中国艺术金融(01572) - 2025 - 中期财报

Company Information This section provides essential company details, including board members, key offices, banking relationships, and auditor information Board of Directors and Principal Offices This section lists the company's board members, company secretary, registered office, and principal places of business in Hong Kong and China - The company's board members include Executive Directors Mr. Fan Zhixin (Co-Chairman) and Mr. Tian Rui (Co-Chairman), Non-executive Director Mr. Chen Yunwei, and Independent Non-executive Directors Mr. Liang Shuxin, Ms. Shao Qiongqiong, and Ms. Yin Xuhong[1] - The company's registered office is in the Cayman Islands, its principal place of business in Hong Kong is in Kowloon Bay, and its principal place of business and head office in China is in Yixing City, Jiangsu Province[1] Banks, Auditor, and Share Information This section provides basic information on the company's principal bankers, auditor, company website, and stock code - The principal bankers in Hong Kong are Bank of Communications (Hong Kong) Limited and CMB Wing Lung Bank Limited, while in China they are Jiangsu Yixing Rural Commercial Bank and China Construction Bank[2] - The company's auditor is Tianjian Deyang Certified Public Accountants Limited, its website is www.cnartfin.com.hk, and its stock code is 1572[2] Management Discussion and Analysis This section reviews the group's business performance, financial results, liquidity, and future outlook Business Review During the review period, the Group's art and asset pawnbroking business revenue significantly decreased, while art and asset auction business revenue grew substantially but still recorded a loss, and art and asset sales business revenue and profit both increased, becoming the main growth driver - The international and domestic markets continue to face challenges, prompting the Group to adjust its marketing strategies to navigate the unstable environment[3] Art and Asset Pawnbroking Business Both revenue and profit from the pawnbroking business significantly decreased, primarily due to lower interest rates and the suspension of new business caused by the relocation of the principal place of business in China; despite this, the Group experienced no defaults during the review period through effective risk management | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 4.0 | 10.9 | -63.3% | | Profit | 2.0 | 8.9 | -77.5% | - The decrease in revenue was primarily due to lower pawnbroking loan interest rates and the suspension of new business from March to May 2025 caused by the relocation of the principal place of business in China[4] - The Group employed a multi-layered internal approval and risk management system and engaged third-party appraisal agencies, resulting in no defaults in the pawnbroking business during H1 2025[5] Art and Asset Auction Business Auction business revenue significantly increased by approximately 15.3 times, but the loss slightly expanded due to increased operating costs | Metric | H1 2025 (RMB) | H1 2024 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 98,000 | 6,000 | +15.3 times | | Loss | 278,000 | 259,000 | +7.3% | - The increase in loss was mainly due to higher operating costs for this business during the period[6] Art and Asset Sales Business The art and asset sales business achieved significant growth in both revenue and profit, becoming the primary driver for the Group's diversified business and profit growth, as the company strengthened its market position by expanding its customer base and optimizing art trading strategies | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 39.2 | 25.8 | +51.9% | | Profit | 1.5 | 1.3 | +15.4% | - The increase in revenue and profit was primarily due to higher revenue from art trading during the review period[7] - The Group developed this business by identifying potential buyers, providing staff training, expanding its customer base, and acquiring cost-effective artworks such as Zisha pottery and calligraphy and paintings[7] Financial Review The Group's total revenue increased during the review period, but profit before tax and profit for the period significantly decreased due to reduced revenue from the art and asset pawnbroking business and increased central administrative expenses - Total revenue increased by 17.5% year-on-year to approximately RMB 43.2 million, primarily driven by increased art sales revenue from the art and asset sales business[8] - Profit before tax decreased by 85.2% year-on-year to approximately RMB 1.2 million, and profit for the period decreased by 94.4% year-on-year to approximately RMB 0.3 million[18][20] Revenue During the review period, the Group's total revenue increased by 17.5% year-on-year, primarily driven by the strong performance of the art and asset sales business | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 43.2 | 36.8 | +17.5% | - The increase in revenue was mainly due to higher art sales revenue