健康之路(02587) - 2025 - 中期财报

Corporate Information This section provides an overview of the company's governance structure, key personnel, and essential contact details Board of Directors Composition The Board comprises executive, non-executive, and independent non-executive directors, chaired by Mr. Zhang Wanneng; a non-executive director resigned in July 2025 - Executive Directors include Mr. Zhang Wanneng (Chairman and CEO) and Mr. Chen Jing[5] - Non-executive Directors include Mr. Chen Yong (resigned on July 11, 2025) and Mr. Zhang Xiangming[5] - Independent Non-executive Directors include Mr. Xu Jing, Dr. Lu Tao, and Ms. Deng Xiaolan[5] Committees and Key Personnel The company has Audit, Remuneration, and Nomination Committees, all chaired by independent non-executive directors, with changes in joint company secretaries - The Audit Committee is chaired by Mr. Xu Jing, while the Remuneration Committee and Nomination Committee are both chaired by Dr. Lu Tao[5][6] - Mr. Chen Zhoufeng was appointed Joint Company Secretary on March 28, 2025, with Mr. Li Guomin resigning on the same day[6][7] Company Information and Contacts The company disclosed details of its compliance advisor, auditor, legal counsel, registered office, principal business addresses, and main bankers - The compliance advisor is Smart Rich Finance Limited, and the auditor is KPMG[9][10] - The company is registered in the Cayman Islands, with its principal place of business in Hong Kong at 4/F, Hua Yuan Building, 149 Queen's Road Central, and its China headquarters in Fuzhou Software Park[9][10][11] - Principal bankers include China Merchants Bank Fuzhou Branch, Industrial Bank Fuzhou Global Sub-branch, and CMB Wing Lung Bank Limited[12][13] Management Discussion and Analysis This section reviews the company's operational performance, financial results, balance sheet items, liquidity, treasury policies, and future outlook Business Review The company expanded its user and doctor base in H1 2025, with stable enterprise services, but digital marketing and medical support faced challenges - As of June 30, 2025, registered individual users increased to 211.8 million (end of 2024: 205.5 million), registered doctors to 905,000 (end of 2024: 889,000), and connected hospitals to 12,161 (end of 2024: 11,762)[17][19] - Page views for popular science content services decreased from 400 million in H1 2024 to 250 million in H1 2025[18][20] - The number of clients for precision content services increased from 9 pharmaceutical companies in H1 2024 to 16 pharmaceutical companies and 6 other entities in H1 2025[18][20] - The number of clients for RWS support services increased from 30 pharmaceutical companies in H1 2024 to 48 pharmaceutical companies and 6 other entities in H1 2025[18][20] - The number of paying enterprise and institutional clients for digital marketing services decreased from 570 at the end of 2024 to 353 as of June 30, 2025, primarily due to economic downturn[21][23] - Individual clients for the health membership program decreased from 6.5 million in H1 2024 to 5.9 million in H1 2025, and enterprise clients decreased from 164 to 133[22][23] - Online medical consultations decreased from 1.8 million in H1 2024 to 1.4 million in H1 2025[22][23] Financial Review The company achieved a net profit of RMB 7.0 million in H1 2025, turning around from a loss, primarily due to cost control and the impact of redeemable liability changes Revenue Comparison for H1 2025 vs. H1 2024 | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change Rate | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 517,852 | 611,485 | -15.3% | Decrease in content services, value-based medical services, and digital marketing services revenue | | Health and Medical Services | 104,638 | 122,829 | -14.8% | Decrease in pharmaceutical sales and comprehensive health and medical service packages revenue | | Enterprise Services and Digital Marketing Services | 413,059 | 488,539 | -15.5% | Decrease in content services and digital marketing services revenue | | Others | 155 | 117 | +32.5% | - | Cost and Profit Comparison for H1 2025 vs. H1 2024 | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change Rate | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Cost of Sales | 356,118 | 427,824 | -16.8% | Consistent with revenue decrease | | Gross Profit | 161,734 | 183,661 | -11.9% | Decrease in revenue | | Gross Profit Margin | 31.2% | 30.0% | +1.2% | Impacted by business mix, pricing policies, and cost structure | | Other Net Income | 1,161 | 455 | +155.2% | Increase in interest income and government grants, partially offset by