先施(00244) - 2025 - 中期财报

Company Information Board of Directors and Key Personnel This section details Sincere Company Limited's board members, committee structures, and key corporate personnel including auditors and bankers - Board members include Executive Directors Dr. Lam Hiu Lo (Chairman), Ms. So Kiu Wah (Chief Executive Officer), Dr. Yu Lai; Non-executive Director Dr. Tai Tak Fung; Independent Non-executive Directors Mr. Yu Leung Fai, Mr. Chung Chun Hung, Mr. Lam Lam[2] - The Audit Committee is chaired by Mr. Yu Leung Fai, the Remuneration Committee by Mr. Lam Lam, the Nomination Committee by Mr. Chung Chun Hung, and the Executive Committee by Dr. Lam Hiu Lo[2] - The independent auditor is Grant Thornton Hong Kong Limited, and principal bankers include DBS Bank (Hong Kong) Limited and Bank of China (Hong Kong) Limited[2] Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss This section presents the condensed consolidated statement of profit or loss for the six months ended June 30, 2025, showing a slight revenue decrease but a narrower loss for the period Key Data from Condensed Consolidated Statement of Profit or Loss | Metric | H1 2025 (HK$ thousand) | H1 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 64,308 | 65,050 | | Cost of sales | (33,904) | (29,116) | | Other income and net gains | 10,180 | 10,368 | | Selling and distribution expenses | (34,155) | (33,476) | | General and administrative expenses | (24,126) | (25,091) | | Finance costs | (8,073) | (14,275) | | Loss before income tax | (26,462) | (26,662) | | Loss for the period | (26,468) | (26,662) | | Loss per share attributable to owners of the Company (basic and diluted) | (0.02) HK$ | (0.02) HK$ | - Loss for the period slightly decreased from HK$26,662 thousand in the same period of 2024 to HK$26,468 thousand in 2025, primarily due to a significant decrease in finance costs[4] Condensed Consolidated Statement of Comprehensive Income This section discloses the condensed consolidated statement of comprehensive income for the six months ended June 30, 2025, showing a total comprehensive loss of HK$26,423 thousand, a narrower loss than the prior period Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | H1 2025 (HK$ thousand) | H1 2024 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the period | (26,468) | (26,662) | | Exchange differences on translation of overseas operations | 45 | 5 | | Revaluation surplus on leasehold land and buildings | – | 1,883 | | Total comprehensive loss for the period | (26,423) | (24,774) | | Attributable to owners of the Company | (25,853) | (25,415) | - In H1 2025, exchange differences on translation of overseas operations amounted to HK$45 thousand, while H1 2024 included a revaluation surplus of HK$1,883 thousand on leasehold land and buildings[5] Condensed Consolidated Statement of Financial Position This section presents the condensed consolidated statement of financial position as of June 30, 2025, indicating a significant increase in net current liabilities and a substantial decrease in net assets Key Data from Condensed Consolidated Statement of Financial Position | Metric | As of Jun 30, 2025 (HK$ thousand) | As of Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | 277,125 | 266,636 | | Current assets | 73,097 | 77,306 | | Current liabilities | 268,750 | 81,536 | | Net current liabilities | (195,653) | (4,230) | | Total assets less current liabilities | 81,472 | 262,406 | | Non-current liabilities | 15,505 | 170,016 | | Net assets | 65,967 | 92,390 | | Total equity | 65,967 | 92,390 | - As of June 30, 2025, net current liabilities significantly increased to HK$195,653 thousand from HK$4,230 thousand as of December 31, 2024, mainly due to related company loans reclassified from non-current to current liabilities[6] - Net assets decreased from HK$92,390 thousand as of December 31, 2024, to HK$65,967 thousand as of June 30, 2025[7] Condensed Consolidated Statement of Changes in Equity This section illustrates the condensed consolidated statement of changes in equity for the six months ended June 30, 2025, primarily reflecting the impact of the period's loss on accumulated losses Key Data from Condensed Consolidated Statement of Changes in Equity (Attributable to Owners of the Company) | Metric | As of Jan 1, 2025 (HK$ thousand) | Loss for the Period (HK$ thousand) | Other Comprehensive Income for the Period (HK$ thousand) | As of Jun 30, 2025 (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Share capital | 469,977 | – | – | 469,977 | | Other reserves | 331,830 | – | 831 | 332,661 | | Investment revaluation reserve | (9,194) | – | – | (9,194) | | Accumulated losses | (746,023) | (26,684) | – | (772,707) | | Total reserves | (423,387) | (26,684) | 831 | (449,240) | | Total equity | 92,390 | (26,468) | 45 | 65,967 | - As of June 30, 2025, accumulated losses attributable to owners of the Company increased to HK$772,707 thousand, while total equity decreased to HK$65,967 thousand[8] Condensed Consolidated Statement of Cash Flows This section provides the condensed consolidated statement of cash flows for the six months ended June 30, 2025, showing increased net cash outflow from operating activities and a decrease in period-end cash and cash equivalents Key Data from Condensed Consolidated Statement of Cash Flows | Metric | H1 2025 (HK$ thousand) | H1 2024 (HK$ thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (14,259) | (2,373) | | Net cash (used in) / generated from investing activities | (1,267) | 9,967 | | Net cash generated from / (used in) financing activities | 13,505 | (87,100) | | Net decrease in cash and cash equivalents | (2,021) | (79,506) | | Cash and cash equivalents at end of period | 8,926 | 13,188 | - Net cash used in operating activities increased from HK$2,373 thousand in the same period of 2024 to HK$14,259 thousand in 2025, indicating increased cash outflow pressure from operations[9] - Net cash from financing activities shifted from an outflow of HK$87,100 thousand in the same period of 2024 to an inflow of HK$13,505 thousand in 2025, primarily influenced by proceeds from related company loans[9] Notes to the Condensed Consolidated Interim Financial Statements 1. Company Information This section outlines Sincere Company Limited's registration, main business scope (department stores, securities trading, life insurance), and identifies its direct and ultimate controlling shareholders - The Group's principal activities include operating department stores, securities trading, and providing life insurance, with no change in business scope during the period[10] - Merryland Holdings Limited is the Company's direct controlling company, with ultimate shareholders being Dr. Lam Hiu Lo (70% equity) and Ms. So Kiu Wah (30% equity)[10] 2. Basis of Preparation This section details the basis of preparation for the condensed consolidated interim financial statements, focusing on the going concern assumption, and outlines management's measures and shareholder support to ensure continued operations despite net current liabilities and losses - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the HKICPA and the Listing Rules of the Stock Exchange[11] - As of June 30, 2025, the Group recorded a net loss of HK$26,468 thousand, net current liabilities of HK$195,653 thousand, and cash and bank balances of HK$8,926 thousand[15] - Management has implemented measures to improve profitability, control costs, reduce capital expenditure, negotiate lower rents with landlords, and identify opportunities to realize assets[15] - Dr. Lam Hiu Lo and Merryland Holdings have committed to providing continuous financial support to the Group for at least twelve months from June 30, 2025, and the Group has unutilized bank facilities of HK$730 thousand and related company loan facilities of HK$80,392 thousand[15][16] 3. Adoption of New and Revised Hong Kong Financial Reporting Standards This section explains that the adoption of HKAS 21 amendment 'Lack of Exchangeability' had no material impact, and lists new but not yet effective HKFRS standards - The adoption of the HKAS 21 amendment 'Lack of Exchangeability' had no material impact on the Group's condensed consolidated interim financial statements[19][20] - New but not yet effective standards include HKFRS 18 'Presentation and Disclosure in Financial Statements' and HKFRS 19 'Non-publicly Accountable Subsidiaries: Disclosures', which are not expected to have a material impact on the Group's financial statements[21] 4. Segment Information This section discloses the Group's revenue, results, assets, and liabilities by operating segment (department store, securities trading, other) and geography (Hong Kong, UK, other) to assess business unit performance - The Group's operating segments include department store business (providing consumer goods), securities trading (Hong Kong and overseas securities), and other (property rental and life insurance)[22] Operating Segment Revenue and Results | Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2025 Results (HK$ thousand) | 2024 Results (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Department Store Business | 64,204 | 65,279 | (23,709) | (17,309) | | Securities Trading | – | (329) | (1,253) | (1,340) | | Other | 104 | 100 | (3,415) | (3,628) | | Total | 