from the art and asset sales business[8] Other Income Other income decreased by 33.7% year-on-year, primarily due to a reduction in bank interest income | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Other Income | 0.2 | 0.3 | -33.7% | Other Gains / (Losses) Net The period saw a net other gain of RMB 0.1 million, a turnaround from a net loss of RMB 0.2 million in the same period last year | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | | :--- | :--- | :--- | | Other Gains Net | 0.1 | (0.2) | Cost of Inventories Sold The cost of inventories sold increased year-on-year, reflecting the growth in sales volume of the art and asset sales business | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Cost of Inventories Sold | 35.6 | 23.0 | +54.8% | Reversal / (Recognition) of Impairment Losses, Net Net impairment losses on pawnbroking loans shifted from recognition last year to a reversal this period, indicating an improvement in asset quality | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Impairment Losses | Reversal 13 | Recognition (99) | Staff Costs Staff costs increased by 31.8% year-on-year, primarily due to an increase in the average number of employees and senior positions | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Staff Costs | 2.9 | 2.2 | +31.8% | Depreciation of Property, Plant and Equipment Depreciation of property, plant and equipment remained stable, with no significant additions or disposals during the period | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | | :--- | :--- | :--- | | Depreciation | 0.1 | 0.1 | Depreciation of Right-of-Use Assets Depreciation of right-of-use assets remained stable | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | | :--- | :--- | :--- | | Depreciation | 0.3 | 0.3 | Advertising and Promotion Expenses Advertising and promotion expenses increased, aiming to enhance brand value and promote business activities | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Advertising and Promotion Expenses | 1.5 | 1.2 | +25.0% | Other Expenses Other expenses decreased by 13.0% year-on-year, primarily due to a reduction in legal and professional fees | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Other Expenses | 2.0 | 2.3 | -13.0% | Profit Before Tax Profit before tax significantly decreased by 85.2%, mainly impacted by reduced pawnbroking business revenue and increased central administrative expenses | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Profit Before Tax | 1.2 | 8.1 | -85.2% | Income Tax Expense Income tax expense decreased by 66.7% year-on-year, primarily due to a reduction in taxable profit | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Income Tax Expense | 0.9 | 2.7 | -66.7% | Profit for the Period Profit for the period significantly decreased by 94.4%, reflecting challenges in the pawnbroking business and overall operating cost pressures | Metric | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Profit for the Period | 0.3 | 5.4 | -94.4% | Liquidity, Financial Resources, and Capital Structure The Group's financial position remains robust, primarily funding operations through internal cash flow; despite a decrease in total bank balances and cash, there are no bank borrowings or significant asset pledges, maintaining a low gearing ratio - The Group primarily funds its working capital, capital expenditure, and other capital requirements through internally generated cash flow[21] - As of June 30, 2025, the Group's total bank balances and cash amounted to approximately RMB 588.0 million, a 10.0% decrease compared to December 31, 2024[22] - As of June 30, 2025, and December 31, 2024, the Group had no bank borrowings or significant assets pledged[22] Net Cash Flow Net cash used in operating activities significantly increased, while net cash from investing and financing activities decreased, leading to a reduction in cash and cash equivalents at period-end | Metric | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (68,273) | (14,927) | | Net Cash From Investing Activities | 462 | 695 | | Net Cash From Financing Activities | 2,248 | 2,638 | - As of June 30, 2025, total bank balances and cash were approximately RMB 588.0 million, a 10.0% decrease from December 31, 2024[22] Gearing Ratio The gearing ratio slightly increased but remains at a low level, indicating minimal financial leverage risk for the company | Date | Gearing Ratio | | :--- | :--- | | June 30, 2025 | 1.8% | | December 31, 2024 | 1.6% | Contingent Liabilities As of the end of the reporting period, the Group had no significant contingent liabilities or off-balance sheet commitments - As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities or any other off-balance sheet commitments and arrangements[25] Capital Expenditure Capital expenditure significantly increased this period, primarily for the acquisition of property, plant and equipment | Metric | H1 2025 (RMB million) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Capital