[Financial Highlights](index=1&type=section&id=%E8%B4%A2%E5%8A%A1%E6%91%98%E8%A6%81) [Performance Overview](index=1&type=section&id=%E4%B8%9A%E7%BB%A9%E6%A6%82%E8%A7%88) Ten Pao Group Holdings Limited reported unaudited interim results for the six months ended June 30, 2025, with revenue up 19.3% to HKD 2,948.1 million, gross profit up 4.9% to HKD 526.7 million, but gross margin decreased by 2.4 percentage points to 17.9%, while profit attributable to owners increased by 20.4% to HKD 211.7 million, and an interim dividend of 6.2 HK cents per share was declared Financial Summary for the Six Months Ended June 30, 2025 | Indicator | June 30, 2025 (thousand HKD) | June 30, 2024 (thousand HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 2,948,051 | 2,471,011 | +19.3% | | Gross Profit | 526,658 | 501,850 | +4.9% | | Gross Profit Margin | 17.9% | 20.3% | -2.4 percentage points | | Profit Before Income Tax | 253,309 | 207,024 | +22.4% | | Profit Attributable to Owners of the Company | 211,650 | 175,830 | +20.4% | | Basic Earnings Per Share | HKD 0.21 | HKD 0.17 | +HKD 0.04 | - The Board has resolved to declare an interim dividend of **6.2 HK cents per ordinary share** for the six months ended June 30, 2025 (2024: 5.2 HK cents per ordinary share)[3](index=3&type=chunk) [Financial Statements](index=2&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=%E7%AE%80%E6%98%8E%E5%90%88%E5%B9%B6%E6%8D%9F%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the company's revenue increased to HKD 2,948.1 million, operating profit significantly grew to HKD 252.3 million, and profit attributable to owners reached HKD 211.7 million Key Data from Condensed Consolidated Statement of Profit or Loss | Indicator | June 30, 2025 (thousand HKD) | June 30, 2024 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 2,948,051 | 2,471,011 | | Cost of Sales | (2,421,393) | (1,969,161) | | Gross Profit | 526,658 | 501,850 | | Other Income | 9,262 | 10,508 | | Other Gains — Net | 28,150 | 28,912 | | Selling Expenses | (68,602) | (84,082) | | Administrative Expenses | (241,849) | (247,222) | | Net Impairment Loss on Financial Assets | (1,275) | (9,855) | | Operating Profit | 252,344 | 200,111 | | Finance Income — Net | 965 | 6,913 | | Profit Before Income Tax | 253,309 | 207,024 | | Income Tax Expense | (41,129) | (31,680) | | Profit for the Period | 212,180 | 175,344 | | Profit Attributable to Owners of the Company | 211,650 | 175,830 | | Non-controlling Interests | 530 | (486) | | Basic and Diluted Earnings Per Share | HKD 0.21 | HKD 0.17 | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=%E7%AE%80%E6%98%8E%E5%90%88%E5%B9%B6%E7%BB%BC%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, profit for the period was HKD 212.2 million, with total comprehensive income attributable to owners of HKD 242.5 million, influenced by currency translation differences and fair value changes in equity investments Key Data from Condensed Consolidated Statement of Comprehensive Income | Indicator | June 30, 2025 (thousand HKD) | June 30, 2024 (thousand HKD) | | :--- | :--- | :--- | | Profit for the Period | 212,180 | 175,344 | | Other Comprehensive Income (items that may be reclassified to profit or loss subsequently) | | | | Currency Translation Differences | (19,446) | 30,849 | | Fair Value Changes of Equity Investments at Fair Value Through Other Comprehensive Income | 881 | — | | Total Other Comprehensive Income | (18,565) | 30,849 | | Total Comprehensive Income for the Period | 193,615 | 206,193 | | Total Comprehensive Income for the Period Attributable to Owners of the Company | 193,085 | 206,679 | | Non-controlling Interests | 530 | (486) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E7%AE%80%E6%98%8E%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of June 30, 2025, total assets were HKD 5,121.5 million, total liabilities HKD 3,077.6 million, and total equity HKD 2,043.9 million, showing an increase in non-current assets and a decrease in current assets and liabilities Key Data from Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | **Assets** | | | | Total Non-current Assets | 1,892,023 | 1,678,624 | | Total Current Assets | 3,229,451 | 3,731,027 | | **Total Assets** | **5,121,474** | **5,409,651** | | **Equity** | | | | Share Capital and Reserves Attributable to Owners of the Company | 2,047,846 | 1,855,720 | | Non-controlling Interests | (3,943) | (4,125) | | **Total Equity** | **2,043,903** | **1,851,595** | | **Liabilities** | | | | Total Non-current Liabilities | 186,500 | 177,235 | | Total Current Liabilities | 2,891,071 | 3,380,821 | | **Total Liabilities** | **3,077,571** | **3,558,056** | | **Total Equity and Liabilities** | **5,121,474** | **5,409,651** | [Notes to the Financial Statements](index=6&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) [General Information](index=6&type=section&id=%E4%B8%80%E8%88%AC%E8%B5%84%E6%96%99) Ten Pao Group Holdings Limited, incorporated in the Cayman Islands and listed on HKEX since 2015, primarily engages in consumer switching power supplies and industrial smart chargers and controllers in China, with Mr. Hung Kwong Yee as controlling shareholder - Ten Pao Group Holdings Limited was incorporated in the Cayman Islands on January 27, 2015, and listed on The Stock Exchange of Hong Kong Limited on December 11, 2015[9](index=9&type=chunk)[10](index=10&type=chunk) - The Group is principally engaged in the development, manufacture, and sale of consumer switching power supplies and industrial smart chargers and controllers in the PRC, with Mr. Hung Kwong Yee as the controlling shareholder[9](index=9&type=chunk) [Basis of Preparation](index=6&type=section&id=%E7%BC%96%E5%88%B6%E5%9F%BA%E5%87%86) These interim financial information are prepared in accordance with HKAS 34 "Interim Financial Reporting" issued by the HKICPA and should be read in conjunction with the 2024 annual financial statements - These interim financial information are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and should be read in conjunction with the annual financial statements for the year ended December 31, 2024[13](index=13&type=chunk) [Accounting Policies](index=6&type=section&id=%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96) Accounting policies applied are consistent with the 2024 financial statements, except for HKFRS amendments effective January 1, 2025, which directors believe have no significant impact on the Group's financial performance or position - The accounting policies applied are consistent with those adopted in the 2024 financial statements, except for the adoption of amendments to Hong Kong Financial Reporting Standards effective for financial years beginning on January 1, 2025[14](index=14&type=chunk) - The Directors believe that the application of new and revised standards and interpretations of HKFRS during the period has no significant impact on the Group's financial performance and position for the current and prior periods, nor on the information disclosed in these interim financial information[15](index=15&type=chunk) Standards Issued But Not Yet Applied by the Group | Standard | Description | Effective Date | | :--- | :--- | :--- | | Annual Improvements to HKFRS Accounting Standards | Annual Improvements | January 1, 2026 | | Amendments to HKFRS 9 and HKFRS 7 | Classification and Measurement of Financial Instruments | January 1, 2026 | | HKFRS 18 | Presentation and Disclosure in Financial Statements | January 1, 2027 | | HKFRS 19 | Non-publicly Accountable Subsidiaries: Disclosures | January 1, 2027 | | HK(IFRIC)-Int 5 | Classification by a Borrower of a Term Loan that Contains a Repayment on Demand Clause | January 1, 2027 | | Amendments to HKAS 28 and HKFRS 10 | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture | To be determined | [Estimates](index=7&type=section&id=%E4%BC%B0%E8%AE%A1) The preparation of interim financial information involves management judgments, estimates, and assumptions consistent with those applied in the 2024 financial statements, with actual results potentially differing - The preparation of interim financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses, and actual results may differ[18](index=18&type=chunk) - In preparing these interim financial information, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied in the 2024 financial statements[18](index=18&type=chunk) [Financial Risk Management](index=7&type=section&id=%E8%B4%A2%E5%8A%A1%E9%A3%8E%E9%99%A9%E7%AE%A1%E7%90%86) The Group faces market risks (foreign exchange, price, interest rate), credit risk, and liquidity risk, with no changes in risk management functions or policies since December 31, 2024, and no significant liquidity risk - The Group is exposed to various financial risks from its business activities: market risk (including foreign exchange risk, price risk, cash flow, and fair value interest rate risk), credit risk, and liquidity risk[19](index=19&type=chunk) - There have been no changes in the risk management function or risk management policies since December 31, 2024[19](index=19&type=chunk) - The Directors believe that the Group does not have any significant liquidity risk[20](index=20&type=chunk) [Segment Information](index=8&type=section&id=%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group's business is divided into six reportable segments: smart chargers and controllers, telecommunications, new energy business, media and entertainment, lighting, and others, with smart chargers and controllers having the highest revenue and new energy business showing significant growth for the six months ended June 30, 2025 - The Group's electronic charging products are classified into six reportable segments: (i) smart chargers and controllers; (ii) telecommunications; (iii) new energy business; (iv) media and entertainment; (v) lighting; and (vi) others[21](index=21&type=chunk) Segment Revenue and Results (for the Six Months Ended June 30) | Segment | 2025 Revenue (thousand HKD) | 2025 Segment Results (thousand HKD) | 2024 Revenue (thousand HKD) | 2024 Segment Results (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Smart Chargers and Controllers | 1,170,307 | 279,599 | 989,123 | 264,363 | | Telecommunications | 663,505 | 85,430 | 639,117 | 92,967 | | New Energy Business | 562,244 | 44,969 | 420,911 | 48,207 | | Media and Entertainment | 221,977 | 41,713 | 168,547 | 34,876 | | Lighting | 207,137 | 52,361 | 146,748 | 35,146 | | Others | 122,881 | 22,586 | 106,565 | 26,291 | | **Total** | **2,948,051** | **526,658** | **2,471,011** | **501,850** | Non-current Assets by Country (excluding financial instruments and deferred income tax assets) | Country | June 30, 2025 (thousand HKD) | June 30, 2024 (thousand HKD) | | :--- | :--- | :--- | | PRC (excluding Hong Kong) | 1,370,416 | 1,217,535 | | Vietnam | 146,525 | 127,906 | | Hungary | 64,966 | 61,999 | | Hong Kong | 88,829 | 9,818 | | Others | 33,820 | 11,714 | | **Total** | **1,704,556** | **1,428,972** | [Other Income and Other Gains — Net](index=10&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%20%E2%80%94%20%E5%87%80%E9%A2%9D) For the six months ended June 30, 2025, other income was HKD 9.3 million and other net gains were HKD 28.2 million, primarily from net exchange gains and government grants Other Income and Other Gains — Net | Item | June 30, 2025 (thousand HKD) | June 30, 2024 (thousand HKD) | | :--- | :--- | :--- | | **Other Income** | | | | Sale of Scraps | 4,867 | 3,586 | | Product Standard Modification Fees | — | 2,444 | | Sale of Raw Materials, Samples, and Molds | 2,209 | 2,423 | | Safety Fee Income | 729 | 707 | | Others | 1,457 | 1,348 | | **Subtotal** | **9,262** | **10,508** | | **Other Gains — Net** | | | | Fair Value Changes of Derivative Financial Instruments | 1,336 | (648) | | Fair Value Changes of Financial Assets at Fair Value Through Profit or Loss | 3,188 | 2,419 | | Fair Value Changes of Investment Properties | (300) | (500) | | Net Exchange Gains | 15,565 | 10,751 | | Government Grants | 7,920 | 17,929 | | Gains on Disposal of Property, Plant and Equipment | 2,816 | 187 | | Others | (2,375) | (1,226) | | **Subtotal** | **28,150** | **28,912** | [Expenses by Nature](index=10&type=section&id=%E6%8C%89%E6%80%A7%E8%B4%A8%E5%88%92%E5%88%86%E7%9A%84%E5%BC%80%E6%94%AF) For the six months ended June 30, 2025, total expenses amounted to HKD 2,731.8 million, with raw materials and consumables being the largest component and employee benefit expenses also increasing Expenses by Nature (for the Six Months Ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Raw Materials and Consumables Used (excluding R&D expenses) | 1,923,878 | 1,741,599 | | Employee Benefit Expenses (excluding R&D expenses) | 394,462 | 326,802 | | Changes in Inventories of Finished Goods and Work-in-progress | 111,136 | (70,274) | | Depreciation, Amortisation and Impairment Expenses (excluding R&D expenses) | 72,091 | 89,538 | | R&D Expenses — Employee Benefit Expenses | 76,792 | 68,902 | | R&D Expenses — Raw Materials, Consumables, and Others Used | 23,424 | 15,873 | | R&D Expenses — Depreciation and Amortisation | 7,946 | 8,642 | | Provision for Impairment of Inventories | 58 | 2,607 | | Auditor's Remuneration | 1,678 | 1,618 | | Other Expenses | 120,379 | 115,158 | | **Total Cost of Sales, Selling Expenses, and Administrative Expenses** | **2,731,844** | **2,300,465** | [Finance Income and Expenses](index=11&type=section&id=%E8%B4%A2%E5%8A%A1%E6%94%B6%E5%85%A5%E5%8F%8A%E5%BC%80%E6%94%AF) For the six months ended June 30, 2025, net finance income was HKD 965 thousand, a significant decrease from HKD 6,913 thousand in the prior year, mainly due to a substantial increase in interest expense on bank borrowings Finance Income and Expenses (for the Six Months Ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | **Finance Income:** | | | | Interest Income | 8,024 | 9,035 | | **Finance Expenses:** | | | | Interest on Bank Borrowings | (6,255) | (1,349) | | Interest on Lease Liabilities | (804) | (773) | | **Finance Expenses Expensed** | **(7,059)** | **(2,122)** | | **Finance Income — Net** | **965** | **6,913** | [Income Tax Expense](index=11&type=section&id=%E6%89%80%E5%BE%97%E7%A8%8E%E5%BC%80%E6%94%AF) For the six months ended June 30, 2025, income tax expense was HKD 41.1 million, primarily comprising PRC corporate income tax, Hong Kong profits tax, and Vietnam corporate income tax, with some PRC subsidiaries enjoying a preferential 15% tax rate as "High-New Technology Enterprises" Income Tax Expense (for the Six Months Ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | **Current Income Tax** | | | | — PRC Corporate Income Tax | 20,792 | 15,573 | | — Hong Kong Profits Tax | 15,399 | 7,815 | | — Vietnam Corporate Income Tax | 7,356 | 4,263 | | **Subtotal** | **43,547** | **27,651** | | Deferred Income Tax | (2,418) | 4,029 | | **Total** | **41,129** | **31,680** | - Ten Pao Electronic (Huizhou) Co, Ltd, Dazhou Ten Pao Jinhu Electronic Co, Ltd, Shaanxi Huifeng Electronic Technology Co, Ltd, Huizhou Ten Pao Chuangneng Technology Co, Ltd, and Ten Pao Precision Technology (Huizhou) Co, Ltd are recognized as "High-New Technology Enterprises" and enjoy a preferential corporate income tax rate of **15%**[27](index=27&type=chunk) [Earnings Per Share](index=12&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) For the six months ended June 30, 2025, basic earnings per share increased to 21 HK cents from 17 HK cents in the prior year, with diluted earnings per share being similar to basic earnings per share Earnings Per Share (for the Six Months Ended June 30) | Indicator | 2025 (thousand HKD/thousand shares/HK cents) | 2024 (thousand HKD/thousand shares/HK cents) | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company | 211,650 | 175,830 | | Weighted Average Number of Shares in Issue | 1,030,389 | 1,030,389 | | Basic Earnings Per Share | 21 | 17 | - As of June 30, 2025, diluted earnings per share were similar to basic earnings per share (June 30, 2024: same)[29](index=29&type=chunk) [Dividends](index=12&type=section&id=%E8%82%A1%E6%81%AF) The Board resolved to declare an interim dividend of 6.2 HK cents per ordinary share for the six months ended June 30, 2025, totaling HKD 63.9 million, an increase from the prior year - The Board resolved on August 21, 2025, to declare an interim dividend of **6.2 HK cents per ordinary share** of the Company for the six months ended June 30, 2025 (2024 interim: 5.2 HK cents per ordinary share), amounting to **HKD 63.9 million** (2024 interim: HKD 53.6 million)[30](index=30&type=chunk) - On June 13, 2025, the final dividend of **6 HK cents per ordinary share** of the Company for the year ended December 31, 2024 (amounting to HKD 61,823,000) was approved by the then shareholders[30](index=30&type=chunk) [Property, Plant and Equipment](index=13&type=section&id=%E7%89%A9%E4%B8%9A%E3%80%81%E5%8E%82%E6%88%BF%E5%8F%8A%E8%AE%BE%E5%A4%87) As of June 30, 2025, the net book value of property, plant and equipment increased to HKD 1,370.6 million from December 31, 2024, primarily due to additions and currency translation differences Changes in Net Book Value of Property, Plant and Equipment | Item | June 30, 2025 (thousand HKD) | | :--- | :--- | | Net Book Value at January 1, 2024 | 1,253,639 | | Additions | 165,456 | | Disposals | (6,491) | | Currency Translation Differences | 26,048 | | Depreciation/Amortisation | (68,061) | | **Net Book Value at June 30, 2025** | **1,370,591** | [Inventories](index=13&type=section&id=%E5%AD%98%E8%B4%A7) As of June 30, 2025, net inventories decreased to HKD 851.2 million from December 31, 2024, mainly due to reductions in raw materials, work-in-progress, and finished goods, while impairment provisions slightly increased Composition of Inventories | Item | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Raw Materials | 327,152 | 400,376 | | Work-in-progress | 177,626 | 191,874 | | Finished Goods | 440,675 | 537,563 | | **Total** | **945,453** | **1,129,813** | | Less: Impairment Provision | (94,216) | (92,872) | | **Net Value** | **851,237** | **1,036,941** | Changes in Impairment Provision for Inventories | Item | June 30, 2025 (thousand HKD) | June 30, 2024 (thousand HKD) | | :--- | :--- | :--- | | At January 1 | 92,872 | 108,499 | | Currency Translation Differences | 1,286 | (480) | | Net Write-back of Provision | 58 | 2,607 | | **At June 30** | **94,216** | **110,626** | [Trade and Other Receivables](index=14&type=section&id=%E8%B4%B8%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9) As of June 30, 2025, total trade and other receivables amounted to HKD 1,680.5 million, with net trade receivables at HKD 1,522.2 million, generally subject to 30 to 90-day credit terms, and some receivables pledged for bank borrowings Composition of Trade and Other Receivables | Item | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Trade Receivables — Net | 1,522,219 | 1,452,038 | | VAT Provision | 90,805 | 64,509 | | Prepayments | 24,500 | 20,093 | | Bills Receivable | 18,302 | 97 | | Cash in Transit | 9,420 | 8,837 | | Export Tax Refund Receivable | 6,720 | 16,185 | | Deposits | 3,978 | 8,087 | | Employee Benefits | 3,682 | 3,306 | | Advances to Employees | 745 | 560 | | Others | 143 | 3,635 | | **Total** | **1,680,514** | **1,577,347** | Ageing Analysis of Trade Receivables | Ageing | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Less than 3 months | 1,213,616 | 1,088,281 | | More than 3 months but not exceeding 1 year | 314,610 | 367,100 | | More than 1 year | 1,391 | 3,616 | | **Total** | **1,529,617** | **1,458,997** | - As of June 30, 2025, the Group's bank borrowings were secured by trade and other receivables with a carrying amount of **HKD 83,257,000** (December 31, 2024: HKD 332,282,000)[34](index=34&type=chunk) [Share Capital and Share Premium](index=15&type=section&id=%E8%82%A1%E6%9C%AC%E5%8F%8A%E8%82%A1%E4%BB%BD%E6%BA%A2%E4%BB%B7) As of June 30, 2025, issued and fully paid ordinary share capital was HKD 10.3 million and share premium was HKD 162.4 million, remaining unchanged from December 31, 2024 Issued and Fully Paid Ordinary Shares | Item | Number of Shares | Share Capital (thousand HKD) | Share Premium (thousand HKD) | Total (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | At January 1, 2024, December 31, 2024, January 1, 2025, and June 30, 2025 | 1,030,388,965 | 10,304 | 162,426 | 172,730 | [Borrowings](index=15&type=section&id=%E5%80%9F%E8%B4%B7) As of June 30, 2025, total borrowings were HKD 610.8 million, all current bank borrowings, a decrease from HKD 650.7 million on December 31, 2024, mainly due to net repayment, with some bank borrowings secured by restricted bank deposits and trade and other receivables Total Borrowings | Item | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | **Non-current** | | | | Bank Borrowings — Secured | — | 3,002 | | Less: Current Portion of Non-current Borrowings | — | (3,002) | | **Subtotal** | **—** | **—** | | **Current** | | | | Bank Borrowings — Secured | 505,840 | 606,262 | | Bank Borrowings — Unsecured | 104,936 | 41,477 | | **Total Short-term Bank Borrowings** | **610,776** | **647,739** | | Current Portion of Non-current Borrowings | — | 3,002 | | **Total Borrowings** | **610,776** | **650,741** | Changes in Borrowings (for the Six Months Ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Opening Balance at January 1 | 650,741 | 654,899 | | Proceeds from Borrowings | 583,747 | 140,879 | | Repayment of Borrowings | (632,592) | (584,370) | | Currency Translation Differences | 8,880 | (3,464) | | **Closing Balance at June 30** | **610,776** | **207,944** | Assets Pledged for Bank Borrowings | Pledged Assets | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Restricted Bank Deposits | 385,853 | 584,942 | | Trade and Other Receivables | 83,257 | 332,282 | | Investment Properties | — | 6,300 | | **Total** | **469,110** | **923,524** | [Trade and Other Payables](index=16&type=section&id=%E8%B4%B8%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E5%BA%94%E4%BB%98%E6%AC%BE%E9%A1%B9) As of June 30, 2025, total trade and other payables amounted to HKD 2,105.2 million, a decrease from December 31, 2024, primarily due to reductions in trade payables and bills payable Composition of Trade and Other Payables | Item | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Trade Payables | 1,297,736 | 1,613,613 | | Bills Payable | 322,436 | 496,672 | | Accrued Wages and Employee Benefits | 302,001 | 346,398 | | Accrued Expenses and Other Payables | 129,932 | 130,414 | | Payables Related to Share-based Transactions with Subsidiaries | 24,916 | 29,911 | | Endorsed Bills Receivable Not Derecognized and Not Yet Due | 18,031 | — | | Other Taxes Payable | 10,195 | 6,649 | | **Total** | **2,105,247** | **2,623,657** | Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Less than 3 months | 1,212,210 | 1,267,909 | | More than 3 months but not exceeding 1 year | 77,538 | 335,907 | | More than 1 year | 7,988 | 9,797 | | **Total** | **1,297,736** | **1,613,613** | [Management Discussion and Analysis](index=17&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [Overview](index=17&type=section&id=%E6%A6%82%E8%A7%88) Ten Pao Group, a smart power solution provider, successfully navigated global inflation and geopolitical conflicts in H1 2025 through diversified market presence, production bases, and R&D centers, achieving 19.3% revenue growth to HKD 2,948.1 million and 20.4% profit growth to HKD 211.7 million, while maintaining a stable dividend policy - Ten Pao, as a leading smart power solution provider, has consistently received multiple awards for excellent quality and delivery from Global Fortune 500 clients for many years, and has been recognized as a national provincial green factory and awarded for excellence in new industrialization[37](index=37&type=chunk) - Facing global inflation, geopolitical conflicts, and trade barriers, the Group successfully implemented flexible resource allocation and agile market response through diversified markets, decentralized production bases, and R&D centers[38](index=38&type=chunk) - The Group seized opportunities in AI smart manufacturing and energy development, expanding its new energy and high-end smart controller businesses, enhancing its product portfolio and customer base, thereby forming a business safety barrier[38](index=38&type=chunk) Key Financial Performance for H1 2025 | Indicator | Amount (HKD) | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | 2,948.1 million | 19.3% | | Gross Profit | 526.7 million | - | | Gross Profit Margin | 17.9% | Decreased | | Profit Before Tax | 253.3 million | - | | Profit Attributable to Owners of the Company | 211.7 million | 20.4% | | Basic Earnings Per Share | 21 HK cents | Increased | - The Group is committed to maintaining a long-term stable dividend policy, declaring an interim dividend of **6.2 HK cents per ordinary share** for the current period (2024: 5.2 HK cents), with a payout ratio of approximately **30.2%**[40](index=40&type=chunk) [Market and Business Review](index=18&type=section&id=%E5%B8%82%E5%9C%BA%E5%8F%8A%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE) Amid global market uncertainties, the Group maintained operational and financial stability through its "high quality, strong R&D, smart manufacturing, and global presence" strategy, expanding industrial power, new energy, and consumer power businesses, with global production layout entering a harvest phase and active positioning in AI computing power and smart controller markets - The Group steadfastly executed its comprehensive strategy of "high quality, strong R&D, smart manufacturing, and global presence" to drive diversified development of innovative products and customers with high flexibility, maintain stable raw material supply, advance order fulfillment and delivery, and implement strict internal cost control, thereby maintaining operational and financial stability[41](index=41&type=chunk) - The industrial power segment's revenue increased by **18.3%** year-on-year, accounting for **39.7%** of total revenue, as the Group continued to research and develop fast charging technologies and high-tech digital power products, entering the new track of high-power computing power power supplies[42](index=42&type=chunk) - The Group successfully expanded its AI computing power power product matrix, launching new high-power power products of **3,500W** for servers, widely applicable in high-performance computing scenarios such as cloud computing data centers, supercomputing/HPC systems, and enterprise-grade servers[43](index=43&type=chunk) - To seize opportunities in the smart controller market, the Group actively engaged with Global Fortune 500 clients to expand demand for high-end smart controller orders, with new production bases in Vietnam and Mexico equipped with smart controller production facilities[45](index=45&type=chunk) - New energy business revenue increased by **33.6%** year-on-year, rising to **19.1%** of total revenue, primarily driven by energy storage and automotive electronics products, as the Group adhered to three strategies: "energy storage systems, automotive electronics applications, and core charging modules for electric vehicles," and participated in Thailand's "oil-to-electric" two-wheel electric vehicle battery swap cabinet and fast charging pile projects[47](index=47&type=chunk) - The Group's global production layout is entering a harvest phase, with production bases located in Huizhou and Dazhou in China, Hungary, Vietnam, and Mexico, and the new Chuangneng Industrial Park production lines in Huizhou are expected to be fully operational in H2 2025, while new factory production lines in Vietnam and Mexico primarily focus on smart controllers[48](index=48&type=chunk) - The Group integrates AI application technology into its production equipment and develops core components of AI hardware—smart controllers and charging solutions—to fully connect the AI industry chain, enhance production capacity and efficiency, and provide high-end technical support to downstream customers[50](index=50&type=chunk) [Outlook](index=20&type=section&id=%E5%B1%95%E6%9C%9B) For H2 2025, facing global economic slowdown and trade policy changes, the Group will deepen its core new energy and smart controller businesses, align with "new quality productive forces," focus on energy storage, EV charging, and AI computing power, and enhance R&D, global production, and supply chain management for sustainable growth - Looking ahead to H2 2025, the Group will maintain close communication with customers, respond to global market changes with a flexible global production and sales network, and seize global emission reduction and intelligentization trends to develop competitive smart products, continuously deepening and expanding its core new energy and smart controller businesses[51](index=51&type=chunk) - The Group will actively respond to the national call for developing "new quality productive forces," expand into the green new energy sector, focusing on cutting-edge areas such as energy storage system solutions, electric vehicle charging equipment, green mobility, and AI computing power power supplies, which will become new engines driving Ten Pao's future growth[52](index=52&type=chunk) - The Group will continue to strengthen R&D investment, focusing on developing smart products and energy storage systems, high-end smart controllers, all-digital power products, and high-power and high-stability power products, and actively expand into the Southeast Asian new energy market, participating in Thailand's "oil-to-electric" two-wheel electric vehicle battery swap cabinet and fast charging pile projects[54](index=54&type=chunk) - The global smart controller market size is projected to exceed **USD 100 billion by 2033**, and the Group will continue to empower growth across various industries, making it a key development direction[55](index=55&type=chunk) - Global AI computing power equipment power supply market sales are expected to reach **USD 805 million by 2031**, with a compound annual growth rate of **7.5%**, and the Group will continue to strengthen the development and market promotion of AI computing power power supply related product lines, and evaluate cooperation opportunities with leading global technology companies[57](index=57&type=chunk) - The Group will continue to strengthen its global product and production layout, strategically expand overseas production bases, actively promote the application of intelligent manufacturing and high-efficiency technologies, and enhance cooperation with top international clients to expand into high-value-added business areas[59](index=59&type=chunk) [Liquidity and Financial Resources](index=23&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E5%8F%8A%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%BA%90) As of June 30, 2025, the Group maintained a sound financial position with net current assets of HKD 338.4 million, a current ratio of 1.12 times, and a gearing ratio of 29.9%, with net cash from operating activities at HKD 99.7 million, net cash used in investing activities at HKD 230.4 million, and net cash from financing activities at HKD 3.1 million Liquidity and Financial Ratios | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Current Assets | HKD 338.4 million | HKD 350.2 million | | Current Ratio | 1.12 times | 1.10 times | | Gearing Ratio | 29.9% | 35.1% | Cash Flow (for the Six Months Ended June 30) | Item | 2025 (million HKD) | 2024 (million HKD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 99.7 | 332.9 | | Net Cash Used in Investing Activities | (230.4) | (183.9) | | Net Cash from Financing Activities | 3.1 | (66.9) | Debt Maturity Profile | Maturity Period | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Within 1 year | 610,776 | 650,741 | | 1 to 2 years | — | — | | 2 to 5 years | — | — | | **Total** | **610,776** | **650,741** | [Financial Risk Management](index=24&type=section&id=%E8%B4%A2%E5%8A%A1%E9%A3%8E%E9%99%A9%E7%AE%A1%E7%90%86_MD%26A) The Group manages foreign exchange risk, cash flow and fair value interest rate risk, and credit risk through regular review of net foreign exchange exposure, maintaining sufficient cash, and implementing strict customer credit assessment policies [Foreign Exchange Risk](index=24&type=section&id=%E5%A4%96%E6%B1%87%E9%A3%8E%E9%99%A9) The Group primarily faces exchange rate fluctuation risks of HKD and USD against RMB, as most revenue and receivables are denominated in USD and HKD, while cost of sales is mainly in RMB, with no foreign exchange forward contracts entered into during the period - The Group is exposed to currency exchange rate fluctuation risks of HKD and USD against RMB due to its export sales to overseas countries, with revenue denominated in USD and HKD accounting for approximately **48.7%** of its total revenue (2024: 50.1%)[65](index=65&type=chunk) - The Group manages its foreign exchange risk by regularly reviewing its net foreign exchange exposure and may enter into foreign exchange forward contracts when necessary, but no such contracts were entered into during the current period[65](index=65&type=chunk) [Cash Flow and Fair Value Interest Rate Risk](index=24&type=section&id=%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E5%8F%8A%E5%85%AC%E5%85%81%E5%80%BC%E5%88%A9%E7%8E%87%E9%A3%8E%E9%99%A9) The Group's income and operating cash flows are largely unaffected by market interest rate changes due to no significant interest-bearing assets (excluding bank balances and cash), with bank borrowings primarily denominated in HKD, USD, and RMB - The Group's income and operating cash flows are largely unaffected by changes in market interest rates, as the Group has no significant interest-bearing assets (other than bank balances and cash)[66](index=66&type=chunk) - As of June 30, 2025, the Group's bank borrowings amounted to **HKD 610.8 million** (December 31, 2024: HKD 650.7 million), primarily denominated in HKD, USD, and RMB[66](index=66&type=chunk) [Credit Risk](index=24&type=section&id=%E4%BF%A1%E8%B4%B7%E9%A3%8E%E9%99%A9) The Group has no significant concentration of credit risk, managing it by extending credit to customers with good credit records, regularly assessing financial standing, and requiring prepayments, while bank balances and restricted deposits are held with reputable banks - The Group has no significant concentration of credit risk, having implemented policies to ensure that credit terms are only granted to customers with good credit records, and regularly assesses their creditworthiness based on financial standing, past experience, and other factors[67](index=67&type=chunk) - For customers not granted credit terms, the Group generally requires them to pay deposits and/or advances before product delivery[67](index=67&type=chunk) - All of the Group's bank balances, time deposits, and restricted bank deposits are held with reputable and large banks and financial institutions in the PRC and Hong Kong that do not have significant credit risk[68](index=68&type=chunk) [Liquidity Risk](index=25&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E9%A3%8E%E9%99%A9) Management closely monitors liquidity, maintaining sufficient cash and cash equivalents to cover working capital and mitigate cash flow fluctuations - The Group's management closely monitors its liquidity position, maintaining cash and cash equivalents at levels deemed sufficient to cover working capital and mitigate the impact of cash flow fluctuations[69](index=69&type=chunk) [Contingent Liabilities](index=25&type=section&id=%E6%88%96%E7%84%B6%E8%B4%9F%E5%80%BA) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities (December 31, 2024: nil)[70](index=70&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=25&type=section&id=%E8%B4%AD%E4%B9%B0%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B5%8E%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) During the period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[71](index=71&type=chunk) [Human Resources](index=25&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B5%84%E6%BA%90) As of June 30, 2025, the Group employed approximately 8,000 full-time employees, with total labor costs of HKD 471.3 million, and has adopted new share option and subsidiary share award schemes to attract, develop, and retain talent - As of June 30, 2025, the Group employed approximately **8,000 full-time employees**, with total labor costs for the period amounting to **HKD 471.3 million**, compared to HKD 395.7 million for the corresponding period last year[72](index=72&type=chunk) - The Company conditionally adopted a share option scheme ("2025 Share Option Scheme") on June 13, 2025, aiming to provide incentives, rewards, or encouragement to eligible participants through the grant of share options[73](index=73&type=chunk) - The board of directors of Ten Pao Electronic (Huizhou) Co, Ltd, a subsidiary of the Company, has resolved to propose the adoption of the Ten Pao Electronic (Huizhou) Share Award Scheme, aiming to establish a long-term incentive mechanism to attract and retain talent[73](index=73&type=chunk) [Other Information](index=26&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) [Corporate Governance Practices](index=26&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A7%84) The Company is committed to good corporate governance, having established audit, nomination, and remuneration committees, and has complied with the Corporate Governance Code during the period, except for the combined roles of Chairman and CEO, which the Board believes is in the Company's best interest - The Board has established an Audit Committee, a Nomination Committee, and a Remuneration Committee, and formulated their respective terms of reference, in compliance with the requirements of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[74](index=74&type=chunk) - The Company has complied with the applicable code provisions of the Corporate Governance Code throughout the period, save for code provision C.2.1 (separation of the roles of chairman and chief executive)[74](index=74&type=chunk) - The Board believes that combining the roles of Chairman and Chief Executive Officer allows for strong and consistent leadership, which facilitates the Group's implementation and execution of business strategies, serving the best interests of the Company[75](index=75&type=chunk) [Changes in Composition of Nomination Committee](index=26&type=section&id=%E6%8F%90%E5%90%8D%E5%A7%94%E5%91%98%E4%BC%9A%E7%BB%84%E6%88%90%E5%8F%98%E5%8A%A8) Ms. Hung Shui Lam, an executive director, was appointed as a member of the Nomination Committee effective August 21, 2025, resulting in a six-member committee comprising two executive and four independent non-executive directors - Ms. Hung Shui Lam, an executive director of the Company, has been appointed as a member of the Nomination Committee, effective August 21, 2025[76](index=76&type=chunk) - Following the aforementioned change, the Nomination Committee will comprise **six members**, including two executive directors (namely Mr. Hung, Chairman, and Ms. Hung Shui Lam) and four independent non-executive directors[76](index=76&type=chunk) [Standard Code for Securities Transactions](index=27&type=section&id=%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93%E6%A0%87%E5%87%86%E5%AE%88%E5%88%99) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors and relevant employees, with all directors confirming compliance during the period - 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 as its code of conduct for directors' dealings in the Company's securities[77](index=77&type=chunk) - All Directors confirmed that they have complied with the Model Code throughout the period and up to the date of this announcement, and the Company is not aware of any non-compliance with the Model Code by relevant employees[77](index=77&type=chunk) [Interim Dividend](index=27&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board has resolved to declare an interim dividend of 6.2 HK cents per ordinary share for the period (2024: 5.2 HK cents), expected to be paid on October 27, 2025, to shareholders on record as of October 10, 2025 - The Board has resolved to declare an interim dividend of **6.2 HK cents per ordinary share** (2024: 5.2 HK cents per ordinary share) to shareholders for the current period[78](index=78&type=chunk) - The interim dividend is expected to be paid on Monday, October 27, 2025, to all shareholders whose names appear on the register of members of the Company on Friday, October 10, 2025[78](index=78&type=chunk) [Significant Events After Reporting Period](index=27&type=section&id=%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%90%8E%E9%87%8D%E5%A4%A7%E4%BA%8B%E4%BB%B6) The Directors are unaware of any discloseable significant events occurring after June 30, 2025, and up to the announcement date - The Directors are not aware of any significant events requiring disclosure that have occurred subsequent to June 30, 2025, and up to the date of this announcement[79](index=79&type=chunk) [Closure of Register of Members](index=27&type=section&id=%E6%9A%82%E5%81%9C%E5%8A%9E%E7%90%86%E8%82%A1%E4%BB%BD%E8%BF%87%E6%88%B7%E7%99%BB%E8%AE%B0%E6%89%8B) The Company's register of members will be closed from October 8 to October 10, 2025, to determine shareholders entitled to the interim dividend, with the ex-dividend date being October 3, 2025 - The Company's register of members will be closed from Wednesday, October 8, 2025, to Friday, October 10, 2025 (both days inclusive), for the purpose of determining shareholders entitled to the interim dividend for the current period[80](index=80&type=chunk) - The ex-dividend date will be Friday, October 3, 2025[80](index=80&type=chunk) [Audit Committee and Review of Financial Statements](index=27&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A%E5%8F%8A%E5%AE%A1%E9%98%85%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) The Audit Committee, comprising four independent non-executive directors, has reviewed the unaudited interim condensed consolidated financial statements for the period and deemed the Group's risk management and internal control systems effective - The Audit Committee comprises all **four independent non-executive directors**[81](index=81&type=chunk) - The Audit Committee has reviewed the Company's unaudited interim condensed consolidated financial statements for the period with the Company's management, and has also reviewed the effectiveness of the Group's risk management and internal control systems, deeming them effective[81](index=81&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=28&type=section&id=%E5%88%8A%E7%99%BB%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E5%85%AC%E5%91%8A%E5%8F%8A%E4%B8%AD%E6%9C%9F%E6%8A%A5%E5%91%8A) The interim results announcement has been published on the HKEX and Company websites, and the interim report, containing all information required by the Listing Rules, will be issued to shareholders and published on both websites in due course - This interim results announcement is published on the HKEX website (www.hkexnews.hk) and the Company's website (www.tenpao.com)[82](index=82&type=chunk) - The interim report for the period, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the respective websites of the HKEX and the Company in due course[82](index=82&type=chunk)

