百福控股(01488) - 2025 - 中期财报

Corporate Information Board of Directors and Committees The company's Board of Directors comprises executive directors Zhao Linghuan (Chairman), Wang Xiaolong, Jing Shen, and independent non-executive directors Leung Kwai Ki, Lo Wai Yan, and Zhuo Ping, with audit, remuneration, and nomination committees ensuring effective corporate governance - The Chairman of the Board is Mr. Zhao Linghuan, with executive directors including Mr. Wang Xiaolong and Mr. Jing Shen[6][7] - Independent non-executive directors include Mr. Leung Kwai Ki (also Chairman of the Audit and Remuneration Committees), Mr. Lo Wai Yan, and Ms. Zhuo Ping[6][7] Company Details and Advisors The company is registered in the Cayman Islands with its principal place of business in Central, Hong Kong, banking with Citibank and China Merchants Bank, audited by PwC, and listed under stock code 1488 - The company's registered office is in the Cayman Islands, with its principal place of business located at Two International Finance Centre, Central, Hong Kong[7][12] - Principal bankers include Citibank (Hong Kong) Limited and China Merchants Bank Co., Ltd. in Hong Kong, and Industrial and Commercial Bank of China and China Merchants Bank Co., Ltd. in mainland China[9][10][12] - The auditor is PricewaterhouseCoopers, and the stock code is 1488[11][12] Management Discussion and Analysis Performance Review In the first half of 2025, the Group's total system sales remained stable, but system sales and financial statement revenue for Group-branded directly operated and franchised restaurants declined due to industry slowdown, increased competition, and weak consumption, prompting brands to adjust strategies Group System Sales and Revenue Overview for H1 2025 | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | Remarks | | :--- | :--- | :--- | :--- | :--- | | Total system sales of the Group and associates | 1,716 | 1,715 | Stable | Includes sales from all directly operated and franchised restaurants | | Group-branded system sales | 274 | 325 | -13.6% | Primarily due to intense market competition | | Group financial statement revenue | 190 | 244 | -22.0% | Primarily due to intense market competition | - As of June 30, 2025, the total number of stores across all brands under the Group and its associates was 1,131, largely consistent with the same period in 2024[14][18] - The overall growth of China's catering industry has slowed, market consolidation has intensified, consumer demand is more focused on price sensitivity and differentiated products, and price wars on food delivery platforms have increased pressure on corporate profitability[15][18] - HooHoo Valley Chinese fast food leverages food delivery platform traffic, strengthens its freshly-cooked advantage, and launches new products to counter market competition; Xinladao Fish Hotpot responds to competition by piloting new models, upgrading products, expanding with light assets, and enhancing brand image[16][17][19] - Associate brand 'Meet Noodles' enhances competitiveness through price advantage, product variety, and multi-period operations, also expanding into the Hong Kong market; 'Baozaihuang' has over 200 stores nationwide, innovating with a 'stove-around' model to enhance dining experience[21][24] - The Group continues to leverage the 'Co-creation Camp' platform to integrate ecosystem and industry resources, aiming to broaden revenue streams, strengthen industry cooperation, and drive innovative development[22][24] Revenue The Group's revenue for the first half of 2025 decreased by 22.0% year-on-year to RMB 190.3 million, primarily due to lower restaurant operations and food delivery revenue, while sales of food ingredients saw a slight increase Group Revenue Composition and YoY Change | Revenue Source | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Restaurant operations revenue | 71.7 | 116.2 | -38.3% | | Food delivery business revenue | 73.6 | 84.9 | -13.3% | | Sales of food ingredients revenue | 45.0 | 42.9 | +4.9% | | Total Revenue | 190.3 | 244.0 | -22.0% | - The decrease in restaurant operations revenue is primarily attributable to intensified market competition[23][25] - The decline in food delivery business revenue is mainly due to a reduction in the number of stores[23][25] Cost and Expense Analysis In the first half of 2025, several of the Group's costs and expenses decreased in absolute terms, but their percentage of revenue increased due to a larger revenue decline, indicating pressure on profitability, with employee benefit expenses and property rentals significantly down, while raw material costs as a percentage of revenue rose Changes in Key Costs and Expenses | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | % of Revenue (2025 vs 2024) | | :--- | :--- | :--- | :--- | :--- | | Raw