Net current assets | 808,769 | 807,774 | +0.1% | | Total assets less current liabilities | 2,061,022 | 1,999,278 | +3.1% | | Net assets | 1,306,873 | 1,255,923 | +4.1% | | Cash and bank balances | 348,043 | 466,554 | -25.4% | | Inventories | 854,938 | 781,202 | +9.4% | | Trade and bills receivables | 540,900 | 453,045 | +19.4% | Condensed Consolidated Interim Statement of Changes in Equity For the six months ended June 30, 2025, the company's total equity increased to HK$1.307 billion, driven by HK$98.9 million in total comprehensive income for the period and HK$0.764 million from shares issued under the share option scheme, partially offset by dividends paid Condensed Consolidated Interim Statement of Changes in Equity Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Total equity at beginning of period | 1,255,923 | 1,205,058 | +4.2% | | Total comprehensive income for the period | 98,900 | 25,978 | +280.7% | | Shares issued under share option scheme | 764 | 716 | +6.7% | | Approved final dividend for the year | (46,491) | (51,794) | -10.3% | | Total equity at end of period | 1,306,873 | 1,177,650 | +11.0% | Condensed Consolidated Interim Cash Flow Statement For the six months ended June 30, 2025, net cash used in operating activities significantly decreased to HK$109 million, net cash used in investing activities increased, and financing activities shifted from net cash used to a net inflow of HK$8.48 million, with cash and cash equivalents at period-end decreasing to HK$336 million Condensed Consolidated Interim Cash Flow Statement Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (108,636) | (212,768) | 48.9% decrease in usage | | Net cash used in investing activities | (39,264) | (27,007) | 45.4% increase in usage | | Net cash from/(used in) financing activities | 8,478 | (38,517) | From usage to inflow | | Cash and cash equivalents at end of period | 336,010 | 172,032 | +95.3% | Notes to the Condensed Consolidated Interim Financial Statements This section details the basis of preparation, accounting policies, segment information, specific components and changes of various assets, liabilities, and profit and loss items, as well as information on related party transactions and fair value measurement of financial instruments, providing essential context and details for understanding the financial data Note 1. General Information This note outlines the Group's principal activities, which include garment manufacturing and brand operations, and confirms the company's listing on the Hong Kong Stock Exchange since 1988 - The Group's principal activities are (i) garment manufacturing and (ii) brand operations[17] - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 1988[17] Note 2. Basis of Preparation and Accounting Policies This note confirms that the interim financial statements are prepared in accordance with HKAS 34 and the applicable disclosure provisions of the Listing Rules, using the same accounting policies as the 2024 annual financial statements - These interim financial statements are prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants, and are prepared using the same accounting policies as those adopted in the 2024 annual financial statements[19] Note 3. Changes in Accounting Policies This note states that the Group has applied amendments to HKAS 21 during the period, but these amendments have no material impact on the interim financial statements as no foreign currency transactions involved non-exchangeable currencies - The Group has applied the amendments to Hong Kong Accounting Standard 21 during the current accounting period, but these amendments have no material impact on these interim financial statements as no foreign currency transactions involved foreign currencies that are not exchangeable into other currencies[20] Note 4. Estimates This note highlights that management must make judgments, estimates, and assumptions in preparing these interim financial statements in compliance with HKAS 34, and actual results may differ from these estimates - In preparing these interim financial statements in compliance with Hong Kong Accounting Standard 34, management is required to make judgments, estimates, and assumptions, and actual results may differ from these estimates[21] Note 5. Segment Information This note identifies two reportable segments, garment manufacturing and brand operations, with performance assessed and resources allocated based on reported profit or loss before tax by the chief operating decision maker - The Group has identified two reportable segments, namely (i) garment manufacturing and (ii) brand operations, with segment performance assessed and resources allocated by the chief operating decision maker based on reported profit or loss before tax[22] Segment Revenue and Profit/(Loss) Before Tax (For the six months ended June 30) | Metric | 2025 Garment (HK$ Thousand) | 2024 Garment (HK$ Thousand) | 2025 Brand Operations (HK$ Thousand) | 2024 Brand Operations (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 796,690 | 973,595 | 879,741 | 952,806 | | Profit/(Loss) before tax | 66,333 | 122,085 | (40,003) | (61,448) | Revenue by Customer Location (For the six months ended June 30) | Region | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | China | 483,648 | 580,312 | | United Kingdom | 340,460 | 430,296 | | Canada | 248,396 | 286,443 | | Italy | 183,000 | 204,151 | | Singapore | 73,276 | 72,064 | | Other countries | 347,651 | 353,135 | | Total | 1,676,431 | 1,926,401 | Note 6. Seasonality of Operations This note explains that the Group typically records higher sales revenue in the second half of the year due to seasonal influences from increased shipments of garment and brand products for the autumn/winter and holiday seasons - The Group tends to record higher sales revenue in the second half of the year compared to the first half, primarily due to the seasonal impact of increased shipments of garment products and brand business products for the autumn/winter and holiday seasons[30] Note 7. Other Net Income This note details the components of other net income, including government grants, impairment losses on property, plant and equipment, net loss/gain on disposal of property, plant and equipment, and net gain on derecognition of right-of-use assets and lease liabilities Other Net Income (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Government grants | 3,078 | 323 | | Impairment loss on property, plant and equipment | (4,999) | – | | Net (loss)/gain on disposal of property, plant and equipment | (1,205) | 19,465 | | Net gain on derecognition of right-of-use assets and lease liabilities | 1,666 | 855 | | Miscellaneous income | 2,226 | 2,334 | | Total | 766 | 22,977 | - The net gain on disposal of property, plant and equipment for the six months ended June 30, 2024, included a gain of HK$20.923 million from the disposal of certain unused leasehold land use rights and ancillary buildings in Mainland China[34] Note 8. Operating Profit This note provides a breakdown of items adjusted in operating profit, including amortization of intangible assets, depreciation expenses for owned property, plant and equipment, right-of-use assets, and employee costs and staff welfare expenses Operating Profit Adjustments (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Amortisation of intangible assets | 26,057 | 28,620 | | Depreciation expense – owned property, plant and equipment | 30,832 | 43,206 | | Depreciation expense – right-of-use assets | 54,892 | 63,057 | | Employee costs and staff welfare expenses | 378,438 | 373,354 | Note 9. Finance Income and Finance Costs This note details the Group's finance income, primarily interest income from bank deposits, and finance costs, mainly interest on franchise fees payable, for the reporting periods Finance Income and Finance Costs (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Finance income | 3,969 | 2,137 | | Interest income from bank deposits | 3,545 | 1,783 | | Finance costs | 27,676 | 30,383 | | Interest on franchise fees payable | 22,602 | 24,361 | Note 10. Income Tax Expense This note presents the breakdown of income tax expense, including current income tax (Hong Kong profits tax and non-Hong Kong tax) and deferred income tax, for the reporting periods Income Tax Expense (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current income tax | 15,506 | 31,351 | | Hong Kong profits tax | 5,564 | 16,204 | | Non-Hong Kong tax | 9,942 | 15,147 | | Deferred income tax | 1,722 | 1,987 | | Total | 20,141 | 33,238 | - Hong Kong profits tax provision is calculated at an estimated annual effective tax rate of 16.5% applicable for the six months ended June 30, 2025[34] Note 11. Earnings Per Share This note provides the calculation of basic and diluted earnings per share, based on profit attributable to equity holders and the weighted average number of ordinary shares outstanding Earnings Per Share (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to equity holders of the Company (HK$ Thousand) | 1,675 | 62,532 | | Weighted average number of ordinary shares outstanding | 272,775,684 | 271,776,561 | | Basic earnings per share | HK$0.006 | HK$0.23 | | Diluted earnings per share | HK$0.006 | HK$0.23 | Note 12. Dividends This note states that the Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025, and details the final dividend approved and paid for the year ended December 31, 2024 - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: HK$0.06 per share, totaling HK$16.356 million)[36] - The final dividend of HK$0.17 per share for the year ended December 31, 2024, was approved by shareholders on June 24, 2025, and paid on July 17, 2025[37] Note 13. Property, Plant and Equipment This note details the Group's additions to right-of-use