Financial Performance - Revenue increased by RMB 106.5 million or 3.5% to RMB 3,181.1 million for the six months ended June 30, 2025[13] - Gross profit rose by RMB 79.0 million or 3.8% to RMB 2,157.6 million, with a gross margin of 67.8%[13] - Net profit attributable to shareholders decreased by RMB 74.9 million or 19.3% to RMB 312.9 million[13] - EBITDA increased by RMB 48.1 million or 4.2% to RMB 1,204.2 million[13] - The company recorded a revenue increase of 3.5% to RMB 3,181.1 million for the six months ending June 30, 2025[16] - Revenue from the oncology treatment segment increased by 13.5% to RMB 1,295.2 million, while revenue from the central nervous system treatment segment rose by 5.4% to RMB 867.5 million[18] - The cardiovascular treatment segment saw a revenue decrease of 9.2% to RMB 693.0 million, and the metabolic treatment segment's revenue decreased by 7.9% to RMB 180.2 million[18] - The net profit attributable to the company was approximately RMB 357.4 million, a decrease of RMB 80.8 million or 18.4% compared to RMB 438.2 million in the previous year[78] - Total comprehensive income for the period was RMB 425,791 thousand, slightly down from RMB 440,312 thousand in 2024[120] Research and Development - The company has a total of 31 products under development in China, including 13 oncology products and 12 CNS products[6] - The R&D team consists of 611 employees, including 59 PhDs and 299 Master's degree holders[6] - The company has achieved significant R&D milestones for several candidate products during the reporting period[40] - The company continues to invest in four strategic therapeutic areas: oncology, central nervous system, cardiovascular, and metabolism, with 31 products in various stages of development in China as of June 30, 2025, including 13 oncology products, 12 CNS products, and 6 others[39] - The global first weekly-administered transdermal patch for donepezil (LY30410) received approval in China in October 2023 for treating mild to moderate Alzheimer's disease symptoms, and is expected to launch in Japan by March 2025[41] - The next-generation VMAT2 inhibitor LY03015 has shown good safety and tolerability in Phase I trials, with Phase II trials for tardive dyskinesia patients ongoing in China[45] - The company is developing LY03017, a novel compound for treating Parkinson's disease psychosis and Alzheimer's disease psychosis, with promising preclinical results indicating superior efficacy and safety[47] - LY03020, a new generation antipsychotic, has demonstrated significant improvements in schizophrenia symptoms and is expected to meet clinical needs better than existing treatments[48] - LY03021, an innovative compound for treating depression, has shown rapid onset and sustained efficacy in preclinical studies, with Phase I trials ongoing in China[49][51] Market and Competitive Position - The company has established a strong competitive advantage in 18 major products within high-prevalence disease areas, with market share expected to grow or maintain current levels[19] - The company has developed a global supply chain with 8 production bases and adheres to international GMP quality management standards[15] - The product "Lipopson" is the only marketed paclitaxel liposome formulation globally and has been included in the 2024 National Medical Insurance Drug List in China[20] - "Bevacizumab" (博優諾) has received approval for multiple cancer treatments and is currently under review for market authorization in Brazil[21] - "Goserelin" (百拓維) is the only long-acting microsphere formulation of its kind and has been included in the 2023 National Medical Insurance Drug List for prostate cancer treatment[22] - "Zanbiga" (贊必佳) has received priority review approval in China and is the only new chemical entity approved by the FDA for treating recurrent small cell lung cancer in nearly 28 years[23] - "Mimixin" (米美欣) is a novel oral formulation approved for severe pain management, incorporating abuse-deterrent technology to prevent misuse[25] - The company has launched Rykindo, a long-acting injectable for schizophrenia, which was included in the national medical insurance catalog in December 2023, maintaining the original reimbursement standards[29] - Erzofri, a long-acting injectable for schizophrenia, received FDA approval in July 2024, marking it as the first product developed by a Chinese company with independent intellectual property rights in the U.S.[30] Financial Position and Assets - The total assets increased to RMB 32,031.5 million as of June 30, 2025, compared to RMB 27,198.5 million at the end of 2024[10] - As of June 30, 2025, the group's net current assets amounted to approximately RMB 3,748.2 million, an increase from RMB 2,539.0 million as of December 31, 2024[79] - The current ratio increased from approximately 1.24 as of December 31, 2024, to approximately 1.31 as of June 30, 2025, primarily due to a slight increase in current assets[79] - Total borrowings increased from approximately RMB 8,294.4 million as of December 31, 2024, to approximately RMB 9,770.9 million as of June 30, 2025[80] - The debt-to-equity ratio rose from 52.7% as of December 31, 2024, to 59.1% as of June 30, 2025, mainly due to the increase in total borrowings during the reporting period[81] - Non-current assets totaled RMB 16,344,287 thousand as of June 30, 2025, compared to RMB 16,304,093 thousand at the end of 2024[121] - Current assets increased to RMB 15,687,178 thousand from RMB 13,308,107 thousand, indicating a growth of 17.9%[121] - Current liabilities rose to RMB 11,939,025 thousand from RMB 10,769,142 thousand, reflecting an increase of 10.9%[122] - Total equity as of June 30, 2025, was RMB 16,542,615 thousand, up from RMB 15,753,670 thousand at the end of 2024[122] Shareholder and Governance Information - Major shareholders include Green Leaf Pharmaceutical Investment Limited with a 33.13% stake and Hillhouse Fund V, LP with a 14.68% stake[107] - The company has adhered to corporate governance standards, except for a deviation regarding the separation of the roles of Chairman and CEO[100] - The company has adopted a code of conduct for securities trading by directors and employees, ensuring compliance with regulations[101] - The audit committee has reviewed the unaudited interim financial statements for the six months ending June 30, 2025, and recommended their adoption to the board[103] - There were no changes in director information that required disclosure under the listing rules as of the reporting date[105] Cash Flow and Financing Activities - The company’s cash flow from operating activities generated RMB 1,784,352,000, a significant improvement compared to a cash outflow of RMB 394,400,000 in the previous year[126] - The company reported a net cash inflow from financing activities of RMB 583,809 thousand for the six months ended June 30, 2025, compared to RMB 980,399 thousand in the same period of 2024[127] - The company’s total cash flow from investment activities was a net outflow of RMB 267,365 thousand for the six months ended June 30, 2025, an improvement from a net outflow of RMB 505,313 thousand in the same period of 2024[127] - The company has secured bank loans with interest rates ranging from 2.27% to 4.50% for guaranteed bank loans maturing between 2025 and 2026, totaling RMB 3,149,496,000[159] - The company reported a provision for arbitration claims amounting to approximately RMB 273,482,000, including arbitration fees and related interest[161] Risks and Contingencies - The company identified potential risks related to pillar two income tax regulations primarily in Switzerland and mainland China, but these do not pose significant impacts on overall tax risks[142] - As of June 30, 2025, the company had no significant contingent liabilities[82] - There were no major acquisitions or disposals of subsidiaries, associates, or joint ventures during the six months ended June 30, 2025[86]

CONTENTS 目錄 2 Financial Highlights 財務摘要 3 Corporate Profile 公司簡介 7 Management Discussion and Analysis 管理層討論與分析 64 Corporate Governance and Other Information 企業管治及其他資料 80 Review Report 審閱報告 82 Consolidated Statement of Profit or Loss and Other Comprehensive Income 綜合損益及其他全面收益表 84 Consolidated Statement of Financial Position 綜合財務狀況表 86 Consolidated Statement of Changes in Equity 綜合權益變動表 88 Consolidated Cash Flow Statement 綜合現金流量表 90 Notes to the Unaudited Interim Financial Reports 未經審核中期財務報告附註 125 Corporate I ...

重要提示 一、 天津創業環保集團股份有限公司（「本公司」）董事會（「董事會」）、董事（「董事」）及高級管理人員保證2025年 中期報告（「中期報告」）內容的真實性、準確性、完整性，不存在虛假記載、誤導性陳述或重大遺漏，並承擔 個別和連帶的法律責任。 二、 未出席董事情況 | 未出席董事職務 | 未出席董事姓名 | 未出席董事的原因說明 | 被委託人姓名 | | --- | --- | --- | --- | | 董事長 | 唐福生先生 | 因公無法出席，委託董事付 | 付興海先生 | | | | 興海先生代為表決 | | 三、 本公司截至2025年6月30日止六個月的中期財務報告未經審計。 無 十一、其他 中期報告中涉及的財務數字如無特殊說明，所指幣種均為人民幣。 1 二零二五年度中期報告 天津創業環保集團股份有限公司 四、 本公司負責人唐福生先生、主管會計工作負責人聶豔紅女士及會計機構負責人（會計主管人員）劉濤先生 聲明：保證中期報告中財務報告的真實、準確、完整。 五、 董事會決議通過的本報告期利潤分配預案或公積金轉增股本預案 不適用 六、 前瞻性陳述的風險聲明 不適用 七、 是否存在被控股股東及其他關聯方 ...

Revenue and Financial Performance - In the first half of 2025, the Group's revenue was approximately RMB 701.86 million, reflecting a year-on-year increase of 5.53% in pipeline and liquefied industrial gas business[17]. - The Group's revenue for the first half of 2025 was approximately RMB701.86 million, representing an increase of 9.54% compared to RMB640.75 million in the same period of 2024[22][35]. - The revenue from liquefied natural gas products and pipeline transportation at the Luanxian plant increased by 34.83% compared to the same period last year[17]. - The revenue from the supply of industrial gases (pipeline and liquefied) was approximately RMB580.44 million, with a gross profit margin of 27.02%[33]. - The sales of pipeline industrial gas reached approximately 1,935.36 million NM3, generating revenue of approximately RMB511.84 million, an increase from RMB462.32 million in the same period of 2024[34][35]. - The revenue from liquefied natural gas (LNG) and gas transmission services was approximately RMB112.86 million, up from RMB83.71 million in the same period of 2024, marking a growth of 34.83%[22][35]. - The gross profit for the reporting period was approximately RMB168.44 million, an increase of approximately 1.99% from RMB165.16 million in the same period of 2024[52]. - The profit attributable to owners for the reporting period was approximately RMB74.60 million, compared to RMB51.79 million in the same period of 2024[52]. - Revenue from pipeline industrial gas supply was approximately RMB512.59 million, an increase of approximately 10.87% from RMB462.32 million in the same period of 2024, mainly due to an increase in third-party pipeline gas users[54]. - Revenue from liquefied industrial gas supply was approximately RMB62.69 million, a decrease of approximately 23.92% from RMB82.40 million in the same period of 2024, primarily due to increased pipeline gas supply leaving no excess oxygen for liquefaction[54]. - Revenue from liquefied natural gas and gas transportation services was approximately RMB112.87 million, an increase of approximately 34.83% from RMB83.71 million in 2024, attributed to the resumption of normal production of liquefied natural gas[54]. - The total comprehensive income for the period was RMB 75,285,922, up from RMB 52,889,545, reflecting a growth of 42.5%[164]. - For the six months ended June 30, 2025, total external revenue reached RMB 701,859,449, with the supply of industrial gas contributing RMB 580,443,170[199]. Production and Market Conditions - In the first half of 2025, China's crude steel production was approximately 515 million tons, a decrease of 3.0% year-on-year[17]. - Pig iron production was approximately 435 million tons, down 0.8% year-on-year[17]. - Steel product production reached approximately 734 million tons, showing a year-on-year increase of 4.6%[17]. - The steel industry in 2025 is expected to face challenges due to high raw material prices and declining steel prices, leading to a significant decline in profitability[36]. Expenses and Financial Management - Selling and marketing expenses decreased by approximately 5.26% to RMB1.44 million from RMB1.52 million in 2024, primarily due to reduced equipment maintenance costs[62]. - Administrative expenses decreased by approximately 23.36% to RMB17.98 million from RMB23.46 million in 2024, mainly due to lower depreciation and service fees[63]. - The credit loss allowance for trade receivables increased by approximately RMB12.11 million, compared to RMB1.88 million in 2024, due to an increase in aged receivables[64]. - The Group's liquidity policy has been effective in managing liquidity risk, ensuring the ability to meet short-term and long-term liquidity needs[84][93]. - The Group does not currently have a foreign currency and interest rate hedging policy but monitors exposure regularly[89][95]. Assets and Liabilities - The Group's total cash and bank balances were approximately RMB193.84 million as of June 30, 2025, up from RMB183.88 million at the end of 2024[72]. - The current ratio was approximately 1.43 as of June 30, 2025, down from 1.54 at the end of 2024, with total current assets increasing by 3.00% and total current liabilities increasing by 10.84%[75]. - As of June 30, 2025, the provision for impairment loss for trade receivables was approximately RMB38.69 million, an increase from RMB26.58 million as of December 31, 2024[80][83]. - Approximately 96% of trade receivables were payable by HBIS and HBIS Group as of June 30, 2025, up from 89% as of December 31, 2024[80][83]. - The Group's total capital commitments amounted to approximately RMB36.83 million as of June 30, 2025, down from approximately RMB55.68 million as of December 31, 2024[91][97]. Shareholder Information and Corporate Governance - The Board does not recommend the payment of an interim dividend for the year ending December 31, 2025 (2024: Nil)[122]. - As of June 30, 2025, none of the Directors or chief executives had any interests or short positions in the shares of the Company[128]. - Huitang Zhihe (Hong Kong) Co., Limited holds 431,904,000 shares, representing approximately 35.99% of the Company's issued share capital[130]. - China Gas Investors Ltd. holds 468,096,000 shares, representing approximately 39.01% of the Company's issued share capital[130]. - The company has complied with all applicable code provisions set out in the Corporate Governance Code throughout the Reporting Period[119]. Share Option Scheme - The Share Option Scheme was adopted on June 17, 2020, and is effective for 10 years from December 29, 2020, aimed at motivating and retaining eligible persons[141]. - The total number of shares available for issue under the Share Option Scheme is 120,000,000, representing 10% of the issued shares of the Company[150]. - No options were granted by the Company under the Share Option Scheme since the Date of Adoption, and there were no outstanding share options as of June 30, 2025[151]. - The maximum number of shares to be issued upon exercise of all outstanding share options shall not exceed 30% of the shares in issue at any time[146]. - The maximum number of shares issued and to be issued upon exercise of share options granted to any one Eligible Person in any 12-month period shall not exceed 1% of the shares in issue[147].