[Financial Summary](index=1&type=section&id=Financial%20Summary) For the six months ended June 30, 2025, the company's revenue grew by 31.5% year-over-year to $94.5 million, but basic earnings per share decreased by 9.5% due to increased listing expenses; adjusted net profit, excluding non-recurring items, rose by 13.9% to $18.9 million, indicating core business profitability growth [Financial Summary](index=1&type=section&id=Financial%20Summary) For the six months ended June 30, 2025, the company's revenue grew by 31.5% year-over-year to $94.5 million, but basic earnings per share decreased by 9.5% due to increased listing expenses; adjusted net profit, excluding non-recurring items, rose by 13.9% to $18.9 million, indicating core business profitability growth Key Financial Indicators for H1 2025 | Indicator | For the Six Months Ended June 30, 2025 | Year-over-Year Change | | :--- | :--- | :--- | | Revenue | $94.5 million | +31.5% | | Basic Earnings Per Share | $0.067 | -9.5% | | Adjusted Net Profit | $18.9 million | +13.9% | | Adjusted Basic Earnings Per Share | $0.084 | +7.7% | - During the reporting period, listing expenses significantly increased from **$0.9 million** in the prior year to **$4.0 million**, a primary factor in the decline of basic earnings per share[4](index=4&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's interim condensed consolidated financial statements, including the statement of profit or loss, comprehensive income, and financial position, reflecting revenue growth, changes in profitability, and a strengthened balance sheet due to listing proceeds [Interim Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) During the reporting period, the company's revenue increased by 31.5% to $94.46 million, and gross profit rose by 15.3% to $31.83 million; however, due to a significant increase in administrative expenses, profit before tax slightly decreased by 1.7% to $18.62 million, and profit for the period declined by 4.8% to $14.98 million Interim Condensed Consolidated Statement of Profit or Loss (USD Thousands) | Item | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | 94,464 | 71,839 | | Gross Profit | 31,830 | 27,604 | | Profit Before Tax | 18,621 | 18,934 | | Profit for the Period | 14,976 | 15,734 | | Basic Earnings Per Share (US Cents) | 6.7 | 7.4 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the reporting period, the company's total comprehensive income, including other comprehensive income from foreign currency translation, was $14.98 million, slightly lower than $15.73 million in the prior year Interim Condensed Consolidated Statement of Comprehensive Income (USD Thousands) | Item | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Profit for the Period | 14,976 | 15,734 | | Other Comprehensive Income for the Period | 7 | (6) | | Total Comprehensive Income for the Period | 14,983 | 15,728 | [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets significantly increased to $198 million, primarily due to listing proceeds boosting cash and cash equivalents to $164 million; net assets also grew from $48.09 million to $163 million, reflecting a substantially strengthened financial position Key Balance Sheet Items (USD Thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | 164,117 | 54,818 | | Total Assets | 198,422 | 74,136 | | **Liabilities** | | | | Total Current Liabilities | 34,495 | 25,396 | | **Equity** | | | | Net Assets | 163,078 | 48,089 | | Total Equity | 163,078 | 48,089 | [Notes to the Interim Condensed Consolidated Financial Information](index=6&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the interim condensed consolidated financial information, covering operating segment data, dividends, and changes in share capital, offering further insights into the company's financial structure and performance [3. Operating Segment Information](index=7&type=section&id=3.%20Operating%20Segment%20Information) The company manages and evaluates its business as a single operating segment (beverage and snack sales), with Mainland China being its primary market, contributing the vast majority of revenue and achieving significant growth during the reporting period - Management views the Group's business as a single operating segment for resource allocation and performance assessment[14](index=14&type=chunk) Revenue by Geographical Region (USD Thousands) | Region | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Mainland China | 87,511 | 67,424 | | Hong Kong | 3,997 | 2,496 | | Taiwan | 1,334 | 578 | | Other | 1,622 | 1,341 | | **Total** | **94,464** | **71,839** | [6. Dividends](index=9&type=section&id=6.%20Dividends) During the reporting period, company shareholders approved and paid multiple dividends, including a 2024 final dividend of $28 million and 2025 interim dividends totaling $14 million Dividends Declared and Paid During the Reporting Period (USD Thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | 2024 Final Dividend | 28,000 | - | | 2023 Final Dividend | - | 8,500 | | 2025 Interim Dividend | 12,000 | - | | 2024 Interim Dividend | - | 3,000 | | Dividends Paid from Retained Earnings | 2,000 | - | [12. Share Capital](index=12&type=section&id=12.%20Share%20Capital) During the reporting period, the company's share capital underwent significant changes, including a 1-for-200 share split and a successful listing on the Hong Kong Stock Exchange on June 30, 2025, issuing approximately 41.67 million new ordinary shares and raising approximately $147.6 million in total proceeds - The company effected a **1-for-200 share split** on June 17, 2025[37](index=37&type=chunk) - On June 30, 2025, the company listed on the Main Board of the Hong Kong Stock Exchange, issuing **41,666,800 new shares** and raising approximately **$147.6 million** in total proceeds, with related transaction costs of approximately **$5.6 million**[38](index=38&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operational and financial performance, covering business overview, review of operations, future outlook, and detailed financial review, offering management's perspective on key drivers and strategies [1. Business Overview](index=16&type=section&id=1.%20Business%20Overview) The company is a Thailand-based ready-to-drink beverage and ready-to-eat food company with core brands `if` and `Innococo`, a leader in introducing natural coconut water to Mainland China, expanding across Asia and other global markets, and launched six new products during the reporting period to meet market demand - The company's core brands are `if` (focused on natural healthy Thai beverages) and `Innococo` (a healthy alternative to traditional sports drinks)[51](index=51&type=chunk) - Mainland China is the company's largest market, with products also popular in Asian markets such as Hong Kong, Singapore, and Taiwan[50](index=50&type=chunk) - During the reporting period, the company launched **six new products**, including the `if` tea series, Thai street drinks, and a limited-edition coconut water to celebrate the 50th anniversary of China-Thailand diplomatic relations[51](index=51&type=chunk) [2. Business Review](index=17&type=section&id=2.%20Business%20Review) In H1 2025, total revenue grew by 31.5% year-over-year to $94.5 million, primarily driven by coconut water products which saw a 33.3% revenue increase and accounted for 96.9% of total revenue; the `if` brand was a key growth driver, increasing its revenue contribution from 82.4% to 89.0%, but gross margin declined by 4.7 percentage points to 33.7% due to adverse Thai Baht appreciation Revenue by Brand (USD Thousands) | Brand | H1 2025 | % of Total | H1 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | if | 84,083 | 89.0% | 59,174 | 82.4% | | Innococo | 10,381 | 11.0% | 12,594 | 17.5% | | **Total** | **94,464** | **100%** | **71,839** | **100%** | Revenue by Product (USD Thousands) | Product | H1 2025 | % of Total | H1 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Coconut Water | 91,506 | 96.9% | 68,664 | 95.6% | | Other Coconut Water Related | 701 | 0.7% | 1,352 | 1.9% | | Other Beverages | 2,257 | 2.4% | 1,436 | 2.0% | | Plant-Based Snacks | – | – | 387 | 0.5% | | **Total** | **94,464** | **100%** | **71,839** | **100%** | - Gross margin decreased from **38.4% to 33.7%**, primarily due to adverse foreign exchange impacts from the appreciation of the Thai Baht against the US Dollar during the reporting period[56](index=56&type=chunk) - Adjusted net profit (excluding listing expenses) was **$18.9 million**, a **13.9% year-over-year increase**, demonstrating robust core business profitability[56](index=56&type=chunk) [3. Outlook](index=19&type=section&id=3.%20Outlook) The company maintains an optimistic outlook on future market prospects, anticipating continued high growth in the ready-to-drink soft beverage market, especially the coconut water segment, across Greater China and globally; to capitalize on opportunities, five key business strategies include strengthening procurement, enhancing innovation, consolidating the China market while expanding overseas, reinforcing brand building, and pursuing strategic collaborations and M&A - The Greater China coconut water beverage market is projected to grow from **$1.09 billion** in 2024 to **$2.65 billion** by 2029, at a **CAGR of 19.4%**[61](index=61&type=chunk) - The company's future growth strategies include strengthening procurement capabilities, enhancing innovation, consolidating the China market while expanding overseas (Australia, Americas, Southeast Asia), continuous investment in brand building, and pursuing strategic collaborations and mergers and acquisitions[62](index=62&type=chunk) [4. Financial Review](index=20&type=section&id=4.%20Financial%20Review) This section details the company's H1 financial performance, with revenue up 31.5% driven by Mainland China, gross profit up 15.3% but gross margin down due to exchange rates, sales and distribution expenses increasing with revenue, marketing expenses decreasing due to timing, and administrative expenses surging 122.9% due to listing fees, which was the primary cause of net profit decline; listing proceeds significantly boosted cash and bank balances to $164 million [A. Revenue](index=20&type=section&id=A.%20Revenue) Revenue for the reporting period increased by 31.5% year-over-year to $94.5 million, primarily driven by continued penetration in the Mainland China market and increased coconut water sales; revenue in Mainland China, Hong Kong, Taiwan, and Australia grew by 29.8%, 60.1%, 130.8%, and 215.3% respectively - Revenue increased from **$71.8 million to $94.5 million**, a **31.5% year-over-year growth**, primarily attributable to increased coconut water sales in Mainland China[63](index=63&type=chunk) [B. Gross Profit and Gross Margin](index=20&type=section&id=B.%20Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by 15.3% year-over-year to $31.8 million; however, gross margin decreased from 38.4% in the prior year to 33.7%, primarily due to adverse foreign exchange movements from the appreciation of the Thai Baht against the US Dollar - Gross margin decreased by **4.7 percentage points to 33.7%**, primarily due to adverse currency movements from the appreciation of the Thai Baht against the US Dollar[64](index=64&type=chunk) [E. Administrative Expenses](index=21&type=section&id=E.%20Administrative%20Expenses) Administrative expenses surged by 122.9% year-over-year to $6.1 million, primarily due to a $4.0 million increase in non-recurring professional fees related to the listing on the Hong Kong Stock Exchange - Administrative expenses increased from **$2.7 million to $6.1 million**, primarily attributable to a **$4.0 million** increase in non-recurring professional fees related to the listing on the Stock Exchange during the reporting period[68](index=68&type=chunk) [I. Profit for the Period](index=22&type=section&id=I.%20Profit%20for%20the%20Period) Affected by a significant increase in listing-related professional fees, profit for the period decreased by 4.8% from $15.7 million to $15.0 million, with net margin falling from 21.9% to 15.9%; excluding listing fees, adjusted net profit was $18.9 million, a 13.9% year-over-year increase - Profit for the period decreased by **4.8% year-over-year to $15.0 million**, primarily due to increased listing-related professional fees[72](index=72&type=chunk) [J. Cash and Bank Balances](index=22&type=section&id=J.%20Cash%20and%20Bank%20Balances) As of the end of the reporting period, cash and bank balances were $164.1 million, a significant 199.4% increase from $54.8 million at the end of 2024, primarily due to $147.6 million in proceeds from the listing and issuance of ordinary shares, partially offset by $42.0 million in dividends paid - Cash and bank balances increased from **$54.8 million to $164.1 million**, primarily due to net proceeds from the listing[73](index=73&type=chunk) [6. Cash Flows](index=23&type=section&id=6.%20Cash%20Flows) During the reporting period, net cash inflow from operating activities was $9.6 million, a year-over-year decrease; net cash outflow from investing activities was $0.3 million; net cash inflow from financing activities surged to $100 million, primarily from listing proceeds, net of dividend payments and issuance costs; ultimately, cash and cash equivalents at period-end significantly increased to $164 million Cash Flow Statement Summary (USD Thousands) | Item | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 9,596 | 15,345 | | Net Cash Flow Used in Investing Activities | (263) | (10) | | Net Cash Flow from Financing Activities | 99,951 | 5,188 | | **Net Increase in Cash and Cash Equivalents** | **109,284** | **20,523** | - Net cash inflow from financing activities primarily stemmed from **$147.6 million** in proceeds from the issuance of ordinary shares, offset by **$42.0 million** in dividends paid and **$5.6 million** in transaction costs[86](index=86&type=chunk) [Use of Listing Proceeds](index=27&type=section&id=Use%20of%20Listing%20Proceeds) The company listed on June 30, 2025, raising net proceeds of approximately $138 million, all of which remained unutilized as of the reporting period end; funds are planned for strengthening warehousing and distribution capabilities (30%), brand building (22%), market expansion (13%), product development (5%), strategic alliances and acquisitions (20%), and working capital (10%) Planned Use of Listing Proceeds (USD Millions) | Purpose | % of Total | Planned Amount | Amount Utilized | Unutilized Amount | | :--- | :--- | :--- | :--- | :--- | | Strengthening Warehousing and Distribution Capabilities | 30 | 41.4 | 0 | 41.4 | | Brand Building | 22 | 30.4 | 0 | 30.4 | | Market Consolidation and Expansion | 13 | 17.9 | 0 | 17.9 | | Enhancing Product Development Capabilities | 5 | 6.9 | 0 | 6.9 | | Strategic Alliances and Acquisitions | 20 | 27.6 | 0 | 27.6 | | Working Capital and Other | 10 | 13.8 | 0 | 13.8 | | **Total** | **100** | **138.0** | **0** | **138.0** |

[Company Information and Performance Summary](index=1&type=section&id=Company%20Information%20and%20Performance%20Summary) This section provides an overview of the company and its financial performance for the first half of 2025 [Company Profile](index=1&type=section&id=PETRO-KING%20OILFIELD%20SERVICES%20LIMITED) PETRO-KING OILFIELD SERVICES LIMITED, a BVI-registered company (stock code 2178), presents its unaudited consolidated results for the six months ended June 30, 2025 - Company name: PETRO-KING OILFIELD SERVICES LIMITED, stock code: **2178**[2](index=2&type=chunk) [First Half Performance Overview](index=1&type=section&id=Business%20Review) In H1 2025, the Group's revenue significantly decreased by 32.9% to 111.3 million HKD, resulting in a net loss of 11.5 million HKD and no interim dividend Key Financial Performance for H1 2025 | Metric | 2025 H1 (million HKD) | 2024 H1 (million HKD) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 111.3 | 165.9 | -32.9% | | Net Loss | (11.5) | (0.4) | Increased by 11.1 million HKD | | Loss attributable to owners of the Company | (11.8) | (0.4) | Increased by 11.4 million HKD | | Basic loss per share (HK cents) | (0.68) | (0.02) | Increased by 0.66 HK cents | - The Board resolved not to declare an interim dividend for H1 2025 (H1 2024: nil)[4](index=4&type=chunk) [Business Review and Operational Analysis](index=2&type=section&id=Business%20Review%20and%20Operational%20Analysis) This section analyzes the Group's operational performance across geographical markets, service types, and customer segments, alongside human resources, R&D, and future outlook [Geographical Market Analysis](index=2&type=section&id=Geographical%20Market%20Analysis) In H1 2025, overall revenue decreased by 32.9%, with China market revenue down 26.4% and overseas market revenue sharply declining by 86.7% H1 2025 Geographical Market Revenue Comparison | Market | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Approximate % Change (%) | % of Total Revenue H1 2025 (%) | % of Total Revenue H1 2024 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | China Market | 108.9 | 147.9 | -26.4 | 97.8 | 89.2 | | Overseas Market | 2.4 | 18.0 | -86.7 | 2.2 | 10.8 | | **Total** | **111.3** | **165.9** | **-32.9** | **100** | **100** | - China market revenue decreased primarily due to reduced production enhancement services in Southwest China[5](index=5&type=chunk) - Overseas market revenue significantly decreased due to the expiration of a Middle East supervision service contract in H1 2024 with no H1 2025 revenue, and reduced drilling services in Uzbekistan and integrated project management services in the Middle East[6](index=6&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk) [China Market](index=2&type=section&id=China%20Market) China market revenue decreased by 26.4% year-on-year, with Southwest China seeing the largest decline due to reduced production enhancement services, while Northwest China grew by 17.0% from increased drilling services H1 2025 China Market Revenue Comparison by Region | Region | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Approximate % Change (%) | % of Total China Market Revenue H1 2025 (%) | % of Total China Market Revenue H1 2024 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Southwest China | 73.4 | 113.7 | -35.4 | 67.4 | 76.9 | | North China | 21.0 | 21.9 | -4.1 | 19.3 | 14.8 | | Northwest China | 11.0 | 9.4 | 17.0 | 10.1 | 6.3 | | Other China Regions | 3.5 | 2.9 | 20.7 | 3.2 | 2.0 | | **Total** | **108.9** | **147.9** | **-26.4** | **100** | **100** | - Southwest China revenue decreased primarily due to reduced production enhancement services[7](index=7&type=chunk) - Northwest China revenue increased mainly due to increased drilling services, partially offset by reduced production enhancement and completion services[8](index=8&type=chunk) [Overseas Market](index=4&type=section&id=Overseas%20Market) Overseas market revenue sharply declined by 86.7% year-on-year, primarily due to the expiration of a Middle East supervision service contract and reduced drilling services in Uzbekistan H1 2025 Overseas Market Revenue Comparison by Region | Region | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Approximate % Change (%) | % of Total Overseas Market Revenue H1 2025 (%) | % of Total Overseas Market Revenue H1 2024 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Middle East | 1.4 | 14.2 | -90.1 | 58.3 | 78.9 | | Other | 1.0 | 3.8 | -73.7 | 41.7 | 21.1 | | **Total** | **2.4** | **18.0** | **-86.7** | **100** | **100** | - Middle East revenue decreased primarily due to the expiration of a supervision service contract in H1 2024 with no H1 2025 revenue, and reduced integrated project management services[9](index=9&type=chunk) - Other overseas regions' revenue decreased mainly due to reduced drilling services provided in Uzbekistan[10](index=10&type=chunk) [Analysis by Service Type](index=5&type=section&id=Analysis%20by%20Service%20Type) In H1 2025, oilfield project tools and services revenue decreased by 28.6%, and consulting services revenue sharply declined by 67.6%, while drilling services saw a 32.1% increase H1 2025 Revenue Comparison by Service Type | Service Type | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Approximate % Change (%) | % of Total Revenue H1 2025 (%) | % of Total Revenue H1 2024 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Oilfield Project Tools and Services | 105.4 | 147.7 | -28.6 | 94.7 | 89.0 | | Consulting Services | 5.9 | 18.2 | -67.6 | 5.3 | 11.0 | | **Total** | **111.3** | **165.9** | **-32.9** | **100** | **100** | [Oilfield Project Tools and Services](index=5&type=section&id=Oilfield%20Project%20Tools%20and%20Services) Revenue from oilfield project tools and services decreased by 28.6% year-on-year, primarily due to reduced production enhancement services in Southwest China - Oilfield project tools and services revenue decreased primarily due to reduced production enhancement services provided in Southwest China[11](index=11&type=chunk) [Consulting Services](index=5&type=section&id=Consulting%20Services) Consulting services revenue sharply decreased by 67.6% year-on-year, mainly due to the expiration of a Middle East supervision service contract and reduced integrated project management services - Consulting services revenue decreased primarily due to the expiration of a supervision service contract in H1 2024 with no H1 2025 revenue, and reduced integrated project management services in the Middle East[12](index=12&type=chunk) [Production Enhancement Services](index=6&type=section&id=Production%20Enhancement) Production enhancement services revenue decreased by 31.4% to 93.7 million HKD, primarily due to reduced services in Southwest China H1 2025 Oilfield Project Tools and Services Sub-segment Revenue | Service Type | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Approximate % Change (%) | % of Total Oilfield Project Tools and Services Revenue H1 2025 (%) | % of Total Oilfield Project Tools and Services Revenue H1 2024 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Production Enhancement | 93.7 | 136.6 | -31.4 | 88.9 | 92.5 | | Drilling | 10.7 | 8.1 | 32.1 | 10.2 | 5.5 | | Completion | 1.0 | 3.0 | -66.7 | 0.9 | 2.0 | | **Total** | **105.4** | **147.7** | **-28.6** | **100** | **100** | - Production enhancement revenue decreased primarily due to reduced production enhancement services provided in Southwest China[13](index=13&type=chunk) [Drilling Services](index=6&type=section&id=Drilling) Drilling services revenue increased by 32.1% to 10.7 million HKD, mainly driven by increased services in Northwest China, partially offset by reductions in Uzbekistan - Drilling revenue increased primarily due to increased drilling services provided in Northwest China, partially offset by reduced drilling services provided in Uzbekistan[14](index=14&type=chunk) [Completion Services](index=6&type=section&id=Completion) Completion services revenue decreased by 66.7% to 1.0 million HKD, mainly due to reduced completion tool sales in Northwest China, partially offset by increased sales in North China - Completion revenue decreased primarily due to reduced completion tool sales in Northwest China, partially offset by increased sales in North China[15](index=15&type=chunk) - Completion revenue includes commission income of approximately **0.3 million HKD** from facilitating sales of completion tools by Petro-King Energy Technology (Guangdong) Co., Ltd. and its subsidiaries to independent customers[15](index=15&type=chunk) [Analysis by Customer](index=7&type=section&id=Customers) In H1 2025, revenue from the top three customers significantly declined, with Customer 1 down 29.6% due to project delays and Customer 3 down 90.1% from contract expiration H1 2025 Revenue Comparison by Customer | Customer | 2025 H1 (million HKD) | 2024 H1 (million HKD) | Approximate % Change (%) | % of Total Revenue H1 2025 (%) | % of Total Revenue H1 2024 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Customer 1 | 81.0 | 115.0 | -29.6 | 72.8 | 69.3 | | Customer 2 | 26.4 | 30.3 | -12.9 | 23.7 | 18.3 | | Customer 3 | 1.4 | 14.1 | -90.1 | 1.3 | 8.5 | | Customer 4 | 1.2 | 2.3 | -47.8 | 1.1 | 1.4 | | Customer 5 | 0.5 | – | N/A | 0.4 | – | | Other Customers | 0.8 | 4.2 | -81.0 | 0.7 | 2.5 | | **Total** | **111.3** | **165.9** | **-32.9** | **100** | **100** | - Customer 1 revenue decreased primarily due to internal extraction plan adjustments, delaying certain shale gas production enhancement projects to H2 2025[16](index=16&type=chunk) - Customer 3 revenue significantly decreased due to the expiration of a Middle East supervision service contract in H1 2024 with no H1 2025 revenue[16](index=16&type=chunk) [Human Resources](index=8&type=section&id=Human%20Resources) The Group values its employees, provides training, streamlines its organizational structure, and recruits international experts, resulting in a 2.1% reduction in total employees to 191 as of June 30, 2025 - In H1 2025, the Group arranged **68** training courses totaling over **2,163** hours, attended by **131** employees[17](index=17&type=chunk) - As of June 30, 2025, the Group had **191** employees, a decrease of approximately **2.1%** from **195** employees as of December 31, 2024[17](index=17&type=chunk) - The Company prioritizes talent acquisition and has hired several international experts skilled in market development[17](index=17&type=chunk) [Research and Development Investment and Achievements](index=8&type=section&id=R%26D) The Group prioritizes R&D in oilfield services and new energy, holding 40 utility model patents and 11 invention patents, with 35 additional applications pending as of June 30, 2025 - In H1 2025, in addition to oilfield service technology R&D, the Group also conducted several new energy utilization studies, including CO2 geological sequestration, LNG cold energy utilization, solidified hydrogen storage, geothermal energy utilization, and in-situ underground coal hydrogen production technology[18](index=18&type=chunk) - As of June 30, 2025, the Group held **40** utility model patents and **11** invention patents, with **27** utility model patents and **8** invention patents currently under application[18](index=18&type=chunk) [Business Outlook](index=9&type=section&id=Outlook) The Group anticipates stable demand for production enhancement and other oilfield services in H2 2025, driven by stable international oil prices and China's shale gas policies, while also exploring diversified investment opportunities in green energy - Market demand for the Group's production enhancement and other oilfield services is expected to remain robust for the remainder of 2025, supported by relatively stable international oil prices and China's policies encouraging shale gas consumption[19](index=19&type=chunk) - The Group will continue to focus on marketing and promoting oilfield services and technologies, and explore diversified investment opportunities, including green and renewable energy projects[19](index=19&type=chunk) [Financial Statements](index=10&type=section&id=Financial%20Statements) This section presents the Group's interim condensed consolidated statements of comprehensive income and financial position for H1 2025 [Interim Condensed Consolidated Statement of Comprehensive Income](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) In H1 2025, the Group's revenue significantly decreased to 111,266 thousand HKD, resulting in an operating loss of 4,730 thousand HKD and a net loss of 11,532 thousand HKD Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Metric | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 111,266 | 165,908 | | Operating (Loss)/Profit | (4,730) | 7,636 | | Loss for the period | (11,532) | (412) | | Loss for the period attributable to owners of the Company | (11,793) | (395) | | Basic loss per share (HK cents) | (0.68) | (0.02) | [Interim Condensed Consolidated Statement of Financial Position](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group reported total assets less current liabilities of 211,532 thousand HKD and net assets of 171,799 thousand HKD, with net current liabilities increasing to 7,896 thousand HKD Summary of Interim Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Non-current assets | 219,428 | 226,208 | | Current assets | 381,579 | 416,731 | | Current liabilities | 389,475 | 417,096 | | Net current liabilities | (7,896) | (365) | | Net assets | 171,799 | 180,263 | | Equity attributable to owners of the Company | 164,093 | 172,818 | [Notes to Financial Information and Management Discussion](index=14&type=section&id=Notes%20to%20Financial%20Information%20and%20Management%20Discussion) This section provides detailed notes on the financial information, including general company data, accounting policies, segment performance, and balance sheet item analysis [General Information](index=14&type=section&id=1%20General%20Information) PETRO-KING OILFIELD SERVICES LIMITED, incorporated in BVI in 2007 and listed in Hong Kong in 2013, primarily provides oilfield technical and consulting services - The Group primarily provides oilfield technical services covering different stages of the oilfield lifecycle (including drilling, completion, and production enhancement) and oil and gas field consulting services, supplemented by trading activities of related oil and gas field products[24](index=24&type=chunk) - The Company was listed on The Stock Exchange of Hong Kong Limited on **March 6, 2013**[24](index=24&type=chunk) [Basis of Preparation and Going Concern](index=14&type=section&id=2%20Basis%20of%20Preparation) The interim financial information, prepared under IAS 34, highlights a net loss and net current liabilities as of June 30, 2025, indicating significant going concern uncertainties, which the directors plan to address through additional financing - For the six months ended June 30, 2025, the Group recorded a net loss of approximately **11,532,000 HKD**, with net current liabilities of approximately **7,896,000 HKD** and total current bank and other borrowings of approximately **112,083,000 HKD**, while holding cash and cash equivalents of only approximately **18,832,000 HKD**[25](index=25&type=chunk) - The directors have prepared cash flow forecasts covering the next fifteen months and plan to apply for additional loan facilities from Bank of China (expected to be no less than **RMB 20,000,000**) and draw down unutilized loan facilities of **RMB 30,000,000** to support going concern[26](index=26&type=chunk)[27](index=27&type=chunk) - These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern[26](index=26&type=chunk) [Significant Accounting Policies](index=16&type=section&id=3%20Significant%20Accounting%20Policies) The accounting policies adopted are consistent with the 2024 financial statements, and the adoption of new and revised IFRS effective January 1, 2025, had no significant impact on the interim condensed consolidated financial statements - The Group has adopted all new and revised International Financial Reporting Standards (IFRS) relevant to its operations and effective for the accounting period beginning on **January 1, 2025**[30](index=30&type=chunk) - The adoption of new and revised IFRS did not have a significant impact on the Group's interim condensed consolidated financial statements[30](index=30&type=chunk) [Revenue and Segment Information](index=16&type=section&id=4%20Revenue%20and%20Segment%20Information) The Group's primary operating segments are oilfield project tools and services (105,376 thousand HKD revenue, 13,013 thousand HKD loss) and consulting services (5,890 thousand HKD revenue, 3,764 thousand HKD profit) for H1 2025 - The Group has two operating segments: Oilfield Project Tools and Services (providing oilfield technical services and related product trading) and Consulting Services (providing integrated project management and supervision services)[33](index=33&type=chunk) [Revenue Recognition](index=17&type=section&id=Revenue) In H1 2025, the Group's total revenue was 111,266 thousand HKD, with oilfield project tools and services contributing 105,376 thousand HKD and consulting services contributing 5,890 thousand HKD H1 2025 Revenue Recognized by Service Type | Service Type | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Oilfield Project Tools and Services | 105,376 | 147,716 | | – Production Enhancement Projects | 93,721 | 136,623 | | – Drilling Projects | 10,664 | 8,061 | | – Completion Projects | 991 | 3,032 | | Consulting Services | 5,890 | 18,192 | | – Integrated Project Management Services | 1,692 | 3,496 | | – Supervision Services | 4,198 | 14,696 | | **Total Revenue** | **111,266** | **165,908** | - In H1 2025, most revenue (**110,557 thousand HKD**) was recognized over time, with only **709 thousand HKD** recognized at a point in time[35](index=35&type=chunk) [Segment Results](index=18&type=section&id=Segment%20Results) In H1 2025, the oilfield project tools and services segment recorded a loss of 13,013 thousand HKD, while the consulting services segment recorded a profit of 3,764 thousand HKD, resulting in an overall segment loss H1 2025 Segment Results | Segment | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Oilfield Project Tools and Services Revenue | 105,376 | 147,716 | | Consulting Services Revenue | 5,890 | 18,192 | | Oilfield Project Tools and Services Results | (13,013) | (4,219) | | Consulting Services Results | 3,764 | 8,717 | | **Total Segment Results** | **(9,249)** | **4,498** | [Other Income and Losses, Net](index=21&type=section&id=Other%20Income%20and%20Losses%2C%20Net) In