[Company Information](index=5&type=section&id=Company%20Information) [General Information](index=5&type=section&id=1%20General%20Information) Junlian Holdings Limited is a limited liability company incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange, primarily engaged in property agency services for industrial, commercial, and retail properties in Hong Kong, property investment, money lending, and securities investment - The company is incorporated in the Cayman Islands and listed on the Main Board of The Stock Exchange of Hong Kong Limited[7](index=7&type=chunk) - The Group's principal activities include providing industrial, commercial, and retail property agency services in Hong Kong, property investment, money lending, and securities investment[7](index=7&type=chunk) [Basis of Preparation](index=5&type=section&id=2%20Basis%20of%20Preparation) The unaudited condensed consolidated interim financial information for the six months ended June 30, 2025, is prepared on a historical cost basis, adjusted for the revaluation of investment properties at fair value, complying with HKAS 34 and Listing Rules disclosure requirements. The Group adopted revised standards effective in 2025, with no material impact on results or financial position - The financial information is prepared on a historical cost basis, adjusted for the revaluation of investment properties at fair value, in compliance with HKAS 34 and Appendix D2 of the Listing Rules disclosure requirements[10](index=10&type=chunk) - The adoption of revised standards effective in 2025 had no material impact on the Group's results or financial position[12](index=12&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Condensed Consolidated Statement of Comprehensive Income](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income%20%28Unaudited%29) For the six months ended June 30, 2025, the Group shifted from profit to a loss of HKD 33,803 thousand, primarily due to a significant increase in fair value loss on investment properties. Despite a 19.36% year-on-year revenue growth, both operating and pre-tax profits turned into losses Key Figures from Condensed Consolidated Statement of Comprehensive Income | Metric | June 30, 2025 (HKD thousands) | June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 240,538 | 201,530 | +19.36% | | Fair value loss on investment properties | (47,200) | (3,400) | Loss widened | | Operating (loss)/profit | (25,036) | 19,788 | Shifted from profit to loss | | (Loss)/Profit before tax | (31,300) | 10,974 | Shifted from profit to loss | | (Loss)/Profit and total comprehensive (loss)/income for the period | (33,803) | 9,291 | Shifted from profit to loss | - The loss attributable to owners of the Company for the period was **HKD 33,343 thousand**, compared to a profit of HKD 9,504 thousand in the prior year period[4](index=4&type=chunk) [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position%20%28Unaudited%29) As of June 30, 2025, the Group's total assets were HKD 1,539,222 thousand, a 5.90% decrease from the end of 2024, mainly due to a reduction in investment property fair value. Total liabilities and equity also decreased, while current liabilities declined Key Figures from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Total assets | 1,539,222 | 1,635,768 | -5.90% | | Investment properties | 905,700 | 952,900 | -4.95% | | Cash and cash equivalents | 209,947 | 285,998 | -26.60% | | Total liabilities | 461,717 | 524,460 | -12.06% | | Total equity | 1,077,505 | 1,111,308 | -3.04% | [(Loss)/Earnings per share](index=12&type=section&id=8%20%28Loss%29%2FEarnings%20per%20share) For the six months ended June 30, 2025, the loss attributable to owners of the Company resulted in a basic and diluted loss per share of HK cents 1.847, compared to a profit per share of HK cents 0.526 in the prior year period. Diluted loss per share was the same as basic loss per share due to the anti-dilutive effect of share options (Loss)/Earnings per share | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company (HKD thousands) | (33,343) | 9,504 | | Basic and diluted (loss)/earnings per share (HK cents) | (1.847) | 0.526 | - Diluted (loss)/earnings per share was the same as basic (loss)/earnings per share, as the exercise of the Company's share options had an anti-dilutive effect[29](index=29&type=chunk) [Interim Dividend](index=11&type=section&id=7%20Interim%20Dividend) The Board did not declare an interim dividend for the six months ended June 30, 2025, consistent with the prior year period - The Board did not declare an interim dividend for the six months ended June 30, 2025 (for the six months ended June 30, 2024: nil)[27](index=27&type=chunk)[66](index=66&type=chunk) [Business Segment Performance](index=6&type=section&id=Business%20Segment%20Performance) [Revenue and Segment Information](index=6&type=section&id=3%20Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from property agency, rental income, and money lending interest. Total revenue grew 19.36% year-on-year in H1 2025. The property investment segment shifted from profit to loss due to fair value losses, while external customer revenue from property agency business increased - Executive Directors assess performance based on the Group's principal activities in Hong Kong, including property agency services for industrial, commercial, and retail properties, property investment, money lending, and securities investment[15](index=15&type=chunk) [Revenue Composition](index=6&type=section&id=3.1.1%20Revenue%20Composition) Revenue Composition (For the six months ended June 30) | Revenue Source | 2025 (HKD thousands) | 2024 (HKD thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Agency fees | 209,390 | 171,657 | +22.09% | | Rental income | 14,022 | 13,394 | +4.69% | | Interest income from money lending business | 17,126 | 16,479 | +3.92% | | **Total Revenue** | **240,538** | **201,530** | **+19.36%** | [Segment Results Analysis](index=7&type=section&id=3.1.2%20Segment%20Results%20Analysis) H1 2025 Segment Revenue from External Customers (HKD thousands) | Segment | 2025 | 2024 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Commercial property agency | 55,126 | 64,859 | -15.01% | | Industrial property agency | 84,064 | 43,237 | +94.42% | | Retail property agency | 70,200 | 63,561 | +10.45% | | Property investment (rental income) | 14,022 | 13,394 | +4.69% | | Money lending business (interest income) | 17,126 | 16,479 | +3.92% | | Securities investment | - | - | - | | **Total** | **240,538** | **201,530** | **+19.36%** | H1 2025 Segment Results (HKD thousands) | Segment | 2025 | 2024 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Commercial property agency | 2,453 | 2,505 | -2.1% | | Industrial property agency | (2,862) | 4,440 | Shifted from profit to loss | | Retail property agency | 9,965 | 474 | +1999.15% | | Property investment | (39,058) | 4,262 | Shifted from profit to loss | | Money lending business | 12,506 | 13,858 | -9.76% | | Securities investment | (1) | - | - | | **Segment results for reported segments** | **(16,997)** | **25,539** | **Shifted from profit to loss** | [Segment Assets and Liabilities](index=9&type=section&id=3.1.3%20Segment%20Assets%20and%20Liabilities) June 30, 2025 Segment Assets and Liabilities (HKD thousands) | Segment | Segment Assets | Segment Liabilities | | :--- | :--- | :--- | | Commercial property agency | 38,465 | 37,977 | | Industrial property agency | 81,836 | 87,186 | | Retail property agency | 62,864 | 55,600 | | Property investment | 906,956 | 21,022 | | Money lending business | 214,904 | 934 | | Securities investment | 7 | - | | **Total** | **1,305,032** | **202,719** | - Segment assets accounted for **84.78%** of total assets (1,305,032 / 1,539,222), and segment liabilities accounted for **43.90%** of total liabilities (202,719 / 461,717)[20](index=20&type=chunk)[21](index=21&type=chunk) [Other Income](index=10&type=section&id=4%20Other%20Income) Other income for H1 2025 was HKD 166 thousand, a 41.75% decrease from HKD 285 thousand in the prior year period Other Income (HKD thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Other income | 166 | 285 | [Other Operating Costs](index=11&type=section&id=5%20Other%20Operating%20Costs) Other operating costs for H1 2025 were HKD 18,701 thousand, a 4.64% year-on-year increase, primarily driven by higher legal and professional fees, insurance expenses, and other miscellaneous expenses Other Operating Costs (HKD thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Office and branch operating expenses | 5,621 | 5,598 | | Government rent and rates, building management fees | 3,184 | 3,527 | | Legal and professional fees | 2,779 | 1,558 | | Trademark license fees | 583 | 715 | | Insurance expenses | 2,112 | 1,923 | | Bank charges | 229 | 1,004 | | Auditor's remuneration | 733 | 733 | | Others | 3,460 | 2,813 | | **Total** | **18,701** | **17,871** | - Direct operating expenses for investment properties generating rental income amounted to **HKD 3,124 thousand**, of which **HKD 1,632 thousand** was included in other operating costs[23](index=23&type=chunk) [Income Tax Expense](index=11&type=section&id=6%20Income%20Tax%20Expense) Income tax expense for H1 2025 was HKD 2,503 thousand, a 48.72% year-on-year increase, mainly due to deferred tax shifting from a reversal to an expense. Hong Kong profits tax rate remained at 16.5%, with a two-tiered tax rate applicable to some subsidiaries Income Tax Expense (HKD thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Hong Kong profits tax | 1,581 | 1,960 | | Deferred tax | 922 | (277) | | **Total** | **2,503** | **1,683** | - Hong Kong profits tax is provided at a rate of **16.5%** on the estimated assessable profit for the period, with a two-tiered tax rate of **8.25%** applicable to the first **HKD 2,000,000** of assessable profit for certain subsidiaries[26](index=26&type=chunk) [Assets and Liabilities Details](index=12&type=section&id=Assets%20and%20Liabilities%20Details) [Investment Properties](index=12&type=section&id=9%20Investment%20Properties) As of June 30, 2025, investment properties had a fair value of HKD 905,700 thousand, with a fair value loss of HKD 47,200 thousand recognized during the period, a significant increase from the prior year. Investment properties totaling HKD 627,500 thousand were pledged as collateral for bank borrowings Changes in Fair Value of Investment Properties (HKD thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | At beginning of period | 952,900 | 952,900 | | Changes in fair value | (47,200) | (3,400) (June 30, 2024) | | At end of period | 905,700 | 952,900 | - Investment properties totaling **HKD 627,500 thousand** were pledged as collateral for the Group's bank borrowings[30](index=30&type=chunk) [Loans Receivable](index=13&type=section&id=10%20Loans%20Receivable) As of June 30, 2025, total loans receivable were HKD 214,367 thousand, a 14.62% decrease from the end of 2024. Overdue loans significantly decreased by 86.34%, with the largest portion due within one year. All loans receivable are secured by property mortgages in Hong Kong Loans Receivable Maturity Profile (HKD thousands) | Maturity | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Overdue | 8,306 | 60,721 | | Within one year | 205,061 | 190,343 | | After one year but within two years | 1,000 | - | | **Total** | **214,367** | **251,064** | - Loans receivable refer to property mortgage loans granted to customers in Hong Kong[32](index=32&type=chunk) [Trade and Other Receivables](index=13&type=section&id=11%20Trade%20and%20Other%20Receivables) As of June 30, 2025, total trade and other receivables were HKD 160,409 thousand, a significant 98.95% increase from the end of 2024. Current (not overdue) trade receivables constituted the largest portion and increased significantly Trade Receivables Ageing Analysis (HKD thousands) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current (not overdue) | 147,111 | 74,323 | | Overdue less than 30 days | 6,366 | 4,207 | | Overdue 31 to 60 days | 5,724 | 1,742 | | Overdue 61 to 90 days | 943 | 352 | | Overdue 91 to 180 days | 265 | - | | **Total** | **160,409** | **80,624** | - Trade receivables primarily represent agency fees due from customers, with no general credit terms granted[34](index=34&type=chunk) [Bank Borrowings](index=14&type=section&id=12%20Bank%20Borrowings) As of June 30, 2025, total bank borrowings were HKD 234,541 thousand, a significant 37.00% decrease from the end of 2024. The current portion repayable within one year significantly declined. Bank borrowings are secured by the Group's investment properties and corporate guarantees from the Company Bank Borrowings Repayment Schedule (HKD thousands) | Repayment Period | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Repayable within one year | 15,006 | 146,006 | | Repayable after one year but within two years | 176,807 | 100,380 | | Repayable after two years but within five years | 42,728 | 126,658 | | **Total** | **234,541** | **373,044** | - Bank borrowings are secured by the Group's investment properties totaling **HKD 627,500 thousand** and corporate guarantees provided by the Company[35](index=35&type=chunk) [Trade and Other Payables](index=14&type=section&id=13%20Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables were HKD 194,365 thousand, a significant 59.12% increase from the end of 2024, primarily comprising commissions and rebates payable to property consultants, co-operating real estate agents, and property purchasers - Total trade and other payables amounted to **HKD 194,365 thousand** (December 31, 2024: HKD 122,156 thousand)[6](index=6&type=chunk) - Trade payables primarily include commissions and rebates payable to property consultants, co-operating real estate agents, and property purchasers, with **HKD 19,129 thousand** due within 30 days for related agency fees already received[37](index=37&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) [Results Review](index=15&type=section&id=Results%20Review) The Group recorded a loss attributable to owners of HKD 33,343 thousand in H1 2025, compared to a profit of HKD 9,504 thousand in the prior year, primarily due to fair value losses from revaluation of investment properties - The Group recorded a loss attributable to owners of **HKD 33,343 thousand**, compared to a profit of HKD 9,504 thousand in the prior year period[39](index=39&type=chunk) - The loss for the interim period was primarily due to fair value losses arising from the revaluation of the Group's investment properties[39](index=39&type=chunk) [Market and Business Performance](index=15&type=section&id=Market%20and%20Business%20Performance) In H1 2025, Hong Kong's property market sentiment slightly improved, with increased non-residential property sales registrations. The Group's agency, property investment, and credit businesses showed stable or slight improvements, but investment property revaluation losses offset profits from other operations [Market Activities](index=15&type=section&id=Market%20Activities%20Slightly%20Improved) - Overall market sentiment slightly improved in H1 2025, with year-on-year increases in sales registrations for retail, office, and industrial properties[40](index=40&type=chunk) - The market rebound was primarily driven by the rise of AI startups boosting Hong Kong stocks, a significant drop in HIBOR, and the government's reduction of stamp duty on property transactions below HKD 4 million[40](index=40&type=chunk) - The overall business environment remains challenging, with market performance still well below pre-pandemic levels, ongoing geopolitical uncertainties, and the retail sector continuously impacted by cross-border consumption[40](index=40&type=chunk) [Agency Business](index=15&type=section&id=Agency%20Business%20Slightly%20Improved) - Operating results for the property agency business showed a slight improvement compared to the prior year period, benefiting from increased transactions in the non-residential property market[41](index=41&type=chunk) - The new management team actively promoted synergy between the sales team and relevant member companies of Midland Holdings, leading to a significant year-on-year increase in referral income from non-residential property business[41](index=41&type=chunk) - The increase in referral business also contributed to a rise in rebate expenses[41](index=41&type=chunk) [Property Investment Business](index=15&type=section&id=Property%20Investment%20Business%20Remains%20Stable) - Property leasing business continued to perform steadily in H1 2025, with high occupancy rates for serviced apartments and a slight increase in rental income[42](index=42&type=chunk) - For commercial properties, the overall environment remains challenging due to weak retail market conditions and the shadow of trade tensions[42](index=42&type=chunk) - Property leasing business continues to provide stable returns to the Group, with its performance only impacted by property revaluation losses[42](index=42&type=chunk) [Money Lending Business](index=16&type=section&id=Money%20Lending%20Business%20Remains%20Stable) - The operating environment for the money lending business remained challenging in H1 2025[43](index=43&type=chunk) - The Group consistently adheres to a prudent credit policy and has not relaxed its risk tolerance for high-risk businesses[43](index=43&type=chunk) - The money lending business continued to make a positive contribution to the Group during the interim period[43](index=43&type=chunk) [Property Revaluation](index=16&type=section&id=Property%20Revaluation) - The commercial property market is still a considerable distance from a full recovery, and asset prices have not yet stopped falling[44](index=44&type=chunk) - The Group's investment properties recorded revaluation losses exceeding the profits generated by other businesses, despite being non-cash in nature[44](index=44&type=chunk) [Outlook](index=16&type=section&id=Outlook) The Group anticipates an increasingly uncertain global economic landscape but sees opportunities from China's strong economic performance and Hong Kong's status as a capital safe haven. While the non-residential property market shows improvement, challenges persist, alongside investment opportunities arising from asset depreciation [Global Economy and Hong Kong Opportunities](index=16&type=section&id=Global%20Headwinds%20and%20Emerging%20Opportunities) - The global economic landscape is increasingly uncertain, with unpredictable US trade and foreign policies and escalating geopolitical tensions[45](index=45&type=chunk) - Mainland China's economy has performed relatively well year-to-date in 2025, with **5.4% growth in Q1** and a **5.2% increase in Q2 GDP**[45](index=45&type=chunk) - Hong Kong has become a safe haven for capital inflows, HIBOR is expected to remain low long-term, and in H1 2025, Hong Kong surpassed Wall Street as the world's preferred IPO destination[45](index=45&type=chunk)[46](index=46&type=chunk) - Tourist arrivals in Hong Kong are increasing, Kai Tak Sports Park and West Kowloon Cultural District will inject new impetus, and Hong Kong is further solidifying its position as a global education hub[46](index=46&type=chunk) [Non-Residential Property Market Challenges and Opportunities](index=17&type=section&id=Improvements%20Amidst%20Challenges) - While Hong Kong's non-residential property market shows signs of improvement, it still faces significant challenges, and a full recovery will take time[47](index=47&type=chunk) [Office Market](index=17&type=section&id=Office%20Market) - Favorable factors: Major transactions in Central demonstrate strong confidence from financial institutions in Hong Kong's prime office market, with some office prices falling by nearly **70%**, limiting further significant declines[48](index=48&type=chunk) - Unfavorable factors: AI applications may reduce recruitment and office demand, geopolitical tensions, and the market still faces severe oversupply of office space, leading to high vacancy rates[49](index=49&type=chunk) [Retail Shop Market](index=17&type=section&id=Retail%20Shop%20Market) - Favorable factors: The overall retail sector shows initial signs of stabilization, the government's "Mega Event Capital" initiatives are yielding results, and a weaker US dollar is helping Hong Kong's tourism regain competitiveness[50](index=50&type=chunk) - Unfavorable factors: Cross-border consumption has a profound impact, coupled with the prevalence of online shopping, it may take time for the local retail industry to emerge from its slump[51](index=51&type=chunk) [Industrial Building Market](index=17&type=section&id=Industrial%20Building%20Market) - Favorable factors: The industrial building market has seen significant price drops, with some properties now trading below construction costs, potentially attracting end-users and investors as interest rates decline[52](index=52&type=chunk) - Unfavorable factors: A full recovery remains distant, and while lower borrowing costs offer some relief, they are not a panacea[53](index=53&type=chunk) [Property Investment and Money Lending Business Outlook](index=17&type=section&id=Property%20Investment) - The residential leasing market has a positive outlook, benefiting from an increase in non-local students and an influx of mainland professionals to Hong Kong[54](index=54&type=chunk) - The retail shop leasing outlook is cautiously optimistic, with the Group's retail leasing portfolio expected to benefit from a gradual recovery in the retail market[54](index=54&type=chunk) - The money lending business still faces multiple challenges, but the real estate market shows signs of warming up, transaction activity is increasing, and lower interest rates are expected to provide some support[55](index=55&type=chunk) [Opportunities Amidst Crisis](index=18&type=section&id=Crisis-ridden%20with%20Emerging%20Opportunities) - Some experienced investors or developers are willing to exit at discounted prices during deleveraging, with significant asset depreciation making returns attractive (e.g., Grade A office prices fell **51%** from peak, with returns increasing by **1.2 percentage points to 3.6%**)[56](index=56&type=chunk) - Hong Kong Exchanges and Clearing Limited and universities are actively acquiring properties for self-use, providing market support[56](index=56&type=chunk) - The Development Bureau expanded the definition of "hotel" to include student dormitories, exempting related planning procedures and simplifying applications, which is expected to stimulate more en-bloc property transactions and redevelopment investment opportunities[56](index=56&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) [Liquidity and Financial Resources](index=19&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2025, the Group's cash and cash equivalents decreased, bank borrowings significantly declined, and both the gearing ratio and current ratio improved. Return on equity shifted from positive to negative. Directors believe the Group's financial resources are sufficient for its ongoing working capital needs Key Indicators of Liquidity and Financial Resources | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents (HKD thousands) | 209,947 | 285,998 | -26.60% | | Bank borrowings (HKD thousands) | 234,541 | 373,044 | -37.00% | | Gearing ratio | 21.8% | 33.6% | Improved | | Current ratio | 2.7 | 2.3 | Improved | | Return on equity | -3.14% | +0.81% (June 30, 2024) | Shifted from positive to negative | - The Group had unutilized banking facilities of **HKD 73,000 thousand** from certain banks, consistent with the end of 2024[58](index=58&type=chunk) - The Directors believe the Group's financial resources are sufficient to meet its ongoing working capital requirements and are primarily invested in liquid instruments, products, or equities with good credit quality[59](index=59&type=chunk) - The Group faces minimal foreign exchange risk[60](index=60&type=chunk) [Loan Portfolio and Money Lending Business Information](index=20&type=section&id=The%20Group%27s%20Loan%20Portfolio%20and%20Money%20Lending%20Business%20Information) As of June 30, 2025, total outstanding loans receivable were HKD 214,400 thousand, involving 32 loans. All loans are secured by first mortgages on residential and/or non-residential properties, with an average loan-to-value ratio of approximately 48%. The Group strictly implements credit risk assessment and collection policies, with no loan impairment losses recognized during the period - As of June 30, 2025, outstanding loans receivable amounted to **HKD 214,400 thousand** (December 31, 2024: HKD 251,100 thousand), involving **32 loans**[62](index=62&type=chunk) - The largest outstanding loan receivable was **HKD 32,200 thousand** (approximately **15%** of the total outstanding loan portfolio), secured by a first mortgage on a prime residential property and two parking spaces, with a loan-to-value ratio of approximately **27%**[62](index=62&type=chunk) - All outstanding loans receivable are secured by first mortgages on residential and/or non-residential properties, with an average loan-to-value ratio of approximately **48%**. No loan impairment losses were recognized during the period[62](index=62&type=chunk) - The Group's money lending business is operated by Junlian Credit Limited, implementing strict credit risk assessments (including borrower's financial strength, collateral, market conditions) and regular review of the loan portfolio by a collection team[63](index=63&type=chunk) [Other Information](index=20&type=section&id=Other%20Information) [Contingent Liabilities](index=20&type=section&id=Contingent%20Liabilities) The Group has been involved in certain claims/litigations related to property agency services, but management, after legal advice, believes sufficient provisions have been made or there is no indication of potential outflow of economic resources based on current facts and evidence, thus no further provisions are required - The Group has been involved in certain claims/litigations related to property agency services, including several cases where third-party clients alleged that certain employees of the Group made misrepresentations regarding properties clients intended to purchase when providing advice[64](index=64&type=chunk) - Management believes that sufficient provisions have been made in the condensed consolidated financial statements to cover any potential liabilities, or based on current facts and evidence, there is no indication of a possible outflow of economic resources, thus no further provisions are required[64](index=64&type=chunk) [Staff Information](index=20&type=section&id=Staff%20Information) As of June 30, 2025, the Group employed 385 full-time employees, a decrease from 405 at the end of 2024. The Group offers competitive remuneration and benefits, including discretionary bonuses, profit-linked incentives, share options, education allowances, medical and retirement benefits, and regular internal and external training - As of June 30, 2025, the Group employed **385 full-time employees** (December 31, 2024: 405 employees)[65](index=65&type=chunk) - Employee remuneration policy is determined with reference to industry practice, individual performance, qualifications, and experience, offering discretionary bonuses, profit-linked incentives, and share options[65](index=65&type=chunk) - The Group also provides other benefits to its employees, including education allowances, medical and retirement benefits, and regular internal and external training and development programs[65](index=65&type=chunk) [Corporate Governance](index=21&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules during the interim period and adopted a code of conduct for directors' securities transactions no less stringent than the standard code. Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the interim period - The Company has complied with all applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules throughout the interim period[67](index=67&type=chunk) - The Company has adopted its own code of conduct for directors' securities transactions, the terms of which are no less stringent than the standards set out in Appendix C3 of the Listing Rules, and all Directors have confirmed compliance[68](index=68&type=chunk) - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the interim period[69](index=69&type=chunk) [Review of Financial Statements and Publication](index=21&type=section&id=Review%20of%20Financial%20Statements) The Company's Audit Committee has reviewed and discussed the Group's unaudited condensed consolidated interim financial information with management. The interim results announcement has been published on the HKEX and Company websites, and the interim results report will be dispatched to shareholders and published in due course - The Company's Audit Committee has reviewed and discussed the Group's unaudited condensed consolidated interim financial information for the interim period with management[70](index=70&type=chunk) - This interim results announcement is published on the HKEX website and the Company's website, and the Company's 2025 interim results report will be dispatched to shareholders and published in due course[71](index=71&type=chunk) [Acknowledgement](index=21&type=section&id=Acknowledgement) The Board sincerely thanks all shareholders and clients for their continuous support and expresses gratitude to management and the team for their resilience and dedication during challenging times - The Board hereby expresses its sincere gratitude to all shareholders and clients for their continuous support[72](index=72&type=chunk) - Sincere appreciation is extended to the management and team for their resilience and dedication demonstrated during challenging times[72](index=72&type=chunk)