CONTENTS 目錄 | Corporate Information | 公司資料 | 2 | | --- | --- | --- | | Management Discussion and Analysis | 管理層討論及分析 | 5 | | Unaudited Condensed Consolidated Statement of Comprehensive | 未經審核簡明綜合全面收益表 | 27 | | Income | | | | Unaudited Condensed Consolidated Statement of Financial Position | 未經審核簡明綜合財務狀況表 | 29 | | Unaudited Condensed Consolidated Statement of Changes in Equity | 未經審核簡明綜合權益變動表 | 31 | | Unaudited Condensed Consolidated Statement of Cash Flows | 未經審核簡明綜合現金流量表 | 32 | | Notes to Unaudited Condens ...

Financial Performance - The company's revenue decreased from approximately RMB 133.9 million in the first half of 2024 to approximately RMB 19.0 million in the first half of 2025, representing a decline of 85.8%[8] - Gross profit fell from approximately RMB 21.1 million in the first half of 2024 to approximately RMB 3.0 million in the first half of 2025, a decrease of 85.9%[8] - The company's revenue for the first half of 2025 decreased by approximately RMB 114.9 million or 85.8% to about RMB 19.0 million compared to RMB 133.9 million in the first half of 2024[18] - Gross profit fell by approximately RMB 18.1 million or 85.9% to about RMB 3.0 million in the first half of 2025 from RMB 21.1 million in the first half of 2024[18] - The pre-tax loss increased by 79.8% to RMB 34.7 million in the first half of 2025 from RMB 19.3 million in the first half of 2024[22] - The net loss for the first half of 2025 was approximately RMB 33.8 million, compared to a net loss of approximately RMB 19.5 million in the first half of 2024[33] - The company reported a net loss of RMB 34 million for the six months ended June 30, 2025, with a net cash outflow from operating activities of RMB 15 million[78] - The total comprehensive loss for the period was RMB 34.608 million, which includes a loss of RMB 31.438 million from operations[78] Revenue Breakdown - The decline in revenue was primarily due to a reduction of approximately RMB 45.7 million from mobile gaming, RMB 62.4 million from digital media, and RMB 6.8 million from game product supply[8] - Mobile game revenue dropped by approximately RMB 45.7 million or 97.4% from about RMB 46.9 million in the first half of 2024 to about RMB 1.2 million in the first half of 2025[23] - Digital media content distribution revenue fell by approximately RMB 62.4 million or 79.5% from about RMB 78.5 million in the first half of 2024 to about RMB 16.1 million in the first half of 2025[23] - Revenue from game product supply to subsidiaries was RMB 1,687,000 for the six months ended June 30, 2025, down from RMB 8,498,000 in the same period of 2024, indicating a decline[107] Assets and Liabilities - The total assets decreased by 41.8% from RMB 550.6 million as of December 31, 2024, to RMB 320.5 million as of June 30, 2025[16] - The total equity decreased by 20.6% from RMB 179.3 million to RMB 142.3 million during the same period[16] - Total current assets decreased to RMB 199,743,000 from RMB 416,206,000, reflecting a decline of 52%[72] - The company's total assets less current liabilities decreased to RMB 167,114,000 from RMB 196,651,000, a decline of 15%[73] - The total equity attributable to the owners of the parent company decreased to RMB 123,336,000 from RMB 157,944,000, a decline of 22%[73] User Metrics - The number of paying players dropped to 0.08 thousand from 211.3 thousand, representing a 100% decrease[21] - Average monthly paying users also fell to 0.08 thousand from 35.2 thousand, marking a 100% decrease[21] - The company reported a significant increase in monthly paying users, reaching a total of 1 million, representing a growth of 25% year-over-year[118] Strategic Initiatives - The company aims to strengthen investments in mobile game development, digital media content production, AI technology research, and overseas market expansion[10] - The company plans to explore deeper integration of AI technology with its business to enhance product offerings and user experiences[11] - The company plans to strengthen investments in mobile game development, digital media content production, AI technology research, and overseas market expansion in the second half of 2025[19] - The company aims to explore deeper integration of AI with its business to uncover new product scenarios and enhance resource integration and innovation[19] - The company will continue to collaborate with technology service companies and well-known game companies to create high-quality games and enhance its digital media marketing capabilities[19] Governance and Compliance - The audit committee consists of three members, including two independent non-executive directors, and has reviewed the interim financial results for the first half of 2025[66] - The company has complied with all applicable corporate governance codes, except for the separation of the roles of chairman and CEO[63] - A female non-executive director was appointed on March 28, 2025, to enhance board diversity[65] - The company has established governance measures to avoid conflicts of interest among directors[53] Market Challenges - The company faces significant risks in the mobile gaming market in China, including reliance on distribution channels and potential delays in payment from settlement agents, which could adversely affect cash flow and financial performance[42] - The company is expanding into AI application development and AIGC mobile applications, facing compliance risks due to evolving regulations and uncertainty regarding user willingness to pay for AIGC applications[42] - The company relies on overseas suppliers for game product procurement, facing challenges related to product quality and transportation losses[43] - The company has established a significant presence in the digital media content sector but faces external disruptions such as system outages and hacking incidents[42] Shareholder Information - As of June 30, 2025, Mr. Wang Le holds 447,974,711 shares, representing 61.00% of the company's equity, through Infinities Global[45] - Ms. An Fenghua also holds 447,974,711 shares, representing 61.00% of the company's equity, through controlled entities[49] - The company did not recommend any interim dividend for the first half of 2025, consistent with the previous year[54] - The company has not disclosed any arrangements allowing directors to benefit from purchasing shares or debt securities of the company or other entities[47] Future Outlook - The company plans to expand its market presence in Southeast Asia, targeting a 30% market share by the end of 2025[118] - New product launches are expected to contribute an additional HKD 100 million in revenue over the next fiscal year[118] - The company is investing HKD 50 million in research and development for new technologies aimed at enhancing user experience[118] - The company has set a performance guidance of 20% revenue growth for the upcoming fiscal year[118]

[Section I Definitions](index=2&type=section&id=%E7%AC%AC%E4%B8%80%E7%AF%80%20%E9%87%8B%E7%BE%A9) This section provides definitions of common terms used in the report, ensuring clear understanding of the content [Definitions of Common Terms](index=3&type=section&id=%E5%B8%B8%E7%94%A8%E8%A9%9E%E8%AA%9E%E9%87%8B%E7%BE%A9) This section defines key terms such as company names, major shareholders, relevant institutions, operating principles, and the reporting period - Company, the Company, and Maanshan Iron & Steel all refer to Maanshan Iron & Steel Company Limited[9](index=9&type=chunk) - The Group refers to the Company and its subsidiaries[9](index=9&type=chunk) - China Baowu is the controlling shareholder of Magang Group, which is the direct controlling shareholder of the Company[9](index=9&type=chunk) - The Reporting Period refers to January 1, 2025, to June 30, 2025[10](index=10&type=chunk) - "Four Modernizations" refers to the development path of high-end, intelligent, green, and efficient; "Four Haves" refers to production with orders, revenue with profit, output with margin, and profit with cash[10](index=10&type=chunk) [Section II Company Profile and Key Financial Indicators](index=4&type=section&id=%E7%AC%AC%E4%BA%8C%E7%AF%80%20%E5%85%AC%E5%8F%B8%E7%B0%A1%E4%BB%8B%E5%92%8C%E4%B8%BB%E8%A6%81%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99) This section provides an overview of the company's basic information, contact details, stock profile, and key financial performance metrics [I. Company Information](index=5&type=section&id=%E4%B8%80.%20%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) This section outlines the company's basic registration information, including its Chinese name, abbreviation, foreign name, and legal representative - The company's Chinese name is Maanshan Iron & Steel Company Limited, abbreviated as Maanshan Iron & Steel[11](index=11&type=chunk) - The legal representative is Jiang Yuxiang[11](index=11&type=chunk) [II. Contact Persons and Information](index=5&type=section&id=%E4%BA%8C.%20%E8%81%AF%E7%B9%AB%E4%BA%BA%E5%92%8C%E8%81%AF%E7%B9%AB%E6%96%B9%E5%BC%8F) This section provides detailed contact information for the Company Secretary and Joint Company Secretary, facilitating communication with investors and the public - The Company Secretary is He Hongyun, and the Joint Company Secretary is Zhao Kaishan[12](index=12&type=chunk) - Company contact addresses include No. 8 Jiuhua West Road, Maanshan City, Anhui Province, China, and Chinese Bank Building, 61 Des Voeux Road Central, Hong Kong, China[12](index=12&type=chunk) [III. Brief Introduction to Changes in Basic Information](index=5&type=section&id=%E4%B8%89.%20%E5%9F%BA%E6%9C%AC%E6%83%85%E6%B3%81%E8%AE%8A%E6%9B%B4%E7%B0%A1%E4%BB%8B) The company's registered address has remained at No. 8 Jiuhua West Road, Maanshan City, Anhui Province, since June 2009, with its official websites also listed - The company's registered address has been No. 8 Jiuhua West Road, Maanshan City, Anhui Province, since June 2009[13](index=13&type=chunk) - The company's website is www.magang.com.cn (A-shares) and www.magang.com.hk (H-shares)[13](index=13&type=chunk) [IV. Brief Introduction to Changes in Information Disclosure and Document Placement](index=5&type=section&id=%E5%9B%9B.%20%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E5%8F%8A%E5%82%99%E7%BD%AE%E5%9C%B0%E9%BB%9E%E8%AE%8A%E6%9B%B4%E6%83%85%E6%B3%81%E7%B0%A1%E4%BB%8B) The company designates "Shanghai Securities News" for information disclosure and publishes its semi-annual report on the SSE and HKEX websites, with reports available at the Company Secretary's Office - The company's designated information disclosure newspaper is "Shanghai Securities News"[14](index=14&type=chunk) - The semi-annual report is published on www.sse.com.cn and www.hkex.com.hk[14](index=14&type=chunk) [V. Company Stock Profile](index=6&type=section&id=%E4%BA%94.%20%E5%85%AC%E5%8F%B8%E8%82%A1%E7%A5%A8%E7%B0%A1%E6%B3%81) The company's A-shares and H-shares are listed on the Shanghai Stock Exchange and Hong Kong Stock Exchange respectively, with their abbreviations, codes, and transfer registration details provided Company Stock Profile | Stock Type | Listing Exchange | Stock Abbreviation | Stock Code | | :--- | :--- | :--- | :--- | | A-shares | Shanghai Stock Exchange | Maanshan Iron & Steel | 600808 | | H-shares | Hong Kong Stock Exchange | Maanshan Iron & Steel | 00323 | - The company's A-share transfer registration office is China Securities Depository and Clearing Corporation Limited, Shanghai Branch[16](index=16&type=chunk) - The company's H-share transfer registration office is Hong Kong Registrars Limited[16](index=16&type=chunk) [VI. Key Accounting Data and Financial Indicators](index=6&type=section&id=%E5%85%AD.%20%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%95%B8%E6%93%9A%E5%92%8C%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99) During the reporting period, operating revenue decreased by **11.47%** year-on-year, but net loss attributable to shareholders significantly narrowed from **RMB 1.145 billion** to **RMB 0.075 billion**, while net cash flow from operating activities decreased by **23.38%** Key Accounting Data (January-June 2025 vs. Prior Year Period) | Key Accounting Data | Current Reporting Period (Jan–Jun) (RMB) | Prior Year Period (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 38,075,533,544 | 43,007,478,790 | -11.47 | | Total Profit | 117,712,960 | -1,190,806,469 | N/A | | Net Profit Attributable to Shareholders | -74,780,316 | -1,144,779,937 | N/A | | Net Cash Flow from Operating Activities | 940,725,426 | 1,227,796,059 | -23.38 | | Net Assets Attributable to Shareholders | 23,901,475,700 | 23,257,460,660 | 2.77 | | Total Assets | 82,322,514,611 | 78,962,973,613 | 4.25 | | Total Share Capital | 7,722,104,586 | 7,746,937,986 | -0.32 | Key Financial Indicators (January-June 2025 vs. Prior Year Period) | Key Financial Indicators | Current Reporting Period (Jan–Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | -0.01 | -0.148 | N/A | | Diluted Earnings Per Share (RMB/share) | -0.01 | -0.148 | N/A | | Weighted Average Return on Net Assets (%) | -0.32 | -4.21 | Increased by 3.89 percentage points | | Weighted Average Return on Net Assets (Excluding Non-recurring Gains/Losses) (%) | -0.47 | -4.55 | Increased by 4.08 percentage points | [(I) Key Accounting Data](index=6&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%95%B8%E6%93%9A) In H1 2025, operating revenue was **RMB 38.076 billion**, a **11.47%** year-on-year decrease, while net loss attributable to shareholders significantly narrowed to **RMB 0.075 billion** Key Accounting Data (January-June 2025 vs. Prior Year Period) | Key Accounting Data | Current Reporting Period (Jan–Jun) (RMB) | Prior Year Period (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 38,075,533,544 | 43,007,478,790 | -11.47 | | Net Profit Attributable to Shareholders | -74,780,316 | -1,144,779,937 | N/A | | Net Cash Flow from Operating Activities | 940,725,426 | 1,227,796,059 | -23.38 | | Net Assets Attributable to Shareholders | 23,901,475,700 | 23,257,460,660 | 2.77 | | Total Assets | 82,322,514,611 | 78,962,973,613 | 4.25 | [(II) Key Financial Indicators](index=7&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E4%B8%BB%E8%A6%81%E8%B2%A1%E5%8B%99%E6%8C%87%E6%A8%99) Basic earnings per share improved to **-RMB 0.01/share**, and weighted average return on net assets increased by **3.89 percentage points**, indicating profitability recovery Key Financial Indicators (January-June 2025 vs. Prior Year Period) | Key Financial Indicators | Current Reporting Period (Jan–Jun) | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | -0.01 | -0.148 | N/A | | Weighted Average Return on Net Assets (%) | -0.32 | -4.21 | Increased by 3.89 percentage points | | Weighted Average Return on Net Assets (Excluding Non-recurring Gains/Losses) (%) | -0.47 | -4.55 | Increased by 4.08 percentage points | [VII. Non-recurring Gains and Losses and Amounts](index=7&type=section&id=%E4%B8%83.%20%E9%9D%9E%E7%B6%93%E5%B8%B8%E6%80%A7%E6%90%8D%E7%9B%8A%E9%A0%85%E7%9B%AE%E5%92%8C%E9%87%91%E9%A1%8D) Total non-recurring gains and losses amounted to **RMB 33.4588 million**, primarily from government subsidies and asset disposals Non-recurring Gains and Losses and Amounts | Non-recurring Gains and Losses Item | Amount (RMB) | | :--- | :--- | | Gains/losses on disposal of non-current assets | 2,563,049 | | Government subsidies recognized in current profit/loss | 22,642,603 | | Fair value changes and disposal gains/losses from financial assets and liabilities held by non-financial enterprises | 1,058 | | Other non-operating income and expenses apart from the above | 13,939,531 | | Less: Income tax impact | -3,192,947 | | Less: Impact on minority interests (after tax) | -2,494,455 | | Total | 33,458,839 | [Section III Management Discussion and Analysis](index=8&type=section&id=%E7%AC%AC%E4%B8%89%E7%AF%80%20%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) This section provides a comprehensive discussion and analysis of the company's industry, operations, core competencies, and financial performance during the reporting period [I. Industry and Principal Business Overview During the Reporting Period](index=8&type=section&id=%E4%B8%80.