H1 2025, net other income increased significantly to 2,777 thousand HKD, primarily due to higher government subsidies, partially offset by a loss on deemed acquisition of an associate's interest H1 2025 Composition of Other Income and Losses, Net | Item | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Net foreign exchange (losses)/gains | (258) | 308 | | Loss on deemed acquisition of interest in an associate | (2,095) | – | | Government subsidies | 4,390 | 553 | | **Total** | **2,777** | **225** | [Net Finance Costs](index=21&type=section&id=6%20Net%20Finance%20Costs) In H1 2025, net finance costs decreased by 16.2% to 5,670 thousand HKD, primarily due to reduced interest expenses on bank and other borrowings H1 2025 Net Finance Costs | Item | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Finance income | 220 | 834 | | Finance costs | (5,890) | (7,584) | | **Net finance costs** | **(5,670)** | **(6,750)** | - Net finance costs decreased primarily due to repayment of bank and other borrowings in H1 2025[57](index=57&type=chunk) [Income Tax Expense](index=22&type=section&id=7%20Income%20Tax%20Expense) In H1 2025, income tax expense decreased to 412 thousand HKD, comprising current tax of 98 thousand HKD and overseas withholding tax of 314 thousand HKD H1 2025 Income Tax Expense | Item | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Current tax | 98 | (21) | | Overseas withholding tax | 314 | 1,027 | | **Income tax expense** | **412** | **1,006** | [Loss Per Share](index=22&type=section&id=8%20Loss%20Per%20Share) In H1 2025, loss attributable to owners of the Company was 11,793 thousand HKD, resulting in a basic and diluted loss per share of 0.68 HK cents, a significant increase from the prior year H1 2025 Loss Per Share | Metric | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company (thousand HKD) | (11,793) | (395) | | Weighted average number of ordinary shares (thousand shares) | 1,726,674 | 1,726,674 | | **Basic and diluted loss per share (HK cents)** | **(0.68)** | **(0.02)** | - Diluted loss per share for H1 2025 was the same as basic loss per share, as all potential ordinary shares had an anti-dilutive effect[43](index=43&type=chunk) [Dividend Policy](index=22&type=section&id=9%20Dividends) The Board resolved not to declare an interim dividend for H1 2025, consistent with the prior year - The Board resolved not to declare an interim dividend for H1 2025 (H1 2024: nil)[44](index=44&type=chunk) [Balance Sheet Item Analysis](index=23&type=section&id=Balance%20Sheet%20Item%20Analysis) This section details changes in key balance sheet items, including reduced property, plant and equipment acquisitions, increased right-of-use assets, and changes in trade receivables, payables, contract assets, inventories, and interests in associates [Property, Plant and Equipment](index=23&type=section&id=10%20Property%2C%20Plant%20and%20Equipment) In H1 2025, the Group acquired 1,576 thousand HKD and disposed of 32 thousand HKD in property, plant and equipment, both lower than the prior year H1 2025 Property, Plant and Equipment Movements | Item | 2025 H1 (thousand HKD) | 2024 H1 (thousand HKD) | | :--- | :--- | :--- | | Additions to property, plant and equipment | 1,576 | 4,472 | | Disposals of property, plant and equipment | 32 | 210 | [Right-of-use Assets](index=23&type=section&id=11%20Right-of-use%20Assets) In H1 2025, the Group added 142 thousand HKD in right-of-use assets, with no additions in the prior year - In H1 2025, the Group added approximately **142,000 HKD** in right-of-use assets (H1 2024: nil)[46](index=46&type=chunk) [Trade Receivables](index=23&type=section&id=12%20Trade%20Receivables) As of June 30, 2025, net trade receivables decreased by 24.0% to 153.3 million HKD, while the average turnover days increased from 206 to 289 days due to reduced revenue Trade Receivables Ageing Analysis (thousand HKD) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Up to 3 months | 39,209 | 160,362 | | 3 to 6 months | 66,401 | 38,582 | | 6 to 12 months | 47,852 | 2,545 | | Over 12 months | 4,002 | 5,066 | | **Trade receivables – Total** | **157,464** | **206,555** | - As of June 30, 2025, net trade receivables were approximately **153.3 million HKD**, a decrease of approximately **24.0%** from December 31, 2024[63](index=63&type=chunk) - The average turnover days for trade receivables increased from approximately **206** days in H1 2024 to approximately **289** days in H1 2025, primarily due to reduced revenue[63](index=63&type=chunk) [Trade Payables](index=24&type=section&id=13%20Trade%20Payables) As of June 30, 2025, trade payables decreased by 6.8% to 189.4 million HKD, while the average turnover days increased from 426 to 500 days due to reduced material costs and technical service fees Trade Payables Ageing Analysis (thousand HKD) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Up to 3 months | 26,990 | 87,226 | | 3 to 6 months | 40,979 | 9,529 | | 6 to 12 months | 49,573 | 23,619 | | Over 12 months | 71,890 | 82,858 | | **Total** | **189,432** | **203,232** | - As of June 30, 2025, trade payables were approximately **189.4 million HKD**, a decrease of approximately **6.8%** from December 31, 2024[65](index=65&type=chunk) - The average turnover days for trade payables increased from approximately **426** days in H1 2024 to approximately **500** days in H1 2025, primarily due to reduced material costs and technical service fees incurred in H1 2025[65](index=65&type=chunk) [Contract Assets](index=28&type=section&id=Contract%20Assets) As of June 30, 2025, contract assets increased by 8.4% to 119.4 million HKD, mainly due to increased unbilled work for production enhancement services - As of June 30, 2025, the Group's contract assets were approximately **119.4 million HKD**, an increase of approximately **8.4%** from December 31, 2024, primarily due to increased unbilled work for production enhancement services provided to certain customers[64](index=64&type=chunk) [Inventories](index=27&type=section&id=Inventories) As of June 30, 2025, inventories remained stable at 8.4 million HKD, but average turnover days decreased from 131 to 78 days, reflecting stricter inventory control - As of June 30, 2025, the Group's inventories were approximately **8.4 million HKD**, consistent with December 31, 2024[62](index=62&type=chunk) - The average inventory turnover days decreased from approximately **131** days in H1 2024 to approximately **78** days in H1 2025, reflecting the Group's implementation of stricter inventory control policies[62](index=62&type=chunk) [Interests in Associates](index=27&type=section&id=Interests%20in%20Associates) As of June 30, 2025, interests in associates decreased by 2.1 million HKD to 82.3 million HKD, mainly due to the share of losses from Petro-King Energy Group and exchange differences - As of June 30, 2025, the Group's interests in associates were approximately **82.3 million HKD**, a decrease of approximately **2.1 million HKD** from December 31, 2024, primarily due to its share of losses from Petro-King Energy Group and exchange differences[61](index=61&type=chunk) - The Group holds approximately **28.11%** equity interest in Petro-King Energy (December 31, 2024: approximately **27.67%**) and intends to retain its interest as a long-term investment[61](index=61&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The Group aims to ensure going concern and optimize capital structure, with cash and cash equivalents at 18.8 million HKD and total borrowings of 146.7 million HKD, facing restricted bank deposits and pledged assets [Cash and Borrowings](index=28&type=section&id=Cash%20and%20Borrowings) As of June 30, 2025, cash and cash equivalents increased to 18.8 million HKD, while total bank and other borrowings amounted to 146.7 million HKD, with 76.4% due within one year - As of June 30, 2025, the Group's cash and cash equivalents were approximately **18.8 million HKD**, an increase of approximately **3.2 million HKD** from December 31, 2024[66](index=66&type=chunk) - As of June 30, 2025, the Group's bank and other borrowings were approximately **146.7 million HKD**, of which approximately **76.4%** are repayable within one year[66](index=66&type=chunk) [Restricted Bank Deposits and Pledged Assets](index=29&type=section&id=Restricted%20Bank%20Deposits%20and%20Pledged%20Assets) As of June 30, 2025, approximately 31.7 million HKD in bank deposits were frozen, and the Group pledged 56.7 million HKD in machinery and 79.5 million HKD in trade receivables as collateral for borrowings - As of June 30, 2025, bank deposits of approximately **RMB 28.9 million** (approximately **31.7 million HKD**) were frozen by the court, pending the outcome of an appeal for a technical service fee claim[67](index=67&type=chunk) - As of June 30, 2025, the Group pledged certain machinery with a carrying amount of approximately **56.7 million HKD** and trade receivables of approximately **79.5 million HKD** as collateral for borrowings[67](index=67&type=chunk) [Gearing Ratio](index=29&type=section&id=Gearing%20Ratio) As of June 30, 2025, the Group's gearing ratio was 36.2%, a slight decrease from 36.7% at the end of 2024 - As of June 30, 2025, the Group's gearing ratio (calculated as net debt divided by total capital) was approximately **36.2%** (December 31, 2024: approximately **36.7%**)[68](index=68&type=chunk) [Foreign Exchange Risk](index=29&type=section&id=Foreign%20Exchange%20Risk) The Group faces foreign exchange risk primarily related to USD and RMB, arising from various foreign currency-denominated financial instruments, and did not use hedging instruments in H1 2025 - The Group is exposed to foreign exchange risk primarily related to USD and RMB, arising from foreign currency-denominated trade and other receivables, contract assets, cash and cash equivalents, trade and other payables, intercompany balances, bank and other borrowings, and lease liabilities[69](index=69&type=chunk) - In H1 2025, the Group did not use any financial instruments for hedging purposes[69](index=69&type=chunk) [Off-balance Sheet Arrangements](index=29&type=section&id=Off-balance%20Sheet%20Arrangements) As of June 30, 2025, the Group had no off-balance sheet arrangements - As of June 30, 2025, the Group had no off-balance sheet arrangements[70](index=70&type=chunk) [Other Information](index=30&type=section&id=Other%20Information) This section covers post-reporting period events, corporate governance, directors' securities transactions, dealings in listed securities, interim dividend policy, and the audit committee's review [Events After Reporting Period](index=30&type=section&id=Events%20After%20Reporting%20Period) No significant events materially affecting the Group's operations or financial position have occurred since the end of the reporting period or the publication of the 2024 annual report - No significant events materially affecting the Group's business operations occurred from the end of the reporting period up to the date of this announcement[71](index=71&type=chunk) - There have been no significant changes in the development or future development of the Group's business and financial position since the publication of the Company's annual report for the year ended December 31, 2024[72](index=72&type=chunk) [Corporate Governance](index=30&type=section&id=Corporate%20Governance) The Company maintains high corporate governance standards, with a Board comprising three executive, one non-executive, and three independent non-executive directors, and complied with Appendix C1 of the Listing Rules in H1 2025 - The Board comprises three executive directors, one non-executive director, and three independent non-executive directors[73](index=73&type=chunk)[78](index=78&type=chunk) - In H1 2025, the Company complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules in all applicable aspects[73](index=73&type=chunk) [Directors' Securities Transactions](index=30&type=section&id=Directors'%20Securities%20Transactions) All directors fully complied with the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix C3 of the Listing Rules, during H1 2025 - The Company confirms that all directors fully complied with the standards set out in the Model Code as stipulated in Appendix C3 of the Listing Rules during H1 2025[74](index=74&type=chunk) [Dealings in Listed Securities](index=30&type=section&id=Dealings%20in%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during H1 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during H1 2025[75](index=75&type=chunk) [Interim Dividend](index=30&type=section&id=Interim%20Dividend) The Board resolved not to declare an interim dividend for H1 2025, consistent with the prior year - The Board resolved not to declare an interim dividend for H1 2025 (H1 2024: nil)[76](index=76&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Company has established an Audit Committee, composed of three independent non-executive directors, which has reviewed the unaudited interim condensed consolidated financial information - The Company has established an Audit Committee, comprising three independent non-executive directors, which has reviewed the unaudited interim condensed consolidated financial information[77](index=77&type=chunk)

[Interim Results Summary](index=1&type=section&id=Interim%20Results%20Summary) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's unaudited interim results show total revenue decreased by 15.2% to HK$39,874 thousand, gross profit decreased by 34.4% to HK$7,296 thousand, and loss for the period narrowed by 13.6% to HK$37,653 thousand, with basic and diluted loss per share of 2.23 HK cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 39,874 | 47,023 | -15.2% | | Cost of Revenue | (32,578) | (35,893) | -9.2% | | Gross Profit | 7,296 | 11,130 | -34.4% | | Other Income | 90 | 113 | -20.4% | | Other Gains and Losses | (13,266) | (14,276) | -7.1% | | Administrative Expenses | (16,190) | (21,863) | -26.0% | | Impairment Losses | (559) | (2,655) | -79.0% | | Share of Results of Associates | (14,764) | (15,877) | -7.0% | | Finance Costs | (260) | (144) | +80.6% | | Loss Before Tax | (37,653) | (43,572) | -13.6% | | Income Tax Expense | – | (19) | -100.0% | | Loss for the Period | (37,653) | (43,591) | -13.6% | | Total Comprehensive Expense for the Period | (28,479) | (54,536) | -47.8% | | Basic and Diluted Loss Per Share | (2.23) HK Cents | (2.58) HK Cents | -13.6% | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets were HK$359,365 thousand, an 8.4% decrease from December 31, 2024. Total liabilities were HK$46,963 thousand, an 8.9% decrease, and net assets declined to HK$312,402 thousand Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 295,946 | 324,253 | -8.7% | | Current Assets | 63,419 | 68,203 | -7.0% | | **Total Assets** | **359,365** | **392,456** | **-8.4%** | | Current Liabilities | 44,588 | 48,156 | -7.4% | | Non-current Liabilities | 2,375 | 3,419 | -30.6% | | **Total Liabilities** | **46,963** | **51,575** | **-8.9%** | | Share Capital | 168,730 | 168,730 | 0.0% | | Reserves | 143,672 | 172,151 | -16.5% | | **Total Equity** | **312,402** | **340,881** | **-8.3%** | [Notes to the Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Company Information](index=5&type=section&id=1.%20Company%20Information) The Company is a listed entity incorporated in the Cayman Islands with shares listed on the Hong Kong Stock Exchange, primarily engaged in sales of daily necessities, healthcare and hygiene products, food products and nutritional supplements, equity securities trading, property investment, investment holding, and money lending in Hong Kong and China - The company is a listed entity incorporated in the Cayman Islands, with shares listed on the Hong Kong Stock Exchange[8](index=8&type=chunk) - Principal businesses include sales of daily necessities, healthcare and hygiene products, production and sales of food products and nutritional supplements, equity securities trading, property investment, investment holding, and money lending businesses[8](index=8&type=chunk) [Basis of Preparation and Accounting Policies](index=5&type=section&id=2.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim condensed consolidated financial statements are prepared in accordance with HKAS 34 and the Listing Rules, with accounting policies consistent with the 2024 annual consolidated financial statements, except for new standards effective January 1, 2025. Management exercised significant judgment and estimates in their preparation - The financial statements are prepared in accordance with HKAS 34 and the Listing Rules, with accounting policies largely consistent with the 2024 annual statements[9](index=9&type=chunk) - The Group has not early adopted new or revised Hong Kong Financial Reporting Standards that have been issued but are not yet effective[9](index=9&type=chunk)[11](index=11&type=chunk) - Preparation of the statements involves significant management judgments and estimates, and actual results may differ[9](index=9&type=chunk)[12](index=12&type=chunk) [Revenue Analysis](index=6&type=section&id=5.%20Revenue%20Analysis) Total revenue for the first half of 2025 was HK$39,874 thousand, a 15.2% year-on-year decrease, with customer contract revenue (mainly from sales of daily necessities, healthcare, and hygiene products) at HK$37,212 thousand and rental income at HK$2,662 thousand, primarily from the Hong Kong market Revenue Sources (For the six months ended June 30) | Revenue Source | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Sales of daily necessities, healthcare and hygiene products | 35,803 | 42,002 | -14.8% | | Sales of food products and nutritional supplements | 1,409 | 1,855 | -24.0% | | Rental income | 2,662 | 3,166 | -15.9% | | **Total Revenue** | **39,874** | **47,023** | **-15.2%** | - Revenue is primarily recognized when customers obtain control of goods, typically upon delivery and acceptance[14](index=14&type=chunk) - Geographical revenue primarily originated from Hong Kong (**HK$35,803 thousand**), with China contributing **HK$1,409 thousand**[14](index=14&type=chunk) [Segment Information](index=7&type=section&id=6.%20Segment%20Information) The Group is organized into three reportable segments based on operational nature: distribution, manufacturing, and investment. The finance lease segment has no related items this period as the associate is no longer classified as such. Segment results exclude certain other income, gains and losses, share of results of associates, and corporate expenses - The Group's principal operating segments include distribution (daily necessities, healthcare, and hygiene products in Hong Kong), manufacturing (food products and nutritional supplements in China), and investment (investment properties in China, Hong Kong securities, and money lending)[17](index=17&type=chunk) - The finance lease segment had no related items during the current period, as Beijing Hengjia Group is no longer classified as an associate[16](index=16&type=chunk) [Segment Revenue and Results](index=8&type=section&id=Segment%20Revenue%20and%20Results) In the first half of 2025, the distribution segment reported HK$35,803 thousand in revenue and a loss of HK$1,792 thousand; the manufacturing segment had HK$1,409 thousand in revenue and a loss of HK$2,425 thousand; the investment segment generated HK$2,662 thousand in revenue and a loss of HK$11,632 thousand, with no revenue or results from the finance lease segment Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (HK$ Thousand) | 2024 Revenue (HK$ Thousand) | Revenue Change (%) | 2025 Results (HK$ Thousand) | 2024 Results (HK$ Thousand) | Results Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Distribution | 35,803 | 42,002 | -14.8% | (1,792) | (887) | +102.0% | | Manufacturing | 1,409 | 1,855 | -24.0% | (2,425) | (2,454) | -1.2% | | Investment | 2,662 | 3,166 | -15.9% | (11,632) | (14,348) | -19.0% | | Finance Lease | – | – | N/A | – | (15,553) | -100.0% | | **Total** | **39,874** | **47,023** | **-15.2%** | **(15,849)** | **(33,242)** | **-52.3%** | - All segment revenue was derived from external customers[19](index=19&type=chunk) [Segment Assets and Liabilities](index=9&type=section&id=Segment%20Assets%20and%20Liabilities) As of June 30, 2025, the distribution segment had assets of HK$42,250 thousand and liabilities of HK$4,556 thousand; the manufacturing segment had assets of HK$45,546 thousand and liabilities of HK$5,938 thousand; the investment segment had assets of HK$177,803 thousand and liabilities of HK$6,931 thousand, with interests in associates totaling HK$75,094 thousand Segment Assets and Liabilities (As of June 30) | Segment | 2025 Assets (HK$ Thousand) | 2024 Assets (HK$ Thousand) | Assets Change (%) | 2025 Liabilities (HK$ Thousand) | 2024 Liabilities (HK$ Thousand) | Liabilities Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Distribution | 42,250 | 46,567 | -9.2% | 4,556 | 7,315 | -37.7% | | Manufacturing | 45,546 | 46,376 | -1.8% | 5,938 | 5,946 | -0.1% | | Investment | 177,803 | 188,012 | -5.4% | 6,931 | 7,349 | -5.7% | | Interests in Associates | 75,094 | 91,442 | -17.9% | – | – | N/A | | **Total** | **359,365** | **392,456** | **-8.4%** | **46,963** | **51,575** | **-8.9%** | - Most assets and liabilities are allocated to reportable and operating segments, with the exception of a few corporate items[22](index=22&type=chunk) [Details of Other Financial Items](index=9&type=section&id=Details%20of%20Other%20Financial%20Items) This section details the composition and changes in other income, other gains and losses, impairment losses, finance costs, and loss for the period [Other Income](index=9&type=section&id=7.%20Other%20Income) Other income for the first half of 2025 was HK$90 thousand, a 20.4% year-on-year decrease, primarily from interest income from banks and non-bank financial institutions and government grants Other Income (For the six months ended June 30) | Income Source | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Interest income from banks and non-bank financial institutions | 33 | 65 | -49.3% | | Government grants | 54 | – | N/A | | Miscellaneous income | 3 | 48 | -93.8% | | **Total** | **90** | **113** | **-20.4%** | [Other Gains and Losses](index=10&type=section&id=8.%20Other%20Gains%20and%20Losses) Net other gains and losses for the first half of 2025 amounted to a loss of HK$13,266 thousand, a 7.1% year-on-year decrease, primarily comprising fair value losses on investment properties of HK$10,876 thousand and fair value losses on financial assets at fair value through profit or loss of HK$1,823 thousand Other Gains and Losses (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Fair value changes on financial assets at fair value through profit or loss | (1,823) | (871) | +109.3% | | Fair value changes on investment properties | (10,876) | (12,991) | -16.3% | | Net exchange losses | (7) | (28) | -75.0% | | Write-off of property, plant and equipment | – | (145) | -100.0% | | Write-off of trade receivables | (31) | – | N/A | | Write-off of inventories | (192) | (129) | +48.8% | | Loss on remeasurement of assets classified as held for sale | (337) | – | N/A | | Others | – | (112) | -100.0% | | **Total** | **(13,266)** | **(14,276)** | **-7.1%** | [Impairment Losses under Expected Credit Loss Model](index=10&type=section&id=9.%20Impairment%20Losses%20under%20Expected%20Credit%20Loss%20Model) Total impairment losses for the first half of 2025 amounted to HK$559 thousand, a significant 79.0% year-on-year decrease, primarily due to impairment of other receivables, with no impairment losses on loans receivable this period Impairment Losses under Expected Credit Loss Model (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Loans receivable | – | 1,400 | -100.0% | | Other receivables | 559 | 1,255 | -55.5% | | **Total** | **559** | **2,655** | **-79.0%** | [Finance Costs](index=10&type=section&id=10.%20Finance%20Costs) Finance costs for the first half of 2025 were HK$260 thousand, an 80.6% year-on-year increase, primarily due to higher interest on lease liabilities and bank borrowings Finance Costs (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Interest on bank borrowings | 51 | 23 | +121.7% | | Interest on lease liabilities | 155 | 63 | +146.0% | | Interest on other loans | 54 | 58 | -6.9% | | **Total** | **260** | **144** | **+80.6%** | [Income Tax Expense](index=11&type=section&id=11.%20Income%20Tax%20Expense) Income tax expense for the first half of 2025 was zero, compared to HK$19 thousand in the same period of 2024, primarily due to a reduction in China corporate income tax Income Tax Expense (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Current tax – China corporate income tax | – | 22 | -100.0% | | Over-provision in prior years – Hong Kong profits tax | – | (3) | -100.0% | | **Income Tax Expense** | **–** | **19** | **-100.0%** | [Components of Loss for the Period](index=11&type=section&id=12.%20Components%20of%20Loss%20for%20the%20Period) The loss for the first half of 2025 was primarily composed of cost of inventories sold of HK$32,578 thousand, staff costs of HK$8,349 thousand, and total depreciation of HK$2,543 thousand Components of Loss for the Period (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 353 | 128 | +175.8% | | Depreciation of right-of-use assets | 2,190 | 1,794 | +22.1% | | **Total Depreciation** | **2,543** | **1,922** | **+32.3%** | | Cost of inventories sold | 32,578 | 35,893 | -9.2% | | Staff costs | 8,349 | 11,154 | -25.2% | | Short-term lease expenses | 194 | 591 | -67.2% | [Dividends and Loss Per Share](index=11&type=section&id=Dividends%20and%20Loss%20Per%20Share) The Board does not recommend an interim dividend for the first half of 2025, and basic and diluted loss per share for the period was 2.23 HK cents, a narrowing compared to the prior year [Dividends](index=11&type=section&id=13.%20Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[30](index=30&type=chunk) [Loss Per Share Attributable to Owners of the Company](index=12&type=section&id=14.%20Loss%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Company) Loss attributable to owners of the Company for the period was HK$37,653 thousand, with basic and diluted loss per share of 2.23 HK cents, a narrowing compared to the same period last year Loss Per Share Attributable to Owners of the Company (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company | (37,653) HK$ Thousand | (43,591) HK$ Thousand | | Weighted average number of ordinary shares | 1,687,303 Thousand Shares | 1,687,303 Thousand Shares | | **Basic and Diluted Loss Per Share** | **(2.23) HK Cents** | **(2.58) HK Cents** | - The Company had no dilutive potential ordinary shares during the current and prior periods, thus diluted loss per share is the same as basic loss per share[31](index=31&type=chunk) [Receivables and Payables](index=12&type=section&id=Receivables%20and%20Payables) This section details the composition and aging analysis of trade receivables, other receivables, deposits and prepayments, and trade and other payables, illustrating changes in each account [Trade Receivables](index=12&type=section&id=15.%20Trade%20Receivables) As of June 30, 2025, net trade receivables amounted to HK$7,736 thousand, a 16.9% decrease from December 31, 2024, with an increase in receivables aged 31-90 days and 91-270 days Trade Receivables (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables | 7,910 | 9,760 | -18.9% | | Less: Impairment allowance | (174) | (457) | -61.9% | | **Net Trade Receivables** | **7,736** | **9,303** | **-16.9%** | Aging Analysis of Trade Receivables (As of June 30) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | 0-30 days | 1,956 | 4,786 | -59.1% | | 31-90 days | 3,097 | 2,499 | +23.9% | | 91-270 days | 1,961 | 1,334 | +47.0% | | Over 270 days | 722 | 684 | +5.6% | | **Total** | **7,736** | **9,303** | **-16.9%** | - The credit period granted to customers ranges from **0 to 60 days**[32](index=32&type=chunk) [Other Receivables, Deposits and Prepayments](index=13&type=section&id=16.%20Other%20Receivables%2C%20Deposits%20and%20Prepayments) As of June 30, 2025, total other receivables, deposits, and prepayments amounted to HK$14,362 thousand, a 13.2% decrease from December 31, 2024, with impairment allowance increasing to HK$5,749 thousand Other Receivables, Deposits and Prepayments (As of June 30) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Other receivables | 11,709 | 12,589 | -7.0% | | Prepayments | 1,179 | 1,552 | -24.1% | | Prepayments for purchases of goods | 6,582 | 6,949 | -5.3% | | Deposits | 641 | 642 | -0.2% | | **Subtotal** | **20,111** | **21,732** | **-7.5%** | | Less: Impairment allowance | (5,749) | (5,190) | +10.8% | | **Total** | **14,362** | **16,542** | **-13.2%** | [Trade and Other Payables](index=14&type=section&id=17.%20Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables amounted to HK$20,638 thousand, a 15.2% decrease from December 31, 2024, with a significant reduction in trade payables aged 0-30 days and 31-90 days Trade and Other Payables (As of June 30) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Trade payables | 860 | 2,383 | -63.9% | | Accrued expenses | 6,300 | 8,050 | -21.7% | | Receipts in advance | 5,099 | 6,658 | -23.4% | | Deposits received | 1,380 | – | N/A | | Other payables | 6,999 | 7,263 | -3.6% | | **Total** | **20,638** | **24,354** | **-15.2%** | Aging Analysis of Trade Payables (As of June 30) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | 0-30 days | 293 | 705 | -58.5% | | 31-90 days | 40 | 1,031 | -96.1% | | 91-270 days | 1 | 136 | -99.3% | | Over 270 days | 526 | 511 | +2.9% | | **Total** | **860** | **2,383** | **-63.9%** | - Deposits received include a deposit of RMB1,259,000 (approximately **HK$1,380,000**) for the disposal of an investment property classified as held for sale[34](index=34&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=15&type=section&id=Business%20Review) The Group's total revenue decreased by 15.2% year-on-year, gross profit by 34.4%, and net loss narrowed by 13.6% in the first half of 2025, with all business segments (distribution, manufacturing, investment) facing challenges and declining revenue, though the investment segment's loss narrowed - The Group's total revenue was **HK$39.9 million**, a **15.2% year-on-year decrease**; gross profit was **HK$7.3 million**, a **34.4% year-on-year decrease**; and net loss was **HK$37.7 million**, a **13.6% year-on-year decrease**[36](index=36&type=chunk) - The Group operates three segments: distribution, manufacturing, and investment, in China and Hong Kong[37](index=37&type=chunk) [Distribution Segment](index=15&type=section&id=Distribution%20Segment) The distribution segment's revenue decreased by 14.8% year-on-year to HK$35.8 million, recording a net loss of HK$1.8 million, primarily due to changing consumption patterns and reduced supply of traditional Chinese medicine products Distribution Segment Performance (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 35.8 | 42.0 | -14.8% | | Net Loss | (1.8) | (0.9) | +100.0% | - The decrease in revenue was mainly due to underperformance of own-brand health and wellness products, and reduced supply of traditional Chinese medicine products due to packaging changes and the suspension of approval for continuing connected transactions[38](index=38&type=chunk) [Manufacturing Segment](index=15&type=section&id=Manufacturing%20Segment) The manufacturing segment's revenue decreased by 26.3% year-on-year to HK$1.4 million, with a net loss of HK$2.4 million, a slight narrowing of loss, facing challenges from intense competition in the Chinese food market and limited production scale hindering cost reduction Manufacturing Segment Performance (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1.4 | 1.9 | -26.3% | | Net Loss | (2.4) | (2.5) | -4.0% | - Extremely low sales and a recorded loss were primarily impacted by intense competition in the Chinese food market and limited production scale making product cost reduction difficult[39](index=39&type=chunk) [Investment Segment](index=16&type=section&id=Investment%20Segment) The investment segment's revenue decreased by 15.9% year-on-year to HK$2.7 million, mainly due to an early lease termination by a tenant, while net loss narrowed to HK$11.6 million, primarily benefiting from reduced fair value losses on investment properties, and the Group has signed an agreement to dispose of a property in Shanghai Investment Segment Performance (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2.7 | 3.2 | -15.9% | | Net Loss | (11.6) | (14.3) | -19.0% | - The decrease in revenue was primarily due to an early lease termination by a tenant[40](index=40&type=chunk) - The reduction in loss was mainly attributable to a decrease in fair value losses on investment properties in China from **HK$13.0 million** to **HK$10.9 million**[40](index=40&type=chunk) - The Group has agreed to dispose of a property in Minhang District, Shanghai, for RMB6,295,842 (approximately **HK$6,844,000**), with completion expected on or before August 30, 2025[40](index=40&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) This section provides a detailed analysis of changes in the Group's financial metrics, noting that total revenue declined due to Hong Kong daily necessities sales, gross margin decreased due to discounts and rising costs, administrative expenses significantly reduced due to staff cost control, and associate losses primarily stemmed from Top Insight Limited [Revenue](index=16&type=section&id=Revenue) Revenue for the period was HK$39.9 million, a 15.2% year-on-year decrease, primarily due to lower sales of daily necessities, healthcare, and hygiene products in Hong Kong - Revenue was **HK$39.9 million**, a **15.2% year-on-year decrease**, primarily due to lower sales of daily necessities, healthcare, and hygiene products in Hong Kong[41](index=41&type=chunk) [Gross Profit](index=16&type=section&id=Gross%20Profit) Gross profit for the period was HK$7.3 million, a 34.4% year-on-year decrease, with gross margin falling from 23.7% to 18.3%, mainly due to higher trade discounts offered to bulk buyers and increased costs for certain products - Gross profit was **HK$7.3 million**, a **34.4% year-on-year decrease**[42](index=42&type=chunk) - Gross profit margin decreased from **23.7% to 18.3%**, attributed to higher trade discounts offered to bulk buyers and increased costs for certain products[42](index=42&type=chunk) [Other Income](index=16&type=section&id=Other%20Income) Other income for the period was HK$90 thousand, a 20.4% year-on-year decrease, primarily from bank fixed deposit interest income and a one-off Chinese government grant - Other income was **HK$90 thousand**, a **20.4% year-on-year decrease**, primarily from bank fixed deposit interest income and a one-off Chinese government grant[43](index=43&type=chunk) [Other Gains and Losses](index=17&type=section&id=Other%20Gains%20and%20Losses) Net other gains and losses for the period resulted in a HK$13.3 million loss, a 7.1% year-on-year decrease, primarily comprising fair value losses on investment properties of HK$10.9 million and fair value losses on financial assets at fair value through profit or loss of HK$1.8 million - Net other gains and losses resulted in a **HK$13.3 million loss**, a **7.1% year-on-year decrease**[44](index=44&type=chunk) - This primarily included fair value losses on investment properties of **HK$10.9 million** (a **16.2% year-on-year decrease**) and fair value losses on financial assets at fair value through profit or loss of **HK$1.8 million** (a **100% year-on-year increase**)[44](index=44&type=chunk) [Administrative Expenses](index=17&type=section&id=Administrative%20Expenses) Administrative expenses for the period were HK$16.2 million, a 25.9% year-on-year decrease, primarily comprising staff costs of HK$8.3 million, legal and professional fees, depreciation, and various administrative expenses - Administrative expenses were **HK$16.2 million**, a **25.9% year-on-year decrease**[45](index=45&type=chunk) - This primarily included staff costs of **HK$8.3 million** (a **25.6% year-on-year decrease**), legal and professional fees, depreciation, and various administrative expenses[45](index=45&type=chunk) [Share of Results of Associates](index=17&type=section&id=Share%20of%20Results%20of%20Associates) Share of results of associates for the period was a loss of HK$14.8 million, a 7.0% year-on-year decrease, primarily due to the share of loss from Top Insight Limited, with no related share of loss from Beijing Hengjia Group as it is no longer classified as an associate - Share of results of associates was a **HK$14.8 million loss**, a **7.0% year-on-year decrease**[46](index=46&type=chunk) - This primarily included a share of loss from Top Insight Limited of **HK$14.7 million** (compared to a profit of **HK$800 thousand** in the prior year) and a loss from Simagi Finance Company Limited of **HK$34 thousand**[46](index=46&type=chunk) - Beijing Hengjia Group, no longer classified as an associate, had no related share of loss this period (compared to a **HK$15.6 million loss** in the prior year)[46](index=46&type=chunk) [Loss for the Period Attributable to Owners of the Company](index=17&type=section&id=Loss%20for%20the%20Period%20Attributable%20to%20Owners%20of%20the%20Company) Net loss attributable to owners of the Company for the period was HK$37.7 million, a 13.6% year-on-year decrease, primarily due to tightened control over administrative expenses - Net loss for the period was **HK$37.7 million**, a **13.6% year-on-year decrease**[47](index=47&type=chunk) - The reduction in loss was primarily due to tightened control over administrative expenses[47](index=47&type=chunk) [Financial Position and Liquidity](index=17&type=section&id=Financial%20Position%20and%20Liquidity) The Group's total assets and liabilities both decreased, while the gearing ratio and current ratio remained stable, with cash and cash equivalents declining primarily due to net cash outflow from operating activities [Financial Position](index=17&type=section&id=Financial%20Position) As of June 30, 2025, the Group's total assets were HK$359.4 million, an 8.4% year-on-year decrease; total liabilities were HK$47.0 million, an 8.9% year-on-year decrease, with both the gearing ratio and current ratio remaining stable Financial Position Overview (As of June 30) | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 