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company's financial performance for the six months ended June 30, 2025, shows significant revenue growth of 30.26% to RMB 298.55 million and a substantial reduction in net loss by 38.48% to RMB 82.28 million Financial Highlights for the Six Months Ended June 30, 2025 | Metric | 2025 (RMB '000) | 2024 (RMB '000) | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | 298,552 | 229,205 | 30.26% | | **Gross Profit** | 153,868 | 121,198 | 26.96% | | **Loss Before Tax** | (100,134) | (163,289) | (38.68)% | | **Loss for the Period** | (82,276) | (133,738) | (38.48)% | | **Net Loss Attributable to Owners of the Parent** | (74,086) | (129,653) | (42.86)% | [Management Discussion and Analysis](index=2&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operational performance, financial position, and strategic initiatives for the reporting period [Industry Overview and Core Technologies](index=2&type=section&id=Industry%20Overview%20and%20Core%20Technologies) Driven by national policies and large model breakthroughs, the medical AI industry is booming, with the company's domestically trained 'iFlytek Spark Medical Large Model' maintaining a leading edge in key technologies and applications - The company launched iFlytek Spark Medical Large Model X1, based on deep reasoning technology, as the only medical deep reasoning large model trained with fully domestic computing power, outperforming GPT-4o and DeepSeek R1 in several key metrics[10](index=10&type=chunk) Key Capability Enhancements of iFlytek Spark Medical Large Model | Capability Metric | March 2025 (X1) | July 2025 (Upgraded) | | :--- | :--- | :--- | | General Practice Assisted Diagnosis Accuracy Rate | 94.0% | 95.0% | | Health Consultation Answering Rate | 89.0% | 91.5% | | Physical Examination Report Interpretation Accuracy Rate | - | 86.3% | | Hospital Cardiology Primary Diagnosis Accuracy Rate | 90.1% | 91.2% | - In the first half of 2025, the company's total R&D investment (including R&D expenses and development expenditures) was **RMB 134.2 million**, accounting for **44.9% of total revenue** for the reporting period[17](index=17&type=chunk) - The company maintains multiple advantages in industry implementation, including massive professional knowledge data accumulation, fully self-developed large model technology, systematic innovative AI capabilities combining general and specialized applications, a robust technology implementation and service assurance system, and a firm commitment to fully localized hardware and software solutions[16](index=16&type=chunk)[18](index=18&type=chunk) [Business Review](index=8&type=section&id=Business%20Review) In the first half of 2025, total revenue grew 30.3% to RMB 298.6 million, with gross profit up 27.0% to RMB 153.9 million, driven by strong growth in regional and grassroots solutions Revenue and Gross Profit Breakdown by Business Segment (For the Six Months Ended June 30) | Business Segment | 2025 Revenue (RMB '000) | Revenue Share | YoY Growth | 2025 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Grassroots Solutions | 83,812 | 28.1% | 52.3% | 50.6% | | Regional Solutions | 57,625 | 19.3% | 178.1% | 25.9% | | Hospital Solutions | 52,862 | 17.7% | -10.0% | 61.5% | | Patient Management Services | 104,253 | 34.9% | 10.1% | 61.4% | | **Total** | **298,552** | **100.0%** | **30.3%** | **51.5%** | - The company's business is closely aligned with its mission of 'AI Assistant for Every Doctor, AI Health Assistant for Everyone,' upgrading its business classification into four major segments to empower government regulation, hospital efficiency, and personal health management through AI[23](index=23&type=chunk) [Grassroots Solutions](index=10&type=section&id=Grassroots%20Solutions) Driven by 'Smart Doctor Assistant,' this business saw revenue grow 52.3% to RMB 83.8 million, covering over 75,000 grassroots medical institutions with enhanced AI diagnostic accuracy - As of June 30, 2025, Smart Doctor Assistant covered **697 districts and counties** nationwide, serving over **75,000 grassroots medical institutions**[25](index=25&type=chunk) Key Operational Data for Smart Doctor Assistant | Metric | Cumulative Data | | :--- | :--- | | AI Assisted Diagnosis Suggestions | Over 1.01 billion times | | Standardized Electronic Medical Records Generated | Over 390 million copies | | Valuable Medical Records with Corrected Diagnoses | Over 1.763 million cases | | Unreasonable Prescriptions Identified | Over 110 million copies | - For the six months ended June 30, 2025, Grassroots Solutions recorded revenue of **RMB 83.8 million**, a **52.3% year-on-year increase**, accounting for **28.1% of total revenue**[26](index=26&type=chunk) [Regional Solutions](index=12&type=section&id=Regional%20Solutions) This business achieved a strong 178.1% revenue growth to RMB 57.6 million, primarily due to the widespread adoption of AI infectious disease prevention and control solutions across multiple provinces - For the six months ended June 30, 2025, Regional Solutions recorded revenue of **RMB 57.6 million**, a **178.1% year-on-year increase**, accounting for **19.3% of total revenue**, primarily driven by the application of AI infectious disease prevention and control solutions in multiple provinces[29](index=29&type=chunk) - AI Medical Insurance Solutions have covered **3,236 medical institutions** in **86 counties**, with an average detection rate of unreasonable expenditures reaching **3.9%**, ranking among the industry leaders[28](index=28&type=chunk) [Hospital Solutions](index=13&type=section&id=Hospital%20Solutions) Revenue for this segment decreased by 10.0% to RMB 52.9 million, as large model updates temporarily slowed application promotion, yet the 'three-in-one' smart hospital solution is deployed in over 500 hospitals - For the six months ended June 30, 2025, Hospital Solutions recorded revenue of **RMB 52.9 million**, a **10.0% year-on-year decrease**, accounting for **17.7% of total revenue**[31](index=31&type=chunk) - The AI medical record quality control system increased medical record quality inspection coverage from less than **5%** with traditional manual sampling to **100%** full coverage driven by AI[31](index=31&type=chunk) - iFlytek Spark Medical Large Model has been implemented in over **20 leading hospitals** nationwide and has established deep collaborations with top medical institutions such as Sichuan Huaxi Hospital and Shandong Qilu Hospital[30](index=30&type=chunk) [Patient Management Services](index=14&type=section&id=Patient%20Management%20Services) As the largest revenue source, this segment grew 10.1% to RMB 104.3 million, driven by AI post-diagnosis patient management, imaging cloud, and the 'iFlytek Xiaoyi' app, which surpassed 24 million downloads - For the six months ended June 30, 2025, Patient Management Services recorded revenue of **RMB 104.3 million**, a **10.1% year-on-year increase**, accounting for **34.9% of total revenue**[37](index=37&type=chunk) - As of June 30, 2025, the iFlytek Xiaoyi APP downloads exceeded **24 million**, with over **140 million AI consultations** completed and a user satisfaction rate of **98.0%**[36](index=36&type=chunk) - In the first half of 2025, the number of offline partner stores for smart hearing aids expanded from **227 to 380**, representing a **67.4% increase**[37](index=37&type=chunk) [Financial Review](index=18&type=section&id=Financial%20Review) Total revenue increased by 30.3%, with gross margin stable at 51.5%, while net loss significantly narrowed by 38.5% to RMB 82.3 million, supported by increased bank borrowings [Operating Performance Analysis](index=18&type=section&id=Operating%20Performance%20Analysis) Revenue growth was driven by grassroots and regional solutions, with gross profit increasing 27.0% to RMB 153.9 million, while effective cost control led to a 38.5% reduction in net loss - Gross margin slightly decreased from **52.9%** in the prior year to **51.5%**, showing minimal fluctuation[40](index=40&type=chunk) - Selling expenses increased by **16.7%** year-on-year to **RMB 102.1 million**, primarily due to higher staff costs and advertising expenses; R&D expenses decreased by **15.4%** year-on-year to **RMB 114.5 million**, mainly due to reduced share option and intangible asset amortization[43](index=43&type=chunk)[45](index=45&type=chunk) Reconciliation of Non-IFRS Measures | Metric (RMB '000) | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Loss for the Period | (82,276) | (133,738) | | Add: Equity-settled share-based payments | 16,099 | 28,632 | | Add: Listing expenses | — | 18,735 | | **Adjusted Net Loss for the Period** | **(66,177)** | **(86,371)** | [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held RMB 743.9 million in cash, with net cash outflow from operations of RMB 169.2 million, leading to an increase in bank borrowings and a debt-to-asset ratio of 60.4% Condensed Cash Flow Statement (For the Six Months Ended June 30) | Item (RMB Million) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (169.2) | (134.1) | | Net Cash Used in Investing Activities | (24.2) | (7.8) | | Net Cash From Financing Activities | 260.6 | 101.4 | | **Cash and Cash Equivalents at End of Period** | **743.9** | **102.0** | - Bank borrowings increased from **RMB 244.8 million** at the end of 2024 to **RMB 513.5 million** as of June 30, 2025[59](index=59&type=chunk) - The debt-to-asset ratio (total liabilities/total assets) increased from **52.8%** at the end of 2024 to **60.4%** as of June 30, 2025[60](index=60&type=chunk) [Outlook and Human Resources](index=24&type=section&id=Outlook%20and%20Human%20Resources) The company will pursue a 'top-tier technology, grounded application' strategy, focusing on leading AI medical technology and serving government, hospitals, and patients, supported by 928 employees and a total staff cost of RMB 167.6 million - The company will steadfastly implement its 'top-tier' (maintaining globally leading AI medical technology) and 'grounded' (focusing on critical social needs, serving GBC clients) development strategies[68](index=68&type=chunk) - As of June 30, 2025, the Group had **928 full-time employees**, a slight increase from **911** at the end of 2024[69](index=69&type=chunk) - For the six months ended June 30, 2025, total staff remuneration and welfare expenses amounted to **RMB 167.6 million**[71](index=71&type=chunk) [Condensed Consolidated Financial Statements](index=26&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the six months ended June 30, 2025, including the income statement, statement of financial position, and selected notes, reflecting revenue growth and reduced losses [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=26&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the reporting period, revenue reached RMB 298.6 million, a 30.3% increase, with gross profit at RMB 153.9 million, up 27.0%, leading to a narrowed loss of RMB 82.28 million Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended June 30) | Item (RMB '000) | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Revenue | 298,552 | 229,205 | | Gross Profit | 153,868 | 121,198 | | Loss Before Tax | (100,134) | (163,289) | | Loss and Total Comprehensive Expenses for the Period | (82,276) | (133,738) | | Loss Attributable to Owners of the Company | (74,086) | (129,653) | | Basic Loss Per Share (RMB) | (0.61) | (1.14) | [Condensed Consolidated Statement of Financial Position](index=27&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets were RMB 2,323 million, total liabilities RMB 1,402 million, and net assets RMB 921 million, with increases in both assets and liabilities driven by trade receivables and bank borrowings Summary of Condensed Consolidated Statement of Financial Position | Item (RMB '000) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | **Non-current Assets** | 466,982 | 408,745 | | **Current Assets** | 1,855,774 | 1,681,192 | | **Total Assets** | **2,322,756** | **2,089,937** | | **Current Liabilities** | 1,157,438 | 1,000,289 | | **Non-current Liabilities** | 244,653 | 102,806 | | **Total Liabilities** | **1,402,091** | **1,103,095** | | **Net Assets** | **920,665** | **986,842** | [Notes to the Financial Statements (Selected)](index=29&type=section&id=Notes%20to%20the%20Financial%20Statements%20(Selected)) These notes detail revenue breakdown by business line and type, highlighting a major customer contributing over 10% of total revenue, and provide an aging analysis of trade receivables and payables Disaggregation of Revenue from Contracts with Customers (By Business Line) | Business Line (RMB '000) | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Grassroots Solutions | 83,812 | 55,042 | | Regional Solutions | 57,625 | 20,722 | | Hospital Solutions | 52,862 | 58,727 | | Patient Management Services | 104,253 | 94,714 | | **Total** | **298,552** | **229,205** | - During the reporting period, revenue from Customer A was **RMB 39.03 million**, accounting for **13.1% of total revenue**, making them a major customer[89](index=89&type=chunk)[90](index=90&type=chunk) [Other Information](index=37&type=section&id=Other%20Information) This section covers the company's corporate governance, compliance, and the utilization of IPO proceeds, confirming adherence to governance codes and the review of interim financial statements by auditors [Corporate Governance and Compliance](index=37&type=section&id=Corporate%20Governance%20and%20Compliance) The company maintains high corporate governance standards, complying with all applicable code provisions of the Listing Rules, with its interim financial statements reviewed by Deloitte Touche Tohmatsu - The company complied with the applicable code provisions of the Corporate Governance Code for the six months ended June 30, 2025[103](index=103&type=chunk) - The Group's interim financial statements have been reviewed by its auditor, Deloitte Touche Tohmatsu, in accordance with Hong Kong Standard on Review Engagements 2410[105](index=105&type=chunk) - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[108](index=108&type=chunk) [Use of Proceeds from Listing](index=39&type=section&id=Use%20of%20Proceeds%20from%20Listing) The company, listed in December 2024, had net IPO proceeds of approximately HKD 507.1 million, with HKD 75.7 million utilized for operations, R&D, and product upgrades, and the remaining HKD 431.4 million planned for use by end of 2026 Use of Proceeds from Listing and Utilization (HKD Million) | Item | Planned Percentage | Utilized During Reporting Period | Unutilized at Period End | | :--- | :--- | :--- | :--- | | Investment in R&D, Strengthening Core Capabilities | 32.3% | 12.0 | 152.0 | | Upgrading and Developing Products | 26.6% | 9.1 | 125.9 | | Strengthening Commercialization Capabilities | 24.7% | 5.5 | 119.6 | | Potential Acquisitions | 6.4% | — | 32.3 | | Working Capital and Others | 10.0% | 49.1 | 1.6 | | **Total** | **100%** | **75.7** | **431.4** |

[H1 2025 Performance Highlights](index=2&type=section&id=H1%202025%20Performance%20Highlights) The company achieved its first adjusted EBITDA and net profit turnaround since 2022 and 2021 respectively, driven by AI technology and improved gross margin H1 2025 Financial Performance Summary (RMB Million) | Indicator | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 775.5 | 867.4 | (10.6%) | | Adjusted Revenue | 775.5 | 719.1 | 7.8% | | Gross Profit | 582.3 | 575.9 | 1.1% | | Adjusted Gross Profit | 583.2 | 428.5 | 36.1% | | Operating Profit / (Loss) | 0.3 | (287.3) | (100.1%) | | Loss Before Income Tax | (29.7) | (547.1) | (94.6%) | | Loss for the Period | (47.2) | (569.8) | (91.7%) | | Adjusted EBITDA / (Loss) | 71.8 | (176.3) | (140.7%) | | Adjusted Net Profit / (Loss) | 16.9 | (187.4) | (109.0%) | - The company firmly positions AI technology as its core driver, continuously deepening its SaaS and precision marketing business layout, and promoting the widespread application and implementation of AI Agent technology in key scenarios like e-commerce and retail[5](index=5&type=chunk) - Gross margin increased from **66.4% to 75.1%**, indicating continuous improvement in revenue quality, achieving the first adjusted EBITDA turnaround since 2022 and the first adjusted net profit turnaround since 2021[6](index=6&type=chunk) - AI-related revenue achieved a breakthrough, reaching **RMB 34 million** in H1 2025, contributing to the quarter-over-quarter stabilization and rebound of subscription solutions revenue[5](index=5&type=chunk)[7](index=7&type=chunk)[9](index=9&type=chunk) - As of June 30, 2025, the Group's cash and bank balances were approximately **RMB 1.574 billion**, indicating a healthy cash and financial position[6](index=6&type=chunk) [I. Subscription Solutions](index=5&type=section&id=I.%20Subscription%20Solutions) Subscription solutions revenue declined due to macro factors and business adjustments, but AI-related income is emerging as a new growth driver Subscription Solutions Key Data (H1 2025 vs H1 2024) | Indicator | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue (RMB Million) | 438.0 | 487.0 | (10.1%) | | Number of Paying Merchants | 59,149 | 68,725 | (13.9%) | | Average Revenue Per User (ARPU) (RMB) | 7,402 | 7,083 | 4.5% | - Revenue decline was primarily due to the reduction of low-quality subscription businesses in 2024 and a temporary delay in demand caused by existing customers' business contraction amidst the external macro environment[7](index=7&type=chunk)[13](index=13&type=chunk) - AI-related revenue contributed **RMB 34 million** in H1 2025, helping subscription solutions revenue stabilize and rebound quarter-over-quarter[7](index=7&type=chunk)[13](index=13&type=chunk) - Smart retail customer GMV increased by **13.4%** year-on-year, with the number of accounts generating over RMB 100 million in GMV growing by **60%**, and accounts generating over RMB 1 million in GMV growing by **34%**[14](index=14&type=chunk) - Actively exploring internationalization, the one-stop e-commerce growth solution Markivo has become a Shopify app service provider, and its Haiding business is expanding into Southeast Asian and European and American markets[15](index=15&type=chunk) [II. Merchant Solutions](index=6&type=section&id=II.%20Merchant%20Solutions) Merchant solutions achieved significant adjusted revenue growth and improved gross margin, driven by business restructuring and multi-platform expansion Merchant Solutions Key Data (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Million) | 2024 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 337.6 | 380.6 | (11.3%) | | Adjusted Revenue | 337.6 | 232.3 | 45.3% | | Gross Profit | 308.2 | 283.5 | 8.7% | | Gross Margin | 91.3% | 74.5% | 16.8 ppt | | Gross Advertising Revenue | 8,623.1 | 8,341.8 | 3.4% | | Number of Paying Merchants | 39,281 | 38,706 | 1.5% | | Average Spending Per Paying Merchant (RMB) | 219,523 | 215,434 | 1.9% | - Adjusted revenue significantly increased by **45.3%** year-on-year, and gross margin rose from **74.5% to 91.3%**, primarily due to the reduction of low-margin businesses and customer structure adjustments[8](index=8&type=chunk)[16](index=16&type=chunk) - Consolidated its leading position in Tencent advertising, with video account advertising consumption growing by **46%** year-on-year, and received multiple Tencent advertising service provider honors[17](index=17&type=chunk) - Actively expanded its multi-platform strategy, achieving an **87%** year-on-year increase in annual consumption on Xiaohongshu, and received awards such as Kuaishou Magnet Engine's "2025 Annual Top Ten Benchmark Partner"[17](index=17&type=chunk) - Continuously deepened "AI + Marketing" applications, achieving cost reduction and efficiency improvement, with the average monthly generated content volume being **25 times** that at its 2024 launch[17](index=17&type=chunk) [Business Outlook](index=8&type=section&id=Business%20Outlook) The company plans to deepen AI applications, expand the WeChat e-commerce ecosystem, explore multi-channel opportunities, focus on local life services, and actively pursue internationalization [1. Fully Embrace AI and Promote AI Agent Application](index=8&type=section&id=1.%20Fully%20Embrace%20AI%20and%20Promote%20AI%20Agent%20Application) The company will expand AI technology applications in SaaS and precision marketing, leveraging AI product matrices to enhance merchant capabilities and deploy AI Agents in e-commerce, retail, and local life - Continuously expand AI technology application scenarios in SaaS and precision marketing, utilizing AI product matrices such as WAI SaaS, WAI Pro, and WIME to comprehensively help merchants enhance operational strategy planning, efficiency, business management, and marketing content creation capabilities[18](index=18&type=chunk) - Promote the application and implementation of AI Agent in e-commerce retail, local life, and precision marketing, with WIME also integrating with super applications like WPS to expand commercialization opportunities[18](index=18&type=chunk) [2. Deeply Cultivate WeChat E-commerce Ecosystem](index=8&type=section&id=2.%20Deeply%20Cultivate%20WeChat%20E-commerce%20Ecosystem) The company will optimize its integrated WeChat e-commerce solutions, enhance merchant operational efficiency, and drive traffic and sales growth through social commerce features and video account MCN business - Long-term comprehensive layout of the WeChat e-commerce ecosystem, continuously optimizing Weimob x WeChat Mini-Store integrated solutions to improve merchant operational efficiency and user experience[19](index=19&type=chunk) - Layout the "Tuike" section to leverage social distribution coverage, enhancing conversion efficiency and user stickiness; combining "Group Buy" and "Send Gifts" social e-commerce features to help merchants acquire traffic at low cost and precisely convert customers[19](index=19&type=chunk) - Focus on video account MCN business, driving brand exposure and sales growth for merchants through live streaming, short video content, and influencer recommendations and interactions[19](index=19&type=chunk) [3. Expand Multi-Channel Business Opportunities](index=8&type=section&id=3.%20Expand%20Multi-Channel%20Business%20Opportunities) The company will deepen multi-platform cooperation in SaaS and actively expand into new advertising channels like Douyin for merchant solutions, integrating public domain platforms with mini-program businesses - In SaaS, beyond existing WeChat channels, continue to deepen multi-platform business opportunities with Douyin, Huawei HarmonyOS, Meituan, Xiaohongshu, and Alipay, building integrated capabilities between public domain platforms and mini-program businesses[20](index=20&type=chunk) - In precision marketing, new channels like Xiaohongshu and Kuaishou have achieved rapid growth in the past two years, and active expansion into Douyin channels is planned for Q4 2025 and next year, expected to bring new growth momentum for merchant solutions[20](index=20&type=chunk) [4. Focus on Local Life Services Market](index=9&type=section&id=4.%20Focus%20on%20Local%20Life%20Services%20Market) The company will strengthen its support for offline local services, integrate multi-channel traffic, and provide comprehensive capabilities to merchants, accelerating digital transformation and business growth in the local life sector - Focus on the local life sector, increasing system support capabilities for offline local "product, store service, and experience" business scenarios[21](index=21&type=chunk) - Integrate resources through industry empowerment and ecosystem cooperation, connecting multi-channel traffic and providing merchants with multi-dimensional capabilities including membership operations and precision marketing, to accelerate digital transformation and business growth in the local life sector[21](index=21&type=chunk) [5. Actively Explore Internationalization](index=9&type=section&id=5.%20Actively%20Explore%20Internationalization) The company will expand into mature overseas markets like North America with AI applications, help Chinese brands go global, and grow its Haiding business internationally by researching localized operational strategies - Further expand into mature overseas markets like North America, with Markivo becoming a Shopify app service provider, leveraging deep industry accumulation and technical experience to promote AI application capabilities overseas[22](index=22&type=chunk) - Weimob International launched its "Weimob Go Global" business, dedicated to helping Chinese brands expand globally, offering AI-powered rapid website building, multi-channel traffic acquisition, and brand consulting services[22](index=22&type=chunk) - Further promote the expansion and growth of its Haiding business in overseas markets, using the overseas expansion of high-quality new consumer merchants in China as a foundation, gradually penetrating and expanding to local overseas merchants[22](index=22&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed review of the company's financial and operational performance, highlighting key trends, drivers, and strategic initiatives for the period [Comparison of the Six Months Ended June 30, 2025, and June 30, 2024](index=10&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%2C%20and%20June%2030%2C%202024) This section compares the financial performance for H1 2025 and H1 2024, showing a decrease in total revenue but growth in adjusted revenue, significant improvements in gross profit, and a substantial reduction in operating loss Condensed Consolidated Statement of Comprehensive Loss Summary (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 775,467 | 867,434 | | Cost of Sales | (193,211) | (291,529) | | Gross Profit | 582,256 | 575,905 | | Selling and Distribution Expenses | (389,495) | (565,260) | | General and Administrative Expenses | (216,605) | (287,008) | | Operating Profit / (Loss) | 270 | (287,323) | | Loss for the Period | (47,242) | (569,842) | Key Operating Data (H1 2025 vs H1 2024) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | New Paying Merchants for Subscription Solutions | 4,793 | 8,515 | | Number of Paying Merchants for Subscription Solutions | 59,149 | 68,725 | | Churn Rate for Subscription Solutions | 13.6% | 9.2% | | ARPU for Subscription Solutions (RMB) | 7,402 | 7,083 | | Number of Paying Merchants for Merchant Solutions | 39,281 | 38,706 | | Revenue for Merchant Solutions (RMB Million) | 337.6 | 232.4 | | ARPU for Merchant Solutions (RMB) | 8,595 | 6,003 | | Gross Revenue for Merchant Solutions (RMB Million) | 8,623.1 | 8,341.8 | Key Financial Ratios (H1 2025 vs H1 2024) | Indicator | 2025 (%) | 2024 (%) | | :--- | :--- | :--- | | Total Adjusted Revenue Growth | 7.8 | (37.3) | | Adjusted Gross Margin | 75.2 | 59.6 | | Adjusted EBITDA Margin | 9.3 | (24.5) | | Net Margin Attributable to Equity Holders of the Company | (4.3) | (63.5) | | Adjusted Net Margin Attributable to Equity Holders of the Company | 3.1 | (24.4) | [Revenue](index=12&type=section&id=Revenue) Total revenue decreased by 10.6% to RMB 775.5 million, while adjusted total revenue increased by 7.8% to RMB 775.5 million, primarily driven by strong growth in adjusted merchant solutions revenue Revenue Breakdown (H1 2025 vs H1 2024) | Revenue Category | 2025 (RMB Million) | Share (%) | 2024 (RMB Million) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription Solutions | 437.9 | 56.5 | 486.8 | 56.1 | | Merchant Solutions | 337.6 | 43.5 | 380.6 | 43.9 | | **Total** | **775.5** | **100.0** | **867.4** | **100.0** | Adjusted Revenue Breakdown (H1 2025 vs H1 2024) | Revenue Category | 2025 (RMB Million) | Share (%) | 2024 (RMB Million) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription Solutions | 437.9 | 56.5 | 486.8 | 67.7 | | Merchant Solutions | 337.6 | 43.5 | 232.3 | 32.3 | | **Total** | **775.5** | **100.0** | **719.1** | **100.0** | [Subscription Solutions](index=13&type=section&id=Subscription%20Solutions_Revenue) Subscription solutions revenue decreased by 10.1% to RMB 437.9 million, impacted by a weak macro economy and small merchant churn, though AI-related business is an emerging revenue stream - Subscription solutions revenue decreased by **10.1%** from **RMB 486.8 million** in H1 2024 to **RMB 437.9 million** in H1 2025[31](index=31&type=chunk) - The revenue decrease was primarily due to the negative impact of a weak macro economy and sluggish consumption on the churn rate of small merchants; persistent deflationary pressure hindering new brand merchant expansion; and new revenue channels like AI-related businesses still being in early development stages[31](index=31&type=chunk) - In H1 2025, AI-related business revenue was approximately **RMB 30 million to RMB 40 million**[31](index=31&type=chunk) [Merchant Solutions](index=13&type=section&id=Merchant%20Solutions_Revenue) Merchant solutions gross revenue increased by 3.4% to RMB 8.6231 billion, with adjusted revenue significantly growing by 45.3% to RMB 337.6 million due to increased advertising platform rebates and business restructuring Merchant Solutions Gross Revenue and Revenue (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Million) | 2024 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | Gross Revenue | 8,623.1 | 8,341.8 | 3.4% | | Revenue | 337.6 | 380.6 | (11.3%) | Merchant Solutions Adjusted Revenue (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Million) | 2024 (RMB Million) | YoY Change | | :--- | :--- | :--- | :--- | | Adjusted Revenue | 337.6 | 232.3 | 45.3% | - Adjusted revenue increased by **45.3%**, primarily due to an increase of approximately **RMB 171.1 million** in net rebates from advertising platforms, and a decrease of approximately **RMB 65.8 million** in TSO service and credit technology service revenue due to business restructuring[35](index=35&type=chunk) - The increase in merchant solutions gross revenue was mainly due to an increase in the number of paying merchants and average spending per advertiser[34](index=34&type=chunk) [Cost of Sales](index=14&type=section&id=Cost%20of%20Sales) Total cost of sales decreased significantly by 33.7% to RMB 193.2 million, mainly due to reduced intangible asset amortization after a full impairment of self-developed software in 2024 Cost of Sales Breakdown (By Nature, H1 2025 vs H1 2024) | Cost of Sales | 2025 (RMB Million) | Share (%) | 2024 (RMB Million) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Advertising Traffic Costs | – | – | 42.8 | 14.7 | | Staff Costs | 52.9 | 27.4 | 27.1 | 9.3 | | Broadband and Hardware Costs | 58.5 | 30.3 | 13.6 | 4.7 | | Operating Service Costs | 74.1 | 38.3 | 100.0 | 34.3 | | Intangible Asset Amortization | 0.9 | 0.5 | 99.5 | 34.1 | | Taxes and Surcharges | 6.1 | 3.2 | 7.5 | 2.6 | | Depreciation and Amortization | 0.7 | 0.3 | 1.0 | 0.3 | | **Total** | **193.2** | **100.0** | **291.5** | **100.0** | Cost of Sales Breakdown (By Business Segment, H1 2025 vs H1 2024) | Cost of Sales | 2025 (RMB Million) | Share (%) | 2024 (RMB Million) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription Solutions | 163.8 | 84.8 | 194.4 | 66.7 | | Merchant Solutions | 29.4 | 15.2 | 97.1 | 33.3 | | **Total** | **193.2** | **100.0** | **291.5** | **100.0** | - Total cost of sales decreased by **33.7%**, primarily due to a **RMB 98.6 million** reduction in intangible asset amortization[38](index=38&type=chunk) [Subscription Solutions](index=15&type=section&id=Subscription%20Solutions_Cost%20of%20Sales) Subscription solutions cost of sales decreased by 15.8% to RMB 163.8 million, primarily due to reduced intangible asset amortization, despite increased broadband, hardware, and staff costs for new business development - Subscription solutions cost of sales decreased by **15.8%**, mainly due to a **RMB 98.6 million** reduction in intangible asset amortization after the full impairment of self-developed software in 2024; however, broadband and hardware costs and staff costs increased by **RMB 70.7 million** due to new business development[41](index=41&type=chunk) [Merchant Solutions](index=15&type=section&id=Merchant%20Solutions_Cost%20of%20Sales) Merchant solutions cost of sales significantly decreased by 69.7% to RMB 29.4 million, driven by reduced advertising traffic costs and contract operating service costs, aligning with the decline in TSO and credit tech service revenues - Merchant solutions cost of sales decreased by **69.7%**, primarily due to reduced advertising traffic costs and contract operating service costs, which is consistent with the decline in TSO service revenue and credit technology solution sales commission revenue[42](index=42&type=chunk) [Gross Profit and Gross Margin](index=16&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by 1.1% to RMB 582.3 million, with the overall gross margin improving from 66.4% to 75.1%, primarily due to business restructuring in merchant solutions and reduced intangible asset amortization Gross Profit and Gross Margin Breakdown (H1 2025 vs H1 2024) | Business Segment | 2025 Gross Profit (RMB Million) | 2025 Gross Margin (%) | 2024 Gross Profit (RMB Million) | 2024 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription Solutions | 274.1 | 62.6 | 292.4 | 60.1 | | Merchant Solutions | 308.2 | 91.3 | 283.5 | 74.5 | | **Total** | **582.3** | **75.1** | **575.9** | **66.4** | Adjusted Gross Profit and Gross Margin Breakdown (H1 2025 vs H1 2024) | Business Segment | 2025 Adjusted Gross Profit (RMB Million) | 2025 Adjusted Gross Margin (%) | 2024 Adjusted Gross Profit (RMB Million) | 2024 Adjusted Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Subscription Solutions | 275.0 | 62.8 | 293.3 | 60.3 | | Merchant Solutions | 308.2 | 91.3 | 135.2 | 58.2 | | **Total** | **583.2** | **75.2** | **428.5** | **59.6** | - Adjusted gross profit increased by **36.1%** year-on-year to **RMB 583.2 million**, with adjusted gross margin rising from **59.6% to 75.2%**[46](index=46&type=chunk) - The adjusted gross margin for merchant solutions significantly increased to **91.3%**, primarily due to a higher percentage of net rebate income from merchant solutions after the restructuring of TSO and credit technology services[46](index=46&type=chunk) [Selling and Distribution Expenses](index=17&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased by 31.1% to RMB 389.5 million, mainly due to reduced staff costs from organizational optimization, lower contract acquisition costs, and savings in rent and property services - Selling and distribution expenses decreased by **31.1%** to **RMB 389.5 million**[47](index=47&type=chunk) - Staff costs decreased by **RMB 101.9 million**, contract acquisition costs decreased by **RMB 57 million**, and rent and property service expenses decreased by **RMB 10.8 million**[47](index=47&type=chunk) [General and Administrative Expenses](index=17&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by 24.5% to RMB 216.6 million, primarily due to reduced staff costs and savings in server, network, and communication expenses - General and administrative expenses decreased by **24.5%** to **RMB 216.6 million**[48](index=48&type=chunk) - Staff costs decreased by **RMB 63.3 million**, and server costs, network, and communication expenses decreased by **RMB 4.4 million**[48](index=48&type=chunk) [Research and Development Expenses](index=18&type=section&id=Research%20and%20Development%20Expenses) Total R&D expenses decreased by 41.8% to RMB 136.1 million, mainly due to a significant reduction in R&D expenses capitalized as development costs and intangible assets Total R&D Expenses (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Million) | 2024 (RMB