联泰控股(00311) - 2025 - 中期财报

Company Overview This section provides an overview of the company's board members and their roles Board of Directors The report lists the executive, non-executive, and independent non-executive directors, CFO, and company secretary of Luen Thai Holdings Limited, noting changes in independent non-executive director appointments - The Board of Directors includes Chairman Wang Weimin, Permanent Honorary Chairman Dr. Henry Tan, CEO Raymond Tan as executive directors, Huo Yushan as a non-executive director, and Chan Ming Yan, Li Cheuk Ran, Shi Min as independent non-executive directors. Shi Min was appointed on March 29, 2025, while Wang Jing retired on the same day[6][7] Review Report on Interim Financial Information This section presents the independent auditor's review report on the interim financial information Independent Auditor's Review Report PricewaterhouseCoopers reviewed Luen Thai Holdings Limited's interim financial information for the six months ended June 30, 2025, concluding no material matters indicated non-compliance with HKAS 34 - PricewaterhouseCoopers reviewed the interim financial information, confirming its preparation in all material respects in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants[8][9][10] Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including the statement of financial position, income, comprehensive income, changes in equity, and cash flows Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets increased to USD 480,924 thousand, driven by higher current assets, particularly inventory and cash balances, with total liabilities also rising due to increased borrowings Condensed Consolidated Statement of Financial Position Key Data (USD thousands) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Total non-current assets | 162,498 | 165,811 | -3,313 | | Total current assets | 318,426 | 280,172 | +38,254 | | Total assets | 480,924 | 445,983 | +34,941 | | Equity | | | | | Equity attributable to owners of the Company | 156,076 | 155,954 | +122 | | Non-controlling interests | 629 | 748 | -119 | | Total equity | 156,705 | 156,702 | +3 | | Liabilities | | | | | Total non-current liabilities | 29,266 | 26,079 | +3,187 | | Total current liabilities | 294,953 | 263,202 | +31,751 | | Total liabilities | 324,219 | 289,281 | +34,938 | Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2025, revenue slightly decreased, but gross profit increased, leading to a profit attributable to owners of USD 373 thousand, a turnaround from a loss of USD 9,728 thousand in the prior period Condensed Consolidated Statement of Profit or Loss Key Data (USD thousands) | Indicator | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Revenue | 295,824 | 304,522 | -2.9% | | Cost of sales | (254,645) | (265,901) | -4.2% | | Gross profit | 41,179 | 38,621 | +6.6% | | Operating profit/(loss) | 4,583 | (2,602) | Turned loss into profit | | Finance costs — net | (4,795) | (6,412) | -25.2% | | Profit/(loss) for the period | 254 | (9,808) | Turned loss into profit | | Profit/(loss) attributable to owners of the Company | 373 | (9,728) | Turned loss into profit | | Basic earnings/(loss) per share (US cents) | 0.04 | (0.94) | Turned loss into profit | Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, profit for the period was USD 254 thousand, resulting in a total comprehensive income of USD 3 thousand after other comprehensive losses, a significant improvement from a USD 9,343 thousand loss in the prior period Condensed Consolidated Statement of Comprehensive Income Key Data (USD thousands) | Indicator | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Profit/(loss) for the period | 254 | (9,808) | Turned loss into profit | | Currency translation differences | (251) | 465 | Switched to loss | | Total comprehensive income/(loss) for the period | 3 | (9,343) | Significant improvement | | Total comprehensive income/(loss) attributable to owners of the Company | 122 | (8,946) | Significant improvement | Condensed Consolidated Statement of Changes in Equity As of June 30, 2025, equity attributable to owners of the Company slightly increased from USD 155,954 thousand to USD 156,076 thousand, primarily due to profit for the period offsetting some currency translation differences Condensed Consolidated Statement of Changes in Equity Key Data (USD thousands) | Indicator | January 1, 2025 | June 30, 2025 | January 1, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the Company | 155,954 | 156,076 | 190,668 | 181,722 | | Non-controlling interests | 748 | 629 | 1,018 | 621 | | Total equity | 156,702 | 156,705 | 191,686 | 182,343 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, net cash outflow from operating activities significantly decreased, while