64,308 | 65,050 | (28,377) | (22,277) | Geographical Segment Revenue | Region | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | 64,204 | 64,949 | | UK | 104 | 101 | | Total | 64,308 | 65,050 | 5. Revenue, Other Income and Net Gains This section details the Group's revenue composition, primarily from own goods and counter sales, and other income and net gains, with imputed interest from Win Dynamic grant as a major component Revenue Composition | Revenue Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sales of goods – own goods | 51,460 | 48,944 | | Sales from concessionaire counters and consignment | 12,744 | 16,335 | | Net realized loss on securities trading | – | (330) | | Rental income | 104 | 101 | | Total Revenue | 64,308 | 65,050 | Other Income and Net Gains | Income Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank interest income | 194 | 156 | | Imputed interest income from Win Dynamic grant | 9,426 | 9,424 | | Dividends from financial assets at fair value through profit or loss | 376 | 72 | | Net exchange (loss) / gain | (31) | 26 | | Other | 215 | 690 | | Total | 10,180 | 10,368 | - Performance obligations for customer loyalty programs amounted to HK$1,014 thousand (2024: HK$1,202 thousand), expected to be recognized as revenue within one year[37] 6. Finance Costs This section discloses finance costs for the six months ended June 30, 2025, showing a significant year-on-year decrease in total finance costs, mainly due to reduced interest on bank and related company loans Finance Costs Composition | Cost Source | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 179 | 2,584 | | Interest on lease liabilities | 1,031 | 910 | | Interest on other loans | 6 | 23 | | Interest on related company loans | 6,857 | 10,758 | | Total Finance Costs | 8,073 | 14,275 | - Total finance costs decreased by 43.4% year-on-year, from HK$14,275 thousand to HK$8,073 thousand[40] 7. Loss Before Income Tax This section lists key deductions impacting the Group's loss before income tax, including employee benefits, depreciation, inventory provisions, and expected credit loss allowances Key Deductions from Loss Before Income Tax | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Employee benefits expense (excluding directors' and chief executive's emoluments) | 18,668 | 16,848 | | Depreciation | 9,831 | 16,670 | | Provision for inventories | 389 | 580 | | Expected credit loss allowance for other receivables | 632 | 626 | | Other charges relating to leased properties | 17,214 | 9,472 | - Depreciation expense decreased from HK$16,670 thousand in the same period of 2024 to HK$9,831 thousand in 2025[41] 8. Income Tax Expense This section explains the current income tax expense, noting no provision for Hong Kong profits tax due to no taxable profit, and other regions' taxes calculated at local rates - No provision for Hong Kong profits tax was made due to no taxable profit during the period[43] Income Tax Expense | Region | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong | – | – | | Other regions | 6 | – | | Total | 6 | – | 9. Loss Per Share Attributable to Owners of the Company This section calculates basic and diluted loss per share for the six months ended June 30, 2025, noting they are identical due to the absence of potential dilutive ordinary shares - For the six months ended June 30, 2025, basic and diluted loss per share attributable to owners of the Company remained flat at HK$(0.02), consistent with the same period in 2024[45] - Loss per share is calculated based on the loss attributable to owners of the Company of HK$26,684 thousand (2024: HK$27,260 thousand) and the weighted average of 1,313,962,560 ordinary shares outstanding during the period[45] 10. Dividends The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[46] 11. Property, Plant and Equipment This section discloses the net book value and period-end changes of property, plant and equipment (including owned and right-of-use assets), showing an increase in total net book value Changes in Net Book Value of Property, Plant and Equipment | Item | Owned Assets (HK$ thousand) | Right-of-Use Assets (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | | Net book value as of Jan 1, 2025 | 1,764 | 14,319 | 16,083 | | Additions | 1,397 | 274 | 1,671 | | Lease modifications | – | 13,064 | 13,064 | | Depreciation for the period | (567) | (9,264) | (9,831) | | Disposals/write-offs | (40) | – | (40) | | Net book value as of Jun 30, 2025 | 2,554 | 18,393 | 20,947 | - Total net book value of property, plant and equipment increased from HK$16,083 thousand as of January 1, 2025, to HK$20,947 thousand as of June 30, 2025, primarily