exchange losses | | Selling Expenses | 87,249 | 98,576 | -11.6% | Decrease in marketing activities and health membership program promotion expenses | | Administrative Expenses | 26,256 | 29,097 | -9.6% | Decrease in office and third-party service expenses, partially offset by increased staff costs | | Research and Development Costs | 37,386 | 53,968 | -30.7% | Completion of AI disease prediction platform and other products, decrease in technical service fees | | Finance Costs | 1,358 | 2,321 | -39.1% | Repayment of certain bank loans and borrowings | | Change in Fair Value of Redeemable Liabilities | 0 | 62,989 | -100% | Preferential rights terminated due to listing, reclassified to equity | | Profit/(Loss) Before Taxation | 10,498 | (63,150) | N/A | Turnaround to profit | | Income Tax | 3,458 | (5,875) | N/A | Turnaround from loss to profit, reversal of deferred tax assets | | Net Profit/(Loss) | 7,040 | (57,275) | N/A | Turnaround to profit | | Basic Earnings/(Loss) Per Share | 0.01 | (0.08) | N/A | Turnaround to profit | | Diluted Earnings/(Loss) Per Share | 0.01 | (0.08) | N/A | Turnaround to profit | Discussion of Selected Items in the Consolidated Statement of Financial Position Net current assets slightly decreased, but total net assets increased; inventories, receivables, and intangible assets grew, while prepayments and payables decreased Comparison of Selected Balance Sheet Items as of June 30, 2025, vs. December 31, 2024 | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change Rate | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Net Current Assets | 103,508 | 114,400 | -9.5% | Decrease in cash and cash equivalents, prepayments, and other financial assets, partially offset by a decrease in trade and other payables | | Inventories | 9,390 | 7,096 | +32.3% | Unrecognized revenue from content services, capitalization of related contract fulfillment costs | | Trade and Other Receivables | 158,102 | 144,208 | +9.6% | Extension of payment terms for certain customers | | Prepayments | 14,959 | 27,450 | -45.5% | Decrease in prepayments to suppliers after strategic discussions | | Trade and Other Payables | 177,508 | 208,562 | -14.9% | Consistent with the decrease in cost of sales | | Contract Liabilities | 56,002 | 58,015 | -3.5% | Remained relatively stable | | Loans and Borrowings (Current) | 54,416 | 55,502 | -2.0% | Repayment of certain loans and borrowings | | Net Assets | 240,166 | 231,800 | +3.6% | - | | Property, Plant and Equipment | 6,663 | 8,660 | -23.0% | Depreciation | | Intangible Assets | 99,020 | 81,272 | +21.8% | Recognition of R&D achievements as intangible assets | | Goodwill | 8,605 | 8,605 | 0% | Remained stable | - As of June 30, 2025, the company had no significant contingent liabilities[66][72] Liquidity and Financial Resources Cash and cash equivalents decreased, with investing outflows for R&D capitalization and financing outflows for loan repayments; the gearing ratio remained stable Cash Flow Comparison for H1 2025 vs. H1 2024 | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change Rate | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 34,670 | 13,030 | +166.1% | - | | Net Cash Used in Investing Activities | (52,344) | (18,578) | +181.8% | Expenses related to the recognition of R&D achievements as intangible assets | | Net Cash Used in Financing Activities | (11,130) | (13,409) | -17.0% | Repayment of bank loans and payment of listing fees | | Net Decrease in Cash and Cash Equivalents | (28,804) | (18,957) | +52.0% | - | | Cash and Cash Equivalents at June 30 | 231,425 | 149,736 | +54.6% | - | - As of June 30, 2025, total bank loans and borrowings amounted to RMB 54.7 million (end of 2024: RMB 56.4 million), with RMB 54.4 million repayable within one year[79][81] - All loans and borrowings are denominated in RMB, with fixed annual interest rates ranging from 3.35% to 14.65% (June 30, 2024: 3.80% to 11.70%)[79][81] - The gearing ratio remained relatively stable at 57% as of June 30, 2025 (December 31, 2024: 60%)[80][81] Treasury Policies and Foreign Exchange Exposure The company maintains prudent treasury policies, focusing on capital preservation; a net exchange loss was recorded, but no major liquidity issues or hedging occurred - Long-term investment objectives are to invest in or acquire businesses complementary to its operations, while short-term investments focus on highly liquid, low-risk financial instruments[82][86] - A net exchange loss of RMB 1.65 million was recorded during the reporting period (H1 2024: RMB 0.46 million)[83][86] - The company did not hedge foreign currency risks and did not encounter