net cash inflow from financing activities increased, leading to a net increase in cash and bank balances of USD 19,191 thousand and an ending balance of USD 72,756 thousand Condensed Consolidated Statement of Cash Flows Key Data (USD thousands) | Indicator | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Net cash outflow from operating activities | (4,851) | (11,114) | Improved 56.3% | | Net cash inflow from investing activities | 474 | 224 | Increased 111.6% | | Net cash inflow from financing activities | 23,568 | 16,638 | Increased 41.6% | | Net increase in cash and bank balances | 19,191 | 5,748 | Increased 233.9% | | Cash and bank balances at end of period | 72,756 | 81,212 | -10.4% | Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes supporting the condensed consolidated interim financial information, covering general information, basis of preparation, accounting policies, estimates, financial risk management, segment information, and other financial details General Information Luen Thai Holdings Limited primarily manufactures and trades apparel and accessories with production facilities in China, Cambodia, the Philippines, and Myanmar, listed on the HKEX Main Board, with interim financial information presented in USD and unaudited - The Group's principal activities are the manufacturing and trading of apparel and accessories, with production facilities located in China, Cambodia, the Philippines, and Myanmar[19] - The Company is primarily listed on the Main Board of The Stock Exchange of Hong Kong Limited, and this condensed consolidated interim financial information is presented in USD and is unaudited[20][21] Basis of Preparation The condensed consolidated interim financial information is prepared in accordance with HKAS 34 'Interim Financial Reporting' and should be read with the Company's annual report for the year ended December 31, 2024, with income tax accrued using the applicable tax rate on the expected annual total earnings - The condensed consolidated interim financial information has been prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[22] - Income tax is accrued using the tax rate that would be applicable to the expected total annual earnings[23] Accounting Policies The Group's accounting policies are consistent with the 2024 annual financial statements, adopting only HKAS 21 and HKFRS 1 (amendments) — Lack of Exchangeability effective for FY2025 with no significant impact, while assessing the potential impact of HKFRS 18 - The accounting policies applied are consistent with those of the annual financial statements for the year ended December 31, 2024, with the adoption of HKAS 21 and HKFRS 1 (amendments) — Lack of Exchangeability effective for the 2025 financial year, which are not expected to have a significant impact[24][25] - The Group is currently assessing the potential impact of adopting HKFRS 18 (Presentation and Disclosure in Financial Statements), which primarily affects the presentation of the consolidated statement of comprehensive income and cash flows[27] Estimates Management's significant judgments, estimates, and assumptions in preparing the interim financial information are consistent with those applied in the 2024 consolidated financial statements, though actual results may differ from estimates - The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty in preparing the condensed consolidated interim financial information are the same as those applied to the consolidated financial statements for the year ended December 31, 2024[28] Financial Risk Management The Group faces market risks (foreign exchange and interest rate), credit risk, and liquidity risk, with no significant changes in risk management policies since December 31, 2024, and derivative financial instruments are measured at fair value as Level 2 financial instruments - The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and cash flow interest rate risk), credit risk, and liquidity risk[29] - There have been no changes in the risk management policies since December 31, 2024[30] Fair Value of Derivative Financial Instruments (USD thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Derivative financial instruments (liabilities) | 167 | — | | Derivative financial instruments (assets) | — | 31 | Segment Information The Group primarily operates in two segments: apparel and accessories; for the six months ended June 30, 2025, the apparel segment saw decreased revenue but significantly reduced losses, while the accessories segment experienced revenue growth but a slight profit decline, with overall segment profit turning from loss to gain Segment Revenue and Profit (USD thousands) | Segment | June 30, 2025 Revenue | June 30, 2024 Revenue | Revenue Change | June 30, 2025 Segment Profit/(Loss) | June 30, 2024 Segment Profit/(Loss) | Profit Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Apparel | 171,553 | 183,362 | -6.4% | (2,741) | (9,635) | Improved 71.6% | | Accessories | 124,271 | 121,160 | +2.6% | 5,040 | 5,277 | -4.5% | | Group Total | 295,824 | 304,522 | -2.9% | 2,299 | (4,358) | Turned loss into profit | Revenue Analysis by Category (USD thousands) | Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Sales of apparel, textiles and accessories | 292,347 | 299,592 | -2.4% | | Other income | 3,477 | 4,930 | -29.5% | | Total Revenue | 295,824 | 304,522 | -2.9% | Intangible Assets and Property, Plant and Equipment As of June 30, 2025, the total net book value of intangible assets and property, plant, and equipment was USD 125,181 thousand, a decrease from the beginning of the year; goodwill impairment tests for apparel and accessories cash-generating units resulted in no impairment loss, but key assumptions for value-in-use calculations were updated Net Book Value of Intangible Assets and Property, Plant and Equipment (USD thousands) | Indicator | June 30, 2025 | January 1, 2025 | June 30, 2024 | January 1, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total intangible assets | 43,229 | 43,563 | 43,897 | 44,231 | | Property, plant and equipment | 81,952 | 87,386 | 98,845 | 105,203 | | Total | 125,181 | 130,949 | 142,742 | 149,434 | - As of June 30, 2025, the Group performed goodwill impairment tests for the apparel and accessories cash-generating units, with no impairment loss recognized as the recoverable amounts exceeded the carrying amounts[43] Key Assumptions for Goodwill Impairment Test (Average) | Assumption | Accessories (June 30, 2025) | Apparel (June 30, 2025) | Accessories (December 31, 2024) | Apparel (December 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Average revenue growth | 7.1% | 6.6% | 5.8% | 4.6% | | Average gross margin | 18.2% | 13.8% | 19.4% | 13.6% | | Terminal growth rate | 2.0% | 2.0% | 2.0% | 2.0% | | Discount rate | 16.0% | 17.0% | 16.0% | 17.0% | Leases As of June 30, 2025, total right-of-use assets amounted to USD 25,542 thousand, and total lease liabilities were USD 25,071 thousand, with total cash outflow for leases during the period decreasing to USD 3,900 thousand from the prior year Right-of-Use Assets and Lease Liabilities (USD thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total right-of-use assets | 25,542 | 23,202 | | Lease liabilities (current) | 2,535 | 3,202 | | Lease liabilities (non-current) | 22,536 | 19,514 | | Total lease liabilities | 25,071 | 22,716 | - Total cash outflow for leases for the six months ended June 30, 2025, was USD 3,900 thousand, a decrease from USD 5,344 thousand in the corresponding period of 2024[48] Inventories As of June 30, 2025, total inventories increased to USD 70,943 thousand, primarily driven by increases in work-in-progress and finished goods, reflecting changes in production activities Composition of Inventories (USD thousands) | Category | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Raw materials | 23,833 | 24,285 | -1.9% | | Work-in-progress | 37,612 | 23,370 | +61.0% | | Finished goods | 9,498 | 7,929 | +19.8% | | Total | 70,943 | 55,584 | +27.6% | Trade and Other Receivables As of June 30, 2025, net trade receivables increased to USD 108,585 thousand, with total trade and other receivables at USD 170,482 thousand; the Company generally grants customers a credit period of up to 120 days Trade and Other Receivables (USD thousands) | Category | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade receivables — net | 108,585 | 104,197 | +4.2% | | Amounts due from related parties — net | 18,050 | 19,234 | -6.2% | | Deposits, prepayments and other receivables | 27,124 | 25,285 | +7.3% | | Indemnity guarantee assets | 16,723 | 16,723 | 0% | | Total current portion | 170,482 | 165,439 | +3.0% | - The Group generally grants credit terms of up to 120 days to its customers[52] Cash and Bank Balances As of June 30, 2025, cash and bank balances increased significantly to USD 72,756 thousand from December 31, 2024, reflecting improved liquidity Cash and Bank Balances (USD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash at bank and in hand | 72,756 | 54,136 | +34.4% | | Bank deposits maturing after 3 months | — | 735 | -100% | | Total cash and cash equivalents | 72,756 | 54,871 | +32.6% | Share Capital As of June 30, 2025, issued and fully paid share capital remained unchanged at USD 10,341 thousand, consisting of ordinary shares with a par value of USD 0.01 per share Share Capital Information (USD thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Issued and fully paid share capital | 10,341 | 10,341 | Other