due to lease modifications[47] 12. Prepayments, Deposits, Other Receivables and Other Assets This section details the composition of prepayments, deposits, other receivables, and other assets, with the Win Dynamic grant as a major component and an increase in expected credit loss allowance Composition of Prepayments, Deposits, Other Receivables and Other Assets | Item | As of Jun 30, 2025 (HK$ thousand) | As of Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Receivable from Win Dynamic grant | 202,527 | 193,101 | | Prepayments, deposits and other receivables | 40,060 | 39,040 | | Other assets | 4,421 | 4,421 | | Expected credit loss allowance | (1,886) | (1,254) | | Total | 245,122 | 235,308 | | Classified as non-current portion | 224,255 | 218,630 | | Classified as current portion | 20,867 | 16,678 | - Receivable from Win Dynamic grant increased from HK$193,101 thousand as of December 31, 2024, to HK$202,527 thousand as of June 30, 2025[48] - Expected credit loss allowance increased from HK$1,254 thousand as of December 31, 2024, to HK$1,886 thousand as of June 30, 2025[48] 13. Trade Payables This section provides an aging analysis of trade payables as of June 30, 2025, showing most payables are within three months, but those aged four to six months significantly increased Aging Analysis of Trade Payables | Aging | As of Jun 30, 2025 (HK$ thousand) | As of Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current to three months | 30,394 | 38,083 | | Four to six months | 7,794 | 1,195 | | Seven to twelve months | 109 | 55 | | Over one year | 2,013 | 2,059 | | Total | 40,310 | 41,392 | - Trade payables aged four to six months significantly increased from HK$1,195 thousand as of December 31, 2024, to HK$7,794 thousand as of June 30, 2025[50] 14. Leases This section outlines the Group's lease contracts as a lessee and discloses the carrying amount and period-end changes of lease liabilities, indicating an increase in total lease liabilities - The Group holds lease contracts for shops and warehouses used in its operations, typically with lease terms ranging from 1 to 3 years, and some contracts include extension and termination options[52] Changes in Carrying Amount of Lease Liabilities | Item | H1 2025 (HK$ thousand) | Year ended Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Beginning of period/year | 13,643 | 11,913 | | Accreted interest recognized during the period/year | 1,031 | 1,609 | | Payments | (9,843) | (31,997) | | Additions | 274 | 9,389 | | Lease modifications | 13,064 | 22,729 | | End of period/year | 18,169 | 13,643 | | Within one year | 9,597 | 7,319 | | Second to fifth year | 8,572 | 6,324 | - Total lease liabilities increased from HK$13,643 thousand at year-end 2024 to HK$18,169 thousand as of June 30, 2025, primarily due to lease modifications[54] 15. Bank Borrowings, Other Loans and Related Company Loans This section details the terms, interest rates, maturity, and collateral of the Group's bank borrowings, other loans, and related company loans, highlighting related company loans as a primary funding source Bank Borrowings | Type | Effective Interest Rate | Maturity Date | As of Jun 30, 2025 (HK$ thousand) | As of Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Secured bank borrowings | HIBOR+1.0% | 2025 | 8,834 | 8,572 | | Analyzed as: within one year or on demand | | | 8,834 | 8,572 | - The Group's bank borrowings and facilities are secured by bank balances and time deposits of HK$11,103 thousand (December 31, 2024: HK$11,216 thousand)[55] - Related company loans (provided by companies owned 70% by Dr. Lam and 30% by Ms. So) are unsecured, bear interest at HIBOR plus 5% per annum, and are repayable by March 20, 2026[58] 16. Share Capital This section discloses the Company's issued and fully paid share capital, noting no changes for the six months ended June 30, 2025 Share Capital Information | Item | As of Jun 30, 2025 (HK$ thousand) | As of Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Issued and fully paid: 1,313,962,560 ordinary shares | 469,977 | 469,977 | - There were no changes in the Company's share capital for the six months ended June 30, 2025[59] 17. Related Party Transactions This section lists significant related party transactions, including professional fees, interest expenses, handling fees, goods sales, and sales commissions, and discloses key management personnel remuneration Related Party Transactions | Transaction Type | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Professional fees paid to fellow subsidiaries | – | 993 | | Interest expense on related company loans | 6,857 | 10,758 | | Handling fees paid to related