significant liquidity issues due to exchange rate fluctuations[83][86] Employees and Remuneration Policies The company employs 400 staff in China, offering competitive remuneration and training, and maintained good labor relations during the reporting period - As of June 30, 2025, the company had 400 employees, all based in China[84][87] - Remuneration policies include basic salaries and performance-based bonuses, which are regularly reviewed and improved to maintain competitiveness[85][87] - The company provides internal training, including mandatory and recommended courses, to enhance employee skills and knowledge[89][94] - No strikes, labor disputes, or industrial actions with a significant impact on operations occurred during the reporting period[90][95] Outlook The company expects to improve financial performance through monetization of pharmaceutical sales, content, and IT services, and plans to deepen doctor engagement, maintaining cautious optimism - Plans to improve financial performance and profitability through the monetization of pharmaceutical sales, content services, and information technology services[91][96] - Will deepen connections with more doctors and integrate their medical services onto the platform to be in a more favorable position in the pharmaceutical sales business[91][96] - By expanding cooperation with doctors, aims to acquire broader real-world clinical data to provide pharmaceutical companies with drug research insights[92][96] - Despite challenging market conditions, the company remains cautiously optimistic about its business prospects[93][97] Other Information This section covers directors' and substantial shareholders' interests, share schemes, securities transactions, corporate governance, dividends, use of proceeds, and contractual arrangements Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures Directors and the chief executive held long positions in company shares and associated corporations, primarily through controlled entities, as of June 30, 2025 Directors' Long Positions in the Company's Ordinary Shares (as of June 30, 2025) | Director's Name | Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Zhang Wanneng | Interest in controlled corporation | 295,915,335 | 33.71% | | Mr. Chen Yong | Interest in controlled corporation | 91,530,500 | 10.43% | | Mr. Chen Jing | Interest in controlled corporation | 42,774,900 | 4.87% | - Mr. Zhang Wanneng holds shares through Fengji Limited, which is wholly owned by him[109] - Mr. Chen Yong holds shares through Jiaman Group Investment Limited, which is wholly owned by him[109] - Mr. Chen Jing holds approximately 43.06% equity interest in Yuanjing Co., Ltd. and is deemed to be interested in all shares held by it[102][105] Substantial Shareholders' and Other Persons' Interests and Short Positions in the Company's Shares and Underlying Shares Substantial shareholders, excluding directors, held long positions in the company's ordinary shares, including Fengji, Baidu (Hong Kong), Jiaman Group, and Meiyi Limited Substantial Shareholders' Long Positions in the Company's Ordinary Shares (as of June 30, 2025) | Substantial Shareholder Name/Entity | Nature and Capacity of Interest | Number of Shares Held/Interested | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Fengji Limited | Beneficial owner | 295,915,335 | 33.71% | | Baidu (Hong Kong) Limited | Beneficial owner | 106,245,100 | 12.11% | | Jiaman Group Investment Limited | Beneficial owner | 91,530,500 | 10.43% | | Meiyi Limited | Beneficial owner | 81,012,500 | 9.23% | - Baidu (Hong Kong) Limited is a wholly-owned subsidiary of Baidu Holdings Limited[118][119] - Meiyi Limited is wholly owned by Mr. Zhang Wande, the brother of Mr. Zhang Wanneng[118][119] Directors' Rights to Acquire Shares or Debentures No rights to acquire company shares or debentures were granted to or exercised by directors, their spouses, or minor children during the reporting period - During the reporting period, no rights to acquire benefits by acquiring shares or debentures of the company were granted to any director or their respective spouses or minor children, nor were any such rights exercised[112][113] Share Scheme The company has not adopted any share scheme under Chapter 17 of the Listing Rules - The company has not adopted any share scheme under Chapter 17 of the Listing Rules[122][125] Directors' Securities Transactions The company adopted the Model Code for directors' securities transactions, and all directors confirmed compliance during the reporting period - The company has adopted the Model Code set out in Appendix C3 of the Listing Rules