Reserves As of June 30, 2025, total other reserves decreased to (USD 6,936) thousand from (USD 6,685) thousand at the beginning of the year, primarily due to currency translation differences Composition of Other Reserves (USD thousands) | Category | January 1, 2025 | June 30, 2025 | January 1, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Capital reserve | 7,891 | 7,891 | 7,891 | 7,891 | | Other capital reserve | (4,031) | (4,031) | (2,795) | (2,795) | | Employee benefits reserve | 870 | 913 | 4,602 | 1,012 | | Exchange reserve | (11,415) | (11,709) | (12,378) | (11,536) | | Total | (6,685) | (6,936) | (2,680) | (5,428) | Interests in Joint Ventures and Associates As of June 30, 2025, the Group's total interests in joint ventures and associates slightly decreased to USD 4,975 thousand from the beginning of the year, mainly influenced by dividends received Interests in Joint Ventures and Associates (USD thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Interests in joint ventures | 4,888 | 4,990 | | Interests in associates | 87 | 88 | | Total | 4,975 | 5,078 | - For the six months ended June 30, 2025, the Group's share of post-tax profit from joint ventures and associates was USD 311 thousand, and dividends of USD 414 thousand were received[55] Borrowings As of June 30, 2025, total Group borrowings increased to USD 169,587 thousand, entirely current and unsecured, primarily comprising term loans and trade financing Composition of Borrowings (USD thousands) | Category | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Bank borrowings — term loans | 144,952 | 122,090 | +18.7% | | Bank borrowings — trade financing | 24,635 | 21,411 | +15.1% | | Total borrowings | 169,587 | 143,501 | +18.2% | | Current borrowings (unsecured) | 169,587 | 141,902 | +19.5% | Trade and Other Payables As of June 30, 2025, total trade and other payables increased to USD 93,377 thousand, primarily consisting of trade payables and accrued wages and salaries Composition of Trade and Other Payables (USD thousands) | Category | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Trade payables | 50,635 | 40,404 | +25.3% | | Contract liabilities | 70 | 74 | -5.4% | | Other tax payables | 9,266 | 9,033 | +2.6% | | Accrued wages and salaries | 19,306 | 23,177 | -16.7% | | Accrued professional fees | 2,732 | 2,941 | -7.0% | | Amounts due to related parties | 800 | 1,004 | -20.4% | | Others | 10,568 | 10,163 | +4.0% | | Total | 93,377 | 86,796 | +7.6% | Provisions As of June 30, 2025, total provisions amounted to USD 19,054 thousand, including USD 16,723 thousand in contingent liabilities primarily related to potential risks from import duties, other taxes, and penalties in overseas countries, with corresponding indemnity assets Composition of Provisions (USD thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contingent liabilities | 16,723 | 16,723 | | Other provisions | 2,331 | 2,355 | | Total | 19,054 | 19,078 | - Contingent liabilities primarily relate to potential risks from import duties, other taxes, and penalties in certain overseas countries, amounting to USD 16,723 thousand, with corresponding indemnity assets[58][59] Other Gains/(Losses) — Net For the six months ended June 30, 2025, the Group achieved net other gains of USD 328 thousand, primarily driven by net foreign exchange gains, reversing a loss in the prior period Other Gains/(Losses) — Net (USD thousands) | Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Fair value (loss)/gain on derivative instruments — net | (198) | 244 | Switched from gain to loss | | Net foreign exchange gains | 526 | 62 | Significant increase | | Loss on disposal of a joint venture | — | (323) | Loss eliminated | | Total | 328 | (17) | Turned loss into gain | Operating Profit/(Loss) For the six months ended June 30, 2025, operating profit was USD 4,583 thousand, a significant improvement from a USD 2,602 thousand loss in the prior period, mainly due to reduced depreciation and amortization and increased provision for obsolete inventories Factors Affecting Operating Profit/(Loss) (USD thousands) | Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Amortisation of intangible assets | 334 | 334 | 0% | | Depreciation of property, plant and equipment | 6,058 | 7,271 | -16.7% | | Depreciation of right-of-use assets | 1,985 | 2,766 | -28.3% | | (Gain)/loss on disposal of property, plant and equipment | (199) | 56 | Switched from loss to gain | | Impairment (reversal)/provision for trade receivables | (79) | 41 | Switched from provision to reversal | | Provision for obsolete inventories | 907 | — | New provision | Finance Costs — Net For the six months ended June 30, 2025, net finance costs significantly decreased to USD 4,795 thousand, primarily due to a substantial