companies | 1,050 | 1,163 | | Expenses paid to related companies | 1,281 | 1,507 | | Sales of goods to related companies | 70 | 430 | | Sales commissions | 282 | 394 | Key Management Personnel Remuneration | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 342 | 342 | | Pension contributions | – | – | | Total | 342 | 342 | - Interest expense on related company loans decreased from HK$10,758 thousand in the same period of 2024 to HK$6,857 thousand in 2025[60] 18. Fair Value Hierarchy of Financial Instruments This section provides the fair value hierarchy for the Group's financial instruments, including equity investments at fair value through other comprehensive income and financial assets at fair value through profit or loss, detailing valuation techniques and significant unobservable inputs for Level 3 measurements Assets Measured at Fair Value | Item | Level 1 (HK$ thousand) | Level 2 (HK$ thousand) | Level 3 (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | As of Jun 30, 2025 | | | | | | Equity investments at fair value through other comprehensive income | – | – | 6,165 | 6,165 | | Financial assets at fair value through profit or loss | – | 178 | – | 178 | | Other assets | – | 2,000 | – | 2,000 | | Total | – | 2,178 | 6,165 | 8,343 | | As of Dec 31, 2024 | | | | | | Equity investments at fair value through other comprehensive income | – | – | 6,165 | 6,165 | | Financial assets at fair value through profit or loss | – | 846 | – | 846 | | Other assets | – | 2,000 | – | 2,000 | | Total | – | 2,846 | 6,165 | 9,011 | - Equity investments measured at Level 3 fair value use the market approach, adjusted for a 20.4% discount for lack of marketability[67] - A 3% increase/(decrease) in unobservable inputs would result in a (decrease)/increase in other comprehensive income of HK$201 thousand[67] 19. Commitments and Contingent Liabilities This section discloses the Group's outstanding commitments at the end of the reporting period, primarily irrevocable letters of credit Outstanding Commitments | Item | As of Jun 30, 2025 (HK$ thousand) | As of Dec 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Irrevocable letters of credit | 1,536 | 1,581 | 20. Litigation This section details significant litigation between the Group and Win Dynamic regarding deed validity and payment, including Win Dynamic's claim of invalidity, a High Court injunction, and mutual claims and defenses, with no trial date yet set - Win Dynamic executed a deed of gift in favor of the Company in 2020, promising approximately HK$260,443 thousand, but declared the deed invalid and cancelled it in February 2021[70][71] - The High Court has issued an interim injunction restricting Win Dynamic from disposing of or reducing its assets in Hong Kong, up to the value of the WD proceeds[75] - The Company and Well Link have claimed against Win Dynamic and Mr. Ma King Hin, seeking specific performance of the deed and a declaration of its validity; Win Dynamic and Mr. Ma counterclaimed for a declaration of invalidity[76][77] - As of June 30, 2025, the carrying amount of the receivable from Win Dynamic grant was HK$200,641 thousand (net of expected credit loss allowance), with no trial date yet fixed[85] Management Discussion and Analysis Interim Results This section outlines the Group's main business performance during the review period (H1 2025), including department store operations, securities trading, and life insurance provision - The Group's principal activities during the review period were operating department stores, securities trading, and providing life insurance[86] Overall Financial Review This section summarizes the Group's overall financial performance for H1 2025, noting a slight decrease in consolidated revenue but a narrower net loss year-on-year, primarily due to a weak Hong Kong consumer and retail market and reduced finance costs Overall Financial Performance | Metric | H1 2025 (approx.) | H1 2024 (approx.) | Change (approx.) | Change % (approx.) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenue | 64,300 HK$ thousand | 65,100 HK$ thousand | (800) HK$ thousand | (1.2%) | | Net Loss | 26,500 HK$ thousand | 26,700 HK$ thousand | (200) HK$ thousand | (0.7%) | | Gross Profit | 30,400 HK$ thousand | 35,900 HK$ thousand | (5,500) HK$ thousand | (15.3%) | - The persistently weak Hong Kong consumer and retail market led to a decline in gross profit for the department store business, but a reduction in finance costs of approximately HK$6,200 thousand offset some of the impact[87] Revenue This section details the Group's revenue composition and year-on-year changes for H1 2025, primarily driven by the department store business - Revenue for H1 2025 was approximately HK$64,300 thousand, a decrease of approximately HK$800 thousand or 1.2% compared to H1 2024[88] - Revenue primarily derived from department store operations, amounting to approximately HK$64,200 thousand (H1 2024: approximately HK$65,300 thousand)[88] Other Income and Net Gains This section explains the sources of other income and net gains for H1 2025, primarily from imputed interest on the Win Dynamic grant - Other income and net gains for H1 2025 were approximately HK$10,200 thousand, a decrease of approximately HK$200 thousand or 1.9% compared to H1 2024[89] - Primarily from imputed interest on the Win Dynamic grant, amounting to approximately HK$9,400 thousand (H1 2024: approximately HK$9,400 thousand)[89] Selling and Distribution Expenses This section analyzes the composition and year-on-year increase in selling and distribution expenses for H1 2025, mainly due to higher employee benefits expenses - Selling and distribution expenses for H1 2025 were approximately HK$34,200 thousand, an increase of approximately HK$700 thousand or 2.1% compared to H1 2024[90] - The increase was mainly due to higher employee benefits expenses of approximately HK$1,100 thousand[90] - Key components include depreciation expenses of approximately HK$8,100 thousand (H1 2024: approximately HK$16,400 thousand) and short-term lease expenses and other occupancy costs of approximately HK$15,500 thousand (H1 2024: approximately HK$7,400 thousand)[90] General and Administrative Expenses This section analyzes the composition and year-on-year decrease in general and administrative expenses for H1 2025, mainly due to reduced trademark registration fees, partially offset by increased depreciation related to leased warehouses - General and administrative expenses for H1 2025 were approximately HK$24,100 thousand, a decrease of approximately HK$1,000 thousand or 4.0% compared to H1 2024[91] - The decrease was mainly due to no trademark registration fees in H1 2025 (H1 2024: approximately HK$2,300 thousand)[91] Finance Costs This section explains the significant year-on-year decrease in finance costs for H1 2025, primarily due to reduced interest expenses on bank borrowings and related company loans - Finance costs for H1 2025 were approximately HK$8,100 thousand, a decrease of approximately HK$6,200 thousand or 43.4% compared to H1 2024[92] - The decrease was mainly due to reduced interest expenses on bank borrowings of approximately HK$2,400 thousand and related company loans of approximately HK$3,900 thousand[92] Loss Attributable to Owners of the Company This section reports the year-on-year decrease in loss attributable to owners of the Company for H1 2025 - Loss attributable to owners of the Company for H1 2025 was approximately HK$26,700 thousand, a decrease of approximately HK$600 thousand or 2.2% compared to H1 2024[93] Business Review This section provides a detailed review of the Group's business segment performance, including decreased revenue and increased loss in department store operations, and the loss situation in securities trading Department Store Business The department store business saw decreased revenue and increased segment loss in H1 2025, primarily due to a weak Hong Kong retail market, extended promotions, and price reductions, though inventory levels declined - Department store business revenue for H1 2025 was approximately HK$64,200 thousand, a decrease of approximately 1.7% compared to H1 2024, with segment loss increasing to approximately HK$23,700 thousand, a year-on-year increase of approximately HK$6,400 thousand or 37.0%[94] - Inventory levels decreased to approximately HK$32,000 thousand, a reduction of approximately HK$5,600 thousand or 14.9% from December 31, 2024, primarily aimed at clearing aged inventory[94] Securities Trading Business The securities trading business recorded zero net realized loss and increased net unrealized loss in H1 2025, but dividend income grew, with segment loss remaining flat - Securities trading business recorded a net realized loss of approximately HK$nil (H1 2024: approximately HK$300 thousand) and a net unrealized loss of approximately HK$700 thousand (H1 2024: approximately HK$100 thousand) in H1 2025[95] - Dividend income increased from approximately HK$70 thousand in H1 2024 to approximately HK$400 thousand in H1 2025[95] - Segment loss was approximately HK$1,300 thousand, flat compared to H1 2024[95] Prospects This section anticipates continued challenges for Hong Kong's retail sector from weak consumer markets and online shopping trends, but the Group remains optimistic with flexible