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%85%A7%E5%85%AC%E5%8F%B8%E6%89%80%E5%B1%AC%E8%A1%8C%E6%A5%AD%E5%8F%8A%E4%B8%BB%E7%87%9F%E6%A5%AD%E5%8B%99%E6%83%85%E6%B3%81%E8%AA%AA%E6%98%8E) In H1 2025, the steel industry experienced "reduced output, optimized inventory, and recovering profitability" amid stable economic growth, with the company maintaining its diversified steel product business - In H1 2025, national GDP grew by **5.3%**, and the steel industry showed characteristics of "reduced output, optimized inventory, and recovering profitability"[24](index=24&type=chunk) Key Steel Industry Data (January-June 2025) | Indicator | Data | YoY Change | | :--- | :--- | :--- | | Domestic Crude Steel Production | 515 million tons | -3% | | Apparent Crude Steel Consumption | 450 million tons | -5.7% | | Steel Exports | 58.147 million tons | +9.2% | | Average Domestic Steel Composite Price Index | 93.75 points | -13.35% | | Average Imported Iron Ore Price | - | -16.7% | | Coking Coal Procurement Cost | - | -32.04% | | Metallurgical Coke Procurement Cost | - | -28.64% | - The company's principal business is the production and sale of steel products, making it one of China's largest steel producers and sellers by single production base[25](index=25&type=chunk) - The company's products consist of four major series: "special steel, wheels and axles, long products, and plates," widely used in aviation, railway, automotive, and other fields[25](index=25&type=chunk) [II. Discussion and Analysis of Operations](index=8&type=section&id=%E4%BA%8C.%20%E7%B6%93%E7%87%9F%E6%83%85%E6%B3%81%E7%9A%84%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) In H1 2025, the company achieved overall improved operations and a **RMB 1.07 billion** year-on-year profit increase in net profit attributable to the parent, driven by cost reduction, product adjustment, and strategic synergies, aiming to avoid full-year losses - In H1 2025, the Group produced **9.36 million tons of pig iron, 10.35 million tons of crude steel, and 9.63 million tons of steel products**[26](index=26&type=chunk) H1 2025 Key Financial Data | Indicator | Amount (RMB) | | :--- | :--- | | Operating Revenue | 38.076 billion | | Net Profit Attributable to Shareholders | -0.075 billion | | Year-on-year Profit Increase | 1.07 billion | - Through internal cost reduction and efficiency improvement in procurement and manufacturing, **unit steel cost was reduced by RMB 91**[28](index=28&type=chunk) - Settlement of key steel products reached **2.77 million tons, a 22% year-on-year increase**; sales of new products reached **867,000 tons, with unit material excess gross profit increasing by 39% year-on-year**[29](index=29&type=chunk) - Maanshan Iron & Steel Co., Ltd. (Magang Limited) introduced Baosteel Co. as a strategic investor with a **49% stake**, creating favorable conditions for deep synergistic development with Baosteel Co[30](index=30&type=chunk) - **172 supporting projects** were jointly carried out with Baosteel Co., driving Magang Limited to achieve monthly profitability since its independent operation in March[32](index=32&type=chunk) - Changjiang Steel's hot metal cost decreased by **26%**, and its self-generated power ratio increased by **18.62 percentage points**[32](index=32&type=chunk) - In H2, the company will actively respond to the severe situation, focus on value creation, deepen accounting-based management, and strive to **avoid losses for the full year**[33](index=33&type=chunk) Cash Flow Changes (H1 2025 vs. Prior Year Period) | Item | H1 2025 (RMB) | Prior Year Period (RMB) | Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 0.941 billion | 1.228 billion | Decreased by 0.287 billion | | Net Cash Outflow from Investing Activities | 1.620 billion | 0.704 billion | Increased by 0.916 billion | | Net Cash Inflow from Financing Activities | 2.30 billion | 0.330 billion | Significantly increased | | Net Increase in Cash and Cash Equivalents | 1.628 billion | 0.852 billion | Increased | - The significant increase in net cash inflow from financing activities was primarily due to the **receipt of the first installment of RMB 2.57 billion from the disposal of a 35.42% equity stake in Magang Limited**[40](index=40&type=chunk) - At the end of the reporting period, the Group's **asset-liability ratio was 60.49%**, a decrease of **4.91 percentage points** compared to the end of 2024[41](index=41&type=chunk) - The company actively manages exchange rate and interest rate fluctuation risks by adhering to the principles of "cost locking, tool locking, exposure locking, and cash flow locking," and expands cross-border RMB business to mitigate exchange rate risks[42](index=42&type=chunk) [1. Key Operating Performance](index=8&type=section&id=1.%20%E4%B8%BB%E8%A6%81%E7%B6%93%E7%87%9F%E6%83%85%E6%B3%81) In H1 2025, the company focused on value creation, achieving a **RMB 91** unit steel cost reduction, progress in product structure adjustment, and monthly profitability for Magang Limited through strategic reforms and synergies - In H1 2025, the Group produced **9.36 million tons of pig iron, 10.35 million tons of crude steel, and 9.63 million tons of steel products**[26](index=26&type=chunk) H1 2025 Key Financial Data | Indicator | Amount (RMB) | | :--- | :--- | | Operating Revenue | 38.076 billion | | Net Profit Attributable to Shareholders | -0.075 billion | | Year-on-year Profit Increase | 1.07 billion | - In procurement, the iron ore segment's average spot purchase price outperformed the index by **USD 4.58/ton**, and the coking coal procurement cost was **RMB 10.67/ton lower than the industry average**[28](index=28&type=chunk) - In marketing, the proportion of key products was **35%** and direct supply was **73.4%**, increasing by **5.0 and 8.5 percentage points** respectively compared to last year[28](index=28&type=chunk) - Through internal cost reduction and efficiency improvement in procurement and manufacturing, **unit steel cost was reduced by RMB 91**[28](index=28&type=chunk) - Settlement of key steel products reached **2.77 million tons, a 22% year-on-year increase**; sales of new products reached **867,000 tons, with unit material excess gross profit increasing by 39% year-on-year**[29](index=29&type=chunk) - Progress was made in the domestic production of high-speed train wheels, with autonomous wheels for Fuxing Hao EMU entering the China Railway Group supplier list and securing orders[29](index=29&type=chunk) - Maanshan Iron & Steel Co., Ltd. (Magang Limited) introduced Baosteel Co. as a strategic investor with a **49% stake**, creating favorable conditions for deep synergistic development with Baosteel Co[30](index=30&type=chunk) - **172 supporting projects** were jointly carried out with Baosteel Co., driving Magang Limited to achieve monthly profitability since its independent operation in March[32](index=32&type=chunk) - Changjiang Steel's hot metal cost decreased by **26%**, and its self-generated power ratio increased by **18.62 percentage points**, with unit steel external power cost decreasing by **22.97%**[32](index=32&type=chunk) [2. H2 Situation and Tasks](index=10&type=section&id=2.%20%E4%B8%8B%E5%8D%8A%E5%B9%B4%E5%BD%A2%E5%8B%A2%E8%88%87%E4%BB%BB%E5%8B%99) The company will proactively address a challenging H2 steel market by focusing on value creation, deepening accounting-based management, and strengthening synergistic value creation to avoid full-year losses - In H2, steel demand is expected to shift from weak to strong, and supply from strong to weak, with steel prices potentially showing a **V-shaped trend** for the full year; raw material prices may fluctuate downwards[33](index=33&type=chunk) - The company will focus on value creation, deepen accounting-based management, comprehensively benchmark for gaps, strengthen synergistic value creation, and intensify product structure adjustments, striving to **achieve no losses for the full year**[33](index=33&type=chunk) - Key tasks include: ensuring stable and smooth production (stabilizing blast furnaces, steel rolling, orders, equipment, and energy)[35](index=35&type=chunk) - Comprehensively deepening benchmarking to drive **full-factor cost reduction and full-process quality improvement**[35](index=35&type=chunk) - Closely monitoring both procurement and sales markets, with marketing focusing on **structure adjustment, export increase, and channel optimization**, and procurement emphasizing **delayed purchasing, multiple batches, and small quantities**[36](index=36&type=chunk) - Solidifying technological innovation support, focusing on **product differentiation, structural adjustment, core breakthroughs, and industrial extension**[37](index=37&type=chunk) - Promoting "three reductions and three enhancements": **reducing ineffective assets, reducing debt and "two funds" (receivables and inventory) scale, enhancing overall labor productivity, increasing the proportion of bidding and direct procurement, and increasing the proportion of direct supply**[39](index=39&type=chunk) [3. Cash Flow](index=12&type=section&id=3.%20%E7%8F%BE%E9%87%91%E6%B5%81) The Group's net increase in cash and cash equivalents was **RMB 1.628 billion**, with operating cash flow decreasing due to lower sales and increased notes receivable, while financing cash flow surged from the Magang Limited equity disposal Cash Flow Changes (H1 2025 vs. Prior Year Period) | Item | H1 2025 (RMB) | Prior Year Period (RMB) | Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 0.941 billion | 1.228 billion | Decreased by 0.287 billion | | Net Cash Outflow from Investing Activities | 1.620 billion | 0.704 billion | Increased by 0.916 billion | | Net Cash Inflow from Financing Activities | 2.30 billion | 0.330 billion | Significantly increased | | Net Increase in Cash and Cash Equivalents | 1.628 billion | 0.852 billion | Increased | - The decrease in net cash inflow from operating activities was mainly due to **lower sales revenue, reduced cash inflow from sales of goods, and an increase in notes receivable**[40](index=40&type=chunk) - The increase in net cash outflow from investing activities was mainly due to **increased net cash outflow for the construction of long-term assets**[40](index=40&type=chunk) - The increase in net cash inflow from financing activities was mainly due to the **receipt of the first installment of RMB 2.57 billion from the disposal of a 35.42% equity stake in Magang Limited**[40](index=40&type=chunk) [4. Financial Position and Exchange Rate Risk](index=12&type=section&id=4.%20%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E5%8F%8A%E5%8C%AF%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group's financial position is stable with an **asset-liability ratio of 60.49%** and ample bank credit, while exchange rate risks are actively managed through hedging strategies and RMB settlement Borrowing Structure (H1 2025) | Borrowing Type | Amount (RMB) | | :--- | :--- | | Short-term Borrowings | 13.181 billion | | Long-term Borrowings | 5.607 billion | | Long-term Borrowings Due Within One Year | 3.320 billion | | **Total** | **22.108 billion** | | Fixed-rate Borrowings | 16.987 billion | | Floating-rate Borrowings | 5.121 billion | - At the end of the reporting period, the Group's **asset-liability ratio was 60.49%**, a decrease of **4.91 percentage points** compared to the end of 2024[41](index=41&type=chunk) - Banks' committed credit lines to the Group totaled approximately **RMB 88.799 billion**, of which approximately **RMB 50.097 billion was unused**[41](index=41&type=chunk) - The company actively manages exchange rate and interest rate fluctuation risks, adhering to the operating principles of "cost locking, tool locking, exposure locking, and cash flow locking," and mitigates exchange rate fluctuation risks through RMB settlement[42](index=42&type=chunk) [5. Internal Control and Risk Management](index=13&type=section&id=5.%20%E5%85%A7%E9%83%A8%E7%9B%A3%E6%8E%A7%E5%8F%8A%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The company maintains an effective internal control system covering all operations, with regular audit committee reviews confirming that all risks are under control, as evidenced by an unqualified audit opinion on financial reporting internal controls - The company implements an internal audit system and has established an internal control system covering the entire production and operation management process, including internal environment, risk assessment, and social responsibility[44](index=44&type=chunk) - The Audit Committee regularly reviews summaries and plans of internal audit work and deliberates on reports concerning anti-fraud efforts[44](index=44&type=chunk) - The Board confirmed that the company maintained effective internal controls in all material aspects for 2024, and Ernst & Young Hua Ming issued a standard unqualified internal control audit report[45](index=45&type=chunk) - The company's control measures for risks such as production safety, bulk raw material price fluctuations, exchange rate and interest rate fluctuations, cash flow management, environmental protection, and total energy consumption control are appropriate, and all risks are under control[45](index=45&type=chunk) [III. Analysis of Core Competencies During the Reporting Period](index=14&type=section&id=%E4%B8%89.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%85%A7%E6%A0%B8%E5%BF%83%E7%AB%B6%E7%88%AD%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competitiveness stems from its integration into China Baowu's ecosystem, strategic geographical location, diversified high-value-added product structure, and proprietary technologies in key steel products, driving continuous innovation - The company actively integrates into China Baowu's ecosystem, achieving optimized resource allocation and efficiency through deep synergy, with the strategic investment of Baosteel Co. in Magang Limited showing initial synergistic effects[47](index=47&type=chunk) - Located in Maanshan City, Anhui Province, the company boasts a superior geographical location, close to rivers and the sea, with excellent transportation conditions, providing vast market space for development[48](index=48&type=chunk) - The company has formed a product structure of four major categories: "special steel, wheels and axles, long products, and plates," with diversified products shifting towards high-value-added items to enhance profitability[49](index=49&type=chunk) - The company possesses proprietary intellectual property and multiple core technologies in three product series: high-speed train wheels, H-beams, and cold heading steel, applying for **187 patents** during the reporting period[50](index=50&type=chunk) - Autonomous wheels for CR400 Fuxing Hao EMU entered the China Railway Group supplier list; stable production and delivery of high-strength, high-toughness, hydrogen-embrittlement-resistant **2000MPa-grade hot-formed steel** were achieved; and silicon steel products for drone drive motors were launched[50](index=50&type=chunk) [IV. Key Operating Performance During the Reporting Period](index=15&type=section&id=%E5%9B%9B.