359.4 | 392.5 | -8.4% | | Total Liabilities | 47.0 | 51.6 | -8.9% | | Gearing Ratio | 13.1% | 13.1% | 0.0% | | Current Ratio | 1.4 | 1.4 | 0.0% | - The decrease in total assets was primarily due to fair value losses on investment properties in China and unsatisfactory operating results of associates[48](index=48&type=chunk) - The decrease in total liabilities was mainly due to a reduction in trade and other payables[48](index=48&type=chunk) [Liquidity and Financial Resources](index=18&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, the Group's cash and cash equivalents were approximately HK$8.7 million, a decrease of HK$4.5 million from the beginning of the period, primarily due to net cash outflow from operating activities, while short-term bank borrowings remained stable - Cash and cash equivalents were approximately **HK$8.7 million**, a **HK$4.5 million decrease** from December 31, 2024, primarily due to net cash outflow from operating activities[50](index=50&type=chunk) - Short-term bank borrowings amounted to **HK$2.8 million**, remaining stable compared to the beginning of the period[50](index=50&type=chunk) - The Group finances its business operations through funding from banks and other non-bank financial institutions, as well as internally generated cash flows[50](index=50&type=chunk) [Risk Management](index=18&type=section&id=Risk%20Management) The Group faces no significant foreign exchange risk and has not engaged in hedging, with credit risk primarily stemming from loans receivable, for which policies and procedures are in place to mitigate risk, assessed using an expected credit loss model [Foreign Exchange Risk](index=18&type=section&id=Foreign%20Exchange%20Risk) The Group is not exposed to significant foreign currency exchange rate fluctuation risk, as major transactions are denominated in local currencies, and no foreign exchange hedging transactions or instruments were entered into during the reporting period - The Group is not exposed to significant foreign currency exchange rate fluctuation risk, as major transactions are denominated in local currencies[51](index=51&type=chunk) - No foreign exchange hedging transactions or instruments were entered into during the reporting period[51](index=51&type=chunk) [Credit Risk](index=18&type=section&id=Credit%20Risk) The Group's primary credit risk arises from loans receivable, particularly money lending services, for which policies and procedures are established to mitigate risk, and assessments are conducted using a probability-weighted expected credit loss model - Primary credit risk originates from loans receivable, especially money lending services[52](index=52&type=chunk) - The Group has established policies and procedures to mitigate credit risk and assesses the recoverability of loans receivable using a probability-weighted expected credit loss model[52](index=52&type=chunk)[53](index=53&type=chunk) [Legal and Commitments](index=19&type=section&id=Legal%20and%20Commitments) There were no pledged assets or significant contingent liabilities at the end of the reporting period, while the Group faces litigation related to Beijing Hengjia and has filed for its judicial dissolution, with capital commitments significantly reduced [Pledged Assets](index=19&type=section&id=Pledged%20Assets) As of June 30, 2025, and December 31, 2024, the Group had no pledged assets - As of June 30, 2025, and December 31, 2024, there were no pledged assets[54](index=54&type=chunk) [Contingent Liabilities](index=19&type=section&id=Contingent%20Liabilities) As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities[55](index=55&type=chunk) [Litigation](index=19&type=section&id=Litigation) The Group has received a civil writ from Beijing Hengjia regarding unpaid registered capital of US$22.61 million, with the Board believing there are strong legal grounds to address the claim and having filed a lawsuit in a Chinese court for Beijing Hengjia's judicial dissolution - The Group has received a civil writ from Beijing Hengjia regarding unpaid registered capital of **US$22.61 million**[56](index=56&type=chunk) - The Board believes there are strong legal grounds to address the claim and may realize the investment to eliminate litigation uncertainty[56](index=56&type=chunk) - The Group has filed a lawsuit in a Chinese court seeking the judicial dissolution of Beijing Hengjia[56](index=56&type=chunk) [Capital Commitments](index=19&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no capital commitments, a significant reduction from HK$134 thousand as of December 31, 2024 - As of June 30, 2025, the Group had no capital commitments (December 31, 2024: **HK$134 thousand** for the acquisition of property, plant, and equipment)[57](index=57&type=chunk) [Prospects](index=19&type=section&id=Prospects) The Group's future performance is influenced by economic conditions in Hong Kong and China, with Hong Kong experiencing solid expansion but weak private consumption, and China facing domestic consumption and real estate market challenges. The Group plans to enhance performance and liquidity through product diversification, channel expansion, product optimization, conservative investment strategies, and potential property disposals, while actively seeking new growth opportunities - Hong Kong's economy expanded steadily in the first quarter of 2025, but private consumption expenditure saw a slight decline[58](index=58&type=chunk) - China's economy faces risks including weak domestic consumption, a sluggish real estate market, Sino-US geopolitical tensions, and global trade protectionism[59](index=59&type=chunk) - The Chinese government has introduced various support measures, such as subsidies for old-for-new home appliances and relaxed fiscal policies, to counter external threats, stimulate domestic demand, and support high-tech industries[59](index=59&type=chunk) - The distribution segment aims to boost sales through product diversification, expanding distribution channels, and broadening its customer base[60](index=60&type=chunk) - The manufacturing segment is stabilizing operations of new healthy instant noodle production lines, expanding product categories (e.g., low-GI certified instant noodles), increasing own-brand market exposure, and enriching nutritional supplement categories[60](index=60&type=chunk) - The investment segment will adhere to a conservative strategy, closely evaluating and optimizing its investment portfolio, and may dispose of Chinese properties to replenish liquidity and mitigate market risks[60](index=60&type=chunk) - For the second half of 2025, the Group anticipates optimizing business segments to enhance sales and profitability, seeking cost reductions, potentially exiting loss-making projects, disposing of properties, and reallocating resources to promising segments[60](index=60&type=chunk) - The Group will prudently explore new potential growth opportunities, undervalued assets, and business expansion opportunities to diversify revenue streams, generate profits, and enhance shareholder value[60](index=60&type=chunk) [Other Information](index=20&type=section&id=Other%20Information) [Employees and Remuneration](index=20&type=section&id=Employees%20and%20Remuneration) As of June 30, 2025, the Group employed approximately 42 staff in Hong Kong and China, a decrease from 56 as of December 31, 2024, with remuneration determined by basic salary, bonuses, and benefits-in-kind, referencing industry practice and individual performance Number of Employees | Metric | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Number of Employees | 42 | 56 | -25.0% | - Staff remuneration is determined by basic salary, bonuses, and other benefits-in-kind, referencing industry practice and individual performance[61](index=61&type=chunk) - The Group provides induction training for new staff and regular training for existing employees[61](index=61&type=chunk) [Events After Reporting Period](index=21&type=section&id=Events%20After%20Reporting%20Period) Except as otherwise disclosed in this announcement, the Group had no significant events after the end of the reporting period - No significant events after the end of the reporting period were disclosed[62](index=62&type=chunk) [Purchase, Redemption or Sale of Listed Securities](index=21&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period[63](index=63&type=chunk) [Corporate Governance](index=21&type=section&id=Corporate%20Governance) The Group generally complied with the Corporate Governance Code during the reporting period, with deviations noted in the unseparated roles of Chairman and Chief Executive Officer and the Remuneration Committee's terms of reference not covering senior management remuneration. All Directors confirmed compliance with the Model Code for Securities Transactions, and the Audit Committee reviewed and approved the interim financial statements [Corporate Governance Practices](index=21&type=section&id=Corporate%20Governance%20Practices) The Group complied with all code provisions of Appendix C1 to the Listing Rules, "Corporate Governance Code," except for deviations regarding the unseparated roles of Chairman and Chief Executive Officer and the Remuneration Committee's terms of reference not covering senior management remuneration - The Group complied with all code provisions of Appendix C1 to the Listing Rules, "Corporate Governance Code," with two deviations[64](index=64&type=chunk) - Deviation C.2.1: Mr. Wang Liping serves as both Chairman and Chief Executive Officer, and the company is seeking a suitable candidate; the Board believes the existing balance of power adequately safeguards shareholders' interests[64](index=64&type=chunk) - Deviation E.1.2: The Remuneration Committee's terms of reference do not include reviewing senior management remuneration, as the Board believes executive directors are better suited for this role[65](index=65&type=chunk) [Model Code for Securities Transactions](index=22&type=section&id=Model%20Code%20for%20Securities%20Transactions) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix C3 to the Listing Rules, and all Directors confirmed compliance with the required standards throughout the review period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix C3 to the Listing Rules[66](index=66&type=chunk) - All Directors confirmed compliance with the required standards of the Model Code throughout the review period[66](index=66&type=chunk) [Review by Audit Committee](index=22&type=section&id=Review%20by%20Audit%20Committee) The Audit Committee, established in accordance with the Corporate Governance Code and comprising three independent non-executive directors, has reviewed and approved the unaudited condensed consolidated financial statements for the six months ended June 30, 2025 - The Audit Committee has been established in accordance with the Corporate Governance Code and comprises three independent non-executive directors[67](index=67&type=chunk) - The Audit Committee has reviewed and approved the unaudited condensed consolidated financial statements for the six months ended June 30, 2025[67](index=67&type=chunk) [Publication of Interim Results and Report](index=22&type=section&id=Publication%20of%20Interim%20Results%20and%20Report) This interim results announcement has been published on the Company's website and the Stock Exchange's website, and the 2025 interim report containing all required information will be dispatched to shareholders and published on the aforementioned websites in due course - The interim results announcement has been published on the Company's website (www.egichk.com) and the Stock Exchange's website (www.hkexnews.hk)[68](index=68&type=chunk) - The 2025 interim report, containing all required information, will be dispatched to shareholders and published on the aforementioned websites in due course[68](index=68&type=chunk)

[Announcement Overview](index=1&type=section&id=Announcement%20Overview) [Company Basic Information](index=1&type=section&id=Company%20Basic%20Information) This is the unaudited interim results announcement of TravelSky Technology Limited (Stock Code: 00696) for the six months ended June 30, 2025, prepared in accordance with China Accounting Standards for Business Enterprises - This announcement is the unaudited interim results for the six months ended June 30, 2025[2](index=2&type=chunk) - The financial statements are prepared in accordance with the China Accounting Standards for Business Enterprises[2](index=2&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statement](index=2&type=section&id=Consolidated%20Income%20Statement) For the six months ended June 30, 2025, the Group's total operating revenue was RMB 3,894.5 million, with a net profit of RMB 1,448.8 million and basic earnings per share of RMB 0.49 Key Data from Consolidated Income Statement (For the six months ended June 30, 2025, RMB'000) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Total Operating Revenue | 3,894,500 | 4,041,791 | | Total Operating Costs | 2,427,877 | 2,535,291 | | Operating Profit | 1,689,988 | 1,613,656 | | Profit Before Tax | 1,677,920 | 1,605,722 | | Net Profit | 1,448,783 | 1,376,815 | | Net Profit Attributable to Shareholders of the Parent Company | 1,447,651 | 1,367,221 | | Basic Earnings Per Share (RMB/Share) | 0.49 | 0.47 | | Diluted Earnings Per Share (RMB/Share) | 0.49 | 0.47 | - **Net profit attributable to shareholders of the parent company increased by 5.9%** year-on-year to RMB 1,447,651 thousand[3](index=3&type=chunk) [Consolidated Balance Sheet](index=4&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, the Group's total assets reached RMB 32,121.5 million, an increase of approximately 8.1% from the end of the previous year, with total liabilities at RMB 8,445.1 million Key Data from Consolidated Balance Sheet (As of June 30, 2025, RMB'000) | Item | Closing Balance | Prior Year-End Balance | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | 23,384,427 | 20,498,211 | | Total Non-current Assets | 8,737,037 | 9,196,434 | | Total Assets | 32,121,464 | 29,694,646 | | **Liabilities and Equity** | | | | Total Current Liabilities | 7,707,128 | 6,724,716 | | Total Non-current Liabilities | 737,944 | 72,944 | | Total Liabilities | 8,445,071 | 6,797,660 | | Total Equity | 23,676,393 | 22,896,986 | | Total Liabilities and Equity | 32,121,464 | 29,694,646 | - **Total assets increased by approximately 8.1%** compared to the end of the previous year[5](index=5&type=chunk)[6](index=6&type=chunk) - **Total current liabilities increased by 14.6%** year-on-year, while **total non-current liabilities surged by 911.7%**[7](index=7&type=chunk) [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Basic Information of the Company](index=8&type=section&id=Basic%20Information%20of%20the%20Company) The company, incorporated in Beijing on October 18, 2000, provides IT services for the aviation industry, with its ultimate controlling entity being the State-owned Assets Supervision and Administration Commission of the State Council - The company was incorporated in Beijing on October 18, 2000, with a total issued share capital of 2,926,209,589 shares[9](index=9&type=chunk) - Principal activities include air passenger service processing, electronic travel distribution, airport passenger processing, air cargo data processing, and internet travel platform services[9](index=9&type=chunk) - The ultimate controlling entity is the State-owned Assets Supervision and Administration Commission of the State Council of the PRC[9](index=9&type=chunk) [Basis of Preparation of Financial Statements](index=8&type=section&id=Basis%20of%20Preparation%20of%20Financial%20Statements) The interim results are prepared in accordance with China Accounting Standards for Business Enterprises on a going concern basis and comply with Hong Kong's disclosure requirements - The financial statements are prepared in accordance with the China Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC[11](index=11&type=chunk) - The statements comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Hong Kong Companies Ordinance[11](index=11&type=chunk) - The financial statements are prepared on a going concern basis[12](index=12&type=chunk) [Changes in Accounting Policies](index=9&type=section&id=Changes%20in%20Accounting%20Policies) There were no changes in accounting policies during the reporting period - There were no changes in accounting policies during the period[13](index=13&type=chunk) [Taxation](index=9&type=section&id=Taxation) The Group is subject to VAT, Urban Maintenance and Construction Tax, and Corporate Income Tax, enjoying a preferential rate of 15% as a "High and New Technology Enterprise" and a further reduced rate of 10% as a "Key Software Enterprise" Major Taxes and Tax Rates | Tax Type | Applicable Rate (%) | | :--- | :--- | | Value-added Tax (VAT) | 3.00–23.00 | | Urban Maintenance and Construction Tax | 5.00, 7.00 | | Corporate Income Tax | 8.25–25.00 | - The company is recognized as a "High and New Technology Enterprise" and is entitled to a **preferential Corporate Income Tax rate of 15%**, valid until 2025[15](index=15&type=chunk) - The company is recognized as a "Key Software Enterprise" and is entitled to a **further reduced preferential tax rate of 10%**, with the difference to be refunded subsequently[16](index=16&type=chunk) [Notes to Key Items in the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Key%20Items%20in%20the%20Consolidated%20Financial%20Statements) This section details key financial statement items, including receivables, investments, payables, revenue composition, and earnings per share, providing comparative data against prior periods [Accounts Receivable](index=11&type=section&id=Accounts%20Receivable) As of June 30, 2025, total accounts receivable were RMB 5,331.2 million, with provisions for bad debts totaling RMB 930.1 million Aging Analysis of Accounts Receivable (RMB'000) | Aging | Closing Balance | Prior Year-End Balance | | :--- | :--- | :--- | | Within 1 year | 4,148,447 | 4,364,621 | | 1 to 2 years | 1,235,590 | 886,221 | | 2 to 3 years | 342,556 | 402,296 | | Over 3 years | 434,794 | 407,659 | | Subtotal | 6,261,288 | 6,060,796 | | Less: Provision for bad debts | 930,067 | 1,101,521 | | Total | 5,331,221 | 4,959,275 | Analysis of Accounts Receivable by Provision Method (As of period-end, RMB'000) | Category | Carrying Amount | Proportion (%) | Provision for Bad Debts | Provision Rate (%) | Book Value | | :--- | :--- | :--- | :--- | :--- | :--- | | Individually assessed | 871,967 | 13.93 | 589,703 | 67.63 | 282,264 | | Collectively assessed | 5,389,321 | 86.07 | 340,364 | 6.32 | 5,048,957 | | Total | 6,261,288 | 100.00 | 930,067 | | 5,331,221 | [Other Equity Instrument Investments](index=12&type=section&id=Other%20Equity%20Instrument%20Investments) The Group holds a 13.26% stake in China Merchants Renhe Life Insurance, with a fair value of RMB 1,043.8 million, designated as a financial asset at FVTOCI Details of Other Equity Instrument Investments (RMB'000) | Item | Closing Balance | Prior Year-End Balance | | :--- | :--- | :--- | | China Merchants Renhe Life Insurance Co, Ltd | 1,043,827 | 1,004,312 | | Total | 1,043,827 | 1,004,312 | - Holds a **13.26% equity interest** in China Merchants Renhe Life Insurance Co, Ltd, with a fair value of **RMB 1,043,827 thousand**[22](index=22&type=chunk) - The investment is designated as a financial asset at fair value through other comprehensive income (FVTOCI)[22](index=22&type=chunk) [Other Non-current Financial Assets](index=13&type=section&id=Other%20Non-current%20Financial%20Assets) The Group's investment in CMSC Equity Fund has a carrying amount of RMB 996.9 million, with a focus on the 5G and information communication industry chain Details of Other Non-current Financial Assets (RMB'000) | Item | Closing Balance | Prior Year-End Balance | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 996,867 | 1,017,412 | | Of which: Equity instrument investments | 996,867 | 1,017,412 | | Total | 996,867 | 1,017,412 | - This asset represents an investment in CMSC Equity Fund, with a paid-in capital of **RMB 852,175 thousand** and a carrying amount of **RMB 996,867 thousand**[23](index=23&type=chunk) - CMSC Equity Fund primarily invests in companies related to the 5G and information communication industry chain[23](index=23&type=chunk) [Accounts Payable](index=14&type=section&id=Accounts%20Payable) As of June 30, 2025, total accounts payable were RMB 2,209.3 million, a slight increase from the previous year-end, with balances aged within one year accounting for 60.5% Details of Accounts Payable (RMB'000) | Aging | Closing Balance | Prior Year-End Balance | | :--- | :--- | :--- | | Within 1 year (inclusive) | 1,335,823 | 1,549,348 | | 1–2 years (inclusive) | 620,571 | 340,986 | | 2–3 years (inclusive) | 135,545 | 186,807 | | Over 3 years | 117,341 | 110,259 | | Total | 2,209,280 | 2,187,400 | [Contract Liabilities](index=14&type=section&id=Contract%20Liabilities) As of June 30, 2025, contract liabilities amounted to RMB 815.5 million, an increase of 26.3% from the previous year-end, primarily from system integration services Details of Contract Liabilities (RMB'000) | Item | Closing Balance | Prior Year-End Balance | | :--- | :--- | :--- | | Contracts for system integration services, etc | 815,475 | 645,608 | | Total | 815,475 | 645,608 | [Revenue and Cost of Sales](index=15&type=section&id=Revenue%20and%20Cost%20of%20Sales) For the six months ended June 30, 2025, the Group's revenue was RMB 3,894.5 million and cost of sales was RMB 1,606.5 million, with system integration service revenue declining significantly Revenue and Cost of Sales (RMB'000) | Item | Current Period Revenue | Current Period Cost | Prior Period Revenue | Prior Period Cost | | :--- | :--- | :--- | :--- | :--- | | Main business | 3,881,068 | 1,601,054 | 4,020,211 | 1,628,051 | | Other business | 13,431 | 5,472 | 21,581 | 6,072 | | Total | 3,894,500 | 1,606,526 | 4,041,791 | 1,634,123 | Breakdown of Revenue (RMB'000) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Aviation information technology services | 2,313,440 | 2,265,033 | | Settlement and clearing services | 312,470 | 277,972 | | System integration services | 418,355 | 679,849 | | Data network services | 189,533 | 216,410 | | Technical support and product revenue | 384,961 | 295,310 | | Other revenue | 275,742 | 307,218 | | Total | 3,894,500 | 4,041,791 | - **Revenue from system integration services decreased by 38.5% year-on-year**, mainly affected by the progress of project construction[25](index=25&type=chunk) [Investment Income](index=16&type=section&id=Investment%20Income) For the six months ended June 30, 2025, total investment income was RMB 28.7 million, a decrease from the prior period due to lower returns from trading financial assets Details of Investment Income (RMB'000) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Income from long-term equity investments under the equity method | 11,043 | 2,121 | | Investment income from disposal of long-term equity investments | 115 | 7,673 | | Investment income from trading financial assets during the holding period | 8,859 | 29,540 | | Interest income from debt investments during the holding period | 8,697 | — | | Total | 28,714 | 39,335 | [Credit Impairment Losses](index=16&type=section&id=Credit%20Impairment%20Losses) For the six months ended June 30, 2025, credit impairment losses were RMB 176.5 million, a significant increase from the prior period mainly due to higher bad debt losses on accounts receivable Details of Credit Impairment Losses (RMB'000) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Bad debt losses on notes receivable | 5,637 | 7,791 | | Bad debt losses on accounts receivable | 170,908 | 57,873 | | Total | 176,545 | 65,664 | [Asset Impairment Losses](index=17&type=section&id=Asset%20Impairment%20Losses) For the six months ended June 30, 2025, asset impairment losses amounted to RMB 2.1 million, primarily related to contract assets Details of Asset Impairment Losses (RMB'000) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Impairment losses on contract assets | 2,069 | –6,021 | | Total | 2,069 | –6,021 | [Earnings Per Share](index=17&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, both basic and diluted earnings per share were RMB 0.49, an increase from RMB 0.47 in the prior period Earnings Per Share Calculation | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Profit (RMB'000) | 1,447,651 | 1,367,221 | | Number of shares ('000 shares) | 2,926,210 | 2,926,210 | | Earnings per share (basic and diluted) | 0.49 | 0.47 | [Dividend Distribution](index=17&type=section&id=Dividend%20Distribution) A final cash dividend of RMB 0.239 per share for 2024, totaling RMB 699.4 million, was approved and recorded as a distribution of retained earnings - The final cash dividend for 2024 was **RMB 0.239 per share** (tax inclusive), totaling **RMB 699,364 thousand**[28](index=28&type=chunk) - This dividend was recognized in shareholders' equity for the six months ended June 30, 2025, as a distribution of retained earnings[28](index=28&type=chunk) [Asset Disposal](index=18&type=section&id=Asset%20Disposal) For the six months ended June 30, 2025, the Group recorded a gain on asset disposal of RMB 2.7 million, mainly from the disposal of right-of-use assets - Gain on disposal of assets amounted to **RMB 2,734 thousand**[29](index=29&type=chunk) - This primarily includes a gain of RMB 2,770 thousand from the disposal of right-of-use assets (lease modification gain) and a loss of RMB 36 thousand from office and electronic equipment[29](index=29&type=chunk) [Supplementary Information to the Income Statement by Nature of Expense](index=18&type=section&id=Supplementary%20Information%20to%20the%20Income%20Statement%20by%20Nature%20of%20Expense) For the six months ended June 30, 2025, staff costs were RMB 968.2 million and depreciation and amortization were RMB 438.1 million, with system integration sales costs decreasing by 52.1% Expenses by Nature (RMB'000) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Staff costs | 968,206 | 937,785 | | Depreciation and amortization | 438,094 | 531,602 | | Cost of sales for integration business | 200,792 | 418,795 | | Technical support and maintenance fees | 285,498 | 286,074 | | Departure and distribution support fees | 307,218 | 303,275 | | Network usage fees | 42,631 | 44,190 | | Finance costs | –55,907 | –78,654 | | Other operating costs | 196,526 | 47,556 | | Total | 2,383,057 | 2,490,623 | - **Cost of sales for integration business decreased by 52.1%**, mainly affected by the progress of system integration projects[30](index=30&type=chunk) - **Depreciation and amortization decreased by 17.6%**, mainly because certain fixed assets and intangible assets were fully depreciated or amortized[30](index=30&type=chunk) [Business Review](index=19&type=section&id=Business%20Review) [Business Review for the First Half of 2025](index=19&type=section&id=Business%20Review%20for%20the%20First%20Half%20of%202025) In H1 2025, the Group capitalized on the civil aviation market recovery, advanced its core businesses, enhanced innovation, and strategically entered emerging industries like AI and the low-altitude economy - The civil aviation passenger market hit a new record high, with both domestic and international passenger volumes surpassing the same period in 2019[31](index=31&type=chunk) - The Electronic Travel Distribution (ETD) system processed approximately **370.7 million passengers** for domestic and foreign airlines, a **year-on-year increase of 5.3%**[32](index=32&type=chunk) - The settlement and clearing system handled approximately **628.4 million transactions**, up **3.7% year-on-year**, with settled revenue exceeding **RMB 35.61 billion**, a **20.0% increase**[34](index=34&type=chunk) - Actively participated in smart airport construction projects and promoted new-generation departure front-end systems, facial recognition travel platforms, and full-process baggage tracking systems[36](index=36&type=chunk) - Expanded value-added data center services, upgraded cargo terminal production systems, and developed applications for the "Aviation-Travel Chain" blockchain and digital RMB payments[37](index=37&type=chunk) - Ensured stable operation of mainframe and open platform systems with an availability rate exceeding **99.99%** and expanded data center resources[38](index=38&type=chunk) - Led research into AI applications for the civil aviation industry and actively developed the low-altitude economy sector, signing the first user for its collaborative platform[39](index=39&type=chunk) [Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) [Overview](index=23&type=section&id=Overview) In H1 2025, the Group's profit before tax grew 4.5% to RMB 1,677.9 million, and net profit attributable to shareholders rose 5.9% to RMB 1,447.7 million, driven by stable revenue growth and improved collections - **Profit before tax was RMB 1,677.9 million**, an increase of approximately **4.5%** compared to H1 2024[40](index=40&type=chunk) - **Net profit attributable to shareholders of the parent company was RMB 1,447.7 million**, an increase of approximately **5.9%** compared to H1 2024[40](index=40&type=chunk) - The profit growth was mainly attributable to stable revenue growth from aviation information technology services and improved collection of payments[40](index=40&type=chunk) [Total Revenue](index=23&type=section&id=Total%20Revenue) Total revenue for H1 2025 was RMB 3,894.5 million, a 3.6% decrease year-on-year, impacted by a significant 38.5% decline in system integration service revenue despite growth in other segments - **Total revenue was RMB 3,894.5 million**, a **year-on-year decrease of 3.6%**[41](index=41&type=chunk) Revenue Changes by Business Segment (RMB million) | Business Segment | H1 2025 | H1 2024 | Change Rate | | :--- | :--- | :--- | :--- | | Aviation information technology services | 2,313.4 | 2,265.0 | +2.1% | | Settlement and clearing services | 312.5 | 278.0 | +12.4% | | System integration services | 418.4 | 679.8 | -38.5% | | Data network services | 189.5 | 216.4 | -12.4% | | Technical support and product revenue | 385.0 | 295.3 | +30.4% | | Other revenue | 275.7 | 307.2 | -10.2% | - The decrease in system integration service revenue was mainly affected by the progress of project construction[42](index=42&type=chunk) [Total Operating Costs](index=25&type=section&id=Total%20Operating%20Costs) Total operating costs for H1 2025 decreased by 4.2% to RMB 2,427.9 million, driven by a 52.1% reduction in integration business sales costs and a 17.6% drop in depreciation and amortization - **Total operating costs were RMB 2,427.9 million**, a **year-on-year decrease of 4.2%**[44](index=44&type=chunk) - **Credit impairment losses were RMB -176.5 million**, mainly due to improved payment collection from certain customers, resulting in a decrease in the provision for bad debts on accounts receivable[44](index=44&type=chunk) Changes in Major Cost Items | Cost Item | Change Rate | | :--- | :--- | | Staff costs | +3.2% | | Depreciation and amortization | -17.6% | | Cost of sales for integration business | -52.1% | | Technical support and maintenance fees | -0.2% | | Departure and distribution support fees | +1.3% | [Corporate Income Tax](index=26&type=section&id=Corporate%20Income%20Tax) The company accrued corporate income tax for H1 2025 at a preferential rate of 15% as a "High and New Technology Enterprise" and is eligible for a further reduced rate of 10% as a "Key Software Enterprise" - The company accrued corporate income tax for H1 2025 at a **preferential rate of 15%** due to its "High and New Technology Enterprise" status[46](index=46&type=chunk) - The company has been recognized as a "Key Software Enterprise" from 2006 to 2024, entitling it to a **10% preferential tax rate**, with the difference to be refunded subsequently[46](index=46&type=chunk) [Net Profit Attributable to Shareholders of the Parent Company](index=26&type=section&id=Net%20Profit%20Attributable%20to%20Shareholders%20of%20the%20Parent%20Company) Net profit attributable to shareholders of the parent company increased by RMB 80.4 million, from RMB 1,367.2 million in H1 2024 to RMB 1,447.7 million in H1 2025 - Net profit attributable to shareholders of the parent company **increased by RMB 80.4 million year-on-year** to **RMB 1,447.7 million**[48](index=48&type=chunk) [Liquidity and Capital Structure](index=27&type=section&id=Liquidity%20and%20Capital%20Structure) [Liquidity and Capital Structure](index=27&type=section&id=Liquidity%20and%20Capital%20Structure) In H1 2025, the Group generated a net cash inflow from operating activities of RMB 1,314.8 million, holding cash and cash equivalents of RMB 6,621.2 million against total borrowings of RMB 1,396.1 million - **Net cash inflow from operating activities was RMB 1,314.8 million**[49](index=49&type=chunk) - **Total borrowings amounted to RMB 1,396.1 million**, comprising short-term bank loans of RMB 924.6 million and entrusted loans of RMB 471.5 million[49](index=49&type=chunk) - **Cash and cash equivalents stood at RMB 6,621.2 million**, of which 95.3% was denominated in RMB[49](index=49&type=chunk) [Restricted Bank Deposits](index=27&type=section&id=Restricted%20Bank%20Deposits) As of June 30, 2025, restricted bank deposits totaled RMB 1,821.6 million, primarily consisting of provisions for customers' payments used as performance guarantees for settlement-related businesses - Restricted bank deposits amounted to **RMB 1,821.6 million**, of which **RMB 1,794.3 million** was provisions for customers' payments[50](index=50&type=chunk) - These funds are mainly held in designated accounts as performance guarantees for settlement-related businesses[50](index=50&type=chunk) [Entrusted Deposits and Irrecoverable Overdue Time Deposits](index=27&type=section&id=Entrusted%20Deposits%20and%20Irrecoverable%20Overdue%20Time%20Deposits) As of June 30, 2025, the Group had no entrusted deposits or irrecoverable overdue time deposits - The Group had no entrusted deposits or irrecoverable overdue time deposits[51](index=51&type=chunk) [Foreign Exchange Risk](index=27&type=section&id=Foreign%20Exchange%20Risk) The Group's foreign exchange risk arises from commercial transactions and assets and liabilities denominated in foreign currencies, with potential impacts from RMB exchange rate fluctuations - Foreign exchange risk arises from commercial transactions and assets and liabilities denominated in foreign currencies[52](index=52&type=chunk) - Fluctuations in the exchange rate of RMB against foreign currencies may affect operating results[52](index=52&type=chunk) [Investment in Financial Assets](index=27&type=section&id=Investment%20in%20Financial%20Assets) The Group prudently invests in principal-protected wealth management products with returns higher than bank deposit rates, including structured deposits, certificates of deposit, and equity funds - The Group's fund management strategy typically involves selecting principal-protected wealth management products with interest rates higher than bank deposits to maximize returns[53](index=53&type=chunk) [Trading Financial Assets](index=28&type=section&id=Trading%20Financial%20Assets) As of June 30, 2025, the Group held structured bank deposits totaling RMB 6,000 million with annual interest rates ranging from 0.45% to 2.30% - Held structured bank deposits totaling **RMB 6,000 million**, with annual interest rates of **0.45%–2.30%** and tenors of 92 to 186 days[54](index=54&type=chunk) [Financial Assets at Amortized Cost](index=28&type=section&id=Financial%20Assets%20at%20Amortized%20Cost) As of June 30, 2025, the Group held certificates of deposit totaling RMB 670 million and reverse repurchase agreements of RMB 1,000 million - Held certificates of deposit totaling **RMB 670 million**, with annual interest rates of **1.75%–3.10%** and tenors of 365 to 1,097 days[55](index=55&type=chunk) - Held reverse repurchase agreements of **RMB 1,000 million** with an annualized interest rate of **1.66%** and a tenor of 28 days[55](index=55&type=chunk) [Financial Assets at Fair Value through Other Comprehensive Income](index=28&type=section&id=Financial%20Assets%20at%20Fair%20Value%20through%20Other%20Comprehensive%20Income) The Group holds a 13.26% stake in China Merchants Renhe Life Insurance, with a fair value of RMB 1,043.8 million as of June 30, 2025 Investment in China Merchants Renhe Life Insurance (RMB'000) | Investment Name | Shareholding (%) | Fair Value as at June 30, 2025 | Fair Value as at Dec 31, 2024 | Gain for the six months ended June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | China Merchants Renhe Life | 13.26 | 1,043,827 | 1,004,312 | 39,515 | - China Merchants Renhe Life Insurance recorded a **profit of RMB 173.33 million** in H1 2025[57](index=57&type=chunk) - The insurer will continue to promote product transformation and strengthen asset-liability management around its strategic initiatives[59](index=59&type=chunk) [Financial Assets at Fair Value through Profit or Loss](index=30&type=section&id=Financial%20Assets%20at%20Fair%20Value%20through%20Profit%20or%20Loss) The Group has made a capital contribution of RMB 852.2 million to the CMSC Equity Fund, which invests in the 5G industry and information communication supply chain - A capital contribution of **RMB 852.2 million** has been made to the CMSC Equity Fund[60](index=60&type=chunk) - The CMSC Equity Fund primarily invests in companies related to 5G industry applications and the information communication industry chain[60](index=60&type=chunk) [Pledge of Assets](index=31&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no pledged assets - The Group had no pledged assets[61](index=61&type=chunk) [Contingent Liabilities](index=31&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities - The Group had no material contingent liabilities[62](index=62&type=chunk) [Gearing Ratio](index=31&type=section&id=Gearing%20Ratio) As of June 30, 2025, the Group's gearing ratio was 26.3%, an increase from 22.9% at the end of 2024 - The gearing ratio was **26.3%** (December 31, 2024: 22.9%)[63](index=63&type=chunk) [Progress in Data Resource Capitalization](index=31&type=section&id=Progress%20in%20Data%20Resource%20Capitalization) During the period, the Group did not recognize any new data resources as intangible assets, with the existing balance reported at RMB 20.2 million - No new