Expenditure for Property, Plant and Equipment | 0.5 | 2 | Capital Commitments As of the end of the reporting period, the Group had no significant capital commitments - As of June 30, 2025, and December 31, 2024, the Group had no significant capital commitments[27] Events After Reporting Period Subsequent to the reporting period, the company received a statutory demand for payment of approximately HKD 8.45 million in outstanding loans and interest - On August 29, 2025, the company received a statutory demand for payment of approximately HKD 8,453,639.89 in outstanding loans and interest, failing which the creditor may file a winding-up petition[28] Human Resources and Training The Group's employee count slightly increased, with remuneration policies based on performance, qualifications, experience, and market practices, offering various benefits | Date | Number of Employees | | :--- | :--- | | June 30, 2025 | 45 | | December 31, 2024 | 44 | - Employee remuneration policies are determined based on performance, qualifications, experience, and prevailing market practices, including salaries, medical insurance, MPF, and discretionary year-end bonuses[29] Foreign Exchange Risk The Group's assets and liabilities are primarily denominated in RMB, and foreign exchange risk is not significant, with continuous monitoring of exchange rate fluctuations - The Group's monetary assets and liabilities are mostly denominated in RMB, and business transactions are primarily conducted in RMB and HKD, thus foreign exchange risk is not significant[30] - For the six months ended June 30, 2025, the Group did not enter into any foreign exchange hedging arrangements but will regularly review and consider using derivative financial instruments to hedge risks when necessary[30] Outlook and Prospects Facing global economic challenges and sluggish domestic consumption in China, the Group will maintain a cautious approach and actively adjust strategies across its business segments, including strengthening auction market promotion, prudent lending, expanding digital financial services, and exploring new AI and EV-related businesses to enhance financial performance - The global economic environment remains challenging, including persistent inflation, geopolitical tensions, and divergent growth trajectories; domestic consumption in China is sluggish, particularly in the high-end luxury goods sector[31] - The Group will maintain a cautious approach, balancing risk management with strategic opportunities in its core business areas[31] Art and Asset Auction Business The Group is actively adjusting its auction strategy, intensifying regional and multi-channel market promotion, and exploring the use of advanced technologies such as AI-driven sales strategies to enhance the auction experience and unlock new opportunities - The Group is actively adjusting its auction strategy, intensifying regional and multi-channel market promotion, and maintaining communication with local governments to ensure safe and effective auction activities[32] - It is actively exploring the use of digital platforms and Artificial Intelligence (AI)-driven sales strategies to enhance the auction experience and unlock new opportunities[32] Art and Asset Pawnbroking Business In China's interest rate reduction environment, the Group will adopt a prudent lending strategy, prioritizing capital security, while strengthening its risk assessment framework to address the impact of economic uncertainty on collateral valuation - In a declining interest rate environment, the Group adopts a prudent lending strategy, prioritizing capital security, and cautiously expanding its loan business to eligible customers[33] - Strengthening the risk assessment framework will be a core focus to enhance loan security and operational efficiency, addressing the impact of economic uncertainty on collateral valuation[33] Art and Asset Sales Business Facing increased competition, the Group will leverage its collector network advantage to generate profit through buying and selling spreads, agency services, and auction commissions; simultaneously, it plans to develop county-level digital economic financial services and a secure digital closed-loop for fresh agricultural product supply chains, and explore new AI and EV-related businesses to drive innovation and growth - The Group will leverage its extensive network of collectors to identify and sell artworks in high market demand, generating profit through the spread between acquisition and selling prices, agency service fees, and auction commissions[34] - It plans to develop county-level digital economic financial services and build a secure digital closed-loop for fresh agricultural product supply chains to expand its business layout in digital financial services[34] - The Group will explore cooperation opportunities arising from AI and electric vehicle development to launch new related businesses, significantly enhancing overall financial