assets, primarily for leased offices and retail stores, and reports on the acquisition of plant and equipment items and the loss on disposal of property, plant and equipment - During the six months ended June 30, 2025, the Group recognized additions to right-of-use assets of HK$30.16 million, primarily for leased offices and retail stores[38] Total Retail Store Rent (For the six months ended June 30) | Region | 2025 Fixed Rent (HK$ Thousand) | 2025 Variable Rent (HK$ Thousand) | 2025 Total Rent (HK$ Thousand) | 2024 Total Rent (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 41,819 | 7,064 | 48,883 | 49,185 | | Hong Kong | 1,434 | 407 | 1,841 | 2,430 | | Europe | 8,172 | – | 8,172 | 6,570 | - The Group acquired plant and equipment items at a cost of HK$42.192 million and recorded a loss on disposal of property, plant and equipment items of HK$1.205 million[40] Note 14. Intangible Assets This note provides a breakdown of intangible assets, including franchise rights and trademarks, and highlights that the 'C.P. Company' trademark has an indefinite useful life with no expected diminution in value from use Intangible Assets Composition (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Franchise rights | 392,419 | 417,436 | | Trademarks | 181,775 | 158,022 | | Total Intangible Assets | 574,194 | 575,458 | - Trademarks refer to the 'C.P. Company' trademark, which is considered to have an indefinite useful life, and its value is not expected to diminish from use[43] - During the year ended December 31, 2024, the Group entered into a 10-year franchise agreement for the use of certain trademarks and domain names related to the MASSIMO OSTI brand[42] Note 15. Inventories This note details the composition of inventories, including raw materials, work-in-progress, finished goods, and goods in transit, with increases in raw materials and work-in-progress reflecting seasonal demand for second-half shipments Inventories Composition (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Raw materials | 141,922 | 74,862 | | Work-in-progress | 213,994 | 159,291 | | Finished goods | 475,307 | 517,785 | | Goods in transit | 23,715 | 29,264 | | Total | 854,938 | 781,202 | - The increase in raw materials and work-in-progress reflects the seasonal demand for second-half shipments in the garment manufacturing segment[44] Note 16. Trade and Bills Receivables This note provides the breakdown and aging analysis of trade and bills receivables, including those measured at amortized cost and those for sale measured at fair value through other comprehensive income, and explains the Group's credit terms and cash flow management practices Trade and Bills Receivables (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables measured at amortised cost | 375,893 | 330,538 | | Trade receivables for sale measured at fair value through other comprehensive income (revolving) | 165,007 | 122,507 | | Total | 540,900 | 453,045 | Aging Analysis of Trade and Bills Receivables (As of June 30) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than 3 months | 499,553 | 412,595 | | 3 months to 6 months | 33,694 | 36,551 | | Over 6 months | 19,544 | 14,046 | - The Group grants credit terms to its customers mainly ranging from 45 to 90 days and sells a portion of its trade receivables to financial institutions before their due date under customer supplier financing programs to manage cash flow[45][47] Note 17. Cash and Bank Balances This note details the composition of cash and bank balances, including short-term bank deposits, cash at bank and in hand, and pledged bank deposits, and clarifies the use of pledged deposits as collateral for bank facilities Cash and Bank Balances Composition (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Short-term bank deposits | 105,246 | 159,114 | | Cash at bank and in hand | 230,764 | 296,804 | | Pledged bank deposits | 12,033 | 10,636 | | Cash and bank balances in consolidated statement of financial position | 348,043 | 466,554 | - As of June 30, 2025, the Group pledged bank deposits of HK$12.033 million as collateral for bank facilities granted to the Group[48] Note 18. Trade and Bills Payables This note provides an aging analysis of trade and bills payables, indicating that most supplier payment terms are within 60 days and all payables are expected to be settled within one year or on demand Aging Analysis of Trade and Bills Payables (As of June 30) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than 3 months | 267,182 | 289,622 | | 3 months to 6 months | 8,970 | 19,757 | | Over 6 months | 24,476 | 19,633 | | Total | 300,628 | 329,012 | - Supplier payment terms are mostly within 60 days, and all trade and bills payables are expected to be settled within one year or on demand[49] Note 19. Accruals and Other Payables and Contract Liabilities This note clarifies that accruals and other payables primarily include employee