as its own code of conduct for directors' securities transactions[123][126] - All directors have confirmed their compliance with the required standards set out in the Model Code during the reporting period[123][126] Changes in Directors' Information Mr. Chen Yong resigned as a non-executive director on July 11, 2025, due to personal matters, confirming no disagreement with the Board - Mr. Chen Yong resigned as a non-executive director, effective July 11, 2025, to focus on family and other personal matters[124][127] - Mr. Chen confirmed that he had no disagreement with the Board and that there were no matters relating to his resignation that needed to be brought to the attention of shareholders and the Stock Exchange[124][127] Audit Committee The Audit Committee, chaired by Mr. Xu Jing, reviewed the group's accounting principles, internal controls, and interim financial statements - The Audit Committee comprises Mr. Xu Jing (Chairman), Ms. Deng Xiaolan, and Mr. Zhang Xiangming[128][133] - The Committee has reviewed and discussed the group's accounting principles, practices, audit, internal controls, and financial reporting matters, as well as the unaudited consolidated interim financial statements for the six months ended June 30, 2025[129][133] Compliance with the Code on Corporate Governance Practices The company generally complies with the Corporate Governance Code, but the Chairman and CEO roles are combined, an arrangement the Board deems beneficial - The company's corporate governance practices have complied with the Corporate Governance Code, but there is a deviation from Code Provision C.2.1 (roles of Chairman and Chief Executive should be separate)[130][131][134][135] - Mr. Zhang Wanneng serves concurrently as Chairman and Chief Executive Officer, an arrangement the Board believes benefits group management, with senior management and the Board effectively monitoring and balancing his powers[132][135][136][137] - The Board will continue to review and consider separating the roles of Chairman and Chief Executive Officer at appropriate and suitable times[138][141] Interim Dividend The Board does not recommend declaring an interim dividend for the six months ended June 30, 2025 - The Board does not recommend declaring an interim dividend for the six months ended June 30, 2025 (2024: nil)[139][142] Purchase, Sale or Redemption of the Company's Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities during the reporting period - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[143] Use of Proceeds Net proceeds from the December 2024 global offering (HKD 109.4 million) were utilized consistent with the prospectus for business expansion, R&D, and working capital - The company's shares were listed on the Main Board of the Stock Exchange of Hong Kong on December 30, 2024[144][146] - The total net proceeds from the global offering amounted to approximately HKD 109.4 million (approximately RMB 101.25 million)[144][146] Intended Use of Net Proceeds and Utilization as of June 30, 2025 | Intended Use | Allocation of Net Proceeds (HKD million) | Net Proceeds Utilized as of June 30, 2025 (HKD million) | Unutilized Net Proceeds as of June 30, 2025 (HKD million) | Expected Timeline for Utilization of Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | Business Expansion | 66.19 | 0.36 | 65.83 | Before December 2027 | | Strategic Investments or Acquisitions | 22.97 | 0 | 22.97 | Before December 2027 | | Research and Development | 15.86 | 0.19 | 15.67 | Before December 2027 | | Working Capital and General Corporate Purposes | 4.38 | 0 | 4.38 | Before December 2027 | | Total | 109.4 | 0.55 | 108.85 | | Significant Investments, Material Acquisitions and Disposals, and Future Plans for Material Investments or Capital Assets The company held no significant investments, nor undertook material acquisitions or disposals; no other major investment plans were authorized as of the report date - The company held no significant investments during the reporting period, nor did it undertake any material acquisitions or disposals concerning subsidiaries, associates, and joint ventures, or any pledging of group assets during the period[148][151] - As of the date of this report, there were no other significant investment or capital asset acquisition plans authorized by the Board[148][151] Compliance with the Contractual Arrangements The Group complied with contractual arrangements and the Foreign Investment Law, with no material changes during the reporting period - During the reporting period, the Group complied with the contractual arrangements disclosed in the "Contractual