Million) | | :--- | :--- | :--- | | R&D Expenses Capitalized as Development Costs and Intangible Assets | – | 55.4 | | R&D Expenses Included in General and Administrative Expenses | 136.1 | 178.4 | | **Total R&D Expenses** | **136.1** | **233.8** | - Total R&D expenses decreased by **41.8%** to **RMB 136.1 million**[50](index=50&type=chunk) [Net Impairment Loss on Financial Assets](index=18&type=section&id=Net%20Impairment%20Loss%20on%20Financial%20Assets) Net impairment loss on financial assets decreased by RMB 3.2 million to RMB 1.6 million, primarily due to improved collection of trade receivables in the precision marketing business - Net impairment loss on financial assets decreased by **RMB 3.2 million** to **RMB 1.6 million**[51](index=51&type=chunk) - This was primarily due to improved collection of trade receivables in the precision marketing business[51](index=51&type=chunk) [Other Income](index=18&type=section&id=Other%20Income) Other income slightly increased to RMB 22.2 million, primarily driven by an increase in government grants - Other income slightly increased to **RMB 22.2 million**, primarily due to an increase in government grants[52](index=52&type=chunk) [Net Other Gains / (Losses)](index=18&type=section&id=Net%20Other%20Gains%20%2F%20%28Losses%29) The Group recorded a net other gain of RMB 3.5 million, a significant improvement from a loss of RMB 27.19 million in H1 2024, mainly due to fair value changes in financial investments and rental property income - A net other gain of **RMB 3.5 million** was recorded, primarily due to fair value changes in financial investments of **RMB 3.3 million** and rental property income (net of bank charges) of **RMB 1.6 million**[53](index=53&type=chunk) [Operating Profit / (Loss)](index=18&type=section&id=Operating%20Profit%20%2F%20%28Loss%29) The Group achieved an operating profit of RMB 0.3 million in H1 2025, a significant turnaround from an operating loss of RMB 287.3 million in H1 2024 - An operating profit of **RMB 0.3 million** was achieved, compared to an operating loss of **RMB 287.3 million** in H1 2024[54](index=54&type=chunk) [Finance Costs](index=18&type=section&id=Finance%20Costs) Finance costs significantly decreased by RMB 176.6 million to RMB 36.4 million, primarily due to a reduction in amortized interest expenses from the early redemption of 2021 convertible bonds - Finance costs significantly decreased by **RMB 176.6 million** to **RMB 36.4 million**[55](index=55&type=chunk) - This was primarily due to a **RMB 162.2 million** reduction in amortized interest expenses resulting from the early redemption of the 2021 convertible bonds[55](index=55&type=chunk) [Finance Income](index=19&type=section&id=Finance%20Income) Finance income decreased to RMB 2.9 million, primarily due to a reduction in interest income from bank deposits - Finance income decreased to **RMB 2.9 million**, primarily due to a reduction in interest income from bank deposits[56](index=56&type=chunk) [Share of Net Profit / (Loss) of Associates Accounted for Using the Equity Method](index=19&type=section&id=Share%20of%20Net%20Profit%20%2F%20%28Loss%29%20of%20Associates%20Accounted%20for%20Using%20the%20Equity%20Method) The Group recorded a net profit of RMB 3.6 million from associates accounted for using the equity method, representing its share of profit from equity investment funds - A net profit of **RMB 3.6 million** from associates accounted for using the equity method was recorded, representing the share of profit from equity investment funds[57](index=57&type=chunk) [Fair Value Change of Convertible Bonds](index=19&type=section&id=Fair%20Value%20Change%20of%20Convertible%20Bonds) No fair value change of convertible bonds was recorded for H1 2025, as the convertible bonds issued in April 2024 have been settled - No fair value change of convertible bonds was recorded for the six months ended June 30, 2025, as the convertible bonds issued in April 2024 have been settled[58](index=58&type=chunk) [Income Tax Expense](index=19&type=section&id=Income%20Tax%20Expense) Income tax expense was RMB 17.6 million, primarily due to reduced impairment losses on financial assets offsetting decreased taxable income from Chinese subsidiaries, leading to derecognition of deferred tax assets - Income tax expense was **RMB 17.6 million**, primarily due to reduced impairment losses on financial assets offsetting decreased taxable income from Chinese subsidiaries, leading to the derecognition of deferred tax assets, resulting in a reduction in current income tax expense[59](index=59&type=chunk) [Loss for the Period](index=19&type=section&id=Loss%20for%20the%20Period) The Group recorded a loss of RMB 47.2 million for H1 2025, a significant reduction from a loss of RMB 569.8 million in H1 2024 - Loss for the period was **RMB 47.2 million**, compared to a loss of **RMB 569.8 million** in H1 2024[60](index=60&type=chunk) [Non-HKFRS Measures: Adjusted EBITDA and Adjusted Net Loss](index=19&type=section&id=Non-HKFRS%20Measures%3A%20Adjusted%20EBITDA%20and%20Adjusted%20Net%20Loss) The Group utilized non-HKFRS measures, Adjusted EBITDA and Adjusted Net Loss, to better reflect operating performance, showing a significant turnaround to a profit of RMB 71.8 million and RMB 16.9 million respectively in H1 2025 - Adjusted EBITDA significantly improved from a loss of **RMB 176.3 million** in H1 2024 to a profit of **RMB 71.8 million**[63](index=63&type=chunk)[65](index=65&type=chunk) - Adjusted net profit significantly improved from a loss of **RMB 187.4 million** in H1 2024 to a profit of **RMB 16.9 million**[63](index=63&type=chunk)[65](index=65&type=chunk) Adjusted Financial Metrics Reconciliation (H1 2025) | Indicator | As Reported (RMB Million) | As Adjusted (RMB Million) | | :--- | :--- | :--- | | Gross Profit | 582.3 | 583.2 | | Operating Profit / (Loss) | 0.3 | 46.4 | | EBITDA | 49.9 | 71.8 | | Net Loss | (47.2) | 16.9 | | Net (Loss) / Profit Attributable to Equity Holders of the Company | (33.1) | 23.8 | Adjusted Financial Metrics Reconciliation (H1 2024) | Indicator | As Reported (RMB Million) | As Adjusted (RMB Million) | | :--- | :--- | :--- | | Gross Profit | 575.9 | 428.5 | | Operating Profit / (Loss) | (287.3) | (331.4) | | EBITDA | (183.6) | (176.3) | | Net Loss | (569.8) | (187.4) | | Net Loss Attributable to Equity Holders of the Company | (550.8) | (175.4) | [Liquidity and Financial Resources](index=22&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's liquidity is primarily from operations, bank borrowings, and equity injections, with cash and bank balances of RMB 1.5736 billion as of June 30, 2025, despite facing some bank covenant breaches that have received temporary waivers [Cash and Bank Balances](index=22&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2025, the Group's total cash and bank balances were approximately RMB 1.5736 billion, including bank wealth management products, restricted cash, and cash and cash equivalents - As of June 30, 2025, the Group's cash and bank balances totaled approximately **RMB 1.5736 billion**[66](index=66&type=chunk) Cash and Bank Balances Breakdown (As of June 30, 2025) | Category | Amount (RMB Million) | | :--- | :--- | | Bank wealth management products at fair value through profit or loss | 35.7 | | Restricted cash* | 532.9 | | Cash and cash equivalents | 1,004.8 | | **Subtotal (Current Assets)** | **1,573.4** | | Non-current restricted cash | 0.2 | | **Total** | **1,573.6** | * Restricted cash primarily refers to cash deposited in offshore banks as collateral for domestic loans denominated in RMB [Net Debt to Equity Ratio](index=22&type=section&id=Net%20Debt%20to%20Equity%20Ratio) The Group's net debt to equity ratio increased to 44.4% as of June 30, 2025, up from 37.8% in the prior year Debt to Equity Ratio (As of June 30) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Net Debt | 890,502 | 947,855 | | Total Equity | 2,007,064 | 2,510,642 | | Total Capital | 2,897,566 | 3,458,497 | | **Net Debt to Equity Ratio** | **44.4%** | **37.8%** | - The net debt to equity ratio increased from **37.8%** in 2024 to **44.4%** in 2025[69](index=69&type=chunk) [Bank Borrowings](index=23&type=section&id=Bank%20Borrowings) As of June 30, 2025, the Group's total bank borrowings were approximately RMB 2.1985 billion, with some covenant breaches temporarily waived, and management is confident in refinancing and securing new facilities - As of June 30, 2025, the Group's bank borrowings totaled approximately **RMB 2.1985 billion**[70](index=70&type=chunk) - The Group has breached certain covenants related to bank borrowings totaling **RMB 371.75 million**, but the lenders have granted temporary waivers for the syndicated loan-related breaches[99](index=99&type=chunk) - Management is confident in renewing existing financing and obtaining new financing, and continuously monitors compliance with all bank borrowing and financing covenant requirements[101](index=101&type=chunk) [Capital Expenditures](index=25&type=section&id=Capital%20Expenditures) Total capital expenditures for H1 2025 increased by 13% to RMB 113.7 million, primarily due to increased spending on fixed assets Capital Expenditures (H1 2025 vs H1 2024) | Category | 2025 (RMB Million) | 2024 (RMB Million) | | :--- | :--- | :--- | | Fixed Assets | 113.3 | 45.2 | | Intangible Assets | 0.4 | 55.4 | | **Total** | **113.7** | **100.6** | - Total capital expenditures increased to **RMB 113.7 million**, primarily due to increased expenditures on fixed assets, including computer equipment, office furniture, vehicles, renovation of leased offices, and construction[75](index=75&type=chunk)[77](index=77&type=chunk) [Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures, and Future Plans for Material Investments or Capital Assets](index=25&type=section&id=Significant%20Investments%20Held%2C%20Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures%2C%20and%20Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) As of June 30, 2025, the Group held no significant investments, nor did it undertake any material acquisitions or disposals, with no board-approved future plans for major investments or capital asset purchases - As of June 30, 2025, the Group held no significant investments, nor did it undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures[78](index=78&type=chunk) - As of the date of this announcement, the Group had no board-approved future plans for material investments or purchases of capital assets[78](index=78&type=chunk) [Pledged Assets](index=25&type=section&id=Pledged%20Assets) As of June 30, 2025, the Group pledged land use rights, property, plant and equipment, and investment properties totaling RMB 833.532 million as collateral for long-term bank borrowings - As of June 30, 2025, land use rights of **RMB 301.122 million**, property, plant and equipment of **RMB 507.1 million**, and investment properties of **RMB 25.31 million** were pledged as collateral for the Group's long-term borrowings of **RMB 249.894 million** and long-term bank borrowings repayable within one year of **RMB 47.898 million**[79](index=79&type=chunk) [Foreign Exchange Risk Management](index=26&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group primarily operates in China with most transactions settled in RMB, facing foreign exchange risks mainly related to USD and HKD, without hedging through long-term contracts or currency borrowings in H1 2025 - The Group primarily operates in China, with most transactions settled in RMB, and faces foreign exchange risks from various currencies, mainly related to USD and HKD[80](index=80&type=chunk) - For the six months ended June 30, 2025, the Group did not hedge foreign currency risks through any long-term contracts, currency borrowings, or other means[80](index=80&type=chunk) [Contingent Liabilities](index=26&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[81](index=81&type=chunk) [Employees](index=26&type=section&id=Employees) As of June 30, 2025, the Group had 3,400 full-time employees, with 951 in sales and marketing and 778 in R&D, attracting and retaining talent through competitive compensation and comprehensive training - As of June 30, 2025, the Group had **3,400** full-time employees, including **951** in sales and marketing and **778** in R&D[82](index=82&type=chunk) - The company provides employees with competitive salaries, performance-linked cash incentives, and other motivational measures, along with robust training programs and customized professional development[82](index=82&type=chunk) [Condensed Interim Consolidated Statement of Comprehensive Loss](index=27&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Comprehensive%20Loss) The condensed interim consolidated statement of comprehensive loss shows a significant reduction in loss for the period and loss attributable to equity holders, driven by a turnaround in operating profit and reduced finance costs Condensed Interim Consolidated Statement of Comprehensive Loss (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 775,467 | 867,434 | | Cost of Sales | (193,211) | (291,529) | | Gross Profit | 582,256 | 575,905 | | Selling and Distribution Expenses | (389,495) | (565,260) | | General and Administrative Expenses | (216,605) | (287,008) | | Operating Profit / (Loss) | 270 | (287,323) | | Finance Costs | (36,354) | (212,986) | | Finance Income | 2,873 | 8,097 | | Loss Before Income Tax | (29,654) | (547,145) | | Income Tax Expense | (17,588) | (22,697) | | Loss for the Period | (47,242) | (569,842) | | Loss Attributable to Equity Holders of the Company | (33,056) | (550,784) | | Total Comprehensive Loss for the Period | (48,422) | (570,538) | | Basic Loss Per Share (RMB) | (0.01) | (0.19) | | Diluted Loss Per Share (RMB) | (0.01) | (0.19) | - Loss for the period significantly narrowed by **91.7%** to **RMB 47.242 million**, and loss attributable to equity holders of the Company narrowed by **94%** to **RMB 33.056 million**[83](index=83&type=chunk) - The turnaround from operating loss to profit and a significant decrease in finance costs were the main reasons for the narrowed loss[83](index=83&type=chunk) [Condensed Interim Consolidated Statement of Financial Position](index=29&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Financial%20Position) The condensed interim consolidated statement of financial position indicates a slight decrease in total assets, a reduction in total liabilities, and an increase in total equity, with current liabilities exceeding current assets Condensed Interim Consolidated Statement of Financial Position Summary (As of June 30, 2025 vs December 31, 2024) | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 2,627,719 | 2,553,212 | | Total Current Assets | 4,038,915 | 4,407,424 | | **Total Assets** | **6,666,634** | **6,960,636** | | Total Equity | 2,007,064 | 1,812,756 | | Total Non-current Liabilities | 510,634 | 635,528 | | Total Current Liabilities | 4,148,936 | 4,512,352 | | **Total Liabilities** | **4,659,570** | **5,147,880** | | Total Equity and Liabilities | 6,666,634 | 6,960,636 | - Total assets slightly decreased, total liabilities reduced, and total equity increased[86](index=86&type=chunk)[87](index=87&type=chunk) - Current liabilities exceeded current assets by **RMB 110.021 million**, indicating some short-term liquidity pressure[99](index=99&type=chunk) [Condensed Interim Consolidated Statement of Changes in Equity](index=31&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Changes%20in%20Equity) The condensed interim consolidated statement of changes in equity shows an increase in total equity attributable to equity holders, primarily due to convertible bond conversions and share-based employee compensation expenses Changes in Share Capital and Reserves Attributable to Equity Holders of the Company (H1 2025) | Indicator | January 1, 2025 (RMB Thousand) | June 30, 2025 (RMB Thousand) | | :--- | :--- | :--- | | Share Capital | 2,298 | 2,470 | | Shares Held for Restricted Share Unit Scheme | (144) | (142) | | Share Premium | 9,449,301 | 9,761,217 | | Equity Component of Convertible Bonds | 76,842 | 1,141 | | Other Reserves | (596,843) | (591,453) | | Accumulated Losses | (7,204,478) | (7,237,534) | | **Subtotal** | **1,726,976** | **1,935,699** | | Non-controlling Interests | 85,780 | 71,365 | | **Total Equity** | **1,812,756** | **2,007,064** | - Total equity attributable to equity holders of the Company increased from **RMB 1.727 billion** as of January 1, 2025, to **RMB 1.936 billion** as of June 30, 2025[89](index=89&type=chunk) - The increase in equity was primarily influenced by convertible bond conversions (increasing share capital and share premium) and share-based employee compensation expenses[89](index=89&type=chunk) [Condensed Interim Consolidated Statement of Cash Flows](index=33&type=section&id=Condensed%20Interim%20Consolidated%20Statement%20of%20Cash%20Flows) The condensed interim consolidated statement of cash flows reflects a shift to net cash outflow from operating activities, increased net cash outflow from investing activities, and a significant reduction in net cash outflow from financing activities Condensed Interim Consolidated Statement of Cash Flows Summary (H1 2025 vs H1 2024) | Indicator | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Net Cash (Used in) / Generated from Operating Activities | (28,061) | 29,498 | | Net Cash (Used in) / Generated from Investing Activities | (125,647) | 92,767 | | Net Cash Used in Financing Activities | (35,796) | (562,499) | | Net Decrease in Cash and Cash Equivalents | (189,504) | (440,234) | | Cash and Cash Equivalents at End of Period | 1,004,853 | 1,213,720 | - Net cash flow from operating activities shifted from a net inflow to a net outflow of **RMB 28.061 million**[92](index=92&type=chunk) - Net cash outflow from investing activities increased to **RMB 125.647 million**, primarily due to increased purchases of property, plant and equipment and loans to related parties[92](index=92&type=chunk) - Net cash outflow from financing activities significantly decreased to **RMB 35.796 million**, mainly due to reduced repurchase of convertible bonds and increased proceeds from bank borrowings[94](index=94&type=chunk) [Notes to the Condensed Interim Financial Information](index=35&type=section&id=Notes%20to%20the%20Condensed%20Interim%20Financial%20Information) This section provides detailed notes on the basis of preparation, significant accounting policies, segment information, and other financial disclosures for the interim period [1. General Information](index=35&type=section&id=1.%20General%20Information) Weimob Inc. incorporated in the Cayman Islands in 2018, provides digital commerce and media services to merchants in China, with its shares listed on the HKEX since January 2019 - Weimob Inc. was incorporated as an exempted company in the Cayman Islands on January 30, 2018, primarily engaged in providing digital commerce and media services to merchants in the People's Republic of China[95](index=95&type=chunk) - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since January 15, 2019[96](index=96&type=chunk) [2. Basis of Preparation](index=35&type=section&id=2.%20Basis%20of%20Preparation) The interim financial information is prepared in accordance with HKAS 34, addressing going concern uncertainties through operational efficiency improvements, refinancing, and potential capital raising - As of June 30, 2025, the Group recorded a net loss of **RMB 47.242 million** and a net cash outflow from operating activities of **RMB 28.061 million**[99](index=99&type=chunk) - The Group's total borrowings amounted to **RMB 2.201659 billion**, of which **RMB 1.951765 billion** is repayable within twelve months, and current liabilities exceeded current assets by **RMB 110.021 million**[99](index=99&type=chunk) - The Group has breached certain bank borrowing covenants totaling **RMB 371.75 million**, but the lenders have granted temporary waivers for the syndicated loan-related breaches[99](index=99&type=chunk) - Management plans to address going concern uncertainties by improving operational efficiency, continuously renewing bank borrowings and obtaining new financing, and raising additional capital through share issuance or convertible bonds if needed[101](index=101&type=chunk) [3. Significant Accounting Policies](index=37&type=section&id=3.%20Significant%20Accounting%20Policies) The accounting policies applied are consistent with the 2024 financial statements, with new and revised standards having no material impact on the Group's policies or financial statements - The accounting policies applied are consistent with those applied in the 2024 financial statements, except for the adoption of new and revised standards[103](index=103&type=chunk) - Certain new or revised standards are applicable but have no impact on the Group's accounting policies and require no retrospective adjustments[104](index=104&type=chunk) - Several new standards and amendments to standards that have been issued but are not yet effective are not expected to have a significant impact on the Group's condensed consolidated financial statements[105](index=105&type=chunk) [4. Segment Information](index=38&type=section&id=4.%20Segment%20Information) The Group operates in two segments: Subscription Solutions (SaaS products, custom software) and Merchant Solutions (value-added services, precision marketing), with performance assessed based on segment revenue and gross profit - The Group's operations are structured into two segments: Subscription Solutions (primarily including standard cloud-hosted SaaS products, customized software, and other software-related services) and Merchant Solutions (primarily including precision marketing services and in-depth operational and marketing services)[107](index=107&type=chunk) - The chief operating decision-makers primarily assess the performance of operating segments based on segment revenue and segment gross profit[107](index=107&type=chunk) Segment Revenue and Gross Profit (H1 2025 vs H1 2024) | Business Segment | 2025 Revenue (RMB Thousand) | 2025 Gross Profit (RMB Thousand) | 2024 Revenue (RMB Thousand) | 2024 Gross Profit (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | | Subscription Solutions | 437,836 | 274,073 | 486,779 | 292,350 | | Merchant Solutions | 337,631 | 308,183 | 380,655 | 283,555 | | **Total** | **775,467** | **582,256** | **867,434** | **575,905** | [5. Revenue](index=39&type=section&id=5.%20Revenue) The Group's total revenue for H1 2025 was RMB 775.5 million, a 10.6% year-on-year decrease, with subscription solutions accounting for 56.5% and merchant solutions for 43.5% Revenue Analysis by Category (H1 2025 vs H1 2024) | Revenue Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Subscription Solutions | 437,836 | 486,779 | | Merchant Solutions | 337,631 | 380,655 | | **Total Revenue** | **775,467** | **867,434** | [6. Expenses by Nature](index=39&type=section&id=6.%20Expenses%20by%20Nature) Total expenses by nature for H1 2025 decreased by 30% to RMB 799.311 million, primarily due to significant reductions in employee benefit expenses, outsourcing fees, promotional costs, and depreciation and amortization Total Expenses by Nature (H1 2025 vs H1 2024) | Expense Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Employee Benefit Expenses | 492,025 | 631,371 | | Outsourcing Service Fees | 77,961 | 102,676 | | Promotion and Advertising Expenses | 68,514 | 127,653 | | Depreciation and Amortization of Intangible Assets and Property, Plant and Equipment | 27,924 | 128,275 | | Server and SMS Fees Related to Subscription Solutions Revenue | 24,557 | 31,248 | | Utilities and Office Expenses | 21,445 | 28,989 | | Depreciation of Right-of-Use Assets | 15,177 | 22,245 | | Broadband and Hardware Costs | 48,300 | 1,763 | | Travel and Entertainment Expenses | 7,920 | 9,020 | | Other Consulting Fees | 3,097 | 5,675 | | Auditor's Remuneration | 2,700 | 2,700 | | Advertising Traffic Costs | – | 42,818 | | Others | 9,691 | 9,364 | | **Total** | **799,311** | **1,143,797** | - Employee benefit expenses decreased by **RMB 139.346 million**, primarily due to organizational optimization[111](index=111&type=chunk) - Depreciation and amortization of intangible assets and property, plant and equipment decreased by **RMB 100.351 million**[111](index=111&type=chunk) [7. Other Income](index=40&type=section&id=7.%20Other%20Income) Other income for H1 2025 was RMB 22.186 million, a slight increase from H1 2024, primarily due to increased government grants Other Income Breakdown (H1 2025 vs H1 2024) | Income Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Interest Income from Time Deposits and Loans to Related Parties and Third Parties | 12,203 | 12,904 | | Government Grants | 9,448 | 8,136 | | Operating Lease Income | 535 | – | | **Total** | **22,186** | **21,040** | - Increased government grants were the main reason for the growth in other income[112](index=112&type=chunk) [8. Net Other Gains / (Losses)](index=40&type=section&id=8.%20Net%20Other%20Gains%20%2F%20%28Losses%29) The Group recorded a net other gain of RMB 3.492 million in H1 2025, a significant improvement from a loss of RMB 27.19 million in H1 2024, mainly due to fair value changes in listed equity securities investments and foreign exchange gains Net Other Gains / (Losses) Breakdown (H1 2025 vs H1 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Fair Value Change of Listed Equity Securities Investments | 8,867 | 1,066 | | Net Foreign Exchange Gains / (Losses) | 248 | (19,446) | | Gains from Disposal of Short-term Investments Measured at Fair Value Through Profit or Loss | 147 | 998 | | Loss from Disposal of Financial Assets Measured at Fair Value Through Other Comprehensive Income | – | (890) | | Fair Value Change of Non-current Financial Assets Measured at Fair Value Through Profit or Loss | – | (7,169) | | Fair Value Change of Current Financial Assets Measured at Fair Value Through Profit or Loss | (5,613) | 124 | | Other Net | (157) | (1,873) | | **Total** | **3,492** | **(27,190)** | - The shift from a loss in H1 2024 to a gain in H1 2025 was primarily due to fair value changes in listed equity securities investments and foreign exchange gains[113](index=113&type=chunk) [9. Finance Costs](index=41&type=section&id=9.%20Finance%20Costs) Finance costs for H1 2025 significantly decreased by 82.9% to RMB 36.354 million, primarily due to a substantial reduction in amortized cost adjustments from the early redemption of 2021 convertible bonds Finance Costs Breakdown (H1 2025 vs H1 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Interest Expense on Borrowings | 34,712 | 35,832 | | Interest Expense on Put Option Liabilities | 3,019 | 2,890 | | Interest Expense on Liability Component of Convertible Bonds | 988 | 25,378 | | Interest Expense on Lease Liabilities | 653 | 1,393 | | Amortized Cost Adjustment Arising from Early Redemption of 2021 Convertible Bonds | – | 137,804 | | Bond Offering Issuance Costs | – | 17,455 | | Less: Interest Capitalized | (3,018) | (7,766) | | **Total** | **36,354** | **212,986** | - Finance costs significantly decreased by **RMB 176.632 million**, primarily due to a **RMB 137.804 million** reduction in amortized cost adjustments resulting from the early redemption of the 2021 convertible bonds[114](index=114&type=chunk) [10. Finance Income](index=41&type=section&id=10.%20Finance%20Income) Finance income for H1 2025 decreased by 64.5% to RMB 2.873 million, primarily due to reduced interest income from bank deposits held for cash management Finance Income Breakdown (H1 2025 vs H1 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Interest Income from Bank Deposits Held for Cash Management | 2,873 | 8,097 | - Finance income decreased by **RMB 5.224 million**, primarily due to reduced interest income from bank deposits[115](index=115&type=chunk) [11. Taxation](index=41&type=section&id=11.%20Taxation) The Group's taxation includes VAT and income tax, with H1 2025 income tax expense at RMB 17.588 million, and certain Chinese subsidiaries enjoying a preferential 15% corporate income tax rate as high-tech enterprises [Value Added Tax](index=41&type=section&id=Value%20Added%20Tax) The Group primarily pays VAT at rates of 6% and 13%, along with surcharges on VAT payments - The Group primarily pays VAT at **6% and 13%**, along with surcharges on VAT payments[116](index=116&type=chunk) [Income Tax](index=41&type=section&id=Income%20Tax) The Group's H1 2025 income tax expense was RMB 17.588 million, primarily contributed by deferred income tax, with current tax being negative Income Tax Expense (H1 2025 vs H1 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Current Tax | (4,096) | (96) | | Deferred Income Tax | 21,684 | 22,793 | | **Income Tax Expense** | **17,588** | **22,697** | [Pillar Two Income Tax](index=41&type=section&id=Pillar%20Two%20Income%20Tax) The Group operates in jurisdictions where Pillar Two regulations have not yet been enacted or substantially enacted, and it does not anticipate significant Pillar Two income tax risks - The Group operates in jurisdictions where Pillar Two regulations have not yet been enacted or substantially enacted, and it does not anticipate significant Pillar Two income tax risks[118](index=118&type=chunk) [Cayman Islands Income Tax](index=42&type=section&id=Cayman%20Islands%20Income%20Tax) The Company, incorporated as an exempted company in the Cayman Islands, is not subject to Cayman Islands income tax - The Company, incorporated as an exempted company in the Cayman Islands under the Companies Act of the Cayman Islands, is not subject to Cayman Islands income tax[119](index=119&type=chunk) [Hong Kong Profits Tax](index=42&type=section&id=Hong%20Kong%20Profits%20Tax) No provision for Hong Kong profits tax was made for H1 2025, as the Group had no assessable income subject to Hong Kong profits tax - No provision for Hong Kong profits tax was made for the six months ended June 30, 2025, as the Group had no assessable income subject to Hong Kong profits tax[120](index=120&type=chunk) [China Corporate Income Tax](index=42&type=section&id=China%20Corporate%20Income%20Tax) The general corporate income tax rate in China is 25%, with certain Chinese subsidiaries enjoying a preferential 15% rate as "High and New Technology Enterprises" for three years - The general corporate income tax rate in China is **25%**[121](index=121&type=chunk) - Certain Chinese subsidiaries of the Group meet the criteria for "High and New Technology Enterprises" and enjoy a preferential corporate income tax rate of **15%** for a period of three years, from 2023 to 2026 or 2024 to 2027[121](index=121&type=chunk) [China Withholding Tax](index=42&type=section&id=China%20Withholding%20Tax) Dividends distributed by Chinese companies to foreign investors are generally subject to a 10% withholding income tax, with no provision made for H1 2024 and H1 2025 due to accumulated losses in most Chinese subsidiaries - Dividends distributed by Chinese companies to foreign investors from profits earned after January 1, 2008, are generally subject to a **10%** withholding income tax, which can be reduced to **5%** for eligible Hong Kong investors[122](index=122&type=chunk) - No provision for withholding tax was made for the six months ended June 30, 2024, and June 30, 2025, as most subsidiaries incorporated in China recorded accumulated losses during these periods[122](index=122&type=chunk) [12. Dividends](index=42&type=section&id=12.%20Dividends) The Company neither paid nor declared any dividends for the six months ended June 30, 2024, and June 30, 2025 - The Company neither paid nor declared any dividends for the six months ended June 30, 2024, and June 30, 2025[123](index=123&type=chunk) [13. Loss Per Share](index=43&type=section&id=13.%20Loss%20Per%20Share) The Group's basic loss per share for H1 2025 was RMB 0.01, a significant improvement from RMB 0.19 in H1 2024, with diluted loss per share being the same due to anti-dilution effects [Basic](index=43&type=section&id=Basic_Loss%20Per%20Share) The net loss attributable to equity holders for H1 2025 was RMB 33.056 million, resulting in a basic loss per share of RMB 0.01 Basic Loss Per Share (H1 2025 vs H1 2024) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Net Loss Attributable to Equity Holders of the Company (RMB Thousand) | (33,056) | (550,784) | | Weighted Average Number of Ordinary Shares Issued | 3,579,959,455 | 2,862,176,129 | | **Basic Loss Per Share (RMB)** | **(0.01)** | **(0.19)** | [Diluted](index=43&type=section&id=Diluted_Loss%20Per%20Share) Diluted loss per share for H1 2024 and H1 2025 was the same as basic loss per share, as potential ordinary shares from convertible bonds and restricted share units were anti-dilutive due to the Group's loss - Diluted loss per share for the six months ended June 30, 2024, and June 30, 2025, was the same as the basic loss per share for the respective periods, as the inclusion of potential dilutive ordinary shares from convertible bonds and restricted share units would be anti-dilutive[126](index=126&type=chunk) [14. Prepayments, Deposits and Other Assets](index=44&type=section&id=14.