performance[34] Directors' and Chief Executive's Interests and Short Positions in Shares, Related Shares and Debentures This section discloses the interests and short positions of directors and the chief executive in the company's shares and related securities Disclosure of Directors' and Chief Executive's Interests As of June 30, 2025, none of the company's directors or chief executive held any interests or short positions in the shares, related shares, or debentures of the company or its associated corporations that are required to be disclosed under the Securities and Futures Ordinance or the Listing Rules - As of June 30, 2025, none of the company's directors or chief executive held any disclosable interests or short positions in the shares, related shares, or debentures of the company or its associated corporations[35] Substantial Shareholders' Interests and Short Positions in Shares, Related Shares and Debentures This section details the interests and short positions of substantial shareholders in the company's shares and related securities Overview of Substantial Shareholders' Holdings As of June 30, 2025, several substantial shareholders, including Hanxin Investment, Jinsha Investment, Ziyu Investment, and Mr. Fan Zhijun and parties acting in concert, held approximately 59.64% long positions and 59.62% short positions in the company's shares | Shareholder Name / Company Name | Nature of Interest / Capacity | Number of Shares (thousand shares) | Approximate Percentage of Holding | | :--- | :--- | :--- | :--- | | Hanxin Investment Limited | Beneficial Owner | 1,000,768 (L) | 59.64% | | | | 1,000,384 (S) | 59.62% | | Jinsha Investment Limited | Interest in Controlled Corporation | 1,000,768 (L) | 59.64% | | | | 1,000,384 (S) | 59.62% | | Ziyu Investment Limited | Interest in Controlled Corporation | 1,000,768 (L) | 59.64% | | | | 1,000,384 (S) | 59.62% | | Mr. Fan Zhijun | Interest in Controlled Corporation and Jointly Held with Other Persons | 1,000,768 (L) | 59.64% | | | | 1,000,384 (S) | 59.62% | - Mr. Fan Zhijun, Ms. Fan Qinzi, Mr. Fan Yajun, Ms. Wu Jian, and Ms. Xu Min collectively control approximately 59.64% of the share interests through Ziyu Investment, Jinsha Investment, and Hanxin Investment, and have entered into a confirmation of acting in concert[39] - Winwin International Strategic Investment Funds SPC ("WIS") holds a guaranteed interest in 1,000,384,000 shares of the company[37][39] Other Information This section covers various corporate governance and operational details, including share option schemes, securities transactions, and audit committee activities Share Option Scheme The company has a share option scheme to incentivize eligible participants, but no share options were granted, exercised, cancelled, lapsed, and/or remained outstanding for the six months ended June 30, 2025 - The share option scheme was adopted on October 14, 2016, to grant share options to employees, directors, and other eligible participants, and will expire on October 13, 2026[40] - For the six months ended June 30, 2025, and 2024, no share options under the scheme were granted, exercised, cancelled, lapsed, and/or remained outstanding[41] Purchase, Sale or Redemption of the Company's Securities During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any listed securities - During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[43] Audit Committee The Audit Committee, composed of three independent non-executive directors, is responsible for reviewing and overseeing the Group's financial reporting process and internal controls, and has reviewed the interim financial statements for the period without objection - The Audit Committee comprises three independent non-executive directors: Mr. Liang Shuxin (Chairman), Ms. Shao Qiongqiong, and Ms. Yin Xuhong[44] - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, and had no objections to the accounting treatments adopted[44] Rights to Purchase Company's Securities For the six months ended June 30, 2025, neither the company nor any of its subsidiaries entered into any arrangements that would entitle directors to subscribe for the company's securities or benefit from purchasing shares or debentures of the company or any other corporation - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries entered into any arrangements that would entitle directors to subscribe for the company's securities or benefit from purchasing shares or debentures of the company or any other corporation[45] Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[46] Directors' Securities Transactions All directors confirmed compliance with the standard code adopted by the company for securities transactions during the review period - Following specific inquiries with all directors, all directors confirmed that they had complied with the required standards of dealing as set out in the standard code for the six months ended June 30, 2025[47] Compliance with Corporate Governance Report The