data resources were recognized as intangible assets during the period[64](index=64&type=chunk) - The financial statements report "Intangible assets – of which: data resources" at **RMB 20.2 million**[64](index=64&type=chunk) [Significant Investment or Financing Plans](index=31&type=section&id=Significant%20Investment%20or%20Financing%20Plans) The Group had no significant acquisitions, disposals, or investment plans as of June 30, 2025, with capital expenditure in H1 2025 totaling RMB 133.8 million - As of June 30, 2025, the Group had no significant acquisitions, disposals, or plans for major investments or capital asset purchases[65](index=65&type=chunk) - Total capital expenditure for H1 2025 was **RMB 133.8 million** (H1 2024: RMB 141.5 million)[65](index=65&type=chunk) - Capital expenditure commitments amounted to approximately **RMB 1,518.7 million**, mainly for operations, system maintenance, and R&D upgrades[65](index=65&type=chunk) [Employees](index=32&type=section&id=Employees) As of June 30, 2025, the Group had 6,740 employees, with staff costs for H1 2025 amounting to RMB 968.2 million, representing 39.9% of total operating costs - As of June 30, 2025, the Group had a total of **6,740 employees**[67](index=67&type=chunk) - Staff costs for H1 2025 were approximately **RMB 968.2 million**, accounting for about **39.9% of total operating costs**[67](index=67&type=chunk) - Total enterprise annuity expenses were approximately **RMB 47.3 million** (H1 2024: RMB 40.9 million)[67](index=67&type=chunk) [Subsequent Events](index=32&type=section&id=Subsequent%20Events) [Subsequent Events](index=32&type=section&id=Subsequent%20Events) In July and August 2025, the company received a tax refund of RMB 89.7 million related to its "Key Software Enterprise" status, with no other significant events to disclose - In July and August 2025, the company received a tax refund of **RMB 89.7 million** related to its "Key Software Enterprise" status[68](index=68&type=chunk) - There were no other significant events to disclose from June 30, 2025, to the date of this announcement[68](index=68&type=chunk) [Outlook and Dividend Policy](index=33&type=section&id=Outlook%20and%20Dividend%20Policy) [Outlook for the Second Half of 2025](index=33&type=section&id=Outlook%20for%20the%20Second%20Half%20of%202025) For H2 2025, the Group will focus on high-quality development, technology-led innovation, strengthening its industrial position, and accelerating its layout in strategic emerging industries - In H2, the focus will be on high-quality development, strengthening technology-led innovation, and enhancing industrial control capabilities[69](index=69&type=chunk) - The Group will accelerate its layout in strategic emerging industries, cultivate new quality productive forces, and consolidate its core business advantages[69](index=69&type=chunk) [Interim Dividend](index=33&type=section&id=Interim%20Dividend) The Board of Directors has recommended not to declare an interim dividend for the first half of 2025 - The Board of Directors recommended **no interim dividend** for the first half of 2025[70](index=70&type=chunk) [Purchase, Sale or Redemption of Securities](index=33&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Securities) The company and its subsidiaries did not purchase, sell, or redeem any of its listed securities during the first half of 2025 and held no treasury shares - In H1 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities[71](index=71&type=chunk) - As of June 30, 2025, the company did not hold any treasury shares[71](index=71&type=chunk) [Corporate Governance](index=34&type=section&id=Corporate%20Governance) [Corporate Governance](index=34&type=section&id=Corporate%20Governance) The company adheres to high standards of corporate governance but has two deviations from the code provisions: the concurrent roles of Chairman and CEO and a delayed board election - The company has adopted the code provisions in the Corporate Governance Code and Corporate Governance Report in Appendix C1 to the Listing Rules[72](index=72&type=chunk) - **Deviation from code provision C.2.1**: The roles of Chairman and Chief Executive Officer are held by the same individual as a transitional arrangement[72](index=72&type=chunk) - **Deviation from code provision B.2.2**: The re-election of the Board of Directors has been postponed but will not affect normal operations[73](index=73&type=chunk) - Apart from the above deviations, the company fully complied with all other code provisions during H1 2025[73](index=73&type=chunk) [Audit and Risk Management Committee (Supervisory Committee)](index=35&type=section&id=Audit%20and%20Risk%20Management%20Committee%20(Supervisory%20Committee)) The Audit and Risk Management Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and discussed related matters - The Audit and Risk Management Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[75](index=75&type=chunk) - The committee discussed matters including internal control, risk management, and financial reporting[75](index=75&type=chunk) [Other Information](index=35&type=section&id=Other%20Information) [Publication of Interim Results on the Internet](index=35&type=section&id=Publication%20of%20Interim%20Results%20on%20the%20Internet) This results announcement is available on the websites of Hong Kong Exchanges and Clearing Limited and the company - This results announcement is available on the website of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and the company's website (www.travelskyir.com)[76](index=76&type=chunk) [Board of Directors](index=35&type=section&id=Board%20of%20Directors) As of the announcement date, the Board comprises one executive director, three non-executive directors, three independent non-executive directors, and one employee representative director - Executive Director: Mr. Huang Rongshun (Chairman)[78](index=78&type=chunk) - Non-executive Directors: Mr. Sun Yuquan, Mr. Qu Guangji, and Ms. He Xiaoqun[78](index=78&type=chunk) - Independent Non-executive Directors: Mr. Liu Zehong, Mr. Chan Wing Tak, and Mr. Xu Hongzhi[78](index=78&type=chunk) - Employee Representative Director: Ms. Liang Shuang[77](index=77&type=chunk)

Announcements and Disclaimers [HKEX and Stock Exchange Disclaimer](index=1&type=section&id=%E9%A6%99%E6%B8%AF%E4%BA%A4%E6%98%93%E6%89%80%E5%8F%8A%E8%81%AF%E4%BA%A4%E6%89%80%E5%85%8D%E8%B2%AC%E8%81%B2%E6%98%8E) The HKEX and the Stock Exchange disclaim responsibility for the announcement's content, accuracy, or completeness, and any losses incurred from reliance on it - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited are not responsible for the contents of this announcement, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement[1](index=1&type=chunk) [Company Information and Announcement Purpose](index=1&type=section&id=%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E4%BF%A1%E6%81%AF%E5%8F%8A%E5%85%AC%E5%91%8A%E7%9B%AE%E7%9A%84) Jimu Group Limited (Stock Code: 8187) announces its unaudited consolidated financial results for the six months ended June 30, 2025, in compliance with GEM Listing Rules - Jimu Group Limited (Stock Code: **8187**) announces its unaudited consolidated financial results for the six months ended June 30, 2025[2](index=2&type=chunk)[3](index=3&type=chunk) - This announcement complies with the relevant requirements for preliminary announcements of interim results under the GEM Listing Rules of The Stock Exchange of Hong Kong Limited[3](index=3&type=chunk) [GEM Market Characteristics and Risk Warning](index=2&type=section&id=GEM%E5%B8%82%E5%A0%B4%E7%89%B9%E8%89%B2%E5%8F%8A%E9%A2%A8%E9%9A%AA%E6%8F%90%E7%A4%BA) The GEM market, designed for SMEs, carries higher investment risks, potential for significant stock price volatility, and no guarantee of liquidity; the Board confirms report accuracy - The GEM market is positioned for small and medium-sized companies, carrying higher investment risks, potential for significant stock price volatility, and no guarantee of high liquidity[6](index=6&type=chunk) - The Directors confirm that the information contained in this report is accurate and complete in all material aspects, without any misleading or fraudulent content[6](index=6&type=chunk) Condensed Consolidated Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, revenue grew significantly by 167.8% to HKD 14,358 thousand, but loss for the period expanded to HKD 3,932 thousand, with basic loss per share of HKD 0.026 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 14,358 | 5,361 | 167.8% | | Cost of inventories sold | (8,852) | (3,059) | 189.4% | | Loss before tax | (3,932) | (3,410) | 15.3% | | Loss and total comprehensive expenses for the period | (3,932) | (3,410) | 15.3% | | Basic and diluted loss per share (HKD) | (0.026) | (0.031) | -16.1% | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, total assets were HKD 20,640 thousand, and net assets were HKD 12,220 thousand, with net current assets decreasing from HKD 14,400 thousand to HKD 10,144 thousand Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 2,715 | 2,545 | 6.7% | | Current assets | 17,925 | 21,486 | -16.6% | | Current liabilities | 7,781 | 7,086 | 9.8% | | Net current assets | 10,144 | 14,400 | -29.5% | | Net assets | 12,220 | 16,152 | -24.3% | | Total equity | 12,220 | 16,152 | -24.3% | [Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) As of June 30, 2025, total equity was HKD 12,220 thousand, a decrease of HKD 3,932 thousand from the beginning of the year, primarily due to the loss for the period Condensed Consolidated Statement of Changes in Equity | Indicator | January 1, 2025 (HKD thousand) | June 30, 2025 (HKD thousand) | Change (HKD thousand) | | :--- | :--- | :--- | :--- | | Total equity | 16,152 | 12,220 | (3,932) | | Loss and total comprehensive expenses for the period | - | (3,932) | (3,932) | [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, net cash from operating activities was HKD 6,864 thousand, with a net increase in cash and cash equivalents of HKD 5,743 thousand, bringing period-end bank balances and cash to HKD 10,782 thousand Condensed Consolidated Statement of Cash Flows | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | Change (HKD thousand) | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 6,864 | 5,345 | 1,519 | | Net cash used in investing activities | (400) | (964) | 564 | | Net cash used in financing activities | (721) | (4,771) | 4,050 | | Net increase/(decrease) in cash and cash equivalents | 5,743 | (390) | 6,133 | | Cash and cash equivalents at end of period | 10,782 | 1,092 | 9,690 | Notes to the Condensed Consolidated Financial Statements [General Information](index=7&type=section&id=%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) Jimu Group Limited is an investment holding company incorporated in the Cayman Islands, primarily engaged in trading footwear, apparel, and sports-related peripheral products, with shares listed on GEM - The Company is an investment holding company primarily engaged in the trading of footwear, apparel, and sports-related peripheral products[14](index=14&type=chunk) - The Company's shares are listed on the GEM of The Stock Exchange of Hong Kong Limited[13](index=13&type=chunk) [Basis of Preparation](index=7&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) These interim financial statements are prepared in accordance with HKAS 34 and Chapter 18 of the GEM Listing Rules, unaudited by external auditors but reviewed by the Audit Committee - The unaudited condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and Chapter 18 of the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited[16](index=16&type=chunk) - The unaudited condensed consolidated financial statements have not been audited by the Company's auditor but have been reviewed by the Company's Audit Committee[17](index=17&type=chunk) [Principal Accounting Policies](index=8&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) The accounting policies adopted for these interim financial statements are consistent with the prior year, and newly adopted HKFRSs have no significant impact on the Group's results or financial position - The accounting policies adopted in the preparation of the interim unaudited condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2024[18](index=18&type=chunk) - The adoption of new/revised HKFRSs has no significant impact on the Group's results and financial position for the current and prior periods[19](index=19&type=chunk) [Revenue](index=8&type=section&id=%E6%94%B6%E5%85%A5) For the six months ended June 30, 2025, the Group's entire revenue of HKD 14,358 thousand was derived from trading footwear, apparel, and sports-related peripheral products, representing significant growth year-on-year Revenue by Source | Revenue Source | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Trading of footwear, apparel and sports-related peripheral products | 14,358 | 5,361 | [Segment Information](index=9&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group operates solely in one reportable and operating segment: footwear, apparel, and sports-related peripheral products, with all revenue primarily from Hong Kong and no longer from Canada - The Group has only one reportable and operating segment, which is the footwear, apparel, and sports-related peripheral products business[22](index=22&type=chunk) Revenue by Geographical Location | Region | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Hong Kong | 14,358 | 5,060 | | Canada | – | 301 | | **Total** | **14,358** | **5,361** | Non-current Assets by Geographical Location | Location of Non-current Assets | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Hong Kong | 2,478 | 2,308 | [Income Tax Expense](index=10&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) No Hong Kong profits tax provision was made for the six months ended June 30, 2025, and 2024, as the Group had no assessable profits during these periods - No provision for Hong Kong profits tax has been made in the unaudited condensed consolidated financial statements as the Group had no assessable profits for the six months ended June 30, 2025, and June 30, 2024[29](index=29&type=chunk) [Loss for the Period](index=11&type=section&id=%E6%9C%9F%E5%85%A7%E虧%E6%90%8D) The loss for the period was primarily influenced by the cost of inventories sold, employee costs (salaries, allowances, retirement benefits), and depreciation expenses (plant and equipment, right-of-use assets) Components of Loss for the Period | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Cost of inventories sold | 8,852 | 3,059 | | Total employee costs | 3,327 | 2,462 | | Total depreciation | 840 | 1,045 | | Expenses related to short-term leases | 730 | 115 | [Dividends](index=11&type=section&id=%E8%82%A1%E6%81%AF) The Company's directors do not recommend the payment of any interim dividend for the six months ended June 30, 2025 - No dividends were paid, declared, or proposed during the current interim period and prior interim period[32](index=32&type=chunk) [Loss Per Share](index=12&type=section&id=%E6%AF%8F%E8%82%A1%E虧%E6%90%8D) For the six months ended June 30, 2025, both basic and diluted loss per share were HKD 0.026, with diluted loss being the same due to the anti-dilutive nature of share options Loss Per Share Calculation | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Loss for the purpose of calculating basic loss per share | (3,932) | (3,410) | | Weighted average number of ordinary shares for calculating basic loss per share (thousand shares) | 151,684 | 108,345 | - Basic and diluted loss per share for the six months ended June 30, 2025, and June 30, 2024, were the same because the exercise of share options would decrease the loss per share, thus having an anti-dilutive effect[34](index=34&type=chunk) [Movements in Property, Plant and Equipment and Right-of-Use Assets](index=13&type=section&id=%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99%E4%BB%A5%E5%8F%8A%E4%BD%BF%E7%94%A8%E6%AC%8A%E8%B3%87%E7%94%A2%E8%AE%8A%E5%8B%95) For the six months ended June 30, 2025, the Group acquired approximately HKD 401 thousand in property, plant and equipment and HKD 609 thousand in right-of-use assets, incurring corresponding depreciation expenses Asset Movements | Asset Category | Acquisition Cost (HKD thousand) | Depreciation Expense (HKD thousand) | | :--- | :--- | :--- | | Property, plant and equipment (June 30, 2025) | 401 | 197 | | Property, plant and equipment (December 31, 2024) | 965 | - | | Right-of-use assets (June 30, 2025) | 609 | 643 | | Right-of-use assets (December 31, 2024) | 1,736 | - | [Inventories](index=13&type=section&id=%E5%AD%98%E8%B2%A8) As of June 30, 2025, merchandise inventories of footwear, apparel, and sports-related peripheral products for resale significantly decreased to HKD 6,004 thousand from HKD 13,163 thousand at December 31, 2024 Inventories | Inventory Category | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Merchandise of footwear, apparel and sports-related peripheral products for resale | 6,004 | 13,163 | -54.4% | [Trade Receivables](index=14&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E8%B3%AC%E6%AC%BE) As of June 30, 2025, trade receivables (net of impairment losses) were zero, primarily due to an impairment provision of HKD 2,175 thousand for expected credit losses Trade Receivables | Indicator | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Trade receivables from contracts with customers | 2,175 | 2,126 | | Less: Impairment loss under expected credit loss model | (2,175) | – | | **Net amount** | **–** | **2,126** | - The Group grants credit terms ranging from **30 to 60 days** to its customers for sales of footwear, apparel, and sports-related peripheral products[37](index=37&type=chunk) Ageing Analysis of Trade Receivables | Ageing | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Over 90 days | – | 2,126 | [Other Receivables, Prepayments and Deposits](index=15&type=section&id=%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85%E3%80%81%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%8C%89%E9%87%91) As of June 30, 2025, the total of other receivables, prepayments, and deposits was HKD 1,139 thousand, a slight decrease from HKD 1,158 thousand at December 31, 2024 Other Receivables, Prepayments and Deposits | Item | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Other receivables (net of provision) | 401 | 383 | | Prepayments | 139 | 186 | | Lease deposits | 642 | 642 | | Other deposits | 194 | 184 | | Less: Lease deposits shown under non-current assets | (237) | (237) | | **Total** | **1,139** | **1,158** | [Trade Payables](index=15&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E8%B3%AC%E6%AC%BE) As of June 30, 2025, total trade payables increased to HKD 3,072 thousand from HKD 2,415 thousand at December 31, 2024, with credit terms ranging from 0 to 60 days Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | 0 to 30 days | 578 | 54 | | 31 to 60 days | 88 | – | | 61 to 90 days | 82 | – | | Over 90 days | 2,324 | 2,361 | | **Total** | **3,072** | **2,415** | - The credit period for purchases of goods ranges from **0 to 60 days**[40](index=40&type=chunk) [Other Payables and Accruals](index=16&type=section&id=%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85%E5%8F%8A%E6%87%89%E8%A8%88%E8%B2%BB%E7%94%A8) As of June 30, 2025, total other payables and accruals were HKD 3,681 thousand, a slight decrease from HKD 3,777 thousand at December 31, 2024 Other Payables and Accruals | Item | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Accrued staff wages | 760 | 463 | | Accrued expenses | 343 | 960 | | Other taxes payable | 1,239 | 1,220 | | Other payables | 1,339 | 1,134 | | **Total** | **3,681** | **3,777** | [Share Capital](index=16&type=section&id=%E8%82%A1%E6%9C%AC) As of June 30, 2025, the Company's issued and fully paid share capital remained at HKD 30,337 thousand, comprising 151,683,840 shares, consistent with the capital structure after the 2024 share placement Share Capital | Item | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Authorized ordinary shares (HKD thousand) | 100,000 | 100,000 | | Issued and fully paid shares (HKD thousand) | 30,337 | 30,337 | | Number of issued shares (shares) | 151,683,840 | 151,683,840 | - The placing of **43,338,240 new shares** was completed on October 31, 2024, with net proceeds of approximately **HKD 10,200,000**, increasing share capital by **HKD 8,668,000** and share premium by approximately **HKD 1,580,000**[42](index=42&type=chunk) [Share Option Scheme](index=17&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The Company adopted a share option scheme in 2016 to reward eligible individuals; as of June 30, 2025, 807,886 share options remained unexercised at an exercise price of HKD 0.37 per share, with no cancellations or exercises during the period - The Company adopted a share option scheme (the "2016 Scheme") to grant share options to eligible persons as a reward for their contributions[43](index=43&type=chunk) Share Options Outstanding | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of share options outstanding at period/year-end | 807,886 | 807,886 | | Weighted average exercise price (HKD per share) | 0.37 | 0.37 | - No share options were cancelled or exercised during the six months ended June 30, 2025, and June 30, 2024[51](index=51&type=chunk) [Fair Value Measurement of Financial Instruments](index=19&type=section&id=%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E7%9A%84%E5%85%AC%E5%B9%B3%E5%80%BC%E8%A8%88%E9%87%8F) The Directors believe that the carrying amounts of the Group's financial assets and liabilities recorded at amortized cost in the unaudited condensed consolidated financial statements approximate their fair values - The Directors are of the opinion that the carrying amounts of these financial assets and financial liabilities recorded at amortized cost in the unaudited condensed consolidated financial statements approximate their fair values[52](index=52&type=chunk) [Related Party Disclosures](index=19&type=section&id=%E9%97%9C%E8%81%AF%E6%96%B9%E6%8A%AB%E9%9C%B2) The Group's key management comprises all executive directors, whose remuneration is determined by the Remuneration Committee based on individual and Group performance, industry standards, and market conditions - The Group's key management comprises all executive directors of the Company, whose remuneration details are disclosed in Note 7[53](index=53&type=chunk) - The remuneration of executive directors is determined by the Company's Remuneration Committee based on individual performance, the Group's performance and profitability, industry remuneration standards, and prevailing market conditions[53](index=53&type=chunk) Management Discussion and Analysis [Business Review and Outlook](index=20&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E5%8F%8A%E5%B1%95%E6%9C%9B) The Group primarily engages in footwear, apparel, and sports-related peripheral products, expanding retail through physical stores and wholesale, expecting positive revenue effects in H2 2025 from Hong Kong's event economy - The Group is engaged in the business of footwear, apparel, and sports-related peripheral products, continuously expanding its retail business through physical stores while strategically seeking wholesale opportunities[55](index=55&type=chunk)[56](index=56&type=chunk) - The Hong Kong government's development of a mega-event economy creates a positive environment for the sports trade industry, and the Group's business is expected to benefit from this trend, achieving positive revenue effects in the second half of 2025[56](index=56&type=chunk) [Footwear, Apparel and Sports-related Peripheral Products Business](index=20&type=section&id=%E9%9E%8B%E6%9C%8D%E5%8F%8A%E9%81%8B%E5%8B%95%E7%9B%B8%E9%97%9C%E9%80%B1%E9%82%8A%E7%94%A2%E5%93%81%E6%A5%AD%E5%8B%99) The Group's business involves sourcing, retail, and marketing of footwear, printed apparel, sportswear, and other sports-related peripheral products in Hong Kong, with significant revenue growth from a new wholesale contract - The Group is engaged in the sourcing, retail, and marketing of footwear, printed apparel, sportswear, and other sports-related peripheral products in Hong Kong[56](index=56&type=chunk) - In the first half of 2025, the Group successfully signed a wholesale contract with an independent distributor, significantly boosting the Group's revenue[56](index=56&type=chunk) [Financial Review](index=21&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's revenue significantly increased by 166.7% during the reporting period, mainly due to wholesale business expansion, but loss for the period widened due to higher employee benefits, new store openings, and impairment of trade receivables [Revenue](index=21&type=section&id=%E6%94%B6%E7%9B%8A) Revenue for the period saw a substantial increase, primarily driven by the expansion of the wholesale business Revenue | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 14,400 | 5,400 | 166.7% | - The increase in revenue was primarily due to the expansion of the wholesale business[59](index=59&type=chunk) [Cost of Inventories Sold](index=21&type=section&id=%E5%B7%B2%E5%94%AE%E5%AD%98%E8%B2%A8%E6%88%90%E6%9C%AC) The cost of inventories sold increased significantly in line with the substantial growth in revenue Cost of Inventories Sold | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cost of inventories sold | 8,900 | 3,100 | 187.1% | [Employee Benefit Expenses](index=21&type=section&id=%E5%83%B1%E5%93%A1%E7%A6%8F%E5%88%A9%E9%96%8B%E6%94%AF) Employee benefit expenses increased due to the opening of more retail stores and the hiring of additional senior employees during the reporting period Employee Benefit Expenses | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Employee benefit expenses | 3,300 | 2,500 | 32.0% | - The increase in employee benefit expenses was due to the opening of more retail stores and the hiring of more senior employees during the reporting period[61](index=61&type=chunk) [Other Operating Expenses](index=21&type=section&id=%E5%85%B6%E4%BB%96%E7%B6%93%E7%87%9F%E9%96%8B%E6%94%AF) Other operating expenses increased, primarily attributable to the opening of two additional stores during the reporting period Other Operating Expenses | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other operating expenses | 3,900 | 3,000 | 30.0% | - The increase in other operating expenses was due to the opening of two additional stores during the reporting period[62](index=62&type=chunk) [Finance Costs](index=22&type=section&id=%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) Finance costs decreased, mainly because no additional loan interest was incurred for the six months ended June 30, 2025 Finance Costs | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Finance costs | 98 | 182 | -46.2% | - The decrease in finance costs was mainly due to no further loan interest being incurred for the six months ended June 30, 2025[63](index=63&type=chunk) [Loss for the Period](index=22&type=section&id=%E6%9C%9F%E5%85%A7%E虧%E6%90%8D) The loss for the period increased due to higher employee benefits from wholesale expansion, increased operating expenses from new stores, and an impairment loss of approximately HKD 2,200 thousand on trade receivables Loss for the Period | Indicator | June 30, 2025 (HKD thousand) | June 30, 2024 (HKD thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Loss for the period | (3,900) | (3,400) | 14.7% | - The increase in loss was mainly due to increased employee benefit expenses from wholesale business expansion, increased other operating expenses from new store openings, and an impairment loss on trade receivables of approximately **HKD 2,200 thousand** recognized under the expected credit loss model[64](index=64&type=chunk) [Liquidity, Financial and Capital Structure](index=23&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) As of June 30, 2025, the Group's total borrowings were approximately HKD 1,700 thousand, with a gearing ratio of 8.3%, net current assets of HKD 10,100 thousand, and a current ratio of approximately 2.3 times, maintaining a prudent financial policy Liquidity, Financial and Capital Structure | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total borrowings | HKD 1,700 thousand | HKD 1,700 thousand | No change | | Gearing ratio | 8.3% | 7.1% | Increase of 1.2 percentage points | | Net current assets | HKD 10,100 thousand | HKD 14,400 thousand | Decrease of HKD 4,300 thousand | | Current ratio | 2.3 times | 3.0 times | Decrease of 0.7 times | - The Group's operations are primarily financed by revenue generated from its business operations, available bank balances and cash, and interest-bearing borrowings[66](index=66&type=chunk) [2024 Placing](index=24&type=section&id=2024%20Placing) The Company completed a placing of 43,338,240 new shares at HKD 0.25 per share on October 31, 2024, raising net proceeds of approximately HKD 10,200 thousand for loan repayment and business operations - The Company completed the placing of **43,338,240 new shares** at a placing price of **HKD 0.25 per share** on October 31, 2024[67](index=67&type=chunk) Use of Proceeds from 2024 Placing | Purpose | Net Proceeds (HKD thousand) | Utilized as of Dec 31, 2024 (HKD thousand) | Utilized as of June 30, 2025 (HKD thousand) | Unutilized as of June 30, 2025 (HKD thousand) | | :--- | :--- | :--- | :--- | :--- | | Repayment of loans | 2,700 | (2,700) | – | – | | Business operations | 7,500 | (3,346) | (4,154) | – | | **Total** | **10,200** | **(6,046)** | **(4,154)** | **–** | [2024 Subscription](index=24&type=section&id=2024%20Subscription) The Company's 2024 subscription agreement with China Mining United Holdings Group Limited was terminated on May 30, 2025, after multiple extensions, due to the subscriber needing more time to meet compliance requirements - The Company's 2024 subscription agreement with China Mining United Holdings Group Limited was terminated on **May 30, 2025**, after multiple extensions[69](index=69&type=chunk)[70](index=70&type=chunk) - The termination was due to the subscriber requiring more time to satisfy applicable compliance requirements[70](index=70&type=chunk) [Pledge of Assets](index=25&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group had not pledged any assets to secure other borrowings - As of June 30, 2025, the Group had not pledged any assets to secure other borrowings of the Group[72](index=72&type=chunk) [Exchange Rate Risk](index=25&type=section&id=%E5%8C%AF%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group's revenue, costs, and expenses are denominated in HKD and CAD, and management believes there is no significant foreign exchange risk, with no financial instruments used for hedging - The Group's revenue, costs, and expenses are denominated in **HKD** and **CAD**, and management believes there is no significant foreign exchange risk[73](index=73&type=chunk) - As of June 30, 2025, the Group did not use any financial instruments to hedge foreign exchange risk[73](index=73&type=chunk) [Future Plans for Material Investments and Capital Assets](index=26&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E4%B9%8B%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) As of the six months ended June 30, 2025, the Group currently has no other material investment plans - As of the six months ended June 30, 2025, the Group currently has no other material investment plans[74](index=74&type=chunk) [Contingent Liabilities](index=26&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2025, the Group had no material contingent liabilities - As of June 30, 2025, the Group had no material contingent liabilities[75](index=75&type=chunk) [Capital Commitments](index=26&type=section&id=%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94) As of June 30, 2025, the Group had no material capital commitments - As of June 30, 2025, the Group had no material capital commitments[76](index=76&type=chunk) [Employees and Remuneration Policy](index=26&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%87%91%E6%94%BF%E7%AD%96) As of June 30, 2025, the total number of employees decreased to 22; the Group offers competitive remuneration, including internal promotion, share options, and performance bonuses, to attract and retain talent Employee Headcount | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total number of employees | 22 | 24 | Decrease of 2 employees | - The Group provides competitive remuneration packages to its employees, including internal promotion opportunities, share options, and performance bonuses, to attract, develop, and retain highly capable employees[77](index=77&type=chunk) [Material Investments Held](index=26&type=section&id=%E6%89%80%E6%8C%81%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) For the six months ended June 30, 2025, the Group held no material investments - For the six months ended June 30, 2025, the Group held no material investments[78](index=78&type=chunk) [Material Acquisitions or Disposals](index=26&type=section&id=%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E6%88%96%E5%87%BA%E5%94%AE) For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries and associated companies - For the six months ended June 30, 2025, the Group had no material acquisitions or disposals of subsidiaries and associated companies[79](index=79&type=chunk) [Compliance with Corporate Governance Code](index=26&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The Company complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the GEM Listing Rules, except for the vacant Chairman position; Mr. Zhou Yifeng was appointed CEO - The Company has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the GEM Listing Rules, except for the position of Chairman which has remained vacant[80](index=80&type=chunk)[81](index=81&type=chunk) - Mr. Zhou Yifeng was appointed as the Chief Executive Officer of the Company with effect from November 12, 2024[81](index=81&type=chunk) [Code of Conduct for Directors' Securities Transactions](index=27&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9B%B8%E9%97%9C%E4%B9%8B%E6%93%8D%E5%AE%88%E5%AE%88%E5%89%87) The Group adopted the required dealing standards from the GEM Listing Rules as its code of conduct for directors' securities transactions, with all directors confirming compliance during the review period - The Group has adopted the required dealing standards set out in Rules 5.48 to 5.67 of the GEM Listing Rules as its code of conduct for directors' securities transactions in the Company's shares[83](index=83&type=chunk) - Following specific enquiry with all Directors, all Directors have confirmed that they have complied with the required dealing standards and the code of conduct for directors' securities transactions during the review period[83](index=83&type=chunk) [Interests in Competing Business](index=27&type=section&id=%E6%96%BC%E7%AB%B6%E7%88%AD%E6%A5%AD%E5%8B%99%E4%B9%8B%E6%AC%8A%E7%9B%8A) For the six months ended June 30, 2025, no Directors or their close associates engaged in any business that competed or might compete with the Group's business - For the six months ended June 30, 2025, none of the Directors or any of their respective close associates were engaged in any business that directly or indirectly competed or might compete with the business of the Group[84](index=84&type=chunk) [Share Option Scheme](index=27&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The Company's share option scheme, effective May 30, 2016, for ten years, had total shares issuable under options and awards representing approximately 0.53% of the weighted average issued shares as of June 30, 2025 - The Share Option Scheme became effective on **May 30, 2016**, for a period of **ten years**[86](index=86&type=chunk) Share Option Scheme Summary | Item | January 1, 2025 | June 30, 2025 | | :--- | :--- | :--- | | Total number of share options authorized for grant under the scheme (shares) | 1,592,114 | 1,592,114 | | Total number of shares issuable under options and awards as of period-end (shares) | 807,886 | 807,886 | | Percentage of weighted average issued shares | - | Approximately **0.53%** | [Use of Proceeds from Placing of New Shares under General Mandate in 2024](index=29&type=section&id=%E4%BA%8C%E9%9B%B6%E4%BA%8C%E5%9B%9B%E5%B9%B4%E6%A0%B9%E6%93%9A%E7%89%B9%E5%88%A5%E6%8E%88%E6%AC%8A%E9%85%8D%E5%94%AE%E6%96%B0%E8%82%A1%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The net proceeds of approximately HKD 10,200 thousand from the 2024 placing were fully utilized for loan repayment (HKD 2,700 thousand) and business operations (HKD 7,500 thousand) - The net proceeds of approximately **HKD 10,200,000** from the 2024 placing were fully utilized for loan repayment and business operations[88](index=88&type=chunk)[90](index=90&type=chunk) Use of Proceeds from 2024 Placing | Purpose | Net Proceeds (HKD thousand) | Utilized as of Dec 31, 2024 (HKD thousand) | Utilized as of June 30, 2025 (HKD thousand) | Unutilized as of June 30, 2025 (HKD thousand) | | :--- | :--- | :--- | :--- | :--- | | Repayment of loans | 2,700 | (2,700) | – | – | | Business operations | 7,500 | (3,346) | (4,154) | – | | **Total** | **10,200** | **(6,046)** | **(4,154)** | **–** | [Directors' and Chief Executive's Interests and/or Short Positions in the Shares, Underlying Shares and Debentures of the Company](index=30&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%9A%84%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E6%AC%8A%E8%AD%89%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E2%95%B1%E6%88%96%E6%B7%A1%E5%80%89) As of June 30, 2025, Non-executive Director Mr. Cen Ziyang beneficially owned 6,750 ordinary shares, representing approximately 0.00% of the share capital, with no other directors or chief executives holding disclosable interests or short positions Directors' and Chief Executive's Interests | Director Name | Capacity | Number of Shares Held (Ordinary Shares) | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Mr. Cen Ziyang | Beneficial owner | 6,750 | 0.00% | [Substantial Shareholders' and Other Persons' Interests and/or Short Positions in the Shares and Underlying Shares of the Company](index=31&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E4%BB%BD%E5%8F%8A%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E2%95%B1%E6%88%96%E6%B7%A1%E5%80%89) As of June 30, 2025, Qunying International Limited was a substantial shareholder, beneficially owning 26,464,939 Company shares, representing 17.45% of the issued share capital Substantial Shareholders' Interests | Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Qunying International Limited | Beneficial owner | 26,464,939 | 17.45% | [Purchase, Sale or Redemption of the Company's Listed Securities or Sale of Treasury Shares](index=31&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8%E6%88%96%E5%87%BA%E5%94%AE%E5%BA%AB%E5%AD%98%E8%82%A1%E4%BB%BD) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and the Company held no treasury shares - For the six months ended June 30, 2025, the Company did not redeem any of its own listed securities, nor did the Company or any of its subsidiaries purchase or sell any of the Company's listed securities[93](index=93&type=chunk) - As of June 30, 2025, the Company held no treasury shares[94](index=94&type=chunk) Other Information [Disclosure of Changes in Directors' Information](index=32&type=section&id=%E6%8A%AB%E9%9C%B2%E8%91%A3%E4%BA%8B%E8%B3%87%E6%96%99%E8%AE%8A%E5%8B%95) Changes in directors' information occurred from December 31, 2024, to the report date, as required by GEM Listing Rule 17.50A(1) - In accordance with Rule 17.50A(1) of the GEM Listing Rules, changes in directors' information from December 31, 2024, to the date of this report are set out below[95](index=95&type=chunk) [Audit Committee](index=32&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee, comprising three independent non-executive directors, reviewed the Group's interim results for the six months ended June 30, 2025, confirming financial statements were prepared according to applicable accounting standards - The Audit Committee currently comprises three members (namely Mr. Choi Ho Yan (Chairman), Mr. Kung Wai Sze, and Mr. Yiu Yu Hong), all of whom are independent non-executive directors[95](index=95&type=chunk) - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2025, and is of the opinion that the unaudited condensed consolidated financial statements have been prepared in accordance with applicable accounting standards, the requirements under the GEM Listing Rules, and other applicable legal requirements[95](index=95&type=chunk) [Events After Reporting Period](index=32&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) Subsequent to the reporting period, Mr. Chan Ting Leut was appointed as a director of the Company's wholly-owned subsidiaries on January 17, 2025, and June 30, 2025 - On January 17, 2025, Mr. Chan Ting Leut was appointed as a director of Worldwide Allies Group Limited, Art Kingdom Limited, and Wealthy Creation Limited, all of which are wholly-owned subsidiaries of the Company[98](index=98&type=chunk) - On June 30, 2025, Mr. Chan Ting Leut was appointed as a director of Allied Bless Limited, a wholly-owned subsidiary of the Company[98](index=98&type=chunk) [Publication of Interim Results and Interim Report on the Stock Exchange and Company Website](index=33&type=section&id=%E6%96%BC%E8%81%AF%E4%BA%A4%E6%89%80%E5%8F%8A%E6%9C%AC%E5%85%AC%E5%8F%B8%E7%B6%B2%E7%AB%99%E5%88%8A%E7%99%BC%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) The Company's unaudited interim results announcement for the six months ended June 30, 2025, has been published on the Stock Exchange and Company websites, with the interim report to be dispatched and published in due course - The Company's unaudited interim results announcement for the six months ended June 30, 2025, has been published on the Stock Exchange website www.hkexnews.hk and the Company's website www.jimugrouphk.com[99](index=99&type=chunk)