benefits, current portion of franchise fees payable, and deposits received, while contract liabilities represent prepayments from customers for goods to be delivered - Accruals and other payables primarily include employee benefits expenses payable, current portion of franchise fees payable, deposits received, and other operating expenses payable[51] - Contract liabilities primarily represent prepayments received by the Group before goods are delivered, amounting to HK$27.456 million as of June 30, 2025, and are expected to be settled within one year[52] Note 20. Bank Loans This note states that as of June 30, 2025, bank loans amounted to HK$77 million, denominated in HKD and repayable within one year, with their carrying amount approximating fair value - As of June 30, 2025, bank loans amounted to HK$77 million, denominated in Hong Kong Dollars and repayable within one year, and the carrying amount of bank loans approximated their fair value[53] Note 21. Share Capital This note details the changes in share capital, including the number of shares and their value, resulting from shares issued under the share option scheme during the reporting periods Share Capital Movement (As of June 30) | Metric | Number of Shares as of June 30, 2025 | HK$ Thousand as of June 30, 2025 | Number of Shares as of December 31, 2024 | HK$ Thousand as of December 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | At January 1 | 272,601,253 | 27,260 | 271,607,253 | 27,161 | | Shares issued under share option scheme | 877,000 | 88 | 994,000 | 99 | | At June 30/December 31 | 273,478,253 | 27,348 | 272,601,253 | 27,260 | Note 22. Capital Commitments This note discloses capital commitments, primarily for contracted but unprovided property, plant and equipment, including a construction contract for a new logistics facility in Hefei Industrial Park Capital Commitments (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Contracted but not provided for property, plant and equipment | 38,670 | – | - Capital commitments as of June 30, 2025, primarily include commitments related to a construction contract entered into on April 2, 2025, by a wholly-owned subsidiary of the Group with a contractor for the construction of a new three-story logistics facility in the subsidiary's Hefei Industrial Park, with a contract sum of RMB45,139,583.50[55] Note 23. Related Party Transactions This note details transactions with related parties, including a new lease agreement with TDB Company Limited for factory, storage, and office premises, and compensation paid to key management personnel - The Group entered into a new lease agreement with TDB Company Limited, a related company, to lease certain properties for factory, storage, and ancillary office purposes at a monthly rent of HK$320,000 for a term of two years[56][60] Key Management Personnel Compensation (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Salaries, allowances and bonuses | 10,276 | 10,118 | | Defined contribution plans | 312 | 305 | | Share-based compensation expense – share options granted | 351 | 325 | | Total | 10,939 | 10,748 | Note 24. Fair Value of Financial Instruments This note explains that forward foreign exchange contracts, share options to acquire equity in a company, and trade receivables measured at fair value through other comprehensive income are all measured at fair value and classified as Level 2 valuations - Forward foreign exchange contracts, share options to acquire equity in a company, and trade receivables measured at fair value through other comprehensive income are all measured at fair value and classified as Level 2 valuations as of June 30, 2025, and December 31, 2024[58][59] - The fair value of trade receivables measured at fair value through other comprehensive income is determined using risk-adjusted annual rates ranging from 5.27% to 6.69% as quoted by correspondent banks as of June 30, 2025[59] Management Discussion and Analysis This section provides an overview of the Group's performance, business segment results, financial summary, and outlook, highlighting the challenges faced and strategic responses - The Group recorded profit attributable to equity holders of HK$2 million for the six months ended June 30, 2025, compared to HK$63 million for the six months ended June 30, 2024, primarily due to challenging and competitive market conditions, coupled with continued global trade uncertainties, leading to reduced demand from certain customers and a decline in revenue and profit for the garment manufacturing business[63] - The Group anticipates the remainder of 2025 to remain challenging and will continue to adopt a cautious and focused approach to its businesses, expecting robust performance from its own brand C.P. Company and garment manufacturing business, while striving to improve the performance of its licensed brands in Mainland China[85] Overview For the six