materials consumed and changes in inventories of finished goods | 83.5 | 99.8 | -16.3% | 43.9% vs 40.9% | | Online platform service fees and delivery fees | 13.4 | 16.1 | -16.8% | - | | Employee benefit expenses | 55.1 | 76.2 | -27.7% | 29.0% vs 31.2% | | Depreciation of right-of-use assets | 24.8 | 30.4 | -18.4% | 13.0% vs 12.5% | | Depreciation and amortisation of other assets | 6.7 | 8.9 | -24.7% | 3.5% vs 3.6% | | Property rentals and other related expenses | 4.6 | 8.2 | -43.9% | 2.4% vs 3.4% | | Other expenses | 18.5 | 22.5 | -17.8% | 9.7% vs 9.2% | - Raw material costs as a percentage of revenue increased from 40.9% in H1 2024 to 43.9% in H1 2025, primarily due to reduced revenue[26][31] - Employee benefit expenses decreased by 27.7%, mainly due to fewer directly operated stores, resulting in reduced employee working hours and cost control[28][33] - Property rentals and other related expenses significantly decreased by 43.9%, primarily due to the closure of some stores and relocation to lower-rent premises[36][42] Profitability and Loss In the first half of 2025, the Group's loss for the period narrowed to RMB 36.2 million, primarily benefiting from reduced operating losses and improved profitability of associates Changes in Key Profitability Indicators | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Share of profit/(loss) of associates | 5.9 (Profit) | (5.8) (Loss) | Turned profitable | | Net finance costs | 24.3 | 23.9 | +1.7% | | Income tax expense | 0.6 | 0.5 | +20.0% | | Loss for the period | (36.2) | (46.6) | Loss narrowed by 22.3% | - Associates turned from a loss of RMB 5.8 million in H1 2024 to a profit of RMB 5.9 million in H1 2025, primarily due to contributions from high-performing brands[38][44] - Net finance costs slightly increased, mainly due to higher interest on convertible bonds[39][45] Non-GAAP Financial Measure Excluding interest on convertible bonds, the adjusted loss for the first half of 2025 narrowed to RMB 15.4 million, compared to RMB 26.7 million in the same period of 2024 Reconciliation of Loss for the Period to Adjusted Loss | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the period | (36,167) | (46,569) | | Interest on convertible bonds | 20,748 | 19,869 | | Adjusted loss for the period | (15,419) | (26,700) | - Interest on convertible bonds is considered a non-operating item and does not reflect the operating results of the Group's principal business[49][54] Balance Sheet Highlights As of June 30, 2025, the Group's right-of-use assets, inventories, trade and other receivables, trade and other payables, and lease liabilities all decreased, while total borrowings and convertible bonds increased Changes in Key Assets and Liabilities | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Right-of-use assets | 69.3 | 95.3 | -27.2% | | Inventories | 18.0 | 23.3 | -22.8% | | Trade and other receivables | 60.7 | 62.3 | -2.6% | | Trade and other payables | 114.6 | 116.3 | -1.5% | | Borrowings | 37.8 | 20.9 | +80.9% | | Convertible bonds and related interest | 658.5 | 647.8 | +1.6% | | Lease liabilities | 80.0 | 103.8 | -22.9% | - Inventory turnover days slightly increased from 43 days in 2024 to 45 days in H1 2025, primarily due to reduced revenue[56][62] - Lease liabilities decreased mainly due to rental payments for existing leases and the closure of some stores in H1 2025[61][67] - The total amount of convertible bonds and related interest increased, mainly due to interest accrued during the reporting period and the impact of exchange rate fluctuations[60][66] Future Outlook and Strategy Despite intense competition in the catering industry, the Group remains confident in its long-term growth potential and will continue to implement strategic deployments, including enhancing brand enterprise value, optimizing directly operated businesses, leveraging the capitalization process of quality brands, and exploring diversified investment empowerment models - The Group will contribute to its profit by enhancing brand enterprise value and optimizing the performance of its directly operated businesses[68][71][74] - The Group plans to leverage the capitalization process of quality brands to achieve value enhancement and cash inflow[68][71][74] - The Group will explore diversified investment empowerment models, including store investments, to expand business growth points[68][71][74] - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[68][71] Liquidity, Financial Resources and Capital Structure As of June 30, 2025, the Group's total deficit attributable to owners expanded, and current liabilities exceeded current assets, but with internal cash flow, borrowings, convertible bond financing, and the extension of convertible bond maturity, the Board believes the Group has sufficient funds to meet its debt