reduction in interest expenses on bank loans and overdrafts Finance Costs — Net (USD thousands) | Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Interest expense on lease liabilities from related companies | (42) | (66) | -36.3% | | Interest expense on lease liabilities from third parties | (746) | (809) | -7.7% | | Interest expense on bank loans and overdrafts | (4,415) | (5,880) | -25.0% | | Finance costs | (5,203) | (6,755) | -23.0% | | Interest income from bank deposits | 395 | 328 | +20.4% | | Interest income from amounts due from a joint venture | 13 | 15 | -13.3% | | Finance income | 408 | 343 | +18.9% | | Finance costs — net | (4,795) | (6,412) | -25.2% | Income Tax (Credit)/Expense For the six months ended June 30, 2025, the Group recorded an income tax credit of USD 155 thousand, a reversal from a USD 1,154 thousand expense in the prior period, mainly due to over-provision reversals; the Company settled Hong Kong tax disputes, made provisions for China indirect transfers and Cambodia tax audits, and recognized current tax expenses under Pillar Two rules Income Tax (Credit)/Expense (USD thousands) | Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Current income tax | 1,912 | 1,243 | +53.8% | | Over-provision in prior years | (1,660) | — | New reversal | | Deferred income tax | (407) | (89) | Increased 357.3% | | Total | (155) | 1,154 | Switched from expense to credit | - The Group reached a settlement with the Hong Kong Inland Revenue Department regarding disputes over offshore profit claims for prior years, resulting in a tax provision of USD 4,150 thousand[65] - The Group has made provisions for potential withholding income tax exposure from indirect transfers of Chinese companies (approximately USD 1,533 thousand) and for Cambodian tax audits[66] - The Group has assessed and recognized a current tax expense of USD 562 thousand for the six months ended June 30, 2025, expected to be levied under the OECD Pillar Two rules[67] Earnings/(Loss) Per Share For the six months ended June 30, 2025, basic earnings per share attributable to owners of the Company was 0.04 US cents, a turnaround from a loss of 0.94 US cents per share in the prior period; diluted earnings per share was the same as basic earnings per share due to no dilutive potential ordinary shares Earnings/(Loss) Per Share (US cents) | Indicator | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Profit/(loss) attributable to owners of the Company (USD thousands) | 373 | (9,728) | Turned loss into profit | | Weighted average number of ordinary shares outstanding (thousands) | 1,034,113 | 1,034,113 | 0% | | Basic earnings/(loss) per share (US cents) | 0.04 | (0.94) | Turned loss into profit | - As there were no dilutive potential ordinary shares outstanding for the six months ended June 30, 2025, and 2024, diluted earnings/(loss) per share was the same as basic earnings/(loss) per share[69] Dividends For the six months ended June 30, 2025, the Board of Directors did not declare an interim dividend - The Board of Directors did not declare an interim dividend for the six months ended June 30, 2025, and 2024[70] Related Party Transactions and Balances The Group engages in various related party transactions with its holding companies, joint ventures, and associates, including sales of apparel, textiles, and accessories, management fee income, interest income, and purchases of goods and services; as of June 30, 2025, net amounts due from related parties were USD 18,050 thousand, and amounts due to related parties were USD 800 thousand - The Company's immediate holding company is Shanghai Textile (Hong Kong) Limited, and its ultimate holding company is Shanghai Textile (Group) Co., Ltd[71] Significant Related Party Transactions (USD thousands) | Transaction Type | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Sales of apparel, textiles and accessories to related companies | 22,133 | 34,347 | -35.5% | | Management fee income received from joint ventures and related companies | 2,942 | 1,559 | +88.7% | | Professional and technical support service fees paid to related companies | 577 | 960 | -39.9% | | Outwork charges paid to joint ventures | 11,401 | 3,466 | +228.9% | | Purchases of goods from joint ventures | 10,952 | 11,967 | -8.5% | Period-End Balances with Related Parties (USD thousands) | Category | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Amounts due from related parties — net | 18,050 | 19,234 | -6.2% | | Amounts due to related parties | 800 | 1,004 | -20.4% | | Lease liabilities (from related parties) | 316 | 1,760 | -82.0% | Management Discussion and Analysis This section provides management's discussion and analysis of the Group's operating results, segment performance, market