months ended June 30, 2025, profit attributable to equity holders significantly decreased to HK$2 million, mainly due to market challenges, global trade uncertainties impacting garment business demand and profit, and the absence of a HK$21 million one-off disposal gain recorded in the prior year Profit Attributable to Equity Holders (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Change | | :--- | :--- | :--- | :--- | | Profit attributable to equity holders | 2 | 63 | -96.8% | - The decrease in profit attributable to equity holders was primarily due to challenging and competitive market conditions, coupled with continued global trade uncertainties, leading to reduced demand from certain customers and a decline in revenue and profit for the garment manufacturing business[63] - The Group recognized a HK$21 million one-off gain in the first half of 2024 from the disposal of certain leasehold land use rights and ancillary buildings in Mainland China, but no such gain was recorded in the first half of 2025[63] Business Segment Performance The Group's business segment performance is mixed, with own brand C.P. Company maintaining profit growth despite a soft market and high double-digit retail channel revenue growth, while licensed brands Nautica and Spyder saw revenue decline and increased losses, Reebok revenue decreased but operating loss narrowed, and the garment manufacturing business faced challenges with declining revenue and profit Own Brands Despite a soft market, C.P. Company recorded profit performance and stable sales revenue, increasing 1% at actual exchange rates, with high double-digit growth in retail channel revenue, while Cissonne plans to shift its sales model to an online-platform-based pull-driven operation in the second half - Despite soft market conditions, C.P. Company recorded profit performance and maintained stable sales revenue in the first half of 2025, increasing by 1% at actual exchange rates, with retail channel revenue achieving high double-digit growth[64] - C.P. Company operates twelve directly managed retail stores and outlet stores globally, with outlet stores continuing to perform well[64] - Cissonne will change its sales model in the second half of the year, adopting a pull-driven operating model based on its own brand and online platforms as sales channels[65] Licensed Brands Licensed brands Nautica and Spyder experienced revenue declines and increased losses, while Reebok saw reduced revenue but a narrowed operating loss, as the Group strategically reviewed its portfolio and adjusted store combinations Licensed Brands Revenue Change (For the six months ended June 30) | Brand | Y-o-Y Revenue Change | Loss Change | | :--- | :--- | :--- | | Nautica | -8% | Increased loss | | Spyder | -26% | Increased loss | | Reebok | -21% | Operating loss decreased | - The Group further closed underperforming stores and adjusted its store portfolio during the period to establish a solid store base for Nautica and Spyder[66] - The Group has conducted a strategic review of its licensed brand portfolio to optimize resource allocation, which may include changing existing franchise arrangements or shortening the franchise term for Reebok[67] Garment Manufacturing The garment manufacturing business experienced declines in both revenue and profit in the first half due to challenging and competitive market conditions, coupled with global trade uncertainties leading to reduced customer demand, despite ongoing efforts to enhance production efficiency through automation and streamlined operations - In the first half of the year, due to challenging and competitive market conditions, coupled with continued global trade uncertainties, demand from certain customers decreased, leading to a decline in both revenue and profit for the garment manufacturing business[68] - Revenue from high-end craftsmanship factories decreased by 24% compared to the prior year, and revenue from advanced craftsmanship factories also decreased by 4% compared to the first half of 2024[70] - The Group continues to enhance production efficiency and competitiveness by implementing automation and streamlining operational measures[68] Financial Summary This financial summary provides key operating results, segment performance, and cash flow data for the six months ended June 30, 2025, showing decreased revenue and gross profit, reduced EBITDA, and a significant drop in profit attributable to equity holders, with the garment segment's performance declining and brand operations' loss narrowing Operating Results Summary (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | | :--- | :--- | :--- | | Revenue | 1,676 | 1,926 | | Gross profit | 687 | 795 | | EBITDA | 164 | 260 | | Profit attributable to equity holders | 2 | 63 | Segment Results Summary (For the six months ended June 30) | Segment | 2025 Profit Before Tax (HK$ Million) | 2024 Profit