Arrangements" section of the prospectus and the Foreign Investment Law of the People's Republic of China and its accompanying explanations[149][152] - The Group will continue to monitor the latest developments in the Foreign Investment Law and its accompanying explanations and promptly update on the latest regulatory developments[149][152] - There were no material changes concerning the structured contracts and contractual arrangements during the reporting period[150][153] Review Report This section presents KPMG's review report on the interim financial information, outlining the scope and conclusion of their limited assurance engagement Introduction and Scope of Review KPMG reviewed the interim financial report for H1 2025 per HKSRS 2410; the scope is less than an audit, thus no audit opinion is expressed - KPMG has reviewed the interim financial report for the six months ended June 30, 2025, which complies with International Accounting Standard 34 "Interim Financial Reporting"[155][158] - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, with a scope substantially less than an audit, thus no audit opinion is expressed[157][160] Conclusion The review found no matters indicating the interim financial report as of June 30, 2025, was not prepared in all material respects per IAS 34 - Based on the review, nothing has come to our attention that causes us to believe the interim financial report as of June 30, 2025, is not prepared in all material respects in accordance with International Accounting Standard 34 "Interim Financial Reporting"[161][162] Consolidated Statement of Profit or Loss The company achieved a net profit of RMB 7.04 million in H1 2025, turning around from a loss, primarily due to cost control and the impact of redeemable liability changes Key Data from Consolidated Statement of Profit or Loss (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 517,852 | 611,485 | -15.3% | | Cost of Sales | (356,118) | (427,824) | -16.8% | | Gross Profit | 161,734 | 183,661 | -11.9% | | Other Net Income | 1,161 | 455 | +155.2% | | Selling Expenses | (87,249) | (98,576) | -11.6% | | Administrative Expenses | (26,256) | (29,097) | -9.6% | | Research and Development Costs | (37,386) | (53,968) | -30.7% | | Operating Profit | 12,004 | 2,475 | +385.0% | | Finance Costs | (1,358) | (2,321) | -41.5% | | Share of Profit less Loss of Associates | (148) | (315) | -53.0% | | Change in Carrying Value of Redeemable Liabilities | – | (62,989) | -100.0% | | Profit/(Loss) Before Taxation | 10,498 | (63,150) | N/A | | Income Tax | (3,458) | 5,875 | N/A | | Profit/(Loss) for the Period | 7,040 | (57,275) | N/A | | Profit/(Loss) Attributable to Equity Holders of the Company | 7,066 | (55,818) | N/A | | Non-controlling Interests | (26) | (1,457) | -98.2% | | Basic and Diluted Earnings/(Loss) Per Share (RMB) | 0.01 | (0.08) | N/A | Consolidated Statement of Profit or Loss and Other Comprehensive Income Total comprehensive income was RMB 8.378 million in H1 2025, a significant improvement from a loss, due to profit for the period and increased exchange differences Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | | Profit/(Loss) for the Period | 7,040 | (57,275) | N/A | | Exchange Differences on Translation of Financial Statements of Overseas Entities | 1,338 | 470 | +184.7% | | Total Comprehensive Income for the Period | 8,378 | (56,805) | N/A | | Attributable to Equity Holders of the Company | 8,404 | (55,348) | N/A | | Non-controlling Interests | (26) | (1,457) | -98.2% | Consolidated Statement of Financial Position Net assets increased to RMB 240.166 million as of June 30, 2025, driven by intangible asset growth, while net current assets slightly decreased due to reduced cash Key Data from Consolidated Statement of Financial Position (as of June 30) | Indicator | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | | Non-current Assets | | | | | Property, Plant and Equipment | 6,663 | 8,660 | -23.0% | | Intangible Assets | 99,020 | 81,272 | +21.8% | | Goodwill | 8,605 | 8,605 | 0.0% | | Interests in Associates | 3,060 | 3,208 | -4.6% | | Deferred Tax Assets | 22,797 | 20,300 | +12.3% | | Current Assets | | | | | Inventories | 9,390 | 7,096 | +32.3% | | Contract Assets | 62 | 111 | -44.1% | | Other Financial Assets | – | 5,549 | -100.0% | | Trade and Other Receivables | 158,102 | 144,208 | +9.6% | | Prepayments | 14,959 | 27,450 | -45.5% | | Restricted Deposits | 138 | 10,138 | -98.6% | | Cash and Cash Equivalents | 231,425 | 260,229 | -11.1% | | Current Liabilities | | | | | Trade and Other Payables | 177,508 | 208,562 | -14.9% | | Contract Liabilities | 56,002 | 58,015 | -3.5% | | Loans and Borrowings | 54,416 | 55,502 | -2.0% | | Lease Liabilities | 2,415 | 3,267 | -26.1% | | Current Taxation | 20,227 | 15,063 | +34.3% | | Net Current Assets | 103,508 | 114,372 | -9.5% | | Non-current Liabilities | | | | | Loans and Borrowings | 301 | 905 | -66.7% | | Lease Liabilities | 3,186 | 3,724 | -14.5% | | Net Assets | 240,166 | 231,788 | +3.6% | | Total Equity | 240,166 | 231,788 | +3.6% | Consolidated Statement of Changes in Equity Total equity increased to RMB 240.166 million as of June 30, 2025, primarily due to profit for the period and increased exchange reserves, offsetting accumulated losses Key Data from Consolidated Statement of Changes in Equity (for the six months ended June 30) | Indicator | As of January 1, 2025 (RMB thousands) | Changes for the six months ended June 30, 2025 (RMB thousands) | As of June 30, 2025 (RMB thousands) | | :--- | :--- | :--- | :--- | | Share Capital | 96 | – | 96 | | Share Premium | 265,946 | – | 265,946 | | Other Reserves | 2,550,745 | – | 2,550,745 | | Exchange Reserve | 23,803 | 1,338 | 25,141 | | Statutory Reserve | 1,417 | – | 1,417 | | Accumulated Losses | (2,615,242) | 7,066 | (2,608,176) | | Total Attributable to Equity Holders of the Company | 226,765 | 8,404 | 235,169 | | Non-controlling Interests | 5,023 | (26) | 4,997 | | Total Equity | 231,788 | 8,378 | 240,166 | Condensed Consolidated Cash Flow Statement Net cash from operating activities increased, but investing outflows for R&D capitalization grew, leading to a net decrease in cash; financing outflows were for loan repayments Key Data from Condensed Consolidated Cash Flow Statement (for the six months ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change Rate | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 34,670 | 13,030 | +166.1% | | Net Cash Used in Investing Activities | (52,344) | (18,578) | +181.8% | | Net Cash Used in Financing Activities | (11,130) | (13,409) | -17.0% | | Net Decrease in Cash and Cash Equivalents | (28,804) | (18,957) | +52.0% | | Cash and Cash Equivalents at January 1 | 260,229 | 168,693 | +54.3% | | Cash and Cash Equivalents at June 30 | 231,425 | 149,736 | +54.6% | - Net cash outflow from investing activities was primarily attributable to RMB 50.7 million for expenses related to the recognition of R&D achievements as intangible assets[78] - Net cash outflow from financing activities was primarily attributable to the repayment of bank loans of RMB 24.9 million and payment of listing fees of RMB 6.4 million[78] Notes to the Unaudited Interim Financial Report This section details the basis of preparation, changes in accounting policies, revenue and segment reporting, and specific financial statement items for the unaudited interim financial report Basis of Preparation The interim financial report is prepared per HKEX Listing Rules and IAS 34, reviewed by KPMG, and adopts consistent accounting policies with 2024 annual statements - The interim financial report is prepared in accordance with the Listing Rules of the Stock Exchange of Hong Kong and International Accounting Standard 34 "Interim Financial Reporting"[180][184] - The report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[185][189] - Except for changes in accounting policies expected to be reflected in the 2025 annual financial statements, the report adopts the same accounting policies as the 2024 annual financial statements[181][184] Changes in Accounting Policies The Group applied IAS 21 amendments with no significant impact due to no relevant foreign currency transactions, and no new standards not yet effective were applied - The Group has applied the amendments to International Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability," but with no significant impact on this interim report[187][190] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[188][191] Revenue and Segment Reporting The company's main businesses are enterprise and digital marketing services and health and medical services, with most revenue from mainland China; gross profit for both segments decreased - The Group's principal businesses are the provision of enterprise services and digital marketing services, and health and medical services[193][194] Revenue Breakdown by Service Line (for the six months ended June 30) | Service Line | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Enterprise Services and Digital Marketing Services | 413,059 | 488,539 | | Health and Medical Services | 104,638 | 122,829 | | Others | 155 | 117 | | Total | 517,852 | 611,485 | Gross Profit by Reportable Segment (for the six months ended June 30) | Segment | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Enterprise Services and Digital Marketing Services | 133,049 | 148,164 | | Health and Medical Services | 28,559 | 35,401 | | Others | 126 | 96 | | Total | 161,734 | 183,661 | - The vast majority of the Group's revenue is derived from mainland China[200][205] Other Net Income Other net income significantly grew to RMB 1.161 million in H1 2025, driven by higher interest income and government grants, partially offset by net exchange losses Other Net Income Breakdown (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Government Grants | 432 | 316 | | Net Exchange Loss | (1,648) | (458) | | Interest Income | 2,511 | 611 | | Others | (134) | (14) | | Total | 1,161 | 455 | - Government grants are primarily for research and development activities and employee retention[212][214] Profit/(Loss) Before Taxation The company achieved a profit before taxation of RMB 10.498 million in H1 2025, turning around from a loss, with reduced finance costs and increased intangible asset amortization Finance Costs Breakdown (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest on Bank Loans | 1,211 | 2,156 | | Interest on Lease Liabilities | 147 | 165 | | Total | 1,358 | 2,321 | Other Expenses Breakdown (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Depreciation – Owned Property, Plant and Equipment | 430 | 410 | | Depreciation – Right-of-use Assets | 1,931 | 2,111 | | Amortization of Intangible Assets | 32,950 | 12,569 | | Impairment Loss (Reversal)/Recognition on Trade and Other Receivables and Contract Assets | (308) | 132 | Income Tax Income tax expense was RMB 3.458 million in H1 2025, a shift from a credit, due to profit turnaround and deferred tax asset reversal; preferential rates apply to some subsidiaries Taxation in Consolidated Statement of Profit or Loss (for the six months ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Tax – Provision for the Period | 5,955 | 1,243 | | Deferred Tax – Origination and Reversal of Temporary Differences | (2,497) | (7,118) | | Total | 3,458 | (5,875) | - Mainland China subsidiaries are subject to a 25% corporate income tax rate, but Fujian Health Road Information Technology Co., Ltd., as a high-tech enterprise, enjoys a preferential tax rate of 15%[228] - Some subsidiaries, as "small low-profit enterprises," enjoy a lower corporate income tax rate of 20%[226][227] - Qualified R&D costs are eligible for an additional 100% bonus deduction for income tax purposes[225][227] Earnings/(Loss) Per Share Basic and diluted earnings per share were RMB 0.01 in H1 2025, a turnaround from a loss, with no potential dilutive ordinary shares - For the six months ended June 30, 2025, basic earnings per share were RMB 0.01 (H1 2024: loss of RMB 0.08)[229][232] - For the six months ended June 30, 2025, there were no potential dilutive ordinary shares, thus diluted earnings per share were the same as basic earnings per share[230][233] Intangible Assets The Group's intangible assets are primarily software and datasets; acquisitions in H1 2025 cost RMB 50.698 million, a significant increase from the prior year - The Group's intangible assets primarily refer to software and datasets[231][234] - For the six months ended June 30, 2025, the Group acquired intangible asset items at a cost of RMB 50,698,000 (H1 2024: RMB 18,404,000)[231][234] Trade and Other Receivables Total trade and other receivables increased to RMB 158.102 million due to extended payment terms, with a shift in aging towards longer periods Aging Analysis of Trade and Other Receivables (as of June 30) | Item | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 month | 85,642 | 105,781 | | Over 1 month but within 1 year | 38,691 | 11,482 | | Over 1 year but within 2 years | 804 | 2,261 | | Over 2 years but within 3 years | 420 | 247 | | Trade Receivables, net of loss allowance | 125,557 | 119,771 | | Amounts Due from Related Parties | 1,052 | 1,000 | | Deposits | 3,457 | 3,997 | | Other Receivables | 28,036 | 19,440 | | Total | 158,102 | 144,208 | Cash and Cash Equivalents Cash and cash equivalents decreased to RMB 231.425 million as of June 30, 2025, with a significant increase in the proportion held in mainland China Cash and Cash Equivalents (as of June 30) | Item | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bank and Cash on Hand | 231,425 | 260,229 | - As of the end of the reporting period, cash and cash equivalents located in mainland China amounted to RMB 175.452 million (December 31, 2024: RMB 102.382 million)[238][239] Trade and Other Payables Total trade and other payables decreased to RMB 177.508 million, consistent