conditions, liquidity, financial resources, risk management, and future outlook Operating Results and Overview Despite global geopolitical instability and trade policy uncertainties, Luen Thai Holdings turned profitable in H1 2025, achieving USD 373 thousand profit attributable to owners, driven by improved gross margin, reduced non-recurring expenses, and lower finance costs - The global economy faces uncertainties from geopolitical instability and US reciprocal tariff policies, leading to reduced or suspended procurement by brand customers[83] Operating Results Overview (USD thousands) | Indicator | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | 295,824 | 304,522 | -2.9% | | Gross profit | 41,179 | 38,621 | +6.6% | | Profit/(loss) attributable to owners of the Company | 373 | (9,728) | Turned loss into profit | - Performance improvement was primarily attributable to: (i) no non-recurring expenses related to US customs laws and regulations in H1 2025 (compared to approximately USD 3,900 thousand in H1 2024); (ii) an overall gross margin increase of 1.2 percentage points to 13.9%; and (iii) a 25.2% reduction in finance costs to USD 4,795 thousand[84] Segment Review In H1 2025, apparel business accounted for approximately 58.0% of total revenue, and accessories for 42.0%; the apparel segment saw revenue decline but losses significantly narrowed by 71.6%, while accessories revenue grew by 2.6% but profit slightly decreased by 4.5% - Apparel and accessories businesses accounted for approximately 58.0% and 42.0% of the Group's total revenue, respectively, during the review period[85] Apparel In H1 2025, apparel segment revenue decreased by 6.4% year-on-year to USD 171,553 thousand, but segment loss significantly improved by 71.6% to USD 2,741 thousand, primarily due to the elimination of non-recurring expenses Apparel Segment Performance (USD thousands) | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | 171,553 | 183,362 | -6.4% | | Segment loss | (2,741) | (9,635) | Improved 71.6% | - The improvement in the apparel segment's performance was mainly due to no non-recurring expenses related to US customs laws and regulations in H1 2025[86] Accessories In H1 2025, accessories segment revenue increased by 2.6% year-on-year to USD 124,271 thousand, but segment profit slightly decreased by 4.5% to USD 5,040 thousand Accessories Segment Performance (USD thousands) | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | 124,271 | 121,160 | +2.6% | | Segment profit | 5,040 | 5,277 | -4.5% | Markets Europe and the US remain the Group's primary export markets, accounting for approximately 62.6% of total revenue in H1 2025, while the Asian market (mainly China and Japan) contributed approximately 20.5% - Europe and the US are the Group's primary export markets, with total revenue of approximately USD 185,196 thousand in H1 2025, accounting for approximately 62.6% of total revenue[88] - The Asian market (mainly China and Japan) generated revenue of approximately USD 60,773 thousand, representing approximately 20.5% of the Group's total revenue[88] Liquidity and Financial Resources As of June 30, 2025, total cash and bank deposits increased to USD 72,756 thousand, and total bank borrowings rose to USD 169,587 thousand, all repayable within one year, resulting in a gearing ratio of 62.0% Liquidity and Financial Resources (USD thousands) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total cash and bank deposits | 72,756 | 54,871 | +32.6% | | Total bank borrowings | 169,587 | 143,501 | +18.2% | - As of June 30, 2025, all of the Group's bank borrowings, approximately USD 169,587 thousand, are repayable within one year[90] - As of June 30, 2025, the Group's gearing ratio was approximately 62.0%[90] Foreign Exchange Risk Management The Group adopts a prudent policy to hedge against exchange rate fluctuations by regularly reviewing net foreign exchange exposure and entering into currency hedging arrangements when necessary; no forward foreign exchange or hedging contracts were entered into during the reporting period - The Group adopts a prudent policy to hedge against exchange rate fluctuations by regularly reviewing its net foreign exchange exposure and entering into currency hedging arrangements when necessary[91] - For the six months ended June 30, 2025, and 2024, the Group did not enter into any forward foreign exchange or hedging contracts[91] Future Plans and Prospects Facing a challenging operating environment and slowing global economic growth, the Group will continue to assess economic conditions, monitor market uncertainties and business risks, and implement strict cost control, streamline production bases, enhance strategic resilience, and adjust business strategies to address