strategies and major shareholder support - Hong Kong's retail sector is expected to continue facing challenges from a weak consumer and retail market and increasing customer preference for online shopping[96] - The Group will continue to monitor and flexibly adjust its department store business strategies to navigate the challenging operating environment[96] - With the support of Dr. Lam and Merryland Holdings, the Board remains optimistic about the Group's prospects[97] Liquidity and Financial Resources This section discloses the Group's cash balances, bank borrowings, related company loans, and net current liabilities, analyzes changes in liquidity and capital-to-debt ratios, and reiterates management's measures to improve profitability and liquidity Key Data on Liquidity and Financial Resources | Metric | H1 2025 (approx.) | H1 2024 (approx.) | | :--- | :--- | :--- | | Cash and bank balances, pledged bank balances and deposits | 20,000 HK$ thousand | 22,200 HK$ thousand | | Of which pledged | 11,100 HK$ thousand | 11,200 HK$ thousand | | Unpledged cash and bank balances | 8,900 HK$ thousand | 10,900 HK$ thousand | | Interest-bearing bank borrowings | 8,800 HK$ thousand | 8,600 HK$ thousand | | Utilized related company loans | 179,600 HK$ thousand | 157,600 HK$ thousand | | Net current liabilities | 195,700 HK$ thousand | 4,200 HK$ thousand | | Equity attributable to owners of the Company | 20,700 HK$ thousand | 46,600 HK$ thousand | | Current Ratio | 0.27 | 0.95 | | Capital-to-debt Ratio | 314% | 195% | - Net current liabilities significantly increased from approximately HK$4,200 thousand as of December 31, 2024, to approximately HK$195,700 thousand as of June 30, 2025; the current ratio decreased from 0.95 to 0.27, and the capital-to-debt ratio increased from 195% to 314%[99] - Management is implementing measures to improve profitability, control operating costs, reduce capital expenditure, negotiate lower rents with landlords, and identify opportunities to realize assets, aiming to enhance operational performance and mitigate liquidity risk[99] Exchange Rate Risk This section notes that some of the Group's products are imported from Europe and settled in Euros, with management monitoring exchange rate risk and considering hedging if significant risks arise - Some of the Group's products are imported from Europe and settled in Euros. Currently, there is no exchange rate hedging policy[100] - Management will continue to closely monitor exchange rate risk and consider hedging if significant risks arise[100] Other Information Employees and Remuneration Policy This section discloses the Group's employee headcount, remuneration package (basic salary, discretionary bonuses, sales commissions), and staff welfare policies - As of June 30, 2025, the Group had 191 employees (December 31, 2024: 199 employees)[101] - The remuneration package includes basic salaries, discretionary bonuses based on individual performance, and a sales commission scheme linked to sales targets for sales personnel[101] - Employee benefits include a defined benefit retirement plan, Mandatory Provident Fund scheme, staff purchase discounts, medical and training subsidies[101] Interim Dividends The Board has resolved not to declare an interim dividend for H1 2025 - The Board has resolved not to declare an interim dividend for H1 2025[102] Major Shareholders This section lists the shareholdings of the Company's major shareholder, Merryland Holdings Limited, and its ultimate controlling shareholders, Dr. Lam Hiu Lo and Ms. So Kiu Wah Major Shareholders' Shareholdings | Name | Capacity | Number of Shares | Approx. % of Issued Shares | | :--- | :--- | :--- | :--- | | Merryland Holdings Limited | Beneficial owner | 985,471,362 | 75.00% | - Dr. Lam Hiu Lo holds 70% equity in Merryland Holdings, and Ms. So Kiu Wah holds 30% equity, both are deemed to have interests in the shares held by Merryland Holdings[103] Directors' and Chief Executive's Interests in Shares This section discloses the interests of directors and the chief executive in the Company's shares, primarily held through controlled corporations and spousal interests, confirming no benefits from acquiring company shares or debentures during the period Directors' Long Positions in Shares | Director's Name | Capacity | Total Interest | Approx. % of Issued Shares | | :--- | :--- | :--- | :--- | | Dr. Lam Hiu Lo | Interest in controlled corporation | 985,471,362 | 75.00% | | Ms. So Kiu Wah | Spousal interest | 985,471,362 | 75.00% | - Dr. Lam Hiu Lo is deemed to have an interest in 985,471,362 shares of the Company by virtue of owning 70% of the issued share capital of