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%85%A7%E4%B8%BB%E8%A6%81%E7%B6%93%E7%87%9F%E6%83%85%E6%B3%81) Operating revenue decreased by **11.47%** due to lower steel prices, but operating costs decreased more significantly, leading to improved profitability, while cash flows were impacted by the Magang Limited equity transfer and asset-liability structure optimization Financial Statement Item Changes (H1 2025 vs. Prior Year Period) | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Operating Revenue | -11.47 | Weak downstream demand, lower average steel prices | | Operating Cost | -14.69 | Full-process cost reduction and efficiency improvement, lower raw material prices | | Net Cash Flow from Operating Activities | -23.38 | Lower sales revenue, increased notes receivable | | Net Cash Flow from Investing Activities | N/A (Increased by 130.10%) | Increased cash paid for construction of fixed assets, intangible assets, and other long-term assets | | Net Cash Flow from Financing Activities | 596.76 | Baosteel Co. acquired equity in Magang Limited, received first installment of RMB 2.57 billion | | Other Income | 64.64 | VAT input tax additional deduction recognized | | Investment Income | -83.92 | Decreased investment income from associates and joint ventures | | Credit Impairment Losses | -158.67 | Increased provision for bad debts | | Gains on Disposal of Assets | -84.51 | Subsidiary recognized land acquisition gains in prior year | | Non-operating Income | 2,348.45 | Write-off of certain unpayable amounts | | Non-operating Expenses | 34.95 | Increased losses from disposal of fixed assets | | Income Tax Expense | -36.00 | Decreased income tax expense for Magang Transportation Materials and Cihu Processing | | Minority Interests Profit/Loss | N/A (Increased by RMB 0.282 billion) | Increased profitability of non-wholly owned subsidiaries year-on-year | | Operating Profit/(Loss), Total Profit/(Loss), Net Profit/(Loss), Net Loss Attributable to Parent Company Shareholders | N/A (Improved year-on-year) | Improved purchase-sale spread, cost reduction and quality improvement measures drove improved operating performance | - The significant increase in net cash inflow from financing activities was primarily due to the **receipt of the first installment of RMB 2.57 billion from the disposal of a 35.42% equity stake in Magang Limited to Baosteel Co. for RMB 5.139 billion**[55](index=55&type=chunk) - At the end of the reporting period, **overseas assets amounted to RMB 0.922 billion, accounting for 1.12% of total assets**[71](index=71&type=chunk) - At the end of the reporting period, the company's **restricted assets totaled approximately RMB 1.731 billion**, mainly comprising bank acceptance bill deposits and performance bond deposits[72](index=72&type=chunk) Overall Analysis of External Equity Investments | Indicator | Amount (Millions of RMB) | | :--- | :--- | | Company's Investment at Period-end | 19,618 | | Change in Investment Amount | 6,482 | | Percentage Change in Investment from Prior Year (%) | 49.35 | - The increase in investment amount this period was mainly due to **capital injection into the subsidiary Magang Limited**[75](index=75&type=chunk) - The company transferred a **35.42% equity stake in Magang Limited to Baosteel Co. for RMB 5.139 billion**, with Baosteel Co. also injecting **RMB 3.861 billion** into Magang Limited. After the transaction, the company's stake in Magang Limited decreased from 100% to **51%**, and Baosteel Co. holds **49%**[85](index=85&type=chunk) - The introduction of Baosteel Co. into Magang Limited helps promote innovation in management and business models, enhance core competitiveness and overall strength, and achieve synergistic development with Baosteel Co[86](index=86&type=chunk) Key Financial Data of Major Controlled and Invested Companies (Millions of RMB) | Company Name | Company Type | Shareholding Ratio | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Maanshan Iron & Steel Co., Ltd. | Subsidiary | 51% | 1,266 | 61,188 | 14,952 | 31,840 | -6.79 | -62 | | Anhui Changjiang Steel Co., Ltd. | Subsidiary | 55% | 1,200 | 8,846 | 3,880 | 6,507 | 115 | 108 | | Magang (Australia) Co., Ltd. | Subsidiary | 100% | (Note 2) | 196 | 191 | 36.99 | 36.80 | 25.63 | | Shenglong Chemical Co., Ltd. | Associate | 31.99% | 568.8 | 7,489 | 4,139 | 2,251 | -79 | -91 | | Henan Jinma Energy Co., Ltd. | Associate | 26.89% | 535 | 10,571 | 4,186 | 4,143 | -137 | -139 | | Baowu Group Finance Co., Ltd. | Associate | 22.36% | 6,840 | 68,813 | 10,309 | 738 | 400 | 303 | | Ouyeel Industrial Products Co., Ltd. | Associate | 9.17% | 4,799 | 24,303 | 5,193 | 1,963 | 126 | 104 | | Linhuan Coking Co., Ltd. | Associate | 5.40% | 1,091 | 4,985 | 1,426 | 3,503 | -221 | -201 | - Magang Limited has achieved **monthly profitability since its independent operation in March**[89](index=89&type=chunk) [(I) Analysis of Principal Business](index=15&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E4%B8%BB%E7%87%9F%E6%A5%AD%E5%88%86%E6%9E%90) Operating revenue decreased by **11.47%** due to lower steel prices, but operating costs decreased more significantly, leading to an improved net loss attributable to the parent, driven by better purchase-sale spread and cost reduction measures Financial Statement Item Changes (H1 2025 vs. Prior Year Period) | Item | Current Period Amount (RMB) | Prior Year Period Amount (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 38,075,533,544 | 43,007,478,790 | -11.47 | | Operating Cost | 36,244,525,052 | 42,484,454,227 | -14.69 | | Net Cash Flow from Operating Activities | 940,725,426 | 1,227,796,059 | -23.38 | | Net Cash Flow from Investing Activities | -1,619,631,859 | -703,896,902 | N/A | | Net Cash Flow from Financing Activities | 2,297,776,926 | 329,780,103 | 596.76 | | Other Income | 219,162,236 | 133,118,240 | 64.64 | | Investment Income | 13,557,382 | 84,287,590 | -83.92 | | Credit Impairment Losses | -9,568,661 | 16,310,120 | -158.67 | | Gains on Disposal of Assets | 11,386,204 | 73,529,933 | -84.51 | | Non-operating Income | 17,953,725 | 733,269 | 2,348.45 | | Non-operating Expenses | 12,837,349 | 9,512,675 | 34.95 | | Income Tax Expense | 77,493,175 | 121,089,148 | -36.00 | | Net Loss Attributable to Parent Company Shareholders | -74,780,316 | -1,144,779,937 | N/A | - The decrease in operating revenue was mainly due to the **year-on-year decline in average steel prices** affected by sustained weak demand in downstream industries[55](index=55&type=chunk) - The increase in net cash inflow from financing activities was mainly due to **Baosteel Co.'s acquisition of a 35.42% equity stake in Magang Limited from Maanshan Iron & Steel Co. for RMB 5.139 billion**, with the first installment of **RMB 2.57 billion** already received this period[55](index=55&type=chunk) - The year-on-year improvement in net loss attributable to parent company shareholders was mainly due to an **improved purchase-sale spread** and the company's efforts to continuously improve operating performance through accounting-based management, full-factor cost reduction, and full-process quality improvement measures[62](index=62&type=chunk) [(II) Analysis of Assets and Liabilities](index=17&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E8%B3%87%E7%94%A2%E3%80%81%E8%B2%A0%E5%82%B5%E6%83%85%E6%B3%81%E5%88%86%E6%9E%90) Monetary funds, notes receivable financing, and other receivables significantly increased, while inventory decreased, and minority interests surged by **112.20%** due to Baosteel Co.'s investment in Magang Limited Asset and Liability Status Changes (H1 2025 vs. End of Prior Year) | Item Name | Current Period-end Amount (RMB) | % of Total Assets | Prior Year-end Amount (RMB) | % of Total Assets | % Change from Prior Year-end | | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 8,436,274,044 | 10.25 | 6,434,105,447 | 8.15 | 31.12 | | Notes Receivable Financing | 2,585,459,712 | 3.14 | 1,382,456,994 | 1.75 | 87.02 | | Inventory | 7,126,202,291 | 8.66 | 7,908,952,095 | 10.02 | -9.90 | | Other Receivables | 3,010,330,626 | 3.66 | 544,731,735 | 0.69 | 452.63 | | Construction in Progress | 1,083,887,697 | 1.32 | 795,364,312 | 1.01 | 36.28 | | Minority Interests | 8,623,103,874 | 10.47 | 4,063,591,541 | 5.15 | 112.20 | - Monetary funds increased by **31.12%**, mainly due to the company's transfer of a **35.42% equity stake in Magang Limited to Baosteel Co.** and the receipt of the first installment of **RMB 2.57 billion** from the equity transfer this period[67](index=67&type=chunk) - Other receivables increased by **452.63%**, mainly because the second installment of **RMB 2.57 billion** from the Magang Limited equity transfer was recognized as other receivables[67](index=67&type=chunk) - **Overseas assets amounted to RMB 0.922 billion, accounting for 1.12% of total assets**[71](index=71&type=chunk) - At the end of the reporting period, the company's **restricted assets totaled approximately RMB 1.731 billion**, mainly comprising bank acceptance bill deposits and performance bond deposits[72](index=72&type=chunk) [(III) Analysis of Investment Status](index=19&type=section&id=%EF%BC%88%E4%B8%89%EF%BC%89%E6%8A%95%E8%B3%87%E7%8B%80%E6%B3%81%E5%88%86%E6%9E%90) Total external equity investment increased by **49.35%** due to capital injection into Magang Limited, with significant non-equity investments in product quality, environmental protection, and technological transformation projects progressing towards completion Overall Analysis of External Equity Investments | Indicator | Amount (Millions of RMB) | | :--- | :--- | | Company's Investment at Period-end | 19,618 | | Change in Investment Amount | 6,482 | | Percentage Change in Investment from Prior Year (%) | 49.35 | - The increase in investment amount this period was mainly due to **capital injection into the subsidiary Magang Limited**[75](index=75&type=chunk) Major Non-equity Investment Projects | Project Name | Total Budgeted Investment (Millions of RMB) | New Investment in Reporting Period (Millions of RMB) | Project Progress | | :--- | :--- | :--- | :--- | | Product Quality Projects | 12,298 | 363 | 4% | | Energy Saving and Environmental Protection Projects | 3,499 | 134 | 4% | | Technological Transformation Projects | 3,237 | 397 | 17% | | Total | N/A | 968 | N/A | Major Engineering Projects | Project Name | Planned Investment Amount (Millions of RMB) | Project Progress | | :--- | :--- | :--- | | New Special Steel Project | 8,457 | Phase I completed, Phase II feasibility study adjusted | | Magang Cold Rolling Product Structure Adjustment – New 6 Galvanized Line Project | 895 | Civil works, steel structure, equipment installation | | Magang South Area Section Steel Renovation Project - 3 Continuous Casting Machine Project | 534 | Civil works, steel structure construction | | Magang North Area Phase III Gas Power Generation Project | 370 | Civil works construction | | Changjiang Steel Bar Near-Net-Shape Casting and Rolling Integration Upgrade Project | 105 | Plant steel structure, equipment foundation construction | | Total | 10,361 | ╱ | [(IV) Major Asset and Equity Disposals](index=21&type=section&id=%EF%BC%88%E5%9B%9B%EF%BC%89%E9%87%8D%E5%A4%A7%E8%B3%87%E7%94%A2%E5%92%8C%E8%82%A1%E6%AC%8A%E5%87%BA%E5%94%AE) The company completed the transfer of a **35.42% equity stake in Magang Limited to Baosteel Co.** for **RMB 5.139 billion**, reducing its stake to **51%** and promoting synergistic development - The company transferred a **35.42% equity stake in Magang Limited to Baosteel Co. for RMB 5.139 billion**[85](index=85&type=chunk) - Baosteel Co. injected **RMB 3.861 billion in cash** into Magang Limited, and the company waived its right to subscribe for this capital increase[85](index=85&type=chunk) - The equity transfer was completed on **June 30, 2025**, reducing the company's stake in Magang Limited from 100% to **51%**, with Baosteel Co. holding **49%**[85](index=85&type=chunk) - This transaction helps promote innovation in Magang Limited's management and business models, enhance its core competitiveness and overall strength, and achieve synergistic development with Baosteel Co[86](index=86&type=chunk) [(V) Analysis of Major Controlled and Invested Companies](index=22&type=section&id=%EF%BC%88%E4%BA%94%EF%BC%89%E4%B8%BB%E8%A6%81%E6%8E%A7%E8%82%A1%E5%8F%83%E8%82%A1%E5%85%AC%E5%8F%B8%E5%88%86%E6%9E%90) This section provides an overview of the company's major controlled and invested companies, highlighting Magang Limited's monthly profitability since Baosteel Co.'s strategic investment Key Financial Data of Major Controlled and Invested Companies (Millions of RMB) | Company Name | Company Type | Shareholding Ratio | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Maanshan Iron & Steel Co., Ltd. | Subsidiary | 51% | 1,266 | 61,188 | 14,952 | 31,840 | -6.79 | -62 | | Anhui Changjiang Steel Co., Ltd. | Subsidiary | 55% | 1,200 | 8,846 | 3,880 | 6,507 | 115 | 108 | | Magang (Australia) Co., Ltd. | Subsidiary | 100% | (Note 2) | 196 | 191 | 36.99 | 36.80 | 25.63 | | Shenglong Chemical Co., Ltd. | Associate | 31.99% | 568.8 | 7,489 | 4,139 | 2,251 | -79 | -91 | | Henan Jinma Energy Co., Ltd. | Associate | 26.89% | 535 | 10,571 | 4,186 | 4,143 | -137 | -139 | | Baowu Group Finance Co., Ltd. | Associate | 22.36% | 6,840 | 68,813 | 10,309 | 738 | 400 | 303 | | Ouyeel Industrial Products Co., Ltd. | Associate | 9.17% | 4,799 | 24,303 | 5,193 | 1,963 | 126 | 104 | | Linhuan Coking Co., Ltd. | Associate | 5.40% | 1,091 | 4,985 | 1,426 | 3,503 | -221 | -201 | - Magang Limited has achieved **monthly profitability since its independent operation in March**[89](index=89&type=chunk) - During the reporting period, Anhui Changjiang Steel Trading Hefei Co., Ltd. was **absorbed and merged by Changjiang Steel**, a subsidiary, and is no longer included in the consolidation scope[91](index=91&type=chunk) [V. Other Disclosures](index=23&type=section&id=%E4%BA%94.%20%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2%E4%BA%8B%E9%A0%85) The company faces operational, safety, environmental, and "two funds" management risks, with corresponding control measures, and has significantly improved operating performance in H1 through strategic initiatives and technological innovation - The company may face major risks including **operational risks, safety (production, network) risks, environmental protection risks, and "two funds" management risks**[92](index=92&type=chunk) - Operational risk control measures include **reducing debt and "two funds" scale, promoting "three reductions and three enhancements," managing operating risks of invested companies, and improving overall labor productivity**[93](index=93&type=chunk) - Safety risk prevention and control include **special rectification for engineering machinery use safety, integrating and optimizing safety management systems, and continuously enhancing network and data security protection capabilities**[93](index=93&type=chunk) - Environmental protection risk prevention and control include **continuous monitoring of environmental protection binding indicators and preparing for inclusion in the carbon market**[93](index=93&type=chunk) - On **August 15, 2025, Mr. Zhang Wenyang resigned** from his positions as company director, general manager, and financial officer, and the Board appointed **Mr. Chen Guorong as deputy general manager and financial officer**[93](index=93&type=chunk) - The company complies with the **HKEX Corporate Governance Code** and the **Model Code for Securities Transactions by Directors of Listed Issuers**[95](index=95&type=chunk) - Implementation of the "Quality Improvement, Efficiency Enhancement, and Return Focus" action plan: H1 achieved a total profit of **RMB 0.118 billion** and net profit attributable to listed company shareholders of **RMB -0.075 billion**, with significantly improved operating performance[95](index=95&type=chunk) - The company introduced a strategic investor by **transferring part of Magang Limited's equity to Baosteel Co. and increasing capital**, promoting synergistic development[95](index=95&type=chunk) - The controlling shareholder, Magang Group, cumulatively increased its holdings of the company's A-shares by **68,927,534 shares** from September to November 2024, accounting for approximately **0.890% of total share capital**[96](index=96&type=chunk) - The company's cumulative