%20Prepayments%2C%20Deposits%20and%20Other%20Assets) Total current prepayments, deposits, and other assets amounted to RMB 1.811778 billion as of June 30, 2025, a decrease from year-end 2024, primarily due to a reduction in other receivables collected on behalf of advertisers Prepayments, Deposits and Other Assets Breakdown (As of June 30, 2025 vs December 31, 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Non-current Deposits - Third Parties | 7,289 | 4,900 | | Current Other Receivables Collected on Behalf of Advertisers - Third Parties | 1,432,502 | 1,596,266 | | Current Prepayments for Advertising Traffic Purchases by the Group | 237,167 | 220,871 | | Current Other Receivables from Related Parties | 197,068 | 182,489 | | Current Recoverable VAT | 131,444 | 130,038 | | Current Prepayments to Other Suppliers | 53,621 | 52,334 | | Current Deposits - Third Parties | 46,833 | 50,503 | | Current Contract Fulfillment Costs | 27,531 | 27,993 | | Current Receivables Related to VAT Refunds | 4,218 | 4,731 | | Current Other Loans Receivable from Third Parties | – | 9,506 | | Current Others | 14,805 | 10,810 | | **Less: Impairment Provision for Other Receivables** | **(333,411)** | **(336,168)** | | **Total (Current)** | **1,811,778** | **1,949,373** | - Total current prepayments, deposits, and other assets decreased, primarily due to a **RMB 163.764 million** reduction in other receivables collected on behalf of advertisers[127](index=127&type=chunk) [15. Trade and Bills Receivables](index=45&type=section&id=15.%20Trade%20and%20Bills%20Receivables) Total trade and bills receivables amounted to RMB 195.851 million as of June 30, 2025, an increase from year-end 2024, primarily due to increased trade receivables from third parties, with typical credit terms of 30 to 90 days Trade and Bills Receivables Breakdown (As of June 30, 2025 vs December 31, 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Trade Receivables from Third Parties | 243,719 | 210,758 | | Bills Receivable | 4,637 | 3,849 | | Trade Receivables from Related Parties | 4,488 | 3,962 | | **Less: Impairment Provision for Trade and Bills Receivables** | **(56,993)** | **(52,262)** | | **Total** | **195,851** | **166,307** | - Total trade and bills receivables increased, primarily due to a **RMB 32.961 million** increase in trade receivables from third parties[128](index=128&type=chunk) - The Group typically grants credit terms of **30 to 90 days** to its customers[128](index=128&type=chunk) [16. Trade and Other Payables](index=46&type=section&id=16.%20Trade%20and%20Other%20Payables) Total trade and other payables amounted to RMB 1.979296 billion as of June 30, 2025, a decrease from year-end 2024. Current portion primarily includes advertiser advances, trade payables for advertising traffic, and accrued salaries and benefits Trade and Other Payables Breakdown (As of June 30, 2025 vs December 31, 2024) | Category | 2025 (RMB Thousand) | 2024 (RMB Thousand) | | :--- | :--- | :--- | | Non-current Payables Related to Property, Plant and Equipment | 23,378 | – | | Non-current Payables Related to Business Acquisitions | 2,906 | 2,906 | | Current Advances from Advertisers - Third Parties | 1,000,999 | 908,179 | | Current Trade Payables for Advertising Traffic Purchases | 315,972 | 485,312 | | Current Accrued Salaries and Benefits | 215,931 | 264,191 | | Current Payables Related to Property, Plant and Equipment | 92,728 | 129,790 | | Current Payables Related to Investments and Business Acquisitions | 85,562 | 84,062 | | Current Commissions Payable | 60,939 | 60,517 | | Current Advances from Subscription Solutions Customers - Third Parties | 56,135 | 50,981 | | Current Other Taxes Payable | 46,870 | 104,077 | | Current Trade Payables Related to Subscription Solutions | 38,252 | 48,882 | | Current Deposits | 11,672 | 11,197 | | Current Accrued Auditor's Remuneration | 2,700 | 3,000 | | Current Payables for Purchase of Non-controlling Interests | 1,500 | – | | Current Amounts Due to Related Parties | 5 | 5 | | Current Other Payables and Accrued Expenses | 23,747 | 37,226 | | **Total** | **1,979,296** | **2,190,325** | - Total current trade and other payables decreased, primarily due to a **RMB 169.34 million** reduction in trade payables for advertising traffic purchases and a **RMB 48.26 million** reduction in accrued salaries and benefits[130](index=130&type=chunk) - The aging of trade payables is all within **3 months**[130](index=130&type=chunk) [Use of Proceeds](index=47&type=section&id=Use%20of%20Proceeds) This section details the utilization of net proceeds from the 2021 convertible bonds and 2023 placing, primarily for enhancing R&D, upgrading marketing systems, and supplementing working capital [Use of Proceeds from 2021 Convertible Bonds](index=47&type=section&id=Use%20of%20Proceeds%20from%202021%20Convertible%20Bonds) As of June 30, 2025, the Company had utilized the net proceeds of USD 275.6 million from the 2021 convertible bonds as planned, focusing on R&D, marketing system upgrades, and working capital - As of June 30, 2025, the Company had utilized the net proceeds of **USD 275.6 million** from the 2021 convertible bonds as planned[131](index=131&type=chunk) Use of Net Proceeds from 2021 Convertible Bonds (As of June 30, 2025) | Purpose | Utilized (USD Million) | Unutilized (USD Million) | Expected Timeframe for Full Utilization | | :--- | :--- | :--- | :--- | | Enhancing the Group's Integrated R&D Capabilities | 128.8 | 18.0 | Before December 31, 2025 | | Upgrading the Group's Marketing System | 44.0 | – | Not Applicable | | Supplementing Funds for Potential Strategic Investments and M&A and Working Capital | 58.8 | – | Not Applicable | | General Corporate Purposes | 44.0 | – | Not Applicable | [Use of Proceeds from 2023 Placing](index=47&type=section&id=Use%20of%20Proceeds%20from%202023%20Placing) As of June 30, 2025, the Company had utilized the net proceeds of HKD 1.4118 billion from the 2023 placing as planned, primarily for marketing system upgrades, working capital, and general corporate purposes, with some R&D funds remaining - As of June 30, 2025, the Company had utilized the net proceeds of **HKD 1.4118 billion** from the 2023 placing as planned[132](index=132&type=chunk) Use of Net Proceeds from 2023 Placing (As of June 30, 2025) | Purpose | Utilized (HKD Million) | Unutilized (HKD Million) | Expected Timeframe for Full Utilization | | :--- | :--- | :--- | :--- | | Enhancing the Group's Integrated R&D Capabilities | – | 156.9 | Before December 31, 2025 | | Upgrading the Group's Marketing System | 313.7 | – | Not Applicable | | Supplementing Working Capital | 470.6 | – | Not Applicable | | General Corporate Purposes | 627.5 | – | Not Applicable | [Corporate Governance](index=48&type=section&id=Corporate%20Governance) The Group maintains high corporate governance standards, adhering to the HKEX Listing Rules' Corporate Governance Code, with a noted deviation regarding the combined roles of Chairman and CEO - The Group is committed to maintaining a high standard of corporate governance and has adopted the principles and code provisions of the Corporate Governance Code set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[135](index=135&type=chunk) - For the six months ended June 30, 2025, the Company has complied with all applicable code provisions, except for a deviation from code provision C.2.1 (the roles of chairman and chief executive officer should be separate)[135](index=135&type=chunk) - Mr. Sun Taoyong serves concurrently as the Chairman of the Board and Chief Executive Officer, which the Board believes is beneficial to the Company and its shareholders as a whole at the current stage of the Group's development[135](index=135&type=chunk) [Standard Code for Securities Transactions by Directors](index=48&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance for the six months ended June 30, 2025 - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules. Following specific inquiries to all Directors, each Director has confirmed that they have complied with the required standards set out in the Standard Code for the six months ended June 30, 2025[137](index=137&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=48&type=section&id=Purchase%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities for the six months ended June 30, 2025 - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[138](index=138&type=chunk) [Post-Balance Sheet Events](index=49&type=section&id=Post-Balance%20Sheet%20Events) A significant post-balance sheet event includes Weimob Global Limited's subscription of new redeemable preference shares in Genstore Inc. for USD 10 million in July 2025 - On July 21, 2025,

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的內容概不負責，對其準確性或完整性亦不發表 任何聲明，並明確表示概不對因本公告全部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何 責任。 （於開曼群島註冊成立之有限公司） （股份代號：1128及債務股份代號：5280、40102、40259、40357、5754、5877） 截 至 2025 年 6 月 3 0 日止六個月 中期業績公告、 宣派中期股息及暫停辦理股份登記手續 永利澳門有限公司（「本公司」）董事會欣然宣佈本公司及其附屬公司（統稱「本集團」）截 至2025年6月30日止六個月的未經審核綜合業績如下。 財務摘要 截至6月30日止六個月 | | | 2025年 | 2024年 | | --- | --- | --- | --- | | | | 港元 | 港元 | | | | （以千計，每股金額或 | | | | | 另有列明者除外） | | | 娛樂場收益 | | 11,385,785 | 12,089,797 | | 其他收益 | | 2,240,620 | 2,644,337 | | 經調整EBITDA | | 3,466,84 ...

[Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&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) The Group's revenue increased 11% to HK$340.9 million, but gross profit declined 66.9% to HK$14.2 million due to market competition, leading to a 69.3% drop in profit attributable to owners to HK$4.8 million Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 340,853 | 306,970 | 11.0% | | Cost of sales | (326,698) | (264,074) | 23.7% | | Gross profit | 14,155 | 42,896 | -66.9% | | Other income | 18 | 102 | -82.4% | | Net other gains/(losses) | 35 | (19,868) | N/A | | Selling and distribution expenses | (40) | (168) | -76.2% | | Administrative expenses | (9,371) | (7,406) | 26.5% | | Finance costs | (23) | (8) | 187.5% | | Operating profit before income tax | 4,774 | 15,548 | -69.3% | | Income tax expense | – | – | N/A | | Profit for the period attributable to owners of the Company | 4,774 | 15,548 | -69.3% | | Total comprehensive income for the period | 4,495 | 15,695 | -71.3% | | Basic earnings per share | 2.82 HK cents | 9.18 HK cents | -69.3% | - Revenue growth was primarily contributed by the electronic components business, accounting for approximately **99%** of total revenue[33](index=33&type=chunk) - The significant decrease in gross profit was mainly due to intensified market competition, leading to the sale of electronic components products at lower gross margins[33](index=33&type=chunk) - Net other gains/(losses) turned from a loss of **HK$19.8 million** in the prior period to a gain of **HK$35 thousand**, primarily due to no onerous contract provisions in the current period[16](index=16&type=chunk)[34](index=34&type=chunk) [Condensed Consolidated Statement of Financial Position](index=3&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 HK$392.4 million, with net current assets rising to HK$370.2 million due to reduced current liabilities, and equity attributable to owners increasing to HK$390.1 million Condensed Consolidated Statement of Financial Position (As at June 30, 2025) | Indicator | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Non-current assets | 20,312 | 21,154 | -4.0% | | Current assets | 372,073 | 386,155 | -3.6% | | **Total assets** | 392,385 | 407,309 | -3.7% | | **Equity** | | | | | Equity attributable to owners of the Company | 390,065 | 385,570 | 1.2% | | **Liabilities** | | | | | Non-current liabilities | 424 | 424 | 0.0% | | Current liabilities | 1,896 | 21,315 | -91.1% | | **Total liabilities** | 2,320 | 21,739 | -89.3% | | Net current assets | 370,177 | 364,840 | 1.5% | - Current liabilities significantly decreased by **91.1%**, mainly due to provisions falling from **HK$18.4 million** to zero[5](index=5&type=chunk)[29](index=29&type=chunk) - Inventories decreased to **HK$124.6 million** (December 31, 2024: **HK$188.8 million**), reflecting inventory management[4](index=4&type=chunk)[39](index=39&type=chunk) - Trade and other receivables significantly increased to **HK$220.3 million** (December 31, 2024: **HK$174.1 million**), primarily driven by a **120.8%** increase in trade receivables[4](index=4&type=chunk)[26](index=26&type=chunk)[40](index=40&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=5&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) These notes detail the Group's business, accounting policies, segment performance, income, expenses, balance sheet changes, and provisions, offering essential context for the interim results [1. General Information and Basis of Preparation](index=5&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99%E5%8F%8A%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) This section outlines the Group's primary business activities, its incorporation details, and the functional currency used for financial reporting - The Group is principally engaged in the sale of electronic components products and health products and food[6](index=6&type=chunk) - The Company was incorporated in the Cayman Islands and its shares are listed on the Main Board of The Stock Exchange of Hong Kong[6](index=6&type=chunk) - The financial statements are presented in Hong Kong dollars, which is also the Company's functional currency[7](index=7&type=chunk) [2. Basis of Preparation](index=5&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) This section details the specific accounting standards and disclosure requirements followed in the preparation of the financial statements - The 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 the applicable disclosure requirements of the Listing Rules of the Stock Exchange[8](index=8&type=chunk) [3. Significant Accounting Policies](index=6&type=section&id=3.%20%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) This section outlines the accounting policies and methods applied, including the impact of newly adopted accounting standards - The condensed consolidated financial statements have been prepared on the historical cost basis, and the accounting policies and methods of computation used are consistent with those followed in the annual financial statements for the year ended December 31, 2024[9](index=9&type=chunk) - The Group has initially applied the amended HKAS 21 'Lack of Exchangeability' during the current interim period, which had no significant impact on the Group's results and financial position[10](index=10&type=chunk) [4. Segment Information](index=6&type=section&id=4.%20%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) This section provides a breakdown of the Group's revenue and results by operating segment, including electronic components and health products - The Group's operating segments include electronic components products (sale of NAND flash wafers, eMCP memory, and other electronic components) and health products and food (sale of medicated wine and other health products)[12](index=12&type=chunk) Revenue and Results by Segment (For the six months ended June 30) | Indicator | 2025 Electronic Components (HK$ Thousand) | 2025 Health Products & Food (HK$ Thousand) | 2025 Total (HK$ Thousand) | 2024 Electronic Components (HK$ Thousand) | 2024 Health Products & Food (HK$ Thousand) | 2024 Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Segment revenue | 339,115 | 1,738 | 340,853 | 306,970 | – | 306,970 | | Cost of sales | (325,056) | (1,642) | (326,698) | (264,074) | – | (264,074) | | Segment results (Gross profit) | 14,059 | 96 | 14,155 | 42,896 | – | 42,896 | - In the first half of 2025, the health products and food segment contributed revenue of **HK$1,738 thousand** and segment results of **HK$96 thousand** for the first time[13](index=13&type=chunk) [5. Other Income](index=8&type=section&id=5.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) This section details the components of other income, highlighting changes in interest income from bank deposits and loans Other Income (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Interest income from bank deposits | 18 | 9 | 9 | | Interest income from loans receivable | – | 93 | -93 | | **Total** | 18 | 102 | -84 | - Total other income decreased from **HK$102 thousand** in 2024 to **HK$18 thousand** in 2025, primarily due to the disappearance of interest income from loans receivable[15](index=15&type=chunk) [6. Net Other Gains/(Losses)](index=8&type=section&id=6.%20%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E2%81%84%EF%BC%88%E虧損%EF%BC%89%E6%B7%A8%E9%A1%8D) This section explains the significant shift in net other gains or losses, primarily driven by the absence of onerous contract provisions Net Other Gains/(Losses) (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Onerous contract provisions | – | (19,872) | 19,872 | | Net exchange gains | 35 | 4 | 31 | | **Total** | 35 | (19,868) | 19,903 | - The absence of onerous contract provisions in the current period, compared to **HK$19,872 thousand** in the prior period, was the main reason for the net other gains/(losses) turning from a loss to a gain[16](index=16&type=chunk)[34](index=34&type=chunk) [7. Finance Costs](index=8&type=section&id=7.%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) This section details the Group's finance costs, primarily consisting of interest expenses on lease liabilities Finance Costs (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Interest expense on lease liabilities | 23 | 8 | 15 | - Finance costs primarily consisted of interest expenses on lease liabilities, increasing from **HK$8 thousand** in 2024 to **HK$23 thousand** in 2025[17](index=17&type=chunk) [8. Profit Before Tax](index=9&type=section&id=8.%20%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) This section outlines the items deducted in calculating profit before tax, including depreciation and lease-related expenses Items Deducted in Profit Before Tax (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 852 | 1,216 | -364 | | Expenses relating to short-term leases and other leases | 460 | 460 | 0 | - Depreciation expenses decreased, while expenses related to short-term leases and other leases remained unchanged[19](index=19&type=chunk) [9. Income Tax Expense](index=9&type=section&id=9.%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) This section explains the Group's income tax position across different jurisdictions, noting the absence of tax provisions due to taxable losses or exemptions - Hong Kong Profits Tax: No provision has been made as the Company and its Hong Kong subsidiaries had no assessable profits or sufficient tax losses brought forward[20](index=20&type=chunk) - PRC Enterprise Income Tax: No provision has been made as the PRC subsidiaries had estimated tax losses[21](index=21&type=chunk) - Cayman Islands and British Virgin Islands jurisdictions: The Group is not subject to income tax[22](index=22&type=chunk) [10. Dividends](index=9&type=section&id=10.%20%E8%82%A1%E6%81%AF) This section states that the Board of Directors has not recommended the distribution of any dividends for the interim period - The Board of Directors has not recommended the distribution of any dividends[23](index=23&type=chunk) [11. Earnings Per Share](index=10&type=section&id=11.%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) This section provides the calculation of basic and diluted earnings per share, noting their equivalence due to anti-dilutive effects Earnings Per Share Calculation Data (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand/Thousand Shares) | 2024 (HK$ Thousand/Thousand Shares) | | :--- | :--- | :--- | | Profit attributable to owners of the Company | 4,774 | 15,548 | | Weighted average number of ordinary shares | 169,445 | 169,445 | | Basic and diluted earnings per share | 2.82 HK cents | 9.18 HK cents | - Diluted earnings per share are the same as basic earnings per share because the exercise of outstanding share options had an anti-dilutive effect[24](index=24&type=chunk) [12. Property, Plant and Equipment](index=10&type=section&id=12.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99) This section details the Group's capital expenditures on property, plant, and equipment during the interim period - Acquisitions of property, plant and equipment amounted to **HK$10,580** during the current interim period, an increase from **HK$8,000** in the previous period[25](index=25&type=chunk) - No significant disposals were made in either period[25](index=25&type=chunk) [13. Trade and Other Receivables](index=11&type=section&id=13.%20%E8%B2%A3%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) This section provides a detailed breakdown and aging analysis of trade and other receivables, highlighting significant changes and credit management practices Trade and Other Receivables (As at each reporting date) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | 217,993 | 98,746 | 119,247 | | Prepayments for purchases of inventories | – | 70,574 | -70,574 | | Other prepayments and deposits | 2,338 | 4,826 | -2,488 | | **Total** | 220,331 | 174,146 | 46,185 | Aging Analysis of Trade Receivables (As at each reporting date) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 30 days | 112,743 | 78,732 | | 31 to 60 days | 105,250 | 20,014 | | **Total** | 217,993 | 98,746 | - Trade receivables significantly increased by **120.8%**, primarily reflecting sales growth[26](index=26&type=chunk)[40](index=40&type=chunk) - Prepayments for purchases of inventories decreased from **HK$70.6 million** to zero, indicating that prepayments have been utilized or converted into inventories[26](index=26&type=chunk)[28](index=28&type=chunk) - The Group grants credit periods of **60 to 180 days** to customers and closely monitors credit quality[26](index=26&type=chunk) [14. Provisions](index=12&type=section&id=14.%20%E6%92%A5%E5%82%99) This section details the changes in onerous contract provisions, explaining their utilization and the underlying reasons Movement in Onerous Contract Provisions (As at each reporting date) | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | At January 1 | 18,400 | 92,199 | | (Utilized)/Provision | (18,400) | 60,400 | | Derecognition upon disposal of subsidiary | – | (134,199) | | **At end of period** | – | 18,400 | - As of June 30, 2025, onerous contract provisions were fully utilized, resulting in a zero balance at period-end, compared to **HK$18.4 million** as of December 31, 2024[29](index=29&type=chunk) - Provisions primarily related to electronic components product purchase contracts, where expected costs exceeded economic benefits due to declining market prices[29](index=29&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) This section details the Group's operational performance, financial changes, future strategies, and risk management, noting revenue growth despite declining gross margins due to competition, with a focus on technology, capacity, and diversification [Business Review](index=13&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) This section reviews the Group's core business in electronic components, market trends, and strategic approaches to product management and pricing - The Group is principally engaged in the sale of electronic components products, including NAND flash wafers, eMCP memory, etc[31](index=31&type=chunk) - The global semiconductor market experienced significant growth driven by technological advancements, increased demand for electronic devices, the promotion of AI and 5G technologies, and the intelligent and electrified transformation of the automotive industry[31](index=31&type=chunk) - The Group adopts a strategic bulk procurement approach, actively manages its product portfolio and inventory levels, and focuses on product portfolio diversification, venturing into consumer electronics, automotive, and industrial application fields[31](index=31&type=chunk)[32](index=32&type=chunk) - Continuously evaluates pricing strategies, utilizing data analytics to adjust pricing in response to market changes, ensuring competitiveness and profit maximization[32](index=32&type=chunk) [Financial Review](index=14&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section provides an overview of the Group's financial performance, including revenue, gross profit, and net profit, highlighting key changes and their drivers - Revenue for the current interim period was approximately **HK$340.9 million**, representing a year-on-year increase of approximately **11%**, primarily from the electronic components business[33](index=33&type=chunk) - Gross profit significantly decreased from **HK$42.9 million** to **HK$14.2 million**, mainly due to intensified market competition leading to lower gross margins[33](index=33&type=chunk) - Profit attributable to owners of the Company was approximately **HK$4.8 million**, a significant decrease from **HK$15.5 million** in the prior period[35](index=35&type=chunk) Key Financial Review Data (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 340,900 | 307,000 | 11.0% | | Gross profit | 14,200 | 42,900 | -66.9% | | Profit attributable to owners of the Company | 4,800 | 15,500 | -69.0% | [Revenue and Gross Profit](index=14&type=section&id=%E6%94%B6%E7%9B%8A%E5%8F%8A%E6%AF%9B%E5%88%A9) This section analyzes the drivers behind the Group's revenue growth and the significant decline in gross profit due to market competition - Revenue increased by **11%** to **HK$340.9 million**, with the electronic components business contributing approximately **99%**[33](index=33&type=chunk) - Gross profit decreased by **66.9%** to **HK$14.2 million**, primarily due to intensified market competition leading to lower gross margins for electronic components products[33](index=33&type=chunk) - The Group will focus on improving operational efficiency and optimizing product portfolio strategies to sustain revenue growth and enhance gross margins[33](index=33&type=chunk) [Net Other Gains/(Losses)](index=14&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%EF%BC%88%E虧損%EF%BC%89%E6%B7%A8%E9%A1%8D) This section explains the shift from a net loss to a net gain in other income, primarily due to the absence of onerous contract provisions - No onerous contract provisions were recognized in the current interim period, compared to approximately **HK$19.8 million** in the prior period, leading to a shift from net loss to net gain in other income[34](index=34&type=chunk) - These provisions were utilized and charged to cost of sales during the current interim period due to the sale of contract products[34](index=34&type=chunk) [Results](index=14&type=section&id=%E6%A5%AD%E7%B8%BE) This section highlights the significant decrease in profit attributable to owners of the Company for the interim period - Profit attributable to owners of the Company for the period was approximately **HK$4.8 million**, a significant decrease from **HK$15.5 million** in the prior period[35](index=35&type=chunk) [Future Prospects](index=15&type=section&id=%E6%9C%AA%E4%BE%86%E5%89%8D%E6%99%AF) This section outlines the Group's strategic plans for future growth, including investments in new technologies, capacity expansion, and diversification into new business areas - The electronic components industry will be driven by new technologies such as third-generation semiconductors, 5G, AI, and automotive electronics, with demand in new energy sectors (electric vehicles, smart cars, solar energy storage) expected to grow significantly[36](index=36&type=chunk) - Plans to invest in production facilities in China to enhance capacity and provide technical support, product customization, assembly, packaging, and testing services[36](index=36&type=chunk) - Seeks collaboration with technology companies and research institutions to drive innovation and develop next-generation products[36](index=36&type=chunk) - The health segment is actively developing, exploring investments in skincare and health product factories, and procuring body care products to establish authorized distributor relationships[36](index=36&type=chunk) - Will continue to diversify its product and customer base, improve the supply chain, and seize business expansion opportunities by investing in and/or acquiring promising businesses or projects[36](index=36&type=chunk)[37](index=37&type=chunk) [Working Capital and Inventory Management](index=16&type=section&id=%E7%87%9F%E9%81%8B%E8%B3%87%E9%87%91%E5%8F%8A%E5%AD%98%E8%B2%A8%E7%AE%A1%E6%8E%A7) This section discusses the Group's working capital position, including liquidity ratios, equity, and strategies for managing inventory levels Key Working Capital and Inventory Management Data (As at each reporting date) | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Current ratio | Approx. 196.2 times | Approx. 