with lower cost of sales, with reductions across various payable categories Aging Analysis of Trade and Other Payables (as of June 30) | Item | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year | 112,920 | 121,545 | | Over 1 year but within 2 years | 315 | 109 | | Over 2 years but within 3 years | 64 | 103 | | Over 3 years | 159 | 144 | | Accounts Payable | 113,458 | 121,901 | | Amounts Due to Shareholders | 4,659 | 4,714 | | Salaries and Bonuses Payable | 20,045 | 25,006 | | Advances from Customers | 13,424 | 15,751 | | Other Payables | 25,922 | 41,190 | | Total | 177,508 | 208,562 | Contract Liabilities Contract liabilities remained stable at RMB 56.002 million as of June 30, 2025, primarily representing deposits received for future services - Contract liabilities refer to deposits received by the Group before providing related services, primarily including health and medical services, and digital marketing and enterprise services[242][243] Contract Liabilities (as of June 30) | Item | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Contract Liabilities | 56,002 | 58,015 | Loans and Borrowings Total bank loans and borrowings decreased to RMB 54.717 million, mostly current and guaranteed by shareholders or subsidiary directors Loans and Borrowings Breakdown (as of June 30) | Item | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Bank Loans – Secured | 54,416 | 55,502 | | Non-current Bank Loans – Secured | 301 | 905 | | Total | 54,717 | 56,407 | Bank Loan Repayment Schedule (as of June 30) | Repayment Period | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 year or on demand | 54,416 | 55,502 | | After 1 year but within 2 years | 301 | 905 | | Total | 54,717 | 56,407 | - As of June 30, 2025, bank loans of RMB 52.215 million were guaranteed by a shareholder of the company, with the remaining RMB 2.502 million guaranteed by directors of subsidiaries[246] Deferred Tax Deferred tax assets increased to RMB 22.797 million, influenced by unused tax losses and intangible asset amortization; certain deferred tax assets and liabilities were not recognized Components and Movements of Deferred Tax Assets (as of June 30) | Item | As of January 1, 2025 (RMB thousands) | (Charged to)/Credited to Profit or Loss (RMB thousands) | As of June 30, 2025 (RMB thousands) | | :--- | :--- | :--- | :--- | | Credit Loss Provision | 444 | (235) | 209 | | Unused Tax Losses | 726 | 4,398 | 5,124 | | Deferred Income | 9,524 | (6,263) | 3,261 | | Promotion and Advertising Expenses | 3,100 | 1,522 | 4,622 | | Amortization of Intangible Assets | 6,430 | 3,082 | 9,512 | | Others | 76 | (7) | 69 | | Total | 20,300 | 2,497 | 22,797 | - The Group did not recognize deferred tax assets for accumulated tax losses of RMB 6.985 million, as future taxable profits are unlikely to be available[252][255] - No deferred tax liability was recognized for withholding tax on undistributed profits of RMB 23.495 million from mainland China subsidiaries, as the company controls the dividend policy and no future distribution is expected[253][256] Capital, Reserves and Dividends The directors do not recommend paying an interim dividend for the interim period ended June 30, 2025 - The directors do not recommend paying an interim dividend for the interim period (for the six months ended June 30, 2024: nil)[254][257] Material Related Party Transactions The company engaged in service and purchase transactions with Baidu Group and had balances with an associate; all transactions were unsecured, interest-free, and repayable on demand Material Related Party Transactions (for the six months ended June 30) | Transaction Type | Related Party | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | | Provision of Services to | Baidu Group | 3,489 | 7,963 | | Purchase of Goods and Services from | Baidu Group | 106 | 146 | | Prepayment to an Associate | Xiamen Zhongjian Xinlian | 850 | – | | Recovery from an Associate | Xiamen Zhongjian Xinlian | 850 | – | Material Balances with Related Parties (as of June 30) | Item | Related Party | 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | | Trade Receivables from Related Parties | Baidu Group | 1,295 | 1,186 | | Amounts Due from Related Parties | Xiamen Zhongjian Xinlian | 850 | 850 | | Amounts Due from Related Parties | Baidu Group | 50 | 50 | | Amounts Due to Shareholders | Mr. Zhang Wanneng | 674 | 682 | | Amounts Due to Shareholders | Fengji Limited | 3,985 | 4,032 | - All related party balances are unsecured, interest-free, and repayable on demand[266] - Shareholders provided guarantees for bank loans, with details disclosed in Note 13[267][268]