dividend payout since listing accounts for approximately **56% of cumulative net profit**, and it will balance the continuity and stability of cash dividends in the future[96](index=96&type=chunk) - The company highly values Environmental, Social, and Governance (ESG), and has been continuously selected for lists such as the **SASAC "Central SOE ESG Pioneer 100 Index"**[96](index=96&type=chunk) [(I) Potential Risks](index=23&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E5%8F%AF%E8%83%BD%E9%9D%A2%E5%B0%8D%E7%9A%84%E9%A2%A8%E9%9A%AA) The company faces operational, safety, environmental protection, and "two funds" management risks, for which it has developed and implemented corresponding control measures - The company may face major risks including **operational risks, safety (production, network) risks, environmental protection risks, and "two funds" management risks**[92](index=92&type=chunk) - Operational risk control measures include **reducing debt and "two funds" scale, promoting "three reductions and three enhancements," managing operating risks of invested companies, and improving overall labor productivity**[93](index=93&type=chunk) - Safety risk prevention and control include **special rectification for engineering machinery use safety, integrating and optimizing safety management systems, and continuously enhancing network and data security protection capabilities**[93](index=93&type=chunk) - Environmental protection risk prevention and control include **continuous monitoring of environmental protection binding indicators and preparing for inclusion in the carbon market**[93](index=93&type=chunk) [(II) Other Disclosures](index=23&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2%E4%BA%8B%E9%A0%85) The Audit Committee reviewed H1 performance, a change in financial leadership occurred, no listed shares were repurchased, and the company complied with governance codes, while actively implementing strategic plans for improved performance, technological innovation, and ESG - The Audit Committee has reviewed the **H1 2025 performance**[93](index=93&type=chunk) - On **August 15, 2025, Mr. Zhang Wenyang resigned** from his positions as company director, general manager, and financial officer, and the Board appointed **Mr. Chen Guorong as deputy general manager and financial officer**[93](index=93&type=chunk) - During the reporting period, the company **did not redeem, purchase, or resell any listed shares**[93](index=93&type=chunk) - The company complies with the **HKEX Corporate Governance Code** and the **Model Code for Securities Transactions by Directors of Listed Issuers**[95](index=95&type=chunk) - Implementation of the "Quality Improvement, Efficiency Enhancement, and Return Focus" action plan: H1 achieved a total profit of **RMB 0.118 billion** and net profit attributable to listed company shareholders of **RMB -0.075 billion**, with significantly improved operating performance[95](index=95&type=chunk) - The company introduced a strategic investor by **transferring part of Magang Limited's equity to Baosteel Co. and increasing capital**, promoting synergistic development[95](index=95&type=chunk) - The controlling shareholder, Magang Group, cumulatively increased its holdings of the company's A-shares by **68,927,534 shares** from September to November 2024, accounting for approximately **0.890% of total share capital**[96](index=96&type=chunk) - The company's cumulative dividend payout since listing accounts for approximately **56% of cumulative net profit**, and it will balance the continuity and stability of cash dividends in the future[96](index=96&type=chunk) - The company highly values Environmental, Social, and Governance (ESG), and has been continuously selected for lists such as the **SASAC "Central SOE ESG Pioneer 100 Index"**[96](index=96&type=chunk) [Section IV Corporate Governance, Environment, and Society](index=26&type=section&id=%E7%AC%AC%E5%9B%9B%E7%AF%80%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86%E3%80%81%E7%92%B0%E5%A2%83%E5%92%8C%E7%A4%BE%E6%9C%83) This section details changes in the company's governance, its environmental information disclosure, and its efforts in rural revitalization and poverty alleviation [I. Changes in Directors, Supervisors, and Senior Management](index=26&type=section&id=%E4%B8%80.%20%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%A3%E4%BA%8B%E3%80%81%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E4%BA%BA%E5%93%A1%E8%AE%8A%E5%8B%95%E6%83%85%E6%B3%81) While no changes occurred during the reporting period, Mr. Zhang Wenyang resigned as director, general manager, and financial officer on August 15, 2025, with Mr. Chen Guorong appointed as his successor in financial roles - During the reporting period, there were **no changes in the company's directors, supervisors, or senior management**[98](index=98&type=chunk) - On **August 15, 2025, Mr. Zhang Wenyang resigned** from his positions as company director, general manager, and financial officer[98](index=98&type=chunk) - The Board appointed **Mr. Chen Guorong as deputy general manager and financial officer**[98](index=98&type=chunk) [II. Profit Distribution or Capital Reserve Conversion Plan](index=26&type=section&id=%E4%BA%8C.%20%E5%88%A9%E6%BD%A4%E5%88%86%E9%85%8D%E6%88%96%E8%B3%87%E6%9C%AC%E5%85%AC%E7%A9%8D%E9%87%91%E8%BD%89%E5%A2%9E%E9%A0%90%E6%A1%88) The company did not propose any profit distribution or capital reserve to share capital conversion plan for this semi-annual period - The company **did not propose any profit distribution or capital reserve to share capital conversion plan** for this semi-annual period[99](index=99&type=chunk) [III. Status and Impact of Company Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=26&type=section&id=%E4%B8%89.%20%E5%85%AC%E5%8F%B8%E8%82%A1%E6%AC%8A%E6%BF%80%E5%8B%B5%E8%A8%88%E5%8A%83%E3%80%81%E5%93%A1%E5%B7%A5%E6%8C%81%E8%82%A1%E8%A8%88%E5%8A%83%E6%88%96%E5%85%B6%E4%BB%96%E5%93%A1%E5%B7%A5%E6%BF%80%E5%8B%B5%E6%8E%AA%E6%96%BD%E7%9A%84%E6%83%85%E6%B3%81%E5%8F%8A%E5%85%B6%E5%BD%B1%E9%9F%BF) The company has a repurchase and cancellation of restricted A-shares, with relevant progress disclosed in interim announcements - The company has a **repurchase and cancellation of restricted A-shares**, with relevant information disclosed in interim announcements[100](index=100&type=chunk) [IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information by Law](index=27&type=section&id=%E5%9B%9B.%20%E7%B4%8D%E5%85%A5%E7%92%B0%E5%A2%83%E4%BF%A1%E6%81%AF%E4%BE%9D%E6%B3%95%E6%8A%AB%E9%9C%B2%E4%BC%81%E6%A5%AD%E5%90%8D%E5%96%AE%E7%9A%84%E4%B8%8A%E5%B8%82%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%85%B6%E4%B8%BB%E8%A6%81%E5%AD%90%E5%85%AC%E5%8F%B8%E7%9A%84%E7%92%B0%E5%A2%83%E4%BF%A1%E6%81%AF%E6%83%85%E6%B3%81) The company and its six major subsidiaries are included in the list of enterprises required to disclose environmental information by law, with reports accessible on the Enterprise Environmental Information Disclosure System (Anhui) - The company and its **six major subsidiaries are included in the list of enterprises required to disclose environmental information by law**[102](index=102&type=chunk)[104](index=104&type=chunk) - Environmental information disclosure reports can be accessed on the **Enterprise Environmental Information Disclosure System (Anhui)**[102](index=102&type=chunk) [V. Specific Progress in Consolidating Poverty Alleviation Achievements and Rural Revitalization](index=27&type=section&id=%E4%BA%94.%20%E5%B7%A2%E5%9B%BA%E6%8B%93%E5%B1%95%E8%84%AB%E8%B2%B6%E6%94%BB%E5%A0%85%E6%88%90%E6%9E%9C%E3%80%81%E9%84%89%E6%9D%91%E6%8C%AF%E8%88%88%E7%AD%89%E5%B7%A5%E4%BD%9C%E5%85%B7%E9%AB%94%E6%83%85%E6%B3%81) The company actively supports rural revitalization through organizational leadership, funding for agricultural projects, compensated assistance, infrastructure development, and educational initiatives to cultivate technical talents - Company leaders and relevant departments visited the assisted village to conduct rural revitalization research and completed the **2025 external donation budget approval**, ensuring financial support[102](index=102&type=chunk) - The company applied for **RMB 400,000 in assistance funds** for the fresh corn planting and processing industry project in Liji Village, providing technical support and introducing investment and operating entities[103](index=103&type=chunk) - The company participated in "group-based assistance," prioritizing compliant procurement of ton bags from assisted areas through the Ouyeel Industrial Products platform, with direct procurement and sales of ton bags reaching **RMB 842,600** in H1[106](index=106&type=chunk) - The company allocated **RMB 70,000 in donation assistance funds** for the installation of new road streetlights in Liji Village and donated **RMB 30,000** for the operation and material replenishment of the "Points Supermarket"[107](index=107&type=chunk)[108](index=108&type=chunk) - The company formulated the **2025 consumption assistance work plan** and organized the completion of procurement bidding for consumption assistance goods and services operators, directly procuring **RMB 2.6058 million** worth of products from designated assisted villages[109](index=109&type=chunk) - The company plans to leverage the educational resources of Magang Technician College to conduct "order-based schooling" through government-school cooperation, assisting Funan County in cultivating technical talents[110](index=110&type=chunk) [Section V Significant Matters](index=28&type=section&id=%E7%AC%AC%E4%BA%94%E7%AF%80%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A0%85) This section covers the company's fulfillment of commitments, absence of irregular financial activities, audit status, and significant related-party transactions [I. Fulfillment of Commitments](index=29&type=section&id=%E4%B8%80.%20%E6%89%BF%E8%AB%BE%E4%BA%8B%E9%A0%85%E5%B1%A5%E8%A1%8C%E6%83%85%E6%B3%81) China Baowu's 2019 commitments to avoid horizontal competition, regulate

[Company Information](index=4&type=section&id=Company%20Information) This section provides essential corporate details including the board of directors, registered offices, share registrars, auditor, and investor relations contact information [Board of Directors and Committees](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) This section lists the company's board members and their roles in the audit, remuneration, and nomination committees, along with authorized representatives and the company secretary - The Board of Directors comprises four executive directors (Ding Peiji, Ding Peiyuan, Liu Min, Yu Jianjun) and three independent non-executive directors (Wu Chengjian, Chen Jun, Guo Zheng)[6](index=6&type=chunk) - Mr. Wu Chengjian serves as the Chairman of the Audit Committee, Mr. Guo Zheng as the Chairman of the Remuneration Committee, and Mr. Chen Jun as the Chairman of the Nomination Committee[6](index=6&type=chunk) [Registered Office and Principal Places of Business](index=4&type=section&id=Registered%20Office%20and%20Principal%20Places%20of%20Business) The company is registered in the Cayman Islands, with its principal place of business in Quanzhou, Fujian, China, and a main place of business in Hong Kong - The registered office is located at Cricket Square, Cayman Islands[6](index=6&type=chunk) - The head office and principal place of business in China are located at No. 168 Chongrong Street, Economic and Technological Development Zone, Quanzhou, Fujian Province[6](index=6&type=chunk) - The principal place of business in Hong Kong is located at Room 1601, Ho King Commercial Centre, 2–16 Fa Yuen Street, Mongkok, Kowloon[6](index=6&type=chunk) [Cayman Islands Share Registrar and Hong Kong Share Registrar](index=5&type=section&id=Cayman%20Islands%20Share%20Registrar%20and%20Hong%20Kong%20Share%20Registrar) This section provides contact details for the company's share registrars in the Cayman Islands and Hong Kong - The Cayman Islands share registrar is Suntera (Cayman) Limited[7](index=7&type=chunk) - The Hong Kong share registrar is Hong Kong Central Share Registrar Limited[7](index=7&type=chunk) [Auditor and Investor Relations](index=5&type=section&id=Auditor%20and%20Investor%20Relations) The company's auditor is BDO Limited, and investor relations contact information and the company website are provided - The auditor is BDO Limited[7](index=7&type=chunk) - Investor relations contact number is (86) 595 2469 7156, email is ir@redkids.com, and the company website is www.redkids.com[7](index=7&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the company's business performance, financial results, working capital, liquidity, capital structure, and risk management for the period [Business Review and Outlook](index=8&type=section&id=Business%20Review%20and%20Outlook) In the first half of 2025, the Group achieved significant revenue growth of **179.0%** by expanding into new supply chain management businesses, despite a challenging Chinese economy and cautious consumer spending 2025 H1 vs 2024 H1 Performance Comparison | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 289.9 | 103.9 | +179.0% | | Net Loss | 4.5 | 1.1 | +309.1% | - The mainland Chinese economy faced challenges in H1 2025, with weak demand in wholesale and retail markets due to changes in consumer spending patterns, decreased confidence, and reduced income[11](index=11&type=chunk) - The Group has commenced new supply chain management business for bulk commodity trading products and expects to expand its business scope to include apparel, industrial, chemical products, and food import/export in 2025[11](index=11&type=chunk)[12](index=12&type=chunk) - Gross profit margin declined due to market conditions and changes in product mix; the Group took actions to preserve cash and strengthen liquidity, strictly managing operating, marketing, and financing costs[12](index=12&type=chunk) [Financial Review](index=9&type=section&id=Financial%20Review) The Group's revenue surged by **179.0%** to **RMB 289.9 million** in H1 2025, primarily driven by new supply chain management business contributing **82.5%** of revenue, but gross profit declined due to higher cost of sales, resulting in an expanded loss after tax 2025 H1 Key Financial Indicators Comparison | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 289.9 | 103.9 | +179.0% | | Cost of Sales | 279.1 | 91.5 | +205.0% | | Gross Profit | 10.8 | 12.4 | -12.9% | | Gross Profit Margin | 3.7% | 11.9% | -8.2 percentage points | | Other Income | 0.8 | 1.9 | -57.9% | | Selling and Distribution Expenses | 8.1 | 8.6 | -5.9% | | Administrative and Other Operating Expenses | 7.7 | 6.6 | +17.3% | | Finance Costs | 0.3 | 0.3 | - | | Income Tax Expense | 0.1 | 0 | - | | Loss After Tax | 4.5 | 1.1 | +309.1% | - In H1 2025, revenue from wholesale business of children's wear and other apparel-related products was approximately **RMB 50.8 million**, accounting for approximately **17.5%** of the Group's revenue[13](index=13&type=chunk) - In H1 2025, revenue from supply chain management business for bulk commodity trading products was approximately **RMB 239.1 million**, accounting for **82.5%** of the Group's revenue[13](index=13&type=chunk) - The decrease in selling and distribution expenses was primarily due to lower advertising and marketing-related expenses given the business environment[19](index=19&type=chunk) [Working Capital Management](index=10&type=section&id=Working%20Capital%20Management) As of June 30, 2025, the Group's net current assets increased to **RMB 125.9 million**, and the current ratio improved to **2.6 times**, with significant reductions in turnover days for trade receivables, inventories, and trade payables Working Capital Indicators Comparison | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Current Assets (RMB million) | 125.9 | 87.1 | | Current Ratio | 