18.1 times | Significantly improved | | Equity attributable to owners of the Company | Approx. HK$390.1 million | Approx. HK$385.6 million | 1.2% growth | | Equity per share | Approx. HK$2.3 | Approx. HK$2.3 | Flat | | Inventories | Approx. HK$124.6 million | HK$188.8 million | 34.0% decrease | - Current ratio significantly increased to **196.2 times**, indicating a substantial improvement in liquidity[38](index=38&type=chunk) - Inventories decreased by **34.0%** to **HK$124.6 million**, stated at the lower of cost and net realizable value, with the Group having risk management and internal control measures in place[39](index=39&type=chunk) - The Group will regularly review and evaluate its product portfolio and structure to optimize inventory levels and capitalize on favorable prices[39](index=39&type=chunk) [Trade Receivables](index=16&type=section&id=%E8%B2%A3%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) This section addresses the increase in trade receivables, outlining management's strategies for credit risk assessment and collection to maintain financial stability - Trade receivables (net of loss allowance) significantly increased by approximately **120.8%** to approximately **HK$218.0 million**, reflecting sales growth[40](index=40&type=chunk) - Management regularly reviews the recoverability of receivables, assesses customer creditworthiness, and monitors aging to identify potential risks and mitigate losses[40](index=40&type=chunk) - Despite the increase in receivables, management remains vigilant in ensuring effective collection management to support liquidity and financial stability[40](index=40&type=chunk) [Liquidity and Financial Resources](index=17&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) This section details the Group's primary funding sources and its cash and cash equivalents position, noting the absence of borrowings Cash and Cash Equivalents (As at each reporting date) | Indicator | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 27.2 | 23.2 | 17.2% | - The Group's primary source of funds is internally generated cash flows[41](index=41&type=chunk) - As at the reporting date, the Group had no borrowings[42](index=42&type=chunk) [Pledge of Assets](index=17&type=section&id=%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) This section discloses the Group's pledged assets, specifically land and buildings, as collateral for product procurement - Certain land and buildings with a total carrying amount of approximately **HK$19.6 million** have been pledged to a supplier as collateral for product procurement in the electronic components business[43](index=43&type=chunk) [Foreign Exchange Risk](index=17&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) This section assesses the Group's exposure to foreign exchange risk, concluding it is not significant due to the HKD-USD peg - The Group's monetary assets and liabilities are primarily denominated in Hong Kong dollars and US dollars, and due to the peg between the Hong Kong dollar and the US dollar, no significant foreign exchange risk has arisen[44](index=44&type=chunk) [Litigation](index=17&type=section&id=%E8%A8%B4%E8%A8%9F) This section details a legal claim against the Company and its former subsidiary, outlining management's assessment and monitoring of the situation - A supplier has initiated legal proceedings against a disposed subsidiary of the Company and the Company itself, claiming payment of approximately **HK$14.8 million**[45](index=45&type=chunk) - Management believes the counterclaim lacks basis and supporting evidence and does not expect it to have a material adverse effect on the Group's overall financial position, thus no provision has been made[45](index=45&type=chunk) - Management is seeking legal advice and closely monitoring the progress of the litigation[45](index=45&type=chunk) [Contingent Liabilities](index=18&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) This section confirms the absence of any significant contingent liabilities for the Group as of the reporting date - As of June 30, 2025, the Group had no significant contingent liabilities[46](index=46&type=chunk) [Events After Reporting Period](index=18&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) This section states that no significant events impacting operations or financial performance occurred after the interim period up to the announcement date - No significant events that would materially affect the Group's operations and financial performance have occurred subsequent to the interim period and up to the date of this announcement[47](index=47&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=18&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) This section confirms that neither the Company nor its subsidiaries engaged in any transactions involving its listed securities during the interim period - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the current interim period[48](index=48&type=chunk) [Interim Dividend](index=18&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) This section reiterates the Board's decision not to recommend any interim dividend for the reported period - The Directors do not recommend the payment of any dividend for the current interim period[49](index=49&type=chunk) [Corporate Governance](index=18&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) The Group maintains high corporate governance standards, adhering to Listing Rules and Model Code, with an Audit Committee of independent non-executive directors reviewing financial reports and internal controls [Corporate Governance Code](index=18&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) This section confirms the Company's adherence to the Corporate Governance Code, including its internal control systems and board composition - The Company has applied the principles of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules and complied with its applicable provisions[50](index=50&type=chunk) - An internal control system is in place, and the Board includes three independent non-executive directors to ensure a balance of power and effective decision-making[50](index=50&type=chunk) [Model Code for Securities Transactions](index=18&type=section&id=%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) This section confirms the Company's adoption and compliance with a code of conduct for securities transactions by directors - The Company has adopted a code of conduct no less exacting than the Model Code set out in Appendix C3 to the Listing Rules and confirmed that all Directors have complied with it[51](index=51&type=chunk) [Audit Committee](index=19&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) This section describes the composition and responsibilities of the Audit Committee, including its review of the interim financial statements - The Audit Committee has been established in accordance with the Listing Rules, comprising three independent non-executive directors, responsible for reviewing and overseeing financial reporting procedures, risk management, and internal control systems[52](index=52&type=chunk) - The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements for the current interim period and is of the opinion that they have been prepared in accordance with applicable standards, the Listing Rules, and statutory provisions, and have made adequate disclosures[52](index=52&type=chunk)[53](index=53&type=chunk) [Other Information](index=19&type=section&id=%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) This section provides the Board's statement and the current list of Board members, offering updated information on the corporate governance structure [Board Statement and Directors' List](index=19&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E8%81%B2%E6%98%8E%E5%8F%8A%E8%91%A3%E4%BA%8B%E5%90%8D%E5%96%AE) This section presents the Board's statement and the current composition of the Board of Directors as of the announcement date - The announcement is issued by Mr. Wong Chi Kwan, Chairman of the Board, on behalf of the Board[54](index=54&type=chunk) - As of the date of this announcement, the Board members include Non-executive Directors Mr. Wong Chi Kwan, Mr. Chan Hoi Bun, Mr. Chan Kei; Executive Directors Mr. Tong Yu Yuen, Mr. Yuen Chi Lap; and Independent Non-executive Directors Mr. Li Wai, Mr. Leung Chun Tung, Ms. Ng Hung Yu[55](index=55&type=chunk)

[Announcement Summary](index=1&type=section&id=Summary) Thinkol Education Group is pleased to announce its unaudited condensed consolidated interim results for the six months ended June 30, 2025, which have been reviewed by the company's audit committee - Thinkol Education Group is pleased to announce its unaudited condensed consolidated interim results for the six months ended June 30, 2025, which have been reviewed by the company's audit committee[2](index=2&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) This section provides an overview of the Group's key financial performance for the six months ended June 30, 2025, showing a 10.1% increase in revenue but a 15.0% and 23.9% decrease in gross profit and profit for the period attributable to owners of the company, respectively [Key Financial Indicators](index=1&type=section&id=Key%20Financial%20Indicators) This section outlines the Group's key financial performance for the six months ended June 30, 2025, showing a 10.1% increase in revenue but a 15.0% and 23.9% decrease in gross profit and profit for the period attributable to owners of the company, respectively | Indicator | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | Change (RMB thousands) | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | 439,393 | 399,113 | 40,280 | 10.1% | | Gross Profit | 150,558 | 177,138 | (26,580) | (15.0)% | | Profit for the Period Attributable to Owners of the Company | 62,933 | 82,652 | (19,719) | (23.9)% | | Basic Earnings Per Share (RMB cents) | 11.42 | 15.21 | (3.79) | (24.9)% | | Diluted Earnings Per Share (RMB cents) | 11.18 | 14.76 | (3.58) | (24.2)% | [Non-IFRS Measures](index=1&type=section&id=Non-IFRS%20Measures) This section explains the Group's use of Non-IFRS measures, such as adjusted profit and adjusted earnings per share, to exclude non-operating items like share-based compensation expenses for a more accurate assessment of operational performance | Indicator | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | Change (RMB thousands) | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted Profit for the Period Attributable to Owners of the Company | 81,312 | 93,542 | (12,230) | (13.1)% | | Adjusted Basic Earnings Per Share (RMB cents) | 14.75 | 17.21 | (2.46) | (14.3)% | | Adjusted Diluted Earnings Per Share (RMB cents) | 14.45 | 16.71 | (2.26) | (13.5)% | - Adjusted profit primarily excludes share-based compensation expenses, which increased by **68.8%** to **RMB 18.4 million** in the first half of 2025 from **RMB 10.9 million** in the same period last year[4](index=4&type=chunk)[6](index=6&type=chunk) [Performance Overview](index=5&type=section&id=Performance%20Overview) The Group recorded an operating profit of RMB 77.4 million for the six months ended June 30, 2025, with revenue increasing by 10.1% to RMB 439.4 million, despite short-term negative impacts on gross and net profit from new learning centers - For the six months ended June 30, 2025, the Group recorded an operating profit of **RMB 77.4 million**[10](index=10&type=chunk) - Revenue increased by **10.1%** year-on-year to **RMB 439.4 million**, with tutoring class hours growing to **4,944,498**[10](index=10&type=chunk) - New learning centers in Guangzhou achieved ideal enrollment and exceeded operational expectations, but the provision of low-priced trial courses and increased related costs had a short-term negative impact on gross profit and net profit[11](index=11&type=chunk) - Excluding the short-term strategic losses in Guangzhou, the Group's net profit for the first half of this year slightly increased compared to the same period last year[11](index=11&type=chunk) - After accounting for share-based compensation expenses, net profit attributable to owners of the company was **RMB 62.9 million**, a year-on-year decrease of **23.9%**[11](index=11&type=chunk)[12](index=12&type=chunk) [Future Prospects and Development Strategies](index=5&type=section&id=Future%20Prospects%20and%20Development%20Strategies) The Group is expanding its revenue base through education tourism and international courses, strengthening its 'Lexue' brand in quality education, and actively seeking new business opportunities while enhancing operational efficiency with AI - Since July 2023, the Group has launched education tourism and international courses to broaden its revenue base and contribute to long-term development[13](index=13&type=chunk) - The 'Lexue' brand will further strengthen its business development in quality education, including art, sports, painting, performing arts, calligraphy, scientific literacy, traditional Chinese culture, logical thinking training, and international literacy[13](index=13&type=chunk)[14](index=14&type=chunk) - The Group will actively seek new business opportunities in various fields, rigorously implement cost control measures, maintain robust cash flow, deepen technological integration, and leverage artificial intelligence to enhance service quality and operational efficiency[14](index=14&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) This section provides a detailed review of the Group's financial performance, including revenue, costs, and profitability, highlighting key drivers and changes for the period [1. Revenue](index=6&type=section&id=1.%20Revenue) The Group's revenue increased by **10.1%** from **RMB 399.1 million** in the same period of 2024 to **RMB 439.4 million** in the first half of 2025, primarily due to an increase in total student enrollments, tutoring class hours, and tuition fees per class hour | Revenue Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | Percentage Change | | :--- | :--- | :--- | :--- | | Non-Academic Quality Courses and Others | 387,660 | 366,525 | 5.8% | | Tutoring Courses | 51,733 | 32,588 | 58.7% | | **Total** | **439,393** | **399,113** | **10.1%** | | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Percentage Change | | :--- | :--- | :--- | :--- | | Student Enrollments | 200,788 | 184,405 | 8.9% | | Tutoring Class Hours | 4,944,498 | 4,564,252 | 8.3% | [2. Cost of Sales](index=7&type=section&id=2.%20Cost%20of%20Sales) Cost of sales increased by **30.1%** from **RMB 222.0 million** in the same period of 2024 to **RMB 288.8 million** in the first half of 2025, primarily due to increased teacher salaries and amortization of right-of-use assets, reflecting the expansion of the learning center network - Cost of sales increased by **30.1%** to **RMB 288.8 million**[17](index=17&type=chunk) - Primarily due to increased teacher salaries and amortization of right-of-use assets, mainly driven by the increase in the total number of learning centers due to network expansion and business growth[17](index=17&type=chunk) [3. Gross Profit and Gross Margin](index=7&type=section&id=3.%20Gross%20Profit%20and%20Gross%20Margin) Gross profit decreased by **15.0%** from **RMB 177.1 million** in the same period of 2024 to **RMB 150.6 million** in the first half of 2025, with gross margin declining from **44.4%** to **34.3%**, primarily due to new learning centers being in their ramp-up phase with limited revenue but significantly increased related costs - Gross profit decreased by **15.0%** to **RMB 150.6 million**[18](index=18&type=chunk) - Gross margin decreased from **44.4%** to **34.3%**[18](index=18&type=chunk) - Primarily due to new learning centers being in their ramp-up phase after opening, generating relatively limited revenue, while related costs (such as rental expenses and salaries and benefits) significantly increased due to the growth in learning centers[18](index=18&type=chunk) [4. Selling Expenses](index=7&type=section&id=4.%20Selling%20Expenses) Selling expenses slightly increased by **0.2%** to **RMB 6.5 million**, primarily related to student activities - Selling expenses slightly increased by **0.2%** to **RMB 6.5 million**, primarily related to student activities[19](index=19&type=chunk) [5. Administrative Expenses](index=7&type=section&id=5.%20Administrative%20Expenses) Administrative expenses increased by **14.6%** to **RMB 64.4 million**, mainly due to increased administrative staff expenses, consistent with the Group's business growth - Administrative expenses increased by **14.6%** to **RMB 64.4 million**, primarily due to increased administrative staff expenses, consistent with the Group's business growth[20](index=20&type=chunk) [6. Research and Development Expenses](index=7&type=section&id=6.%20Research%20and%20Development%20Expenses) Research and development expenses slightly decreased by **2.6%** to **RMB 10.5 million**, primarily for R&D personnel expenses related to developing teaching materials, course products, and market research for quality education courses - Research and development expenses slightly decreased by **2.6%** to **RMB 10.5 million**[21](index=21&type=chunk) - These expenses are primarily for R&D personnel, related to developing teaching materials and course products, as well as market research for a series of quality education courses across different themes and levels[21](index=21&type=chunk) [7. Other Income](index=8&type=section&id=7.%20Other%20Income) Other income decreased by **13.9%** to **RMB 5.6 million**, primarily due to a **RMB 2.5 million** reduction in finance income, partially offset by a **RMB 1.3 million** increase in government grants - Other income decreased by **13.9%** to **RMB 5.6 million**[22](index=22&type=chunk) - This decrease was primarily due to a **RMB 2.5 million** reduction in finance income, partially offset by a **RMB 1.3 million** increase in government grants[22](index=22&type=chunk) [8. Other Gains—Net](index=8&type=section&id=8.%20Other%20Gains%E2%80%94Net) Other gains—net decreased by **21.8%** to **RMB 2.7 million**, primarily due to a net loss of **RMB 0.9 million** from the disposal of property, plant and equipment and a **RMB 0.7 million** decrease from lease modifications - Other gains—net decreased by **21.8%** to **RMB 2.7 million**[23](index=23&type=chunk) - This decrease was primarily due to a net loss of **RMB 0.9 million** from the disposal of property, plant and equipment for the six months ended June 30, 2025 (six months ended June 30, 2024: net gain of **RMB 0.04 million** from disposal of property, plant and equipment) and a **RMB 0.7 million** decrease from lease modifications[23](index=23&type=chunk) [9. Finance Costs](index=8&type=section&id=9.%20Finance%20Costs) Finance costs decreased by **11.6%** to **RMB 4.3 million**, primarily due to a reduction in interest expenses on lease liabilities - Finance costs decreased by **11.6%** to **RMB 4.3 million**, primarily due to a reduction in interest expenses on lease liabilities[24](index=24&type=chunk) [10. Profit Before Income Tax](index=8&type=section&id=10.%20Profit%20Before%20Income%20Tax) Profit before income tax decreased by **33.8%** from **RMB 109.0 million** in the same period of 2024 to **RMB 72.2 million** in the first half of 2025 - Profit before tax decreased by **33.8%** to **RMB 72.2 million**[25](index=25&type=chunk) [11. Income Tax Expense](index=8&type=section&id=11.%20Income%20Tax%20Expense) Income tax expense decreased by **65.1%** from **RMB 26.8 million** in the same period of 2024 to **RMB 9.3 million** in the first half of 2025, primarily due to a reduction in taxable profit - Income tax expense decreased by **65.1%** to **RMB 9.3 million**, primarily due to a reduction in taxable profit[26](index=26&type=chunk) [12. Profit for the Period Attributable to Owners of the Company](index=8&type=section&id=12.%20Profit%20for%20the%20Period%20Attributable%20to%20Owners%20of%20the%20Company) Profit for the period attributable to owners of the company decreased by **23.9%** from **RMB 82.7 million** in the same period of 2024 to **RMB 62.9 million** in the first half of 2025 - Profit for the period attributable to owners of the company decreased by **23.9%** to **RMB 62.9 million**[27](index=27&type=chunk) [Treasury Management Policy](index=9&type=section&id=Treasury%20Management%20Policy) The Group's treasury management policy aims to generate income by investing surplus cash reserves in low-risk wealth management products, primarily medium-to-low risk, short-term (generally not exceeding one year) products, with investment decisions authorized by the Chairman of the Board and execution and monitoring by the Treasury Department - The Group utilizes surplus cash reserves to invest in low-risk wealth management products to generate income, typically investing in medium-to-low risk, short-term products (generally not exceeding one year)[29](index=29&type=chunk) - The Board has authorized the Chairman of the Board to make investment decisions within pre-defined limits, with the Treasury Department responsible for execution, tracking, and analysis of investment performance[29](index=29&type=chunk)[30](index=30&type=chunk) [Foreign Exchange Risk](index=10&type=section&id=Foreign%20Exchange%20Risk) The Group's majority of revenue and expenses are denominated in RMB, with cash and bank balances primarily in RMB and HKD; currently, there is no foreign currency hedging policy, and management will continue to monitor foreign exchange risk - The Group's majority of revenue and expenses are denominated in RMB, with cash and bank balances primarily in RMB and HKD[31](index=31&type=chunk) - The Group currently has no foreign currency hedging policy, and management will continue to monitor foreign exchange risk and consider prudent measures when appropriate[31](index=31&type=chunk) [Material Acquisitions and Disposals and Material Investments](index=10&type=section&id=Material%20Acquisitions%20and%20Disposals%20and%20Material%20Investments) For the six months ended June 30, 2025, the company did not undertake any material investments, acquisitions, or disposals other than those disclosed in this announcement; the Group will actively seek investment opportunities to broaden its revenue base, with no single investment exceeding **5%** of the Group's total assets - For the six months ended June 30, 2025, the company did not undertake any material investments, material acquisitions, or disposals of subsidiaries, associates, and joint ventures[32](index=32&type=chunk) - The Group is committed to adapting to the rapidly changing market, actively seeking investment opportunities to broaden its revenue base, with no single investment exceeding **5%** of the Group's total assets as of June 30, 2025[32](index=32&type=chunk) [Dividends](index=10&type=section&id=Dividends) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[34](index=34&type=chunk) [Contingent Liabilities](index=10&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities, guarantees, or pending litigations - As of June 30, 2025, the Group had no material contingent liabilities, guarantees, or any material litigation or claims pending or threatened against any member of the Group[35](index=35&type=chunk) [Pledge of Assets](index=11&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no material pledge of assets - As of June 30, 2025, and December 31, 2024, the Group had no material pledge of assets[36](index=36&type=chunk) [Employees and Remuneration Policy](index=11&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had a total of **3,085** employees, with a remuneration policy consistent with market practices, determined by individual performance and experience, and continuously reviewed to maintain market competitiveness - As of June 30, 2025, the Group employed a total of **3,085** employees (December 31, 2024: **2,973** employees)[37](index=37&type=chunk) - The Group's remuneration policy is consistent with prevailing market practices, determined by individual performance and experience, and continuously reviewed to ensure market competitiveness[37](index=37&type=chunk) [Condensed Consolidated Interim Financial Statements](index=12&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) This section presents the Group's unaudited condensed consolidated interim financial statements, including the statement of comprehensive income and statement of financial position, providing a snapshot of financial performance and position [Condensed Consolidated Interim Statement of Comprehensive Income](index=12&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) This statement presents the Group's unaudited condensed consolidated comprehensive income for the six months ended June 30, 2025, showing revenue growth but a decrease in operating profit and profit for the period due to increased cost of sales and administrative expenses | Indicator | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 439,393 | 399,113 | | Cost of sales | (288,835) | (221,975) | | Gross profit | 150,558 | 177,138 | | Selling expenses | (6,512) | (6,498) | | Administrative expenses | (64,420) | (56,213) | | Research and development expenses | (10,484) | (10,557) | | Other income | 5,559 | 6,456 | | Other gains—net | 2,733 | 3,493 | | Operating profit | 77,434 | 113,819 | | Finance costs | (4,255) | (4,816) | | Share of net loss of investments accounted for using the equity method | (1,019) | — | | Profit before income tax | 72,160 | 109,003 | | Income tax expense | (9,337) | (26,748) | | Profit for the period | 62,823 | 82,255 | | Profit attributable to owners of the company | 62,933 | 82,652 | | Basic earnings per share (RMB cents) | 11.42 | 15.21 | | Diluted earnings per share (RMB cents) | 11.18 | 14.76 | [Condensed Consolidated Interim Statement of Financial Position](index=13&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) This statement presents the Group's unaudited condensed consolidated statement of financial position as of June 30, 2025, showing a slight decrease in total assets but an increase in total equity, a significant reduction in current liabilities, and a substantial improvement in the gearing ratio | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | **Assets** | | | | Total non-current assets | 738,019 | 771,384 | | Total current assets | 562,336 | 556,041 | | **Total assets** | **1,300,355** | **1,327,425** | | **Equity** | | | | Capital and reserves attributable to owners of the company | 717,571 | 635,110 | | Non-controlling interests | (377) | (267) | | **Total equity** | **717,194** | **634,843** | | **Liabilities** | | | | Total non-current liabilities | 208,282 | 212,315 | | Total current liabilities | 374,879 | 480,267 | | **Total liabilities** | **583,161** | **692,582** | | **Total equity and liabilities** | **1,300,355** | **1,327,425** | - Total equity increased to **RMB 717.2 million** from **RMB 634.8 million** as of December 31, 2024[28](index=28&type=chunk) - Cash and cash equivalents decreased by **30.9%** to **RMB 269.9 million**, primarily due to payments for property purchases and repayment of bank borrowings[28](index=28&type=chunk) - The gearing ratio decreased from **6.3%** as of December 31, 2024, to **1.7%** as of June 30, 2025[28](index=28&type=chunk) [Notes to the Condensed Consolidated Interim Financial Information](index=15&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) This section provides detailed notes to the condensed consolidated interim financial information, explaining the basis of preparation, accounting policies, fair value estimates, and other financial details [1. General Information](index=15&type=section&id=1.%20General%20Information) This section provides basic company information, including its place of incorporation, principal business (providing private education services in China), ultimate controlling shareholder, and listing status on the Hong Kong Stock Exchange - Thinkol Education Group is incorporated in the Cayman Islands and primarily engaged in providing private education services in China[42](index=42&type=chunk) - Mr. Chen Qiyuan is the ultimate controlling shareholder of the company[43](index=43&type=chunk) [2. Basis of Preparation](index=15&type=section&id=2.%20Basis%20of%20Preparation) This section states that the condensed consolidated interim financial information is prepared in accordance with IAS 34 and should be read in conjunction with the annual consolidated financial statements; the Board confirms the Group will continue to adopt the going concern basis - The condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' issued by the International Accounting Standards Board[47](index=47&type=chunk) - The Directors believe that the Group's existing sources of funds are sufficient to meet its financial obligations falling due within the next twelve months from June 30, 2025, and therefore continue to adopt the going concern basis[48](index=48&type=chunk) [3. Accounting Policies](index=16&type=section&id=3.%20Accounting%20Policies) This section notes that the accounting policies applied in this financial information are consistent with those in the 2024 financial statements, listing newly adopted and amended standards (such as IAS 21 amendments), which are not expected to have a significant impact on the condensed consolidated interim financial information - The accounting policies applied in this financial information are consistent with those applied in the 2024 financial statements, except for the adoption of new and revised standards[49](index=49&type=chunk) - The adoption of IAS 21 (Amendment) 'Lack of Exchangeability' is not expected to have a significant impact on the condensed consolidated interim financial information[51](index=51&type=chunk) [4. Fair Value Estimation](index=17&type=section&id=4.%20Fair%20Value%20Estimation) This section provides a hierarchical analysis of the Group's financial instruments measured at fair value as of June 30, 2025, including wealth management products, listed and unlisted equity investments | Financial Instruments (Assets) | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Wealth management products | 113,762 | 96,299 | | Listed equity investments in Mainland China | 4,123 | 5,220 | | Unlisted equity investments in Mainland China | 53,811 | 54,168 | | **Total** | **171,696** | **155,687** | - Valuation techniques used for fair value measurement categorize input data into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs, either directly or indirectly), and Level 3 (unobservable inputs)[55](index=55&type=chunk) [5. Operating Segments](index=18&type=section&id=5.%20Operating%20Segments) This section states that the Group operates and manages as a single operating segment of private education services, with its primary market in Guangdong Province, China, and no single customer accounted for more than **10%** of total revenue during the period - The Group operates and manages as a single operating segment of private education services[56](index=56&type=chunk) - The Group's primary market is located in Guangdong Province, China, with the majority of its revenue and operating profit derived from Guangdong Province[56](index=56&type=chunk) - During the period, no single customer accounted for more than **10%** of the Group's total revenue[58](index=58&type=chunk) [6. Other Income](index=19&type=section&id=6.%20Other%20Income) This section details the composition of the Group's other income, including net sub-lease income, operating lease rental income, finance income, and government grants | Other Income Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Sub-lease—net | 78 | 166 | | Rental income from operating leases | 1,543 | 1,226 | | Finance income | 2,186 | 4,645 | | Government grants | 1,752 | 419 | | **Total** | **5,559** | **6,456** | [7. Other Gains—Net](index=19&type=section&id=7.%20Other%20Gains%E2%80%94Net) This section details the composition of the Group's other gains—net, including fair value gains on financial assets at fair value through profit or loss, lease modifications, and net loss/gain on disposal of property, plant and equipment | Other Gains Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Fair value gains on financial assets at fair value through profit or loss | 3,161 | 3,491 | | Lease modifications | 858 | 1,601 | | Net (loss)/gain on disposal of property, plant and equipment | (933) | 41 | | Loss on deposits | (832) | (361) | | Compensation expenses | (3) | (444) | | Fair value loss on investment properties | — | (620) | | Net foreign exchange loss | (20) | (501) | | Others | 502 | 286 | | **Total** | **2,733** | **3,493** | [8. Expenses by Nature](index=20&type=section&id=8.%20Expenses%20by%20Nature) This section provides a breakdown of the Group's expenses by nature, including employee benefit expenses, depreciation and amortization, property management expenses, teaching material costs, and advertising and exhibition expenses | Expense Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Employee benefit expenses | 273,288 | 219,650 | | Depreciation and amortization | 56,639 | 36,153 | | Property management expenses | 8,064 | 6,372 | | Teaching materials | 5,672 | 5,346 | | Advertising and exhibition expenses | 4,719 | 4,247 | | Maintenance costs | 3,069 | 2,870 | | Professional service fees | 2,414 | 2,393 | | Office expenses | 3,003 | 2,321 | | Utilities | 2,485 | 2,028 | | Other taxes | 1,808 | 1,721 | | Auditor's remuneration | 400 | 650 | | Impairment provision | 35 | 398 | | Others | 8,655 | 11,094 | | **Total** | **370,251** | **295,243** | [9. Finance Costs](index=20&type=section&id=9.%20Finance%20Costs) This section presents the composition of the Group's finance costs, primarily comprising interest expenses on borrowings and interest expenses on lease liabilities | Finance Cost Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest expenses on borrowings | 400 | 350 | | Interest expenses on lease liabilities | 3,855 | 4,466 | | **Total** | **4,255** | **4,816** | [10. Income Tax Expense](index=20&type=section&id=10.%20Income%20Tax%20Expense) This section provides a breakdown of the Group's income tax expense, including current tax on profit for the period and deferred income tax | Income Tax Expense Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Current tax—current tax on profit for the period | 16,390 | 28,961 | | Deferred income tax—decrease in deferred income tax | (7,053) | (2,213) | | **Total** | **9,337** | **26,748** | [11. Earnings Per Share](index=21&type=section&id=11.%20Earnings%20Per%20Share) This section details the calculation methods for basic and diluted earnings per share, based on profit attributable to owners of the company and the weighted average number of ordinary shares outstanding | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Profit attributable to owners of the company (RMB thousands) | 62,933 | 82,652 | | Weighted average number of ordinary shares outstanding (thousands) | 551,171 | 543,391 | | Basic earnings per share (RMB cents) | 11.42 | 15.21 | | Diluted earnings per share (RMB cents) | 11.18 | 14.76 | [12. Right-of-Use Assets and Leases](index=22&type=section&id=12.%20Right-of-Use%20Assets%20and%20Leases) This section presents the recognized amounts of the Group's right-of-use assets and lease liabilities in the statement of financial position, as well as depreciation expenses for right-of-use assets and lease finance costs in the statement of comprehensive income | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | **Right-of-use assets** | | | | Land use rights | 91,011 | 80,079 | | Properties | 279,192 | 271,752 | | **Total** | **370,203** | **351,831** | | **Lease liabilities** | | | | Current | 93,234 | 83,190 | | Non-current | 196,757 | 203,802 | | **Total** | **289,991** | **286,992** | | Expense Category | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Depreciation expense for right-of-use assets—properties | 39,996 | 26,881 | | Depreciation expense for right-of-use assets—land use rights | 1,614 | 993 | | Lease finance costs | 3,855 | 4,466 | [13. Share Capital](index=23&type=section&id=13.