company has complied with the applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules during the review period - The company has complied with the applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025[48] Acknowledgement The Board extends its sincere gratitude to the directors, management, and staff for their contributions and excellent performance during the review period - The Board extends its sincere gratitude to the directors, management, and staff for their contributions and excellent performance during the review period[49] Condensed Consolidated Financial Statements This section presents the group's condensed consolidated financial statements, including the income statement, balance sheet, equity changes, and cash flow statement Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's revenue, expenses, profit before tax, income tax expense, and profit for the period, as well as other comprehensive income, showing a significant decrease in profit for the period | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 43,220 | 36,778 | | Profit Before Tax | 1,195 | 8,085 | | Income Tax Expense | (940) | (2,669) | | Profit for the Period Attributable to Owners of the Company | 255 | 5,416 | | Total Comprehensive Income for the Period Attributable to Owners of the Company | 391 | 5,369 | | Basic and Diluted Earnings Per Share (RMB cents) | 0.02 | 0.32 | Condensed Consolidated Statement of Financial Position This statement presents the Group's non-current assets, current assets, current liabilities, non-current liabilities, and total equity as of June 30, 2025, showing a slight increase in total assets but a decrease in bank balances and cash | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 2,862 | 2,056 | | Current Assets | 1,134,854 | 1,133,123 | | Current Liabilities | 26,594 | 24,714 | | Non-current Liabilities | 452 | 186 | | Total Equity | 1,110,670 | 1,110,279 | - Inventories significantly increased to RMB 101,000 thousand (December 31, 2024: RMB 32,000 thousand), primarily comprising Zisha pottery and calligraphy and paintings[53][96] - Bank balances and cash decreased to RMB 588,009 thousand (December 31, 2024: RMB 653,570 thousand)[53] Condensed Consolidated Statement of Changes in Equity This statement details the changes in the Group's share capital, share premium, statutory reserve, capital reserve, exchange reserve, and retained profits during the review period, reflecting the impact of profit for the period and other comprehensive income on total equity | Metric | June 30, 2025 (RMB thousand) | June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Share Capital | 14,793 | 14,793 | | Share Premium | 199,999 | 199,999 | | Statutory Reserve | 82,944 | 82,521 | | Capital Reserve | 172,301 | 172,301 | | Exchange Reserve | (1,258) | (1,283) | | Retained Profits | 641,891 | 642,952 | | Total | 1,110,670 | 1,111,283 | - Profit for the period was RMB 255 thousand, and other comprehensive income for the period was RMB 136 thousand, resulting in a total comprehensive income for the period of RMB 391 thousand[55] Condensed Consolidated Statement of Cash Flows This statement provides details of the Group's cash flows from operating, investing, and financing activities during the review period, showing a significant increase in net cash used in operating activities, leading to a decrease in cash and cash equivalents | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (68,273) | (14,927) | | Net Cash From Investing Activities | 462 | 695 | | Net Cash From Financing Activities | 2,248 | 2,638 | | Net Decrease in Cash and Cash Equivalents | (65,563) | (11,594) | | Cash and Cash Equivalents at End of Period | 588,009 | 684,226 | - Net cash used in operating activities increased from RMB 14,927 thousand to RMB 68,273 thousand, primarily due to increased cash outflows from operating activities[57] Notes to the Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, explaining accounting policies, segment information, and specific financial items 1. General Information and Basis of Preparation This note explains the basis of preparation for the Group's condensed consolidated financial statements, which comply with HKAS 34 and are presented in RMB, and details the structure for exercising control over Hexin Pawnbroking and Hexin Auction through contractual arrangements - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[59] - The Group exercises effective control over the economic benefits of Hexin Pawnbroking and Hexin Auction through contractual arrangements and treats them as indirect wholly-owned subsidiaries of the company[61][62][63] 2. Significant Accounting Policies Information This note states that the condensed consolidated financial statements are prepared on a historical cost basis and indicates that the application of revised HKFRSs during the period had no significant impact on the financial position and performance - The condensed consolidated financial statements are