2.6 times | 2.2 times | Turnover Days Comparison | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Trade Receivables | 65 days | 219 days | | Inventories | 20 days | 64 days | | Trade Payables | 8 days | 26 days | [Liquidity and Capital Resources](index=11&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the Group's cash and cash equivalents significantly increased to **RMB 121.7 million**, with no bank borrowings, and a net increase in cash from financing activities due to new share placements Liquidity and Capital Resources Comparison | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 121.7 | 39.7 | | Bank Borrowings | 0 | 17.0 | | Gearing Ratio | Not applicable | 12.8% (December 31, 2024) | Cash Flow Comparison | Cash Flow Source | 2025 H1 (RMB million) | 2024 H1 (RMB million) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 49.3 | 67.8 | | Net Cash from Investing Activities | 0.2 | 0.3 (primarily interest received) | | Net Cash from Financing Activities | 30.9 | 18.3 | | Net Increase in Cash and Cash Equivalents | 80.4 | 86.3 | - The increase in net cash from financing activities primarily resulted from proceeds from the placement of new shares and the issuance of shares under the share option scheme[26](index=26&type=chunk) [Capital Structure and Fundraising Activities](index=12&type=section&id=Capital%20Structure%20and%20Fundraising%20Activities) In May 2025, the company completed a share placement, raising approximately **HK$41.9 million** net, intended for establishing a cross-border B2B platform, smart customs system, channel expansion, marketing, staff expansion, and general working capital - On May 26, 2025, the company entered into a placing agreement with a placing agent to place up to **31,635,200 placing shares** at **HK$1.35 per share**[30](index=30&type=chunk) - The placing price represented a discount of approximately **15.09%** to the closing price on May 26, 2025, and approximately **14.77%** to the average closing price for the five trading days immediately preceding the announcement date[30](index=30&type=chunk) Use of Proceeds from Share Placement (as of June 30, 2025) | Purpose | Planned Amount (HK$ million) | Percentage of Total Net Proceeds | Actual Usage (HK$ million) | | :--- | :--- | :--- | :--- | | Establishment of a multi-language cross-border B2B platform and smart customs clearance system | 7.0 | 16.7% | – | | Channel development and marketing | 10.0 | 23.9% | – | | Expansion of the Group's workforce to broaden business scope | 6.0 | 14.3% | – | | General working capital | 18.9 | 45.1% | – | | **Total** | **41.9** | **100.0%** | **–** | [Financial Risk Management](index=13&type=section&id=Financial%20Risk%20Management) The company implements treasury policies to control operations and reduce borrowing costs, ensuring sufficient cash and bank financing, with management deeming currency and exchange rate risks to be insignificant due to RMB-denominated primary business - Treasury policies aim to maintain sufficient cash and bank financing to fund daily operations and short-term funding requirements[34](index=34&type=chunk) - The Group's majority of monetary assets and liabilities are denominated in RMB, and management considers the currency risk exposure to be insignificant[34](index=34&type=chunk) - Interest rate risk primarily arises from bank borrowings, but as the Group mainly operates in mainland China, the Directors believe there is no significant exchange rate risk[34](index=34&type=chunk) [Capital Commitments and Contingent Liabilities](index=13&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities - As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities[35](index=35&type=chunk) [Pledge of Assets](index=13&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no properties or prepaid lease payments pledged for bank loans, a change from December 31, 2024, when approximately **RMB 9.7 million** of such assets were pledged - As of June 30, 2025, no properties and prepaid lease payments were pledged for bank loans[36](index=36&type=chunk) - As of December 31, 2024, properties and prepaid lease payments with a net book value of approximately **RMB 9.7 million** were pledged[36](index=36&type=chunk) [Material Investments and Significant Acquisitions and Disposals of Subsidiaries](index=13&type=section&id=Material%20Investments%20and%20Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries) For the six months ended June 30, 2025, the Group made no other material investments, significant acquisitions, or disposals - For the six months ended June 30, 2025, the Group made no other material investments, significant acquisitions, or disposals[37](index=37&type=chunk) [Investments Held in Foreign Currencies and Hedging](index=13&type=section&id=Investments%20Held%20in%20Foreign%20Currencies%20and%20Hedging) For the six months ended June 30, 2025, the Group held no investments denominated in foreign currencies, and its working capital or liquidity was not significantly affected by exchange rate fluctuations - For the six months ended June 30, 2025, the Group held no investments denominated in foreign currencies[38](index=38&type=chunk) - The Group's working capital or liquidity was not subject to any significant difficulties or impacts due to exchange rate fluctuations[38](index=38&type=chunk) [Employees and Remuneration Policy](index=13&type=section&id=Employees%20and%20Remuneration%20Policy) The Group's remuneration policy aims to attract, retain, and motivate talent, with compensation determined by job nature, position, and market levels, employing approximately **310 full-time staff** with total employee costs of **RMB 11.7 million** in H1 2025 - The remuneration policy aims to attract, retain, and motivate talent, with performance-based compensation reflecting market levels[39](index=39&type=chunk) - As of June 30, 2025, the Group employed approximately **310 full-time employees**[39](index=39&type=chunk) Total Employee Costs Comparison | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | | :--- | :--- | :--- | | Total Employee Costs | 11.7 | 11.6 | [Corporate Governance and Other Information](index=14&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the company's adherence to corporate governance codes, directors' securities transactions, audit committee review, dividend policy, public float, and directors' and substantial shareholders' interests [Corporate Governance Code](index=14&type=section&id=Corporate%20Governance%20Code) The company is committed to high corporate governance standards, adopting the Listing Rules' Corporate Governance Code, with minor deviations regarding the Chairman/CEO role and management reporting frequency, which the Board believes do not impair power balance - The company has adopted the Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[41](index=41&type=chunk) - Deviation from Code Provision A.2.1: The Chairman (Mr. Ding Peiji) also serves as the Chief Executive Officer, an arrangement the Board believes ensures consistent leadership direction[41](index=41&type=chunk) - Deviation from Code Provision C.1.2: Management does not provide monthly updates to the Board, but will do so when appropriate[42](index=42&type=chunk) [Model Code for Securities Transactions by Directors](index=14&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted the Model Code for Securities Transactions by Directors as set out in Appendix C3 of the Listing Rules, and all directors confirmed full compliance during H1 2025 - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[43](index=43&type=chunk) - All Directors confirmed full compliance with the required standards of dealing as set out in the Model Code during H1 2025[43](index=43&type=chunk) [Update on Directors' Information under Rule 13.51B(1) of the Listing Rules](index=14&type=section&id=Update%20on%20Directors'%20Information%20under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) No other information required disclosure under Listing Rule 13.51B(1) during the reporting period and up to the date of this interim report, beyond what has already been disclosed - During the reporting period and up to the date of this interim report, no other information was required to be disclosed under Listing Rule 13.51B(1)[44](index=44&type=chunk) [Audit Committee and Review of Unaudited Interim Results](index=15&type=section&id=Audit%20Committee%20and%20Review%20of%20Unaudited%20Interim%20Results) The Audit Committee, established under Listing Rule 3.21, is responsible for reviewing financial reporting, internal controls, and risk management, and has reviewed the unaudited interim results for H1 2025, deeming them compliant with applicable accounting standards and Listing Rules - The Audit Committee comprises Mr. Wu Chengjian (Chairman), Mr. Chen Jun, and Mr. Guo Zheng[45](index=45&type=chunk) - The Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and considers them to be in compliance with applicable accounting standards and the Listing Rules[45](index=45&type=chunk) [Interim Dividend](index=15&type=section&id=Interim%20Dividend) The Board resolved not to declare any interim dividend for the first half of 2025, consistent with the first half of 2024 - The Board resolved not to declare any interim dividend for H1 2025 (H1 2024: nil)[46](index=46&type=chunk) [Sufficiency of Public Float](index=15&type=section&id=Sufficiency%20of%20Public%20Float) The directors confirm that, as of the date of this announcement, the company has maintained a sufficient public float of over **25%** of its issued share capital as required by the Listing Rules - The Directors confirm that the company has maintained a sufficient public float of over **25%** of its issued share capital as required by the Listing Rules as of the date of this announcement[47](index=47&type=chunk) [Directors' and Chief Executive's Interests in Securities](index=15&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Securities) As of June 30, 2025, Mr. Ding Peiji and Mr. Ding Peiyuan held interests in company shares and share options, with Mr. Ding Peiji holding approximately **11.5%** through a controlled corporation and as beneficial owner, and Mr. Ding Peiyuan holding approximately **2.36%** Directors' Long Positions in the Company (as of June 30, 2025) | Director Name | Nature of Interest | Capacity | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Mr. Ding Peiji | Long Position | Interest in controlled corporation | 24,817,669 | 11.29% | | | | Beneficial owner | 373,200 | 0.17% | | | | Beneficial owner (Share Options) | 90,000 | 0.04% | | Mr. Ding Peiyuan | Long Position | Interest in controlled corporation | 4,231,200 | 1.92% | | | | Beneficial owner (Share Options) | 960,000 | 0.44% | - Mr. Ding Peiji wholly owns and controls Huazhi Holdings Investment Limited and is therefore deemed to be interested in all shares held by Huazhi[51](index=51&type=chunk) - Mr. Ding Peiyuan wholly owns and controls Rightful Style Limited and is therefore deemed to be interested in all shares held by Rightful Style[51](index=51&type=chunk) [Substantial Shareholders' Interests and Short Positions](index=17&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions) As of June 30, 2025, substantial shareholders included Huazhi Holdings Investment Limited (controlled by Mr. Ding Peiji), Rightful Style Limited (controlled by Mr. Ding Peiyuan), and Goldrun Limited (controlled by Mr. Chen Xinfu), holding approximately **11.29%**, **1.92%**, and **9.42%** of the company's shares, respectively Substantial Shareholders' Long Positions in the Company (as of June 30, 2025) | Name/Designation | Nature of Interest | Capacity | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Huazhi Holdings Investment Limited | Long Position | Beneficial owner | 24,817,669 | 11.29% | | Mr. Ding Peiji | Long Position | Interest in controlled corporation | 24,817,669 | 11.29% | | | | Beneficial owner | 373,200 | 0.17% | | | | Beneficial owner (Share Options) | 90,000 | 0.04% | | Rightful Style Limited | Long Position | Beneficial owner | 4,231,200 | 1.92% | | Mr. Ding Peiyuan | Long Position | Interest in controlled corporation | 4,231,200 | 1.92% | | | | Beneficial owner (Share Options) | 960,000 | 0.44% | | Goldrun Limited | Long Position | Beneficial owner | 20,704,000 | 9.42% | | Mr. Chen Xinfu | Long Position | Interest in controlled corporation | 20,704,000 | 9.42% | - Huazhi Holdings Investment Limited is wholly owned and controlled by Mr. Ding Peiji[52](index=52&type=chunk) - Rightful Style Limited is wholly owned and controlled by Mr. Ding Peiyuan, an executive Director[53](index=53&type=chunk) - Goldrun Limited is wholly owned by Mr. Chen Xinfu[61](index=61&type=chunk) [Directors' Interests in Contracts](index=18&type=section&id=Directors'%20Interests%20in%20Contracts) No director had a significant interest in any material contract entered into by the company or its holding company, subsidiaries, or fellow subsidiaries at June 30, 2025, or at any time during the period - No director had a significant interest in any material contract entered into by the company or its holding company, subsidiaries, or fellow subsidiaries at June 30, 2025, or at any time during the period[57](index=57&type=chunk) [Contracts with Controlling Shareholders](index=18&type=section&id=Contracts%20with%20Controlling%20Shareholders) Neither the company nor any of its subsidiaries entered into any material contracts with the company's controlling shareholders or their subsidiaries during the period - Neither the company nor any of its subsidiaries entered into any material contracts with the company's controlling shareholders or their subsidiaries during the period[58](index=58&type=chunk) [Equity-Settled Share-Based Payments](index=18&type=section&id=Equity-Settled%20Share-Based%20Payments) The company adopted a share option scheme in 2013 to reward and retain eligible participants, which expired in 2023, with **6,300,000 share options** remaining unexercised at **HK$1.07 per share** as of June 30, 2025 - The share option scheme was adopted on December 27, 2013, to reward and retain eligible participants[60](index=60&type=chunk) - The share option scheme expired on December 27, 2023, and no further share options can be granted thereafter[60](index=60&type=chunk) - The maximum number of shares that may be issued upon exercise of all options shall not exceed **10%** of the shares in issue on the Listing Date (i.e., **8,000,000 shares**)[62](index=62&type=chunk) Details of Share Option Movements (as of June 30, 2025) | Name/Category | Unexercised as of Jan 1, 2025 | Granted during Period | Exercised during Period | Cancelled during Period | Unexercised as of June 30, 2025 | Exercise Price (HK$) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Directors | 2,220,000 | – | (900,000) | – | 1,230,000 | 1.07 | | Employees | 2,580,000 | – | – | – | 2,580,000 | 1.07 | | Others | 3,200,000 | – | (800,000) | – | 2,400,000 | 1.07 | | **Total** | **8,000,000** | **–** | **(1,700,000)** | **–** | **6,300,000** | **1.07** | [Acknowledgement](index=20&type=section&id=Acknowledgement) The Board expresses sincere gratitude to the management team and employees for their contributions and dedication, and thanks shareholders and business partners for their strong support - The Board extends its sincere gratitude to the management team and employees for their contributions and dedication[68](index=68&type=chunk) - Appreciation is also extended to shareholders and business partners for their strong support to the Group[68](index=68&type=chunk) [Events After Reporting Period](index=21&type=section&id=Events%20After%20Reporting%20Period) As of the date of this report, the Group had no significant events after the reporting period requiring disclosure - As of the date of this report, the Group had no significant events after the reporting period requiring