obligations and capital expenditures for the next 12 months Liquidity and Capital Structure Overview | Indicator | June 30, 2025 (RMB million) | Dec 31, 2024 (RMB million) | | :--- | :--- | :--- | | Total deficit attributable to owners | 250.2 | 220.2 | | Current assets | 162.2 | 152.7 | | Current liabilities | 911.7 | 897.7 | | Current ratio | 0.18 | 0.17 | | Outstanding borrowings | 37.8 | 20.9 | | Cash and cash equivalents | 24.3 | 21.3 | | Net cash to equity ratio | 0.054 | -0.002 | - The Group's capital structure comprises debt (convertible bonds, lease liabilities, and borrowings) and equity attributable to equity holders of the Company (share capital and reserves)[78][82] - The maturity date of the convertible bonds has been extended by 25 months to December 23, 2027, with all accrued interest payment dates similarly extended[77][81] Capital Commitments and Significant Investments As of June 30, 2025, the Group had no significant capital commitments but held two material investments, "Meet Noodles" and "Tianshuilai," each exceeding 5% of total Group assets by book value, and is committed to supporting associate development through platform synergies - As of June 30, 2025, the Group had no contracted capital expenditure for property, plant and equipment not provided for in the condensed consolidated interim financial information[79][83] Overview of Significant Investments (as of June 30, 2025) | Investee | Equity Interest | Book Value (RMB million) (Equity Method) | % of Group's Total Assets | | :--- | :--- | :--- | :--- | | Meet Noodles | 17.16% | 61.1 | 7.9% | | Tianshuilai | 25.03% | 52.4 | 6.8% | - 'Meet Noodles' is a leading modern Chinese noodle restaurant operator, with its store network expanding from 170 at the end of 2022 to 360 at the end of 2024[86][89] - 'Tianshuilai' operates the 'Baozaihuang' brand, with over 200 stores nationwide, primarily directly operated[87][89] - The Group has established a multi-brand investment matrix across regions, industries, and diverse business formats, implementing internal controls to effectively monitor investment projects[88][89] Other Financial and Operational Aspects During the reporting period, the Group had no significant M&A or disposal activities, nor clear future major investment plans, with no pledged assets or material contingent liabilities, while the gearing ratio increased to 159%, and employee numbers decreased, but good employee relations, training, and competitive compensation were maintained - For the six months ended June 30, 2025, the Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures[91][97] - As of the reporting date, the Group currently has no definite plans for significant investments and capital assets[92][98] - As of June 30, 2025, the Group had no pledged assets or material contingent liabilities[93][94][99][100] Gearing Ratio | Indicator | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Gearing ratio | 159% | 152% | - The Group's business is primarily conducted in HKD and RMB, exposing it to foreign exchange risk, but no forward contracts were entered into for hedging during the reporting period[96][102] - As of June 30, 2025, the Group had approximately 1,303 employees, a decrease from 1,582 as of December 31, 2024[103][106] - No significant events occurred after the reporting period, other than the extension of convertible bond maturity and the disposal of 'Meet Noodles' equity[104][107] Shareholder and Governance Information The report discloses the shareholdings and long positions of company directors and major shareholders, noting that the employee share option scheme and share award scheme have expired with no new grants in the first half of 2025, and the company complies with corporate governance codes and director securities dealing standards, with the audit committee having reviewed the interim report Directors' and Chief Executive's Long Positions in Shares and Underlying Shares of the Company (as of June 30, 2025) | Name | Capacity | Number of Shares (including issued shares and underlying shares) | Approximate % of the Company's Interest | | :--- | :--- | :--- | :--- | | Mr. Zhao Linghuan | Interest in controlled corporation | 1,701,520,440 (L) | 107.78% | | Mr. Wang Xiaolong | Beneficial owner | 40,255,932 (L) | 2.55% | | Mr. Jing Shen | Beneficial owner | 14,207,976 (L) | 0.90% | - As of June 30, 2025, Sonic Tycoon Limited held 1,183,998,000 shares and beneficially owned convertible bonds with a principal amount of HKD 610,676,480, convertible into 517,522,440 shares[112][149] - The employee share option scheme and share award scheme have expired, with no new options or award shares granted during the six months ended June 30, 2025[115][118][123][124][138][139][140][142] - The Company has complied with the provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules, and the Directors have confirmed compliance with the Model Code for Securities Transactions by Directors[151][152][155][156] - The Company's Audit Committee has reviewed the unaudited condensed consolidated interim financial information and the interim report for the six months ended June 30, 2025[153][157] Convertible Bonds Details The company signed an amendment deed with investors to extend the maturity date of convertible bonds totaling HKD 1,500,000,000 by 25 months to December 23, 2027, with all accrued interest payment dates similarly extended, an arrangement approved by shareholders and the Stock Exchange - The maturity date of the convertible bonds has been extended from November 23, 2025, to December 23, 2027, with all accrued interest payment dates similarly extended[159][162] - As of June 30, 2025, the outstanding principal of the convertible bonds was HKD 610,676,480, convertible into 517,522,440 shares at an initial conversion price of HKD 1.18 per share[161][163] Changes in Company Share Capital Structure (Assuming Full Conversion of Convertible Bonds) | Shareholder | June 30, 2025 (Number of Shares) | June 30, 2025 (%) | After Full Conversion (Number of Shares) | After Full Conversion (Estimated %) | | :--- | :--- | :--- | :--- | :--- | | Investor | 1,183,998,000 | 75.00 | 1,701,520,440 | 81.17 | | Public | 394,666,000 | 25.00 | 394,666,000 | 18.83 | | Total | 1,578,664,000 | 100.00% | 2,096,186,440 | 100.00% | - No potentially dilutive shares were included in the calculation of diluted loss per share for H1 2025, as they had an anti-dilutive effect[167] Interim Condensed Consolidated Statement of Comprehensive Income Key Financial Performance Indicators For the six months ended June 30, 2025, the Group's revenue decreased by 22.0% year-on-year to RMB 190.3 million, with loss for the period narrowing to RMB 36.2 million, primarily due to reduced operating losses and profit contributions from associates, and basic and diluted loss per share both at RMB 2.08 cents Key Data from the Consolidated Statement of Comprehensive Income for H1 2025 | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 190,271 | 243,952 | | Other income | 5,513 | 10,290 | | Raw materials consumed and changes in inventories of finished goods | (83,533) | (99,802) | | Employee benefit expenses | (55,144) | (76,163) | | Share of profit/(loss) of associates | 5,914 | (5,793) | | Loss before tax | (35,569) | (46,119) | | Income tax expense | (598) | (450) | | Loss for the period | (36,167) | (46,569) | | Loss per share attributable to equity holders of the Company (Basic) | (2.08) cents | (2.86) cents | | Loss per share attributable to equity holders of the Company (Diluted) | (2.08) cents | (2.86) cents | - Other comprehensive income for the period was RMB 6,153 thousand, primarily from exchange differences arising on translation of overseas operations[174] Interim Condensed Consolidated Balance Sheet Key Financial Position Indicators As of June 30, 2025, the Group's total assets were RMB 773.0 million, total liabilities were RMB 1,023.2 million, resulting in a total deficit of RMB 250.2 million, with current liabilities significantly exceeding current assets, mainly due to convertible bonds Key Data from the Consolidated Balance Sheet as of June 30, 2025 | Indicator | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets | 610,750 | 648,936 | | Property, plant and equipment | 38,516 | 44,353 | | Right-of-use assets | 69,323 | 95,303 | | Investments in associates | 151,300 | 153,759 | | Current assets | 162,223 | 152,746 | | Inventories | 18,001 | 23,335 | | Trade and other receivables | 55,919 | 53,209 | | Cash and cash equivalents | 24,346 | 21,325 | | Total assets | 772,973 | 801,682 | | Current liabilities | 911,689 | 897,680 | | Trade and other payables | 114,603 | 116,282 | | Lease liabilities (current portion) | 35,391 | 46,473 | | Borrowings | 37,839 | 20,860 | | Convertible bonds | 658,482 | 647,780 | | Non-current liabilities | 111,475 | 124,179 | | Lease liabilities (non-current portion) | 44,640 | 57,344 | | Total liabilities | 1,023,164 | 1,021,859 | | Total deficit | (250,191) | (220,177) | - As of June 30, 2025, the Group's current liabilities exceeded current assets by RMB 749,466 thousand, primarily due to convertible bonds being classified as current liabilities[178][192] Interim Condensed Consolidated Statement of Changes in Equity Equity Movements For the six months ended June 30, 2025, the deficit attributable to equity holders of the Company increased from RMB 249.6 million at the beginning of the period to RMB 276.3 million, mainly due to the loss for the period, partially offset by an increase in exchange reserves Key Data from the Consolidated Statement of Changes in Equity for H1 2025 | Indicator | Jan 1, 2025 (RMB thousand) | June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | | Share capital | 133,023 | 133,023 | | Share premium | 693,388 | 693,388 | | Reserves | (11,664) | (5,511) | | Accumulated losses | (1,257,984) | (1,290,843) | | Deficit attributable to equity holders of the Company | (249,626) | (276,332) | | Non-controlling interests | 29,449 | 26,141 | | Total deficit | (220,177) | (250,191) | - Loss for the period attributable to equity holders of the Company was RMB 32,859 thousand[180] - Other comprehensive income for the period, primarily from exchange differences, was RMB 6,153 thousand[180] Interim Condensed Consolidated Statement of Cash Flow Cash Flow Activities For the six months ended June 30, 2025, the Group generated net cash of RMB 16.6 million from operating activities, had net cash outflows of RMB 6.1 million from investing activities and RMB 7.5 million from financing activities, resulting in a net increase of RMB 3.0 million in cash and cash equivalents Key Data from the Consolidated Statement of Cash Flow for H1 2025 | Cash Flow Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 16,618 | 14,641 | | Net cash (used in)/generated from investing activities | (6,120) | 6,059 | | Net cash used in financing activities | (7,469) | (23,754) | | Net increase/(decrease) in cash and cash equivalents | 3,029 | (3,054) | | Cash and cash equivalents at end of period | 24,346 | 32,602 | - Cash outflows from investing activities primarily included additions to property, plant and equipment, purchase of intangible assets, and purchase of financial assets measured at fair value[182] - Cash outflows from financing activities primarily included repayment of borrowings and payment of lease liabilities, partially offset by loans from related parties and proceeds from borrowings[183] Notes to the Condensed Consolidated Interim Financial Information General Information Bai Fu Holdings Limited and its subsidiaries primarily engage in chain restaurant operations, with the company registered in the Cayman Islands and its ultimate controlling shareholder being Mr. Zhao Linghuan, and the financial information presented in RMB and unaudited - The Group is principally engaged in chain restaurant operations[184] - The Company's ultimate controlling shareholder is Mr. Zhao Linghuan, who is also the Chairman of the Company[185][188] - The condensed consolidated interim financial information is presented in RMB and is unaudited[186][189][190] Basis of Preparation and Going Concern This financial information is prepared in accordance with HKAS 34 and presented on a going concern basis; despite current liabilities exceeding current assets, the Board believes the Group has sufficient funds for the next 12 months, considering the extended convertible bond maturity and future cash flows from operations and investing activities - This condensed consolidated interim financial information has been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of Appendix D2 to the Listing Rules[187][191] - As of June 30, 2025, the Group's current liabilities exceeded its current assets by RMB 749,466 thousand, including convertible bonds with a carrying amount of RMB 658,482 thousand[192][196] - The maturity date of the convertible bonds has been extended by 25 months to December 23, 2027, with this extension arrangement effective from July 8, 2025[193][194][196] - The Directors believe that, based on the extension arrangement and the Group's ability to generate net cash inflows from future operating and investing activities, the Group has sufficient funds to meet its debt obligations and capital expenditure requirements for the next 12 months, thus the financial information is prepared on a going concern basis[195][197] Principal Accounting Policies This financial information is prepared on a historical cost basis, except for financial assets measured at fair value, and the Group has adopted HKAS 21 (amended) while disclosing new and amended standards not yet adopted, which are expected to have a general impact on future financial statement presentation and disclosures - This condensed consolidated interim financial information has been prepared on the historical cost convention, except for financial assets measured at fair value through profit or loss, which are measured at fair value[198][202] - The Group has first applied HKAS 21 (amendment) 'Lack of Exchangeability' from January 1, 2025, with no significant impact expected[199][200][202] - New and amended standards not yet adopted include HKFRS 9, HKFRS 7 amendments, HKFRS 18, and HKFRS 19, with HKFRS 18 expected to have a general impact on the presentation and disclosures of the Group's financial statements[201][204][205][210] Financial Risk Management The Group faces market risks (including