%20Share%20Capital) This section provides information on the company's authorized and issued ordinary share capital | Indicator | June 30, 2025 | January 1, 2024 and June 30, 2024 | | :--- | :--- | :--- | | Number of authorized ordinary shares | 1,000,000,000 | 1,000,000,000 | | Number of issued ordinary shares | 564,869,050 | 555,700,000 | | Par value of issued ordinary shares (RMB) | 3,840,311 | 3,774,897 | [14. Dividends](index=23&type=section&id=14.%20Dividends) This section states that 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 (six months ended June 30, 2024: nil)[68](index=68&type=chunk) [15. Trade and Other Payables](index=23&type=section&id=15.%20Trade%20and%20Other%20Payables) This section provides details and aging analysis of the Group's trade and other payables, primarily including trade payables, employee benefit payables, and other tax payables | Category | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 1,632 | 3,723 | | Employee benefit payables | 23,685 | 33,773 | | Other tax payables | 12,649 | 13,944 | | Interest payables | — | 29 | | Other payables | 10,668 | 23,088 | | **Total** | **48,634** | **74,557** | - Trade payables are primarily related to the purchase of educational books and other teaching materials, with credit terms typically granted for three months[69](index=69&type=chunk) [Corporate Governance and Other Information](index=24&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section covers the Group's adherence to corporate governance practices, including compliance with the Corporate Governance Code and standards for securities transactions by directors, as well as details on the audit committee and share transactions [1. Compliance with the Corporate Governance Code on Corporate Governance Practices](index=24&type=section&id=1.%20Compliance%20with%20the%20Corporate%20Governance%20Code%20on%20Corporate%20Governance%20Practices) The company confirms compliance with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025 - The company has complied with all applicable code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix C1 of the Listing Rules[71](index=71&type=chunk) [2. Compliance with the Model Code for Securities Transactions by Directors](index=24&type=section&id=2.%20Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The company has adopted the Model Code as set out in Appendix C3 of the Listing Rules as its code for securities transactions, and all directors and relevant employees confirmed compliance with the code during the period after specific enquiry - The company has adopted the Model Code as set out in Appendix C3 of the Listing Rules as its code for securities transactions[72](index=72&type=chunk) - Following specific enquiry with all Directors and relevant employees, they confirmed compliance with the Model Code for the six months ended June 30, 2025[72](index=72&type=chunk) [3. Audit Committee](index=24&type=section&id=3.%20Audit%20Committee) The company has established an Audit Committee in accordance with the Listing Rules, comprising three independent non-executive directors, responsible for reviewing and overseeing the Group's financial reporting, risk management, and internal control systems, and has reviewed this interim results announcement - The Audit Committee comprises three independent non-executive directors, with primary responsibilities including reviewing and overseeing the Group's financial reporting, risk management, and internal control systems[73](index=73&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements and this interim results announcement for the six months ended June 30, 2025[73](index=73&type=chunk) [4. Purchase, Sale or Redemption of the Company's Listed Securities](index=25&type=section&id=4.%20Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) This section discloses that the trustee of the share award scheme acquired **700,000** company shares, and **1,088,000** repurchased shares remain uncancelled, which the Directors believe will enhance earnings per share and net asset value per share - The trustee of the share award scheme acquired a total of **700,000** company shares from the market for a total consideration of **HKD 2,847,000** (approximately **RMB 2,630,000**)[74](index=74&type=chunk) - As of June 30, 2025, a total of **1,088,000** shares repurchased by the company remained uncancelled; the Directors believe that such repurchases will enhance earnings per share and increase net asset value per share attributable to shareholders[74](index=74&type=chunk) [Publication of this Interim Results Announcement and Interim Report](index=25&type=section&id=Publication%20of%20this%20Interim%20Results%20Announcement%20and%20Interim%20Report) This section states that this interim results announcement has been published on the HKEX website and the company's website, and the interim report will be published and dispatched to shareholders in due course - This announcement has been published on the HKEX website www.hkexnews.hk and the company's website http://www.skledu.com[75](index=75&type=chunk) - The Group's interim report for the six months ended June 30, 2025, will be published on the aforementioned websites and dispatched to the company's shareholders in due course[75](index=75&type=chunk) [Definitions](index=25&type=section&id=Definitions) This section provides definitions for key terms used throughout the announcement to ensure consistent understanding, including Board, Corporate Governance Code, Company, Directors, Group, IFRS, Listing Rules, Model Code, Share Award Scheme, Shares, Shareholders, Share Option Scheme, Stock Exchange, and Trustee - This section lists key terms and their definitions used in the announcement to ensure consistent understanding, including Board, Corporate Governance Code, Company, Directors, Group, International Financial Reporting Standards, Listing Rules, Model Code, Share Award Scheme, Shares, Shareholders, Share Option Scheme, Stock Exchange, and Trustee[76](index=76&type=chunk)[78](index=78&type=chunk)

[Company Announcement](index=1&type=section&id=Company%20Announcement) This section contains the official interim results announcement for the six months ended June 30, 2025 [Interim Results Announcement](index=1&type=section&id=Interim%20Results%20Announcement) The Board of Directors of Emperor Watch & Jewellery Limited announces the unaudited condensed consolidated results for the six months ended June 30, 2025 - This announcement is the unaudited condensed consolidated results announcement of Emperor Watch & Jewellery Limited for the six months ended June 30, 2025[3](index=3&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) This section summarizes the Group's key financial performance indicators for the first half of 2025 [Key Financial Indicators](index=1&type=section&id=Key%20Financial%20Indicators) The Group achieved growth in total revenue and gross profit in H1 2025, though the interim dividend saw a decline Key Financial Indicators for H1 2025 | Indicator | 2024 (HK$ million) | 2025 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2,597 | 2,794 | + 7.6% | | Gross Profit | 780 | 840 | + 7.7% | | Gross Profit Margin | 30.0% | 30.1% | + 0.1 ppt | | Adjusted EBITD | 282 | 297 | + 5.3% | | Net Profit | 185 | 194 | + 4.9% | | Basic Earnings Per Share | 2.72 HK cents | 2.73 HK cents | + 0.4% | - The Board declared an interim dividend of **HK$0.55 cents per share**, a decrease from HK$0.65 cents in 2024[7](index=7&type=chunk) [Business Review](index=2&type=section&id=Business%20Review) This section provides a comprehensive overview of the Group's operational performance, strategies, and future outlook [Overall Performance](index=2&type=section&id=Overall%20Performance) The Group's revenue and profit grew in H1 2025, driven by sales in Hong Kong and Mainland China and a strong jewellery segment Revenue by Region and Product Segment for H1 2025 | Category | 2024 (HK$ million) | 2025 (HK$ million) | Change | Share of Total Revenue (2025) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | 2,597 | 2,794 | + 7.6% | 100% | | **By Region** | | | | | | Hong Kong | 1,465 | 1,594 | + 8.8% | 57.1% | | Mainland China | 665 | 723 | + 8.7% | 25.9% | | **By Product Segment** | | | | | | Watch | 1,632 | 1,700 | + 4.2% | 60.8% | | Jewellery | 965 | 1,094 | + 13.4% | 39.2% | | *Of which gold products accounted for jewellery segment revenue* | | | | 75.2% | - The Group's gross profit margin remained resilient, slightly increasing to **30.1%** in 2025 from 30.0% in 2024[7](index=7&type=chunk) [Business Overview](index=2&type=section&id=Business%20Overview) Emperor Watch & Jewellery is a leading retailer of European watches and "Emperor Jewellery" branded products with an extensive network across Asia - The Group's core strategy is to maintain its leading position as a watch and jewellery retailer in Greater China while expanding its business beyond the region[8](index=8&type=chunk) [Jewellery Business Expansion Strategy](index=2&type=section&id=Jewellery%20Business%20Expansion%20Strategy) The Group plans a major expansion in Mainland China by opening 600 new jewellery stores over five years through a strategic partnership - The Group has partnered with Mr Chan Sai Cheong to establish a roadmap for store expansion in Mainland China, initially targeting the opening of **600 stores** in phases over the next five years[9](index=9&type=chunk) - Product development plans include launching themed gold jewellery series, creating uniquely designed light luxury products, and engaging in IP collaborations to appeal to "Millennial" and "Gen Z" consumers[10](index=10&type=chunk) - The Group plans to strengthen its presence on platforms like Xiaohongshu, Douyin, and WeChat Mini Programs, leveraging an O2O sales model and e-commerce live streaming to enhance brand awareness and sales[10](index=10&type=chunk) [Leadership in Watch Business](index=3&type=section&id=Leadership%20in%20Watch%20Business) The Group maintains a leading position in the watch market, particularly in Hong Kong, through strong relationships with luxury Swiss brands - The Group maintains solid relationships with major luxury Swiss watch brand suppliers and holds a comprehensive portfolio of watch distributorships, maintaining a leading position especially in Hong Kong[11](index=11&type=chunk) - The official website highlights brands such as Patek Philippe, Rolex, Tudor, and Cartier, and the Group will continue to seek opportunities to collaborate with other watch brands[11](index=11&type=chunk) [Retail Network Layout](index=3&type=section&id=Retail%20Network%20Layout) As of June 30, 2025, the Group operated 73 stores across Asia, expanding its footprint with new flagship and specialty stores Store Distribution as of June 30, 2025 | Region | Number of Stores | | :--- | :--- | | Hong Kong | 30 | | Macau | 8 | | Mainland China | 26 | | Singapore | 8 | | Malaysia | 1 | | **Total** | **73** | - During the period, the Group opened two new jewellery stores in Hong Kong and Macau, a Patek Philippe flagship store in Hong Kong, and a Tudor watch specialty store in Chongqing, Mainland China[13](index=13&type=chunk) [Future Outlook](index=4&type=section&id=Future%20Outlook) The Group anticipates retail market recovery driven by tourism and favorable policies, capitalizing on gold demand and strategic expansion in China - The anticipated rebound of the Japanese Yen, the resumption of the "multiple-entry" Individual Visit Scheme for Shenzhen residents, and the Hong Kong government's tourism blueprint are expected to drive growth in the overall retail market[14](index=14&type=chunk) - Gold jewellery as an alternative investment will continue to be popular among Chinese consumers, and the strategic partnership with Mr Chan will create valuable opportunities for jewellery business expansion in Mainland China[14](index=14&type=chunk) - The Group will adopt a diversified market segmentation strategy to effectively expand its retail network and capture the vast business opportunities in the Mainland China market[14](index=14&type=chunk) [Financial and Other Information](index=4&type=section&id=Financial%20and%20Other%20Information) This section details the Group's capital structure, liquidity, and other significant corporate activities during the period [Capital Structure and Liquidity](index=4&type=section&id=Capital%20Structure%20and%20Liquidity) The Group maintained a strong net cash position with zero bank borrowings and ample working capital as of June 30, 2025 Capital Structure and Liquidity as of June 30, 2025 | Indicator | Dec 31, 2024 (HK$ million) | Jun 30, 2025 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Bank Balances and Cash on Hand | 950 | 1,508 | + 58.7% | | Bank Borrowings | 0 | 0 | - | | Net Gearing Ratio | 0 | 0 | - | | Current Assets | 4,072 | 4,586 | + 12.6% | | Current Liabilities | 531 | 569 | + 7.2% | | Current Ratio | 7.7 | 8.1 | + 0.4 | | Quick Ratio | 2.0 | 2.8 | + 0.8 | - The Group has sufficient working capital to meet its operational and future development plans[15](index=15&type=chunk) [Share Placement](index=5&type=section&id=Share%20Placement) The Group raised approximately HK$79 million in net proceeds from a successful share placement to fund retail network expansion - The Group successfully placed **477,250,000 shares**, raising net proceeds of approximately **HK$79,000,000**[16](index=16&type=chunk) - The proceeds from the placement have been fully utilized for expanding the Group's retail network and for general working capital[16](index=16&type=chunk) [Property Acquisition](index=5&type=section&id=Property%20Acquisition) The Group acquired a property in Tsim Sha Tsui, Hong Kong for approximately HK$80 million to establish a luxury watch flagship store - The Group acquired space and advertising spots at 4-8 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong for approximately **HK$80,000,000** to serve as a mega flagship store for a luxury watch brand[17](index=17&type=chunk) - The relevant resolutions were passed at a special general meeting, and the transaction is scheduled for completion in August 2025 as planned[17](index=17&type=chunk) [Establishment of Joint Venture](index=5&type=section&id=Establishment%20of%20Joint%20Venture) The Group entered into a joint venture agreement to design, produce, and sell "Emperor Jewellery" products in Mainland China - The Group entered into a joint venture agreement with an independent third party to establish a joint venture company primarily engaged in the design, production, and sale of precious metal and jewellery products under the "Emperor Jewellery" brand in Mainland China[18](index=18&type=chunk) [Employees and Remuneration](index=5&type=section&id=Employees%20and%20Remuneration) As of June 30, 2025, the Group employed 738 staff with total staff costs amounting to HK$200 million Employee Headcount and Costs as of June 30, 2025 | Category | 2024 | June 30, 2025 | | :--- | :--- | :--- | | Sales Staff | 708 | 567 | | Office Staff | 225 | 171 | | **Total Staff Costs** | **HK$185,000,000** | **HK$200,000,000** | - Employee remuneration is determined based on individual responsibilities, capabilities, experience, performance, and market salary levels, with competitive benefits such as medical and life insurance and retirement plans provided[19](index=19&type=chunk) [Dividend Policy](index=6&type=section&id=Dividend%20Policy) The Board declared an interim dividend of HK$0.55 cents per share for the fiscal year ending December 31, 2025 Interim Dividend Declaration | Year | Dividend per Share (HK cents) | Total Amount (HK$ '000) | | :--- | :--- | :--- | | 2025 | 0.55 | 39,912 | | 2024 | 0.65 | 44,066 | - The interim dividend will be paid on September 17, 2025, to shareholders on the register as of September 5, 2025[20](index=20&type=chunk) - To determine eligibility for the interim dividend, the register of members will be closed from September 4, 2025, to September 5, 2025[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the Group's unaudited financial statements for the interim period [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement details the Group's revenue, costs, expenses, and profit for the six months ended June 30, 2025 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the 6 months ended June 30, 2025) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Revenue | 2,793,641 | 2,597,314 | | Cost of sales | (1,953,291) | (1,817,119) | | Gross profit | 840,350 | 780,195 | | Other income | 14,792 | 13,446 | | Selling and distribution expenses | (502,855) | (478,089) | | Administrative expenses | (86,642) | (74,247) | | Other gains or losses | (14,388) | (5,733) | | Finance costs | (10,466) | (12,258) | | Profit before tax | 240,791 | 223,314 | | Tax | (46,469) | (38,606) | | Profit for the period | 194,322 | 184,708 | | Exchange differences on translation of foreign operations | 17,400 | (6,520) | | Total comprehensive income for the period | 211,722 | 178,188 | | Profit for the period attributable to owners of the Company | 196,474 | 184,708 | | Profit for the period attributable to non-controlling interests | (2,152) | – | | Total comprehensive income for the period attributable to owners of the Company | 213,332 | 178,188 | | Total comprehensive income for the period attributable to non-controlling interests | (1,610) | – | | Basic earnings per share | 2.73 HK cents | 2.72 HK cents | [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement presents the Group's assets, liabilities, and net equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Statement of Financial Position (As at June 30, 2025) | Item | Jun 30, 2025 (HK$ '000) | Dec 31, 2024 (HK$ '000) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, plant and equipment | 1,336,276 | 1,383,443 | | Right-of-use assets | 381,796 | 374,882 | | Rental deposits | 94,270 | 97,382 | | Deposits paid for acquisition of property, plant and equipment | 31,261 | 9,736 | | Deferred tax assets | 5,094 | 5,094 | | **Total Non-current Assets** | **1,848,697** | **1,870,537** | | **Current Assets** | | | | Inventories | 2,986,732 | 3,003,428 | | Right-of-return assets | 1,289 | 1,289 | | Receivables, deposits and prepayments | 89,537 | 116,704 | | Amounts due from related companies | 430 | 578 | | Time deposits with original maturity over three months | 396,505 | 33,459 | | Cash and cash equivalents | 1,111,708 | 916,360 | | **Total Current Assets** | **4,586,201** | **4,071,818** | | **Current Liabilities** | | | | Payables and accrued charges | 201,567 | 202,375 | | Lease liabilities | 217,675 | 216,477 | | Contract liabilities | 39,674 | 30,193 | | Refund liabilities | 2,267 | 2,267 | | Amounts due to related companies | 9,181 | 15,186 | | Tax payable | 98,963 | 64,690 | | **Total Current Liabilities** | **569,327** | **531,188** | | **Net Current Assets** | **4,016,874** | **3,540,630** | | **Non-current Liabilities** | | | | Deferred tax liabilities | 1,281 | 1,221 | | Lease liabilities | 198,474 | 195,856 | | **Total Non-current Liabilities** | **199,755** | **197,077** | | **Net Assets** | **5,665,816** | **5,214,090** | | **Capital and Reserves** | | | | Share capital | 3,563,493 | 3,484,152 | | Reserves | 1,825,920 | 1,729,938 | | Equity attributable to owners of the Company | 5,389,413 | 5,214,090 | | Non-controlling interests | 276,403 | – | | **Total Equity** | **5,665,816** | **5,214,090** | [Notes to the Financial Statements](index=10&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed explanations of the accounting policies and specific items in the financial statements [Basis of Preparation and Accounting Policies](index=10&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The financial statements are prepared under HKAS 34, consistent with prior year policies, with no material impact from new accounting standards - The unaudited condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules[25](index=25&type=chunk) - The application of amendments to Hong Kong Financial Reporting Standards during the interim period has not had a material effect on the financial position and performance of the Group for the current and prior periods[27](index=27&type=chunk) [Revenue and Segment Information](index=11&type=section&id=Revenue%20and%20Segment%20Information) Revenue is primarily from retail sales, with Hong Kong remaining the largest contributor to both revenue and segment profit in H1 2025 - Revenue represents income from the sale of products to retail customers and commission income from services provided, all of which is recognised at a point in time[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) Revenue and Segment Profit by Region for H1 2025 | Region | 2025 Revenue (HK$ '000) | 2024 Revenue (HK$ '000) | 2025 Segment Profit (HK$ '000) | 2024 Segment Profit (HK$ '000) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 1,690,942 | 1,641,992 | 215,206 | 167,526 | | Macau | 194,454 | 171,580 | 31,505 | 23,282 | | China | 723,002 | 665,038 | 83,807 | 103,624 | | Other APAC | 309,673 | 307,638 | 52,640 | 53,714 | | **Consolidated Total** | **2,793,641** | **2,597,314** | **383,158** | **348,146** | [Analysis of Items in Profit Before Tax](index=14&type=section&id=Analysis%20of%20Items%20in%20Profit%20Before%20Tax) Profit before tax is detailed after deducting costs such as inventory, depreciation, and employee expenses Items Deducted from (Credited to) Profit Before Tax (For the 6 months ended June 30, 2025) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Cost of inventories included in cost of sales | 1,947,872 | 1,812,224 | | Depreciation of property, plant and equipment | 74,911 | 68,170 | | Depreciation of right-of-use assets | 133,145 | 135,395 | | Staff costs, including directors' remuneration | 200,297 | 184,969 | | Loss on disposal/write-off of property, plant and equipment | 6,902 | 1,182 | | Loss/(gain) on termination/modification of leases | 3,944 | (261) | | Net foreign exchange loss | 3,542 | 4,812 | [Tax Expense](index=15&type=section&id=Tax%20Expense) Total tax expense for the period was HK$46.5 million, primarily comprising profits tax from various jurisdictions in Asia Tax Expense (For the 6 months ended June 30, 2025) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 25,681 | 16,325 | | Macau Complementary Tax | 4,243 | 4,109 | | China Enterprise Income Tax | 8,823 | 9,755 | | Other APAC Income Tax | 7,722 | 8,287 | | Deferred tax | – | 130 | | **Total** | **46,469** | **38,606** | - Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit, Macau Complementary Tax at 12%, China subsidiaries at 25%, and Singapore income tax at 17%[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) [Dividends](index=16&type=section&id=Dividends) An interim dividend of HK$0.55 cents per share was declared for H1 2025, totaling approximately HK$39.9 million Dividends Declared and Paid (For the 6 months ended June 30, 2025) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Interim dividend declared: HK$0.55 cents per share (2024: HK$0.65 cents) | 39,912 | 44,066 | | 2024 final dividend paid: HK$0.45 cents per share (2023: HK$0.56 cents) | 32,655 | 37,965 | [Earnings Per Share](index=16&type=section&id=Earnings%20Per%20Share) Basic earnings per share slightly increased to HK$2.73 cents, with no diluted EPS presented due to the absence of potential dilutive shares Calculation of Basic Earnings Per Share (For the 6 months ended June 30, 2025) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company for basic EPS calculation | 196,474 | 184,708 | | Number of ordinary shares for basic EPS calculation | 7,256,708,129 | 6,779,458,129 | | **Basic Earnings Per Share** | **2.73 HK cents** | **2.72 HK cents** | - No diluted earnings per share was presented for both periods as there were no potential dilutive ordinary shares in issue during both periods[42](index=42&type=chunk) [Receivables, Deposits and Prepayments](index=17&type=section&id=Receivables,%20Deposits%20and%20Prepayments) Trade receivables decreased as of June 30, 2025, with the majority of balances aged within 30 days Analysis of Receivables, Deposits and Prepayments (As at June 30, 2025) | Item | Jun 30, 2025 (HK$ '000) | Dec 31, 2024 (HK$ '000) | | :--- | :--- | :--- | | Trade receivables from contracts with customers (net) | 22,455 | 45,654 | | Other receivables, deposits and prepayments | 79,959 | 77,339 | | Rental deposits | 94,270 | 97,382 | | Recoverable VAT in China | 15,208 | 3,447 | | Recoverable GST in Singapore | 3,176 | – | | **Total** | **215,068** | **223,822** | | **Of which current portion** | **89,537** | **116,704** | Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | Jun 30, 2025 (HK$ '000) | Dec 31, 2024 (HK$ '000) | | :--- | :--- | :--- | | Within 30 days | 22,314 | 44,540 | | 31 to 60 days | 31 | 1,105 | | 61 to 90 days | 43 | – | | Over 90 days | 591 | 525 | | **Total** | **22,979** | **46,170** | [Payables and Accrued Charges](index=19&type=section&id=Payables%20and%20Accrued%20Charges) Total payables and accrued charges remained stable, with most trade payables aged within 30 days Analysis of Payables and Accrued Charges (As at June 30, 2025) | Item | Jun 30, 2025 (HK$ '000) | Dec 31, 2024 (HK$ '000) | | :--- | :--- | :--- | | Trade payables | 73,070 | 64,582 | | Other payables and accrued charges | 127,545 | 134,295 | | VAT payable in China | 952 | 2,772 | | GST payable in Singapore | – | 726 | | **Total** | **201,567** | **202,375** | - Other payables and accrued charges include accumulated bonuses and incentives of HK$13,078,000, accrued commission of HK$7,981,000, and accrued renovation costs of HK$30,332,000[46](index=46&type=chunk) Ageing Analysis of Trade Payables (As at June 30, 2025) | Ageing | Jun 30, 2025 (HK$ '000) | Dec 31, 2024 (HK$ '000) | | :--- | :--- | :--- | | Within 30 days | 71,179 | 64,131 | | 31 to 60 days | 793 | 69 | | 61 to 90 days | 333 | 230 | | Over 90 days | 765 | 152 | | **Total** | **73,070** | **64,582** | [Corporate Governance and Other Information](index=20&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section covers the Group's corporate governance practices and other statutory disclosures [Review of Interim Results](index=20&type=section&id=Review%20of%20Interim%20Results) The Group's condensed consolidated financial statements for the period have been reviewed by the Audit Committee - The Group's condensed consolidated financial statements for the period have not been reviewed or audited by the Company's auditor, but have been reviewed by the Company's Audit Committee[48](index=48&type=chunk) [Compliance with Corporate Governance Code](index=20&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has complied with all code provisions of the Corporate Governance Code throughout the period - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules during the period[49](index=49&type=chunk) [Model Code for Securities Transactions](index=20&type=section&id=Model%20Code%20for%20Securities%20Transactions) The Company has adopted its own code for securities transactions by directors, with full compliance confirmed for the period - The Company has adopted its own code of conduct regarding securities transactions by directors on terms no less exacting than the required standard set out in the Model Code in Appendix C3 to the Listing Rules[50](index=50&type=chunk) - Upon specific enquiry of the directors, all directors confirmed that they have complied with the required standard of dealings set out in the Emperor Watch & Jewellery Securities Code throughout the period[50](index=50&type=chunk) [Dealings in Listed Securities](index=20&type=section&id=Dealings%20in%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - During the period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities[51](index=51&type=chunk) [Publication of Announcement](index=20&type=section&id=Publication%20of%20Announcement) This interim results announcement is available on the websites of the HKEX and the Company - This interim results announcement is published on the website of the Stock Exchange (https://www.hkexnews.hk) and the Company's website (https://www.EmperorWatchJewellery.com)[52](index=52&type=chunk) [Board of Directors](index=21&type=section&id=Board%20of%20Directors) The Board of Directors comprises three Executive Directors and three Independent Non-executive Directors as of the announcement date Board of Directors | Position | Name | | :--- | :--- | | Executive Director | Ms Yeung Nok Sze | | Executive Director | Mr Leong Ho Cheong | | Executive Director | Ms Fan Man Seung | | Independent Non-executive Director | Mr Liu Hing Hung | | Independent Non-executive Director | Mr Lo Ka Ming | | Independent Non-executive Director | Ms Lai Ka Fung |