prepared on a historical cost basis, and the accounting policies and methods of computation used are the same as those adopted in the annual financial statements for the year ended December 31, 2024, except for changes in accounting policies resulting from the application of revised Hong Kong Financial Reporting Standards[65] - The application of a revised HKFRS (HKAS 21 (Amendment) Lack of Exchangeability) during this interim period had no significant impact on the Group's financial position and performance[66] 3. Revenue and Segment Information This note provides a detailed analysis of the Group's revenue and results by business segment, including pawnbroking, auction, and sales businesses, and offers revenue disaggregation information by asset class, geographical location, and major customers - External reportable segment information is analyzed by art and asset pawnbroking business, art and asset auction business, and art and asset sales business, consistent with internal information regularly reviewed by the chief operating decision maker[72] Revenue (Notes) The Group's revenue primarily derives from interest income from the art and asset pawnbroking business, art sales from the art and asset sales business, and auction revenue from the art and asset auction business, with art sales revenue significantly increasing while pawnbroking interest income substantially decreased | Revenue Source | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest Income from Art and Asset Pawnbroking Business | 3,963 | 10,931 | | Art Sales from Art and Asset Sales Business | 39,159 | 25,841 | | Auction Revenue from Art and Asset Auction Business | 98 | 6 | | Total | 43,220 | 36,778 | - Interest income from the art and asset pawnbroking business decreased by 63.7% year-on-year, while art sales revenue from the art and asset sales business increased by 51.5% year-on-year[67] Disaggregation of Revenue from Contracts with Customers for Art and Asset Sales Business Art sales revenue primarily comes from Zisha pottery and calligraphy and paintings, with Zisha pottery sales significantly increasing, and all sales originating from China (excluding Hong Kong) | Asset Class Sold | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Zisha Pottery | 37,124 | 14,115 | | Calligraphy and Paintings | 2,035 | 11,726 | | Total | 39,159 | 25,841 | - In H1 2025, Zisha pottery sales increased by 163.0% year-on-year, while calligraphy and painting sales decreased by 82.6% year-on-year[70] - All art sales revenue originated from China (excluding Hong Kong)[70] Disaggregation of Revenue from Contracts with Customers for Art and Asset Auction Business Auction revenue primarily comes from commercial properties and parking spaces, with all auction revenue originating from China (excluding Hong Kong) | Asset Class Auctioned | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Commercial Properties and Parking Spaces | 98 | – | | Others | – | 6 | | Total | 98 | 6 | - In H1 2025, auction revenue primarily came from commercial properties and parking spaces, whereas in H1 2024, it mainly came from other categories[70] - All auction revenue originated from China (excluding Hong Kong)[70] Segment Information This section provides a detailed analysis of revenue, results, assets, and liabilities by operating segment, showing that the art and asset sales business was the only segment to achieve profit growth, while the pawnbroking business experienced a significant decline in profit - Segment results refer to the performance of each segment, with other income, other gains/(losses) net, central administrative expenses, and finance costs not allocated[72] Segment Revenue and Results Segment revenue and results for the art and asset sales business grew significantly, while those for the art and asset pawnbroking business substantially decreased, and the art and asset auction business remained in a loss-making state | Segment | 2025 Revenue (RMB thousand) | 2025 Results (RMB thousand) | 2024 Revenue (RMB thousand) | 2024 Results (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Art and Asset Pawnbroking Business | 3,963 | 1,985 | 10,931 | 8,870 | | Art and Asset Auction Business | 98 | (278) | 6 | (259) | | Art and Asset Sales Business | 39,159 | 1,513 | 25,841 | 1,281 | | Total | 43,220 | 3,220 | 36,778 | 9,892 | - The segment results of the art and asset pawnbroking business decreased by 77.6% year-on-year, while the segment results of the art and asset sales business increased by 18.1% year-on-year[73][75] Segment Assets and Liabilities The art and asset pawnbroking business remains the segment with the largest asset scale, while assets of the art and asset sales business significantly increased, and bank balances and cash account for the largest portion of unallocated assets | Segment | 2025 Assets (RMB thousand) | December 31, 2024 Assets (RMB thousand) | | :--- | :--- | :--- | | Art and Asset Pawnbroking Business | 446,719 | 447,500 | | Art and Asset