Before Tax (HK$ Million) | | :--- | :--- | :--- | | Garment manufacturing segment | 66 | 122 | | Brand operations segment | (40) | (61) | Cash Flow Summary (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | | :--- | :--- | :--- | | Cash used in operations | (82) | (183) | Financial Review The Group's total revenue decreased by 13% year-on-year to HK$1.676 billion, with declines in both garment manufacturing and licensed brand revenue, while C.P. Company revenue slightly increased; gross margin remained stable but gross profit decreased due to lower revenue, other net income significantly reduced due to the absence of prior year's one-off gain, and selling and distribution expenses and income tax expense decreased, while general and administrative expenses increased Revenue Total revenue decreased by 13% to HK$1.676 billion, with garment manufacturing revenue down 18.3% and brand operations revenue down 7.7%, though C.P. Company saw a 1% increase at actual exchange rates, reflecting the Group's seasonal business pattern with higher revenue in the second half Total Revenue and Segment Revenue Change (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total revenue | 1,676 | 1,926 | -13% | | Garment manufacturing revenue | 796 | 974 | -18.3% | | Brand operations revenue | 880 | 953 | -7.7% | - C.P. Company's revenue increased by 1% at actual exchange rates[72] - The Group's business is seasonally skewed towards the second half of the year, primarily due to increased shipments of garment and brand business products for the autumn/winter and holiday seasons[70] Gross Profit Gross profit decreased due to lower revenue, although the overall gross margin for brand operations slightly increased compared to the prior year, mainly driven by an improved gross margin for C.P. Company Gross Profit and Gross Margin (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Gross Margin 2025 | Gross Margin 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross profit | 687 | 795 | 41.0% | 41.3% | - The decrease in gross profit was primarily due to reduced revenue, while the overall gross margin for brand operations slightly increased compared to the prior year, mainly due to an improved gross margin for C.P. Company[73] Other Net Income Other net income in the first half of 2024 included a HK$21 million gain from the disposal of certain unused leasehold land use rights and ancillary buildings in Mainland China, with no such one-off items recorded in the current reporting period - In the first half of 2024, other net income included a gain of HK$21 million from the disposal of certain unused leasehold land use rights and ancillary buildings in Mainland China; no such one-off items were recorded in the current reporting period[74] Selling and Distribution Expenses Selling and distribution expenses decreased compared to the prior year, mainly due to reduced retail partner commissions and store expenses for licensed brands, as well as lower advertising and promotion expenses and e-commerce and agency commissions for C.P. Company - Selling and distribution expenses decreased compared to the prior year, primarily due to reduced retail partner commissions and store expenses for licensed brands, coupled with lower advertising and promotion expenses and e-commerce and agency commissions for C.P. Company[75] General and Administrative Expenses General and administrative expenses reported for the current period increased compared to the prior year, primarily due to higher exchange gains recorded in the first half of 2024 - General and administrative expenses reported for the current period increased compared to the prior year, primarily due to higher exchange gains recorded in the first half of 2024[76] Income Tax Expense Income tax expense decreased compared to the prior year, primarily due to reduced profit in the garment manufacturing business during the first half - Income tax expense decreased compared to the prior year, primarily due to reduced profit in the garment manufacturing business during the first half[77] Segment Results Garment manufacturing business recorded a profit decline due to reduced revenue, while the overall loss for brand operations narrowed, with C.P. Company showing increased profit, and operating losses for licensed brands Nautica and Spyder increased, while Reebok's decreased - Garment manufacturing business recorded a profit decline due to reduced revenue; the overall loss for brand operations narrowed compared to the prior year; C.P. Company recorded an increase in profit; among licensed brands, operating losses for Nautica and Spyder increased, while Reebok's decreased[78] Financial Resources and Liquidity Shareholders' equity increased as of June 30, 2025, compared to December 31, 2024, mainly due to exchange gains from the translation of overseas subsidiaries' financial statements, particularly from the significant