[Announcement Background and Purpose](index=1&type=section&id=%E5%85%AC%E5%91%8A%E8%83%8C%E6%99%AF%E4%B8%8E%E7%9B%AE%E7%9A%84) This announcement provides supplementary information to the 2024 annual report, detailing risk management, internal control, and prior year adjustments [Further Supplementary Announcement Explanation](index=1&type=section&id=%E8%BF%9B%E4%B8%80%E6%AD%A5%E8%A1%A5%E5%85%85%E5%85%AC%E5%91%8A%E8%AF%B4%E6%98%8E) This announcement supplements the 2024 annual report, focusing on risk management, internal control, and prior year adjustments in financial statements - This announcement supplements the 2024 annual report, focusing on risk management and internal control in the corporate governance report, and prior year adjustments in the notes to the consolidated financial statements[2](index=2&type=chunk) [Identification of Internal Control System Deficiencies](index=1&type=section&id=%E5%86%85%E9%83%A8%E6%8E%A7%E5%88%B6%E7%B3%BB%E7%BB%9F%E4%B8%8D%E8%B6%B3%E7%9A%84%E8%AF%86%E5%88%AB) Internal control deficiencies in financial statement review were identified, stemming from a lack of qualified personnel and leading to specific accounting errors [Nature and Causes of Deficiencies](index=1&type=section&id=%E4%B8%8D%E8%B6%B3%E4%B9%8B%E5%A4%84%E7%9A%84%E6%80%A7%E8%B4%A8%E4%B8%8E%E5%8E%9F%E5%9B%A0) Deficiencies in reviewing draft financial statements stemmed from the inability to recruit a qualified financial controller after the previous one's departure - The company's internal control system had deficiencies in reviewing draft financial statements[3](index=3&type=chunk) - The primary reason for the deficiencies was the company's failure to timely recruit a suitable dedicated financial controller after the former financial controller's departure in early 2024, leading to a lack of professionals to review technical accounting items[3](index=3&type=chunk) [Specific Errors and Impact Assessment](index=2&type=section&id=%E5%85%B7%E4%BD%93%E9%94%99%E8%AF%AF%E4%B8%8E%E5%BD%B1%E5%93%8D%E8%AF%84%E4%BC%B0) Technical accounting errors in non-controlling interests and promissory note amortization led to 2023 prior year adjustments, deemed non-material to financial performance - Specific errors included: (a) currency translation calculation and allocation of non-controlling interests; (b) amortization of certain promissory notes[4](index=4&type=chunk) - These errors necessitated prior year adjustments to the 2023 consolidated financial statements[4](index=4&type=chunk) - The company believes these errors are purely accounting in nature and have no impact on the group's operating results, profitability, or financial position[4](index=4&type=chunk) - Engaged internal control experts found no other deficiencies[4](index=4&type=chunk) [Remedial Actions](index=2&type=section&id=%E8%A1%A5%E6%95%91%E8%A1%8C%E5%8A%A8) Remedial actions include hiring a new dedicated financial controller to oversee financial functions and prevent future internal control deficiencies [Measures Taken](index=2&type=section&id=%E5%B7%B2%E9%87%87%E5%8F%96%E7%9A%84%E6%8E%AA%E6%96%BD) A new dedicated financial controller was hired in July 2025 to oversee accounting and financial functions and review financial statements - The company hired a new dedicated financial controller in **July 2025**[5](index=5&type=chunk) - The new financial controller will be responsible for overseeing the company's accounting and financial functions and reviewing the group's financial statements[5](index=5&type=chunk) [Expected Outcome](index=2&type=section&id=%E9%A2%84%E6%9C%9F%E6%95%88%E6%9E%9C) The company anticipates that the new financial controller will prevent the recurrence of internal control system deficiencies - The company expects that internal control system deficiencies will not recur in the future[6](index=6&type=chunk) [Board Statement](index=2&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E5%A3%B0%E6%98%8E) The Board statement confirms the announcement's signing date and lists the current executive and independent non-executive directors [Announcement Signing and Board Members](index=2&type=section&id=%E5%85%AC%E5%91%8A%E7%AD%BE%E7%BD%B2%E4%B8%8E%E8%91%A3%E4%BA%8B%E4%BC%9A%E6%88%90%E5%91%98) The announcement was signed by Chairman Zhu Min on August 21, 2025, listing current executive and independent non-executive board members - The announcement was signed by Mr. Zhu Min, Chairman of the Board, on **August 21, 2025**[7](index=7&type=chunk)[8](index=8&type=chunk) - Board members include: Executive Directors Mr. Zhu Min, Ms. Ye Xinyu; Independent Non-executive Directors Mr. Li Yisheng, Mr. Cao Ke, Mr. Li Jinrong[8](index=8&type=chunk)

[Business Overview](index=1&type=section&id=Business%20Overview) The company achieved significant revenue growth, stable core product performance, and expanded its business scope with new commercialized products and clinical trial advancements [Business Highlights During the Reporting Period](index=1&type=section&id=Business%20Highlights%20During%20the%20Reporting%20Period) The company achieved significant revenue growth, stable core product performance, and expanded its business scope with new commercialized products and clinical trial advancements - The company's operating revenue reached **RMB 294.0 million**, a **75.4% year-on-year increase**, primarily driven by stable growth of core products and incremental contributions from Alcon-introduced products[4](index=4&type=chunk) - Zerviate® (0.24% Cetirizine Ophthalmic Solution) received NMPA approval for commercialization, currently the only FDA-approved anti-allergic ophthalmic drug for patients aged two years and above[4](index=4&type=chunk) - OT-703 (ILUVIEN®, Fluocinolone Acetonide Intravitreal Implant) was approved by CDE for inclusion in the Hainan Boao Lecheng International Medical Tourism Pilot Zone for real-world study, with patient enrollment initiated[4](index=4&type=chunk) - The Phase III clinical trial application for self-developed product OT-802 (Pilocarpine Hydrochloride) for presbyopia indication was approved by CDE, potentially filling a market gap for commercialized innovative drugs in China's presbyopia field[5](index=5&type=chunk) - During the reporting period, six of the company's products received production approval, and the local production of YUTIQ® entered the review and public announcement phase[5](index=5&type=chunk) [Financial Summary](index=2&type=section&id=Financial%20Summary) The Group's revenue significantly increased, but adjusted net loss slightly widened due to rising cost of sales, while bank balances and other financial assets remained high Key Financial Indicators Comparison (For the six months ended June 30) | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Revenue | 294.0 | 167.6 | 75.4% increase | Significant growth in ophthalmic product sales and CDMO services, partially offset by reduced pharmaceutical product promotion service revenue | | Adjusted Net Loss | 108.0 | 100.8 | 7.2 increase | Cost of sales (including intangible asset amortization) increased slightly more than revenue growth | | Bank Balances and Other Financial Assets | 578.2 | N/A | N/A | As of June 30, 2025 | [Company Overview](index=3&type=section&id=Company%20Overview) Ocumension Therapeutics is a China-focused ophthalmic pharmaceutical platform dedicated to developing and commercializing first-in-class or best-in-class therapies [Company Positioning and Product Pipeline](index=3&type=section&id=Company%20Positioning%20and%20Product%20Pipeline) Ocumension Therapeutics is a China-focused ophthalmic pharmaceutical platform with a comprehensive ophthalmic drug pipeline covering anterior and posterior segment diseases - The company is positioned as a China ophthalmic pharmaceutical platform company, with a vision to provide world-class holistic drug solutions to meet China's ophthalmic medical needs[8](index=8&type=chunk) - A comprehensive ophthalmic drug pipeline has been established, with **34 drug assets**, including **21 products in commercialization**, **3 products in Phase III clinical trials**, and **2 products entering commercial registration**[8](index=8&type=chunk) - Core product YUTIQ® (0.18mg Fluocinolone Acetonide Intravitreal Implant) has been approved for commercialization in mainland China and included in the National Medical Insurance Catalog, while the innovative anti-allergic drug Zerviate® has also been approved for commercialization[8](index=8&type=chunk) Overview of Selected Ophthalmic Drug Pipeline | Pipeline Category | Product Name | Mechanism of Action | Indication | Clinical/Market Status | | :--- | :--- | :--- | :--- | :--- | | Uveitis, Retinal Diseases | OT-401 YUTIQ® | Fluocinolone Acetonide Intravitreal Implant | Chronic non-infectious uveitis affecting the posterior segment of the eye | Marketed | | Uveitis, Retinal Diseases | OT-702 Boyoujing® | Aflibercept Ophthalmic Solution | Wet age-related macular degeneration, diabetic macular edema | Marketed | | Refractive Correction | OT-802 | Pilocarpine Hydrochloride Ophthalmic Solution | Presbyopia | Phase III/RWE | | Keratoconjunctivitis | OT-1001 Zerviate® | Cetirizine Hydrochloride Ophthalmic Solution | Allergic conjunctivitis | Marketed | | Ophthalmic Surgery and Post-operative Inflammation | OT-502 Dexycu® | Dexamethasone Intracameral Suspension | Post-operative inflammation | Commercialization application submitted | [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) The company achieved significant revenue growth, optimized R&D investment, and expanded market coverage and brand influence during the reporting period [Business Review](index=4&type=section&id=Business%20Review) The company achieved significant revenue growth, optimized R&D investment, and expanded market coverage and brand influence during the reporting period - Operating revenue reached **RMB 294.0 million**, a **75.4% year-on-year increase**, enhancing product line depth and opening up market space[12](index=12&type=chunk) - R&D expenses amounted to **RMB 39.0 million**, a **33.6% year-on-year decrease**, with steady progress in the R&D pipeline[12](index=12&type=chunk) [R&D Performance](index=4&type=section&id=R%26D%20Performance) The company achieved significant clinical R&D progress with Zerviate® approval, OT-703 real-world study, and OT-802 entering Phase III, solidifying its leading position in innovative ophthalmic drugs - Zerviate® received NMPA approval for commercialization, currently the only FDA-approved anti-allergic ophthalmic drug for patients aged two years and above[13](index=13&type=chunk) - OT-703 was approved by CDE for inclusion in the Hainan Boao Lecheng International Medical Tourism Pilot Zone for real-world data application, with patient enrollment initiated[13](index=13&type=chunk) - The Phase III clinical trial application for self-developed product OT-802 (for presbyopia indication) was approved by CDE[13](index=13&type=chunk) - The company currently has **three products in Phase III clinical trials** and **two products in commercial registration**, ranking among the top innovative pharmaceutical companies in China for ophthalmic drugs in Phase III clinical and registration stages[13](index=13&type=chunk) [Progress of Key Candidate Drugs](index=5&type=section&id=Progress%20of%20Key%20Candidate%20Drugs) OT-703's real-world study has been approved and initiated patient enrollment, while OT-802's Phase III clinical trial application was approved, expected to start in early 2026, demonstrating the company's strategic focus in DME and presbyopia - The real-world study application for OT-703 (Fluocinolone Acetonide Intravitreal Implant) was approved by CDE in May 2025, with patient enrollment initiated in the Hainan Boao Lecheng International Medical Tourism Pilot Zone, and further patient enrollment expected in H2 2025[14](index=14&type=chunk)[15](index=15&type=chunk) - The Phase III clinical trial application for OT-802 (Pilocarpine Hydrochloride Ophthalmic Solution) was approved by CDE in June 2025, with Phase III clinical trials expected to commence in early 2026[15](index=15&type=chunk)[16](index=16&type=chunk) [Commercialization Performance](index=5&type=section&id=Commercialization%20Performance) The company successfully integrated Alcon-introduced products, actively expanded hospital coverage and market promotion, achieving rapid sales growth and establishing a nationwide commercial network - The acquired and licensed Alcon product portfolio has been integrated into the company's commercialization landscape, accelerating hospital coverage expansion and promoting market access for new products like Zerviate®[17](index=17&type=chunk) - Total revenue reached **RMB 294.0 million**, a **75.4% year-on-year increase**, primarily from commercialized products[17](index=17&type=chunk) - The company has achieved coverage of **21,535 hospitals nationwide**, including **2,799 tertiary hospitals**, with a commercial team of over **290 people**, completing nationwide commercial network coverage[17](index=17&type=chunk) [Production Performance](index=5&type=section&id=Production%20Performance) Six products received production approval, commercial batch production is proceeding orderly, and YUTIQ®'s local production entered the review and public announcement phase, demonstrating commitment to providing quality ophthalmic drugs - Six products have received production approval, with commercial batch production proceeding as planned[18](index=18&type=chunk) - The local production of YUTIQ® has entered the review and public announcement phase[18](index=18&type=chunk) [Future Development and Outlook](index=6&type=section&id=Future%20Development%20and%20Outlook) The company aims to accelerate new product R&D and commercialization, optimize production, promote core products, and expand international and online channels to achieve its vision as a leader in ophthalmology [Development Goals for H2 2025](index=6&type=section&id=Development%20Goals%20for%20H2%202025) The company aims to accelerate new product R&D and commercialization, optimize production, promote core products, and expand international and online channels to achieve its vision as a leader in ophthalmology - Accelerate new product R&D and commercialization: Increase investment to ensure at least one NDA approval and maintain a continuous rhythm of new product launches[19](index=19&type=chunk) - Optimize production and supply chain management: Focus on commercial batch production at the Suzhou factory, ensuring stable supply and product quality, and improving production efficiency and cost reduction[19](index=19&type=chunk) - Promote core product YUTIQ®: Intensify promotion efforts, expand coverage, and increase market penetration[19](index=19&type=chunk) - Strengthen marketing and promotion for other drugs: Increase marketing and promotion for Xelpros®, Xelpros Plus®, Betimol®, Emadine®, and AzaSite®, consolidating leadership in niche markets[19](index=19&type=chunk) - Expand international vision: Actively explore international markets, seek cooperation opportunities with overseas partners, and expand international business through out-licensing innovative products[20](index=20&type=chunk) - Continuous innovation and technological leadership: Continuously invest in R&D, exploring new therapeutic areas and methods[20](index=20&type=chunk) - Expand online OTC channels: Improve online OTC channels to provide end-users with a more convenient and efficient purchasing experience[21](index=21&type=chunk) [Management Discussion and Analysis - Financial Performance](index=8&type=section&id=Management%20Discussion%20and%20Analysis%20-%20Financial%20Performance) The company's revenue significantly increased, but adjusted net loss slightly widened due to rising cost of sales, while bank balances and other financial assets remained high [Revenue](index=8&type=section&id=Revenue) The Group's revenue significantly increased, driven by strong ophthalmic product sales and CDMO services, partially offset by a change in promotion service revenue Revenue Components (For the six months ended June 30) | Revenue Source | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Sales of ophthalmic products | 284,680 | 150,013 | 89.8% increase | | Pharmaceutical product promotion services | 568 | 11,859 | 95.2% decrease | | Sales-based royalty income | 2,108 | 2,291 | 8.0% decrease | | CDMO services | 6,677 | 3,460 | 93.0% increase | | **Total Revenue** | **294,033** | **167,623** | **75.4% increase** | - Revenue growth was primarily due to a significant increase in sales of ophthalmic products (including Xelpros®, AzaSite®, and products under the Alcon transaction) and CDMO services[22](index=22&type=chunk) - The decrease in pharmaceutical product promotion service revenue was due to a change in revenue recognition resulting from a business model shift for Xelpros® and Xelpros Plus®[22](index=22&type=chunk) [Cost of Sales](index=8&type=section&id=Cost%20of%20Sales) Cost of sales significantly increased, primarily due to higher ophthalmic product sales, Alcon transaction-related license amortization costs, and a business model shift - Cost of sales increased from **RMB 68.4 million** in the same period of 2024 to **RMB 188.4 million** in 2025[24](index=24&type=chunk) - The increase was due to higher costs of sales of ophthalmic products, increased amortization costs for licenses related to the Alcon transaction, and a business model shift for Xelpros® and Xelpros Plus® from promotion services to direct sales[24](index=24&type=chunk) [Gross Profit](index=9&type=section&id=Gross%20Profit) Despite the increase in cost of sales, gross profit still achieved a slight increase, consistent with overall revenue growth - Gross profit increased by **6.5%** from **RMB 99.2 million** in the same period of 2024 to **RMB 105.6 million** in 2025[25](index=25&type=chunk) [Other Income](index=9&type=section&id=Other%20Income) Other income primarily consists of bank interest and government grants, which significantly decreased this period due to reduced bank deposits and lower interest rates - Other income decreased by approximately **RMB 10.3 million** from **RMB 15.4 million** in the same period of 2024 to **RMB 5.1 million** in 2025[26](index=26&type=chunk) - This was primarily due to reduced bank deposits and lower deposit interest rates[26](index=26&type=chunk) [Other Losses](index=9&type=section&id=Other%20Losses) Other losses slightly increased, mainly due to higher net foreign exchange losses resulting from currency fluctuations - Other losses increased from **RMB 0.3 million** in the same period of 2024 to **RMB 0.7 million** in 2025[27](index=27&type=chunk) - This was primarily due to increased net foreign exchange losses from currency fluctuations, partially offset by an increase in the fair value of other financial assets[27](index=27&type=chunk) [Selling and Marketing Expenses](index=9&type=section&id=Selling%20and%20Marketing%20Expenses) Selling and marketing expenses slightly increased, primarily reflected in the growth of salaries and benefits, and marketing and promotion fees Selling and Marketing Expenses Components (For the six months ended June 30) | Component | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Salaries and benefits | 64,440 | 52,360 | 23.1% increase | | Share-based payments | 8,159 | 18,347 | 55.6% decrease | | Marketing and promotion | 31,945 | 22,528 | 41.8% increase | | Others | 12,460 | 16,678 | 25.3% decrease | | **Total Selling and Marketing Expenses** | **117,004** | **109,913** | **6.4% increase** | - Total selling and marketing expenses slightly increased from **RMB 109.9 million** in the same period of 2024 to **RMB 117.0 million** in 2025[28](index=28&type=chunk) [Research and Development Expenses](index=10&type=section&id=Research%20and%20Development%20Expenses) R&D expenses significantly decreased, primarily due to lower share-based payments and third-party contractor costs R&D Expenses Components (For the six months ended June 30) | Component | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Third-party contractor costs | 11,875 | 19,656 | 39.6% decrease | | Staff costs | 19,188 | 27,709 | 30.7% decrease | | Depreciation and amortization | 4,949 | 5,423 | 8.7% decrease | | Others | 2,974 | 5,917 | 49.7% decrease | | **Total R&D Expenses** | **38,986** | **58,705** | **33.6% decrease** | - R&D expenses decreased by **33.6%** from **RMB 58.7 million** in the same period of 2024 to **RMB 39.0 million** in 2025[30](index=30&type=chunk) - The decrease was primarily due to a **RMB 8.5 million** reduction in share-based payments to R&D personnel and a **RMB 7.8 million** reduction in third-party contractor costs[30](index=30&type=chunk) [Administrative Expenses](index=10&type=section&id=Administrative%20Expenses) Administrative expenses decreased, primarily due to a reduction in share-based payments for administrative personnel - Administrative expenses decreased by **RMB 6.5 million** from **RMB 91.1 million** in the same period of 2024 to **RMB 84.6 million** in 2025[32](index=32&type=chunk) - This was primarily due to a reduction in share-based payments to administrative personnel[32](index=32&type=chunk) [Income Tax Expense](index=10&type=section&id=Income%20Tax%20Expense) Income tax expense remained relatively stable during the reporting period - Income tax expense remained relatively stable at **RMB 0.3 million** in both 2025 and the same period of 2024[33](index=33&type=chunk) [Loss for the Period](index=10&type=section&id=Loss%20for%20the%20Period) Loss for the period decreased year-on-year, driven by increased gross profit and reduced R&D and administrative expenses, partially offset by higher selling and marketing expenses - Loss for the period decreased by **RMB 19.0 million** from **RMB 151.3 million** in the same period of 2024 to **RMB 132.3 million** in 2025[34](index=34&type=chunk) - The decrease in loss was primarily due to a **RMB 6.4 million** increase in gross profit, a **RMB 19.7 million** decrease in R&D expenses, and a **RMB 6.5 million** decrease in administrative expenses[34](index=34&type=chunk) - This was partially offset by a **RMB 7.1 million** increase in selling and marketing expenses compared to the same period of 2024[34](index=34&type=chunk) [Non-IFRS Measures](index=11&type=section&id=Non-IFRS%20Measures) The company uses non-IFRS adjusted net loss to exclude non-cash items, providing a clearer operational assessment for investors, with adjusted net loss slightly widening this period Non-IFRS Adjusted Net Loss (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the period | (132,320) | (151,341) | | Add: Share-based payments | 24,320 | 50,572 | | **Non-IFRS Adjusted Net Loss for the Period** | **(108,000)** | **(100,769)** | Condensed Consolidated Statement of Financial Position Data (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total current assets | 817,686 | 978,795 | | Total non-current assets | 3,079,244 | 2,995,009 | | Total assets | 3,896,930 | 3,973,804 | | Total current liabilities | 154,667 | 155,001 | | Total non-current liabilities | 89,156 | 45,186 | | Total liabilities | 243,823 | 200,187 | | Net assets | 3,653,107 | 3,773,617 | [Financial Position and Liquidity](index=12&type=section&id=Financial%20Position%20and%20Liquidity) The company maintains a healthy financial position, primarily funded by equity and product sales, with sufficient cash to support operations and R&D [Trade Receivables](index=12&type=section&id=Trade%20Receivables) The increase in trade receivables is largely consistent with revenue growth, with most balances less than one year old - The company provides an average credit period of **30 to 90 days** to its trade customers[36](index=36&type=chunk) - As of June 30, 2025, the increase in trade receivables was largely consistent with revenue growth[38](index=38&type=chunk) [Trade Payables](index=12&type=section&id=Trade%20Payables) Most trade payables have an aging period of less than one year - Most trade payables have an aging period of less than one year[39](index=39&type=chunk) [Working Capital and Funding Sources](index=12&type=section&id=Working%20Capital%20and%20Funding%20Sources) The company primarily obtains working capital from equity financing and product sales, maintaining adequate cash for operations and R&D activities - Cash is primarily used for daily operations, selling and marketing, drug clinical trial R&D, and maintenance and upgrades of production equipment at the Suzhou factory[40](index=40&type=chunk) - Cash is primarily obtained through equity financing, sales of ophthalmic products, pharmaceutical product promotion services, royalty income, and CDMO services[40](index=40&type=chunk) - As of June 30, 2025, cash and cash equivalents amounted to **RMB 458.1 million** (December 31, 2024: RMB 769.2 million)[40](index=40&type=chunk) [Borrowings](index=12&type=section&id=Borrowings) Borrowings increased, with new loan agreements entered into with banks at interest rates ranging from 0.35% to 0.76% below the one-year loan prime rate - As of June 30, 2025, loans recorded amounted to **RMB 49.0 million** (December 31, 2024: RMB 16.5 million)[41](index=41&type=chunk) - During the reporting period, new loan agreements were entered into with banks, with interest rates ranging from **0.35% to 0.76% below the one-year loan prime rate**[41](index=41&type=chunk) [Capital Commitments](index=12&type=section&id=Capital%20Commitments) The company's capital commitments for property, plant, and equipment decreased - As of June 30, 2025, contractual capital commitments for the acquisition of property, plant, and equipment amounted to **RMB 4.2 million** (December 31, 2024: RMB 5.0 million)[42](index=42&type=chunk) [Contingent Liabilities](index=12&type=section&id=Contingent%20Liabilities) As of the end of the reporting period, the company had no significant contingent liabilities - As of June 30, 2025, the company had no significant contingent liabilities, guarantees, or litigation[43](index=43&type=chunk) [Pledge of Assets](index=13&type=section&id=Pledge%20of%20Assets) As of the end of the reporting period, the company had no pledge of assets - As of June 30, 2025, the company had no pledge of assets[44](index=44&type=chunk) [Gearing Ratio](index=13&type=section&id=Gearing%20Ratio) The company is in a net cash position, rendering the gearing ratio inapplicable - As of June 30, 2025, the company was in a net cash position, thus the gearing ratio is not applicable[45](index=45&type=chunk) [Material Investments, Acquisitions and Disposals](index=13&type=section&id=Material%20Investments,%20Acquisitions%20and%20Disposals) During the reporting period, the company had no other material investments, acquisitions, or disposals - The company had no other material investments, significant acquisitions or disposals of subsidiaries, associates, and joint ventures during the six months ended June 30, 2025[46](index=46&type=chunk) [Future Plans for Material Investments or Capital Assets](index=13&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) As of the announcement date, the company has no specific future plans for material capital expenditures, investments, or capital assets - As of the date of this announcement, the company has no specific future plans for material capital expenditures, investments, or capital assets[47](index=47&type=chunk) [Foreign Exchange](index=13&type=section&id=Foreign%20Exchange) The company faces foreign currency risk and has implemented foreign currency hedging measures under its treasury policy, continuously monitoring and managing foreign exchange risk - The company faces foreign currency risk as certain bank balances and cash, trade and other receivables, and trade and other payables are denominated in foreign currencies[48](index=48&type=chunk) - The Group currently implements foreign currency hedging measures under its funding and treasury policy and will closely monitor foreign exchange exposure, considering more detailed measures to hedge significant foreign currency exposure[48](index=48&type=chunk) [Employees and Remuneration](index=13&type=section&id=Employees%20and%20Remuneration) The company's employee count increased, total remuneration costs remained stable, with comprehensive training and performance-based compensation, including share incentive plans [Number of Employees and Remuneration Policy](index=13&type=section&id=Number%20of%20Employees%20and%20Remuneration%20Policy) The company's employee count increased, total remuneration costs remained stable, with comprehensive training and performance-based compensation, including share incentive plans - As of June 30, 2025, the company had **505 employees** (June 30, 2024: 477 employees)[49](index=49&type=chunk) - For the six months ended June 30, 2025, total remuneration costs (including share-based payments) amounted to **RMB 150.3 million** (June 30, 2024: RMB 149.9 million)[49](index=49&type=chunk) Employee Functional Distribution (As of June 30, 2025) | Function | Number of Employees | Percentage of Total | | :--- | :--- | :--- | | Commercial | 291 | 57.6% | | R&D | 55 | 10.9% | | Manufacturing | 126 | 25.0% | | Management and Administration | 33 | 6.5% | | **Total** | **505** | **100%** | - The company provides formal and comprehensive company-level and department-level training, and regularly reviews and determines employee remuneration and benefits based on employee performance, qualifications, responsibilities, and market salary levels of comparable companies[50](index=50&type=chunk) - The company has adopted ESOP, RSU plans, the 2021 Share Option Scheme, the 2021 Share Award Scheme, and the 2024 Share Award Scheme to provide incentives to employees[51](index=51&type=chunk) [Condensed Consolidated Financial Statements](index=15&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's revenue significantly increased, but cost of sales also rose, leading to a slight increase in gross profit. Reduced R&D and administrative expenses offset some selling and marketing expense growth, narrowing the loss for the period [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Revenue significantly increased, but higher cost of sales led to a modest gross profit rise. Reduced R&D and administrative expenses helped narrow the loss for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 294,033 | 167,623 | | Cost of sales | (188,386) | (68,421) | | Gross profit | 105,647 | 99,202 | | Other income | 5,116 | 15,443 | | Other gains and losses | (727) | (267) | | Selling and marketing expenses | (117,004) | (109,913) | | Research and development expenses | (38,986) | (58,705) | | Administrative expenses | (84,573) | (91,087) | | Finance costs | (824) | (1,827) | | Loss before tax | (132,028) | (151,076) | | Income tax expense | (292) | (265) | | **Loss for the period** | **(132,320)** | **(151,341)** | | Total comprehensive expense for the period | (131,152) | (199,662) | | Loss per share (RMB) | (0.17) | (0.23) | [Condensed Consolidated Statement of Financial Position](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets slightly decreased, with reduced current assets but increased non-current assets. Total liabilities rose, leading to a slight decrease in net assets Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, plant and equipment | 426,802 | 435,016 | | Right-of-use assets | 41,602 | 16,514 | | Intangible assets | 2,493,946 | 2,438,120 | | **Current Assets** | | | | Inventories | 66,415 | 45,518 | | Trade and other receivables | 173,000 | 164,072 | | Bank balances and cash | 458,062 | 769,205 | | **Current Liabilities** | | | | Trade and other payables | 129,084 | 141,334 | | Borrowings | 10,443 | 2,056 | | **Non-current Liabilities** | | | | Borrowings | 38,526 | 14,491 | | **Net Assets** | **3,653,107** | **3,773,617** | [Notes to the Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The condensed consolidated financial statements are prepared under IAS 34 and HKEX Listing Rules, applying consistent accounting policies, with no significant impact from new IFRS amendments [Basis of Preparation and Accounting Policies](index=17&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The condensed consolidated financial statements are prepared under IAS 34 and HKEX Listing Rules, applying consistent accounting policies, with no significant impact from new IFRS amendments - The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 and the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[54](index=54&type=chunk) - The accounting policies and methods of computation are consistent with those used in the annual consolidated financial statements for 2024, except for additional changes resulting from the application of amendments to IFRS accounting standards[55](index=55&type=chunk) - The application of amendments to IFRS accounting standards during this interim period has not had a significant impact on the Group's financial position and performance for the current and prior periods and/or the disclosures contained in these condensed consolidated financial statements[56](index=56&type=chunk) [Revenue and Segment Information](index=17&type=section&id=Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from ophthalmic product sales, promotion services, sales-based royalties, and CDMO services, with all external customer revenue originating from China Revenue Source Analysis (For the six months ended June 30) | Type of Goods or Services | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Sales of ophthalmic products | 284,680 | 150,013 | | Pharmaceutical product promotion services | 568 | 11,859 | | Sales-based royalty income | 2,108 | 2,291 | | Contract development and manufacturing (CDMO) services | 6,677 | 3,460 | | **Total** | **294,033** | **167,623** | - Revenue from sales of ophthalmic products is recognized when control of the goods is transferred, and revenue from pharmaceutical product promotion services is recognized when the obligation to arrange for the sale and/or delivery of pharmaceutical products under the service contract is fulfilled[59](index=59&type=chunk)[60](index=60&type=chunk) - Sales-based royalty income is recognized based on the gross margin of each sale when the customer completes the sale; CDMO service revenue is recognized when products are delivered to the customer[61](index=61&type=chunk)[62](index=62&type=chunk) - All external customer revenue of **RMB 292,771,000** (2024: RMB 165,456,000) originated from China, and all non-current assets are located in China[64](index=64&type=chunk) [Other Income and Other Gains and Losses](index=19&type=section&id=Other%20Income%20and%20Other%20Gains%20and%20Losses) Other income decreased due to lower bank interest and government grants, while other losses increased mainly from higher net foreign exchange losses Other Income and Other Gains and Losses (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | **Other Income** | | | | Bank interest income | 4,040 | 14,285 | | Government grants | 472 | 574 | | Others | 604 | 584 | | **Subtotal** | **5,116** | **15,443** | | **Other Gains and Losses** | | | | Net exchange (losses) gains | (1,967) | 725 | | Fair value changes of financial assets at fair value through profit or loss | 1,242 | (213) | | **Subtotal** | **(727)** | **(267)** | - Other income decreased primarily due to reduced bank deposits and lower deposit interest rates[26](index=26&type=chunk) - Increased net exchange losses led to an increase in other losses[27](index=27&type=chunk)[65](index=65&type=chunk) [Income Tax Expense](index=20&type=section&id=Income%20Tax%20Expense) Income tax expense remained stable, primarily involving Hong Kong and mainland China profits tax, with rates determined by local regulations Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current tax – Hong Kong | 104 | 108 | | Current tax – China | 249 | 245 | | Over-provision in prior years | (61) | (88) | | **Total** | **292** | **265** | - Hong Kong current tax is calculated under the two-tiered profits tax regime, and China subsidiaries are taxed at a rate of **25%**[67](index=67&type=chunk) [Trade Receivables](index=20&type=section&id=Trade%20Receivables) The aging analysis of trade receivables shows that most receivables are within 90 days, reflecting a healthy collection cycle Aging Analysis of Trade Receivables (As of June 30) | Aging | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 to 90 days | 150,029 | 125,470 | | 91 to 180 days | – | 218 | | Over 180 days | 1,111 | – | | **Total** | **151,140** | **125,688** | [Bank Balances and Cash](index=21&type=section&id=Bank%20Balances%20and%20Cash) Total bank balances and cash decreased, primarily due to a reduction in time deposits Bank Balances and Cash (As of June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash at bank | 380,110 | 255,118 | | Time deposits | 77,952 | 514,087 | | **Total** | **458,062** | **769,205** | [Trade Payables](index=21&type=section&id=Trade%20Payables) The aging analysis of trade payables shows that most payments are within 30 days, reflecting the company's relatively fast payment cycle Aging Analysis of Trade Payables (As of June 30) | Aging | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 to 30 days | 9,735 | 30,888 | | 31 to 60 days | 1,626 | 2,798 | | Over 60 days | 375 | 733 | | **Total** | **11,736** | **34,419** | - The Group's average credit period for purchases of goods/services is **60 days**[71](index=71&type=chunk) [Borrowings](index=22&type=section&id=Borrowings) Total borrowings increased, with most having repayment terms exceeding one year, indicating a change in the company's financing structure Borrowings Repayment Date Analysis (As of June 30) | Repayment Term | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Within one year | 10,443 | 2,056 | | Over one year but not exceeding two years | 17,541 | 4,112 | | Over two years | 20,985 | 10,379 | | **Total** | **48,969** | **16,547** | - Borrowings bear interest at rates ranging from **0.35% to 0.76% below the one-year loan prime rate** and are guaranteed by Group entities[73](index=73&type=chunk) [Dividends](index=22&type=section&id=Dividends) The Board decided not to declare any dividends for the six months ended June 30, 2025 - No dividends were paid, declared, or proposed for the six months ended June 30, 2025 and 2024[74](index=74&type=chunk) [Other Information](index=23&type=section&id=Other%20Information) This section covers post-reporting period events, dividend policy, corporate governance, securities trading compliance, and the utilization of proceeds from listings and placings [Events After the Reporting Period](index=23&type=section&id=Events%20After%20the%20Reporting%20Period) No significant events occurred after June 30, 2025, up to the announcement date, that would materially impact the Group - No events that would cause a material impact on the Group occurred after June 30, 2025, and immediately before the date of this announcement[75](index=75&type=chunk) [Interim Dividend](index=23&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[76](index=76&type=chunk) [Compliance with Corporate Governance Code](index=23&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Group is committed to maintaining high corporate governance standards and believes it has complied with all applicable code provisions of the Corporate Governance Code - The company has complied with all applicable code provisions of the Corporate Governance Code during the six months ended June 30, 2025[77](index=77&type=chunk) [Compliance with the Model Code for Securities Transactions](index=23&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions) The company has adopted guidelines no less stringent than the Model Code and confirms that all directors and relevant employees complied with the code during the reporting period - Following specific inquiries by the company, all directors and relevant employees have confirmed their compliance with the Model Code during the six months ended June 30, 2025[78](index=78&type=chunk) [Use of Proceeds from Listing](index=24&type=section&id=Use%20of%20Proceeds%20from%20Listing) Net proceeds from the listing were primarily used for R&D of core products and other candidates, commercialization, team expansion, and working capital. As of June 30, 2025, most funds were utilized as planned, with remaining funds to be used per the expected timetable Use of Proceeds from Listing (As of June 30, 2025) | Purpose | Intended Net Proceeds (HKD million) | Utilized as of June 30, 2025 (HKD million) | Unutilized as of June 30, 2025 (HKD million) | Expected Timetable for Unutilized Funds | | :--- | :--- | :--- | :--- | :--- | | R&D personnel costs and ongoing R&D for OT-401 | 197.57 | 103.90 | 93.67 | Before end of 2025 | | Milestone payments for OT-401 | 49.39 | 33.90 | 15.49 | –(1) | | Commercialization of OT-401 | 246.96 | 246.96 | – | – | | Ongoing R&D for other candidate drugs | 562.42 | 562.42 | – | – | | Milestone payments for other licensed-in candidate drugs | 96.15 | 73.68 | 22.47 | Before end of 2027(2) | | Further expansion of sales and marketing team | 164.64 | 164.64 | – | – | | Acquisition of 100% equity in Suzhou Xiaxiang | 164.64 | 164.64 | – | – | | Working capital and general corporate purposes | 164.64 | 164.64 | – | – | | **Total** | **1,646.41** | **1,514.78** | **131.63** | | - As of June 30, 2025, all unutilized net proceeds were held by the company and deposited as short-term deposits in licensed banks or recognized financial institutions[80](index=80&type=chunk) [Use of Proceeds from Placing](index=25&type=section&id=Use%20of%20Proceeds%20from%20Placing) Net proceeds from placing were primarily used for commercial team expansion, international multi-center clinical trials, specific product R&D, and Suzhou factory construction. As of June 30, 2025, most funds were utilized as planned, with remaining funds to be used per the expected timetable Use of Proceeds from Placing and Subscription (As of June 30, 2025) | Purpose | Intended Net Proceeds (HKD million) | Utilized as of June 30, 2025 (HKD million) | Unutilized as of June 30, 2025 (HKD million) | Expected Timetable for Unutilized Funds | | :--- | :--- | :--- | :--- | :--- | | Expansion of commercial team | 234.51 | 157.31 | 77.20 | Before end of 2025 | | International multi-center clinical trials | 273.60 | 254.23 | 19.37 | –(1) | | OT-702 (Eylea biosimilar) | 99.66 | 99.66 | – | – | | OT-301 (NCX-470) | 50.03 | 50.03 | – | – | | OT-101 (Low-dose Atropine) | 43.78 | 43.78 | – | – | | OT-1001 (ZERVIATE®) | 30.10 | 10.73 | 19.37 | –(1) | | OT-202 (TKI) | 50.03 | 50.03 | – | – | | Construction and development of new production facilities at Suzhou factory | 195.43 | 195.43 | – | – | | Other general corporate purposes | 78.17 | 78.17 | – | – | | **Total** | **781.71** | **685.14** | **96.57** | | - As of June 30, 2025, all unutilized net proceeds from the subscription have been deposited in bank accounts maintained by the Group[82](index=82&type=chunk) [Purchases, Sales or Redemptions of the Company's Listed Securities](index=26&type=section&id=Purchases,%20Sales%20or%20Redemptions%20of%20the%20Company's%20Listed%20Securities) During the reporting period, the company repurchased **3,863,500 shares** for a total consideration of **HKD 17,697,268** to enhance long-term shareholder value. Repurchased shares are held in treasury for potential financing, share incentive plans, and other purposes consistent with the company's articles of association Share Repurchase Details (During the Reporting Period) | Month | Number of Shares Purchased | Highest Price Paid (HKD) | Lowest Price Paid (HKD) | Total Consideration Paid (HKD) | | :--- | :--- | :--- | :--- | :--- | | January 2025 | 534,000 | 4.63 | 3.71 | 2,174,693 | | February 2025 | 745,500 | 4.61 | 3.97 | 3,155,375 | | April 2025 | 2,174,000 | 5.42 | 4.09 | 10,217,680 | | May 2025 | 410,000 | 5.41 | 5.17 | 2,149,520 | | **Total** | **3,863,500** | | | **17,697,268** | - As of the date of this announcement, the **3,863,500 repurchased shares** have not yet been cancelled[83](index=83&type=chunk) - The company intends to use the treasury shares for potential financing, awards to eligible participants under share incentive schemes, and/or for other purposes consistent with the company's articles of association, the Listing Rules, and any other applicable laws, rules, and regulations[83](index=83&type=chunk) [Review of Unaudited Interim Results and Interim Report](index=26&type=section&id=Review%20of%20Unaudited%20Interim%20Results%20and%20Interim%20Report) The Group's unaudited condensed consolidated interim financial statements have been reviewed by independent auditor Deloitte Touche Tohmatsu and the Audit Committee, confirming compliance with applicable accounting standards, laws, and regulations - The Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025, have been reviewed by independent auditor Deloitte Touche Tohmatsu[84](index=84&type=chunk) - The Audit Committee believes that the Group's unaudited interim results comply with applicable accounting standards, laws, and regulations, and that appropriate disclosures have been made by the company[84](index=84&type=chunk) [Publication of 2025 Condensed Consolidated Interim Results and Interim Report](index=27&type=section&id=Publication%20of%202025%20Condensed%20Consolidated%20Interim%20Results%20and%20Interim%20Report) This announcement has been published on the HKEX and company websites, and the interim report will be dispatched to shareholders and published on relevant websites in due course - This announcement is published on the HKEX website (www.hkexnews.hk) and the company's website (www.ocumension.com)[85](index=85&type=chunk) - The company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the HKEX and the company's respective websites in due course[85](index=85&type=chunk) [Acknowledgement](index=27&type=section&id=Acknowledgement) The Board extends its sincere gratitude to the Group's shareholders, management, employees, business partners, and customers - The Board hereby expresses its sincere gratitude to the Group's shareholders, management, employees, business partners, and customers for their support and contributions to the Group[86](index=86&type=chunk) [Definitions and Acronyms](index=27&type=section&id=Definitions%20and%20Acronyms) This section defines key terms and acronyms used in the report, covering company, regulatory bodies, products, diseases, and financial reporting standards for clarity [Common Terms and Acronyms](index=27&type=section&id=Common%20Terms%20and%20Acronyms) This section defines key terms and acronyms used in the report, covering company, regulatory bodies, products, diseases, and financial reporting standards for clarity - This section includes definitions for key institutions, business models, and regulatory terms such as "Alcon", "CDE", "CDMO", "FDA", "IFRS", and "NMPA"[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - It also includes explanations for product and disease-related terms such as "core products", "chronic NIU-PS", "AMD", and "wAMD"[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[93](index=93&type=chunk)

Company Profile [Company Overview](index=3&type=section&id=Company%20Overview) Sinopec is one of China's largest integrated energy and chemical companies, with a broad business scope including oil and gas exploration, refining, sales, hydrogen energy, and new energy - Sinopec is one of China's largest integrated energy and chemical companies, with extensive operations in oil and gas exploration, refining, sales, hydrogen energy, and new energy[6](index=6&type=chunk) - The company's H-shares were listed on the Hong Kong Stock Exchange on October 18, 2000, and A-shares on the Shanghai Stock Exchange on August 8, 2001[6](index=6&type=chunk) Company Basic Information | Indicator | Content | | :--- | :--- | | Legal Name | China Petroleum & Chemical Corporation | | Chinese Abbreviation | Sinopec | | English Name | China Petroleum & Chemical Corporation | | English Abbreviation | Sinopec Corp. | | Registered, Office, and Contact Address | 22 Chaoyangmen North Street, Chaoyang District, Beijing, China | | Postal Code | 100728 | | Phone | 86-10-59960028 | | Fax | 86-10-59960386 | | Website | http://www.sinopec.com | | Email | ir@sinopec.com | | A-share Listing Place/Abbreviation/Code | Shanghai Stock Exchange/Sinopec/600028 | | H-share Listing Place/Abbreviation/Code | The Stock Exchange of Hong Kong Limited/Sinopec/00386 | [Definitions](index=3&type=section&id=Definitions) This section defines common terms used in the report, ensuring clear understanding of key terminology and conversion ratios for oil and gas production - The report defines key terms such as "Sinopec", "the Company", and "Sinopec Group Company"[7](index=7&type=chunk) - Conversion ratios for domestic and overseas crude oil and natural gas production are specified, for example, 1 ton of domestic crude oil is approximately 7.1 barrels, and 1 cubic meter of natural gas equals 35.31 cubic feet[7](index=7&type=chunk) Key Financial Data and Indicators [Financial Data and Indicators Prepared Under PRC GAAP](index=5&type=section&id=Financial%20Data%20and%20Indicators%20Prepared%20Under%20PRC%20GAAP) In H1 2025, under PRC GAAP, revenue decreased by 10.6% and net profit attributable to parent company shareholders decreased by 39.8%, mainly due to falling crude oil prices and a sluggish chemical market H1 2025 Key Accounting Data (PRC GAAP) | Item | 2025 (RMB millions) | 2024 (RMB millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,409,052 | 1,576,131 | (10.6) | | Total Profit | 28,767 | 50,868 | (43.4) | | Net Profit Attributable to Parent Company Shareholders | 21,483 | 35,703 | (39.8) | | Net Profit Attributable to Parent Company Shareholders After Deducting Non-Recurring Gains and Losses | 21,215 | 35,582 | (40.4) | | Net Cash Flow from Operating Activities | 61,016 | 42,269 | 44.4 | | Equity Attributable to Parent Company Shareholders (2025/6/30 vs 2024/12/31) | 827,449 | 819,922 | 0.9 | | Total Assets (2025/6/30 vs 2024/12/31) | 2,144,939 | 2,084,771 | 2.9 | H1 2025 Key Financial Indicators (PRC GAAP) | Item | 2025 (RMB) | 2024 (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 0.177 | 0.296 | (40.2) | | Diluted Earnings Per Share | 0.177 | 0.296 | (40.2) | | Basic Earnings Per Share After Deducting Non-Recurring Gains and Losses | 0.175 | 0.295 | (40.7) | | Weighted Average Return on Net Assets (%) | 2.61 | 4.37 | (1.76) percentage points | | Weighted Average Return on Net Assets After Deducting Non-Recurring Gains and Losses (%) | 2.58 | 4.36 | (1.78) percentage points | H1 2025 Non-Recurring Gains and Losses | Item | Amount (RMB millions) | | :--- | :--- | | Net gain from disposal of non-current assets | (557) | | Donation expenses | 42 | | Government subsidies | (453) | | Gains from holding and disposing of various investments | (71) | | Net amount of other non-recurring income and expenses | 330 | | Subtotal | (709) | | Corresponding tax adjustments | 256 | | Total | (453) | | Non-recurring gains and losses affecting net profit attributable to parent company shareholders | (268) | | Non-recurring gains and losses affecting net profit attributable to minority shareholders | (185) | - Accounts receivable increased by **46.0%**, mainly due to increased overseas trade operations[13](index=13&type=chunk) - Investment in other equity instruments increased by **1,064.2%**, primarily due to strategic investment in CATL equity[13](index=13&type=chunk) - Bonds payable increased by **125.2%**, mainly due to the issuance of medium-term notes and technology innovation bonds during the period[13](index=13&type=chunk) - Financial expenses increased by **34.3%**, mainly due to increased net exchange losses on foreign currency loans and decreased interest income from lower deposit rates[14](index=14&type=chunk) - Asset impairment losses increased by **35.5%**, primarily due to increased impairment losses on some petroleum and chemical products and trading crude oil caused by falling crude oil prices[14](index=14&type=chunk) - Cash paid for dividends, profits, or interest increased by **384.0%**, mainly due to differences in dividend payment timing[14](index=14&type=chunk) [Financial Data and Indicators Prepared Under IFRS](index=8&type=section&id=Financial%20Data%20and%20Indicators%20Prepared%20Under%20IFRS) In H1 2025, under IFRS, operating profit decreased by 34.5%, profit attributable to company shareholders decreased by 35.9%, and basic earnings per share decreased by 36.2% H1 2025 Key Accounting Data (IFRS) | Item | 2025 (RMB millions) | 2024 (RMB millions) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Profit | 33,423 | 51,021 | (34.5) | | Profit Attributable to Company Shareholders | 23,752 | 37,079 | (35.9) | | Net Cash Flow from Operating Activities | 61,016 | 42,269 | 44.4 | | Equity Attributable to Company Shareholders (2025/6/30 vs 2024/12/31) | 824,565 | 815,815 | 1.1 | | Total Assets (2025/6/30 vs 2024/12/31) | 2,142,807 | 2,081,440 | 2.9 | H1 2025 Key Financial Indicators (IFRS) | Item | 2025 (RMB) | 2024 (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 0.196 | 0.307 | (36.2) | | Diluted Earnings Per Share | 0.196 | 0.307 | (36.2) | | Return on Capital Employed (%) | 2.82 | 4.30 | (1.48) percentage points | Chairman's Statement [Chairman's Statement](index=8&type=section&id=Chairman's%20Statement) Chairman Hou Qijun reviewed Sinopec's 25-year achievements, highlighting its integrated energy and chemical strengths, and outlined future strategies focusing on innovation, value, transformation, resource security, market expansion, and open cooperation, while announcing an interim cash dividend of RMB 0.088 per share - The company overcame challenges such as significant declines in international crude oil prices and low chemical market margins in the first half, maintaining stable production and operations, but with a substantial year-on-year decrease in profitability[18](index=18&type=chunk) - The Board of Directors decided to distribute an interim cash dividend of **RMB 0.088 per share**, in line with the upper limit specified in the Articles of Association[18](index=18&type=chunk) - The company will fully and accurately implement new development concepts, adhere to specialized development, market-oriented operations, integrated coordination, and digital intelligence empowerment, promoting the extension of the industrial and value chains towards high-end segments[19](index=19&type=chunk) - Future focus will be on innovation-driven development, increasing reform of the scientific and technological system and mechanisms, and deploying new technologies such as new energy batteries, synthetic biology, and AI applications[19](index=19&type=chunk) - Emphasis will be placed on transformation and upgrading, promoting high-end, intelligent, and green development of existing businesses, fostering new productive forces, and building a "second growth curve"[21](index=21&type=chunk) - Greater attention will be given to resource security, increasing oil and gas exploration and development, and expanding the new energy industry to form a "three-pillar" structure of oil, gas, and new energy[22](index=22&type=chunk) - Focus will also be on market expansion, building an integrated energy service provider for "oil, gas, hydrogen, electricity, and services", expanding the natural gas sales network, and improving the Easy Joy integrated service ecosystem[22](index=22&type=chunk) - The company will prioritize open cooperation, promoting "group overseas expansion" across the entire industry chain, deepening strategic cooperation with international companies, and enhancing international operational capabilities[23](index=23&type=chunk) Operating Performance Review and Outlook [Operating Performance Review](index=11&type=section&id=Operating%20Performance%20Review) In H1 2025, China's economy grew steadily, with GDP up 5.3%, while domestic natural gas demand increased 2.1%, refined oil demand decreased 3.6%, and major chemical product demand grew 10.1%, amidst volatile international crude oil prices - In H1 2025, China's GDP increased by **5.3%** year-on-year[25](index=25&type=chunk) - Domestic natural gas demand increased by **2.1%** year-on-year, refined oil demand decreased by **3.6%** year-on-year (gasoline down 4.6%, diesel down 4.3%), and demand for major chemical products increased by **10.1%** year-on-year[25](index=25&type=chunk) - International crude oil prices fluctuated downwards, with the average spot price of Platts Brent crude oil at **US$71.7/barrel**, a year-on-year decrease of **14.7%**[25](index=25&type=chunk) [Production and Operations](index=11&type=section&id=Production%20and%20Operations) In H1 2025, the company actively responded to market changes across all production and operation segments, achieving a 2.0% increase in oil and gas equivalent production and a 5.1% rise in natural gas output Exploration and Production Operating Performance | Item | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Oil and Gas Equivalent Production (million boe) | 262.81 | 257.66 | 2.0 | | Crude Oil Production (million barrels) | 140.04 | 140.53 | (0.3) | | China | 126.73 | 126.49 | 0.2 | | Overseas | 13.31 | 14.04 | (5.2) | | Natural Gas Production (billion cubic feet) | 736.28 | 700.57 | 5.1 | Refining Operating Performance (million tons) | Item | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Crude Oil Processed | 119.97 | 126.69 | (5.3) | | Gasoline, Diesel, Kerosene Production | 71.40 | 77.30 | (7.6) | | Gasoline | 30.79 | 32.34 | (4.8) | | Diesel | 24.27 | 29.31 | (17.2) | | Kerosene | 16.33 | 15.65 | 4.3 | | Chemical Light Oil Production | 22.06 | 19.79 | 11.5 | Marketing and Distribution Operating Performance (million tons) | Item | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Refined Oil Sales | 112.14 | 119.01 | (5.8) | | Domestic Total Refined Oil Sales | 87.05 | 90.14 | (3.4) | | Retail Sales | 54.53 | 56.96 | (4.3) | | Direct Sales and Distribution | 32.52 | 33.18 | (2.0) | - The total number of Sinopec branded service stations increased to **31,015**, and convenience stores to **28,689**, both showing slight growth[33](index=33&type=chunk) Major Chemical Product Production (thousand tons) | Item | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Ethylene | 7,563 | 6,496 | 16.4 | | Synthetic Resins | 11,041 | 9,784 | 12.8 | | Synthetic Fiber Monomers and Polymers | 5,437 | 4,598 | 18.2 | | Synthetic Fibers | 601 | 633 | (5.1) | | Synthetic Rubber | 804 | 678 | 18.6 | [Safety and Health](index=13&type=section&id=Safety%20and%20Health) The company continuously improved its HSE management system, launched a safety production campaign, and enhanced employee HSE awareness, maintaining overall safe and clean production - Continuously improved the HSE management system and launched the Safety Production Remediation Action 2025, maintaining overall safe and clean production[38](index=38&type=chunk) - Strengthened prevention and control of occupational diseases at the source, focusing on the occupational, physical, and mental health of domestic and overseas employees[38](index=38&type=chunk) [Technological Innovation](index=13&type=section&id=Technological%20Innovation) The company made significant progress in key core technology breakthroughs, including enhanced oil recovery, intelligent drilling software, needle coke applications, POE industrial demonstration units, and seawater hydrogen production - Breakthroughs achieved in heterogeneous composite flooding technology for significantly enhanced oil recovery, and an independent Geodrill intelligent drilling software system was developed[39](index=39&type=chunk) - Needle coke products successfully applied in large-diameter graphite electrodes, and proprietary POE industrial demonstration unit and 400,000 tons/year acrylonitrile unit successfully started up[39](index=39&type=chunk) - Seawater hydrogen production industrial pilot plant completed performance and stability tests, and the Changcheng large model was launched[39](index=39&type=chunk) [Capital Expenditures](index=14&type=section&id=Capital%20Expenditures) In H1 2025, the company's capital expenditures totaled RMB 43.8 billion, primarily allocated to exploration and production, refining, marketing and distribution, and chemical segments H1 2025 Capital Expenditures by Segment | Segment | Capital Expenditures (RMB billions) | Main Uses | | :--- | :--- | :--- | | Exploration and Production | 27.6 | Oil and gas capacity building, storage and transportation facilities | | Refining | 5.5 | Refining transformation and upgrading, technological renovation | | Marketing and Distribution | 2.8 | Integrated energy station network, non-fuel business | | Chemicals | 7.3 | Ethylene, aromatics projects | | Headquarters and Others | 0.5 | Scientific research and development, digitalization | | **Total** | **43.8** | | [Business Outlook](index=14&type=section&id=Business%20Outlook) For H2 2025, China's economy is expected to continue its recovery, with sustained growth in natural gas and chemical product demand, while refined oil demand faces alternative energy impacts and international crude oil prices remain uncertain - In H2 2025, China's economy is expected to continue its recovery, with domestic natural gas and chemical product demand maintaining growth, while refined oil demand will be affected by alternative energy sources[41](index=41&type=chunk) - The company will reduce its full-year capital expenditure plan by approximately **5%**[43](index=43&type=chunk) H2 2025 Key Production and Operation Plans | Segment | Planned Indicator | Value | | :--- | :--- | :--- | | Exploration and Production | Crude Oil Production | 141 million barrels | | | Natural Gas Production | 714.5 billion cubic feet | | Refining | Crude Oil Processed | 130 million tons | | Marketing and Distribution | Domestic Refined Oil Sales | 89.8 million tons | | Chemicals | Ethylene Production | 7.85 million tons | Management Discussion and Analysis [Consolidated Operating Results](index=15&type=section&id=Consolidated%20Operating%20Results) In H1 2025, consolidated operating revenue decreased by 10.6% to RMB 1,409.1 billion, and operating profit decreased by 34.5% to RMB 33.4 billion, primarily due to volatile crude oil prices, declining domestic refined oil demand, and low chemical margins H1 2025 Consolidated Income Statement Key Items (IFRS) | Item | 2025 (RMB millions) | 2024 (RMB millions) | Change Rate (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,409,052 | 1,576,131 | (10.6) | | Revenue from Principal Operations | 1,380,387 | 1,545,920 | (10.7) | | Operating Expenses | (1,375,629) | (1,525,110) | (9.8) | | Operating Profit | 33,423 | 51,021 | (34.5) | | Net Finance Costs | (8,426) | (6,275) | 34.3 | | Investment Income and Share of Profits/(Losses) of Associates and Joint Ventures | 6,120 | 7,576 | (19.2) | | Profit Before Tax | 31,117 | 52,322 | (40.5) | | Income Tax Expense | (5,207) | (9,931) | (47.6) | | Profit for the Period | 25,910 | 42,391 | (38.9) | | Attributable to Company Shareholders | 23,752 | 37,079 | (35.9) | | Attributable to Non-Controlling Interests | 2,158 | 5,312 | (59.4) | - Revenue from principal operations decreased by **10.7%** year-on-year, mainly due to lower prices of petroleum and chemical products and decreased sales volumes of refined oil products[47](index=47&type=chunk) H1 2025 Sales Volume and Average Realized Price of Major External Sales Products | Product | 2025 Sales Volume (thousand tons/million cubic meters) | 2024 Sales Volume (thousand tons/million cubic meters) | Sales Volume Change Rate (%) | 2025 Average Realized Price (RMB/ton/thousand cubic meters) | 2024 Average Realized Price (RMB/ton/thousand cubic meters) | Price Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Crude Oil | 3,867 | 4,254 | (9.1) | 3,563 | 3,981 | (10.5) | | Natural Gas | 31,666 | 31,406 | 0.8 | 2,362 | 2,398 | (1.5) | | Gasoline | 44,306 | 46,597 | (4.9) | 8,462 | 9,043 | (6.4) | | Diesel | 36,057 | 38,647 | (6.7) | 6,433 | 7,009 | (8.2) | | Kerosene | 12,261 | 13,376 | (8.3) | 5,071 | 5,805 | (12.6) | | Basic Chemical Raw Materials | 18,811 | 17,940 | 4.9 | 5,147 | 6,126 | (16.0) | | Synthetic Fiber Monomers and Polymers | 4,031 | 3,377 | 19.4 | 5,262 | 5,926 | (11.2) | | Synthetic Resins | 8,815 | 8,074 | 9.2 | 7,277 | 7,454 | (2.4) | | Synthetic Fibers | 610 | 631 | (3.3) | 7,189 | 7,723 | (6.9) | | Synthetic Rubber | 768 | 669 | 14.8 | 11,734 | 11,721 | 0.1 | - Purchases of crude oil, products, operating supplies, and expenses decreased by **10.8%** year-on-year, accounting for **81.3%** of total operating expenses, mainly due to lower crude oil and refined oil procurement costs[51](index=51&type=chunk) - Exploration expenses increased by **24.3%** year-on-year, mainly due to the company's increased efforts in shale oil and ultra-deep oil and gas exploration[51](index=51&type=chunk) - Taxes other than income tax decreased by **7.0%** year-on-year, mainly due to a **RMB 6.3 billion** reduction in consumption tax from lower refined oil production and a **RMB 2.6 billion** reduction in special oil gains levy and resource tax due to falling oil prices[51](index=51&type=chunk) - Other net income increased by **235.1%** year-on-year, mainly due to increased gains from commodity derivative hedging activities[51](index=51&type=chunk) [Operating Results by Business Segment](index=18&type=section&id=Operating%20Results%20by%20Business%20Segment) In H1 2025, operating results across all business segments were significantly impacted by market conditions, with exploration and production, refining, and marketing and distribution segments experiencing profit declines, and the chemical segment incurring a loss H1 2025 Operating Revenue, Expenses, and Profit by Business Segment (IFRS) | Segment | Operating Revenue (RMB millions) | Operating Expenses (RMB millions) | Operating Profit (RMB millions) | Operating Revenue Change Rate (%) | Operating Expenses Change Rate (%) | Operating Profit Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Exploration and Production | 144,656 | 121,018 | 23,638 | (5.9) | (2.9) | (18.9) | | Refining | 658,324 | 654,789 | 3,535 | (12.2) | (11.8) | (50.4) | | Marketing and Distribution | 752,587 | 744,628 | 7,959 | (12.8) | (12.3) | (45.7) | | Chemicals | 241,938 | 246,162 | (4,224) | (6.0) | (5.5) | — | | Headquarters and Others | 662,975 | 661,330 | 1,645 | (16.8) | (16.5) | (61.8) | - The cash operating cost for oil and gas in the Exploration and Production segment was **RMB 718.0/ton**, a year-on-year decrease of **4.7%**[61](index=61&type=chunk) - The average cost of crude oil and feedstock processed by the Refining segment was **RMB 4,077/ton**, a year-on-year decrease of **10.1%**; refining margin was **RMB 315/ton**, a year-on-year decrease of **0.3%**[65](index=65&type=chunk) - Non-fuel business profit in the Marketing and Distribution segment was **RMB 3.09 billion**, a year-on-year increase of **17.0%**, with convenience store merchandise and service profit at **RMB 2.93 billion** and charging service fees at **RMB 0.5 billion**[71](index=71&type=chunk) - The Chemicals segment incurred an operating loss of **RMB 4.2 billion**, an increase of **RMB 1.1 billion** in loss year-on-year, mainly due to concentrated capacity release, declining profitability of aromatics and other products, and scheduled plant maintenance[75](index=75&type=chunk) [Assets, Liabilities, Equity, and Cash Flows](index=22&type=section&id=Assets,%20Liabilities,%20Equity,%20and%20Cash%20Flows) As of June 30, 2025, total assets increased by RMB 61.4 billion to RMB 2,142.8 billion, total liabilities increased by RMB 52.0 billion to RMB 1,161.3 billion, and net cash inflow from operating activities increased by RMB 18.7 billion to RMB 61.0 billion June 30, 2025 Assets, Liabilities, and Equity (RMB millions) | Item | June 30, 2025 | December 31, 2024 | Change Amount | | :--- | :--- | :--- | :--- | | Total Assets | 2,142,807 | 2,081,440 | 61,367 | | Current Assets | 572,910 | 524,515 | 48,395 | | Non-Current Assets | 1,569,897 | 1,556,925 | 12,972 | | Total Liabilities | 1,161,294 | 1,109,293 | 52,001 | | Current Liabilities | 703,751 | 673,237 | 30,514 | | Non-Current Liabilities | 457,543 | 436,056 | 21,487 | | Equity Attributable to Company Shareholders | 824,565 | 815,815 | 8,750 | | Total Equity | 981,513 | 972,147 | 9,366 | - Current assets increased by **RMB 48.4 billion**, mainly due to a **RMB 20.4 billion** increase in accounts receivable from increased overseas business operations, and a **RMB 16.7 billion** increase in cash and cash equivalents and time deposits[79](index=79&type=chunk) - Current liabilities increased by **RMB 30.5 billion**, mainly due to the company's issuance of ultra-short-term financing bonds and reclassification of some long-term borrowings due within one year, with short-term borrowings increasing by **RMB 34.8 billion**[80](index=80&type=chunk) H1 2025 Consolidated Cash Flow Statement Key Items (RMB millions) | Item | 2025 | 2024 | Change Amount | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 61,016 | 42,269 | 18,747 | | Net Cash Flow Used in Investing Activities | (59,968) | (79,004) | 19,036 | | Net Cash Flow from Financing Activities | 15,095 | 36,862 | (21,767) | | Net Increase in Cash and Cash Equivalents | 16,143 | 127 | 16,016 | - Research and development expenditures in H1 2025 totaled **RMB 8.2 billion**, including **RMB 6.2 billion** in expenses and **RMB 2.0 billion** in investments[86](index=86&type=chunk) - Environmental protection expenditures in H1 2025 totaled **RMB 6.9 billion**[86](index=86&type=chunk) Items Related to Fair Value Measurement (RMB millions) | Item | Beginning Balance | Ending Balance | Fair Value Change Gain/Loss for the Period | | :--- | :--- | :--- | :--- | | Financial assets held for trading | 4 | 3 | (1) | | Derivative financial instruments and cash flow hedges | (858) | (3,723) | 4,580 | | Receivables financing | 2,613 | 7,678 | – | | Investments in other equity instruments | 416 | 4,843 | – | | Total | 2,175 | 8,801 | 4,579 | - Strategic investment in CATL equity, with an ending book value of **RMB 4.424 billion** and investment gain/loss for the period of **RMB 854 million**[89](index=89&type=chunk) [Analysis of Financial Statements Prepared Under PRC GAAP](index=25&type=section&id=Analysis%20of%20Financial%20Statements%20Prepared%20Under%20PRC%20GAAP) In H1 2025, under PRC GAAP, consolidated operating profit decreased by 43.5% to RMB 29.1 billion, and net profit attributable to parent company shareholders decreased by 39.8% to RMB 21.5 billion, with refining gross margin being the lowest at 1.5% H1 2025 Operating Revenue and Operating Profit/(Loss) by Business Segment (PRC GAAP) | Segment | Operating Revenue (RMB millions) | Operating Profit/(Loss) (RMB millions) | | :--- | :--- | :--- | | Exploration and Production | 144,656 | 21,267 | | Refining | 658,324 | 2,597 | | Marketing and Distribution | 752,587 | 7,170 | | Chemicals | 241,938 | (4,518) | | Headquarters and Others | 662,975 | (3,213) | | Consolidated Operating Revenue | 1,409,052 | | | Consolidated Operating Profit | | 29,094 | | Net Profit Attributable to Parent Company Shareholders | | 21,483 | - Consolidated operating profit decreased by **43.5%** year-on-year, and net profit attributable to parent company shareholders decreased by **39.8%** year-on-year, mainly due to inventory losses from continuously falling crude oil and product prices, as well as declining domestic gasoline and diesel sales volumes and price spreads[92](index=92&type=chunk)[93](index=93&type=chunk) June 30, 2025 Financial Data (PRC GAAP) | Item | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | Change Amount (RMB millions) | | :--- | :--- | :--- | :--- | | Total Assets | 2,144,939 | 2,084,771 | 60,168 | | Non-Current Liabilities | 456,756 | 435,241 | 21,515 | | Shareholders' Equity | 984,432 | 976,293 | 8,139 | - The increase in total assets was mainly due to a **RMB 20.4 billion** increase in accounts receivable, a **RMB 16.7 billion** increase in monetary funds, and a **RMB 13.1 billion** increase in external equity investments[95](index=95&type=chunk) - The increase in non-current liabilities was mainly due to the issuance of medium-term notes and technology innovation bonds, leading to an increase in low-cost bond financing[95](index=95&type=chunk) H1 2025 Gross Profit Margin by Principal Business Segment (PRC GAAP) | Segment | Operating Revenue (RMB millions) | Operating Costs (RMB millions) | Gross Profit Margin (%) | YoY Operating Revenue Change (%) | YoY Operating Costs Change (%) | YoY Gross Profit Margin Change (percentage points) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Exploration and Production | 144,656 | 102,055 | 23.8 | (5.9) | (1.4) | (1.7) | | Refining | 658,324 | 535,484 | 1.5 | (12.2) | (13.3) | (0.2) | | Marketing and Distribution | 752,587 | 712,628 | 5.1 | (12.8) | (12.6) | (0.3) | | Chemicals | 241,938 | 238,373 | 1.1 | (6.0) | (5.5) | (0.5) | | Headquarters and Others | 662,975 | 656,511 | 1.0 | (16.8) | (16.1) | (0.7) | | Total | 1,409,052 | 1,192,753 | 6.6 | (10.6) | (10.2) | (0.8) | [Reasons and Impact of Changes in Accounting Policies, Estimates, and