disclosure[69](index=69&type=chunk) [Unaudited Condensed Consolidated Interim Financial Statements](index=22&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section presents the unaudited condensed consolidated interim financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows for the period [Unaudited Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income](index=22&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group reported revenue of **RMB 289,908 thousand**, gross profit of **RMB 10,780 thousand**, a loss for the period of **RMB 4,522 thousand**, and basic and diluted loss per share of **RMB 2.37 cents** Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income (for the six months ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 289,908 | 103,903 | | Cost of Sales | (279,128) | (91,492) | | Gross Profit | 10,780 | 12,411 | | Other Income | 786 | 1,896 | | Selling and Distribution Expenses | (8,066) | (8,571) | | Administrative and Other Operating Expenses | (7,722) | (6,583) | | Operating Loss | (4,134) | (780) | | Loss Before Tax | (4,407) | (1,054) | | Income Tax Expense | (115) | – | | Loss for the Period Attributable to Owners of the Company | (4,522) | (1,054) | | Total Comprehensive Loss for the Period | (6,244) | (2,812) | | Loss Per Share (RMB cents) | (2.37) | (0.64) | [Unaudited Condensed Consolidated Interim Statement of Financial Position](index=23&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets were **RMB 250,565 thousand**, net current assets were **RMB 125,850 thousand**, and total equity was **RMB 169,853 thousand** Condensed Consolidated Interim Statement of Financial Position (as of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 45,339 | 46,810 | | Current Assets | 205,226 | 159,248 | | Current Liabilities | 79,376 | 72,191 | | Net Current Assets | 125,850 | 87,057 | | Total Assets Less Current Liabilities | 171,189 | 133,867 | | Non-current Liabilities | 1,336 | 1,391 | | Net Assets | 169,853 | 132,476 | | Total Equity | 169,853 | 132,476 | [Unaudited Condensed Consolidated Interim Statement of Changes in Equity](index=24&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, the loss for the period attributable to owners of the company was **RMB 4,522 thousand**, with total comprehensive loss of **RMB 2,800 thousand**, and total equity increased to **RMB 169,853 thousand** due to share placements and share option exercises Condensed Consolidated Interim Statement of Changes in Equity (for the six months ended June 30) | Equity Item | Balance as of Jan 1, 2025 (RMB thousand) | Loss for the Period (RMB thousand) | Other Comprehensive Loss (RMB thousand) | Shares Issued under Share Option Scheme (RMB thousand) | Shares Issued from Placement (RMB thousand) | Balance as of June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 15,654 | – | – | 157 | 2,902 | 18,713 | | Share Premium | 319,573 | – | – | 2,501 | 35,588 | 357,662 | | Accumulated Losses | (423,376) | (4,522) | – | – | – | (427,898) | | **Total Equity** | **132,476** | **(4,522)** | **1,722** | **1,687** | **38,490** | **169,853** | - In H1 2025, loss for the period was **RMB 4,522 thousand**, and other comprehensive loss was **RMB 1,722 thousand**[77](index=77&type=chunk) - Share capital increased by **RMB 157 thousand** and share premium increased by **RMB 2,501 thousand** due to shares issued under the share option scheme[77](index=77&type=chunk) - Share capital increased by **RMB 2,902 thousand** and share premium increased by **RMB 35,588 thousand** due to shares issued from placement[77](index=77&type=chunk) [Unaudited Condensed Consolidated Interim Statement of Cash Flows](index=25&type=section&id=Unaudited%20Condensed%20Consolidated%20Interim%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities was **RMB 49,285 thousand**, from investing activities was **RMB 154 thousand**, and from financing activities was **RMB 30,910 thousand**, resulting in a net increase in cash and cash equivalents of **RMB 80,349 thousand**, with an ending balance of **RMB 121,731 thousand** Condensed Consolidated Interim Statement of Cash Flows (for the six months ended June 30) | Cash Flow Source | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 49,285 | 67,806 | | Net Cash from Investing Activities | 154 | 347 | | Net Cash from Financing Activities | 30,910 | 18,269 | | Net Increase in Cash and Cash Equivalents | 80,349 | 86,422 | | Cash and Cash Equivalents at January 1 | 39,655 | 39,721 | | Effect of Exchange Rate Changes on Foreign Currencies | 1,727 | (1,758) | | Cash and Cash Equivalents at June 30 | 121,731 | 124,385 | - Net cash from financing activities primarily resulted from net proceeds of **RMB 38,490 thousand** from the issuance of new placing shares[78](index=78&type=chunk) - Repayment of bank loans of **RMB 17,000 thousand** resulted in a zero bank loan balance[78](index=78&type=chunk) [Notes to the Unaudited Condensed Consolidated Interim Financial Statements](index=26&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated interim financial statements, covering general information, basis of preparation, accounting policy changes, segment information, and specific financial items [General Information](index=26&type=section&id=General%20Information) The company, a limited liability entity registered in the Cayman Islands, primarily engages in children's apparel design, manufacturing, and wholesale, and has expanded into supply chain management, with Huazhi Holdings Investment Limited and Mr. Ding Peiji as its direct and ultimate controlling parties - The company is a limited liability company incorporated in the Cayman Islands[80](index=80&type=chunk) - The Group is principally engaged in the design, manufacture, and wholesale of children's wear and has commenced supply chain management business, including bulk commodity trading products in mainland China[80](index=80&type=chunk) - The direct and ultimate controlling parties are Huazhi Holdings Investment Limited and Mr. Ding Peiji, respectively[80](index=80&type=chunk) [Basis of Preparation of Consolidated Financial Statements](index=26&type=section&id=Basis%20of%20Preparation%20of%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated interim financial statements are prepared in accordance with applicable disclosure provisions of the HKEX Listing Rules and IAS 34, reviewed by the Audit Committee, and involve management judgments, estimates, and assumptions - The unaudited condensed consolidated interim financial statements are prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard 34 "Interim Financial Reporting"[83](index=83&type=chunk) - The unaudited interim results have been reviewed by the company's Audit Committee[84](index=84&type=chunk) - Management is required to make judgments, estimates, and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income, and expenses[83](index=83&type=chunk) [Changes in Accounting Policies](index=27&type=section&id=Changes%20in%20Accounting%20Policies) The condensed consolidated interim financial statements are prepared using the historical cost convention and incorporate IFRS amendments effective January 1, 2025, which had no significant impact on the Group's financial position or performance - The condensed consolidated interim financial statements are prepared on the historical cost basis, except for certain properties and financial instruments measured at fair value[85](index=85&type=chunk) - The Group has first applied the amendments to International Financial Reporting Standards issued by the International Accounting Standards Board that are mandatorily effective for annual periods beginning on or after January 1, 2025[86](index=86&type=chunk) - The application of the amendments to IFRS accounting standards had no significant impact on the Group's financial position and performance for the current and prior periods[86](index=86&type=chunk) [Revenue and Segment Information](index=28&type=section&id=Revenue%20and%20Segment%20Information) The Group operates in wholesale (children's apparel) and supply chain management (commodity trading) segments, with the latter contributing most revenue in H1 2025, all from mainland China customers and recognized at a point in time - The Group's operating businesses and reportable segments include: (i) wholesale business: design, manufacture, and wholesale of children's wear and other apparel-related products; and (ii) supply chain management business: bulk commodity trading products[88](index=88&type=chunk)[92](index=92&type=chunk) Segment Revenue and Results (for the six months ended June 30) | Segment | 2025 Revenue (RMB thousand) | 2024 Revenue (RMB thousand) | 2025 Segment Results (RMB thousand) | 2024 Segment Results (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Wholesale Business | 50,824 | 103,903 | (4,538) | (1,313) | | Supply Chain Management Business | 239,084 | – | 1,668 | – | | **Total** | **289,908** | **103,903** | **(2,870)** | **(1,313)** | - All the Group's revenue from external customers and substantially all non-current assets are based in mainland China[96](index=96&type=chunk) Disaggregation of Revenue from Contracts with Customers (for the six months ended June 30) | Product Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Sales of children's wear and other apparel-related products | 50,824 | 103,903 | | Sales of bulk trading commodities | 239,084 | – | | **Total** | **289,908** | **103,903** | - The original expected duration of all revenue contracts is one year or less, and revenue is recognized at a point in time[99](index=99&type=chunk)[100](index=100&type=chunk) [Seasonality of Operations](index=31&type=section&id=Seasonality%20of%20Operations) The Group's children's apparel sales are seasonal, with spring/summer products sold in the first half and higher-priced autumn/winter products in the second half, typically resulting in lower first-half revenue and performance - The Group typically sells spring/summer children's wear products in the first half of the year and autumn/winter children's wear products in the second half of the year[101](index=101&type=chunk) - The selling prices of autumn/winter children's wear products are generally higher than those of spring/summer children's wear products, thus the revenue and results reported in the first half of the year are usually lower[101](index=101&type=chunk) [Other Income](index=31&type=section&id=Other%20Income) For the six months ended June 30, 2025, other income, primarily interest and rental income, totaled **RMB 786 thousand**, a decrease from **RMB 1,896 thousand** in the prior year Other Income (for the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest income | 156 | 486 | | Rental income | 580 | 580 | | Others | 50 | 830 | | **Total** | **786** | **1,896** | [Loss Before Tax](index=31&type=section&id=Loss%20Before%20Tax) For the six months ended June 30, 2025, the loss before tax was **RMB 4,407 thousand**, influenced by finance costs, employee costs, and cost of inventories sold, with employee costs remaining stable and depreciation decreasing Components of Loss Before Tax (for the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Finance costs | 273 | 274 | | Total employee costs | 11,662 | 11,627 | | Depreciation of property, plant and equipment | 1,418 | 2,678 | | Amortisation of right-of-use assets | 50 | 44 | | Cost of inventories sold | 279,128 | 91,492 | - Employee costs include contributions to defined contribution retirement plans, salaries, wages, and other benefits[104](index=104&type=chunk) - Cost of inventories sold includes approximately **RMB 5,937 thousand** (H1 2024: **RMB 6,786 thousand**) related to employee costs[104](index=104&type=chunk) [Taxation](index=32&type=section&id=Taxation) Income tax expense of **RMB 115 thousand** was recorded in H1 2025, mainly for China corporate income tax at **25%**, with no income tax payable in the Cayman Islands, British Virgin Islands, or on taxable profits in Hong Kong Taxation (for the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current tax – China corporate income tax | 115 | – | | Deferred tax – origination of temporary differences | – | – | | **Total** | **115** | **–** | - The Group's principal subsidiaries in mainland China are subject to corporate income tax at a rate of **25%**[109](index=109&type=chunk) - The Group is not subject to any income tax in the Cayman Islands or the British Virgin Islands and did not earn any assessable profits subject to profits tax in Hong Kong[109](index=109&type=chunk) [Loss Per Share](index=32&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2025, basic loss per share expanded to **RMB 2.37 cents** from **RMB 0.64 cents** in the prior year, with diluted loss per share being the same due to the anti-dilutive effect of share options Loss Per Share (for the six months ended June 30) | Metric | 2025 (RMB cents) | 2024 (RMB cents) | | :--- | :--- | :--- | | Basic Loss Per Share | (2.37) | (0.64) | | Diluted Loss Per Share | (2.37) | (0.64) | - Basic loss per share is calculated based on the loss for the period attributable to owners of the company of approximately **RMB 4,522,000** and the weighted average number of ordinary shares of approximately **190,460,000** shares[107](index=107&type=chunk) - The company's share options for the six months ended June 30, 2024 and 2025 had an anti-dilutive effect, thus the diluted loss per share is the same as the basic loss per share[108](index=108&type=chunk) [Property, Plant and Equipment and Right-of-Use Assets](index=33&type=section&id=Property,%20Plant%20and%20Equipment%20and%20Right-of-Use%20Assets) For the six months ended June 30, 2025, the Group acquired plant and machinery at a cost of **RMB 2 thousand**, and as of June 30, 2025, no buildings or right-of-use assets were pledged, unlike December 31, 2024 - For the six months ended June 30, 2025, the Group acquired plant and machinery at a cost of **RMB 2,000**[112](index=112&type=chunk) - As of June 30, 2025, no buildings (December 31, 2024: net book value of **RMB 7,466,000**) were pledged as collateral for the Group's bank loans[112](index=112&type=chunk) - As of June 30, 2025, no right-of-use assets (December 31, 2024: net book value of **RMB 2,061,000**) were pledged as collateral for the Group's bank loans[112](index=112&type=chunk) [Trade Receivables](index=33&type=section&id=Trade%20Receivables) As of June 30, 2025, the Group's total trade receivables significantly decreased to **RMB 51,787 thousand** from **RMB 88,515 thousand** at December 31, 2024, with the majority aged within 90 days Ageing Analysis of Trade Receivables (as of reporting period end) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 90 days | 34,318 | 53,428 | | 90–120 days | 7,069 | 6,830 | | 120 days to 180 days | 3,887 | 19,748 | | 180 days to 1 year | 6,513 | 8,509 | | **Total** | **51,787** | **88,515** | [Prepayments, Deposits and Other Receivables](index=34&type=section&id=Prepayments,%20Deposits%20and%20Other%20Receivables) As of June 30, 2025, total prepayments, deposits, and other receivables amounted to **RMB 15,611 thousand**, primarily comprising prepayments to suppliers of **RMB 13,937 thousand** Prepayments, Deposits and Other Receivables (as of reporting period end) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Other receivables | 1,678 | 227 | | Deposits paid | – | 34 | | Less: Provision for expected credit losses | (4) | (1) | | Prepayments to suppliers | 13,937 | 13,327 | | **Total** | **15,611** | **13,587** | [Trade and Other Payables](index=34&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, trade payables due within 3 months were **RMB 6,361 thousand**. Other payables included approximately **RMB 48,948 thousand** owed to directors, which is unsecured, interest-free, and repayable on demand Ageing Analysis of Trade Payables (as of reporting period end) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 