appreciation of the Euro against the Hong Kong Dollar since April of the current year, with the Group utilizing forward foreign exchange contracts to manage related risks Financial Position (As of June 30) | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Cash and bank balances | 348 | 467 | | Bank loans | 77 | – | | Total equity | 1,307 | 1,256 | - Shareholders' equity as of June 30, 2025, increased compared to December 31, 2024, primarily due to exchange gains arising from the translation of overseas subsidiaries' financial statements (mainly from the significant appreciation of the Euro against the Hong Kong Dollar since April of the current year)[80] - The Group enters into forward foreign exchange contracts to manage related foreign exchange risks[80] Contingent Liabilities and Capital Commitments Capital commitments as of June 30, 2025, primarily include a construction contract for a new three-story logistics facility in Hefei Industrial Park, which upon completion will create synergies with existing facilities and serve as the Group's distribution center for its China brand operations - Capital commitments as of June 30, 2025, primarily include commitments related to a construction contract entered into on April 2, 2025, by Hefei Union Asia Garment Co Ltd, a wholly-owned subsidiary of the Group established in China, with a selected contractor for the construction of a new three-story logistics facility on land owned by Hefei Union Asia in its Hefei Economic and Technological Development Zone Industrial Park, with a contract sum of RMB45,139,583.50[81] - Upon completion, this logistics facility will create synergies with existing facilities in the Hefei Industrial Park and will serve as the Group's distribution center for its China brand operations[81] Human Resources As of June 30, 2025, the Group's total headcount was approximately 6,220 employees, who are provided with competitive remuneration and benefits, with discretionary bonuses and share options awarded to high-performing staff Employee Headcount (As of June 30) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total employees | 6,220 | 6,530 | - Employees are provided with reasonable and competitive remuneration and benefits, and high-performing employees are awarded discretionary bonuses and share options[82] Outlook The Group anticipates the second half of 2025 to remain challenging, with C.P. Company focusing on data-driven direct-to-consumer strategies to counter wholesale declines, licensed brands investing in online channels and digital operations, and garment manufacturing continuing operational streamlining and efficiency improvements, all while strictly controlling costs and focusing on operational effectiveness, brand innovation, and product optimization for long-term growth - C.P. Company will address the decline in wholesale business by implementing a targeted and highly productive direct-to-consumer strategy, focusing on maximizing the performance of its existing physical and online stores[83] - For licensed brands, the second half of the year will see increased investment in online channels to drive growth and enhanced resource allocation for digital operations[84] - The garment manufacturing business will continue to streamline operations and enhance efficiency to maintain competitiveness and flexibility[85] - The Group will strictly control operating costs, continue to focus on enhancing operational effectiveness, brand innovation, and product optimization to strengthen its competitiveness and drive long-term value creation and sustainable growth[85] Shareholder Information and Corporate Governance This section covers disclosures of interests by directors and major shareholders, details of the share option scheme, compliance with the Corporate Governance Code, and other corporate governance matters Disclosure of Interests This section discloses the interests of directors and major shareholders in the company's shares, noting that Mr. Wang Jianzhong holds 66.76% of the company's shares through controlled corporations, and his spouse, Ms. Sun Lin, is deemed to have the same interests Directors' Interests in Securities This note details the long positions held by directors in the company's shares through controlled corporations, including Mr. Wang Jianzhong's 66.76% stake Directors' Interests in the Company's Shares (As of June 30, 2025) | Director's Name | Long/Short Position | Number of Shares Held (Through Controlled Corporations) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Wang Jianzhong | Long | 182,577,000 | 66.76% | Directors' Interests in Associated Corporation Huatai Ordinary Shares (As of June 30, 2025) | Director's Name | Long/Short Position | Number of Ordinary Shares Held (Through Spouse) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Wang Ku Yi Chun | Long | 2,500 | 0.03% | Major Shareholders This note identifies