challenges and seize opportunities - The overall operating environment remains challenging, particularly due to uncertainties arising from US reciprocal tariff policies[92] - The Group will continue to implement strict cost control measures, including reducing production, distribution, and administrative costs, and achieving greater synergy through sharing internal resources[93] - The Group will further streamline and integrate its diversified production bases, enhance strategic resilience, closely monitor market conditions, and adjust business strategies as needed[93] Material Investments, Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures For the period ended June 30, 2025, the Group had no material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures - For the period ended June 30, 2025, there were no material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures[94] Future Plans for Material Investments or Capital Assets As of June 30, 2025, or the date of this report, the Group had no specific plans for material investments or capital assets - As of June 30, 2025, or the date of this report, there were no specific plans for material investments or capital assets[95] Pledge of Assets As of June 30, 2025, the Group had no assets pledged to third parties - As of June 30, 2025, no assets of the Group were pledged to third parties[96] Contingent Liabilities As of June 30, 2025, the Group's total contingent liabilities amounted to USD 16,723 thousand, primarily related to potential risks from import duties, other taxes, and penalties in overseas countries, with corresponding indemnity assets; some tax cases were settled during the period - As of June 30, 2025, the Group's total contingent liabilities were approximately USD 16,723 thousand, involving potential risks from import duties, other taxes, and penalties in overseas countries[97] - Contingent liabilities include USD 5,504 thousand recognized from the Universal business combination and USD 11,461 thousand from the Sachio business combination, both fully indemnified by the sellers[97][98] - For the period ended June 30, 2025, USD 22 thousand of Universal-related tax cases and USD 220 thousand of Sachio-related tax cases were settled[98] Human Resources and Corporate Social Responsibility Luen Thai recruits talent through strategic HR, adopts social responsibility initiatives for growth, commits to safe work environments, fair compensation, career advancement, and acts as a global corporate citizen to advance supply chains and improve the environment - Luen Thai recruits through targeted and strategic human resources strategies and adopts social responsibility programs to support company growth[99] - The Company is committed to providing a safe and pleasant working and living environment, fair compensation and benefits programs, and career advancement opportunities through training and development initiatives[99] - As a global corporate citizen, Luen Thai operates with foresight in its business and sustainable commercial strategies, promoting global supply chain development and improving the surrounding environment[99] Other Information This section covers other relevant information including interim dividends, share transactions, director updates, share options, directors' and major shareholders' interests in shares, corporate governance practices, and review of interim financial information Interim Dividend The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025[100] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed shares - For 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 shares[101] Update on Directors' Information Ms. Shi Min was appointed as an independent non-executive director and committee member on March 29, 2025, while Dr. Wang Jing retired on the same day; Mr. Jin Xin was appointed as a member of the Remuneration Committee - Ms. Shi Min was appointed as an independent non-executive director and a member of the Audit, Remuneration, and Nomination Committees on March 29, 2025[102] - Dr. Wang Jing retired as an independent non-executive director and a member of the relevant committees on March 29, 2025[102] - Mr. Jin Xin was appointed as a member of the Remuneration Committee, effective March 29, 2025[103] Share Options The Company approved a 10-year share option scheme on May 30, 2024; for the period ended June 30, 2025, no share options were granted, exercised, cancelled, or lapsed, with no outstanding options and total shares available for issue representing approximately 10% of issued share capital - The Company approved and adopted a share option scheme on May 30, 2024, with a 10-year validity period, and eligible participants include directors (excluding independent non-executive