6,361 | 2,694 | - Other payables include the carrying amount of approximately **RMB 48,948,000** (December 31, 2024: **RMB 47,951,000**) due to directors, which is unsecured, interest-free, and repayable on demand[115](index=115&type=chunk) [Bank Borrowings](index=35&type=section&id=Bank%20Borrowings) As of June 30, 2025, the Group had no bank borrowings, a change from December 31, 2024, when **RMB 17,000 thousand** in secured fixed-rate bank loans were outstanding, collateralized by buildings and right-of-use assets and guaranteed by directors and an independent third party Bank Borrowings (as of reporting period end) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank borrowings – secured | – | 17,000 | | Fixed-rate bank borrowings | – | 17,000 | Pledged Assets (as of reporting period end) | Pledged Assets | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Buildings | – | 7,466 | | Right-of-use assets | – | 2,061 | | **Total** | **–** | **9,527** | - The bank borrowings as of December 31, 2024, were guaranteed by the company's directors and an independent third party[116](index=116&type=chunk) - The effective annual interest rate for fixed-rate bank borrowings as of December 31, 2024, was **3.7%**[118](index=118&type=chunk) [Capital, Reserves and Dividends](index=37&type=section&id=Capital,%20Reserves%20and%20Dividends) As of June 30, 2025, issued share capital comprised **219,846,000 shares** totaling **RMB 18,713 thousand**, increasing due to share placements and share option exercises, with no dividends paid or proposed during the period Authorized and Issued Share Capital (as of June 30/December 31) | Item | 2025 Number of Shares | 2025 RMB thousand | 2024 Number of Shares | 2024 RMB thousand | | :--- | :--- | :--- | :--- | :--- | | Issued and fully paid at January 1 | 186,514,000 | 15,654 | 158,176,000 | 13,026 | | Shares issued under share option scheme | 1,700,000 | 157 | – | – | | Shares issued from placement | 31,632,000 | 2,902 | 28,338,000 | 2,628 | | **As of June 30/December 31** | **219,846,000** | **18,713** | **186,514,000** | **15,654** | - On June 13, 2025, the company placed **31,632,000 placing shares** at a placing price of **HK$1.35 per share**, raising net proceeds of approximately **RMB 38,490,000**[119](index=119&type=chunk) - Under the Companies Law of the Cayman Islands, funds in the company's share premium account may be distributed to shareholders, subject to certain conditions immediately following the proposed dividend distribution date[120](index=120&type=chunk) - No dividends were paid or proposed for the six months ended June 30, 2025 and 2024[121](index=121&type=chunk) [Fair Value of Financial Assets and Liabilities Not Measured at Fair Value](index=38&type=section&id=Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities%20Not%20Measured%20at%20Fair%20Value) As of June 30, 2025, and December 31, 2024, the carrying amounts of the Group's financial instruments measured at cost or amortized cost did not materially differ from their fair values - As of June 30, 2025, and December 31, 2024, the carrying amounts of the Group's financial instruments measured at cost or amortized cost did not materially differ from their fair values[123](index=123&type=chunk) [Capital Commitments Contracted But Not Provided For in the Unaudited Interim Financial Report](index=38&type=section&id=Capital%20Commitments%20Contracted%20But%20Not%20Provided%20For%20in%20the%20Unaudited%20Interim%20Financial%20Report) As of June 30, 2025, the Group had no capital commitments contracted or provided for - As of June 30, 2025, no capital commitments were contracted or provided for (December 31, 2024: nil)[124](index=124&type=chunk) [Significant Related Party Transactions](index=38&type=section&id=Significant%20Related%20Party%20Transactions) Apart from other disclosures in the financial statements, the Group engaged in significant related party transactions for the six months ended June 30, 2025, including a bank loan guarantee provided by Mr. Ding Peiji, which was no longer outstanding as of June 30, 2025 - Apart from other disclosures in the unaudited financial statements, the Group entered into significant related party transactions for the six months ended June 30, 2025 and 2024[125](index=125&type=chunk) - As of June 30, 2025, no secured bank borrowings (December 31, 2024: **RMB 17,000,000**) were guaranteed by Mr. Ding Peiji[126](index=126&type=chunk)

Revenue and Financial Performance - Revenue increased from RMB 51.89 million for the six months ended June 30, 2024, to RMB 100.05 million for the six months ended June 30, 2025, representing a year-on-year growth of 92.81%[15] - The total loss and comprehensive expenses for the period amounted to RMB 126.88 million, an increase of 10.92% compared to RMB 114.39 million in the previous year[18] - The adjusted net loss for the period was RMB 88.02 million, reflecting an increase of 11.64% from RMB 78.84 million in the prior year[18] - Gross profit increased from RMB 24.52 million for the six months ended June 30, 2024, to RMB 40.85 million for the six months ended June 30, 2025, an increase of 66.60%[44] - Other income surged from RMB 0.58 million for the six months ended June 30, 2024, to RMB 7.28 million for the six months ended June 30, 2025, a growth of 1,155.17%[45] - The company reported a loss before tax of RMB 125,214,000, which is a 9.3% increase from RMB 114,389,000 in the prior year[141] - The company reported a net loss attributable to owners of RMB 126,365,000 for the six months ended June 30, 2025, compared to a loss of RMB 114,328,000 in 2024, indicating a decline of 10.6%[173] Research and Development - The company has completed the research and development phase and is about to enter the registration clinical trial phase for its cognitive digital therapy, with data collection expected to be completed by early 2026[12] - A total of 649 patients were included in the randomized controlled trial for cognitive digital therapy in patients with hypertension and coronary heart disease, with data analysis and report writing completed, aiming for medical device registration submission in 2026[12] - The company has developed a depression treatment software, with clinical trials planned to start in 2026[12] - The ADHD treatment study showed significant improvement in core symptoms, with attention deficit scores improving from 23.3% to 34.6% in the combined treatment group[13] - The company plans to submit applications for medical device registration for multiple products in 2026, indicating a strong pipeline for future growth[12] - The Depression Cognitive Quantitative Assessment software is expected to complete clinical trials by Q3 2025, with commercialization anticipated in 2026[32] - The company is in preclinical development for a Depression Treatment software, projected to start clinical trials in Q1 2026[33] Product Development and Market Expansion - The company launched the BrainAu Onebox M1, a smart medical model machine, in 2025, representing a significant advancement in digital health transformation[16] - The core product, the Brain Function Information Management Platform, is the first regulatory-approved digital therapy product for cognitive impairment in China[22] - As of the report date, the core product has been included in the medical insurance reimbursement catalog of 30 provinces in China[22] - The product pipeline includes eight indications for four major types of cognitive impairment that have been commercialized, with three additional products approved in China and one in the EU[20] - The Basic Cognitive Ability Test software (BCAT) received regulatory approval in October 2022 and is set for commercialization in 2025[27] - The Cognitive Ability Screening Assessment software (SAS) was approved in December 2022 and is also scheduled for commercialization in 2025[28] - The Reading Disability Screening Assessment software (DSS) received approval in September 2023 and is expected to be commercialized in 2025[29] - The company is conducting clinical trials for a Reading Disability Rehabilitation Training software, which includes modules for perception and language training[30] - The company plans to expand its international footprint and establish a global presence by developing cognitive impairment assessment and treatment software for the US and EU markets[34] Operational Metrics - The number of hospitals purchasing the system increased from 186 in 2024 to 205 for the six months ended June 30, 2025[41] - Patient usage of the system rose from approximately 1,800,000 times in 2024 to 2,595,554 times for the six months ended June 30, 2025[41] - The number of cognitive centers increased from 107 in 2024 to 138 for the six months ended June 30, 2025, leading to increased operational costs[43] Expenses and Financial Management - Sales and distribution expenses rose from RMB 25.38 million for the six months ended June 30, 2024, to RMB 30.45 million for the six months ended June 30, 2025, an increase of 19.98%[48] - Administrative expenses increased from RMB 281.4 million for the six months ended June 30, 2024, to RMB 460.1 million for the six months ended June 30, 2025, representing a 63.5% increase[49] - R&D expenses rose from RMB 642.3 million for the six months ended June 30, 2024, to RMB 681.5 million for the six months ended June 30, 2025, an increase of 6.1%[50] - Financial costs increased from RMB 109.0 million for the six months ended June 30, 2024, to RMB 119.8 million for the six months ended June 30, 2025, a rise of 9.82%[53] Assets and Liabilities - Current assets as of June 30, 2025, amounted to RMB 6,701.4 million, with cash and cash equivalents at RMB 2,879.2 million, an increase of 2.88% from RMB 2,798.6 million as of June 30, 2024[56] - The current liabilities as of June 30, 2025, totaled RMB 2,753.3 million, including bank and other borrowings of RMB 1,431.0 million[56] - The gross profit margin decreased to 40.8% for the six months ended June 30, 2025, down from 47.3% for the same period in 2024[60] - The current ratio improved to 2.4 as of June 30, 2025, compared to 0.7 as of June 30, 2024[60] - Unpaid borrowings as of June 30, 2025, were approximately RMB 1,431.0 million, significantly up from RMB 161.3 million as of June 30, 2024[57] Shareholder Information and Corporate Governance - The company holds a total of 1,266,278,000 issued shares as of June 30, 2025[86] - The company’s major shareholders include Mr. Tan with a total holding of 401,701,000 shares, representing approximately 31.72% of the total shares[86] - The company has a significant concentration of ownership, with the top shareholders holding over 31.72% collectively[91] - The company is subject to the Securities and Futures Ordinance, which governs the disclosure of interests and shareholdings[91] - The audit committee reviewed the interim financial performance and confirmed compliance with relevant accounting standards and regulations[75] - The company has adhered to all applicable corporate governance code provisions since its listing date[130] Risks and Challenges - The company faces significant risks related to the successful completion of clinical development and regulatory approvals, which could adversely impact its business and financial outlook[81] - Regulatory requirements are becoming increasingly stringent, potentially hindering the development and launch of new products[84] - The company has a risk of product obsolescence if it fails to develop and launch competitive new products in a timely manner[81]

Impairment and Credit Losses - The company reported a net impairment loss of RMB 4,329.3 million for the year ending December 31, 2024, with RMB 3,032 million related to trade receivables and RMB 1,297 million related to other receivables[2]. - The expected credit loss rate for the third group of trade receivables is 89.94%, with a total book value of RMB 3,573,411,000[3]. - The expected credit loss rate for the fourth group of trade receivables is 49.73%, with a total book value of RMB 407,306,000[3]. - The impairment increased by approximately 709.5% compared to the year ending December 31, 2023, primarily due to provisions for various trade receivables[4]. - The company has established a special task force to assess the recoverability of receivables from the Agile Group and has implemented a recovery plan[6]. - The company has shortened the credit period granted to the Agile Group and is executing strict monthly cash collection procedures[7]. - As of July 31, 2025, the amount of the third group of trade receivables has decreased to RMB 3,552,542,000[11]. - The company entered into a property transfer agreement with the Agile Group to settle receivables amounting to RMB 282.3 million[12]. - The company has taken legal action to recover part of the receivables from the Agile Group[8]. - As of December 31, 2024, the expected credit loss rate for the fourth group of trade receivables is estimated to be similar to that of December 31, 2023, indicating significant credit impairment signs since 2023[13]. - The group has recovered cash amounting to RMB 16,810,000 and completed the transfer of properties from Greenland Holdings to settle approximately RMB 104,000,000 of the fourth group of trade receivables, reducing the balance to RMB 312,706,000[14]. - The total amount of classified bad debts includes RMB 68,203,000 of unpaid interest and RMB 837,455,000 of receivables from business partners, indicating liquidity pressures faced by borrowers[15]. - The company has recognized credit losses on receivables from third parties due to delayed repayments beyond the agreed maturity dates, with a remaining balance of RMB 784,578,000 as of July 31, 2025[19]. - The company expects to recover RMB 13,852,000 of the first batch of unpaid interest in cash by the second half of 2025, while negotiations are ongoing with other borrowers for full repayment[17]. - The company has a guarantee deposit of RMB 700 million from Agile Group, which is under negotiation for compensation through the transfer of unsold parking spaces[20]. - The second batch of unpaid interest, amounting to RMB 20,000,000, is considered unlikely to be recovered due to the borrower's liquidity issues, leading the company to waive this amount[23]. - The company anticipates further progress in negotiations regarding the guarantee deposit in the fourth quarter of 2025[22]. - The overall outlook for the credit risk associated with third-party receivables has significantly increased, prompting the company to assess expected credit losses[16]. - The management acknowledges the high default risk associated with Greenland Holdings, as reflected in the negative outlook from credit rating agencies[13]. Corporate Governance and Leadership - The board of directors consists of seven members, including co-chairmen Mr. Chen Chuo Hung and Mr. Wang Hai Yang, and CEO Mr. Li Da Long[25]. - The company is focused on enhancing its executive team with experienced members to drive strategic initiatives[25]. - The management team includes vice president Mr. Chen Si Yang and independent non-executive directors[25]. - The company aims to improve operational efficiency and market competitiveness through leadership restructuring[25]. - Future strategies will likely involve expanding into new markets and enhancing product offerings[25]. - The board emphasizes the importance of innovation and technology development in driving growth[25]. - The company is committed to maintaining transparency and accountability in its governance practices[25]. - The leadership team is expected to play a crucial role in navigating market challenges and opportunities[25]. - The focus on collaboration among board members is intended to foster a cohesive strategic direction[25]. - The company is preparing for potential mergers and acquisitions to enhance its market position[25].