Auction Business | 234 | 347 | | Art and Asset Sales Business | 101,227 | 32,341 | | Total Segment Assets | 548,180 | 480,188 | - Segment assets of the art and asset sales business significantly increased by 213.0%, primarily reflecting an increase in inventories[77][79] - As of June 30, 2025, bank balances and cash within unallocated assets amounted to RMB 588,009 thousand[77] Other Segment Information Additions to property, plant and equipment and right-of-use assets during the period primarily occurred in the art and asset pawnbroking business, reflecting capital investment in that segment | Metric | Art and Asset Pawnbroking Business (RMB thousand) | Art and Asset Auction Business (RMB thousand) | Art and Asset Sales Business (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | 2025 Additions to Property, Plant and Equipment | 503 | – | – | 503 | | 2025 Additions to Right-of-Use Assets | 702 | – | – | 702 | | 2025 Depreciation of Property, Plant and Equipment | 98 | – | – | 98 | | 2025 Depreciation of Right-of-Use Assets | 120 | 113 | 114 | 347 | Geographical Information All of the Group's revenue and designated non-current assets are located in China (excluding Hong Kong) | Region | 2025 Revenue from External Customers (RMB thousand) | 2024 Revenue from External Customers (RMB thousand) | 2025 Designated Non-current Assets (RMB thousand) | 2024 Designated Non-current Assets (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | China, excluding Hong Kong | 43,220 | 36,778 | 1,608 | 933 | - The Group's business operations and major assets are concentrated in mainland China[84] Information About Major Customers During the period, three major customers (Customers A, B, and C) contributed over 10% of total revenue, primarily from the art and asset sales business | Customer | 2025 (RMB thousand) | 2024 (RMB thousand) | Revenue Source | | :--- | :--- | :--- | :--- | | Customer A | 18,142 | – | Art and Asset Sales Business | | Customer B | 9,912 | – | Art and Asset Sales Business | | Customer C | 7,080 | 4,425 | Art and Asset Sales Business | - In H1 2025, Customers A, B, and C contributed significant revenue to the Group, with Customer A being the largest contributor[85] 4. Reversal / (Recognition) of Impairment Losses, Net Net impairment losses on pawnbroking loans shifted from recognition last year to a reversal this period, reflecting changes in the assessment of expected credit losses | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Reversal / (Recognition) of Impairment Losses, Net for Customer Loans in Art and Asset Pawnbroking Business | 13 | (99) | - The basis for determining the input data and assumptions for expected credit losses of financial assets is consistent with those used in the preparation of the 2024 annual financial statements[87] 5. Income Tax Expense Income tax expense significantly decreased year-on-year, primarily due to a reduction in taxable profit, with Chinese subsidiaries taxed at 25% and no taxable profit in Hong Kong | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Tax | 983 | 2,732 | | Deferred Tax Credit | (43) | (63) | | Total | 940 | 2,669 | - The company's subsidiaries established in China were taxed at a rate of 25% for the six months ended June 30, 2025, and 2024, with no taxable profit in Hong Kong[88] 6. Profit for the Period This note details various income and expenses affecting profit for the period, including staff costs, finance costs, exchange gains/losses, bank interest income, and depreciation | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Staff Costs | 2,896 | 2,240 | | Total Finance Costs | 85 | 25 | | Net Exchange (Gains) / Losses | (222) | 74 | | Bank Interest Income | (462) | (697) | | Depreciation of Property, Plant and Equipment | 98 | 120 | | Depreciation of Right-of-Use Assets | 347 | 320 | - Staff costs increased, finance costs significantly rose, while bank interest income decreased[90] 7. Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (for the six months ended June 30, 2024: nil)[92] 8. Earnings Per Share Basic and diluted earnings per share significantly decreased this period, consistent with the trend of reduced profit for the period | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the Period for Calculating Basic and Diluted Earnings Per Share | 255 | 5,416 | | Weighted Average Number of Ordinary Shares (thousand shares) | 1,690,500 | 1,682,533 | | Basic and Diluted Earnings Per Share (RMB cents) | 0.02 | 0.32 | - As there were no potentially dilutive ordinary shares outstanding during both periods, diluted earnings per share are the same as basic earnings per share[93] 9. Movements in Property, Plant and Equipment and Right-of-Use Assets Additions to property, plant and equipment significantly increased this period, new right-of-use assets were recognized, and some property, plant and equipment were disposed of | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Acquisition of Property, Plant and Equipment | 503 | 2 | | Additions to Right-of-Use Assets | 702 | – | | Loss on Disposal of Property, Plant and Equipment | 85 | – | - The Group entered into a lease agreement for office premises during the period, recognizing additions to right-of-use assets of RMB 702,000[95] 10. Inventories Total inventories significantly increased, primarily driven by an increase in calligraphy and painting inventories, reflecting the inventory strategy of the art and asset sales business | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Zisha Pottery | 38,500 | 32,000 | | Calligraphy and Paintings | 62,500 | – | | Total | 101,000 | 32,000 | - For the six months ended June 30, 2025, the cost of inventories recognized as an expense and included in "Cost of inventories sold" was RMB 35,600,000[96] 11. Loans Receivable Total loans receivable slightly decreased, primarily from the art and asset pawnbroking business, with loan terms generally within three months, a maximum of six months, and annual interest rates ranging from approximately 6% to 12%; all loans are collateralized by pawnbroked items and are not overdue | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer Loans for Art and Asset Pawnbroking | 449,587 | 451,283 | | Less: Impairment Provision | (4,028) | (4,015) | | Total | 445,572 | 447,255 | - Loan terms are generally within three months, with a maximum term of six months from the initial grant date, and annual interest rates ranging from approximately 6% to 12%[98] - All art and asset pawnbroking loans are collateralized by pawnbroked items (primarily Zisha pottery and calligraphy and paintings) and were not overdue at the end of the reporting period[99][100] 12. Accrued Expenses and Other Payables Total accrued expenses and other payables increased, mainly due to new other loans and payables for property, plant and equipment acquisitions, while some amounts due to directors were settled by other lenders on behalf of the Group | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Accrued Expenses | 3,125 | 4,482 | | Loans from a Former Director | 7,316 | 7,243 | | Amount Due to a Director | – | 5,564 | | Amount Due to a Director of a Company Subsidiary | – | 4,897 | | Payables for Acquisition of Property, Plant and Equipment | 503 | – | | Other Loans | 12,618 | – | | Total | 25,040 | 23,423 | - Loans from a former director as of June 30, 2025, were unsecured, interest-bearing, and repayable on demand[103] - New other loans of RMB 12,618 thousand were incurred during the period, representing unsecured revolving credit facilities entered into with independent third parties at an annual interest rate of 5%[103] 13. Share Capital The company's share capital structure remained stable, with 1,690,500 thousand issued and fully paid shares, each with a par value of HKD 0.01 | Metric | Number of Shares (thousand shares) | Amount (RMB thousand) | | :--- | :--- | :--- | | Authorized Share Capital | 5,000,000 | 43,420 | | Issued and Fully Paid Share Capital | 1,690,500 | 14,793 | - On April 26, 2024, the company completed the issuance of 12,500,000 new ordinary shares at HKD 0.12 per share to an independent third party, with net proceeds of approximately RMB 1,319,000[105] 14. Share-based Payments This note details the terms of the share option scheme, including eligible participants, grant limits, exercise price determination, and validity period, reiterating no share option activity during the period - The share option scheme aims to incentivize directors and eligible participants, with the total number not exceeding 10% of the company's issued shares on the date trading commenced on the Stock Exchange (i.e., 160,000,000 shares)[108][109] - The exercise price of share options shall not be less than the highest of the closing price on the grant date, the average closing price for the five business days immediately preceding the grant date, and the nominal value of the shares[110] - For the six months ended June 30, 2025, and 2024, no share options under the scheme were granted, exercised, cancelled, lapsed, and/or remained outstanding[113] 15. Related Party Disclosures This note discloses the remuneration of key management personnel during the period, including salaries, allowances, and contributions to retirement benefit plans | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Salaries and Other Benefits | 943 | 647 | | Contributions to Retirement Benefit Plans | 85 | 85 | | Total | 1,028 | 732 | - Remuneration for key management personnel is determined with reference to individual performance and market trends[115] 16. Major Non-Cash Transactions A major non-cash transaction occurred during the period, where amounts due to a director and a director of a subsidiary were settled by lenders of other loans on behalf of the Group - As of June 30, 2025, amounts due to a director of RMB 5,461,000 and to a director of a company subsidiary of RMB 4,826,000 were settled by lenders of other loans on behalf of the Group[116]