directors) and employees[105] - For the six months ended June 30, 2025, no share options were granted, exercised, cancelled, or lapsed under the share option scheme[105] - As of June 30, 2025, there were no outstanding share options under the share option scheme, and the total number of shares available for issue represents approximately 10% of the total issued share capital[105] Directors' and Chief Executive's Interests in Shares As of June 30, 2025, Dr. Henry Tan and Mr. Raymond Tan held interests in the Company's shares, including trustee, controlled corporation, and spouse interests Directors' and Chief Executive's Long Positions in Shares (As of June 30, 2025) | Director Name | Capacity | Number of Shares (thousands) | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Henry Tan | Trustee | 1,841 | 0.18% | | | Interest in controlled corporation | 10,993 | 1.06% | | | Founder of discretionary trust | 13,916 | 1.35% | | Raymond Tan | Interest in controlled corporation | 15,656 | 1.51% | | | Spouse's interest | 2,050 | 0.20% | - Save as disclosed, as of June 30, 2025, no director or chief executive or their associates had any interests or short positions in any shares, underlying shares, or debentures of the Company or any of its associated corporations[107] Major Shareholders' Interests in Shares As of June 30, 2025, Shanghai Textile (Hong Kong) Limited and its associated companies were the largest shareholders, holding 70.64% of shares; other major shareholders included Double Joy Investment Limited, Luen Thai Capital Limited, Luen Thai Group Limited, and Dr. Henry Tan and Mrs. Tan Chiu Man Kuk Major Shareholders' Long Positions in Shares (As of June 30, 2025) | Shareholder Name | Capacity | Number of Ordinary Shares (thousands) | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Shanghai Textile (Hong Kong) Limited | Beneficial owner | 730,462 | 70.64% | | Shanghai Textile Group Investment Co., Ltd. | Interest in controlled corporation | 730,462 | 70.64% | | Shanghai Textile (Group) Co., Ltd. | Interest in controlled corporation | 730,462 | 70.64% | | Orient International (Holding) Co., Ltd. | Interest in controlled corporation | 730,462 | 70.64% | | Shanghai Guosheng (Group) Co., Ltd. | Interest in controlled corporation | 730,462 | 70.64% | | Double Joy Investment Limited | Beneficial owner | 71,976 | 6.96% | | Luen Thai Capital Limited | Beneficial owner | 17,204 | 1.66% | | Luen Thai Group Limited | Beneficial owner | 13,916 | 1.35% | | Dr. Henry Tan | Interest in controlled corporation | 103,096 | 9.97% | | Mrs. Tan Chiu Man Kuk | Interest in controlled corporation/Spouse's interest | 103,096 | 9.97% | - Shanghai Textile (Hong Kong) Limited is 100% directly owned by Shanghai Textile Group Investment Co., Ltd., which is in turn 100% directly owned by Shanghai Textile (Group) Co., Ltd.[111] Corporate Governance Practices The Company consistently complied with the applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period, maintaining high corporate governance standards through its Audit, Remuneration, Nomination, and Finance and Banking Committees - The Company has consistently complied with the applicable code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules for the six months ended June 30, 2025[114] - The Board has established an Audit Committee, Remuneration Committee, Nomination Committee, and Finance and Banking Committee to enhance corporate transparency and uphold ethical conduct[115][117] Review of Interim Financial Information The Audit Committee reviewed the Group's accounting principles and practices, discussed review, internal controls, and financial reporting with management, and external auditor PricewaterhouseCoopers reviewed the unaudited condensed consolidated interim financial information - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed review, internal controls, and financial reporting matters with management[118] - The unaudited condensed consolidated interim financial information has been reviewed by the external auditor, PricewaterhouseCoopers, in accordance with Hong Kong Standard on Review Engagements 2410[118] Compliance with the Model Code for Securities Transactions by Directors The Company adopted a code of conduct for directors' securities transactions no less exacting than the Model Code in Appendix C3 of the Listing Rules, and all directors confirmed compliance during the reporting period - The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code set out in Appendix C3 to the Listing Rules[119] - All directors confirmed their compliance with the required standards set out in the Model Code and the Company's adopted code of conduct for directors' securities transactions for the six months ended June 30, 2025[119]