[GEM Market Characteristics and Disclaimers](index=2&type=section&id=GEM%20Characteristics%20and%20Disclaimers) This section details GEM market characteristics, emphasizing higher investment risks, and clarifies disclaimers and directors' responsibilities [GEM Market Characteristics](index=2&type=section&id=GEM%20Market%20Characteristics) The GEM market targets small and medium-sized companies, featuring higher investment risks, potential market volatility, and unassured liquidity - The GEM market is positioned for small and medium-sized companies, with **higher investment risks**, and securities may face **significant market volatility** and **uncertain liquidity**[2](index=2&type=chunk)[3](index=3&type=chunk) [Disclaimer and Directors' Responsibility](index=2&type=section&id=Disclaimer%20and%20Directors'%20Responsibility) The Hong Kong Stock Exchange disclaims responsibility for this report's content, with company directors assuming full accountability for its accuracy and completeness - The Hong Kong Stock Exchange is **not responsible** for this report's content, while company directors bear **full responsibility** for its accuracy and completeness[4](index=4&type=chunk)[5](index=5&type=chunk) [Financial Highlights](index=3&type=section&id=HIGHLIGHTS) This section presents key financial performance indicators for the first half of 2025, including revenue, gross profit, and profit attributable to owners [Financial Highlights for H1 2025](index=3&type=section&id=Financial%20Highlights%20for%20H1%202025) For H1 2025, operating revenue decreased by 35.35% and gross profit by 27.86%, yet gross profit margin slightly rose to 1.28%, with profit attributable to owners increasing by 59.11% and EPS to 0.3 cents Financial Summary for H1 2025 | Metric | H1 2025 (RMB'000) | H1 2024 (RMB'000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,215,637 | 1,880,472 | -35.35% | | Gross Profit | 15,533 | 21,532 | -27.86% | | Gross Profit Margin | 1.28% | 1.15% | +0.13 pp | | Profit Attributable to Owners | 969 | 609 | +59.11% | | Earnings Per Share (RMB cents) | 0.3 | 0.2 | +50.00% | [Unaudited Consolidated Interim Results for 2025](index=4&type=section&id=UNAUDITED%20CONSOLIDATED%20INTERIM%20RESULTS%20OF%202025) This section provides the unaudited consolidated interim financial statements for 2025, detailing profit or loss, financial position, equity changes, and cash flows [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In H1 2025, revenue significantly declined by 35.35%, leading to a 27.86% decrease in gross profit, but profit attributable to owners increased by 59.11% due to reduced finance costs and higher contributions from associates Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (H1 2025 vs H1 2024) | Metric | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Revenue | 1,215,637 | 1,880,472 | | Cost of Sales | (1,200,104) | (1,858,940) | | Gross Profit | 15,533 | 21,532 | | Administrative Expenses | (23,139) | (19,235) | | Other Income, Gains and Losses – Net | 6,429 | 5,156 | | Net Impairment Losses on Trade Receivables, etc | (1,408) | 2,980 | | Operating Profit | (2,585) | 10,433 | | Finance Costs | (6,039) | (10,351) | | Share of Results of Investments Accounted for Using Equity Method | 5,698 | 4,469 | | Profit Before Income Tax | (2,926) | 4,551 | | Income Tax Expense | (424) | (1,322) | | Profit for the Period | (3,350) | 3,229 | | Profit Attributable to Owners of the Company | 969 | 609 | | Non-controlling Interests | (4,319) | 2,620 | | Earnings Per Share (RMB cents) | 0.3 | 0.2 | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets decreased to RMB 1,426,060 thousand, primarily due to reduced current assets, while total liabilities also significantly declined, maintaining relatively stable net current assets and total equity Condensed Consolidated Statement of Financial Position (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (RMB'000) | December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 832,279 | 899,063 | | Current Assets | 593,781 | 893,878 | | **Total Assets** | **1,426,060** | **1,792,941** | | **Equity** | | | | Equity Attributable to Owners of the Company | 885,858 | 885,098 | | Non-controlling Interests | 93,023 | 97,343 | | **Total Equity** | **978,881** | **982,441** | | **Liabilities** | | | | Non-current Liabilities | 59,377 | 59,682 | | Current Liabilities | 387,802 | 750,818 | | **Total Liabilities** | **447,179** | **810,500** | | Net Current Assets | 205,979 | 143,060 | [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity slightly decreased, influenced by profit for the period and changes in non-controlling interests, while the company repurchased shares during the period Condensed Consolidated Statement of Changes in Equity (H1 2025 vs H1 2024) | Metric | June 30, 2025 (RMB'000) | June 30, 2024 (RMB'000) | | :--- | :--- | :--- | | **Equity Attributable to Owners of the Company** | | | | Share Capital | 354,312 | 354,312 | | Treasury Shares | (209) | — | | Share Premium | 55,244 | 55,244 | | Statutory Reserve | 115,415 | 114,575 | | Other Reserves | (71,868) | (70,875) | | Retained Earnings | 432,964 | 434,632 | | **Equity Attributable to Owners of the Parent** | **885,858** | **887,888** | | Non-controlling Interests | 93,023 | 100,325 | | **Total Equity** | **978,881** | **988,213** | - In H1 2025, the company repurchased **RMB 209 thousand** of shares[21](index=21&type=chunk) [Condensed Consolidated Cash Flow Statement](index=8&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) In H1 2025, net cash inflow from operating activities was RMB 17,482 thousand, net cash inflow from investing activities significantly increased to RMB 83,530 thousand, while net cash outflow from financing activities was RMB 127,429 thousand, resulting in a net decrease of RMB 26,417 thousand in cash and cash equivalents Condensed Consolidated Cash Flow Statement (H1 2025 vs H1 2024) | Metric | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Net Cash From/(Used In) Operating Activities | 17,482 | 25,811 | | Net Cash From/(Used In) Investing Activities | 83,530 | (14,640) | | Net Cash From/(Used In) Financing Activities | (127,429) | (89,225) | | Net Decrease in Cash and Cash Equivalents | (26,417) | (78,054) | | Cash and Cash Equivalents at End of Period | 287,548 | 262,247 | [Notes to the Condensed Consolidated Financial Information](index=9&type=section&id=NOTES%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20INFORMATION) This section provides detailed notes on the condensed consolidated financial information, covering general information, accounting policies, segment data, and other financial disclosures [General Information](index=9&type=section&id=General%20Information) The company, established in China in 2006 as an investment holding company, listed its H-shares on GEM in 2008 and primarily provides integrated logistics services in China, completing the conversion of domestic shares to H-shares in October 2023 - The company was established in China in **2006**, with its H-shares listed on the Stock Exchange's GEM on **April 30, 2008**[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The Group primarily engages in providing **integrated logistics services** in China, including supply chain solutions and material procurement and related logistics services[29](index=29&type=chunk)[32](index=32&type=chunk) - On **October 26, 2023**, the company completed the conversion of all domestic shares into H-shares[29](index=29&type=chunk)[32](index=32&type=chunk) [Basis of Preparation](index=10&type=section&id=Basis%20of%20Preparation) The unaudited condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and applicable disclosure requirements of the Hong Kong Companies Ordinance and GEM Listing Rules Chapter 18 - The financial statements are prepared in accordance with **International Financial Reporting Standards (IFRS)** and applicable disclosure requirements of the Hong Kong Companies Ordinance and GEM Listing Rules Chapter 18[30](index=30&type=chunk)[33](index=33&type=chunk) [Significant Accounting Policies](index=10&type=section&id=Significant%20Accounting%20Policies) IFRS amendments issued by the International Accounting Standards Board were first applied in this interim period, but they had no significant impact on the Group's financial position or performance - IFRS amendments were first applied in this period, but they had **no significant impact** on the financial position and performance[31](index=31&type=chunk)[34](index=34&type=chunk) [Segment Information](index=11&type=section&id=Segment%20Information) The Group's operating segments are categorized into four main areas: automotive vehicle and parts supply chain logistics, material procurement and related logistics, warehousing and multimodal transport, and other services, each managed by independent teams based on product, service, distribution channel, and customer considerations - The Group's operating segments include: **automotive vehicle and parts supply chain logistics services**, **material procurement and related logistics services**, **warehousing and multimodal transport business**, and **other services** (such as leasing and management services)[35](index=35&type=chunk)[36](index=36&type=chunk) H1 2025 Segment Revenue and Results (RMB'000) | Segment | External Customer Revenue | Segment Results | | :--- | :--- | :--- | | Automotive Vehicle and Parts Supply Chain Logistics Services | 433,421 | (9,318) | | Material Procurement and Related Logistics Services | 760,029 | 2,304 | | Warehousing and Multimodal Transport Business | 11,597 | 1,102 | | All Other Segments | 10,590 | 1,342 | | **Total** | **1,215,637** | **(4,570)** | H1 2024 Segment Revenue and Results (RMB'000) | Segment | External Customer Revenue | Segment Results | | :--- | :--- | :--- | | Automotive Vehicle and Parts Supply Chain Logistics Services | 507,270 | 4,314 | | Material Procurement and Related Logistics Services | 1,353,222 | 424 | | Warehousing and Multimodal Transport Business | 12,500 | 634 | | All Other Segments | 7,480 | (80) | | **Total** | **1,880,472** | **5,292** | [Other Income, Other Gains and Losses - Net](index=14&type=section&id=Other%20Income%2C%20Other%20Gains%20and%20Losses%20-%20Net) In H1 2025, net other income, gains, and losses increased to RMB 6,429 thousand from RMB 5,156 thousand in the prior year, primarily driven by higher interest income Other Income, Other Gains and Losses - Net (RMB'000) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Interest Income | 6,067 | 4,758 | | Others | 362 | 398 | | **Total** | **6,429** | **5,156** | [Finance Costs](index=14&type=section&id=Finance%20Costs) Finance costs in H1 2025 significantly decreased to RMB 6,039 thousand from RMB 10,351 thousand in the prior year, mainly due to reduced interest on borrowings and lease liabilities Finance Costs (RMB'000) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Interest on Borrowings | 5,802 | 9,636 | | Interest on Lease Liabilities | 237 | 715 | | **Total** | **6,039** | **10,351** | [Expenses by Nature](index=15&type=section&id=Expenses%20by%20Nature) In H1 2025, total cost of sales and administrative expenses significantly decreased to RMB 1,223,243 thousand from the prior year, with increased depreciation of property, plant, and equipment but reduced cost of sales and other expenses Expenses by Nature (RMB'000) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 25,406 | 20,105 | | Other Expenses | 10,082 | 11,576 | | Cost of Sales | 1,187,755 | 1,846,494 | | **Total Cost of Sales and Administrative Expenses** | **1,223,243** | **1,878,175** | [Income Tax Expenses](index=15&type=section&id=Income%20Tax%20Expenses) Income tax expense in H1 2025 significantly decreased to RMB 424 thousand from the prior year, with the Group's applicable corporate income tax rate in China being 25% Income Tax Expenses (RMB'000) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | The Company and its Subsidiaries | 424 | 1,322 | - The Group's applicable corporate income tax rate in China is **25%**[48](index=48&type=chunk)[50](index=50&type=chunk) [Dividend](index=15&type=section&id=Dividend) The Board of Directors recommends no interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors recommends **no interim dividend** for H1 2025 (H1 2024: nil)[49](index=49&type=chunk)[51](index=51&type=chunk) [Earnings Per Share](index=16&type=section&id=Earnings%20Per%20Share) Basic and diluted earnings per share for H1 2025 were RMB 0.3 cents, higher than RMB 0.2 cents in the prior year, primarily due to increased profit attributable to owners of the company Earnings Per Share (RMB cents) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company | 969 | 609 | | Weighted Average Number of Shares for Basic and Diluted EPS ('000) | 353,790 | 354,312 | | **Basic and Diluted Earnings Per Share (RMB cents)** | **0.3** | **0.2** | [Property, Plant and Equipment](index=16&type=section&id=Property%2C%20Plant%20and%20Equipment) In H1 2025, the Group's expenditure on the acquisition of property, plant, and equipment was approximately RMB 1,301 thousand, an increase from RMB 454 thousand in the prior year - In H1 2025, expenditure on the acquisition of property, plant, and equipment was **RMB 1,301 thousand**, an increase from **RMB 454 thousand** in H1 2024[54](index=54&type=chunk)[55](index=55&type=chunk) [Trade Receivables, Bills and Other Receivables](index=17&type=section&id=Trade%20Receivables%2C%20Bills%20and%20Other%20Receivables) As of June 30, 2025, total trade receivables, bills, and other receivables significantly decreased to RMB 359,589 thousand from RMB 563,435 thousand at the end of 2024, primarily due to a substantial reduction in receivables aged 0-90 days Trade Receivables, Bills and Other Receivables (RMB'000) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Receivables (Net) | 93,701 | 149,703 | | Bills Receivable (Net) | 1,691 | 4,813 | | Other Receivables (Net) | 230,369 | 286,707 | | Prepayments to Suppliers (Net) | 129,220 | 276,728 | | **Total Trade and Other Receivables** | **359,589** | **563,435** | Ageing Analysis of Trade Receivables and Bills Receivable (RMB'000) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 0-90 Days | 92,227 | 152,467 | | 91-180 Days | 1,441 | 621 | | 181-365 Days | 1,210 | 1,259 | | Over 1 Year | 201,808 | 201,639 | | **Total** | **296,686** | **355,986** | [Trade and Other Payables](index=18&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables significantly decreased to RMB 213,585 thousand from RMB 383,219 thousand at the end of 2024, mainly due to a reduction in trade payables and bills payable Trade and Other Payables (RMB'000) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Payables | 141,567 | 189,548 | | Bills Payable | 43,930 | 151,600 | | Other Payables, Accruals and Other Tax Payables | 28,088 | 42,071 | | **Total** | **213,585** | **383,219** | Ageing Analysis of Trade Payables and Bills Payable (RMB'000) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 0-90 Days | 183,952 | 188,191 | | 91-180 Days | 1,330 | 151,651 | | 181-365 Days | 9 | 605 | | Over 1 Year | 206 | 701 | | **Total** | **185,497** | **341,148** | [Borrowings](index=19&type=section&id=Borrowings) As of June 30, 2025, borrowings decreased significantly to RMB 152,095 thousand from RMB 260,119 thousand at the end of 2024, with all borrowings being short-term and no long-term borrowings exceeding one year Borrowings (RMB'000) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Borrowings | 152,095 | 260,119 | - As of June 30, 2025, all borrowings were **short-term**, with no long-term borrowings exceeding one year[109](index=109&type=chunk)[113](index=113&type=chunk) [Share Capital](index=20&type=section&id=Share%20Capital) As of June 30, 2025, the company's share capital was RMB 354,103 thousand, comprising 522 thousand treasury shares and 353,790 thousand H-shares Share Capital Structure (RMB'000) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Treasury Shares ('000) | 522 | — | | H-shares ('000) | 353,790 | 354,312 | | **Amount (RMB'000)** | **354,103** | **354,312** | [Capital Commitments](index=20&type=section&id=Capital%20Commitments) The Group had no capital commitments during the reporting period - The Group had **no capital commitments** during the reporting period[68](index=68&type=chunk)[70](index=70&type=chunk) [Related Party Disclosures](index=20&type=section&id=Related%20Party%20Disclosures) The Group engages in significant transactions with Chinese state-owned entities, including material procurement and logistics fuel purchases, with most cash, bank balances, and borrowings sourced from state-owned banks, and key management personnel compensation increased in H1 2025 - The Group has **significant transactions** with Chinese state-owned entities, including material procurement and logistics fuel purchases[69](index=69&type=chunk)[71](index=71&type=chunk) - For the six months ended June 30, 2025, key management personnel compensation was **RMB 2,420 thousand**, an increase from **RMB 2,297 thousand** in H1 2024[72](index=72&type=chunk)[75](index=75&type=chunk) [Financial Guarantee Liabilities](index=21&type=section&id=Financial%20Guarantee%20Liabilities) As of June 30, 2025, the Group had no financial guarantee liabilities - As of June 30, 2025, the Group had **no significant contingent liabilities**[73](index=73&type=chunk)[76](index=76&type=chunk) [Comparative Figures](index=21&type=section&id=Comparative%20Figures) Certain comparative figures have been reclassified to conform to the current period's presentation - Certain comparative figures have been **reclassified** to conform to the current period's presentation[74](index=74&type=chunk)[77](index=77&type=chunk) [Management Discussion and Analysis](index=22&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section provides a comprehensive review of the Group's financial performance and business operations for the period, along with an analysis of liquidity, financial resources, and capital structure [Financial Review](index=22&type=section&id=Financial%20Review) In H1 2025, operating revenue decreased by 35.35% year-on-year, primarily due to strategic adjustments and reduced automotive logistics volume, while profit attributable to owners increased by 59.11% driven by higher gross profit from material procurement and significantly lower finance costs H1 2025 Key Financial Metrics Changes | Metric | H1 2025 (RMB'000) | H1 2024 (RMB'000) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,215,637 | 1,880,472 | -35.35% | | Cost of Sales | 1,200,104 | 1,858,940 | -35.44% | | Gross Profit | 15,533 | 21,532 | -27.86% | | Administrative Expenses | 23,139 | 19,235 | +20.30% | | Finance Costs | 6,039 | 10,351 | -41.66% | | Tax Expense | 424 | 1,322 | -67.93% | | Share of Results of Joint Ventures and Associates | 5,698 | 4,469 | +27.50% | | Profit Attributable to Owners of the Company | 969 | 609 | +59.11% | - Operating revenue decreased primarily due to the company's **proactive adjustment of revenue structure**, reduction of low-margin businesses (material procurement services), and decreased automotive logistics volume and prices due to upstream customer cost pressures[78](index=78&type=chunk)[81](index=81&type=chunk) - The increase in administrative expenses was mainly due to **severance payments** resulting from personnel streamlining in the automotive vehicle and parts supply chain logistics services segment[80](index=80&type=chunk)[83](index=83&type=chunk) - The decrease in finance costs resulted from the company's continuous efforts to **reduce financing costs**, scale down financing, and actively negotiate lower interest rates with banks[84](index=84&type=chunk)[88](index=88&type=chunk) - The growth in share of results of joint ventures and associates was primarily due to **reduced losses** at associate company Gangwan Automobile[86](index=86&type=chunk)[90](index=90&type=chunk) - The increase in profit attributable to owners of the company was mainly driven by **higher gross profit from material procurement services** and **reduced finance costs**[87](index=87&type=chunk)[91](index=91&type=chunk) [Business Review](index=24&type=section&id=Business%20Review) The Group's core businesses include automotive vehicle and parts supply chain logistics, material procurement and related logistics, warehousing and multimodal transport, and other services, with varied performance in H1 2025, showing improved profitability in material procurement and electronic parts logistics, but challenges in automotive logistics and warehousing - **Automotive Vehicle and Parts Supply Chain Logistics Services**: Operating revenue decreased by **14.56%** to RMB **433,421 thousand**, turning into an operating loss of **RMB 9,318 thousand** (H1 2024: profit of RMB 4,314 thousand), mainly due to reduced imported vehicle and vessel volumes, lost orders, price reductions in high-margin businesses, and severance payments from personnel streamlining[93](index=93&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) - **Material Procurement Services**: Operating revenue decreased by **43.84%** to RMB **760,029 thousand**, but operating results significantly increased by **443.4%** to **RMB 2,304 thousand**, primarily due to the company's proactive adjustment of revenue structure, reduction of low-margin businesses, and increased volume in high-margin projects[95](index=95&type=chunk)[96](index=96&type=chunk)[99](index=99&type=chunk) - **Warehousing and Multimodal Transport Business**: Operating revenue decreased by **7.22%** to RMB **11,597 thousand**, but operating results increased by **73.82%** to **RMB 1,102 thousand**, with revenue decline attributed to weak regional demand and increased market inventory leading to a sluggish leasing market, while performance growth was due to refined management, optimized structure, and reduced labor costs from personnel streamlining[100](index=100&type=chunk)[101](index=101&type=chunk)[105](index=105&type=chunk) - **Other Services**: Operating revenue increased by **41.58%** to RMB **10,590 thousand**, and operating results significantly increased by **1777.5%** to **RMB 1,342 thousand**, mainly due to the normalization of operations from new leases at Beigang Yard[102](index=102&type=chunk)[103](index=103&type=chunk)[106](index=106&type=chunk) - **Electronic Parts Supply Chain Logistics Services (operated through joint ventures)**: Operating net profit increased by **2.35%** to RMB **13,569 thousand**, with profit contribution increasing by **2.11%** to **RMB 6,649 thousand**, maintaining performance largely consistent with the prior year[104](index=104&type=chunk)[107](index=107&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=26&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) As of June 30, 2025, the Group's total assets were RMB 1,426,060 thousand, total liabilities RMB 447,179 thousand, and total equity RMB 978,881 thousand, with borrowings significantly reduced to RMB 152,095 thousand (all short-term), resulting in a lower gearing ratio of 31.36%, and certain investment properties and bank deposits were pledged Liquidity, Financial Resources and Capital Structure Overview (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (RMB'000) | December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Total Assets | 1,426,060 | 1,792,941 | | Current Assets | 593,781 | 893,878 | | Non-current Assets | 832,279 | 899,063 | | Total Liabilities | 447,179 | 810,500 | | Current Liabilities | 387,802 | 750,818 | | Non-current Liabilities | 59,377 | 59,682 | | Total Equity | 978,881 | 982,441 | | Borrowings Balance | 152,095 | 260,119 | | Gearing Ratio | 31.36% | 45.21% | - The borrowings balance significantly decreased, and all borrowings are **short-term**, with no long-term borrowings[109](index=109&type=chunk)[113](index=113&type=chunk) - Investment properties (RMB **298,400 thousand**) and bank deposits (RMB **17,994 thousand**) were pledged to secure borrowings and bills payable[110](index=110&type=chunk)[114](index=114&type=chunk) [Foreign Exchange Risk](index=27&type=section&id=Foreign%20Exchange%20Risk) The Group's primary operating income and expenses are denominated in RMB, with no significant investments outside mainland China, but it faces some foreign exchange risk from foreign currency transactions (e.g., USD, JPY) by its subsidiary Tianjin Toyota Logistics Co., Ltd., realizing a foreign exchange gain of RMB 215 thousand in H1 2025 - All of the Group's operating income and expenses are denominated in **RMB**, with **no significant investments** outside mainland China[116](index=116&type=chunk)[121](index=121&type=chunk) - The Group has foreign currency transactions in **USD, JPY**, etc., realizing a foreign exchange gain of **RMB 215 thousand** in H1 2025[117](index=117&type=chunk)[121](index=121&type=chunk) [Material Acquisitions and Disposals](index=27&type=section&id=Material%20Acquisitions%20and%20Disposals) The Group had no material acquisitions or disposals during the reporting period - The Group had **no material acquisitions or disposals** during the reporting period[118](index=118&type=chunk)[122](index=122&type=chunk) [Contingent Liabilities](index=27&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had **no significant contingent liabilities**[119](index=119&type=chunk)[123](index=123&type=chunk) [Employees](index=27&type=section&id=Employees) As of June 30, 2025, the Group's total workforce decreased significantly to 551 employees from 1,011 in the prior year, primarily due to personnel streamlining at its subsidiary Tianjin Toyota Logistics Co., Ltd. following a decline in business volume, resulting in a slight decrease in employee costs Employee Count and Costs | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Employees | 551 | 1,011 | -460 | | Employee Costs (RMB'000) | 68,364 | 68,880 | -0.75% | - The decrease in employee count was mainly due to **personnel streamlining** at subsidiary Tianjin Toyota Logistics Co., Ltd. following a decline in business volume[120](index=120&type=chunk)[124](index=124&type=chunk) [Prospects and Outlook](index=28&type=section&id=PROSPECTS%20AND%20OUTLOOK) This section outlines the industry environment and the Group's performance in H1 2025, along with its strategic outlook and key priorities for H2 2025 [Industry Environment and Group Performance](index=28&type=section&id=Industry%20Environment%20and%20Group%20Performance) In H1 2025, China's economy showed steady progress with continued logistics demand growth, yet logistics enterprises faced intensified market competition, rising costs, and international volatility, while the Group maintained stability through strategic adjustments and refined operations, planning for high-quality development in H2 - In H1 2025, China's economy showed **steady progress**, with GDP growing by **5.3%** year-on-year and total social logistics increasing by **5.6%** year-on-year[125](index=125&type=chunk)[127](index=127&type=chunk) - Logistics enterprises face multi-dimensional operating pressures, including **intensified market competition**, **rigidly rising costs**, and **volatile international environment**[125](index=125&type=chunk)[127](index=127&type=chunk) - The Group gradually alleviated automotive logistics business pressure through **proactive cost reduction**, **optimization of business structure**, and **deepened customer collaboration**; material procurement services improved profitability by contracting low-margin businesses; and warehousing and multimodal transport businesses enhanced efficiency through cost control and model innovation[125](index=125&type=chunk)[127](index=127&type=chunk) [Outlook and Strategic Focus for H2 2025](index=28&type=section&id=Outlook%20and%20Strategic%20Focus%20for%20H2%202025) Looking ahead to H2 2025, China's new development paradigm will foster dual circulation, unlocking logistics demand potential in green, low-carbon, and consumer sectors, providing policy dividends for the Group's high-quality development, which will focus on solidifying its core business, strengthening cost control, and actively expanding into new markets to achieve dual improvements in quality and efficiency - H2 outlook: The Group will anchor **high-quality development**, solidify its core business foundation, strengthen cost control, and actively expand into incremental markets, implementing multiple measures to expand automotive logistics business and enhance cost-efficiency, promote model innovation and operational effectiveness in warehousing and multimodal transport, and steadily advance the transformation and upgrading of material procurement business, achieving dual improvements in quality and efficiency for its main businesses[126](index=126&type=chunk)[128](index=128&type=chunk) - The logistics industry is at a critical juncture of transformation from **scale-driven to innovation-driven**, and the Group will adhere to the "seek progress while maintaining stability" work principle, serve the real economy, and fully integrate into the modern comprehensive logistics service system[129](index=129&type=chunk)[131](index=131&type=chunk) [Other Information](index=29&type=section&id=OTHER%20INFORMATION) This section covers various other information, including directors' and chief executives' interests, substantial shareholders, competing interests, changes in director information, auditor name change, corporate governance, audit committee, and securities transactions [Directors' and Chief Executives' Interests and/or Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation](index=29&type=section&id=Directors'%20and%20Chief%20Executives'%20Interests%20and%2For%20Short%20Positions) As of June 30, 2025, none of the company's directors or chief executives held any interests or short positions in the shares, underlying shares, or debentures of the company or any associated corporation that require disclosure under the Securities and Futures Ordinance - As of June 30, 2025, none of the company's directors or chief executives held any disclosable interests or short positions in the shares, underlying shares, or debentures of the company or any associated corporation[129](index=129&type=chunk)[131](index=131&type=chunk) [Directors' and Chief Executives' Rights to Acquire Shares or Debentures](index=29&type=section&id=Directors'%20and%20Chief%20Executives'%20Rights%20to%20Acquire%20Shares%20or%20Debentures) As of June 30, 2025, no rights to subscribe for or acquire shares or debentures of the company were granted to or exercised by any director or chief executive - As of June 30, 2025, no rights to subscribe for or acquire shares or debentures of the company were granted to or exercised by any director or chief executive[130](index=130&type=chunk)[132](index=132&type=chunk) [Substantial Shareholders and Persons Holding Interests and Short Positions in Shares and Underlying Shares of the Company](index=30&type=section&id=Substantial%20Shareholders%20and%20Persons%20Holding%20Interests%20and%20Short%20Positions) As of June 30, 2025, Tianjin TEDA Investment Holding Co., Ltd., Chia Tai Pharmaceutical Investment (Beijing) Co., Ltd., Chia Tai Land Co., Ltd., and Tianjin Port Development Holdings Limited were the company's substantial shareholders, holding 42.45%, 21.82%, 8%, and 5.64% of H-shares, respectively Substantial Shareholders' Shareholdings (June 30, 2025) | Name | Capacity | Number of H-shares | Percentage of Total Issued Share Capital | | :--- | :--- | :--- | :--- | | Tianjin TEDA Investment Holding Co., Ltd. | Beneficial Owner | 150,420,051 | 42.45% | | Chia Tai Pharmaceutical Investment (Beijing) Co., Ltd. | Beneficial Owner | 77,303,789 | 21.82% | | Chia Tai Land Co., Ltd. | Beneficial Owner | 28,344,960 | 8% | | Tianjin Port Development Holdings Limited | Beneficial Owner | 20,000,000 | 5.64% | - Chia Tai Land Co., Ltd. and its controlled corporations (FUTAI (Shanghai) Co., Ltd., Chia Tai Group (BVI) Holdings Limited, CPG Overseas Company Limited, Charoen Pokphand Group Company Limited) are deemed to hold **8%** of the H-shares[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Chia Tai Pharmaceutical Investment (Beijing) Co., Ltd. and its controlled corporation (China Biopharmaceutical Limited) are deemed to hold **21.82%** of the H-shares[136](index=136&type=chunk)[138](index=138&type=chunk) [Competing Interests](index=33&type=section&id=Competing%20Interests) None of the company's directors, controlling shareholders, substantial shareholders, or their associates engage in any business that competes or may compete with the Group's business, nor do they have any other conflicts of interest - None of the company's directors, controlling shareholders, substantial shareholders, or their associates have **competing interests** or conflicts of interest with the Group[140](index=140&type=chunk)[144](index=144&type=chunk) [Change in Information of Director or Chief Executive](index=33&type=section&id=Change%20in%20Information%20of%20Director%20or%20Chief%20Executive) As of the report date, the company has not identified any changes in information of directors or chief executives that require disclosure under the GEM Listing Rules - As of the report date, the company has **not identified any changes** in information of directors or chief executives that require disclosure under the GEM Listing Rules[141](index=141&type=chunk)[145](index=145&type=chunk) [Change of Name of Accountant](index=33&type=section&id=Change%20of%20Name%20of%20Accountant) The company's Hong Kong auditor, SHINEWING (HK) CPA Limited, changed its name to Rongcheng (Hong Kong) CPA Limited on June 30, 2025 - The company's Hong Kong auditor, SHINEWING (HK) CPA Limited, changed its name to **Rongcheng (Hong Kong) CPA Limited** on June 30, 2025[142](index=142&type=chunk)[146](index=146&type=chunk) [Corporate Governance Code](index=34&type=section&id=Corporate%20Governance%20Code) During the reporting period, the company consistently complied with all provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the GEM Listing Rules - During the reporting period, the company consistently complied with **all provisions** of the Corporate Governance Code set out in Appendix C1 Part 2 of the GEM Listing Rules[147](index=147&type=chunk)[150](index=150&type=chunk) [Audit Committee](index=34&type=section&id=Audit%20Committee) The company has established an Audit Committee in accordance with the GEM Listing Rules, defining its terms of reference and duties, composed of independent non-executive directors, and has reviewed the unaudited results for the reporting period - The company has established an Audit Committee in accordance with the GEM Listing Rules, defining its terms of reference and duties, and is composed of **independent non-executive directors**[148](index=148&type=chunk)[151](index=151&type=chunk) - The Audit Committee has reviewed the **unaudited results** for the reporting period and provided recommendations and opinions[148](index=148&type=chunk)[151](index=151&type=chunk) [Securities Transactions by Directors](index=34&type=section&id=Securities%20Transactions%20by%20Directors) The company has adopted a code for securities transactions by directors, and all directors have confirmed their compliance with this code - The company has adopted a code for securities transactions by directors, and all directors have confirmed their **compliance** with this code[149](index=149&type=chunk)[152](index=152&type=chunk) [Purchase, Sale or Redemption of Listed Securities of the Company](index=35&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities%20of%20the%20Company) During the reporting period, the company repurchased 522,000 H-shares on GEM, and other than this, neither the company nor its subsidiaries purchased, redeemed, sold, or cancelled any other listed securities - During the reporting period, the company repurchased **522,000 H-shares** on GEM[153](index=153&type=chunk)[155](index=155&type=chunk) - Other than the aforementioned repurchase, neither the company nor its subsidiaries purchased, redeemed, sold, or cancelled any other **listed securities**[153](index=153&type=chunk)[155](index=155&type=chunk)

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的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並表明概不就因本公告全部或任何部分內容而產生或依賴該等內 容而引致的任何損失承擔任何責任。 XXF GROUP HOLDINGS LIMITED 喜相逢集團控股有限公司 （於開曼群島註冊成立的有限公司） （股份代號：2473） 截至2025年6月30日止六個月的 中期業績公告 董事會欣然宣佈本集團截至2025年6月30日止六個月的未經審計綜合中期業績， 連同截至2024年6月30日止六個月的比較數字。 | 財務摘要 | | | | | --- | --- | --- | --- | | | 截至6月30日 | | | | | 止六個月 | | | | | 2025年 | 2024年 | 同比變動 | | | 人民幣千元 | 人民幣千元 | | | | 未經審計 | 未經審計 | | | 收益 | 769,151 | 658,651 | 16.8% | | 毛利 | 230,874 | 209,260 | 10.3% | | 除所得稅前利潤 | 27,920 | 27,064 | 3.2% | | 期間 ...