Methods](index=26&type=section&id=Reasons%20and%20Impact%20of%20Changes%20in%20Accounting%20Policies,%20Estimates,%20and%20Methods) This section refers to Note 2 of the financial statements prepared under International Financial Reporting Standards for details on changes in the company's accounting policies, estimates, and methods - Details on changes in the company's accounting policies, accounting estimates, and accounting methods can be found in Note 2 to the financial statements prepared under International Financial Reporting Standards[98](index=98&type=chunk) Corporate Governance, Environment, and Society [Improvements in Corporate Governance](index=27&type=section&id=Improvements%20in%20Corporate%20Governance) The company continuously improved its corporate governance, complied with regulations, and emphasized shareholder returns, internal control, risk management, information disclosure, and ESG management - The company complies with its Articles of Association and domestic and overseas securities regulatory requirements, improving corporate governance and continuously enhancing the quality of listed companies[99](index=99&type=chunk) - The Board of Directors and its specialized committees diligently reviewed and decided on matters, with independent directors actively conducting special research and providing advice[99](index=99&type=chunk) - The company values shareholder returns, strengthens market value management, formulated and issued the "Sinopec Market Value Management Measures", and continued to implement share repurchases[99](index=99&type=chunk) - Continuously improved ESG management, solidly carried out the Safety Production Remediation Action, deepened systematic environmental protection governance, and steadily advanced carbon peaking actions[99](index=99&type=chunk) [Directors, Supervisors, and Other Senior Management](index=27&type=section&id=Directors,%20Supervisors,%20and%20Other%20Senior%20Management) During the reporting period, several directors, supervisors, and senior management resigned due to work adjustments or age, while new non-executive directors were elected - Mr. Zhang Shaofeng, Mr. Yu Baocai, Mr. Ma Yongsheng, Mr. Tan Wenfang, and Mr. Zhang Chunsheng resigned from their positions due to work adjustments or age[100](index=100&type=chunk)[101](index=101&type=chunk) - Mr. Hou Qijun was elected as a non-executive director and chairman of Sinopec, and Mr. Cai Yong was elected as a non-executive director of Sinopec[101](index=101&type=chunk) - As of June 30, 2025, the company's directors, supervisors, and other senior management and their associates did not hold any disclosable interests or short positions in shares, related shares, or debentures[102](index=102&type=chunk) [Dividend Distribution](index=27&type=section&id=Dividend%20Distribution) The company distributed a final cash dividend of RMB 0.14 per share for 2024 and approved an interim dividend of RMB 0.088 per share for H1 2025, payable by September 25, 2025 - The 2024 final cash dividend of **RMB 0.14/share** (tax inclusive) was distributed on or before June 27, 2025[103](index=103&type=chunk) - The total cash dividend distributed for the full year 2024 was **RMB 0.286/share** (tax inclusive)[103](index=103&type=chunk) - The H1 2025 dividend distribution plan is a dividend of **RMB 0.088/share** (tax inclusive), to be paid on or before September 25, 2025[104](index=104&type=chunk) - Dividends for H-share shareholders will be paid in Hong Kong Dollars, with the exchange rate based on the average benchmark exchange rate of RMB to HKD published by the People's Bank of China in the week prior to the dividend declaration date (i.e., HKD 1 to RMB 0.909564)[105](index=105&type=chunk) - The company is obligated to withhold and pay 10% corporate income tax for non-resident enterprise H-share shareholders, and varying rates of individual income tax for individual H-share shareholders[106](index=106&type=chunk) [Employee Information](index=28&type=section&id=Employee%20Information) As of June 30, 2025, the company had 348,654 employees, with major subsidiaries Sinopec Sales Co. and China International United Petroleum & Chemicals Co. Ltd. employing 116,005 and 621 staff, respectively - As of June 30, 2025, the company had **348,654** employees[107](index=107&type=chunk) - Major subsidiaries Sinopec Sales Co. Ltd. had **116,005** employees, and China International United Petroleum & Chemicals Co. Ltd. had **621** employees[107](index=107&type=chunk) [Compensation Policy](index=28&type=section&id=Compensation%20Policy) The company has established a compensation system based on job value, performance contribution, and capability enhancement, continuously improving employee performance evaluation and incentive mechanisms - The company has established a compensation distribution system based on job value, performance contribution, and capability enhancement[108](index=108&type=chunk) - Continuously improved employee performance evaluation and incentive and restraint mechanisms[108](index=108&type=chunk) [Training Overview](index=28&type=section&id=Training%20Overview) During the reporting period, the company strengthened training management, improved its high-quality training system, and conducted over 29 million hours of online training - In the first half, the headquarters trained **1,700** key talents, focusing on management personnel, expert talents, skilled talents, and international talents[109](index=109&type=chunk) - Deepened the application of Sinopec Online Academy to enhance the intelligence and precision of training, with over **29 million** online training hours in the first half[110](index=110&type=chunk) [Implementation of Share Incentive Scheme](index=29&type=section&id=Implementation%20of%20Share%20Incentive%20Scheme) The company did not implement any share incentive scheme during the reporting period - The company did not implement any share incentive scheme during the reporting period[111](index=111&type=chunk) [Compliance with Corporate Governance Code](index=29&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) During the reporting period, the company complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Hong Kong Listing Rules - During the reporting period, Sinopec complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Hong Kong Listing Rules[112](index=112&type=chunk) [Review of Interim Report](index=29&type=section&id=Review%20of%20Interim%20Report) The Audit Committee of Sinopec's Board of Directors has reviewed and confirmed this report - The Audit Committee of Sinopec's Board of Directors has reviewed and confirmed this report[113](index=113&type=chunk) [Work on Ecological Protection, Pollution Prevention, and Environmental Responsibility](index=29&type=section&id=Work%20on%20Ecological%20Protection,%20Pollution%20Prevention,%20and%20Environmental%20Responsibility) The company deepened systematic environmental protection governance, advanced its Green Enterprise Action Plan, and initiated a "Waste-Free Group" three-year action, achieving stable COD emissions and reduced SO2 emissions - Deepened systematic environmental protection governance, fully promoted the second phase of the Green Enterprise Action Plan, and launched the "Waste-Free Group" three-year action[114](index=114&type=chunk) - COD emissions in discharged wastewater remained largely flat year-on-year, sulfur dioxide emissions decreased by **2%** year-on-year, and solid waste proper disposal rate reached **100%**[114](index=114&type=chunk) [Measures and Effects of Carbon Emission Reduction](index=29&type=section&id=Measures%20and%20Effects%20of%20Carbon%20Emission%20Reduction) The company actively and steadily advanced its "dual carbon" actions, reducing greenhouse gas emissions by 1.456 million tons of CO2 equivalent through energy saving and consumption reduction, and recovering 550 million cubic meters of methane - Reduced greenhouse gas emissions by **1.456 million tons of CO2 equivalent** through energy saving and consumption reduction[115](index=115&type=chunk) - Recovered and utilized **0.961 million tons of CO2**, with **0.398 million tons** injected for enhanced oil recovery[115](index=115&type=chunk) - Recovered **550 million cubic meters of methane**, equivalent to reducing greenhouse gas emissions by **8.25 million tons of CO2 equivalent**[115](index=115&type=chunk) [Number and Names of Enterprises Included in the List of Legally Disclosed Environmental Information, and Inquiry Index for Environmental Information Disclosure Reports](index=29&type=section&id=Number%20and%20Names%20of%20Enterprises%20Included%20in%20the%20List%20of%20Legally%20Disclosed%20Environmental%20Information,%20and%20Inquiry%20Index%20for%20Environmental%20Information%20Disclosure%20Reports) As of June 30, 2025, Sinopec and its major subsidiaries had 12 entities on the list of legally disclosed environmental information enterprises, with their environmental data disclosed through official systems - As of June 30, 2025, Sinopec and its important subsidiaries had **12** entities included in the list of enterprises legally required to disclose environmental information[117](index=117&type=chunk) - These enterprises have legally disclosed environmental information through the enterprise environmental information legal disclosure system established by environmental protection authorities[116](index=116&type=chunk) [Company's Work on Consolidating Poverty Alleviation Achievements and Rural Revitalization](index=30&type=section&id=Company's%20Work%20on%20Consolidating%20Poverty%20Alleviation%20Achievements%20and%20Rural%20Revitalization) During the reporting period, the company actively promoted new achievements in rural revitalization, deepening educational and industrial assistance, and completing consumer assistance totaling RMB 830 million - Deepened educational assistance, with **82** enterprises partnering with **72** schools, promoting projects such as "Academicians in Classroom", "Sinopec Accompanying Study", and "Chunlei Gas Station"[118](index=118&type=chunk) - Implemented industrial assistance, building demonstration industrial projects such as Dongxiang Quinoa and Yuexi Cuilan tea[118](index=118&type=chunk) - Completed consumer assistance totaling **RMB 830 million**[118](index=118&type=chunk) Significant Matters [Major Construction Projects](index=31&type=section&id=Major%20Construction%20Projects) The company continued to advance several major construction projects in H1, including shale oil, LNG, refining upgrades, and ethylene projects, with significant investments aimed at enhancing capacity and new material production - Shengli Shale Oil project completed **174** new wells, added **1.145 million tons/year** of new capacity, with cumulative investment of **RMB 15.4 billion**[119](index=119&type=chunk) - Longkou LNG project Phase I has a designed processing capacity of **6 million tons/year**, with cumulative investment of **RMB 5.9 billion**[120](index=120&type=chunk) - Maoming Refining Transformation and Upgrading and Ethylene Quality Improvement project accumulated investment of **RMB 9.3 billion**, including a 3 million tons/year catalytic cracking unit and 1 million tons/year ethylene plant[121](index=121&type=chunk) - Zhenhai 1.5 million tons/year Ethylene and Downstream High-end New Materials Industrial Cluster project accumulated investment of **RMB 4.4 billion**[122](index=122&type=chunk) - Henan Refining & Chemical 1 million tons/year Ethylene project accumulated investment of **RMB 2.6 billion**[123](index=123&type=chunk) [Analysis of Core Competencies](index=31&type=section&id=Analysis%20of%20Core%20Competencies) The company's core competencies stem from its integrated upstream, midstream, and downstream position as a large energy and chemical company, possessing strong overall scale, risk resistance, and sustained profitability - The company is China's largest supplier of refined oil and petrochemical products, a major oil and gas producer, the world's largest refining company, and the second-largest chemical company, with the second-largest number of service stations globally[124](index=124&type=chunk) - Its integrated business structure generates strong synergies, helping to improve resource utilization efficiency and providing strong risk resistance and sustained profitability[124](index=124&type=chunk) - Possesses market-proximate geographical advantages, a professional talent team, refined management capabilities, and world-leading technological strength, with overall technology reaching advanced international levels[126](index=126&type=chunk) - Formulated a future-oriented green transformation and development strategy, accelerating the development of new energy with a focus on hydrogen energy and high-end chemical materials, aiming to build a world-leading clean energy chemical company[127](index=127&type=chunk) [Continuing Connected Transactions During the Reporting Period](index=32&type=section&id=Continuing%20Connected%20Transactions%20During%20the%20Reporting%20Period) During the reporting period, the company engaged in a series of continuing connected transactions with Sinopec Group Company, including mutual supply, leasing, intellectual property licensing, and financial services, all within approved limits - During the reporting period, the company entered into a series of continuing connected transaction agreements with Sinopec Group Company, including mutual supply agreements, land use right lease contracts, property lease contracts, intellectual property licensing contracts, security fund documents, and financial service agreements[128](index=128&type=chunk) H1 2025 Continuing Connected Transaction Amounts | Transaction Type | Amount (RMB billions) | | :--- | :--- | | Total Purchase Amount | 110.165 | | Of which: Procurement of products and services | 103.464 | | Payment of property rent | 0.607 | | Payment of land rent | 5.591 | | Interest expense | 0.503 | | Total Sales Amount | 67.163 | | Of which: Sales of goods | 65.805 | | Agency commission income | 0.033 | | Interest income | 1.325 | - All continuing connected transaction amounts did not exceed the limits approved by the shareholders' meeting and the Board of Directors[129](index=129&type=chunk) [Connected Debts and Credits](index=33&type=section&id=Connected%20Debts%20and%20Credits) As of the end of the reporting period, the company had connected debts and credits with Sinopec Group Company and its associates, primarily due to loans and other receivables/payables, with no significant adverse impact on operations or financial position H1 2025 Connected Debts and Credits (RMB millions) | Related Party | Relationship | Ending Balance of Funds Provided to Related Parties | Ending Balance of Funds Provided by Related Parties to the Company | | :--- | :--- | :--- | :--- | | Sinopec Group | Parent company and its subsidiaries | 18,960 | 16,877 | | Other Related Parties | Associates and joint ventures | 4,019 | 8,421 | | Total | | 22,979 | 25,298 | - The connected debts and credits arose from loans and other receivables and payables[137](index=137&type=chunk) - The connected debts and credits had no significant adverse impact on the company's operating results and financial position[137](index=137&type=chunk) [Daily Connected Transactions with China Oil & Gas Piping Network Corporation During the Reporting Period](index=33&type=section&id=Daily%20Connected%20Transactions%20with%20China%20Oil%20%26%20Gas%20Piping%20Network%20Corporation%20During%20the%20Reporting%20Period) In H1 2025, the company's daily connected transactions with China Oil & Gas Piping Network Corporation for refined oil pipeline transportation services amounted to RMB 2.484 billion, within the approved annual limit - From January 1 to June 30, 2025, the actual amount of daily connected transactions with China Oil & Gas Piping Network Corporation for refined oil pipeline transportation services was **RMB 2.484 billion**[132](index=132&type=chunk) - This transaction amount complied with the 2025 annual limit approved by the Board of Directors[132](index=132&type=chunk) [Sinopec, Fujian Refining & Petrochemical, and Aramco Singapore Establish Joint Venture](index=33&type=section&id=Sinopec,%20Fujian%20Refining%20%26%20Petrochemical,%20and%20Aramco%20Singapore%20Establish%20Joint%20Venture) Sinopec, Fujian Refining & Petrochemical, and Aramco Singapore signed a joint venture agreement on April 28, 2025, to establish a new company with an estimated registered capital of RMB 28.8009 billion, with Sinopec and Fujian Refining & Petrochemical holding 25% and 50% equity respectively, and Aramco Singapore holding 25% - Sinopec, Fujian Refining & Petrochemical, and Aramco Singapore signed a joint venture agreement on April 28, 2025, to jointly establish a joint venture company[133](index=133&type=chunk) - The registered capital of the joint venture company is estimated to be **RMB 28,800,906,667**, with Sinopec, Fujian Refining & Petrochemical, and Aramco Singapore holding **25%**, **50%**, and **25%** equity respectively[133](index=133&type=chunk) - Sinopec will provide corresponding financial support for Fujian Refining & Petrochemical's capital contribution obligations under the joint venture agreement, based on its **50%** equity interest in Fujian Refining & Petrochemical[133](index=133&type=chunk) - Sinopec and Fujian Refining & Petrochemical were granted a call option to acquire Aramco Singapore's equity in the joint venture, and Aramco Singapore was granted a put option to sell its equity in the joint venture[133](index=133&type=chunk) [Sinopec's Issuance of A-Shares to Specific Subscribers](index=33&type=section&id=Sinopec's%20Issuance%20of%20A-Shares%20to%20Specific%20Subscribers) In 2024, the company completed the issuance of 2,390,438,247 A-shares to Sinopec Group Company, raising RMB 12 billion, with 25% of the funds invested in projects as of the reporting period end - In 2024, the company completed the issuance of **2,390,438,247 A-shares** to Sinopec Group Company, raising a total of **RMB 12 billion**[134](index=134&type=chunk)[135](index=135&type=chunk) Overall Use of Raised Funds (RMB millions) | Source of Raised Funds | Total Raised Funds | Net Raised Funds After Issuance Expenses | Total Committed Investment in Prospectus | Cumulative Investment as of End of Reporting Period | Cumulative Investment Progress (%) | Amount Invested During Reporting Period | Percentage of Amount Invested During Reporting Period (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Issuance of shares to specific subscribers | 12,000 | 11,987 | 11,987 | 3,049 | 25 | 1,182 | 10 | Details of Projects Funded by Raised Capital (RMB millions) | Project Name | Planned Investment Amount from Raised Funds | Cumulative Investment Amount from Raised Funds as of End of Reporting Period | Cumulative Investment Progress (%) | Date Project is Expected to Reach Usable State | | :--- | :--- | :--- | :--- | :--- | | Tianjin LNG Project Phase III Stage I | 4,500 | 281 | 6 | 2027 | | Yanshan Branch Hydrogen Purification Facility Improvement Project | 187 | 143 | 76 | 2024 | | Maoming Branch Refining Transformation and Upgrading and Ethylene Quality Improvement Project | 4,800 | 1,261 | 26 | 2027 | | Maoming Branch 50,000 tons/year Polyolefin Elastomer (POE) Industrial Pilot Plant Project | 900 | 836 | 93 | 2025 | | Sino-Kuwait (Guangdong) Petrochemical Co., Ltd. No. 2 EVA Project | 1,600 | 528 | 33 | 2026 | | Total | 11,987 | 3,049 | 25 | | - During the reporting period, there were no changes or terminations of projects funded by raised capital[140](index=140&type=chunk) - During the reporting period, the company did not use idle raised funds to temporarily supplement working capital or for cash management or investment in related products[141](index=141&type=chunk) [Implementation of the Company's 'Quality Improvement, Efficiency Enhancement, and High Returns' Action Plan](index=35&type=section&id=Implementation%20of%20the%20Company's%20'Quality%20Improvement,%20Efficiency%20Enhancement,%20and%20High%20Returns'%20Action%20Plan) The company formulated an action plan for 2024 and a three-year dividend return plan (2024-2026), maintaining dividend continuity and stability, and continuing share repurchases to prioritize investor returns - The company formulated the 2024 "Quality Improvement, Efficiency Enhancement, and High Returns" action plan and a three-year (2024-2026) shareholder dividend return plan[142](index=142&type=chunk) - In H1 2025, the company maintained dividend continuity and stability, and continued to implement share repurchases, focusing on investor returns[142](index=142&type=chunk) [Major Litigation and Arbitration Matters](index=35&type=section&id=Major%20Litigation%20and%20Arbitration%20Matters) During the reporting period, the company had no major litigation or arbitration matters - During the reporting period, the company had no major litigation or arbitration matters[143](index=143&type=chunk) [Statement on the Integrity of the Company, its Controlling Shareholder, and Actual Controller](index=35&type=section&id=Statement%20on%20the%20Integrity%20of%20the%20Company,%20its%20Controlling%20Shareholder,%20and%20Actual%20Controller) During the reporting period, the company and its controlling shareholder had no unfulfilled obligations from effective legal documents or large overdue debts - During the reporting period, the company and its controlling shareholder had no unfulfilled obligations determined by effective legal documents or large overdue debts[144](index=144&type=chunk) [Major Contracts and Their Performance](index=35&type=section&id=Major%20Contracts%20and%20Their%20Performance) During the reporting period, the company had no major contracts that should have been disclosed but were not - During the reporting period, the company had no major contracts that should have been disclosed but were not[145](index=145&type=chunk) [Major Equity Investments](index=35&type=section&id=Major%20Equity%20Investments) During the reporting period, the company did not undertake any major equity investment matters - During the reporting period, the company did not undertake any major equity investment matters[146](index=146&type=chunk) [Major Asset and Equity Disposals](index=35&type=section&id=Major%20Asset%20and%20Equity%20Disposals) During the reporting period, the company did not undertake any major asset and equity disposal matters - During the reporting period, the company did not undertake any major asset and equity disposal matters[147](index=147&type=chunk) [Business with Finance Company and Shengjun Company](index=36&type=section&id=Business%20with%20Finance%20Company%20and%20Shengjun%20Company) The company conducts deposit, loan, and credit businesses with Sinopec Finance Co., Ltd. and Sinopec Shengjun International Investment Co., Ltd., with total deposits of RMB 81.72 billion and loans of RMB 30.257 billion as of June 30, 2025 H1 2025 Deposit Business (RMB millions) | Related Party | Maximum Daily Deposit Limit | Deposit Interest Rate Range | Beginning Balance | Ending Balance | | :--- | :--- | :--- | :--- | :--- | | Finance Company | Total not exceeding RMB 90 billion | Demand: 0.25%-1.05% Time: 0.60%-7.40% | 7,722 | 14,945 | | Shengjun Company | Total not exceeding RMB 90 billion | Demand: 0%-4.10% Time: 0.15%-5.50% | 58,711 | 66,775 | H1 2025 Loan Business (RMB millions) | Related Party | Loan Limit | Loan Interest Rate Range | Beginning Balance | Ending Balance | | :--- | :--- | :--- | :--- | :--- | | Shengjun Company | 118,078 | 1.67%-5.42% | 2,669 | 2,759 | | Finance Company | 56,347 | 2.35%-4.20% | 25,309 | 27,498 | H1 2025 Credit Business or Other Financial Business (RMB millions) | Related Party | Business Type | Ending Balance | Actual Amount Incurred | | :--- | :--- | :--- | :--- | | Finance Company | Issuance of acceptance bills | 19,258 | 19,840 | | | Bill discounting | — | 4,128 | - The company formulated the "Sinopec Risk Disposal Plan for Financial Business with Sinopec Finance Co., Ltd. and Sinopec Shengjun International Investment Co., Ltd.", to ensure fund safety[152](index=152&type=chunk) [Major Guarantee Contracts and Their Performance](index=38&type=section&id=Major%20Guarantee%20Contracts%20and%20Their%20Performance) As of June 30, 2025, the company's total external guarantees amounted to RMB 3.962 billion (excluding guarantees to controlled subsidiaries), and guarantees to controlled subsidiaries totaled RMB 3.579 billion, with the total guarantee amount representing 0.9% of net assets June 30, 2025 Company Total Guarantee Amount (RMB millions) | Item | Amount | | :--- | :--- | | Total external guarantees by the company (A) | 3,962 | | Total guarantees to controlled subsidiaries by the company (B) | 3,579 | | Total guarantee amount (A+B) | 7,541 | | Percentage of total guarantee amount to company's net assets (%) | 0.9 | | Of which: Debt guarantees provided to guaranteed parties with asset-liability ratio exceeding 70% (D) | 3,962 | | Total of the above three guarantee amounts (C+D+E) | 3,962 | - On June 17, 2025, the company signed a "Financing Guarantee Agreement" with China Construction Bank (Asia) Corporation Limited to provide joint and several liability guarantees for the relevant financing arrangements of the Kazakhstan Gas Chemical Project Company; as of the end of the reporting period, the project company had not yet incurred actual financing[156](index=156&type=chunk) [Performance of Major Commitments by Related Parties](index=39&type=section&id=Performance%20of%20Major%20Commitments%20by%20Related%20Parties) The company and Sinopec Group Company strictly fulfilled various commitments during the reporting period, including those related to IPO, other commitments, and share lock-up commitments for refinancing Performance of Major Commitments by Related Parties | Commitment Background | Commitment Type | Committing Party | Summary of Commitment Content | Performance Period | Strictly Fulfilled | | :--- | :--- | :--- | :--- | :--- | :--- | | Commitments related to initial public offering | Initial Public Offering | Sinopec Group Company | Comply with connected transaction agreements; resolve legality issues of land and property ownership certificates within a time limit; implement "Restructuring Agreement"; intellectual property licensing; avoid horizontal competition; waive business competition and conflicts of interest with Sinopec | — | Yes | | Other commitments | Other | Sinopec Group Company | Grant Sinopec a ten-year option to require Sinopec Group Company to sell overseas oil and gas assets invested after the date of this commitment letter | Within 10 years from the date Sinopec Group Company obtains relevant rights and interests | Yes | | Commitments related to refinancing | Share Lock-up | Sinopec Group Company | Not to transfer the A-shares subscribed in this issuance within 36 months from the completion date of this issuance | 36 months from the completion date of this issuance | Yes | - As of the disclosure date of this report, the company has no unfulfilled performance commitments, unfulfilled asset injection or asset integration commitments, nor any profit forecasts for assets or projects[158](index=158&type=chunk) [Structured Entities Controlled by the Company](index=39&type=section&id=Structured%20Entities%20Controlled%20by%20the%20Company) During the reporting period, the company had no controlled structured entities - None[159](index=159&type=chunk) [Share Repurchases, Sales, and Redemptions](index=40&type=section&id=Share%20Repurchases,%20Sales,%20and%20Redemptions) The company was authorized to repurchase up to 10% of its issued A-shares or H-shares on June 28, 2024, and has repurchased and canceled 36,180,000 H-shares during the reporting period - The company was authorized to repurchase up to **10%** of its issued A-shares or H-shares, respectively[160](index=160&type=chunk) - During the reporting period, the company cumulatively repurchased **36,180,000 H-shares**, accounting for approximately **0.03%** of the company's total issued share capital as of June 30, 2025[160](index=160&type=chunk) - The total amount paid was **HKD 149,221,546**, and the repurchased H-shares that had not yet been canceled were canceled on June 3, 2025[160](index=160&type=chunk) March 2025 H-Share Repurchase Information | Repurchase Month | Number of Shares Repurchased | Highest Price Per Share (HKD/share) | Lowest Price Per Share (HKD/share) | Total Price (HKD) | | :--- | :--- | :--- | :--- | :--- | | March 2025 | 36,180,000 | 4.17 | 4.09 | 149,221,546 | - Controlled subsidiary Sinopec Shanghai Petrochemical Company Limited also implemented H-share repurchases[162](index=162&type=chunk) [Information on Major Subsidiaries or Associates](index=40&type=section&id=Information%20on%20Major%20Subsidiaries%20or%20Associates) During the reporting period, Sinopec Sales Co., Ltd. and China International United Petroleum & Chemicals Co., Ltd. were major subsidiaries, with their net profits or investment income significantly impacting the company's net profit H1 2025 Major Subsidiaries Information (RMB millions) | Company Name | Company Type | Registered Capital | Equity Held (%) | Total Assets | Net Assets | Net Profit | Operating Revenue | Operating Profit | Principal Business | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sinopec Sales Co., Ltd. | Controlled Subsidiary | 28,403 | 70 | 546,868 | 265,254 | 6,942 | 750,908 | 8,441 | Refined oil sales | | China International United Petroleum & Chemicals Co., Ltd. | Wholly-owned Subsidiary | 5,000 | 100 | 225,040 | 72,052 | 5,547 | 659,327 | 6,554 | Crude oil and petrochemical product trading | [Risk Factors](index=41&type=section&id=Risk%20Factors) The company faces multiple operational risks, including macroeconomic changes, industry cyclical fluctuations, policy and regulatory shifts, environmental regulations, oil and gas resource uncertainties, crude oil procurement price volatility, production and natural disaster risks, investment risks, overseas business expansion, exchange rate fluctuations, and cybersecurity risks - Macroeconomic changes risk: Global economic growth momentum is insufficient, increasing uncertainty, potentially affected by carbon tariffs, trade protectionism, geopolitical factors, and international oil price changes[165](index=165&type=chunk) - Industry cyclical changes risk: A significant portion of the company's revenue comes from refined oil and petrochemical products, and its business is cyclical, easily affected by macroeconomic conditions, policies, supply and demand, and price factors[165](index=165&type=chunk) - Macroeconomic policy and government regulation risk: The Chinese government is gradually relaxing industry access and strengthening regulation; policy changes such as opening up crude oil import rights, tightening refined oil export quotas, natural gas price reforms, support for new energy industries, and reforms in resource and environmental taxes may affect the company's operations[166](index=166&type=chunk) - Risk of changes in environmental regulations: Stricter environmental regulations may increase the company's environmental protection expenditures[167](index=167&type=chunk) - Crude oil procurement risk: Most of the crude oil required by the company needs to be purchased externally, and significant fluctuations in crude oil prices and localized supply disruptions may pose risks[168](index=168&type=chunk) - Overseas business expansion and operation risk: Overseas operations are affected by local laws and regulations, geopolitical factors, economic uncertainties, sanctions, unstable fiscal and tax policies, and other factors[170](index=170&type=chunk) - Exchange rate risk: Fluctuations in the RMB exchange rate will impact the revenue of the upstream segment and the profitability of the refining segment[170](index=170&type=chunk) - Cybersecurity risk: Cyberattacks may lead to production interruptions, data loss, damage to personnel, property, environment, and reputation, requiring continuous increased investment in security[171](index=171&type=chunk) Share Changes and Shareholder Information [Statement of Changes in Shares](index=43&type=section&id=Statement%20of%20Changes%20in%20Shares) As of June 30, 2025, the company's total shares decreased by 36,318,000 to 121,245,237,698 shares, primarily due to the cancellation of H-shares, with no change in restricted shares Statement of Changes in Shares | Item | Number Before Change | Percentage Before Change (%) | Change in Number | Number After Change | Percentage After Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 2,390,438,247 | 1.97 | — | 2,390,438,247 | 1.97 | | II. Unrestricted Tradable Shares | 118,891,117,451 | 98.03 | (36,318,000) | 118,854,799,451 | 98.03 | | Of which: Overseas listed foreign shares | 24,049,292,600 | 19.83 | (36,318,000) | 24,012,974,600 | 19.81 | | III. Total Shares | 121,281,555,698 | 100 | (36,318,000) | 121,245,237,698 | 100 | - During the reporting period, Sinopec canceled **36,318,000 H-shares**[172](index=172&type=chunk) - Share repurchases increased basic earnings per share and net assets per share attributable to ordinary shareholders in the most recent year and period[173](index=173&type=chunk) [Number of Shareholders and Shareholding Information](index=44&type=section&id=Number%20of%20Shareholders%20and%20Shareholding%20Information) As of June 30, 2025, the company had 456,099 shareholders, meeting Hong Kong Listing Rules' minimum public float, with Sinopec Group Company as the largest shareholder holding 68.53% - As of June 30, 2025, the company had a total of **456,099** shareholders, including **450,892** domestic A-share shareholders and **5,207** overseas H-share shareholders[174](index=174&type=chunk) - Sinopec's minimum public float complied with the requirements of the Hong Kong Listing Rules[174](index=174&type=chunk) June 30, 2025 Top Ten Shareholders' Shareholding Information | Shareholder Name | Number of Shares Held at Period End | Percentage (%) | Shareholder Nature | | :--- | :--- | :--- | :--- | | China Petrochemical Group Co., Ltd. | 83,090,545,996 | 68.53 | State-owned shares | | HKSCC Nominees Limited | 23,874,861,206 | 19.69 | H-shares | | China Securities Finance Corporation Limited | 2,325,374,407 | 1.92 | A-shares | | China National Petroleum Corporation | 2,165,749,530 | 1.79 | A-shares | | Hong Kong Securities Clearing Company Limited | 883,084,973 | 0.73 | A-shares | - As of June 30, 2025, Sinopec Group Company and its wholly-owned subsidiaries cumulatively increased their holdings of Sinopec A-shares by **28,486,900 shares** and H-shares by **302,004,000 shares**[176](index=176&type=chunk) June 30, 2025 H-Share Shareholder Information Disclosed Under the Securities and Futures Ordinance | Shareholder Name | Capacity in which Shares are Held | Number of Shares in which Interests are Held (shares) | Approximate Percentage of Sinopec's Interests (H-shares) (%) | | :--- | :--- | :--- | :--- | | BlackRock, Inc. | Interests of a corporation controlled by a substantial shareholder | 1,666,916,417(L) | 6.94(L) | | Shengjun Company | Beneficial owner | 1,344,668,000(L) | 5.60(L) | [Changes in Controlling Shareholder and Actual Controller](index=45&type=section&id=Changes%20in%20Controlling%20Shareholder%20and%20Actual%20Controller) During the reporting period, there were no changes in the company's controlling shareholder and actual controller - During the reporting period, there were no changes in Sinopec's controlling shareholder and actual controller[182](index=182&type=chunk) Bond-Related Information [Non-Financial Enterprise Debt Financing Instruments in the Interbank Bond Market](index=46&type=section&id=Non-Financial%20Enterprise%20Debt%20Financing%20Instruments%20in%20the%20Interbank%20Bond%20Market) The company issued multiple tranches of medium-term notes, technology innovation bonds, and ultra-short-term financing bonds in the interbank market, with all proceeds used as specified and timely interest payments made Overview of Non-Financial Enterprise Debt Financing Instruments in the Interbank Bond Market | Bond Abbreviation | Code | Issue Date | Maturity Date | Issue Size (RMB billions) | Bond Balance (RMB billions) | Interest Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 21 Sinopec MTN001 | 102101386 | 2021/7/23 | 2026/7/27 | 5.0 | 5.0 | 3.2 | | 24 Sinopec MTN001 | 102483276 | 2024/7/30 | 2034/7/31 | 3.5 | 3.5 | 2.24 | | 24 Sinopec MTN002 | 102483277 | 2024/7/30 | 2034/7/31 | 3.5 | 3.5 | 2.24 | | 24 Sinopec MTN003 | 102485444 | 2024/12/16 | 2026/12/17 | 6.0 | 6.0 | 1.7 | | 24 Sinopec MTN004 | 102485443 | 2024/12/16 | 2027/12/17 | 4.0 | 4.0 | 1.75 | | 25 Sinopec MTN001 | 102580205 | 2025/1/13 | 2030/1/14 | 12.0 | 12.0 | 1.75 | | 25 Sinopec MTN002 | 102580206 | 2025/1/13 | 2035/1/14 | 10.0 | 10.0 | 1.96 | | 25 Sinopec MTN003 | 102580639 | 2025/2/18 | 2045/2/19 | 5.0 | 5.0 | 2 | | 25 Sinopec SCP001 (Tech Innovation Bond) | 012581163 | 2025/5/19 | 2025/11/18 | 5.0 | 5.0 | 1.5 | | 25 Sinopec SCP002 (Tech Innovation Bond) | 012581165 | 2025/5/19 | 2025/11/18 | 5.0 | 5.0 | 1.5 | | 25 Sinopec SCP003 (Tech Innovation Bond) | 012581167 | 2025/5/19 | 2025/11/18 | 5.0 | 5.0 | 1.5 | | 25 Sinopec MTN004 (Tech Innovation Bond) | 102582100 | 2025/5/20 | 2028/5/21 | 5.0 | 5.0 | 1.62 | | 25 Sinopec SCP004 | 012581715 | 2025/7/18 | 2025/12/16 | 6.0 | 6.0 | 1.45 | - All bond proceeds have been used as specified in the prospectus[184](index=184&type=chunk) - The bonds are unsecured, the debt repayment plan remains unchanged, and the bond trustee has fulfilled its responsibilities as required by regulations[184](index=184&type=chunk) [Company's Accounting Data and Financial Indicators as of the End of the Reporting Period (PRC GAAP)](index=47&type=section&id=Company's%20Accounting%20Data%20and%20Financial%20Indicators%20as%20of%20the%20End%20of%20the%20Reporting%20Period%20(PRC%20GAAP)) As of the reporting period end, the company's current and quick ratios increased, while the asset-liability ratio

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或任何部份內容而產生或因倚賴 該等內容而引致之任何損失承擔任何責任。 （在中華人民共和國註冊成立的股份有限公司） （證券代號：00386） 2025年半年度業績公告 中國石油化工股份有限公司（「中國石化」或「本公司」）董事會謹此宣佈中國石 化及其附屬公司截至2025年6月30日止六個月之未經審計業績。本公告列載中 國石化2025年半年度報告全文，並符合香港聯合交易所有限公司證券上市規則 中有關中期業績初步公告附載資料之要求。中國石化2025年半年度報告全文 同時刊載於香港聯合交易所有限公司網站( www.hkexnews.hk )及中國石化網站 ( www.sinopec.com/listco /)。 發佈業績公告 本業績公告的中英文版本可在中國石化網站(www.sinopec.com/listco /)及香港聯合 交易所有限公司網站(www.hkexnews.hk)查閱。在對中英文版本理解上發生歧義 時，以中文為準。 承董事會命 中國石油化工股份有限公司 黃文生 副總裁、 ...