currency and cash flow interest rate risks), credit risk, and liquidity risk, and as of June 30, 2025, its financial assets measured at fair value primarily consist of unlisted wealth management products valued using the discounted cash flow method - The Group's operations are exposed to market risk (including currency risk and cash flow interest rate risk), credit risk, and liquidity risk[208][212] - There were no changes in risk management policies during the reporting period[209][213] Assets Measured at Fair Value (as of June 30, 2025) | Asset Category | Level 1 (RMB thousand) | Level 2 (RMB thousand) | Level 3 (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Investments in unlisted wealth management products | — | — | 28,545 | 28,545 | - For unlisted wealth management products, valuation is performed using the discounted cash flow method, with key assumptions including expected return rates and discount rates[226][227] Revenue and Segment Information The Group's chief operating decision-maker reviews the Group as a whole, thus no operating segment information is presented, with revenue primarily from restaurant operations, food delivery, and sales of food ingredients, mainly in China, and no single external customer accounting for over 10% of revenue - The Group's chief operating decision-maker reviews the Group as a whole, and thus no operating segment information is presented[229][230][232] Revenue Breakdown from Contracts with Customers | Revenue Source | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Restaurant operations | 71,696 | 116,163 | | Food delivery business | 73,567 | 84,865 | | Sales of food ingredients | 45,008 | 42,924 | | Total | 190,271 | 243,952 | - The Group's principal market is in China, with sales to overseas customers contributing less than 10%, and no non-current assets located outside China[234][236] Other Income In the first half of 2025, the Group's other income was RMB 5.5 million, a 46.4% year-on-year decrease, primarily due to reduced franchise and management service income Composition of Other Income | Revenue Source | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Franchise income | 3,561 | 7,703 | | Government grants | — | 220 | | Income from wealth management product investments | 79 | 169 | | Management service income | 1,066 | 1,733 | | Loan interest income | 162 | 159 | | Others | 396 | 555 | | Total | 5,513 | 10,290 | - Government grants primarily comprise tax refunds and amortisation of deferred government grants, with no unfulfilled conditions[238] - Management service income primarily includes fees charged for providing commercial, management, and administrative support services[238] Other Expenses In the first half of 2025, the Group's other expenses were RMB 18.5 million, a 17.8% year-on-year decrease, primarily due to reduced routine maintenance expenses Composition of Other Expenses | Expense Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Routine maintenance expenses | 4,006 | 7,419 | | Advertising and marketing expenses | 2,387 | 2,952 | | Business development expenses | 2,951 | 3,940 | | Professional service fees | 2,409 | 2,427 | | Auditor's remuneration (audit services) | 900 | 900 | | Other expenses | 5,838 | 4,826 | | Total other expenses | 18,491 | 22,464 | - A significant reduction in routine maintenance expenses was the primary reason for the decrease in other expenses[240] Finance Income and Expenses In the first half of 2025, the Group's net finance costs were RMB 24.3 million, a slight increase from the same period in 2024, primarily influenced by interest on convertible bonds and related party loans Composition of Finance Income and Expenses | Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest income from bank deposits | 25 | 58 | | Interest on convertible bonds | (20,748) | (19,869) | | Interest on lease liabilities | (2,194) | (3,517) | | Interest on bank borrowings | (144) | (149) | | Interest on loans from related parties | (854) | — | | Others | (344) | (468) | | Net finance costs | (24,259) | (23,945) | - Interest on convertible bonds and interest on loans from related parties were the main reasons for the increase in net finance costs[242] Income Tax Expense In the first half of 2025, the Group's income tax expense was RMB 0.6 million, an increase from the same period in 2024, primarily due to withholding income tax on dividends received from associates Composition of Income Tax Expense | Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | — | — | | Withholding income tax on dividends from associates | 379 | — | | China corporate income tax | 42 | 50 | | Deferred tax | 177 | 400 | | Total | 598 | 450 | - Hong Kong profits tax adopts a two-tiered tax rate system, and the corporate income tax rate for PRC subsidiaries is 25%[246][247][250][251] - Dividends