[Financial Highlights](index=3&type=section&id=Financial%20Highlights) [Profitability and Operating Data](index=3&type=section&id=Profitability%20and%20Operating%20Data) For the six months ended June 30, 2025, the company's profitability steadily improved, with revenue increasing by 11.0% to RMB 5.705 billion and profit attributable to equity holders growing by 8.6% to RMB 858 million, while gross profit margin slightly rose by 0.2 percentage points to 41.5% Profitability Data for the Six Months Ended June 30, 2025 | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | RMB 5,704.8 million | RMB 5,141.3 million | +11.0% | | **Gross Profit** | RMB 2,366.5 million | RMB 2,125.0 million | +11.4% | | **Operating Profit** | RMB 1,137.3 million | RMB 1,060.4 million | +7.2% | | **Profit Attributable to Equity Holders** | RMB 857.7 million | RMB 789.7 million | +8.6% | | **Basic Earnings Per Share** | RMB 41.5 cents | RMB 38.2 cents | +8.6% | | **Gross Profit Margin** | 41.5% | 41.3% | +0.2 percentage points | | **Operating Profit Margin** | 19.9% | 20.6% | -0.7 percentage points | [Balance Sheet and Cash Flow Data](index=4&type=section&id=Balance%20Sheet%20and%20Cash%20Flow%20Data) As of June 30, 2025, the company maintained a healthy asset position and ample liquidity, with net cash inflow from operating activities significantly increasing by 227.2% to RMB 524 million and net cash growing by 7.5% to RMB 4.301 billion Asset and Liquidity Data as of June 30, 2025 | Indicator | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Equity Attributable to Equity Holders** | RMB 10,048.8 million | RMB 9,375.2 million | +7.2% | | **Net Cash Inflow from Operating Activities** | RMB 523.8 million | RMB 160.1 million | +227.2% | | **Net Cash** | RMB 4,300.7 million | RMB 4,001.7 million | +7.5% | | **Current Ratio** | 3.8 | 3.6 | +0.2 | | **Inventory Turnover Days** | 109 days | 107 days | +2 days | | **Trade Receivables and Bills Receivable Turnover Days** | 146 days | 149 days | -3 days | | **Trade Payables and Bills Payable Turnover Days** | 71 days | 88 days | -17 days | [Interim Results Overview](index=5&type=section&id=Interim%20Results%20Overview) [Performance and Store Network Summary](index=5&type=section&id=Performance%20and%20Store%20Network%20Summary) In the first half of 2025, the company achieved significant growth across all business segments, with total revenue increasing by 11.0% to RMB 5.70 billion and profit attributable to equity holders growing by 8.6% to RMB 858 million - Revenue increased by **11.0%** to **RMB 5.70 billion**, with profit attributable to equity holders growing by **8.6%** to **RMB 858 million**[10](index=10&type=chunk)[11](index=11&type=chunk) - E-commerce business showed strong performance, with revenue significantly increasing by **45.0%** year-on-year to **RMB 1.82 billion**[14](index=14&type=chunk) - 361º Children's business achieved steady growth, with revenue increasing by **11.4%** year-on-year to **RMB 1.26 billion**[12](index=12&type=chunk) - The Board recommended an interim dividend of **20.4 HK cents** per share, with a payout ratio of **45.0%**[15](index=15&type=chunk) - As of the end of the period, the company operated **5,669 361° stores** and **2,494 361° Children sales outlets** in mainland China, along with **1,357 sales outlets** in overseas markets[17](index=17&type=chunk) [Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) [Overall Performance and Brand Strategy](index=7&type=section&id=Overall%20Performance%20and%20Brand%20Strategy) In the first half of 2025, the Group achieved a 11.0% year-on-year revenue increase to RMB 5.7 billion and an 8.6% growth in profit attributable to equity holders to RMB 858 million, while consistently enhancing its professional and international brand image through strategic sponsorships and product innovations H1 2025 Performance Summary | Indicator | Amount | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | RMB 5.7 billion | 11.0% | | Profit Attributable to Equity Holders | RMB 858 million | 8.6% | - The Board recommended an interim dividend of **20.4 HK cents** per share, with a payout ratio of **45.0%**[20](index=20&type=chunk) - The core brand strategy focuses on "professionalization, youthfulness, and internationalization," strengthening its professional image through sponsoring major events like the Asian Winter Games and collaborating with international sports organizations such as World Aquatics[21](index=21&type=chunk)[25](index=25&type=chunk) - The company launched the first signature shoe "JOKER1 GT" for global brand ambassador Nikola Jokić and successfully held his first "China Tour" event, enhancing the brand's international recognition[28](index=28&type=chunk) [Children's Business and Channel Expansion](index=10&type=section&id=Children's%20Business%20and%20Channel%20Expansion) The 361º Children's business, positioned as a "Youth Sports Expert," continues to drive high-quality growth with 2,494 sales outlets, while the Group expands its omnichannel retail presence, including 49 "Super Stores" and 1,357 overseas sales outlets - 361º Children's business is positioned as a "Youth Sports Expert" and is one of the core engines for the Group's steady growth[31](index=31&type=chunk) - As of the end of the period, the number of 361º Children's sales outlets reached **2,494**, with continuous upgrades to store image[35](index=35&type=chunk) - The new retail format "Super Stores" has accumulated **49 locations** as of June 30, 2025[39](index=39&type=chunk) - Accelerated international expansion includes **1,357 offline sales outlets** across the Americas, Europe, and Belt and Road markets, with the first overseas direct-operated store opened in Kuala Lumpur, Malaysia[39](index=39&type=chunk) [Sustainable Development and Outlook](index=12&type=section&id=Sustainable%20Development%20and%20Outlook) The Group integrates sustainable development into its corporate strategy, focusing on green production, product R&D, and social welfare, while aiming to deepen its brand positioning and expand its business ecosystem globally - Integrating sustainable development (ESG) concepts into corporate strategy, promoting deep integration of green technology and product R&D[40](index=40&type=chunk) - Actively fulfilling social responsibility, for example, by promptly donating supplies to disaster areas after the Tibet earthquake in January 2025[40](index=40&type=chunk) - Looking ahead, the Group will continue to deepen its brand positioning, expand its business ecosystem, and achieve more breakthroughs and value accumulation on the global stage[41](index=41&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) [Industry Review](index=13&type=section&id=Industry%20Review) In the first half of 2025, China's economy demonstrated resilience with 5.3% GDP growth, while the domestic consumer market, particularly sports consumption, saw accelerated transformation driven by supportive policies and technological innovation - In the first half of 2025, China's GDP grew by **5.3%** year-on-year, with the domestic consumer market showing diversified, digitalized, and refined development trends[44](index=44&type=chunk)[45](index=45&type=chunk) - The state has issued multiple policies to support the development of the sports industry, focusing on the ice and snow economy, event economy, outdoor economy, and upgrading of sports goods[45](index=45&type=chunk)[46](index=46&type=chunk) - Technological innovation continues to stimulate new momentum in the sports goods industry, while various sports events (e.g., Asian Winter Games, "Cun Chao") have strong带动 effects[48](index=48&type=chunk) - The domestic children's sportswear market has significant long-term growth potential amid upgraded birth support policies and changing parenting concepts[51](index=51&type=chunk) [Business Review](index=16&type=section&id=Business%20Review) The Group maintained its "professionalization, youthfulness, and internationalization" brand positioning, optimizing its retail network to 5,669 core brand stores and 49 "Super Stores," while achieving strong growth in children's, international, and e-commerce businesses, with e-commerce revenue share increasing to 31.8% [Brand, Positioning and Business Model](index=16&type=section&id=Brand%2C%20Positioning%20and%20Business%20Model) 361º Group, a leading comprehensive sports goods company in China, maintains a "professional, youthful, and international" brand positioning, focusing on the mass professional sports market through an efficient distribution business model - Brand positioning is "professional, youthful, and international," providing consumers with high-value mass professional sports products[55](index=55&type=chunk) - Adopts a distribution business model where first-tier distributors exclusively distribute products in their respective regions, allowing the company to focus on brand management and product R&D[56](index=56&type=chunk) - Holds four ordering fairs annually, typically six months before new product launches, to ensure production delivery times and effectively enhance the certainty of sales revenue[58](index=58&type=chunk) [Retail Network](index=17&type=section&id=Retail%20Network) As of June 30, 2025, the Group operated 5,669 361º core brand stores in China, with an optimized store structure and an average area of 156 square meters, while successfully launching 49 "Super Stores" as a new retail format - As of June 30, 2025, the Group had **5,669 361º brand stores**, with an average single-store area of **156 square meters**[60](index=60&type=chunk) - The new retail format "Super Stores" has accumulated **49 locations**, including **4 dedicated children's Super Stores**, effectively enhancing the shopping experience and brand image[61](index=61&type=chunk) 361º Core Brand Authorized Retail Stores by Region | Region | Number of Stores (As of June 30, 2025) | % of Total | | :--- | :--- | :--- | | East | 1,141 | 20.1% | | South | 684 | 12.1% | | West | 1,252 | 22.1% | | North | 2,592 | 45.7% | | **Total** | **5,669** | **100.0%** | [Brand Promotion and Marketing](index=19&type=section&id=Brand%20Promotion%20and%20Marketing) The Group built a rich brand resource matrix by sponsoring major sports events, professional teams, and elite athletes, significantly enhancing its international influence and professional image in running and basketball through strategic partnerships and IP collaborations - Continuously served as an official partner of the Olympic Council of Asia for **16 years**, becoming the first sports brand to sponsor both the Asian Games and Asian Winter Games simultaneously[70](index=70&type=chunk) - Signed a new partnership with World Aquatics, becoming a global partner for 2026–2029, expanding the brand's overseas presence[70](index=70&type=chunk) - In the running sector, launched its proprietary IP "Track No. 3 10KM Speed Series"; in basketball, its proprietary event "Touchdown and Ignite" has achieved global expansion and entered Japan[71](index=71&type=chunk)[78](index=78&type=chunk) - Successfully broke into younger consumer segments by collaborating with popular IPs such as Xiaoliuya and Peppa Pig to launch co-branded products[81](index=81&type=chunk) [361º Children Business](index=31&type=section&id=361%C2%BA%20Children%20Business) The 361º Children's business, positioned as a "Youth Sports Expert," recorded revenue of RMB 1.261 billion, a 11.4% year-on-year increase, accounting for 22.1% of the Group's total revenue, with 2,494 sales outlets and continuous channel image upgrades 361º Children Business Performance | Indicator | Amount/Quantity | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | RMB 1,260.8 million | +11.4% | | % of Group's Total Revenue | 22.1% | - | | Number of Sales Outlets | 2,494 | - | - Product lines expanded upwards to the **16-year-old age group**, introducing innovative technologies like FLASH technology and arch adaptive system technology to enhance product performance[105](index=105&type=chunk) - Channel image continues to upgrade, with fourth-generation and fifth-generation concept stores collectively accounting for **90.9%**[107](index=107&type=chunk) [361º International Business](index=34&type=section&id=361%C2%BA%20International%20Business) During the review period, the Group's international business achieved steady growth, with revenue of RMB 87.6 million, a 19.7% year-on-year increase, accounting for 1.5% of total revenue, supported by 1,357 overseas sales outlets and the opening of its first direct-operated store in Malaysia 361º International Business Performance | Indicator | Amount/Quantity | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | RMB 87.6 million | +19.7% | | % of Group's Total Revenue | 1.5% | - | | Number of Overseas Sales Outlets | 1,357 | - | - In January 2025, the first overseas direct-operated store was opened in Kuala Lumpur, Malaysia, with good operational performance[118](index=118&type=chunk) [E-commerce Business](index=34&type=section&id=E-commerce%20Business) The Group's e-commerce business demonstrated strong growth momentum, with revenue reaching RMB 1.817 billion, a significant 45.0% year-on-year increase, and its contribution to total revenue rising from 24.4% to 31.8% E-commerce Business Performance | Indicator | Amount | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | RMB 1,816.9 million | +45.0% | | % of Group's Total Revenue | 31.8% | - | - E-commerce business has become one of the key drivers of the Group's business growth, primarily selling through platforms such as Tmall, Taobao, JD.com, and Vipshop[119](index=119&type=chunk)[122](index=122&type=chunk) - In Q1 and Q2 2025, e-commerce omnichannel GMV achieved year-on-year growth of **35%-40%** and **20%**, respectively[122](index=122&type=chunk) [Production and Research & Development](index=35&type=section&id=Production%20and%20Research%20%26%20Development) The Group employs a flexible production model combining in-house manufacturing and OEM outsourcing, with R&D expenses accounting for 2.8% of total revenue in H1, continuously launching professional products with new technologies and holding 870 patents - Adopts a production model combining in-house manufacturing and OEM outsourcing, with approximately **33.0%** of footwear products and **19.0%** of apparel being self-produced[124](index=124&type=chunk)[126](index=126&type=chunk) - R&D expenses accounted for **2.8%** of total revenue in the first half, with an estimated full-year range of **3% to 4%**[127](index=127&type=chunk)[6](index=6&type=chunk) - Continuously launches new technology products, such as "Feibiao FUTURE2" and "Qianhang 1.0" running shoes, "DVD3" and "JOKER1 GT" basketball shoes, and expands into categories like badminton, cycling, and women's training[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - As of June 30, 2025, the Group had obtained **870 patents** and had **832 technical personnel** involved in product R&D[140](index=140&type=chunk) [Awards and Sustainable Development](index=40&type=section&id=Awards%20and%20Sustainable%20Development) During the review period, the Group received multiple accolades, including "Best IR Hong Kong Stock Company," while actively integrating ESG principles into its operations through eco-friendly materials, green procurement, social responsibility, and enhanced corporate governance - Awarded "8th New Fortune Best IR Hong Kong Stock Company (H-share)" and "16th Tianma Award for Investor Relations Management of Hong Kong Listed Companies," among other capital market awards[142](index=142&type=chunk) - Widely applies environmentally friendly materials in products, such as the "Feibiao FUTURE2" running shoes, which use **30%** eco-friendly yarn[145](index=145&type=chunk) - Actively fulfills social responsibility, for example, by promptly donating **RMB 8 million** worth of winter supplies to the disaster area after the Tibet earthquake in January 2025[146](index=146&type=chunk) [Financial Review](index=42&type=section&id=Financial%20Review) In the first half, the Group's financial performance was robust, with revenue increasing by 11.0% to RMB 5.705 billion, driven by strong growth in adult and children's footwear, while gross profit margin slightly rose to 41.5% and operating cash inflow remained strong [Revenue Analysis](index=42&type=section&id=Revenue%20Analysis) During the review period, the Group's revenue increased by 11.0% to RMB 5.705 billion, primarily driven by strong growth in adult and children's footwear, while apparel categories adjusted average selling prices to boost sales Revenue Breakdown by Product Category (RMB thousands) | Product Category | H1 2025 | % of Total | H1 2024 | % of Total | Change | | :--- | :--- | :--- | :--- | :--- | :--- | | **Adult Footwear** | 2,574,949 | 45.1% | 2,283,242 | 44.4% | +12.8% | | **Adult Apparel** | 1,601,482 | 28.1% | 1,575,714 | 30.7% | +1.6% | | **Children's Footwear** | 711,620 | 12.5% | 556,627 | 10.8% | +27.8% | | **Children's Apparel** | 521,850 | 9.1% | 564,668 | 11.0% | -7.6% | | **Others** | 294,929 | 5.2% | 161,033 | 3.1% | +83.2% | | **Total** | **5,704,830** | **100.0%** | **5,141,284** | **100.0%** | **+11.0%** | - The average wholesale selling prices for adult and children's apparel were reduced by **4.5%** and **6.3%** respectively, to enhance value-for-money and boost sales volume[152](index=152&type=chunk)[155](index=155&type=chunk) [Cost, Gross Profit and Expense Analysis](index=45&type=section&id=Cost%2C%20Gross%20Profit%20and%20Expense%20Analysis) In the first half, cost of sales increased by 10.7% to RMB 3.338 billion, in line with revenue growth, leading to an 11.4% increase in gross profit to RMB 2.366 billion and a slight rise in gross profit margin to 41.5%, while selling and distribution expenses increased due to higher advertising and e-commerce platform fees - The Group's overall gross profit margin slightly increased from **41.3%** to **41.5%**, with adult footwear and apparel gross profit margins improving by **0.5** and **1.1 percentage points** respectively[161](index=161&type=chunk)[162](index=162&type=chunk) - Selling and distribution expenses increased by **13.2%** year-on-year to **RMB 1.037 billion**, with advertising and promotion expenses at **RMB 577 million**, accounting for **10.1%** of revenue[168](index=168&type=chunk) - R&D expenses within administrative expenses increased by **12.1%** year-on-year to **RMB 160 million**, accounting for **2.8%** of total revenue[171](index=171&type=chunk)[172](index=172&type=chunk) [Liquidity, Capital Structure and Working Capital](index=49&type=section&id=Liquidity%2C%20Capital%20Structure%20and%20Working%20Capital) As of the period end, the Group maintained a healthy cash position with RMB 4.612 billion in cash and cash equivalents and a low debt-to-asset ratio of 2.2%, while working capital turnover days increased to 184 days primarily due to a significant reduction in trade payables turnover days - Net cash inflow from operating activities was **RMB 524 million**, primarily contributed by profit before tax[178](index=178&type=chunk) - The debt-to-asset ratio (total bank borrowings/total assets) was **2.2%**, indicating a very healthy financial position[184](index=184&type=chunk) Working Capital Turnover Days | Indicator | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Inventory Turnover Days | 109 | 107 | +2 | | Trade Receivables and Bills Receivable Turnover Days | 146 | 149 | -3 | | Trade Payables and Bills Payable Turnover Days | 71 | 88 | -17 | | **Working Capital Turnover Days** | **184** | **168** | **+16** | [Dividends](index=53&type=section&id=Dividends) The Board resolved to declare an interim dividend of 20.4 HK cents per share, an increase from the previous year, with the payout ratio rising to 45.0% and return on equity improving to 8.8%, reflecting enhanced profitability and commitment to shareholder returns - Declared an interim dividend of **20.4 HK cents** per share, higher than **16.5 HK cents** in the same period last year[194](index=194&type=chunk) - The payout ratio reached **45.0%**, a steady increase from **40.3%** in the first half of 2024[194](index=194&type=chunk) - Return on equity (ROE) rose to **8.8%**, showing continuous improvement for three consecutive reporting periods[194](index=194&type=chunk) [Outlook](index=54&type=section&id=Outlook) Looking ahead to H2 2025, the Group will continue to prioritize consumer-centricity, strengthen its "professional, youthful, and international" brand positioning, and expand its global market reach through omnichannel development and cross-border e-commerce - Will continue to solidify the "professional, youthful, and international" brand positioning, focusing on technological innovation and brand building[201](index=201&type=chunk) - The children's brand will extend its product matrix around structural changes in demand, strengthening its positioning as a "Youth Sports Expert"[201](index=201&type=chunk) - Channel development will fully promote online-offline integration, expanding global market coverage through dual empowerment of cross-border e-commerce and overseas offline outlets[201](index=201&type=chunk) [Condensed Consolidated Financial Statements](index=55&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss](index=55&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This statement presents the income, costs, expenses, and profit for the six months ended June 30, 2025, showing revenue of RMB 5.705 billion, operating profit of RMB 1.137 billion, and profit attributable to equity holders of RMB 858 million Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Item (RMB thousands) | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | **Revenue** | **5,704,830** | **5,141,284** | | Cost of sales | (3,338,380) | (3,016,287) | | **Gross Profit** | **2,366,450** | **2,124,997** | | Operating profit | 1,137,251 | 1,060,445 | | Profit before income tax | 1,131,854 | 1,052,282 | | **Profit for the period** | **872,396** | **821,709** | | **Profit attributable to equity holders of the Company** | **857,690** | **789,703** | | **Basic and diluted earnings per share (RMB cents)** | **41.48** | **38.19** | [Condensed Consolidated Statement of Financial Position](index=57&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement reflects the assets, liabilities, and equity as of June 30, 2025, with total assets of RMB 14.129 billion, total liabilities of RMB 3.612 billion, and net assets of RMB 10.517 billion, indicating a strong short-term solvency position Condensed Consolidated Statement of Financial Position Summary (As of reporting period end) | Item (RMB thousands) | As of June 30, 2025 (Unaudited) | As of December 31, 2024 (Audited) | | :--- | :--- | :--- | | **Non-current assets** | 1,335,978 | 1,355,479 | | **Current assets** | 12,793,009 | 12,058,073 | | **Total assets** | **14,128,987** | **13,413,552** | | **Current liabilities** | 3,396,808 | 3,362,734 | | **Non-current liabilities** | 214,826 | 221,690 | | **Total liabilities** | **3,611,634** | **3,584,424** | | **Net assets** | **10,517,353** | **9,829,128** | | **Total equity attributable to equity holders of the Company** | 10,048,761 | 9,375,242 | [Condensed Consolidated Statement of Cash Flows](index=60&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement details cash inflows and outflows for the period, with net cash generated from operating activities of RMB 524 million, net cash used in investing activities of RMB 36 million, and net cash used in financing activities of RMB 149 million, resulting in a net increase of RMB 348 million in cash and cash equivalents to RMB 4.603 billion Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Item (RMB thousands) | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | **Net cash generated from operating activities** | **523,764** | **160,093** | | **Net cash used in investing activities** | **(35,918)** | **(104,181)** | | **Net cash used in financing activities** | **(149,174)** | **(241,440)** | | Net increase/(decrease) in cash and cash equivalents | 338,672 | (185,528) | | Cash and cash equivalents at January 1 | 4,254,236 | 3,596,489 | | **Cash and cash equivalents at June 30** | **4,602,802** | **3,410,468** | [Notes to the Condensed Consolidated Interim Financial Statements](index=61&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide detailed explanations and supplementary information for the financial statements, covering key aspects such as basis of preparation, accounting policy changes, revenue and segment reporting, expense breakdowns, taxation, earnings per share calculation, balance sheet item details, dividend policy, related party transactions, and fair value of financial instruments - Revenue is divided into two reportable segments: adult and children's apparel, with the adult segment contributing **RMB 4.445 billion** and the children's segment contributing **RMB 1.260 billion**[225](index=225&type=chunk)[226](index=226&type=chunk) - As of the end of the reporting period, total trade receivables and bills receivable amounted to **RMB 4.744 billion**, with **92.7%** aged within **180 days**, indicating an improved aging structure[190](index=190&type=chunk)[242](index=242&type=chunk) - The Board declared an interim dividend of **20.4 HK cents** per ordinary share, totaling approximately **RMB 386 million**; the final dividend for the year ended December 31, 2024 (10.0 HK cents per share, totaling approximately RMB 191 million) was paid during the period[254](index=254&type=chunk)[255](index=255&type=chunk) [Corporate Governance and Other Information](index=77&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance and Shareholder Interests](index=77&type=section&id=Corporate%20Governance%20and%20Shareholder%20Interests) During this reporting period, the company complied with the Corporate Governance Code, disclosing detailed shareholdings of directors and major shareholders, with the Audit Committee reviewing the interim financial statements - The company has complied with the code provisions of the Corporate Governance Code as set out in the Listing Rules for the six months ended June 30, 2025[269](index=269&type=chunk) - Major shareholders and executive directors Ding Wuhou, Ding Huihuang, Ding Huirong, and others collectively hold over **60%** of the company's shares through discretionary trusts[270](index=270&type=chunk)[282](index=282&type=chunk) - The company adopted a new share option scheme in April 2023, but no share options have been granted, exercised, cancelled, or lapsed since its adoption[275](index=275&type=chunk)[280](index=280&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim financial statements for the six months ended June 30, 2025[288](index=288&type=chunk) [Shareholder Information](index=82&type=section&id=Shareholder%20Information) [Dividend and Registration Information](index=82&type=section&id=Dividend%20and%20Registration%20Information) This section provides key dates and shareholder registration information for the interim dividend payment, which is 20.4 HK cents per share, with an ex-dividend date of September 10, 2025, and payment around September 25 Interim Dividend Timetable | Event | Date | | :--- | :--- | | Interim Results Announcement | August 12, 2025 | | Ex-dividend Date for Interim Dividend | September 10, 2025 | | Book Closure Period | September 12 to September 16, 2025 | | Record Date | September 16, 2025 | | Interim Dividend Payment Date | On or about September 25, 2025 | - The Board resolved to declare an interim dividend of **20.4 HK cents** per share[290](index=290&type=chunk) [Company Information](index=83&type=section&id=Company%20Information) [Basic Company Information](index=83&type=section&id=Basic%20Company%20Information) This section lists the company's core information, including board members, committee compositions, company secretary, registered office, principal place of business, auditors, legal advisors, and principal bankers, with the company's stock code being 01361 - Executive Directors include Ding Wuhou, Ding Huihuang (Chairman), Ding Huirong, and Wang Jiabi[296](index=296&type=chunk) - The company's auditors are UHY CPA Limited[295](index=295&type=chunk) - The company's stock code is **01361**, and its website is www.361sport.com[295](index=295&type=chunk)[296](index=296&type=chunk)