major shareholders and their interests in the company's shares, clarifying the ultimate beneficial ownership and deemed interests of Mr. Wang Jianzhong and his spouse, Ms. Sun Lin Major Shareholders' Interests in the Company's Shares (As of June 30, 2025) | Shareholder Name | Long/Short Position | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | New Perfect Global Limited | Long | 182,577,000 | 66.76% | | Silver Tree Holdings Inc. | Long | 182,577,000 | 66.76% | | Sun Lin | Long | 182,577,000 | 66.76% | - Silver Tree Holdings Inc. is 100% controlled by New Perfect Global Limited, which is wholly owned by Mr. Wang Jianzhong; Ms. Sun Lin, Mr. Wang Jianzhong's spouse, is deemed to have an interest in the same batch of shares in which Mr. Wang Jianzhong holds an interest through his controlled corporations[94] Share Options The 2016 Share Option Scheme aims to grant share options to eligible persons; for the six months ended June 30, 2025, 832,000 options were granted, 877,000 exercised, 1,951,000 lapsed/cancelled, leaving 6,118,000 unexercised options at period-end - The Company's share option scheme (the '2016 Share Option Scheme') was adopted by shareholders at the Company's annual general meeting held on June 6, 2016, to grant share options to eligible persons to subscribe for shares of the Company[92] Summary of Share Option Movements (For the six months ended June 30, 2025) | Metric | Number of Share Options | | :--- | :--- | | At January 1, 2025 | 8,114,000 | | Granted during the period | 832,000 | | Exercised during the period | (877,000) | | Lapsed/Cancelled | (1,951,000) | | At June 30, 2025 | 6,118,000 | - The total fair value of share options granted during the period was approximately HK$635,000 and will be recognized as employee benefits expense over the vesting period[96] Compliance with the Corporate Governance Code The company has complied with all code provisions of Appendix C1 to the Listing Rules, the Corporate Governance Code, during the reporting period, except for a deviation from code provision C.2.1 where the roles of Chairman and Chief Executive Officer are combined and held by Mr. Wang Jianzhong, an arrangement the Board believes is in the Group's best interest - For the six months ended June 30, 2025, the Company has applied the principles and complied with all code provisions of Appendix C1 to the Listing Rules, the Corporate Governance Code, except for a deviation from code provision C.2.1, which stipulates that the roles of Chairman and Chief Executive Officer should be separate and not performed by the same individual[99] - The Board believes that Mr. Wang Jianzhong's dual role as Chairman of the Board and Chief Executive Officer is in the best interest of the Group, as it benefits the Board by having a Chairman who is familiar with the Group's business and can lead discussions and report on important matters and developments to the Board in a timely manner[99] Purchase, Sale or Redemption of Listed Securities During the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[100] Securities Transactions by Directors and Relevant Employees All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period, and the Board has adopted the Model Code as written guidelines for employees' dealings in the company's securities - Following specific enquiries made by the Company to each Director, all Directors have confirmed that they have complied with the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers throughout the six months ended June 30, 2025[101] - The Board has adopted the Model Code as written guidelines for employees' dealings in the Company's securities[101] Changes in Directors' Information During the reporting period, Professor Lin Chen was appointed as a member of the Nomination Committee, and Ms. Wang Ku Yi Chun retired as a Non-executive Director and Honorary Chairman of Johnson Electric Holdings Limited - Professor Lin Chen was appointed as a member of the Company's Nomination Committee on June 24, 2025[102] - Ms. Wang Ku Yi Chun retired as a Non-executive Director of Johnson Electric Holdings Limited (a company listed on the Stock Exchange) on July 17, 2025, and ceased to be its Honorary Chairman from the same date[103] Interim Dividend The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: HK$0.06 per share) - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: HK$0.06 per share)[104] Review of Financial Statements by Audit Committee The unaudited condensed consolidated interim financial statements and interim report for the six months ended June 30, 2025, have been reviewed by the Company's Audit Committee in conjunction with Group management - The Company's unaudited condensed consolidated interim financial statements and interim report for the six months ended June 30, 2025, have been reviewed by the Company's Audit Committee in conjunction with Group management[105]