received from PRC associates are subject to withholding income tax at a rate of 10%[248][252] Loss for the Period The Group's loss for the first half of 2025 was after deducting total depreciation and amortisation of RMB 31.5 million, and total property rentals and other lease-related expenses of RMB 4.6 million Key Deductions for Loss for the Period | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Depreciation of right-of-use assets | 24,826 | 30,444 | | Depreciation of property, plant and equipment | 6,493 | 8,408 | | Amortisation of intangible assets | 167 | 461 | | Total depreciation and amortisation | 31,486 | 39,313 | | Total property rentals and other lease-related expenses | 4,578 | 8,181 | | Auditor's remuneration (audit services) | 900 | 900 | Loss Per Share For the six months ended June 30, 2025, the Group's basic and diluted loss per share were both RMB 2.08 cents, a narrowing from RMB 2.86 cents in the same period of 2024, with dilutive potential ordinary shares excluded from diluted loss per share calculation due to their anti-dilutive effect Loss Per Share | Indicator | H1 2025 (RMB cents) | H1 2024 (RMB cents) | | :--- | :--- | :--- | | Basic loss per share | (2.08) | (2.86) | | Diluted loss per share | (2.08) | (2.86) | - Basic loss per share is calculated based on the loss for the period attributable to equity holders of the Company of RMB 32,859 thousand and the weighted average number of ordinary shares in issue of 1,578,664 thousand shares[257][260] - The calculation of diluted loss per share did not assume the issue of any dilutive potential ordinary shares as they had an anti-dilutive effect[259][261] Investments in Associates As of June 30, 2025, the Group's investments in associates had a book value of RMB 151.3 million, a slight decrease from the beginning of the period, with new investments of RMB 1.01 million and a share of profit of RMB 5.9 million recognized during the period Changes in Investments in Associates | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Balance at beginning of period | 153,759 | 229,848 | | Additions | 1,010 | — | | Share of profit/(loss) for the period | 5,914 | (5,793) | | Dividends declared by associates | (3,539) | — | | Disposal | (1,500) | — | | Exchange differences on translation | (4,344) | 1,758 | | Balance at end of period | 151,300 | 225,813 | - Investments in associates generated a share of profit of RMB 5,914 thousand for the period, compared to a loss of RMB 5,793 thousand in the same period of 2024[267] Trade and Other Receivables As of June 30, 2025, the Group's net trade and other receivables totaled RMB 60.7 million, a slight decrease from the end of 2024, comprising net trade receivables of RMB 9.5 million and net other receivables of RMB 51.3 million Net Trade and Other Receivables | Category | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables — net | 9,461 | 7,720 | | Other receivables — net | 51,258 | 54,601 | | Trade and other receivables — net | 60,719 | 62,321 | Ageing Analysis of Trade Receivables (by invoice date) | Ageing | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 5,061 | 5,304 | | Over 6 months | 4,110 | 6,094 | | Total | 9,414 | 11,155 | - Other receivables primarily include consideration receivable related to partial disposal of investments in associates, rental deposits, and amounts due from related parties[279] Trade and Other Payables As of June 30, 2025, the Group's total trade and other payables were RMB 114.6 million, a slight decrease from the end of 2024, comprising trade payables of RMB 33.7 million and other payables and accruals of RMB 80.9 million Trade and Other Payables | Category | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 33,680 | 36,649 | | Other payables and accruals | 80,923 | 79,633 | | Total | 114,603 | 116,282 | Ageing Analysis of Trade Payables (by invoice date) | Ageing | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 17,915 | 20,675 | | Over 6 months | 15,765 | 15,974 | | Total | 33,680 | 36,649 | - Other payables and accruals primarily include wages, salaries and other employee benefits, deposits received for partial disposal of investments in associates, accrued renovation costs, and amounts due to franchisees[289] Borrowings As of June 30, 2025, the Group's total borrowings were RMB 37.8 million, a significant 80.9% increase from the end of 2024, with all borrowings due within 12 months and a weighted average annual interest rate of 5.58% Composition and Maturity of Borrowings | Category | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Secured bank borrowings | 2,600 | 1,600 | | Unsecured and unguaranteed bank borrowings | 10,000 | 10,000 | | Borrowings from related parties | 18,239 | 9,260 | | Borrowings from third parties | 7,000 | — | | Total borrowings | 37,839 | 