Merryland Holdings[106] - Ms. So Kiu Wah, as the spouse of Dr. Lam Hiu Lo, is deemed to have an interest in the shares in which Dr. Lam Hiu Lo is deemed to have an interest[106] Directors' Interests in Transactions, Arrangements or Contracts This section states that, apart from related party transactions disclosed in Note 17 to the condensed consolidated interim financial statements, no directors or their related entities had significant interests in material transactions, arrangements, or contracts with the Company or its subsidiaries during H1 2025 - Apart from the disclosed related party transactions, no directors had significant interests in material transactions, arrangements, or contracts with the Group during the period[107] Purchase, Sale or Redemption of the Company's Listed Securities This section states that neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during H1 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during H1 2025[108] Directors' Interests in Competing Businesses This section states that, during H1 2025, no directors were deemed to have interests in businesses directly or indirectly competing or potentially competing with the Group's business, except for those where directors were appointed to represent the Company's and/or Group's interests - No directors had interests in businesses directly or indirectly competing or potentially competing with the Group's business during the period[109] Litigation This section reiterates that, apart from the litigation disclosed in Note 20 to the condensed consolidated interim financial statements, the Group has no other material litigation - Apart from those disclosed in Note 20 to the condensed consolidated interim financial statements, the Group has no other material litigation[110] Commitments and Contingent Liabilities This section reiterates that, apart from the commitments disclosed in Note 19 to the condensed consolidated interim financial statements, the Group has no other material commitments or contingent liabilities - Apart from those disclosed in Note 19 to the condensed consolidated interim financial statements, the Group has no other material commitments or contingent liabilities[111] Material Investments, Acquisitions and Disposals of Subsidiaries and Associates This section states that the Group did not undertake any material acquisitions or disposals of subsidiaries and associates, nor made any material investments, during H1 2025 - The Group did not undertake any material acquisitions or disposals of subsidiaries and associates, nor made any material investments, during H1 2025[112] Standard Code for Securities Transactions This section states that the Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules for directors' securities transactions, and all directors confirmed compliance during H1 2025 - The Company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as the code of conduct for directors' securities transactions[113] - Following specific enquiries by the Company, all directors confirmed compliance with the standards set out in the Standard Code during H1 2025[113] Corporate Governance This section states that the Company complied with the Corporate Governance Code in Appendix C1 of the Listing Rules during H1 2025, except for one independent non-executive director who did not attend a general meeting due to business arrangements - The Company complied with the Corporate Governance Code as set out in Appendix C1 of the Listing Rules during H1 2025, except for code provision C.1.5[114] - Independent Non-executive Director Mr. Chung Chun Hung did not attend the Company's relevant general meeting in H1 2025 due to business arrangements[114] Audit Committee and Review of Financial Statements This section states that the Group's Audit Committee, comprising three independent non-executive directors, reviewed the H1 2025 unaudited condensed consolidated interim financial statements, discussing accounting principles, risk management, internal controls, and financial reporting matters - The Audit Committee comprises three independent non-executive directors, with Mr. Yu Leung Fai as Chairman[115] - The Audit Committee, together with management, reviewed the Group's adopted accounting principles and practices, and discussed matters concerning audit, risk management, internal controls, and financial reporting, including the H1 2025 unaudited condensed consolidated interim financial statements[115] Acknowledgements This section conveys heartfelt gratitude from Dr. Lam Hiu Lo, Chairman of the Board, on behalf of the Board, to all employees, customers, suppliers, business partners, and shareholders