20,860 | | Due within 12 months or less | 37,839 | 20,860 | Weighted Average Annual Interest Rate | Indicator | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Borrowings | 5.58% | 5.16% | - As of June 30, 2025, bank borrowings of RMB 2.6 million were guaranteed by third parties[294] Convertible Bonds As of June 30, 2025, convertible bonds had a carrying amount of RMB 658.5 million, all classified as current liabilities, with changes in both the liability and equity components during the period due to interest expenses and exchange differences Composition of Convertible Bonds | Category | June 30, 2025 (RMB thousand) | Dec 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Convertible bonds (current portion) | 658,482 | 647,780 | | Convertible bonds (non-current portion) | — | — | | Total | 658,482 | 647,780 | - The carrying amount of all convertible bonds was classified as current liabilities because their original maturity dates were within 12 months from the respective balance sheet dates[296][297] Changes in Components of Convertible Bonds | Item | Liability Component (RMB thousand) | Equity Component (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | | Jan 1, 2025 | 647,780 | 104,294 | 752,074 | | Interest expense | 20,748 | — | 20,748 | | Exchange differences | (10,046) | — | (10,046) | | June 30, 2025 | 658,482 | 104,294 | 762,776 | Share-Based Payments As of June 30, 2025, 18,944 thousand share options remained unexercised under the employee share option scheme, with a weighted average exercise price of HKD 1.08 per option and a remaining contractual life of 2 years, while 35,520 thousand award shares remained unvested under the share award scheme, with an average exercise price of HKD 0.54 per share Changes in Employee Share Option Scheme | Indicator | Jan 1, 2025 (thousand options) | June 30, 2025 (thousand options) | | :--- | :--- | :--- | | Number of outstanding share options | 18,944 | 18,944 | | Weighted average exercise price per option (HKD) | 1.08 | 1.08 | | Exercisable at June 30 | — | — | - As of June 30, 2025, the weighted average remaining contractual life for outstanding share options was 2 years[307][308] Changes in Share Award Scheme | Indicator | Jan 1, 2025 (thousand shares) | June 30, 2025 (thousand shares) | | :--- | :--- | :--- | | Number of award shares | 35,520 | 35,520 | | Average exercise price per award share (HKD) | 0.54 | 0.54 | Related and Connected Party Disclosures The Group engaged in several significant related party transactions, including convertible bond interest, sales/purchases of goods and services, and loans, with net amounts due from related parties of RMB 14.95 million and borrowings from related parties of RMB 18.24 million as of June 30, 2025 Significant Related Party Transactions (H1 2025) | Related Party Name | Relationship | Nature of Transaction | Amount (RMB thousand) | | :--- | :--- | :--- | :--- | | Jie Heng Limited | Parent company | Interest on convertible bonds | 20,748 | | Quan Jin Cheng Enterprise Management (Beijing) Co., Ltd. | Key management personnel have significant influence | Sales of goods and services | 590 | | Quan Jin Cheng Food Processing (Beijing) Co., Ltd. | Key management personnel have significant influence | Purchase of goods | 773 | | United Strength Arch Limited | Controlled by ultimate controlling company | Loans received | 9,120 | | United Strength Arch Limited | Controlled by ultimate controlling company | Interest expense | 854 | Outstanding Balances Arising from Related Party Transactions (as of June 30, 2025) | Category | Amount (RMB thousand) | | :--- | :--- | | Trade receivables | 3,875 | | Other receivables — current | 11,969 | | Other receivables — non-current | 2,981 | | Other current assets — prepayments | 2,132 | | Total assets | 20,957 | | Trade payables | 5,464 | | Other payables | 62 | | Contract liabilities | 128 | | Borrowings | 18,239 | | Total liabilities | 23,893 | - Other amounts due from related parties include secured and unsecured loans, and receivables for management service fees (for which expected credit loss provisions have been made)[321] Events After the Balance Sheet Date In addition to the convertible bond maturity extension, the company completed the disposal of a 1.71% equity interest in Guangzhou Meet Noodles Catering Co., Ltd. on August 5, 2025, expected to generate a pre-tax gain of approximately RMB 42 million - The Company entered into an equity transfer agreement on July 31, 2025, and completed the disposal of a 1.71% equity interest in Guangzhou Meet Noodles Catering Co., Ltd. on August 5, 2025[325][327] - This disposal is expected to generate a pre-tax gain of approximately RMB 42 million, calculated based on the carrying value of the investment and the disposal consideration on the disposal date[326][327]